[Federal Register Volume 78, Number 47 (Monday, March 11, 2013)]
[Rules and Regulations]
[Pages 15560-15596]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-04954]
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Vol. 78
Monday,
No. 47
March 11, 2013
Part III
Office of Personnel Management
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45 CFR Part 800
Patient Protection and Affordable Care Act; Establishment of the
Multi-State Plan Program for the Affordable Insurance Exchanges; Final
Rule
Federal Register / Vol. 78, No. 47 / Monday, March 11, 2013 / Rules
and Regulations
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OFFICE OF PERSONNEL MANAGEMENT
45 CFR Part 800
RIN 3206-AM47
Patient Protection and Affordable Care Act; Establishment of the
Multi-State Plan Program for the Affordable Insurance Exchanges
AGENCY: U.S. Office of Personnel Management.
ACTION: Final rule.
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SUMMARY: The U.S. Office of Personnel Management (OPM) is issuing a
final regulation establishing the Multi-State Plan Program (MSPP)
pursuant to 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. Through contracts with OPM,
health insurance issuers will offer at least two multi-State plans
(MSPs) on each of the Affordable Insurance Exchanges (Exchanges). One
of the issuers must be non-profit. Under the law, an MSPP issuer may
phase in the States in which it offers coverage over 4 years, but it
must offer MSPs on Exchanges in all States and the District of Columbia
by the fourth year in which the MSPP issuer participates in the MSPP.
This rule aims to balance adhering to the statutory goals of MSPP while
aligning its standards to those applying to qualified health plans to
promote a level playing field across health plans.
DATES: Effective May 10, 2013, except for Sec. 800.503. OPM will
publish a document announcing the effective date of Sec. 800.503 in
the Federal Register.
Note: Section 2719 of the Public Health Service Act and its
implementing regulations apply to all non-grandfathered group health
plans and health insurance issuers, including MSPP issuers, with
respect to internal claims and appeals and external review. Because
rulemaking implementing section 2719 has not yet been completed, the
provisions of this regulation relating to external review (Sec.
800.503) will take effect on the effective date of those
regulations.
FOR FURTHER INFORMATION CONTACT: Julia Elam by telephone at (202) 606-
2128, by FAX at (202) 606-0033, or by email at [email protected].
SUPPLEMENTARY INFORMATION: The Patient Protection and Affordable Care
Act (Pub. L. 111-148), as amended by the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152), together known as the
Affordable Care Act, provides for the establishment of Health Insurance
Marketplaces, or Exchanges, in each State, where individuals and small
businesses can purchase qualified coverage. The Exchanges will provide
competitive marketplaces for individuals and small employers to
directly compare available private health insurance options on the
basis of price, quality, and other factors. The Exchanges will enhance
competition in the health insurance market, improve choice of
affordable health insurance, and give individuals and small businesses
purchasing power comparable to that of large businesses. The U.S.
Office of Personnel Management is issuing this final regulation to
implement section 1334 of the Affordable Care Act by establishing the
Multi-State Plan Program, as described below.
Abbreviations
FEHBA Federal Employees Health Benefits Act (5 U.S.C. 8901 et seq.)
FEHBP Federal Employees Health Benefits Program
HHS U.S. Department of Health and Human Services
HMO Health Maintenance Organization
I/T/Us Indian Health Service, tribes and tribal organizations, and
urban Indian organizations
MSP Multi-State Plan
MSPP Multi-State Plan Program
NAIC National Association of Insurance Commissioners
OPM U.S. Office of Personnel Management
PHS Act Public Health Service Act
QHP Qualified Health Plan
SHOP Small Business Health Options Program
Pursuant to its responsibilities under the Affordable Care Act, the
U.S. Department of Health and Human Services (HHS) issued regulations
outlining standards to certify Exchanges and qualified health plans
(QHPs) that will be offered on Exchanges. If a State does not elect to
operate an Exchange or is not certified (or conditionally approved) to
operate one, HHS will operate the Exchange in that State.
Section 1334 of the Affordable Care Act directs the U.S. Office of
Personnel Management (OPM) to establish the Multi-State Plan Program
(MSPP) to foster competition among plans competing in the individual
and small group health insurance markets on the Exchanges.
Specifically, section 1334 directs OPM to contract with private health
insurance issuers (one of which must be non-profit) to offer at least
two multi-State plans (MSPs) on each of the Exchanges in each State.
The law allows MSPP issuers to phase in coverage, but coverage must be
offered on Exchanges in all States and the District of Columbia by the
fourth year in which the MSPP issuer participates in the MSPP. The
first open enrollment period for plans offered through Exchanges will
begin on October 1, 2013, for coverage starting January 1, 2014.
The purpose of this regulation is to outline the process by which
OPM will establish and administer the MSPP, as well as to establish
standards and requirements for MSPs and MSPP issuers.
Summary of Comments
On December 5, 2012, OPM published proposed regulations (77 FR
72582) establishing the MSPP at part 800 of title 45, Code of Federal
Regulations. The comment period for the proposed rule closed on January
4, 2013. OPM received about 350 comments from a wide variety of
entities and individuals. A summary of the comments we received
follows, along with our responses to the comments and changes we are
making to the proposed regulations in light of the comments. In
addition, we are making some minor technical and editorial changes to
the proposed regulations to correct errors and improve clarity and
readability.
Responses to Overarching Comments
Of the approximately 350 comments we received on the proposed rule,
about 105 were unique comment letters. Many of the others were form
letters, including letters requesting an extension of the comment
period.
A broad range of stakeholders commented on the proposed regulation,
including 14 States and the National Association of Insurance
Commissioners (NAIC). We also received comments from about a dozen
health insurance issuers, group health plans, and their associations.
Most of the remaining comments came from health care providers,
pharmaceutical companies, business groups, labor unions, and consumer
groups.
Length of the Comment Period
We received many comments about the 30-day comment period and
whether we would extend it. Some commenters contended that the 30-day
comment period did not provide sufficient time to provide feedback.
Our comment period is consistent with the Administrative Procedure
Act and Executive Orders 12866 and 13563. OPM values the participation
of a broad array of diverse stakeholders, and we have succeeded in
obtaining that participation, as evidenced by the volume of comments as
well as the diversity of viewpoints offered in response to our proposed
regulation. Moreover, OPM has provided several other opportunities for
public input on policies relating to the MSPP. On June
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16, 2011, OPM issued a Request for Information (RFI) to solicit
feedback from stakeholders about the program. On September 21, 2012,
OPM issued a draft MSPP application and received public comments over a
30-day period. OPM has also held meetings and phone calls with numerous
stakeholders to seek input and guidance, including from the NAIC,
States, tribal governments, consumer advocates, health insurance
issuers, labor organizations, provider associations, and trade groups.
Church Plans
One commenter urged OPM to consider entering into an MSPP contract
with a church plan. The commenter explained that church plans are
defined in various sections of the law, including section 414(e) of the
Internal Revenue Code and section 3(33) of the Employee Retirement
Income Security Act (ERISA). A church plan does not, by itself, meet
the definition of health insurance issuer in section 2791(b)(2) of the
PHS Act; in addition, enrollment is limited to church employees and
members of the clergy. The commenter interpreted section 1334 of the
Affordable Care Act as allowing OPM to contract with church plans to
offer coverage through the MSPP. First, the commenter stated that,
while section 1334(a)(1) provides that the Director shall enter into
contracts for MSPs with health insurance issuers, it does not expressly
preclude OPM from entering into contracts with entities other than
issuers. The commenter asserted that church plans should be considered
eligible to contract for an MSP because OPM can treat a church plan as
equivalent to an issuer under the Church Parity and Entanglement
Protections Act, Public Law 106-244 (``Parity Act''). The commenter
recommended that OPM could exercise its discretion to exempt church
plans from a number of requirements for MSPs, including permitting a
church plan MSP to limit enrollment to members of the clergy and church
employees.
We disagree with the commenter's interpretation of section 1334 and
do not believe that a church plan meets the requirements necessary for
OPM to offer such a plan under an MSPP contract. Section 1334(a)(1)
explicitly requires OPM to enter into contracts for MSPs with ``health
insurance issuers,'' and we do not agree that the statute authorizes
OPM to enter into contracts with entities other than health insurance
issuers. Because church plans, by themselves, do not meet the
definition of health insurance issuers as described above, OPM does not
have the authority to contract for them under Sec. 1334.
Responses to Comments on the Regulations
Subpart A--General Provisions and Definitions
Basis and Scope (Sec. 800.10)
OPM proposed this section to define the basis and scope of part
800, which establishes the primary authority for the establishment of
the MSPP under the Affordable Care Act. Other relevant statutory
provisions MSPP issuers and MSPs must comply with include all
provisions of part A of title XXVII of the Public Health Service (PHS)
Act. Section 800.10 also sets forth the scope of this regulation, which
establishes standards for health insurance issuers wishing to contract
with OPM to participate in the MSPP and for the appeals processes for
both MSPP issuers and enrollees.
We received no comments on Sec. 800.10 as proposed. Accordingly,
we are adopting it as final, with no changes.
Definitions (Sec. 800.20)
In Sec. 800.20, OPM proposed definitions for terms that are used
throughout part 800. In general, the definitions contained in Sec.
800.20 come from the following sources: title I of the Affordable Care
Act and the final Exchange regulation at 45 CFR parts 155, 156, and
157; title XXVII of the PHS Act and the regulations at 45 CFR part 144;
and the Federal Employees Health Benefits Act (FEHBA) at chapter 89 of
title 5, United States Code, and the regulations governing the Federal
Employees Health Benefits Program (FEHBP) at 5 CFR part 890 and 48 CFR
1609.70. Some new definitions were created for the purpose of
implementing the MSPP. The application of the terms defined in this
section is limited to this final rule.
OPM proposes definitions for several terms based on three HHS
regulations. First, HHS published an Essential Health Benefits (EHB)
final rule in the Federal Register on February 25, 2013, to provide
standards related to EHB, actuarial value (AV), and accreditation.
Second, HHS published a final rule in the Federal Register on February
27, 2013, to provide standards related to fair health insurance
premiums, guaranteed availability, guaranteed renewability, risk pools,
and rate review (the health insurance market rules). Third, HHS
published a final rule elsewhere in today's edition of the Federal
Register, to provide notice of standards relating to benefit and
payment parameters for 2014, including standards related to advance
payments of the premium tax credit and cost-sharing reductions (the
payment rule). OPM is using the definitions promulgated by HHS.
Comments: OPM received several comments recommending changes in the
definitions in proposed Sec. 800.20. A few commenters expressed
concern with how OPM plans to operationalize the definition of
``Indian.'' Specifically, the commenters suggested that OPM adopt the
definition at 42 CFR 447.50 and not use the definition at 45 CFR
155.300(a) as we proposed. OPM was also asked to correct the definition
of ``Indian Plan Variation,'' which currently cross references 45 CFR
156.400, so that there is no confusion regarding eligibility of Indians
for zero-cost-sharing and variable cost-sharing plan variations.
Response: While the terms ``Indian'' and ``Indian Plan Variation''
were introduced in the proposed rule, referencing 45 CFR 155.300(a) and
45 CFR 155.400, respectively, we are removing them from the final rule,
as they are not used elsewhere in the rule.
Comments: A few commenters noted that OPM should not exclude
policies and contracts from the ``benefit plan material or
information'' definition. Two commenters said that we should not
exclude policies and contracts from the definition, because including
them in the scope of the regulation could be helpful to limited-
English-proficient (LEP) individuals in making effective decisions.
One commenter wanted us to clarify that a provider directory falls
within the definition of ``benefit plan material or information.''
Response: We are adopting the proposed definition of ``benefit plan
material or information.'' The term, as defined, includes explanations
or descriptions, whether printed or electronic, that describe a health
insurance issuer's products. The term does not include a policy or
contract for health insurance coverage. As it does in the FEHBP, OPM
will review and approve the policy or contract for health insurance
coverage. Such approval is necessary for effective contract
administration and oversight. We agree that a provider directory does
fall within the scope of the definition.
Comment: One commenter suggested that introducing a second prong to
the definition of ``group of issuers''--to include ``an affiliation of
health insurance issuers and an entity who is not an issuer but who
owns a nationally licensed service mark''--would expand the authority
granted under section 1334 of the Affordable Care Act. The commenter
recommended that we not
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expand the definition of ``group of issuers'' to include entities not
identified in the Affordable Care Act as potential participants in the
MSPP.
Response: Section 1334 does not define ``group of issuers,'' but
only provides examples of affiliations of health insurance issuers that
may be considered health insurance issuers. Thus, OPM, in the exercise
of its discretion, and within the parameters set by section 1334, has
established a definition that we believe affords flexibility in terms
of the types of entities with which OPM may contract. In addition, this
definition, which attempts to encompass a diversity of contractual
arrangements similarly available to OPM under the FEHBP, promotes the
goals of section 1334(a) of the Affordable Care Act, which directs OPM
to implement the MSPP in a manner similar to the manner in which we
implement the contracting provisions with respect to carriers under the
FEHBP. As we noted in the proposed rule, this definition of ``group of
issuers'' is applicable only for the purposes of section 1334.
Comment: One commenter recommended that OPM revise the definition
of ``non-profit entity'' to exclude the portion of the definition that
states a non-profit entity may also be, for purposes of the MSPP, ``a
group of health insurance issuers licensed under State law a
substantial portion of which are incorporated under State law as non-
profit entities,'' as this would further reduce competition in a State
where a ``for-profit'' issuer may already have a significant market
share.
Response: We are adopting the proposed definition of ``non-profit
entity.'' This definition is consistent with the manner in which OPM
implements the contracting provisions with respect to carriers under
the FEHBP and builds on our significant experience in contracting with
and overseeing carriers under that program.
Comment: Another commenter recommended amending the definitions of
``multi-State plan (MSP)'' and ``Multi-State Plan Program issuer (MSPP
issuer)'' to clarify whether each MSP will be under separate contract
with OPM or will contract through the MSPP issuer.
Response: OPM is revising the definition of ``MSP'' to clarify that
an MSP is offered under contract with OPM via an MSPP issuer.
Comment: A commenter suggested that OPM broaden the definition of
``State Insurance Commissioner'' to acknowledge the potential for
multiple regulatory roles in a State.
Response: We understand the commenter's concern and acknowledge the
possibility of multiple regulatory roles in some States, but we are
retaining the proposed definition. This term is a standard term that is
understood in the industry; therefore, we decline to amend the
definition. Our definition of ``State Insurance Commissioner'' aligns
with the definition used in many of the model acts issued by the
National Association of Insurance Commissioners (NAIC) to ensure
consistency with definitions widely used by State insurance regulatory
entities.
Subpart B--Multi-State Plan Program Issuer Requirements
General Requirements (Sec. 800.101)
Section 800.101 of the proposed rule sets forth standards to
implement Sec. 1334(b) of the Affordable Care Act. The general
requirements include licensure, a contract with OPM, required levels of
coverage, eligibility and enrollment, compliance with OPM direction and
other legal requirements. In Sec. 800.101(i), we also proposed that an
MSPP issuer must comply with applicable non-discrimination statutes and
ensure that their MSPs do not discriminate based on race, color,
national origin, disability, age, sex, gender identity, or sexual
orientation. We sought comment on any unique enrollment and eligibility
issues that might affect MSPs. A broad spectrum of consumer and
professional organizations commented on this provision.
Comments: Many commenters support OPM's intent to include non-
discrimination provisions, but recommended adding specific additional
language to strengthen these protections, including clarifying non-
discrimination based on sex or gender identity.
Some commenters requested that OPM add specific non-discrimination
language in Sec. 800.101(d) that describes the MSP and MSPP issuer
responsibilities for eligibility and enrollment. The specific
suggestion was to notify MSPP issuers that benefit packages must be
``substantially equal'' to EHB benchmarks and not include any
discriminatory benefit design elements as defined under 45 CFR 156.125.
Response: In response to comments, we are revising Sec. 800.101(i)
of this final rule to ensure consistency with the prohibition on
discrimination with respect to EHB in 45 CFR 156.125 and the non-
discrimination standards applicable to QHPs under 45 CFR 156.200(e).
With regard to defining EHB benchmarks, we have determined that these
comments are outside the scope of this rule. These standards are
governed by HHS regulations.
Comments: Some commenters suggested that certain health care
providers be included as protected categories for non-discrimination,
and one commenter wanted MSPP issuers and MSPs to align their payment
systems to comply with State and Federal non-discrimination provisions.
Response: The broad prohibition on discrimination in Sec.
800.101(i) clearly bars discrimination against certain health care
providers of the MSPP issuer. Similar comments were addressed in Sec.
800.109, concerning health providers and network adequacy. We are
concerned that specifying types of providers who are protected from
discrimination would detract from the larger issue of broadly ensuring
access to the full range of covered services. Accordingly, no further
change in proposed Sec. 800.101(i) is needed to address this concern.
Comments: A few commenters recommended that OPM expressly clarify
in Sec. 800.101(i) that the Indian Health Service, tribes and tribal
organizations, and urban Indian organizations (collectively, I/T/Us)
are not violating the non-discrimination requirements if they limit
their services, in whole or part, to American Indians/Alaska Natives.
Response: An MSPP issuer would not violate the non-discrimination
requirements by contracting with health care providers who are
authorized or directed by law to serve specific populations, such as
Indian health providers. We note that an MSPP issuer must meet all
standards related to network adequacy and essential community providers
specified in Sec. 800.109 and 45 CFR 156.235, respectively.
Comments: A few commenters stated that OPM should clarify that MSPs
and MSPP issuers must comply with any consumer protections and
regulatory procedures a State or Exchange has put in place.
Response: As explained in our proposed regulation, MSPs and MSPP
issuers are generally required to comply with applicable State law.
This would include the application of stronger protections in the
Exchange provided by State law, as long as application of those
provisions to the MSPP is consistent with the Affordable Care Act. We
received no comments to indicate that the consumer protections
applicable to the MSPP are any weaker than those required by any State
or Exchange. On the contrary, OPM intends to protect
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consumers through its administration of the MSPP in a manner similar to
the manner in which it has protected enrollees in the FEHBP for more
than 50 years. In any event, if there are specific consumer protections
and regulatory procedures that go above and beyond Federal standards,
OPM encourages States to identify them so OPM can consider and address
them through a memorandum of understanding (MOU) with the State and, if
appropriate, in its contracts with issuers.
Comments: A few commenters asked how OPM will work with active
purchasing Exchanges and recommended that OPM incorporate a ``do no
harm'' objective in the preamble.
Response: We will retain our current language and decline to
incorporate a ``do no harm'' provision, as such a provision would be
vague and ambiguous. Instead, we will maintain our approach of applying
standards that neither competitively advantage nor disadvantage MSPs
and MSPP issuers.
Comment: One commenter stated that OPM should require MSPP issuers
to meet standards for certification and licensing prior to signing a
contract with OPM for MSPs in the State.
Response: Section 800.101 clearly provides that an MSPP issuer must
be licensed as a health insurance issuer in each State where it offers
health insurance coverage, and it is deemed certified by OPM when it
signs a contract with OPM.
Compliance With Federal law (Sec. 800.102)
Proposed Sec. 800.102 specifies the Federal laws with which MSPP
issuers must comply as a condition of participation in the MSPP.
Paragraph (a) refers to applicable provisions of title XXVII of the PHS
Act, while paragraph (b) refers to applicable provisions of title I of
the Affordable Care Act.
In this final rule, paragraphs (a) and (b) no longer refer to
Appendix A and B, respectively, which in the proposed rule listed
specific provisions of title XXVII of the PHS Act and title I of the
Affordable Care Act. We are omitting these appendices because, although
the statutes listed in those appendices do apply to MSPP issuers, they
may not necessarily be a comprehensive list of all applicable statutes.
Also, it is possible that the list of statutes in the appendices may
change over time.
We are also omitting Appendix C in this final rule, because Sec.
36B of the Internal Revenue Code does not set forth responsibilities of
issuers.
Comments: Commenters suggested that OPM had erroneously neglected
to include section 2716 of the PHS Act and section 1312 of the
Affordable Care Act.
Response: MSPP issuers that choose to participate in the Small
Business Health Options Program (SHOP) will operate under the same
rules as issuers of health insurance coverage in the small group market
generally. OPM agrees that section 1312 of the Affordable Care Act
applies to MSPP issuers.
Comments: A few commenters noted that we listed section 2707 of the
PHS Act in Appendix A to the proposed rule, which listed PHS Act
provisions applicable to MSPs, and asked OPM to clarify that the PHS
Act requirements were applicable solely to the off-Exchange markets and
would not apply to MSPP issuers for products sold through an Exchange.
Response: While all the requirements applicable to QHP issuers
contained in section 2707 are also contained in requirements applicable
to QHPs, they also apply directly.
Authority To Contract With Issuers (Sec. 800.103)
As provided in section 1334(a)(1) of the Affordable Care Act, OPM
proposed in Sec. 800.103 that it may enter into an MSPP contract with
a group of issuers affiliated either by common ownership and control or
by the use of a nationally licensed service mark, or an affiliation of
health insurance issuers and an entity that is not an issuer but that
owns a nationally licensed service mark.
We received no substantive comments on this section. Accordingly,
we are adopting proposed Sec. 800.103 as final, with no changes.
Phased Expansion (Sec. 800.104)
In Sec. 800.104, we proposed phased expansion of the MSPP into
States and that MSPP issuers may provide partial coverage within a
State. We also proposed that MSPP issuers must be licensed in the State
where they offer coverage and OPM may enter into a contract with an
issuer that is not licensed in all States. We stated in the preamble of
the proposed regulation that Sec. 800.104 implements provisions of
section 1334(e) of the Affordable Care Act regarding the phase-in of
multi-State plans. OPM proposed in Sec. 800.104(b) that MSPP issuers
offering MSPs can offer coverage in part of a State, and do not have to
offer coverage throughout the entire State. We also solicited comment
on whether an MSPP issuer should be required to offer coverage
statewide by the fourth year of participation in the MSPP, when
coverage must be offered in each Exchange in all States and the
District of Columbia.
Comments: Several commenters expressed support for phased expansion
into States. Another commenter stated that a multi-year phase-in
process will allow MSPs to build appropriate networks and partnerships
to satisfy the requirements of the Affordable Care Act and satisfy the
needs of the citizens of each State. One commenter stated that MSPP
issuers should be required to offer coverage on each Exchange in all
States and the District of Columbia as soon as possible or in as many
States as possible. Another commenter recommended an extension of the
phase-in period to 6 years instead of a 4-year phase-in.
Response: We are retaining the standards that are outlined in
section 1334(e) of the Affordable Care Act. However, we have removed
from the regulatory text the number of States that an issuer must phase
into because section 1334(e) refers to percentages and not specific
numbers. We believe the phased expansion approach into States will
encourage MSPP issuers to expand MSPs to provide more consumer choice
throughout the country. It is our intention to ensure that MSPP issuers
have appropriate networks to adequately serve MSP enrollees, and we
will take these comments into consideration when we are evaluating
potential MSPP issuers.
Comment: One commenter was concerned that MSPP issuers will
subcontract to meet the phase-in requirements and that these will
encourage ``marriages of convenience.''
Response: Section 1334 permits OPM to contract with health
insurance issuers and entities that come together in order to apply as
an MSP issuer. We encourage any such new entities to give careful
thought and planning to their strategies for phasing in coverage to the
States and the District of Columbia, and we will ensure through our
application review and contracting process that these entities are
prepared to offer quality health insurance options in the States for
which they are applying.
Comment: One commenter recommended that OPM should require
licensure in all jurisdictions by the end of the phase-in.
Response: We have adequately addressed the licensure requirement in
Sec. 800.104(c). As stated in that section, OPM may enter into a
contract with an MSPP issuer that is not licensed in every State,
provided that the issuer is licensed in every State where it offers MSP
coverage through any Exchanges in that State and demonstrates to OPM
that it is making a good-faith effort to
[[Page 15564]]
become licensed in every State, consistent with the timeframe for the
phase-in.
Comments: We received many comments on whether OPM should have a
role in selecting the States in which MSPP issuers should or should not
offer coverage during phased expansion. Several commenters recommended
that OPM not specify which States an MSPP issuer must cover in the
first year. Other commenters recommended that OPM should consider slow-
tracking implementation of the MSPP in certain States and granting
these States waivers from participation. Another commenter suggested
that OPM limit MSPP issuers to offering MSPs in States that will have
Federally-facilitated Exchanges or State Partnership Exchanges in 2014.
One commenter suggested that OPM focus the phase-in on States where
consumers lack viable coverage options.
Response: OPM declines to identify specific States that MSPP
issuers should cover during phased expansion. We recognize the
importance of providing consumers with more health insurance coverage
options and, while we will not choose specific States where MSPP
issuers must provide coverage during the phase-in, we will use our
oversight and contract negotiation roles to provide consumers with the
additional choice of two high-quality health insurance plans and
promote competition on the Exchanges.
Comments: One commenter supported OPM's proposal that OPM may enter
into contracts with issuers that cannot provide statewide coverage and
stated that it will give MSPP issuers time to develop the capacity to
offer coverage throughout a service area, which will enhance
competition in the MSPP. Several commenters appreciated that issuers
failing to offer statewide coverage must propose a plan for becoming
statewide, but expressed that without more specificity American
Indians/Alaska Natives will not be able to access MSPs.
Response: We acknowledge the importance of access to health
coverage and MSPs, especially in rural and underserved areas. However,
we are providing in the final regulation that OPM may enter into a
contract with an MSPP issuer that will provide partial coverage within
a State. We recognize the challenges that issuers would face if there
were a requirement to offer coverage statewide, and we were made aware
of these challenges from issuers in the MSPP Request for Information as
well as comments on the proposed rule. However, we are maintaining in
the final rule our proposed requirement for MSPP issuers who are
offering partial coverage in a State to supply a plan for offering
coverage throughout the State. As we review MSPP issuer applications,
we will pay special attention to service areas that are medically
underserved, such as rural areas and American Indian/Alaska Native
populations. We intend to encourage issuers to offer coverage statewide
where they have capacity to do so, and will take these comments into
consideration when negotiating MSPP contracts.
Comments: Several commenters wanted clarification of phased
expansion in terms of MSPs being able to meet network adequacy
standards. One commenter recommended that MSPP issuers not be permitted
to offer MSPs in a State unless the plan is capable of offering
coverage to all residents of a State, including meeting network
adequacy standards throughout the State, to avoid selective coverage by
issuers.
Response: While we appreciate the concern for network adequacy, we
decline to set a standard of phased expansion and statewide coverage in
terms of network adequacy. We believe that network adequacy is
sufficiently addressed in Sec. 800.109 to ensure that an MSP's
services are available to all enrollees.
Comments: Many commenters were concerned by our proposal to allow
partial coverage within a State. Some stated that MSPP issuers should
be required to comply with all State requirements regarding geographic
scope of coverage that apply to QHPs. One commenter recommended that
MSPs follow specific State standards for statewideness. Some commenters
stated that, without a requirement of statewideness, there is a
possibility of red-lining by MSPP issuers or adverse selection
resulting in MSPP issuers avoiding certain populations. Commenters were
also concerned about market dislocation. One commenter stated that MSPP
issuers would be able to avoid offering coverage in rural and other
high-cost areas, which would give them a competitive advantage over
both QHP issuers and issuers not offering on an Exchange. Lastly, one
commenter stated that a core purpose of the MSPP is to benefit
individuals who lack options, and allowing issuers to avoid certain
difficult areas in a State contradicts this basic purpose. One
commenter suggested that we include language indicating that we will
consult with State regulators and the State Exchange in determining
that MSP coverage does not exclude specific high-utilizing, high-cost,
or medically-underserved populations.
Response: We are not prohibiting MSPP issuers from being statewide;
on the contrary, we encourage them to do so from the start if they have
the capacity. MSPP issuers should follow State laws regarding
statewideness to the extent it is within their capability to do so. In
addition, we are finalizing this regulation with the requirement for an
MSPP issuer to provide a plan for expanding coverage statewide.
Furthermore, we intend to address an MSPP issuer's ability to expand
coverage statewide as part of the MSPP application and contract
negotiation processes. We acknowledge the commenters' concern for red-
lining and other ``cherry-picking'' practices where an issuer might
offer plans only in geographic areas that are expected to have lower
risk. Therefore, we will evaluate MSPP issuers to ensure that the
locations in which they propose to offer MSP coverage have been
established without regard to racial, ethnic, language, health-status-
related factors listed in section 2705(a) of the PHS Act, or other
factors that exclude specific high-utilizing, high-cost, or medically-
underserved populations. We agree that a core purpose of the MSPP is to
provide additional choice of health insurance plans and promote
competition on the Exchanges, and MSPP issuers should not be permitted
to avoid areas in a State that are difficult to serve. We are aware of
these concerns and are committed to MSPP issuers being neither
competitively advantaged nor disadvantaged, compared to QHP issuers.
OPM proposed that, by the end of the phase-in period, MSPP issuers
should be required to offer coverage on the SHOP in addition to the
individual Exchange. We solicited comments on this approach to SHOP
participation, including on whether participation in SHOP should be
required from the outset or whether we should allow MSPP issuers to
provide a plan that requires a period longer than the phase-in period
to fully participate in the SHOP. We received comments on the phase-in
to SHOPs from States, an issuer association, and professional
organizations.
Comments: Several commenters supported our approach of allowing
MSPP issuers the flexibility to phase-in to SHOPs. One commenter asked
that OPM clarify whether the statement in the preamble that the ``MSPP
issuer may choose to participate in the SHOP'' is a proposal to phase-
in MSPP issuer coverage in the SHOP. Some commenters were concerned
that MSPs will have a competitive advantage if they are not required to
follow the same
[[Page 15565]]
rules as the Federally-facilitated Exchange and State requirements for
QHPs to offer coverage in both the individual and SHOP markets. One
commenter noted that OPM's approach presents a significant challenge,
since it has merged markets. Some commenters would like OPM to require
participation in the SHOP from the outset or require full participation
in the SHOP at the fourth year of phase-in.
Response: We appreciate the support for our approach of allowing
MSPP issuers the flexibility to phase-in coverage to the SHOPs, which
was discussed in the preamble of the proposed rule, though not
addressed in the regulatory text. Based on the policy for Federally-
facilitated SHOP participation published in the HHS Payment Notice, we
are finalizing our regulation to require MSPP issuers to comply with 45
CFR 156.200(g). In the HHS Payment Notice, HHS adopted a provision
stating that a QHP issuer applicant will participate in a Federally-
facilitated SHOP based on an issuer applicant's current small group
market share. The provision uses a threshold of 20 percent market share
to determine whether a small group market issuer is subject to the
tying provision for QHPs in the Federally-facilitated SHOPs. For the
MSPP, we believe this standard for the Federally-facilitated SHOP can
be met if a State-level MSPP issuer or any other issuer in the same
issuer group affiliated with an MSPP issuer provides coverage on the
Federally-facilitated SHOP.
In this final rule, we adopt a policy for the MSPP that mirrors the
standard set by HHS for the Federally-facilitated SHOP. We also adopt a
policy for SHOP participation on State-based Exchanges that is
consistent with our approach to State law under Sec. 800.114 while
retaining OPM discretion on timing of MSPP issuers to participate in
the SHOP. For State-based SHOPs, we will permit an MSPP issuer
flexibility to phase-in participation in the SHOP if the State has set
a standard that requires QHPs to participate. We understand the burden
of building capacity and network in order to offer in the SHOPs and
want to balance the needs of small employers, MSPP issuers, and States.
We believe section 1334(e) provides OPM discretion to allow an MSPP
issuer to phase-in SHOP participation in States that require
participation and this flexibility meets the needs of many
stakeholders. Therefore, we are finalizing regulatory text in Sec.
800.104(c) that requires MSPP issuers to comply with standards in 45
CFR 156.200(g) and with State standards for SHOP participation, subject
to Sec. 800.114, and gives OPM discretion to provide MSPP issuers
flexibility during the initial years of the program to phase into the
SHOP in a State-based Exchange. We also clarify that an MSPP issuer
must offer coverage for both individuals and small groups in a State
with a merged individual and small group market. We encourage MSPP
issuers to expand coverage in States and SHOPs when they have adequate
capacity to accept enrollees.
Benefits (Sec. 800.105)
In Sec. 800.105, OPM proposed to implement section 1334(c)(1)(A)
of the Affordable Care Act, which directs an MSP to offer a benefits
package that is uniform in each State and consists of the EHB described
in section 1302 of the Affordable Care Act. OPM developed its benefits
policy in coordination with HHS, which promulgated the EHB rule.
Generally, under that rule, EHB would be defined by a benchmark plan
selected by each State or, in the absence of a State benchmark
designation, a default benchmark. However, the EHB rule also states at
45 CFR 156.105 that MSPs must meet benchmark standards set by OPM.
In Sec. 800.105(a)(1), OPM proposed that an MSPP issuer must offer
a uniform benefits package for each MSP and that the benefits for each
MSP must be uniform within a State, but not necessarily uniform among
States. In Sec. 800.105(a)(2), OPM proposed that the benefits package
referred to in Sec. 800.105(a)(1) must comply with section 1302 of the
Affordable Care Act, as well as any applicable standards set by OPM or
HHS in regulations. Together, these provisions clarify that MSPP
issuers must comply with applicable HHS requirements and that OPM may
issue additional guidance regarding any issues unique to MSPs.
In Sec. 800.105(b)(1), OPM proposed allowing MSPP issuers to offer
a benefits package, in all States, that is substantially equal to
either (1) each State's EHB-benchmark plan in each State in which it
operates; or (2) any EHB-benchmark plan selected by OPM. The second
option offers administrative efficiencies for MSPP issuers, who face a
number of challenges in being able to offer MSPs on each Exchange in
all States and the District of Columbia. We also noted in our proposed
rule that MSPP issuers could potentially achieve a similar consistency
in their benefits offerings by adhering to State EHB-benchmark plans
and applying the EHB substitution rules at 45 CFR 156.115.
Comments: We received many comments on the proposed EHB-benchmark
policy from a broad range of stakeholders. Many commenters argued that
the proposed policy would lead to adverse selection or consumer
confusion. Some commenters argued that the proposed policy would also
constitute Federal preemption of State authority to regulate insurance.
At least one commenter said that the proposed policy would lead to
administrative complexities and inefficiencies. Finally, some
commenters preferred to have only a national benchmark.
Some commenters noted that differences between an OPM-selected
benchmark and State-selected benchmark are unlikely to be actuarially
significant. Some commenters also noted that the proposed policy would
encourage issuers to participate in the MSPP. Other commenters also
noted that OPM-selected benchmarks would provide robust prescription
drug coverage, obesity treatment services, medical nutrition therapy,
pediatric services, and chiropractic care.
Response: We agree with commenters who noted that the differences
between an OPM-selected benchmark and State-selected benchmark are
unlikely to be actuarially significant. We are not aware of any
compelling evidence that multiple benchmarks would lead to adverse
selection or consumer confusion, nor did the commenters produce any
evidence of adverse selection or consumer confusion. Accordingly, we
are adopting as final the proposed provision to allow an MSPP issuer to
offer a benefits package in all States that is substantially equal to
either the EHB-benchmark plan in each State in which it proposes to
offer an MSP or any EHB-benchmark plan selected by OPM.
Comments: Several commenters discussed the need for national MSPs
for American Indians/Alaska Natives.
Response: We acknowledge that consistency among States would be
helpful for I/T/Us that may consider purchasing plans for tribes that
are in multiple States. Members of tribes would still need to access
the Exchanges in their States to determine their eligibility and
enrollment for products available through the Exchange, including an
MSP. While the MSPP is not a national plan, reciprocity of coverage
among MSPs in States is an issue we intend to take up in contract
negotiations with MSPP issuers. We look forward to conferring with
tribes on this approach and engaging them in how the MSPP may best meet
their needs.
Comments: Several commenters asked us to eliminate or provide
additional guidance regarding the ``substantially equal'' standard.
[[Page 15566]]
Response: Because HHS is defining the standard for the term
``substantially equal,'' we expect MSPP issuers to follow HHS guidance
relating to this term.
OPM also proposed that even if an MSPP issuer chooses to use an
EHB-benchmark plan selected by OPM in all States, the MSPP issuer must
still use a State-selected benchmark in States that do not allow any
substitution for services within the benchmark benefits. The reason for
this is if an MSPP issuer were to use an OPM-selected benchmark in
States that require all plans to offer the same set of benefits, then
the MSP in that State would be different from all of the other plans
offered on the market, which could potentially lead to market
disruption, adverse selection, or consumer confusion could occur.
Comments: Many commenters supported the policy that OPM-selected
benchmarks and substitutions not be allowed in States having standard
benefit designs.
Response: We are adding a paragraph (b)(3) to Sec. 800.105 to
clarify that an MSPP issuer must comply with any State standards
relating to substitution of benchmark benefits or standard benefit
designs. Accordingly, in a State that does not allow substitution of
benchmark benefits, or that has standard benefit designs, an MSPP
issuer that has chosen to use an OPM-selected EHB-benchmark plan under
paragraph (b)(2)(ii) must use the State's EHB-benchmark plan.
No matter which option an MSPP issuer chooses, it must apply that
option uniformly in each State in which the MSPP issuer proposes to
offer MSPs. This means that, except as discussed above, our approach
will not permit an issuer to use a State benchmark plan in some States
in which it operates and an OPM-chosen benchmark plan in others.
In Sec. 800.105(c)(1), OPM proposed selecting, as EHB-benchmark
plans, the three largest FEHBP plan options by enrollment that are open
to Federal employees and annuitants, which were identified by HHS
pursuant to section 1302(b) of the Affordable Care Act. On July 3,
2012, HHS identified the three largest FEHBP plan options (as of March
31, 2012) as Blue Cross Blue Shield (BCBS) Standard Option; BCBS Basic
Option; and Government Employees Health Association (GEHA) Standard
Option.\1\ An MSPP issuer that selects one of these benchmarks must
offer this benefits package in all States in which it operates an MSP.
---------------------------------------------------------------------------
\1\ Centers for Medicare and Medicaid Services, Essential Health
Benefits: List of the Largest Three Small Group Products by State,
available at http://cciio.cms.gov/resources/files/largest-smgroup-products-7-2-2012.pdf.PDF (July 3, 2012).
---------------------------------------------------------------------------
Several commenters urged OPM to be judicious in evaluating all
proposed benchmarks. Based on initial comparative research, it appears
that the proposed OPM-selected EHB-benchmark plans are largely similar
in scope of benefits covered to those benchmark-eligible plans in the
small group markets.\2\ This research also indicates that the OPM-
selected EHB-benchmark plans, like other benchmark-eligible plans, may
lack coverage for pediatric oral services, pediatric vision services,
and habilitative services and devices. Moreover, the EHB-benchmark may
also lack State-required benefits. Accordingly, OPM proposed standards
to supplement the OPM-selected EHB-benchmark plans in Sec.
800.105(c)(2)-(c)(4).
---------------------------------------------------------------------------
\2\ U.S. Department of Health and Human Services, Office of the
Assistant Secretary for Planning and Evaluation, ASPE Research
Brief, Essential Health Benefits: Comparing Benefits in Small Group
Products and State and Federal Employee Plans, available at http://aspe.hhs.gov/health/reports/2011/MarketComparison/rb.pdf (December
2011).
---------------------------------------------------------------------------
In Sec. 800.105(c)(2), we proposed that any OPM-selected EHB-
benchmark plan lacking coverage of pediatric oral services or pediatric
vision services must be supplemented by the addition of the entire
category of benefits from the largest Federal Employee Dental and
Vision Insurance Program (FEDVIP) dental or vision plan option,
respectively, pursuant to 45 CFR 156.110(b) and section 1302(b) of the
Affordable Care Act. On July 3, 2012, HHS identified the largest FEDVIP
dental and vision plan options, as of March 31, 2012, to be,
respectively, MetLife Federal Dental Plan High Option and FEP
BlueVision High Option.
We also solicited comments on the provision of pediatric oral
services by MSPs in order to meet the requirements of section
1302(b)(1)(J) of the Affordable Care Act. Under one proposed approach,
an MSP would include pediatric oral services in its benefit package.
Finally, we solicited comments on how stand-alone dental plans offered
on the Exchanges should affect this requirement, if at all.
Comments: While some commenters favored offering stand-alone dental
plans, others expressed concern that the expense of separate out-of-
pocket maximums might discourage families from purchasing separate
coverage for pediatric oral services. Some commenters proposed to
require all MSPs to offer both a complete medical package and an
identical plan without pediatric oral services in areas where stand-
alone pediatric dental coverage is available.
Response: Given the range of possible benefit designs, we are not
promulgating any further regulatory provisions regarding coverage of
pediatric oral services. Instead, we will keep these comments in mind
during MSPP contract negotiations, which would allow greater
flexibility on benefit designs.
In Sec. 800.105(c)(3), we proposed that an MSPP issuer must follow
State definitions for habilitative services and devices where the State
chooses to specifically define this category pursuant to 45 CFR
156.110(f). When a State chooses not to define this category and any
OPM-selected EHB-benchmark plan lacks coverage of habilitative services
and devices, OPM may determine what to include in this category.
Comments: All commenters supported OPM's intention to include
habilitative services and devices in the MSPs. However, they disagreed
on whether we should defer to State definitions or have OPM define a
specific set of habilitative services and devices that each MSP must
cover. Some asked that we require parity in scope, amount, and duration
for habilitative and rehabilitative services. Other commenters
supported our proposed approach for when a State chooses not to define
the category of habilitation. When this happens, we will determine what
habilitative services and devices must be included in an OPM-selected
EHB-benchmark plan. One commenter suggested that we refer to both
habilitative ``services and devices'' in Sec. 800.105(c)(3) as we do
in Sec. 800.105(c)(4).
Response: Based on the comments, we will direct MSPP issuers to
follow State definitions of habilitative services and devices where
they exist and, where they do not exist, OPM will consider these
comments during MSPP contract negotiation. We are adopting proposed
Sec. 800.105(c)(3) as final, with the one technical correction
mentioned above.
In Sec. 800.105(c)(4), OPM proposed that, at least for years 2014
and 2015, OPM's EHB-benchmark plans would also include, for each State,
any State-required benefits enacted by December 31, 2011, that are
included in a State's EHB-benchmark plan or specific to the market in
which the MSPP issuer offers coverage. Accordingly, these State-
required benefits would be treated as part of the EHB. However,
consistent with 45 CFR 155.170, OPM proposed that State-required
benefits enacted after December 31, 2011, would be in addition to the
EHB. Under section
[[Page 15567]]
1334(c)(4) of the Affordable Care Act, a State must assume the cost of
such additional benefits over the EHB by making payments either to the
enrollee or on behalf of the enrollee to the MSPP issuer, if
applicable. An MSPP issuer must calculate and report the costs of
additional State-required benefits pursuant to Sec. 800.105(e). This
standard is also consistent with 45 CFR 155.170.
Comments: Most commenters supported the inclusion of State-required
benefits before December 31, 2011. However, one commenter opposed the
inclusion of State-required benefits. Another commenter stated that the
cutoff date for inclusion of State-required benefits should be November
26, 2012, the date when the proposed EHB rule was published.
Response: We are making no changes to Sec. 800.105(c)(4), because
it is consistent with standards applicable to QHPs at 45 CFR 155.170.
Comments: Several commenters recommended that State payments for
State-required benefits above the EHB benchmark be made only to issuers
instead of allowing States the option of making payments to either
issuers or enrollees.
Response: We are making no changes to proposed Sec. 800.105(e),
because it is consistent with section 1334(c)(4) of the Affordable Care
Act, as well as standards applicable to QHPs at 45 CFR 155.170.
In Sec. 800.105(d), OPM proposed that an MSPP issuer's benefits
package, including its prescription drug list, must be submitted to and
approved by OPM, which will determine whether a benefits package
proposed by an MSPP issuer is substantially equal to an EHB-benchmark
plan, in accordance with the requirements set forth by HHS in the
proposed EHB rule. In determining whether an MSPP issuer's benefits
package should be approved, OPM proposed to follow the HHS approach set
forth at 45 CFR 156.115, 156.122, and 156.125. Section 156.115(b) of
title 45, Code of Federal Regulations, allows issuers to make benefit
substitutions within each EHB category and directs issuers to submit
evidence of actuarial equivalence of substituted benefits to a State.
We requested comments on whether MSPP issuers should submit evidence of
actuarial equivalence of substituted benefits to OPM in addition to, or
in lieu of, their submission to a State.
Comments: Many commenters recommended that, if MSPP issuers are
allowed to make actuarially equivalent substitutions, evidence should
be submitted to both States and OPM.
Response: We are adopting the proposed Sec. 800.105(d), and we
will work collaboratively with State regulatory officials during the
MSPP application process to ensure they receive evidence of actuarial
equivalence of substituted benefits.
In reviewing an MSPP issuer's proposed benefit design, OPM plans to
review an MSPP issuer's benefits package for discriminatory benefit
design, consistent with section 1302(b)(4) of the Affordable Care Act
and 45 CFR 156.110(d), 156.110(e), and 156.125, and will work closely
with States and HHS to identify and investigate any potentially
discriminatory benefit design in MSPs.
In summary, we are adopting proposed Sec. 800.105 as final, with
the change described above relating to standardized benefit designs. We
also are making minor technical corrections, including by inserting a
reference to both habilitative ``services and devices'' in Sec.
800.105(c)(3) to be consistent with Sec. 800.105(c)(4).
Cost-Sharing Limits, Premium Tax Credits, and Cost-Sharing Reductions
(Sec. 800.106)
In Sec. 800.106(a), OPM proposed that, for each MSP it offers, an
MSPP issuer must ensure that the cost-sharing provisions of the MSP
comply with section 1302(c) of the Affordable Care Act as well as any
applicable standards set by OPM or HHS in regulations. The HHS
standards are set forth in 45 CFR 156.130. In Sec. 800.106(b), OPM
proposed that an MSPP issuer, for each MSP it offers, must ensure that
an eligible individual receives advance payments of premium tax credits
under section 36B of the Internal Revenue Code (the Code) and cost-
sharing reductions under section 1402 of the Affordable Care Act. This
provision would establish MSPP issuer responsibilities under section
1334(c)(3)(A) of the Affordable Care Act, which specifies that an
individual enrolled in an MSP is eligible for the premium tax credits
and cost-sharing reductions in the same manner as an individual who is
enrolled in a QHP. We clarify that under Sec. 800.106(b), MSPP issuers
must comply with the same standards as QHP issuers, including
applicable provisions of sections 1402(a)(2) and 1412(c)(2)(B) of the
Affordable Care Act and 45 CFR part 156, subpart E. OPM may issue
additional guidance regarding any unique issues faced by MSPs.
We received comments on this section from a broad spectrum of
consumer and professional organizations and a few individual States. In
general, our intention is to require MSPP issuers to comply with
Exchange rules to ensure that MSPs operate on a level playing field
with other issuers operating in the Exchanges. To the extent any rules
governing MSPs differ from those governing QHPs, OPM will design them
to afford the MSPs and MSPP issuers neither a competitive advantage nor
a disadvantage with respect to other plans offered on the Exchange.
Comments: Some commenters requested that OPM clarify its
requirement that MSPPs must comply with State cost-sharing
restrictions.
Response: It is our intention to require MSPP issuers to follow HHS
rules regarding cost-sharing except when State laws impose stricter
requirements for their Exchanges. In the event a State standardizes
cost-sharing arrangements and these standards comply with HHS
regulations, an MSPP issuer will also be required to comply with State
standards for cost-sharing.
Comments: One group of commenters suggested that OPM require an MSP
to cover out-of-network subspecialty care with the same cost-sharing
arrangements as in-network.
Response: As acknowledged in our final application for the MSPP, we
may, in some circumstances, also require MSPP issuers to provide in-
network benefits for services from certain out-of-network providers;
however, this would not be done through rulemaking. We will take these
comments under consideration during our contract negotiation with MSPP
issuers.
Concerns about the cost-sharing variation for American Indian/
Alaska Native families who want to purchase child-only coverage are not
within the scope of OPM's rulemaking authority. The Exchanges and HHS
will facilitate all plan variations between MSPP issuers and potential
enrollees just as they will do for families participating in the QHPs.
However, where appropriate, OPM will coordinate closely with HHS on
areas of special concern for American Indian/Alaska Native adults and
children.
We are adopting proposed Sec. 800.106(a) as final, with no
changes, and we are making technical changes to Sec. 800.106(b).
Levels of Coverage (Sec. 800.107)
In Sec. 800.107, we proposed that an MSPP issuer, like a QHP
issuer participating in Exchanges, must offer at least one plan at the
silver level of coverage and one plan at the gold level of coverage in
each Exchange in which the issuer is certified to offer an MSP pursuant
to a contract with OPM. OPM will use its discretion about whether an
MSPP issuer may offer products in
[[Page 15568]]
addition to the required gold and silver products.
We also proposed that an MSPP issuer must offer a child-only plan
at the same level of coverage as any health insurance coverage offered
to individuals who, as of the beginning of the plan year, have not
attained the age of 21. OPM proposed that MSPP issuers must comply with
applicable HHS requirements to offer plan variations that will reduce
or eliminate cost-sharing for eligible enrollees pursuant to section
1402 of the Affordable Care Act. Any MSP plan variations will be
submitted to OPM for review and approval, and OPM will coordinate its
approach to them with the final HHS notice of benefit and payment
parameters for 2014. OPM will exercise this discretion to promote the
best interests of enrollees and potential enrollees in the MSPP and to
ensure adequate administrative oversight of each MSP and MSPP issuer.
A number of comments, although informative, relate to issues that
do not fall within the scope of OPM's rulemaking. In general, our
intention is to direct MSPP issuers to comply with State requirements
related to the offering of levels of coverage, including but not
limited to standardized benefit designs and tiers.
Comments: Some commenters recommended that OPM require or encourage
MSPP issuers to offer coverage beyond gold and silver plans. The
suggestions included requiring MSPP issuers to offer one or more of the
following: At least one bronze plan; a plan in both the MSP and State
Medicaid program; and catastrophic coverage.
Response: The Affordable Care Act requires each MSPP issuer to
offer both a gold and silver plan. OPM will not require bronze coverage
through this regulation, but has the discretion to approve other levels
of coverage through contract negotiation with issuers. Therefore, where
a State allows it, we will consider plans that offer catastrophic or
bronze levels of coverage. We will also consider applicants to the MSPP
that propose to offer an MSP in the Exchange and simultaneously provide
coverage through a State Medicaid program. We agree with commenters
that this would reduce the potential for gaps as consumers transition
between Medicaid and Exchange eligibility. However, we do not have
authority to require MSPP issuers to participate in Medicaid.
No changes are needed in Sec. 800.107 in light of the comments we
received. Therefore, we are adopting proposed Sec. 800.107 as final,
with no changes.
Assessments and User Fees (Sec. 800.108)
The proposed rule provides OPM discretion to collect an assessment
or user fee from MSPP issuers as a condition of participating in the
MSPP. The proposed rule also describes, generally, that any OPM-
collected assessments and user fees would be to cover the
administrative costs of performing the contracting and certification of
MSPs and of operating the program, functions typically conducted
through an Exchange for QHPs.
Comments: Some commenters asked OPM to confirm that MSPP issuers
would pay any State-based Exchange user fees in addition to the MSPP-
specific assessments or user fees. These commenters were concerned that
any administrative fee above and beyond the Exchange fee charged to QHP
issuers is duplicative and could lead to a competitive disadvantage for
MSPP issuers. One commenter asked how the process for paying
assessments and user fees to OPM would work.
Response: In this final rule, OPM is preserving its discretion to
collect an MSPP assessment or user fee, and clarifies that it may begin
collecting the fee in 2015; OPM does not intend to collect an
assessment or user fee in 2014. The user fee could be used to fund OPM
activities directly related to MSPP certification and administration.
We currently estimate that any future assessment or fee would be no
more than 0.2 percent of premiums.
The MSPP user fee would not be a substitute for any user fee or
assessment imposed by a State-based Exchange or Federally-facilitated
Exchange. Rather, OPM intends for any MSPP user fee it collects to be
offset against any State-based Exchange or Federally-facilitated
Exchange user fee that the MSPP issuer must pay. This offset would
preserve a level playing field for MSPP issuers. Under this approach,
the MSPP issuers would pay the same total assessment or user fee to
participate in an Exchange as all other QHPs participating in that
Exchange. In addition, this process would allow the Exchanges to
receive the bulk of the user fee from MSPP issuers to cover the
Exchange costs, while also providing a marginal amount to fund the
certification activities that OPM will perform in the place of an
Exchange with respect to the MSPs.
OPM would issue further guidance in advance of collecting any user
fees in 2015. For example, OPM would provide instructions on whether
MSPP issuers should pay the MSPP portion of the user fee to OPM and pay
separately the balance of the State-based or Federally-facilitated
Exchange user fee to the State or HHS, as appropriate.
Comments: Several commenters wanted more detail about OPM's costs
for certifying and administering the MSPP and to what use the
assessment or user fee would be put. One commenter suggested
eliminating the assessment or user fee since MSPP administration is a
function of OPM.
Response: As stated in the proposed rule, the MSPP assessment or
user fee would be used for OPM's MSPP functions for administration,
including entering into contracts with, certifying, recertifying,
decertifying, and overseeing MSPs and MSPP issuers for that plan year.
OPM will communicate such costs to MSPP issuers and Exchanges when
available. The MSPP user fee is similar to a fee that OPM collects and
uses to administer contracts for the FEHBP and will only be used to
administer the MSPP as it performs plan management functions similar to
State-based and Federally-facilitated Exchanges.
Network Adequacy (Sec. 800.109)
OPM proposed, in Sec. 800.109, a standard for network adequacy for
the MSPP that mirrors the HHS standard set forth in 45 CFR 156.230 and
is intended to ensure that an MSP's services are available to all
enrollees. Consistent with the Exchange final rule's alignment with the
NAIC Model Act, OPM proposed directing an MSPP issuer to (1) maintain a
network that is sufficient in the number and types of providers to
ensure that all services will be accessible without reasonable delay
for enrollees; (2) offer a provider network that is consistent with
network adequacy provisions set forth in section 2702(c) of the PHS
Act; and (3) offer a provider network that includes essential community
providers in compliance with 45 CFR 156.235. OPM intends for an MSPP
issuer to make its provider directory available to the Exchange for
online publication and to potential enrollees in hard copy, upon
request. The proposed regulation stated that OPM would issue guidance
containing the criteria and standards that OPM will use to determine
the adequacy of a provider network. In addition, we solicited comment
on State licensure and any issues for MSPs with respect to State-
specific network adequacy requirements.
Comments: Some commenters recommended that network adequacy
provisions include specific provider types, such as certified
registered nurse anesthetists, tribal health care providers,
chiropractic physicians, optometrists, and Christian Science providers.
Some
[[Page 15569]]
commenters also stated that OPM should prohibit discrimination against
specific provider types. A few commenters recommended that OPM require
MSPP issuers to adopt a standard Indian Addendum for contracting with
tribal health care providers.
Response: While the MSP network adequacy standard should provide
access to a range of health care providers, specifying the inclusion of
specified provider types, beyond what is required under the Affordable
Care Act for QHPs (e.g., essential community providers), would detract
from the larger issue of broadly ensuring affordable access to the full
range of covered services. Accordingly, the final rule retains the
language in proposed Sec. 800.109(a) that requires MSPP issuers to
maintain networks that include sufficient numbers and types of
providers to ensure all services will be accessible without
unreasonable delay. This includes providers representing medical,
surgical, pediatric, mental health, and allied health disciplines to
meet the anticipated health care needs of a diverse patient population.
We acknowledge the importance of having standards in place to prevent
discrimination against specific provider types, because a variety of
providers is important for accessing services. However, we believe that
the non-discrimination standards set forth in Sec. Sec. 800.101 and
800.102 adequately prohibit discrimination against specific provider
types. OPM will reinforce these protections through its contract
negotiations with MSPP issuers.
With regard to the comments on the standard Indian Addendum, OPM
recognizes that furnishing MSPP issuers with a standard Indian Addendum
to a provider contract may make it easier for MSPP issuers to contract
with Indian providers. We are aware that the Centers for Medicare and
Medicaid Services (CMS) has partnered with the Indian Health Service to
develop a Draft Model Qualified Health Program Addendum for contracting
between QHP issuers and tribal health care providers. However, CMS has
not required that QHP issuers use the Addendum in the Exchange rule. We
think it more appropriate to address this issue in our contract
negotiations. We will continue to coordinate closely with CMS on the
use of the standard Indian Addendum by MSPP issuers when contracting
with Indian providers.
Comments: A few commenters recommended that OPM require MSPP
issuers to contract with ``any willing essential community provider.''
Similarly, a few commenters suggested that OPM require MSPP issuers to
comply with any State laws concerning ``any willing provider'' or ``any
willing pharmacy.''
Response: In proposed Sec. 800.109(a)(3), OPM adopted an approach
that mirrors that of HHS regarding inclusion of essential community
providers for QHPs. OPM intends for MSPP issuers to contract with
essential community providers. We do not intend to change this
provision of the proposed regulation, but we wish to assure commenters
that we consider Sec. Sec. 800.109(a) and 800.114 to require MSPP
issuers to comply with State ``any willing provider'' laws.
Comments: We received some comments related to standards for
provider directories under proposed Sec. 800.109(b). Overall,
commenters supported the proposed standards, which mirrored the HHS
standards in the Exchange final rule. However, one commenter suggested
that OPM require MSPP issuers to maintain a dedicated email address
that providers and consumers could use to submit inaccurate provider
directory information for correction. In addition, another commenter
requested that OPM streamline requirements for provider directories by
allowing downloadable electronic versions in place of hard copy and
avoiding requiring regular updates of providers accepting new patients.
Response: The proposed Sec. 800.109(c) mirrors the HHS approach to
provider directories for QHPs. We will consider, during the MSPP
contract negotiations, the comment on an MSPP issuer maintaining a
dedicated email address for changes in provider directory information.
With regard to the commenter who suggested that MSPP issuers not be
required to provide a hard copy of the provider directory to potential
enrollees upon request, this suggestion conflicts with HHS standards.
Comments: We received numerous comments related to establishing a
uniform MSPP network adequacy standard. Many commenters did not support
OPM developing a uniform standard for the MSPP. These commenters
suggested that not applying the same standards to all QHPs and MSPs
within a State would lead to adverse selection and market dislocation,
and would not be in the best interests of consumers, though they did
not submit any evidence to support these contentions. Specifically, two
commenters identified States that had existing network adequacy
standards for managed care products and recommended that an MSPP issuer
comply with those standards. Conversely, many other commenters
recommended that OPM establish a national, uniform standard for network
adequacy for the MSPP. These commenters indicated that a uniform
standard would be considered a critical component of the MSPP and is
especially important in ensuring that MSPs provide reasonable and
timely access to health care.
Response: OPM recognizes that many, though not all, States direct
health insurance issuers to evaluate the adequacy of their provider
networks on an ongoing basis and monitor network adequacy in their
traditional role of regulating health insurance. Based on comments
received on the proposed rule, and informed by previous comments
concerning the RFI and the draft application, we have adopted an
approach under which the MSPP will establish a uniform standard for
network adequacy using time and distance standards that are based on
those published by CMS for Medicare Advantage plans (for providers and
facilities) and Medicare Part D (for retail pharmacies), which we note
meet the QHP network standards in 45 CFR 156.230. For 2014, we will
assess MSPP issuers' compliance with these time and distance standards
for a broad, diverse list of provider types and facility types, which
we believe adequately reflects the ability of an MSPP issuer to assure
that all services will be accessible without unreasonable delay for
enrollees. More information is available in our final MSPP application
that was published on January 18, 2013, on the Federal Business
Opportunities Web site at www.FBO.gov under solicitation number OPM35-
12-R-0006, Multi-State Plan Program.
In the first year of the MSPP, we will apply only the MSPP standard
for MSPP issuer networks, and in future years may require an MSPP
issuer to meet State network standards, if appropriate and in the best
interest of MSP enrollees. Accordingly, we are adopting proposed Sec.
800.109 as final, with no changes; however, we will continue to
consider these comments during the MSPP contract negotiations.
Service Area (Sec. 800.110)
In Sec. 800.110, OPM proposed that MSPP issuers comply with the
service areas defined by Exchanges, but this does not necessarily
require that an MSP be offered in all defined service areas. We also
proposed that for each State in which the MSPP issuer does not offer
coverage in all service areas, the MSPP issuer's application for
participation in the MSPP and the information it submits to support
[[Page 15570]]
renewal of a contract must include a plan for offering coverage
throughout the State. We sought comment on whether MSPP issuers should
be required to offer MSPs in all service areas by the fourth year of
participation in the MSPP.
Comments: We received some support for our proposal on service
areas from a commenter stating that our policy allows MSPP issuers time
to develop the capacity to offer coverage throughout a service area and
this will enhance competition. Several commenters were concerned about
MSPP issuers' ability to cherry-pick the areas where they offer plans.
Some commenters recommended that MSP service and rating areas be
aligned to prevent issuers from cherry-picking. Another commenter
recommended that MSPs be required to comply with the service area
requirements applicable to all other issuers in a State. One commenter
recommended that MSPs be required to cover geographic service areas in
a particular State where they are licensed if their license is other
than statewide, and the commenter also recommended that MSPs should
follow the same rules as QHPs, concerning partial rating regions.
Finally, several commenters were concerned that our proposed policy may
not ensure access in a meaningful way or promote competition.
Response: Similar to our response to comments on Sec. 800.104, we
are not prohibiting MSPP issuers from offering coverage in all service
areas; on the contrary, we encourage them to do so if they have the
capacity. We are clarifying in the final rule that MSPs will be
required to comply with the service area requirements applicable to all
QHPs in a State. We are not making any additional requirements
regarding partial rating regions or geographic service areas in States
with certain licensure laws that determine service area. We acknowledge
the commenters' concern that issuers may cherry-pick certain service
areas. However, we believe that requiring that MSPs be subject to the
same service area requirements as QHPs will create a level playing
field and prevent issuers from cherry-picking. In addition, we intend
to pay special attention to whether service areas include rural areas
and American Indian/Alaska Natives during MSPP contract negotiations.
We will evaluate the service area of an MSP to ensure that it has been
established without regard to racial, ethnic, language, health status-
related factors specified under section 2705(a) of the PHS Act, or
other factors that exclude specific high-utilizing, high-cost or
medically-underserved populations.
Similar to our changes under Sec. 800.104, we are removing the
requirement in the proposed rule that, for each State in which the MSPP
issuer does not offer coverage in all service areas, the MSPP issuer
would submit a plan on expanding coverage throughout the State. For
reasons described in our responses to comments on Sec. 800.104 related
to statewide coverage, we intend to encourage MSPP issuers to expand
coverage and will assess their capacity to do so through the MSPP
contract negotiations.
Accreditation Requirement (Sec. 800.111)
In Sec. 800.111, OPM proposed a requirement that MSPP issuers be
or become accredited consistent with the HHS standards for QHP issuers.
We also proposed that the MSPP issuer must authorize the accrediting
entity to release to OPM and to Exchanges a copy of the MSPP issuer's
most recent accreditation survey, along with any survey-related
information that OPM or an Exchange may require. OPM also proposed that
an issuer that is not accredited as of the date that it enters into a
contract with OPM must become accredited within the timeframe
established by OPM in accordance with 45 CFR 155.1045.
Comments: Several commenters recommended that OPM set a timeframe
for accreditation that meets the accreditation timeframe set for QHP
issuers either participating in Federally-facilitated Exchanges or in
State-based Exchanges. Some commenters supported a unique timeline for
MSPP issuer accreditation.
Response: OPM intends to follow the timeframe for accreditation in
45 CFR 155.1045 and similar provisions adopted by State-based
Exchanges, though we are reserving the authority to set our own
timeframe under narrow circumstances that take into account the unique
nature of the MSPP. Due to the broad geographic coverage required for
the MSPP, MSPP issuers may need additional time to collect data on
local performance for accreditation. Similarly, a group of issuers
coming together to contract as an MSPP issuer under a common service
mark may need additional time to coordinate between accrediting
entities or among component plans. Additional time may also be required
if a component plan has previously been accredited by an entity other
than the accrediting entities recognized by the Secretary. Therefore,
in accordance with our authority under 45 CFR 155.1045, we are adopting
our proposed approach in the final regulation, with no changes.
Comment: One commenter recommended that the MSPP issuer must have a
schedule for a review of policies and procedures with a recognized
accrediting agency during that initial year and have documentation that
a readiness review for accreditation has been completed.
Response: OPM will consider this comment in creating contract
language for MSPP issuers who are obtaining accreditation in accordance
with Sec. 800.111(c).
Comment: One commenter asked OPM to clarify how consumers will be
educated about the differences between an accredited and unaccredited
plan; another commenter requested that accreditation surveys be made
public.
Response: Accreditation status of MSPP issuers (as well as all QHP
issuers) will be made available to consumers through Exchange systems.
No change in the regulation is needed.
Comment: One commenter suggested that to allow a group of
independent insurance issuers to jointly offer an MSP, accreditation
must be required at the State level rather than at a national level.
Response: MSPP issuers will be accredited on the basis of local
performance in accordance with the requirements for QHP issuers
specified in section 1311 of the Affordable Care Act and 45 CFR
156.275(a). No change is required in the proposed rule.
Reporting Requirements (Sec. 800.112)
The proposed Sec. 800.112(a) specified that OPM may collect such
data and information as are permitted or required by the Affordable
Care Act to be collected from an MSPP issuer. OPM has also proposed to
collect such other data and information as it determines necessary for
the oversight and administration of the MSPP.
OPM will use its FEHBP contract administration as a model for
reporting requirements. Examples of reporting that is currently
required for FEHBP carriers and that may be required for the MSPP
include financial reports, premium payment information, enrollment
reporting, and quality assurance information.\3\ OPM will determine the
data and information that MSPP issuers report and the frequency and
process for submitting such reports to be published in future guidance.
Reporting of certain types of information is critical for OPM to
[[Page 15571]]
implement and administer the MSPP. To oversee MSPP contracts, OPM will
need to collect certain information to ensure the integrity of the
MSPP, to protect enrollees, to prevent fraud and abuse, to monitor
quality and quality improvement, and for other purposes.
---------------------------------------------------------------------------
\3\ OPM's Routine Reports and Submissions required for FEHB
carriers is available at http://www.opm.gov/carrier/reports/index.asp.
---------------------------------------------------------------------------
Comments: Commenters raised several issues with regard to MSPP
reporting requirements. Many commenters noted that MSPP issuers should
comply with applicable State and Exchange standards.
Response: We note that Sec. 800.115(e) requires MSPP issuers to
comply with all Federal and State quality improvement and reporting
requirements.
Comments: Many commenters also urged that we coordinate with States
on data collection to avoid duplicative efforts. Some also asked us to
share data with the public. A couple of commenters stated that OPM
should not use a centralized health claims data warehouse for the MSPP,
but adopt a decentralized approach.
Response: We agree with commenters that our approach to data
collection should be coordinated with States. OPM intends to enter into
MOUs with States to streamline data collection and reduce duplicate
reporting requirements. This rule does not address specifics of how OPM
will collect data, and our method for data collection will be developed
in future policy guidance, in consultation with HHS.
Comment: One commenter stated that the MSPP should adopt the
pharmacy benefit manager (PBM) transparency standards that OPM has
established for the FEHBP, while another commenter opposed such an
approach.
Response: PBM transparency standards will be established through
the MSPP contract, and we will consider these comments in developing
contract language.
Comments: Several commenters urged us to adopt specific data
collection requirements, such as annual reports on each health plan,
including data on the number of enrollees receiving treatment for drug
and alcohol abuse and MSPP issuer definitions of medical necessity and
rider policies.
Response: Specific reporting requirements may change from year to
year based on the needs of the program. Accordingly, such issues are
more appropriately addressed through contract negotiations, rather than
this regulation.
Comments: The preamble of the proposed rule also suggested that OPM
may collect demographic data. Several commenters supported data
collection on demographics. A couple of commenters noted that issuers
may not currently collect demographic data and, in some States,
demographic data collection could be prohibited by law. One commenter
opposed all demographic data collection.
Response: Although we are not finalizing any specific demographic
data collection in this rule, our authority to administer MSPP
contracts includes collection of demographic data, if we decide to do
so in the future. In that event, we will consult with any States that
have laws prohibiting collection of demographic data.
Section 800.112(b) specifies quality and quality improvement
standards. With respect to quality reporting, under the FEHBP, OPM
requires all health plans to report their performance through
Healthcare Effectiveness Data and Information Set (HEDIS) metrics and
Consumer Assessment of Healthcare Providers and Systems (CAHPS)
surveys, independent of the source of plan accreditation. This allows
for comparison among plans in a consistent manner. OPM expects to begin
with a similar approach to performance measurement in MSPs to
facilitate oversight. We expect our approach to evolve as HHS sets
forth further guidance on quality reporting standards for QHPs.
Comments: Several commenters supported our proposed approach
regarding quality and quality improvement standards. One commenter was
concerned that requiring HEDIS reporting, which is proprietary to one
accrediting entity, would be an undue burden to other accrediting
entities. One commenter recommended that we immediately use the eValue8
quality reporting tool. Another commenter noted that we include
measures applicable to children, including specific modules for
children with special health care needs across the entire breadth of
conditions and domains (preventive care, mental health, and chronic
care).
Response: We are adopting in this final regulation our proposed
approach to quality and quality improvement standards, because it
reflects current FEHBP policies and Federal standards for QHPs. We
anticipate that quality reporting standards will evolve over time, and
we will consider these comments as the standards develop.
Benefit Plan Material or Information (Sec. 800.113)
In proposed Sec. 800.20, OPM defined the term ``benefit plan
material or information'' to include explanations or descriptions,
whether printed or electronic, that describe a health insurance
issuer's products. The term does not include a policy or contract for
health insurance coverage. As it does in the FEHBP, OPM will review and
approve the policy or contract for health insurance coverage. We view
oversight of such contractual documents as uniquely within OPM's
responsibilities under section 1334(a)(4) to implement the MSPP in a
manner similar to the manner in which we implement the contracting
provisions with respect to carriers under the FEHBP. OPM cannot manage
MSPP contracts similarly to FEHBP contracts without the authority to
review and revise these documents. See the discussion of Sec. 800.20
for our responses to comments on the definition of ``benefit plan
material or information.''
Section 800.113(a) states that MSPP issuers must comply with
Federal and State laws related to benefit plan material or information.
An MSPP issuer must also comply with OPM guidance specifying OPM
standards, process, and timeline for approval of benefit plan material
or information.
Comments: We received many comments about the proposed policy on
compliance with Federal and State law. Several commenters supported the
requirement that MSPP issuers comply with both Federal and State laws
relating to benefit plan material or information. Several commenters
wanted OPM to clarify that State approval of a policy form is a
precondition of OPM approval. One commenter wanted OPM to defer to
States for approval of policy forms, except where a State's action or
inaction prevents an MSP from being offered on an exchange.
Response: While OPM intends to review and approve policy forms for
health insurance coverage, OPM expects MSPP issuers to comply with
related State law requirements for form review. Accordingly, an MSPP
issuer's requirement to comply with State law includes the requirement
to comply with form review laws. However, State approval of a policy
form is not a precondition of OPM approval. OPM expects that few
disagreements will arise between OPM and a State regarding form review
and, if they do, we will work with the State to successfully resolve
the discrepancy in a manner that is acceptable to both OPM and the
particular State.
Proposed Sec. 800.113(b) states that all MSP enrollee notices must
meet minimum access standards for individuals with limited English
proficiency (LEP) and for individuals with disabilities as described in
45 CFR 155.205(c). As stated in the final
[[Page 15572]]
Exchange rule, HHS intends to issue further guidance on minimum
standards to address language access and coordinate HHS accessibility
standards with insurance affordability programs, and across HHS
programs, as appropriate. OPM expects MSPP issuers to comply with these
minimum access standards once HHS publishes this guidance. OPM may also
establish additional standards for MSPP applications and notices.
Comments: Several commenters wanted OPM to clarify that obligations
to provide materials in different languages be calculated by State or
service area, not nationwide. Two commenters wanted us to provide
clearer guidance on our language access policies. They suggested that,
to start with, OPM clarify that LEP guidance set forth by HHS' Office
of Civil Rights, which is referenced in footnote 48 of the HHS proposed
rule with respect to appeals, will also apply to other benefit material
or information.
Response: Such guidance will be addressed through the contract
negotiation process.
Section 800.113(c) states that an MSPP issuer is responsible for
the accuracy of its benefit plan material or information. Section
800.113(d) states that benefit plan material or information must also
be in plain language, be truthful, not be misleading, and have no
material omissions.
QHPs must comply with the provisions of section 2715 of the PHS Act
and its implementing regulations at 45 CFR 147.200 on Summary of
Benefit and Coverage and Uniform Glossary requirements. Under Sec.
800.113(e), OPM also will require MSPs to comply with the statute and
regulations. Additionally, OPM expects that MSPP issuers will meet any
requirements that allow standardized benefit information to be
displayed on HHS or Exchange web portals.
Section 800.113(f) states that OPM will review and approve certain
benefit plan material or information as defined in Sec. 800.20 of the
proposed regulation. OPM may not necessarily review all benefit plan
material or information. It may request from MSPP issuers those
materials that it wishes to review and approve. OPM's review will focus
on the MSPP issuer's compliance with the standards promulgated by OPM
with respect to benefit plan material or information.
Comments: One commenter did not want OPM to review and approve
benefit plan material or information. One commenter was concerned about
the practical difficulties for both issuers and regulators with respect
to the dual requirement that OPM review and approve policy forms and
that issuers also comply with State requirements. One commenter wanted
more clarity on the interplay between Federal and State review. One
commenter stated that OPM review of communication materials, and its
discussion with States, should be concluded no later than 90 days prior
to the beginning of the annual enrollment period.
Response: OPM cannot entirely cede responsibility for the review of
benefit plan material or information since such review is important to
oversight. Nonetheless, in order to avoid unnecessary duplication and
burden, OPM will work with States concerning the review of benefit plan
material or information and may work with States to define respective
roles through MOUs. OPM will also aim for prompt review of benefit plan
material or information.
Section 800.113(g) states that OPM will allow an MSPP issuer to
state that OPM has certified a plan as an MSP and will oversee its
administration. OPM is aware that many States have adopted laws or
regulations prohibiting issuers from using advertisements that ``may
lead the public to believe that the advertised coverages are somehow
provided by or endorsed by [a] governmental agenc[y].'' \4\ However,
because OPM will have certified an MSPP issuer and an MSP as meeting
certain standards, potential issuers may wish to include this fact in
materials they distribute to the public subject to review by OPM. OPM
does not view this as a violation of State law anti-endorsement
provisions because it is not misleading, but rather a recitation of the
fact that the issuer is providing coverage pursuant to a contract with
OPM.
---------------------------------------------------------------------------
\4\ These State law prohibitions derive from the NAIC's
Advertisements of Accident and Sickness Insurance Model Regulation
Sec. 13.C. (Apr. 1999).
---------------------------------------------------------------------------
Comment: One commenter did not want MSPP issuers to include a
statement on certification by OPM.
Response: For the reasons set forth above, we are adopting the
proposed policy regarding statement of certification.
Comments: Several commenters stated that it is critical that the
information about the special protections for American Indians/Alaska
Natives be clearly stated in all plan materials so that they are
informed about the cost-sharing plan variations that may apply to them
so they can enroll in the correct plan. The commenters also stated that
American Indians/Alaska Natives should know whether a plan network
includes their I/T/U provider.
Response: We acknowledge that certain American Indians/Alaska
Natives should be made aware of special protections and whether a plan
includes I/T/U providers. We encourage MSPP issuers to make this
information available to MSPP plan participants. We will continue to
work with CMS and the Indian Health Service to make sure American
Indians/Alaska Natives are informed about the cost-sharing plan
variations.
Because no changes are required based on the comments received, OPM
is adopting proposed Sec. 800.113 as final, with no changes.
Compliance With Applicable State Law (Sec. 800.114)
As proposed, Sec. 800.114 would require MSPP issuers generally to
comply with State law. Paragraph (a) of the proposed regulation
restated the requirement set forth in section 1334(b)(2) of the
Affordable Care Act, including the three categories of State laws with
which MSPP issuers need not comply: (1) State laws that are
inconsistent with section 1334; (2) State laws that prevent the
application of a requirement of part A of title XXVII of the PHS Act;
and (3) State laws that prevent the application of a requirement of
title I of the Affordable Care Act. We have made a technical edit in
paragraph (a) to make it more consistent with Sec. 800.116.
In paragraph (b) of proposed Sec. 800.114, we provided greater
detail on the methods OPM would use to determine whether a State law
fits into one of the above categories. Specifically, we proposed that
OPM would use a list of four factors: (1) Whether the law in question
imposes a requirement that differs from those applicable to QHPs and
QHP issuers on one or more Exchanges in the State; (2) whether the law
creates responsibilities, administrative burdens, or costs that would
significantly deter or impede the MSPP issuer from offering a viable
product on one or more Exchanges; (3) whether the law creates
responsibilities, administrative burdens, or costs that significantly
deter or impede OPM's effective implementation of the MSPP; or (4)
whether the law prevents an MSPP issuer from offering an MSP on one or
more Exchanges in the State.
Comments: Many commenters found the factors listed in paragraph (b)
to be too broad and vague. A few commenters noted that paragraph (b)(1)
compares MSP requirements to QHP requirements, whereas (b)(2) appears
to lack an analog against which to measure responsibilities,
administrative burdens,
[[Page 15573]]
or costs that apply to MSPs and MSPP issuers. A few commenters
expressed specific concern about the use of the words ``significantly
deter or impede'' in paragraphs (b)(2) and (b)(3). A few commenters
requested that the word ``unreasonable'' be added to paragraph (b)(2)
to modify ``responsibilities, administrative burdens, or costs.'' A few
commenters generally opposed OPM's authority to find that a State law
is inconsistent with Federal law, and one commenter questioned OPM's
legal authority to preempt State law through a determination of
inconsistency.
Response: At proposed Sec. 800.114(a), we listed the
justifications for nonapplicability of a State law to the MSPP, as set
forth at section 1334(b)(2) of the Affordable Care Act, which provides
that an MSPP issuer must be ``subject to all requirements of State law
not inconsistent with this section, including the standards and
requirements that a State imposes that do not prevent the application
of a requirement of part A of title XXVII of the [PHS] Act, or a
requirement of this title [I of the Affordable Care Act.]'' In proposed
paragraph (b), we listed factors that may inform OPM's analysis under
paragraph (a). Although these listed elements would be considered
relevant to the analysis, OPM would only be authorized to excuse an
MSPP issuer from compliance with a State law that is inconsistent with
section 1334 of the Affordable Care Act, prevents the application of a
provision of part A of title XXVII of the PHS Act, or prevents the
application of a requirement of title I of the Affordable Care Act.
In light of the concerns expressed concerning the regulatory
factors identified in the proposed regulation, we have amended the
regulatory text to remove the list of factors. By removing these
factors from the regulation, we do not disavow them as relevant
considerations in evaluating whether the statutory standard for
preemption has been satisfied. Rather, we do not wish to give the
impression that they are any more or less important than any other
factors that may be relevant in a specific circumstance to a
determination of whether a State law should be preempted.
Comment: One commenter recommended that OPM consider the
seamlessness of a consumer's experience purchasing health insurance on
an Exchange and the avoidance of consumer confusion in evaluating State
laws under this section.
Response: We will consider all relevant information, including
consumers' experiences in shopping on Exchanges, when determining
whether a State law must be preempted under the statutory standards
listed in paragraph (a). Each determination under this section will
depend on specific facts and circumstances.
Comments: A few commenters recommended that OPM consult with States
and Exchanges prior to making a determination of inconsistency under
this section.
Response: We agree that OPM should work collaboratively with
States, particularly in making determinations regarding State laws. OPM
intends to continue to establish and cultivate working relationships
with officials in State regulatory agencies and Exchanges. Such
relationships may exist informally, or may eventually be reflected in
MOUs, as OPM intends to pursue MOUs with each State in which the MSPs
are being offered. In either case, OPM would consult with States during
the process of making a determination of inconsistency regarding a
State law. We have changed paragraph (b) to state expressly our
intention to engage in such consultation.
Comments: Some commenters expect that OPM's ability to render a
determination of inconsistency under this section will create
competitive advantages for MSPs over QHPs. A few commenters stated that
``double regulation,'' by both OPM and each State, will competitively
disadvantage MSPs.
Response: We are sensitive to concerns that the MSPP will create
disruptions in different markets, and this regulation has been designed
to comply with the statutory directives of the Affordable Care Act
while minimizing any such disruptions. The proposed rule reflects a
balanced approach under which an MSPP issuer will comply with all State
laws except any with respect to which OPM has determined that such
State law is contrary to Federal law. This approach will keep each MSP
in relative balance with QHPs offered on the same Exchange. No evidence
has been offered to support the commenters' assertion that OPM's
reservation and potential exercise of this authority creates a
competitive advantage for the MSPs or MSPP issuers.
Moreover, OPM's proposed framework for MSPP compliance incorporates
State law and sets standards and requirements similar to those used
successfully under the FEHBP. We designed this regulatory framework to
ensure that the program is capable of sufficient flexibility to
facilitate its implementation. We intend to employ that flexibility to
take any appropriate action to ensure that MSPs are neither
unreasonably competitively advantaged nor disadvantaged.
Comments: Some commenters recommended that we require compliance
not only with State law but also with QHP standards set by States and
Exchange authorities. A few commenters recommended that OPM require
MSPP issuers to enter into contracts with Exchanges that will actively
or selectively contract with QHP issuers. One commenter requested
clarification that MSPP issuers would be required to comply with
technical requirements for QHPs, such as data submission formatting.
Response: As noted in the preamble to the proposed rule, we intend
that MSPs and MSPP issuers be subject to all of the same standards and
requirements as QHPs and QHP issuers, except where deviations are
authorized by law. We look forward to working collaboratively with
States to ensure that we are aware of all relevant standards, including
those of a technical nature, to ensure that MSPs and MSPP issuers
comply with such standards.
Requiring MSPP issuers to enter into a contract with Exchanges
would circumvent section 1334(d) of the Affordable Care Act, which
vests certification authority for MSPs in OPM rather than Exchanges by
providing that MSPs offered under a contract with OPM are deemed to be
certified by an Exchange. We consider active or selective contracting
models employed by Exchanges to be operational processes rather than
QHP standards, and we will not direct MSPP issuers to participate in
such processes, consistent with statute.
Comment: One commenter requested clarification that OPM's
determination of inconsistency under this section would only apply to
MSPs and MSPP issuers in Exchanges in one State, as opposed to
throughout all States.
Response: A determination of inconsistency under this section would
be limited to the State in which the State law in question exists. OPM
recognizes that some State laws are based on model acts, and that
several States may employ the same or similar language in State laws.
However, we also realize that the facts and circumstances that give
rise to a determination of inconsistency may vary from one State to
another. OPM will evaluate State laws carefully, and will refer to
previous determinations as precedent when determining the applicability
of a State law, but will not automatically apply a determination of
inconsistency to more than one State law without consulting with the
State
[[Page 15574]]
regulatory agencies and Exchange(s), and thoroughly evaluating the
unique facts and circumstances in each State.
Comment: One commenter requested clarification as to whether OPM
would conduct independent research or rely on a complaint-driven
process to select which State laws may be subject to a determination of
inconsistency under this section.
Response: We intend to use all available information to assess the
compatibility of State laws with the MSPP, including complaints from
enrollees, communication with issuers, collaboration with States, and
additional research.
Comment: One commenter recommended that OPM adopt a standard for
noncompliance with State law where only a ``compelling national goal''
would justify a finding that a State law does not apply to MSPP
issuers.
Response: The standards we have adopted are those set forth in the
statute.
Comment: One commenter supported the proposed approach, but
requested acknowledgement that OPM would assume responsibility for
enforcement of State law with respect to MSPP issuers.
Response: Although we intend to communicate closely with States to
ensure compliance with State and Federal laws, OPM is not authorized to
assume responsibility for enforcement of State law. The same vehicles
available to States to enforce their laws against QHPs would also be
available to enforce them against MSPs. As noted above, we look forward
to working collaboratively with States to ensure that consumers receive
high-quality coverage.
Comment: One commenter supported our proposal, but requested
clarification that OPM would decide whether a State law applies, as
opposed to an issuer or another party.
Response: As reflected in the proposed regulatory text, we agree
that OPM should decide whether a State law meets one of the three
standards in paragraph (a). This responsibility flows from the
statutory authority granted to OPM by section 1334 of the Affordable
Care Act to implement and administer the MSPP.
Comments: A few commenters recommended that Federal Indian law be
recognized separately from State law.
Response: The requirement for MSPP issuer compliance with State law
set forth in Sec. 800.114 is included in the final regulation to
implement section 1334(b)(2) of the Affordable Care Act, which
specifies that an MSPP issuer ``is subject to all requirements of State
law not inconsistent with this section [1334], including the standards
and requirements that a State imposes that do not prevent the
application of a requirement of'' part A of title 27 of the PHS Act or
title I of the Affordable Care Act. We acknowledge the unique concerns
of I/T/Us, including concerns that involve the interaction of State law
and Federal Indian law, and we intend to address them, to the extent
practicable, through contractual terms.
Level Playing Field (Sec. 800.115)
In Sec. 800.115, we proposed that an MSPP issuer would comply with
Federal and State laws involving guaranteed renewal, rating,
preexisting conditions, non-discrimination, quality improvement and
reporting, fraud and abuse, licensure, solvency and financial
requirements, market conduct, prompt payment, appeals and grievances,
privacy and confidentiality, and benefit plan material or information.
This section addresses compliance directly involving these areas of
law, which are expressly listed at section 1324 of the Affordable Care
Act. Section 1324 states that, if an MSP is not subject to a Federal or
State law that falls into one of the 13 categories listed, no private
health insurance coverage would be subject to such law. We received
comments from States, Exchanges, consumer groups, providers and
provider groups, pharmaceutical companies, and professional
associations.
Comments: A few commenters, while generally supporting OPM's
proposed approach, expressed concern that our approaches to rate
review, benefit plan material and information, and external review may
trigger section 1324 (i.e., that they would cause private insurance
plans to be exempt from laws listed in that section).
Response: As explained in the preamble to the proposed rule and in
the responses to comments regarding Sec. Sec. 800.201, 800.501-504,
and 800.113, our approach to rate review, benefit plan material or
information, and external review would not excuse private health
insurance coverage from compliance under section 1324. First, laws
involving rate review do not fall within a category listed in section
1324 of the Affordable Care Act.
Second, our proposed rule explicitly requires MSPP issuers to
comply with Federal and State laws related to benefit plan material or
information. As set forth in Sec. 800.20, and as discussed in
responses to comments regarding that section and Sec. 800.113, the
definition of ``benefit plan material and information'' does not
include a policy or contract for health insurance coverage.
Finally, as we indicated in the proposed rule, we believe that our
approach to external review is required by section 1334 of the
Affordable Care Act and does not trigger the level playing field
provisions of section 1324 because our approach will comply with
external review requirements.
Specifically, we believe our approach to external review is
required by section 1334(a)(4), which directs OPM to implement the MSPP
in a manner similar to the manner in which we implement the contracting
provisions with respect to carriers under the FEHBP. External review is
part of the contracting process. Through the external review process,
matters of contract coverage are resolved.
As noted in the proposed rule, section 2719 of the PHS Act and its
implementing regulations apply to all non-grandfathered group health
plans and health insurance issuers, including MSPP issuers, with
respect to internal claims and appeals and external review. We
understand that the Departments of HHS, Labor, and the Treasury (the
tri-Departments) intend to amend those regulations at 45 CFR 147.136 to
clarify that the MSPP external review process is governed by section
2719(b)(2)(B). Under section 2719(b)(2), the external review
requirements that must be met are established by the tri-Departments,
which have made the judgment that the external review process adopted
in this rule satisfies the requirements under that section. Thus, the
level playing field provisions of section 1324 of the Affordable Care
Act would not be triggered because MSPs and MSPP issuers would comply
with the external review requirements in section 2719(b) of the PHS
Act, just as other health insurance issuers in the group and individual
markets are required to do. As noted in the DATES section of this
notice of final rulemaking, rulemaking by the tri-Departments
interpreting section 2719 in this manner has not yet been completed. We
are making the provisions of this regulation on external review
effective on the date that such tri-Department regulations become
effective.
In addition, our approach to external review does not afford the
MSPs any competitive advantage. Although OPM--instead of the States--
will administer the external review process for MSPs, that process
provides for application of the standards and requirements with which
other issuers must comply under section 2719(b)(2) of the PHS Act.
Thus, MSPs will in fact be
[[Page 15575]]
subject to, and comply with, the same law on external review as other
issuers.
No commenter identified any State external review law that imposes
higher standards than does the Federal external review law proposed for
the MSPP. Based on our experience with the disputed claims process
under the FEHBP, we believe that our external review process is
comparable to any State external review process. We look forward to
working collaboratively with States to ensure that our external review
process is no less protective than the most protective State standards.
Comment: One commenter recommended the expansion of the scope of
``licensure'' under this section.
Response: We recognize that licensure laws in some States may
impose varying requirements on health insurance issuers. Compliance
with a broader range of State laws that may be conditions of licensure
would be required under Sec. 800.114 of this regulation, subject to
the exceptions listed there. However, for purposes of analysis under
this section, an MSPP issuer complies with laws ``relating to''
licensure by being licensed in each State in which the issuer offers an
MSP.
Comment: One commenter requested clarification as to whether the
inverse of section 1324 would also be required, i.e., whether the other
private health insurance coverage in a State would be subject to a
State law to which an MSP is subject.
Response: States typically regulate health insurance markets, and
the MSPs will operate within those markets. As set forth in Sec.
800.114, MSPs and MSPP issuers generally are subject to the same laws
to which the rest of the health insurance market is subject.
Comments: A few commenters expressed concern that OPM would prompt
a ``race to the bottom'' by circumventing, through the MSPP, consumer
protections provided by State laws.
Response: The MSPP will promote uniformly high standards for MSPs
to be made available to consumers. As noted in the proposed rule, we
will deviate from State standards only when the standards are
inconsistent with the implementation of OPM's statutory directive to
implement this program. Like plans offered through the FEHBP, MSPs will
be high-quality products that are subject to the experienced oversight
of OPM.
We are adopting proposed Sec. 800.115 as final, with no changes.
Process for Dispute Resolution (Sec. 800.116)
In Sec. 800.116, we proposed a process by which a State may
request that OPM reconsider a determination under Sec. 800.114 that a
State law does not apply to MSPs or MSPP issuers. The proposed process
calls for a State to demonstrate that the State law at issue is not
inconsistent with section 1334 of the Affordable Care Act, does not
prevent the application of a requirement of part A of title XXVII of
the PHS Act, and does not prevent the application of a requirement of
title I of the Affordable Care Act. This section goes on to set forth
the procedural framework for the process, including the form of the
request, permissible supporting information and documentation, the
timeframe for resolution, and the nature of OPM's written decision as
final agency action. Most of the comments we received regarding this
section were from States and Exchanges, and a few additional comments
were submitted by consumer groups, issuers, and professional
organizations.
Comments: A few commenters recommended that this process be
conducted by a third party outside of OPM. One commenter suggested that
disputes over the applicability of State law be conducted through State
administrative and judicial processes.
Response: OPM cannot cede authority to make these determinations to
an outside entity, because Congress directed OPM to implement and
administer the MSPP.
The process outlined in this section offers a formal route to seek
resolution of a complaint without having to initiate costly,
contentious litigation over the applicability of State laws under the
MSPP. Thus, review under this section would be conducted by a different
official within OPM than the official who made an initial determination
under Sec. 800.114. Similar review is conducted under certain
circumstances in the FEHBP when a dispute arises between OPM and a
carrier. OPM's experience with such review has shown that it is an
effective means of resolving disputes.
Comments: One commenter requested a shorter timeframe than the 60
days proposed in paragraph (c)(3). Another commenter recommended that
OPM ensure the resolution of all potential disputes involving a State's
law prior to an MSP being offered on an Exchange within that State.
Response: Sixty days is an appropriate period within which written
decisions must be issued, but we intend to resolve each dispute under
this section as quickly as possible after it arises.
We have attempted, through the provisions of this regulation, to
anticipate potential Exchange approaches to substantive standards and
requirements. However, we are aware that new State laws may be enacted
or QHP standards established subsequent to the promulgation of this
regulation. This process is necessitated in part by the evolving nature
of health insurance regulation and QHP standards. In addition, we
anticipate that any inconsistencies between State laws and section 1334
of the Affordable Care Act may not become apparent until after MSPP
operations have begun. We intend to work collaboratively with States to
mitigate or avoid any potential disruptions that may result from the
ongoing nature of this process.
Comments: A few commenters recommended that a de novo review be
conducted under this section, that State law applicability be presumed,
or that OPM bear the ``burden'' of demonstrating that a determination
of inconsistency is supported.
Response: This process is designed to create an avenue for a State
to show that OPM's considered determination under Sec. 800.114 was
made in error, which would present an opportunity to avoid potential
litigation that could arise from such a determination. As such, the
State is responsible for demonstrating consistency between Federal and
State law.
Comments: A few commenters recommended that determinations
regarding laws under both Sec. Sec. 800.114 and 800.115 be subject to
the process for dispute resolution under this section. Other commenters
requested clarification as to whether the dispute resolution applied to
all State laws or only to State laws that do not fit into the list of
categories under section 1324(b) of the Affordable Care Act.
Response: We agree that a State should have an opportunity to
request reconsideration of a determination of inconsistency regarding
any State law and we are revising paragraph (a) accordingly.
Comment: One commenter recommended that the record for judicial
review under paragraph (c)(4) include all relevant information, not
only the record that was before OPM when a decision was rendered.
Response: The Administrative Procedure Act permits judicial review
of final agency action, and limits such review to the record that was
before the agency when it took the action being reviewed. This
regulation neither restricts nor expands that limitation.
[[Page 15576]]
Comments: A few commenters recommended that parties other than
States be permitted to seek dispute resolution under this section. One
commenter recommended that MSPP issuers bear the burden of
demonstrating that State laws should not apply to them.
Response: This process is designed to assist States in working with
OPM to prevent and mitigate market disruptions. State health insurance
laws are regulatory by nature; the most expert entities to address them
are therefore the regulatory agency and/or Exchange charged with their
implementation. Regulatory agencies and Exchanges are well-equipped to
represent the interests of the issuers with which they work and the
consumers they serve.
We are amending paragraph (a) of Sec. 800.116 as indicated above,
to reflect that a determination of inconsistency involving any State
law may be the subject of the process outlined in this section. We are
also making a technical correction in paragraph (b) and inserting a
technical amendment in paragraph (c)(3) for greater clarity.
Subpart C--Premiums, Rating Factors, Medical Loss Ratios, and Risk
Adjustment
General Requirements (Sec. 800.201)
Under Sec. 800.201, OPM proposed a number of standards for setting
rates in the MSPP. First, we proposed that OPM would negotiate
premiums, as provided in section 1334(a)(4) of the Affordable Care Act,
in a similar manner to the way we negotiate with FEHBP carriers each
year.
Second, the proposed rule included a provision that required MSPP
rates to remain in effect for the 12-month plan year.
Third, OPM proposed to issue rating guidance for the MSPP, similar
to the way OPM communicates with FEHBP carriers.
Fourth, we proposed that MSPP issuers comply with standards in HHS
guidance for calculating actuarial value (AV), specifically those
standards proposed in 45 CFR 156.135.
Fifth, OPM proposed a process for rate setting and review that
requires an MSPP issuer to follow State rating standards with respect
to rating factors generally applicable in a State. With respect to rate
review, OPM's proposal reflected that some States have a prior approval
process for rates and the authority to reject rates. Therefore, we
proposed to work closely with each State in approving a rate for the
MSPs in that State and to consult with that State about patterns in its
markets and about other rates that an MSPP issuer might be proposing in
that State for non-MSPs. In doing so, MSPP issuers would be required to
file rates with a State, but the final decision regarding rates for
MSPs would rest with OPM, as required by the statute. As described in
proposed Sec. 800.201(e) and (f), with respect to rate review, OPM's
rate process and analysis will be transparent to States in which the
MSP is operating. MSPP issuers will be subject to a State's rate review
process, including a State's Effective Rate Review Program established
by HHS pursuant to section 2794 of the PHS Act and 45 CFR part 154. OPM
proposed that, for States with Effective Rate Review Programs under
section 2794 of the PHS Act, the MSPP issuer would comply with the
State standards. In addition, OPM proposed that in States where HHS is
reviewing rates, HHS would accept the judgment of OPM for MSP rates.
Furthermore, MSPP issuers must comply with the reporting and disclosure
requirements for all rate justifications to HHS, States, and Exchanges,
such as the requirements set forth in 42 CFR 156.210(c). In the event
that a State withholds approval of an MSP rate for reasons that OPM
determines, in its discretion, to be arbitrary, capricious, or an abuse
of discretion, the Act authorizes the Director to make the final
decision to approve rates for participation in the MSPP,
notwithstanding the absence of State approval.
Finally, OPM proposed that MSPP issuers must comply with section
1312(c)(1) and (2) of the Affordable Care Act and implementing
regulations, which provide that a health insurance issuer consider all
enrollees in all non-grandfathered health plans in the individual
market to be members of a single risk pool and all enrollees in non-
grandfathered health plans in the small group market to be members of a
single risk pool within a State. With proposed Sec. 800.201(g), OPM
clarified that an MSPP issuer must consider MSP enrollees to be members
of the same risk pool as all other enrollees of the issuer in non-
grandfathered health plans in the individual and small group markets,
respectively. OPM received several comments on our general standards
related to MSPP rate setting and review policies applicable to an MSPP
issuer and related to compliance with sections 2701 and 2794 of the PHS
Act.
Comments: Many commenters supported the general rate review
approach set out for the MSPP, such as compliance with State rate
review processes, single risk pool, calculation of AV, and State-based
rating. Most of these commenters were concerned about OPM retaining
discretion to negotiate premiums and having final approval of rates. A
few commenters noted that there are administrative and judicial
remedies available under State law for issuers who believe that rate
approval has been withheld for reasons that are ``arbitrary,
capricious, or an abuse of discretion'' and generally a State would be
violating its own laws if it were to withhold for reasons that are
``arbitrary, capricious, or an abuse of discretion.'' The commenters
also noted that this standard is broad and asked OPM to narrow its
scope. One commenter suggested that if OPM were to bypass these
remedies, MSPs would be given an unfair advantage over QHPs and would
be violating State law. A few commenters recommended that OPM not
reserve discretion in States with Effective Rate Review Programs. One
commenter believed OPM's authority to negotiate rates in section 1334
of the Affordable Care Act is constrained by sections 1324 and 1252.
Response: Based on support from some commenters on our proposed
approach, we are adopting this section as final, with modifications.
Section 1334(a)(4) of the Affordable Care Act explicitly authorizes the
Director to make the final decision to approve rates for participation
in the MSPP, notwithstanding the existence or absence of State
approval. We are fully aware of the complexities of rate review in 2014
and subsequent years, and we intend to collaborate closely with HHS and
States on MSP rates. We agree with comments that MSPP issuers should
use the remedies available under State laws related to rate review
decisions. OPM will require MSPP issuers to allow the rate review
process in States, including administrative and judicial remedies, to
proceed unless the timeline for administration of the MSPP is
threatened. In order to give MSPP issuers adequate time to prepare for
open enrollment periods, we maintain our discretion to issue final
decisions on MSP rates. For this reason, we are revising Sec.
800.201(f) to clarify that OPM would exercise its discretion only in
the event that the State's action would impede the Federal objective by
preventing OPM from operating the MSPP. In addition, we are removing
from the final regulation the ``arbitrary, capricious, or an abuse of
discretion'' language, based on the comments we received. We expect
that the Director will rarely, if ever, have to exercise this authority
to disapprove or approve MSP rates over the approval or non-approval of
a State.
We disagree with the interpretation that sections 1324 and 1252
constrain
[[Page 15577]]
OPM's authority to negotiate premiums. Were we to interpret these
sections in the manner suggested by the commenter, section 1334(a)(4)
of the Affordable Care Act, which requires the Director to
``negotiate[] * * * with each multi-state plan * * * the premiums to be
charged,'' would be rendered inoperative. Section 1324(b)(2) refers to
``rating.'' OPM has defined ``rating'' for purposes of section
1324(b)(2) to require compliance with the rating factors permitted by
the PHS Act as detailed in Sec. 800.202. Rating factors refer to the
factors issuers must use to develop their premiums. With regard to the
MSPP, we do not consider ``rating'' to be the same as ``rate review.''
Rate review is a broader concept and is a necessary component of
premium negotiation. As mentioned above, we intend to conduct our own
process to review rates, and each State will have the opportunity to
review the MSP rates under its own procedures. We intend to work
cooperatively with the States, and have coordinated our policy with
HHS.
In addition, the MSPP will comply with section 1252 of the
Affordable Care Act. That section, entitled ``Rating Reforms Must Apply
Uniformly * * *'' requires rating reforms adopted by a State pursuant
to title I of the Affordable Care Act to apply uniformly within a
market. Rating reforms, again, do not equate to ``rate review''
processes. Rather, consistent with OPM's interpretation of ``rating''
for purposes of section 1324(b)(2), rating reforms refer to reforms
that constrain the factors upon which issuers rely to develop their
premiums. Section 1252 does not constrain the Director's power to
negotiate rates with MSP issuers under section 1334(a)(4).
Comment: In addition, the same commenter indicated its view that
section 1252 constrains network adequacy rules.
Response: OPM does not agree with this comment, as section 1252 is
limited in its scope to rating reforms.
Comment: This commenter further indicated that section 1301(a)(2)
applies with ``equal force'' to MSPP issuers.
Response: While OPM acknowledges that QHP standards generally apply
to the MSPP, section 1334(c) specifically reserves to the Director the
discretion to determine whether QHP rules are satisfied in the context
of the MSPP. Therefore, OPM does not agree that section 1301(a)(2)
causes QHP rules to apply to MSPP ``with equal force,'' as they do not
apply in the same manner with respect to enforcement.
Comment: One commenter asked OPM to clarify that the single risk
pool standard proposed in the rule applies to MSPP issuers' pools
within a State and not across States.
Response: Our intent was for an MSPP issuer to consider all
enrollees in an MSP to be in the same risk pool as all enrollees in all
other non-grandfathered health plans in the individual market or small
group market, respectively, in compliance with section 1312(c) of the
Affordable Care Act as well as HHS regulations implementing that
section. Consistent with HHS guidance, we affirm that MSPP issuers will
pool risk within a State and not across States, but we do not believe a
change in the regulatory text is needed.
Comments: Some commenters suggested that OPM establish rules and
conditions that will facilitate tribal sponsorship, to allow tribes to
perform premium aggregation for individuals to enroll in MSPs.
Response: We are exploring whether potential issuers have the
capacity to perform premium aggregation and/or accept aggregated
premiums. In the MSPP issuer application, OPM will ask applicants to
indicate whether they have this capacity and will take the applicants'
responses into consideration when negotiating contracts.
Rating Factors (Sec. 800.202)
The proposed Sec. 800.202 required MSPP issuers to comply with
section 2701 of the PHS Act, as amended by the Affordable Care Act. We
proposed in Sec. 800.202(a) that MSPP issuers must comply with
requirements setting standards for fair health insurance premiums
appearing in HHS regulations. In addition, we proposed that MSPP
issuers must follow standards set for rating areas in a State
established under any HHS or State regulations implementing section
2701 of the PHS Act. OPM received numerous comments related to rating
standards and factors from States, consumer organizations, and issuers.
Comments: Many commenters supported the general approach we
proposed that MSPP issuers must comply with Federal standards and more
narrow State standards for rating factors. A few commenters asked OPM
to clarify the requirement that MSPP issuers use the age curves
established under Federal regulations implementing section 2701(a),
including that an MSPP issuer must also use any age curve established
by a State pursuant to 45 CFR 147.103(e).
Response: We clarify that our intent is for an MSPP issuer to use
any age curve established by a State pursuant to 45 CFR 147.103(e). In
the event that a State does not establish an age curve, the MSPP issuer
would use the standard age curve established by HHS. We are amending
proposed Sec. 800.202(c)(2) to reference State-established age curves.
Comments: A few commenters requested that OPM have MSPP issuers
comply with PHS Act section 2705 and its implementing regulations on
incentives for nondiscriminatory wellness programs in group health
plans pursuant to 45 CFR parts 146 and 147, 29 CFR part 2590, and 26
CFR part 54.
Response: We agree with the commenters and their suggestion.
Accordingly, we have added a paragraph (f) to Sec. 800.202 to require
MSPP issuers offering group health plans to comply with section 2705 of
the PHS Act and any implementing Federal or State regulations. We
believe this appropriately resolves the concerns of commenters.
Comments: Some commenters urged OPM to clarify how MSPP issuers
will define ``family'' as it applies to coverage and rating.
Specifically, commenters recommended OPM coordinate with HHS to ensure
that the coverage and rating requirements established by HHS under
section 2701 clearly apply to MSPs, adopt broad definitions for minimum
categories for family policies, and adopt four types of family coverage
categories: Individual; two adults; adult plus child(ren); and two-
adult with child(ren) or other family composition.
Response: The proposed rule did not require specific standards
around categories of family members, and intended to coordinate MSPP
standards with HHS standards published at 45 CFR part 147. Therefore,
the final rule does not specify the minimum categories of family
members that must be rated in a family policy.
However, we encourage MSPs to provide the same benefits for all
family compositions, including but not limited to same-sex domestic
partners and their children. We note that individuals not eligible for
family coverage will be able to purchase individual coverage on a
guaranteed issue basis.
While we intend to administer the MSPP in a manner that supports a
broad definition of family coverage categories, we are finalizing the
proposed provision without a change. We must coordinate our approach in
applying rating factors consistent with HHS guidance and State law, and
as a result will implement the policy for extending coverage rules so
that they apply to a broad definition of family coverage categories
through the MSPP contract negotiation process.
Medical Loss Ratio (Sec. 800.203)
The proposed rule requires MSPP issuers to attain the medical loss
ratio
[[Page 15578]]
(MLR) in section 2718 of the PHS Act. The proposed rule also codifies
section 1334(a)(4) of the Affordable Care Act, which gives OPM the
explicit authority to negotiate premiums, profit margins, and an MLR by
allowing OPM to set an MSP-specific MLR that is either in the interest
of MSP enrollees or conforms to State MLR standards. Failure to attain
the MLR could result in intermediate sanctions, which include, but are
not limited to, suspension of marketing, decertification in one or more
States, or termination of an MSPP issuer's contract.
Comments: Several commenters expressed support for OPM's approach.
Commenters supported an MLR calculation that was State-based, rather
than nationwide. Commenters also supported pooling MSP and non-MSP
experience in MLR calculation.
Response: OPM is retaining in the final rule its approach to have
MSPP issuers calculate MLR on a State-by-State basis as well as pool
MSP and non-MSP experience within a State.
Comments: Several commenters expressed concern that OPM having
authority to set an MSP-specific MLR different from the State or
Federal standard could give MSPs an advantage over QHPs.
Response: OPM recognizes the concerns of States and other
stakeholders regarding authority to set an MLR standard for the MSPP.
However, section 1334(a)(4)(B) of the Affordable Care Act explicitly
grants OPM legal authority to negotiate an MLR with each MSP. As a
matter of policy, however, OPM does not foresee exercising the
authority to set an MSP-specific MLR. If OPM were to consider
implementing an MSP-specific MLR, it would only be under extraordinary
and rare circumstances, and after consulting with the State.
Comment: A commenter was concerned that OPM may decertify an MSP
mid-year for failing to meet the applicable MLR standard.
Response: While OPM has the authority to decertify an MSP at any
time, we do not want to disrupt State insurance markets or harm
consumers. Decertifying an MSP is one of many compliance actions OPM
proposed in the rule. We want to clarify that OPM would only decertify
an MSP mid-year under unusual circumstances, such as widespread and
repeated failure to comply with the legal or MSPP contractual
requirements. Before decertifying an MSP, we would consult with a State
and/or HHS, as appropriate, to avoid market disruption and protect
consumers. Our approach to compliance actions is discussed in more
detail in relation to Sec. 800.404.
Comment: One commenter requested that MSPP issuers pay a rebate in
addition to other MLR sanctions.
Response: MSPP issuers, like all health insurance issuers regulated
by HHS, are subject to the MLR rebate requirements under the Affordable
Care Act, and OPM will not require additional rebates.
Comment: One commenter wants MSPP user fees to qualify for MLR
inclusion.
Response: This final rule clarifies in Sec. 800.108 that MSPP user
fees will be part of the State-based Exchange or Federally-facilitated
Exchange user fee. According to technical guidance document CCIIO 2012-
002, released April 20, 2012, by HHS, Exchange user fees are subtracted
from premiums in the MLR calculation, as are all other Federal and
State regulatory and licensing fees. MSPP user fees, therefore, will
not be included in the MLR calculation.
We are adopting Sec. 800.203 of the proposed rule as final, with
one technical correction in paragraph (b), relating to the sanctions
for not attaining the required medical loss ratio.
Reinsurance, Risk Corridors, and Risk Adjustment (Sec. 800.204)
The proposed Sec. 800.204 would require MSPP issuer participation
in the transitional reinsurance program in the individual market, risk
adjustment program, and temporary risk corridors program to ensure that
all issuers have the same fiscal responsibilities and protections. OPM
proposed that MSPP issuers be required to participate in the
transitional reinsurance program for the individual market established
pursuant to section 1341 of the Affordable Care Act, and comply with
HHS standards set forth in 45 CFR part 153 and, if applicable, any
State regulations implementing the program. OPM also proposed that an
MSPP issuer must participate in the temporary risk corridors program
established pursuant to section 1342 of the Affordable Care Act and
comply with 45 CFR part 153, as well as any additional HHS standards
implementing the program. Finally, OPM proposed that an MSPP issuer
must participate in the risk adjustment program established pursuant to
section 1343 of the Affordable Care Act and comply with HHS standards
set forth in 45 CFR part 153 and, if applicable, any State standards
implementing the program.
Comments: The majority of the comments we received supported OPM's
approach to requiring MSPP issuers to participate, like QHP issuers, in
the transitional reinsurance program, risk adjustment program, and
temporary risk corridors program. States, consumer organizations, and
issuers supported the general approach OPM proposed that MSPP issuers
must comply with Federal standards and State standards, if applicable,
in the administration of the reinsurance program and risk adjustment
program. One commenter suggested OPM has legal discretion to allow a
church health plan offered through the MSPP to vary premiums to adjust
for risk across its enrollees, using risk adjustment criteria related
to Medicare Part D and Medicare Advantage plans.
Response: OPM appreciates the comments and is adopting the proposed
regulation as final, with two technical corrections. First, in Sec.
800.204(b), we are changing ``any applicable Federal or State
regulations under that section'' to ``any applicable Federal
regulations under that section'' because HHS will be operating the
temporary risk corridors program. Second, we are correcting an
editorial error in paragraph (c) of Sec. 800.204 by changing ``An MSPP
issuer must comply with participate in the risk adjustment program
established pursuant to section 1343 of the Affordable Care Act'' to
``An MSPP issuer must comply with section 1343 of the Affordable Care
Act''.
Finally, we do not agree with the commenter's analysis that OPM
would have legal discretion to allow a church health plan offered
through the MSPP to vary premiums to adjust for risk across its
enrollees, using risk adjustment criteria related to Medicare Part D
and Medicare Advantage plans. Therefore, we are not adopting this
suggestion.
Subpart D--Application and Contracting Procedures
In subpart D of proposed 45 CFR part 800, OPM set forth proposed
processes for accepting and evaluating applications to participate in
the MSPP and for executing contracts to offer coverage under the MSPP.
In general, these processes were designed based on OPM's experience in
the operation of the FEHBP while reflecting the unique aspects of the
MSPP, as directed in section 1334 of the Affordable Care Act. Subpart D
includes sections relating to an application process, review of
applications, MSPP contracting, term of the contract, contract renewal
process, and nonrenewal. OPM received both general comments on this
subpart and specific comments on several sections. We address first the
general comments on the subpart, followed by comments on specific
sections within the subpart.
[[Page 15579]]
Any regulatory changes are noted within the discussion of each section.
Comment: One commenter requested additional information on the
application and contracting procedures, including form, manner, and
timeline for submission and review of applications, contracting, and
renewal of contracts.
Response: OPM has released a final paper application setting forth
the information that we will collect from health insurance issuers that
apply to become MSPP issuers, available on the Federal Business
Opportunities Web site at www.FBO.gov under solicitation number OPM35-
12-R-0006, Multi-State Plan Program. The final paper application was
posted on January 18, 2013. The solicitation notes that OPM expects to
begin receiving application material from issuers in February 2013, and
instructs issuers to submit a notice of intent to apply to receive
access to the MSPP Portal, through which issuers will submit the
requested information to OPM electronically.
Due to the generally compressed deadlines for the first year of
this program and the first years of operation of many Exchanges,
timelines may vary from one year to the next. We therefore will not
establish rigid timelines in this regulation, but will evaluate MSPP
timelines and address them through guidance. Similarly, we intend to
share additional information on initial execution and renewal of
contracts through guidance.
Comments: A few commenters recommended that OPM incorporate States
and Exchanges into the process of evaluating applicants and negotiating
contracts with issuers. Specifically, commenters noted that some
Exchanges will employ an ``active purchaser'' model, whereby QHP
certification will depend on a contract between a QHP issuer and the
Exchange, and recommended that OPM address this model in its
application and contracting procedures. Other commenters voiced concern
that the absence of State representation in application and contracting
procedures, including evaluation of rate and benefit proposals, would
result in inconsistent application of State insurance laws and
regulations.
Response: OPM is directed by section 1334 of the Affordable Care
Act to enter into contracts with health insurance issuers, and to do so
in a manner similar to the manner in which contracting provisions under
the FEHBP are implemented. The Affordable Care Act also provides for
deemed certification of MSPs by virtue of an MSPP contract. We
acknowledge that States will retain responsibility for the enforcement
of their insurance laws and regulations, and we will continue to
develop relationships with States' Departments of Insurance and
Exchange authorities to collaborate to ensure that MSPs may be offered
on Exchanges without creating market disruptions.
Based on the phased expansion provisions of section 1334 of the
Affordable Care Act and of Sec. 800.104 of this regulation, we do not
expect each MSPP issuer to offer an MSP on each Exchange in 2014. We
will communicate with appropriate State officials on an ongoing basis
regarding the MSPs that we expect to certify.
Application and Contracting Procedures (Sec. 800.301)
In Sec. 800.301, we proposed that a health insurance issuer may
submit an application to OPM to participate in the MSPP. We specified
that such applications would meet guidelines to be released regarding
the form and manner of applications, and the timeline for submission.
OPM received a few comments specifically addressing this section.
Comment: One commenter noted the absence of specific timeframes in
the proposed regulation and requested that such timeframes allow each
State to perform its ``traditional role'' in regulating health
insurance products.
Response: As discussed in greater depth regarding subpart C of this
regulation, OPM intends to collaborate with appropriate State officials
regarding the review and approval of rates and benefits. We intend to
be as flexible as possible to ensure that each State has adequate
opportunity to review MSP documentation as appropriate.
Comment: One commenter recommended that OPM ensure that issuers'
proprietary information be protected from information requests,
including under the Freedom of Information Act (FOIA).
Response: We acknowledge that certain information given to OPM by
applicant issuers may be proprietary, and should therefore not be
subject to public inspection. Applicants will be given an opportunity
to mark submitted information as confidential, pursuant to instructions
that will accompany the application in the MSPP Portal, subject to the
limits of FOIA and its implementing regulations.
OPM does not believe that any of these comments require any changes
in the regulatory text. Therefore, we are adopting proposed Sec.
800.301 as final, with no changes.
Review of Applications (Sec. 800.302)
Proposed Sec. 800.302 provided that an issuer that has applied
under Sec. 800.301 may be accepted to enter into contract negotiations
if OPM determines that the applicant meets the requirements of part
800; that OPM may request additional information from issuers in making
such a determination; that OPM will inform the applicant in writing if
OPM declines to enter into contract negotiations with the applicant;
that OPM alone may determine whether an application is to be accepted
or declined; and that a declined applicant may apply for a subsequent
year. OPM received no specific comments on this section. Therefore, we
are adopting proposed Sec. 800.302 as final, with no changes.
MSPP Contracting (Sec. 800.303)
In proposed Sec. 800.303, OPM provided that, to become an MSPP
issuer, an applicant must execute a contract with OPM; that OPM would
establish a standard contract for the MSPP; that OPM and an applicant
would negotiate premiums for each plan year; that OPM would review for
approval an applicant's benefit packages; that OPM may negotiate
additional contractual terms and conditions; and that MSPP issuers
would be certified to offer MSP coverage on Exchanges.
Comments: Several commenters recommended that I/T/Us be
contractually allowed to participate in MSP networks as providers, and
that MSPP issuers comply with Federal laws governing I/T/Us.
Response: OPM will address the specific terms of the MSPP standard
contract through a development process following the publication of
this final rule. We acknowledge the unique concerns of I/T/Us, and we
intend to address them, to the extent practicable, through contractual
terms.
Comment: One commenter recommended that OPM adopt for the MSPP the
same transparency and pass-through pricing standards and requirements
that exist under the FEHBP for PBMs.
Response: As noted above, OPM will address specific contract terms
through a process following the publication of this rule. Such terms
will include standards and requirements for PBMs.
Comments: A few commenters suggested that OPM's proposed
contracting process would be duplicative of State regulatory or
Exchange processes or would circumvent such processes. One commenter
recommended that MSPP issuers be required to attest to compliance with
all State laws as a
[[Page 15580]]
condition of certification. Another commenter recommended that issuers
be required to attest to understanding and compliance with a specific
State law as a condition of contracting. One commenter recommended that
MSPP contracts incorporate consultation with State-based Exchanges to
measure performance and compliance.
Response: In general, MSPP issuers will be expected to comply with
State laws and regulations. Although we intend to monitor such
compliance and to evaluate contract performance in part on such
compliance, we decline to specifically list State laws with which
issuers must comply. Specifically listing laws with which an issuer
must comply may have the unintended result of implying that an issuer
need not comply with unlisted laws and regulations, and OPM cannot list
every relevant State law with which an MSPP issuer must comply.
We intend to promote information sharing between OPM and States,
and OPM will measure MSP performance using standards similar to those
measured under the FEHBP. Sharing information with States will help
ensure that MSPs meet comparable standards to QHPs in the same markets
and that issuers comply with State laws. By measuring contract quality
assurance standards across MSPs, OPM will be able to ensure that MSPs
are of comparably high quality across States. We will set forth the
specific standards that MSPs will be expected to meet in the model MSPP
contract.
We are adopting proposed Sec. 800.303 as final, with the inclusion
of a minor editorial correction.
Term of the Contract (Sec. 800.304)
In Sec. 800.304, we proposed that the term of an MSPP contract be
for a period of at least 12 consecutive months, as set forth in the
MSPP contract; that a plan year be a consecutive 12-month period during
which an MSP provides coverage for health benefits; and that a plan
year may be a calendar year or other 12-month period.
Comment: One commenter recommended that the term of the MSPP
contract coincide with the calendar year so that MSP plan years and
open enrollment periods would coincide with those of QHPs, which would
preserve a level playing field.
Response: In Sec. 800.20, we are adopting the definition of ``plan
year'' established by HHS at 45 CFR 155.20. Section 800.101 states that
MSPs will comply with the same standards for eligibility, enrollment,
and termination of coverage as QHPs on the same Exchange. Open
enrollment periods for MSPs, therefore, will coincide with those of
QHPs.
Comment: One commenter recommended that OPM adopt an initial
contract term of 3 to 5 years, rather than 1 year.
Response: We acknowledge that participation in the MSPP may require
significant initial investment on the part of MSPP issuers, and that a
longer contract term may assure issuers that such investment may
require several years of participation in the program to become cost-
effective. OPM has modeled the application and contracting procedures
in subpart D after those used in the FEHBP, including the automatically
renewable nature of contracts. We anticipate that all MSPP issuers will
participate in the program for many contract terms. However, rates and
benefits will be revised each year, and some terms of the MSPP contract
may need to be updated from one term to the next. Therefore, the
contract term will be 1 year.
We are adopting proposed Sec. 800.304 as final, with no changes.
Contract Renewal Process (Sec. 800.305)
In proposed Sec. 800.305, we set forth a process by which OPM and
an MSPP issuer would renew an MSPP contract, including the issuer's
submission of information to OPM and criteria for a determination by
OPM of whether to renew the contract. This section also provides that
if OPM and the issuer fail to agree to premiums and/or benefits with
respect to an MSP on an Exchange, the contract may nevertheless be
renewed with the same premiums and benefits in effect for the previous
term. OPM received no comments directly addressing this section.
Therefore, we are adopting proposed Sec. 800.305 as final, with no
changes.
Nonrenewal (Sec. 800.306)
In Sec. 800.306, we proposed that either OPM or an issuer could
decline to renew an MSPP contract at the end of a plan year by timely
notifying the other party and MSP enrollees.
Comments: Some commenters recommended lengthening the period of
notice to enrollees of nonrenewal from 90 days to 180 days.
Response: OPM proposed that issuers would be required to notify
enrollees of nonrenewal of an MSPP contract no fewer than 90 days prior
to the date on which coverage would end. The proposed 90-day period was
taken from the same requirement in the FEHBP. Conversely, Exchanges may
have notice periods as short as 30 days. As noted at Sec. 800.306(c),
the 90-day requirement would only take effect in the absence of an
Exchange rule requiring a different notice period.
Comments: Some commenters recommended that OPM require issuers to
assist MSP enrollees who will lose their coverage to find new coverage.
One commenter recommended that OPM defer to a determination by the
Centers for Medicare and Medicaid Services that a QHP issuer must
continue to offer coverage outside of an Exchange.
Response: Enrollment of individuals in QHPs following nonrenewal of
an MSPP contract falls outside of the responsibilities set forth at
section 1334 of the Affordable Care Act. However, as noted throughout
this regulation, we look forward to working collaboratively with States
and Exchanges to best serve consumers, including by ensuring
cooperation with efforts to assist enrollees who lose MSP coverage.
Comments: A few commenters recommended that OPM clarify the
language of paragraph (c) to require issuers to comply with any State
law requirements relating to nonrenewal of coverage and withdrawal from
an Exchange market.
Response: Proposed Sec. 800.306(c) states that an MSPP issuer must
comply with ``any requirements imposed by an Exchange with respect to
the termination of a QHP * * *'' Such requirements would include a
State law requirement relating to nonrenewal of coverage or withdrawal
from an Exchange market. Therefore, no change to Sec. 800.306 is
necessary.
Comment: One commenter noted that Sec. 800.404(d), like Sec.
800.306(c), addresses notice to enrollees who will lose coverage due to
an MSP ceasing to be offered on an Exchange, and recommended using the
same language in both sections.
Response: We agree that the language should be the same in both
sections.
OPM is adopting proposed Sec. 800.306 as final, with one change.
Paragraph (c) will be revised as follows, to include a technical,
clarifying edit: ``The MSPP issuer's written notice of nonrenewal must
be made in accordance with its MSPP contract with OPM. The MSPP issuer
also must comply with any requirements regarding the termination of a
plan that are applicable to a QHP offered on an Exchange on which the
MSP was offered, including a requirement to provide advance written
notice of termination to enrollees. If an Exchange does not have
requirements about advance written notice of termination to enrollees,
the MSPP issuer must inform current MSP enrollees in writing of the
nonrenewal of the MSP no later than 90 days prior
[[Page 15581]]
to termination of coverage, unless OPM determines that good cause
justifies less than 90 days' notice.'' We will also revise Sec.
800.404(d) to mirror this language.
Subpart E--Compliance
In subpart E of the proposed rule, OPM set forth standards and
requirements with which MSPP issuers must comply and a non-exhaustive
list of actions OPM may take to enforce provisions of an MSPP contract.
Like subpart D, these standards, requirements, and compliance actions
have been designed based on OPM's experience in the operation of the
FEHBP, while reflecting the unique aspects of the MSPP, as required by
section 1334 of the Affordable Care Act. Subpart E addresses contract
performance, contract quality assurance, fraud and abuse, compliance
actions, and a process for reconsideration of compliance actions. OPM
received both general comments on this subpart and specific comments on
several sections. We address first the general comments on this
subpart, followed by comments on specific sections within this subpart.
Any regulatory changes are noted within the discussion of each
individual section.
Commenters on this subpart included States and State Exchange
authorities, plan/issuer associations, consumer advocacy organizations,
and a public policy advocacy organization. Comments on this subpart
generally supported the overall structure of contract compliance under
the MSPP, and several offered specific suggestions for improvement. We
received one comment regarding cost accounting systems that is outside
the scope of this rulemaking.
Comments: Some commenters recommended adding specific requirements,
such as network adequacy, to one of the sections of this subpart as a
contract performance standard, a contract quality assurance standard,
or a basis for a compliance action.
Response: OPM acknowledges the importance of requirements and
consumer protections like network adequacy, and addressed network
adequacy in Sec. 800.109 of the proposed rule. We have set forth other
provisions in this regulation that we intend to enforce through
contractual measures and compliance actions; this subpart is structured
to provide OPM the authority to do so in a manner similar to the
administration of the FEHBP. In particular, Sec. 800.404(a)(1) lists
as a cause for OPM to impose a compliance action a failure by the MSPP
issuer to meet the requirements of Sec. 800.401(a), which includes any
violation of section 1334 of the Affordable Care Act or these
regulations. Therefore, a violation of network adequacy standards, or
any other MSPP standard or requirement, would constitute cause for a
compliance action.
Comments: A few commenters recommended that review of financial
resources, records, novation and change of name agreements, and claims
processing practices be left solely to States, and that OPM rely on
States to communicate findings regarding these matters. One commenter
noted States' experience in measurements of these kinds. Another
commenter recommended establishing a notice and communication process
between OPM and the States and Exchanges to ensure MSPP issuers comply
with State laws as well as OPM's standards and requirements.
Response: We acknowledge States' expertise in measuring performance
and compliance, and, as noted above in our responses to comments on
subpart D, we look forward to working with States to ensure compliance
and comparability within States as well as across States. We also note
that OPM has more than 50 years of experience administering the FEHBP,
which includes measurement of numerous performance standards, contract
quality assurance measures, and compliance actions. Section 1334 of the
Affordable Care Act directs OPM to implement this program in a manner
similar to the manner in which the contracting provisions of the FEHBP
are implemented, which includes the compliance measures set forth in
subpart E.
Contract Performance (Sec. 800.401)
In proposed Sec. 800.401, we set forth requirements for MSPP
issuers, including that the issuer must comply with section 1334 of the
Affordable Care Act and with the provisions of this regulation; that it
must meet minimum threshold issuer standards; that it must demonstrate
specified prudent business practices; that it must not engage in
specified poor business practices; and that OPM may collect an
assessment to a performance escrow account. OPM received several
comments specifically addressing this section.
Comment: One commenter recommended that these regulations reflect
OPM's commitment to the protection of enrollees' private and
confidential information. Specifically, the commenter recommended that
we require issuers to comply with Fair Information Practice Principles
by listing failure to comply with such Principles as a poor business
practice.
Response: We appreciate the need to protect private and
confidential information in the MSPP. Personally identifiable
information (PII) and protected health information (PHI) are protected
by the Health Insurance Portability and Accountability Act (HIPAA) and
the Privacy Act of 1974, as well as contractual provisions that will
mirror those used under the FEHBP. By ensuring compliance with these
laws and provisions, OPM will adequately protect PII and PHI.
Comments: Several commenters recommended adding to the list of
``poor business practices'' failure to properly pay I/T/Us in
compliance with 25 U.S.C. 1621e and the cost-sharing protections under
section 1402 of the Affordable Care Act.
Response: The list of ``poor business practices'' does not include
failures to comply with specific laws. This regulation, at Sec.
800.102, addresses compliance with Federal and State laws. Section
800.404(a)(4) permits OPM to impose a compliance action for any
violation of law or regulation. We will address compliance more
specifically in the terms of MSPP contracts.
Comment: One commenter interpreted the list of ``poor business
practices'' to include innovative payment arrangements or delivery
models such as Accountable Care Organizations (ACOs) or Patient-
Centered Medical Homes (PCMHs), and recommended that such models not be
prohibited.
Response: The list of ``poor business practices'' does not address
health care delivery models. The list includes ``[e]ntering into
contracts or employment agreements * * * that include provisions or
financial incentives that directly or indirectly create an inducement
to limit or restrict communication about medically necessary services
to any individual covered under the MSPP.'' Limitation of communication
about medically necessary services to enrollees is not an innovative
payment arrangement or delivery model, and is not a feature of an ACO
or PCMH.
Comments: A few commenters recommended against requiring issuers to
contribute to a performance escrow account. One commenter requested
clarification that OPM's proposal to reserve authority to require MSPP
issuers to contribute to a performance escrow account is limited to
MSPP issuers, presumably as opposed to QHP issuers; that contributions
would be based on premiums rather than a flat fee; that contributions
be assessed at the
[[Page 15582]]
beginning of the year; and that any refunds be remitted to consumers
similarly to MLR rebates.
Response: We continue to explore establishing a performance escrow
account to use in enforcement of MSPP contracts. OPM may develop more
specific policies to begin using such an account no sooner than 2015.
We will issue specific guidance on the operations of a performance
escrow account well in advance of the date on which it takes effect.
We are adopting proposed Sec. 800.401 as final, with no changes
except for minor technical edits.
Contract Quality Assurance (Sec. 800.402)
In proposed Sec. 800.402, we set forth general policies and
procedures to ensure that MSPP contracts conform to quality standards
and requirements, specifically with respect to the issuer's internal
controls and performance standards to be set by OPM.
Comment: One commenter recommended that OPM require MSPP issuers to
meet and comply with States' quality assurance standards and
requirements. The commenter suggested that OPM ensure such compliance
by requiring MSPP issuers to contract with each State, in addition to
contracting with OPM, or by inserting regulatory text.
Response: As noted throughout our responses to comments, we
appreciate the need for coordination with States to ensure that MSPs
are comparable to a QHP offered on the same Exchange. Requiring MSPP
issuers to enter into a contract with Exchanges would circumvent
section 1334(d) of the Affordable Care Act, which vests certification
authority for MSPs in OPM rather than State Exchanges by providing that
MSPs offered under a contract with OPM are deemed to be certified by an
Exchange. We intend to hold MSPs to performance standards that are
comparable to those set for QHPs by States and Exchanges. OPM will
establish and enforce these standards through contractual negotiation
and compliance.
We are adopting proposed Sec. 800.402 as final, with no changes.
Fraud and Abuse (Sec. 800.403)
In proposed Sec. 800.403, we required MSPP issuers to maintain a
program to assess and address vulnerabilities to fraud and abuse, to
maintain a system to detect and eliminate fraud and abuse, and to
provide certain information to OPM. One commenter specifically
addressed this section, requesting further information on the required
fraud detection system. We intend to set forth specific standards and
requirements for systems to detect and eliminate fraud and abuse in the
model MSPP contract. This does not require a change in the proposed
rule; therefore, we are adopting Sec. 800.403 of the proposed
regulation as final, with no changes.
Compliance Actions (Sec. 800.404)
In Sec. 800.404 of the proposed rule, we set forth the bases for
OPM to impose a compliance action; the compliance actions that OPM may
impose; the notices that OPM will send to issuers upon imposition of a
compliance action; and the notices that issuers must send to enrollees
upon imposition of certain compliance actions.
Comment: One commenter noted that mid-year decertification of MSPs
may disrupt markets and harm consumers and recommended that OPM clarify
that such a compliance action would be used only when it is strictly
necessary.
Response: We agree that mid-year decertification creates potential
for disruption, and OPM would only terminate or decertify an MSP if, in
the discretion of the Director, such action was necessary. However,
compliance actions are discretionary, so the regulatory text need not
be modified to reflect that those particular compliance actions would
not be routinely imposed.
Comment: One commenter recommended using State performance
evaluations in reviewing MSP performance and developing processes to
communicate with States and Exchanges regarding compliance actions.
Response: As noted above, we look forward to working with States
and Exchanges to ensure that MSPs meet appropriate standards within
States and across States. Because some compliance actions directly
affect Exchange markets, we agree that Exchanges should receive notice
of such compliance actions. Specifically, regulatory text will be
amended to provide that OPM will notify State and/or Exchange officials
when we reduce the service area or areas of an MSP in the State,
withdraw certification for an MSP in the State, decline to renew the
MSPP contract under which an MSP is offered in the State, or terminate
the MSPP contract under which an MSP is offered in the State.
Section 800.404 of the proposed rule is adopted as final, with two
changes:
First, the following new paragraph will be added after paragraph
(c)(2): ``(3) Upon imposition of a compliance action listed in
paragraphs (b)(2)(iv) through (b)(2)(vii) of this section, OPM must
notify the State Insurance Commissioner(s) and Exchange officials in
the State or States in which the compliance action is effective.''
Second, pursuant to a comment on subpart D of this regulation, we
are inserting language in paragraph (d) of this section to add clarity
and to conform to the wording of Sec. 800.306(c), which sets forth a
similar notice requirement. The revised paragraph (d) will read as
follows: ``If OPM terminates an MSPP issuer's MSPP contract with OPM,
or OPM withdraws the MSPP issuer's certification to offer the MSP on an
Exchange, the MSPP issuer must comply with any requirements regarding
the termination of a plan that are applicable to a QHP offered on an
Exchange on which the MSP was offered, including a requirement to
provide advance written notice of termination to enrollees. If an
Exchange does not have requirements about advance written notice of
termination to enrollees, the MSPP issuer must inform current MSP
enrollees in writing of the nonrenewal of the MSP no later than 90 days
prior to termination of coverage, unless OPM determines that good cause
justifies less than 90 days' notice.''
Reconsideration of Compliance Actions (Sec. 800.405)
In proposed Sec. 800.405, we set forth the right of an MSPP issuer
to request reconsideration of the imposition of certain compliance
actions, the form and manner of such a request, and OPM's notice to the
issuer of a decision upon reconsideration. One commenter specifically
addressed this section, recommending that OPM notify States of requests
for reconsideration under this section. As noted above, we intend to
communicate extensively with States and Exchanges to ensure that MSPs
meet appropriate standards. No change is needed in the wording of
proposed Sec. 800.405; therefore, we are adopting it as final, with no
changes.
Subpart F--Appeals by Enrollees for Denials of Claims for Payment or
Service
In subpart F, we proposed a process by which MSP enrollees (and
individuals acting on behalf of enrollees) could seek an internal
appeal and external review of an adverse benefit determination. The
proposed subpart included sections on general requirements, MSPP issuer
internal claims and appeals processes, MSPP issuer internal claims and
appeals timeframes and notice of determination, external review, and
judicial review. The proposed regulation adopted the standards and
timeframes established under section 2719 of the PHS Act, and
[[Page 15583]]
will be administratively similar to the disputed claims process
employed within the FEHBP. By adopting the standards and timeframes
applicable to health insurance issuers under the PHS Act, we proposed
to provide MSP enrollees with comparable processes to those that will
apply to QHPs and other coverage. In particular, the MSPP external
review process will include binding final decisions by independent
review organizations (IRO) on enrollee disputes that involve medical
judgment (including, but not limited to, those based on medical
necessity, appropriateness, health care setting, level of care, or
effectiveness of a covered benefit). The preamble to our proposed rule
noted that we intend to issue further guidance explaining the details
of these processes.
As indicated in the proposed rule, OPM has considerable experience
in resolving disputed claims pursuant to OPM's statutory authority
under 5 U.S.C. 8902(j). Claims disputed by FEHBP enrollees, generally
governed by 5 CFR 890.105, are first submitted to FEHBP carriers for an
internal level of reconsideration, and FEHBP carriers are required to
comply with the same timeframes that are contained in section 2719 of
the PHS Act. OPM then externally reviews any FEHBP carrier
reconsideration decisions that enrollees submit for OPM's review--
including decisions related to medical judgment, as well as decision
related to interpretation of contract coverage. This process is central
to OPM's contractual oversight of FEHBP carriers, allowing OPM to
determine whether the health plan's daily operations are functioning
appropriately and whether the plan's benefits are meeting enrollees'
needs, which informs the following benefit negotiation cycle. OPM
reviews claims efficiently; in 2012, 97 percent of all FEHB disputed
claims reviewed by OPM were resolved by OPM within 60 days of being
received.
Accordingly, in addition to engaging an independent review
organization for final, binding decisions on MSPP claims disputes
involving medical judgments, we have designed the external review
process for the MSPP to accommodate final, binding decisions by OPM on
claims disputes involving interpretation of contract coverage that does
not involve medical judgments.
Commenters on this subpart included States, Exchanges, State
associations, consumer groups, provider groups, pharmaceutical
companies, and plan and issuer groups. Several comments were generally
supportive of the proposed approach, whereas some commenters generally
preferred specific compliance with each separate State process in each
State. Some commenters expressed support for the adoption of the
standards and timeframes applicable under section 2719 of the PHS Act.
A few commenters recommended specific changes. Below, we address first
the general comments on the approach proposed in this subpart, followed
by the specific content of each section of the final regulation.
Comments: Some commenters suggested that consumers would be
confused by OPM's approach, noting that MSPs in some States would seek
an internal appeal or external review by following a different process
than a QHP on the same Exchange. A few commenters recommended that
notices to enrollees include contact information for Consumer
Assistance Programs (CAPs) or Ombudsman offices available to assist
consumers in filing appeals.
Response: We believe the proposed process adequately addresses the
potential for confusion in several ways. First, MSP issuers must comply
with the internal claims and appeals process under 45 CFR 147.136(b).
Regarding external review, MSP enrollees would send any request for
external review, whether of a determination based on medical judgment
or otherwise, to OPM. Some processes may call for resolution of medical
judgment determinations separately from, for example, determinations of
whether a benefit is covered under a plan. OPM plans to ensure that
this process will be explained clearly in plan documents and enrollee
notices. Second, the process will be administratively operated based on
the existing disputed claims process under the FEHBP. We have operated
this process for more than 35 years across the country, alongside
health coverage that has been subject to different appeals processes,
(for example, separate processes applicable to ERISA plans, commercial
insurance products, non-Federal governmental plans, or church plans).
OPM has nevertheless guided consumers through the disputed claims
process. Finally, we will ensure that notices to enrollees are
accessible and meet the standards established under section 2719 of the
PHS Act and its implementing regulations.
We agree that notices should include contact information for CAPs
and Ombudsman offices. Proposed Sec. Sec. 800.502 and 800.503 state
that MSPP issuers must comply with 45 CFR 147.136(b), which includes
the following provision at Sec. 147.136(b)(2)(ii)(E)(4): issuers
``must disclose the availability of, and contact information for, any
applicable office of health insurance consumer assistance or ombudsman
established under PHS Act section 2793 to assist individuals with the
internal claims and appeals and external review processes.''
Comments: Some commenters objected to the proposed process in
general, preferring instead that MSP enrollees be limited to the
processes available in their State. A few of those commenters suggested
that the proposed approach may trigger the ``level playing field''
provision at section 1324 of the Affordable Care Act, as discussed
under Sec. 800.115 of this regulation.
Response: As noted in the preamble to the proposed rule, our
primary objectives in establishing the internal appeals and external
review processes are to ensure that (1) enrollees have adequate access
to review of adverse benefit determinations and (2) OPM collects the
information necessary for the enforcement of MSPP contracts and
implementation of the program. We consider both objectives integral to
the implementation of the MSPP, and therefore required under section
1334 of the Affordable Care Act.
We have addressed the applicability of the ``level playing field''
provision in our responses to comments relating to Sec. 800.115 of
this regulation. As explained in that discussion, our approach to
external appeals will not trigger the level playing field provision
because MSPP issuers will be subject to the same rules as other
issuers: Section 2719 of the PHS Act and its implementing regulations.
Comments: A few commenters recommended that OPM require MSPP
issuers to comply with our proposed process unless a State's process is
more protective, in which case the more protective State provisions
would take effect for MSP enrollees.
Response: Our proposed process protects consumers by allowing us to
ensure that all MSP enrollees are able to seek review of a broad range
of determinations, and that requests for external review are resolved
consistently across the States. Although States' appeals processes, in
many cases, offer a different approach to consumer protection, we
believe that our processes provide a comparable or greater degree of
protection, which would apply uniformly across the States for MSP
enrollees.
Comments: A few commenters noted that State regulatory agencies
often use external review as a means of ascertaining information
regarding compliance with laws and regulations, and recommended that we
therefore decline to establish a process that would preclude States'
collection of such
[[Page 15584]]
information. Of those commenters, two suggested that States provide OPM
with data and information to use for the MSPP, and one requested that
OPM develop a process to share information with States and Exchanges to
facilitate enforcement of State laws and standards.
Response: As noted above, OPM intends to use these processes to
monitor and enforce MSPP contracts. We consider our ability to resolve
disputes arising under MSPP contracts integral to our implementation of
this program. However, we recognize that external review data and
information may also be important to State regulatory agencies and
Exchanges, and we intend to share information collected through this
process, to the extent that it is legally and operationally feasible,
with States and Exchanges. We look forward to working in collaboration
with States and Exchanges to ensure that the appropriate information is
shared seamlessly.
General Requirements (Sec. 800.501)
In this section, we set forth definitions, and provide that an MSP
enrollee or a person acting on behalf of an MSP enrollee may seek
review of an adverse determination under this program. We are adopting
proposed Sec. 800.501 as final, with no changes.
MSPP Issuer Internal Claims and Appeals Processes (Sec. 800.502) and
MSPP Issuer Internal Claims and Appeals Timeframes and Notice of
Determination (Sec. 800.503)
In Sec. 800.502, we provided that an MSPP issuer must comply with
internal claims and appeals processes applicable under 45 CFR
147.136(b). In Sec. 800.503, we provide that an MSPP issuer must
comply with notice requirements under 45 CFR 147.136(b) and (e) upon
rendering a determination on a claim under Sec. 800.502. We are not
making any substantive changes in these sections; however, because they
are so closely related, we have decided to combine Sec. Sec. 800.502
and 800.503 into a single section numbered 800.502, with paragraph (a)
of Sec. 800.502 containing the content of proposed Sec. 800.502, and
paragraph (b) of Sec. 800.502 containing the content of proposed Sec.
800.503.
External Review (Sec. 800.504)
In Sec. 800.504, we proposed an external review process under
which OPM would conduct external review of adverse benefit
determinations under the MSPP, enrollees would receive notices pursuant
to 45 CFR 147.136(e), and MSPP issuers would be required to pay a claim
or provide a service pursuant to a final decision by OPM or an IRO. In
the proposed rule, we referred to the State external review process
under standards in paragraph (c)(2) of the appeals regulation, 45 CFR
147.136(c)(2). The standards outlined in paragraph (c)(2), however,
expressly apply only to a State external review process, and would be
inconsistent with the national approach OPM was proposing. OPM's
national approach more appropriately falls under 45 CFR 147.136(d). We
therefore wish to clarify that we intended the State external review
standards in paragraph (c)(2) to serve as a model for the consumer
protections that OPM would incorporate into its proposed external
review process. Accordingly, the change in citation from 45 CFR
147.136(c)(2) to 45 CFR 147.136(d) has been made.
Judicial Review (Sec. 800.505)
In proposed Sec. 800.505, we provided that OPM's written decision
pursuant to completed external review of an adverse benefit
determination would constitute final agency action under the
Administrative Procedure Act, and that review of such a decision in the
appropriate U.S. district court would be limited to the record that was
before OPM when it made its decision. We are adopting proposed Sec.
800.505 as final, with one change, and renumbering it as Sec. 800.504.
Although OPM will conduct external review under the MSPP, final
decisions on adverse benefit determinations related to medical judgment
will be made by IROs, in accordance with section 2719 of the PHS Act.
Decisions made by IROs will be final, and OPM will not be responsible
for their approval. Such decisions therefore cannot be considered final
agency action. The regulation will provide that a decision by an IRO on
external review of an adverse benefit determination related to medical
judgment will not be considered final agency action.
Subpart G--Miscellaneous
Reservation of Authority (Sec. 800.601)
We received no comment on this section of the proposed rule, which
simply provides that OPM reserves the right to implement and supplement
its regulations with written operational guidelines. Therefore, we are
adopting this section as final, with no changes.
Consumer Choice With Respect to Certain Services (Sec. 800.602)
Section 800.602 of the proposed rule requires that at least one MSP
on each Exchange not offer services described at section
1303(b)(1)(B)(i) of the Affordable Care Act. Further, MSPs in States
that prohibit these services must comply with State law.
Comments: Several commenters expressed concern that OPM is
proposing to preempt State law regarding coverage of services described
in section 1303(b)(1)(B)(i) of the Affordable Care Act. Some commenters
expressed a preference that at least one MSP in each Exchange be
required to provide coverage for these services. In particular, there
was concern that, since FEHBP plans do not generally cover services
described at section 1303(b)(1)(B)(i), the FEHBP benchmark plan would
exclude these services for an MSP. One commenter was concerned that
requiring enrollees to make separate payments for these services would
be burdensome.
Response: OPM is complying with section 1334(a)(6) of the
Affordable Care Act, which directs that at least one of the MSPs in a
State not offer services described in section 1303(b)(1)(B)(i). If an
MSP is offered in a State that requires coverage of the services
described in section 1303(b)(1)(B)(i), OPM will discuss options for
compliance with State and Federal laws in contract negotiations with
MSPP applicants. Although an FEHBP benchmark would not include services
described in section 1303(b)(1)(B)(i), MSPP issuers can include
services permitted by law as long as the EHB benefits are substantially
equal. OPM will require MSPs to comply with HHS rules about segregation
of funds as described in 45 CFR part 156.
We are adopting as final proposed subpart G, with a technical
correction to Sec. 800.602, which included an incorrect reference to
the Affordable Care Act provision describing the services in section
1303(b)(1)(B)(i).
Executive Orders 13563 and 12866; Regulatory Review
OPM has examined the impact of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993) and
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 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). A
regulatory impact analysis must be prepared for major rules with
economically significant effects ($100 million or more in any one year,
[[Page 15585]]
adjusted for inflation). Section 3(f) of Executive Order 12866 defines
a ``significant regulatory action'' as an action that is likely to
result in a rule that may:
(1) Have an annual effect on the economy of $100 million or more in
any one year or adversely affect in a material way a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal government or communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impacts of entitlement grants,
user fees, or loan programs, or the rights and obligations of
recipients thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
Executive Order 12866.
The economic impact of this rule may exceed the $100 million
threshold for at least one year; we therefore assess costs and benefits
as required by the Executive order.
This rule gives health insurance issuers the opportunity to
contract with OPM to offer a product on the Affordable Insurance
Exchanges, but does not require those issuers to outlay funds. In 2013,
the Congressional Budget Office (CBO) and the Joint Committee on
Taxation (JCT) estimated the effects of the Affordable Care Act on
nationwide insurance enrollment and on the Federal budget.\5\ CBO and
JCT estimated that from 2016 on, between 24 million and 27 million
people will receive individually purchased coverage through the
Exchanges, and another 3-4 million people will receive employment-based
coverage through the Exchanges. In the preamble to the proposed rule,
we noted that OPM lacks the information necessary to make assumptions
about the potential enrollment penetration for MSPs on the Exchanges.
We sought comments on the number of States where MSPs will participate
and the influence of current market dynamics on enrollment in MSPs, but
received none. As we have not yet begun contract negotiations or closed
the application process, we do not have any more information on
projected enrollment than we had at the time of the proposed rule. As
such, this analysis will continue to largely reflect qualitative
analysis, with quantitative analysis where possible.
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\5\ Congressional Budget Office, Effects of the Affordable Care
Act on Health Insurance Coverage--February 2013 Baseline, available
at http://www.cbo.gov/publication/43900 (February 5, 2013).
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One primary benefit of health insurance coverage would be an
increase in longevity or health for newly-enrolled individuals.
Improved access to health care services has been shown to lead to
higher use of preventive services and health improvements, such as
reduced hypertension, improved vision and better self-reported health
status, as well as better clinical outcomes and lower
mortality.6 7
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\6\ Brook, Robert H., John E. Ware, William H. Rogers, Emmett B.
Keeler, Allyson Ross Davies, Cathy D. Sherbourne, George A.
Goldberg, Kathleen N. Lohr, Patricia Camp and Joseph P. Newhouse.
The Effect of Coinsurance on the Health of Adults: Results from the
RAND Health Insurance Experiment. Santa Monica, CA: RAND
Corporation, 1984. Finkelstein, A. et al. ``The Oregon Health
Insurance Experiment: Evidence from the First Year.'' NBER Working
Paper No. 17190, July 2011. Doyle, J.J. ``Health Insurance,
Treatment and Outcomes: Using Auto Accidents and Health Shocks.''
National Bureau of Economic Research. NBER Working Paper No. 11099,
February 2005.
\7\ See the regulatory impact analysis developed by HHS for the
Exchange Establishment final rule, available at http://cciio.cms.gov
under ``Regulations and Guidance'', for a comprehensive overview of
the empirical evidence on the benefits of enhanced availability of
quality, affordable health insurance, which to great extent applies
to the MSPP program and this proposed rule as well.
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Additional benefits would be generated for newly-enrolled
individuals in the form of improved financial security. There is
evidence that bankruptcy filings, for instance, decrease in response to
increases in Medicaid eligibility.\8\ Furthermore, a 2011 analysis by
the Office of the Assistant Secretary for Planning and Evaluation
(ASPE) found that most of the uninsured were unable to afford a single
hospitalization, because 90 percent of the uninsured reported having
total financial assets below $13,000.\9\ A related benefit would be
generated by increased access to non-employment-based health insurance,
which can give individuals greater flexibility to take positions that
better match their skills or interests.
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\8\ Gross, T., Notowidigdo, M. ``Health Insurance and the
Consumer Bankruptcy Decision: Evidence from Medicaid Expansions.''
Journal of Public Economics 95 (7-8): 2011.
\9\ Assistant Secretary for Planning and Evaluation The Value of
Health Insurance: Few of the Uninsured Have Adequate Resources to
Pay Potential Hospital Bills: 2011. Washington, DC: U.S. Department
of Health and Human Services.
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Expansion of health insurance coverage leads to many benefits, such
as improved access to health care and improved financial security for
the newly insured. However, insurance coverage can lead to increased
utilization of health services for individuals who become newly
insured. While a portion of this increased utilization may be
economically inefficient, studies that estimated the effects of
Medicare found that the cost of this inefficiency is likely more than
offset by the benefit of risk reduction.10 11
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\10\ Finkelstein, A, McKnight R: ``What Did Medicare Do? The
Initial Impact of Medicare on Mortality and Out Of Pocket Medical
Spending '' Journal of Public Economics 2008, 92:1644-1668.
\11\ 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.
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Administrative costs of the rule would be generated both within OPM
and by issuers deciding to offer MSPs. The costs that MSPP issuers may
incur are the same as those of QHPs and, as stated in 45 CFR part 157,
will include accreditation, network adequacy standards, and quality
improvement strategy reporting. The costs associated with MSP
certification offset the costs that issuers would face were they to be
certified by the State, or HHS on behalf of the State, to offer QHPs
through the Exchange.
Finally, some of the most notable effects of Exchanges in general,
and MSPs in particular, may not be net social costs or benefits, but
would instead be transfers between members of society--in particular,
decreases in uncompensated care.
OPM lacks data to quantify most of these benefits, costs and
transfers. Perhaps most notably, OPM cannot isolate the effects of MSPs
from forecasts of the overall effects of the Affordable Care Act
coverage provisions. We requested comments on our cost-benefit
analysis, but received no comments.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35; see 5
CFR part 1320) requires that OMB approve all collections of information
by a Federal agency from the public before they can be implemented.
Respondents are not required to respond to any collection of
information unless it displays a current valid OMB control number. OPM
will have several collections from MSPP issuers or applicants seeking
to become MSPP issuers, but we have determined that they are exempt
from the requirements of the Paperwork Reduction Act. For example, we
seek to collect information in connection with the MSPP application
process and reporting requirements under Sec. 800.112. We are also
requiring issuers to authorize accrediting entities to send
documentation to OPM under Sec. 800.111. We are setting up a process
under
[[Page 15586]]
Sec. 800.116 for States to request that OPM reconsider a standard
applicable to MSPs or MSPP issuers that does not comply with that
State's laws for QHPs. Under Sec. 800.503, MSPP issuers are directed
to provide certain written notices, which are third-party disclosures
under the Paperwork Reduction Act. These collections would generally be
considered reporting requirements under the Paperwork Reduction Act.
Moreover, based on responses to the RFI, subsequent conversations with
both responding health insurance issuers and other health insurance
issuers subsequent to the RFI, and other practical considerations, OPM
expects fewer than ten responsible entities to respond to all of the
collections noted above. For that reason alone, the collections are
exempt from the Paperwork Reduction Act under 44 U.S.C. 3502(3)(A)(i).
There may also be other reasons why these collections are exempt from
these requirements. We sought comments on these assumptions but
received none.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) \12\ requires agencies to
prepare an initial regulatory flexibility analysis to describe the
impact of the final rule on small entities, unless the head of the
agency can certify that the rule would not have a significant economic
impact on a substantial number of small entities. The RFA 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.''
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\12\ 5 U.S.C. 601 et seq.
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The RFA requires agencies to analyze options for regulatory relief
of small businesses, if a rule has a significant impact on a
substantial number of small entities. For purposes of the RFA, small
entities include small businesses, small non-profit organizations, and
small government jurisdictions. Small businesses are those with sizes
below thresholds established by the SBA. With respect to health
insurers, the SBA size standard is $7.0 million in annual receipts.\13\
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\13\ According to the SBA size standards, entities with average
annual receipts of $7 million or less would be considered small
entities for North American Industry Classification System (NAICS)
Code 524114 (Direct Health and Medical Insurance Carriers) (for more
information, see ``Table of Size Standards Matched To North American
Industry Classification System Codes,'' effective March 26, 2012,
U.S. Small Business Administration, available at http://www.sba.gov).
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OPM does not think that small businesses with annual receipts less
than $7.0 million would likely have sufficient economies of scale to
become MSPP issuers or be part of a group of MSPP issuers. Similarly,
while the Director must enter into an MSPP contract with at least one
non-profit entity, OPM does not think that small non-profit
organizations would likely have sufficient economies of scale to become
MSPP issuers or be part of a group of MSPP issuers.
OPM does not think that these regulations will have a significant
economic impact on a substantial number of small businesses with annual
receipts less than $7.0 million, because there are only a few health
insurance issuers that could be considered small businesses. Moreover,
while the Director must enter into an MSPP contract with at least one
non-profit entity, OPM does not think that these regulations will have
a significant economic impact on a substantial number of small non-
profit organizations, because few health insurance issuers are small
non-profit organizations.
OPM incorporates by reference previous analysis by HHS, which
provides some insight into the number of health insurance issuers that
could be small entities. Particularly, as discussed by HHS in the
Medical Loss Ratio interim final rule (75 FR 74918), few, if any,
issuers are small enough to fall below the size thresholds for small
business established by the SBA. In that rule, HHS used a data set
created from 2009 NAIC Health and Life Blank annual financial statement
data to develop an updated estimate of the number of small entities
that offer comprehensive major medical coverage in the individual and
group markets. For purposes of that analysis, HHS used total Accident
and Health earned premiums as a proxy for annual receipts. HHS
estimated that there are 28 small entities with less than $7 million in
accident and health earned premiums offering individual or group
comprehensive major medical coverage. OPM concurs with this HHS
analysis, and, thus, does not think that these regulations will have a
significant economic impact on a substantial number of small entities.
Based on the foregoing, OPM is not preparing an analysis for the
RFA because OPM has determined, and the Director certifies, that these
regulations will not have a significant economic impact on a
substantial number of small entities.
Unfunded Mandates
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) \14\
requires that agencies assess anticipated costs and benefits and take
certain other actions before issuing a final rule that includes any
Federal mandate that may result in expenditures in any one year by a
State, local, or tribal government, in the aggregate, or by the private
sector, of $100 million in 1995 dollars, updated annually for
inflation. In 2013, that threshold is approximately $150 million. UMRA
does not address the total cost of a rule. Rather, it focuses on
certain categories of costs, 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.
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\14\ Public Law 104-4.
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These regulations do not place any Federal mandates on State,
local, or tribal governments, or on the private sector. This final rule
would establish the MSPP, a voluntary Federal program that provides
health insurance issuers the opportunity to contract with OPM to offer
MSPs on the Exchanges. Section 3 of UMRA excludes from the definition
of ``Federal mandate'' duties that arise from participation in a
voluntary Federal program. Accordingly, no analysis under UMRA is
required.
Federalism
Executive Order 13132 outlines fundamental principles of
federalism, and requires the adherence to specific criteria by Federal
agencies in the process of their formulation and implementation of
policies that have ``substantial direct effects'' on the States, the
relationship between the national government and States, or on the
distribution of power and responsibilities among the various levels of
government. Federal agencies promulgating regulations that have these
federalism implications must consult with State and local officials,
and describe the extent of their consultation and the nature of the
concerns of State and local officials in the preamble to the
regulation.
These regulations have federalism implications, because they have
direct effects on the States, the relationship between the national
government and States, or on the distribution of power
[[Page 15587]]
and responsibilities among various levels of government. In particular,
under Sec. 800.114, OPM may deem a State law to be inconsistent with
section 1334 of the Affordable Care Act, and, thus, inapplicable to an
MSP or MSPP issuer. However, in OPM's view, the federalism implications
of these regulations are substantially mitigated because OPM expects
that the vast majority of States have laws that are consistent with
section 1334 of the Affordable Care Act. Furthermore, Sec. 800.116
sets forth a process for dispute resolution if a State seeks to
challenge OPM's determination that a State law is inapplicable to an
MSP or MSPP issuer.
We received one comment that OPM is not in compliance with
Executive Order 13132, because we do not defer to more consumer-
protective State standards. However, we respectfully disagree because,
as noted throughout this rule, OPM defers to more consumer-protective
State standards. Moreover, in compliance with the requirement of
Executive Order 13132 that agencies examine closely any policies that
may have federalism implications or limit the policy-making discretion
of the States, OPM has engaged in efforts to consult with and work
cooperatively with affected State and local officials, including
attending meetings of the NAIC and consulting with State insurance
officials on an individual basis. OPM expects to act in a similar
fashion in enforcing the Affordable Care Act requirements. Throughout
the process of developing these final regulations, OPM has attempted to
balance the States' interests in regulating health insurance issuers,
and the statutory requirement to provide two MSPs in all Exchanges in
the 50 States and the District of Columbia. By doing so, it is OPM's
view that it has complied with the requirements of Executive Order
13132.
Pursuant to the requirements set forth in section 8(a) of Executive
Order 13132, and by the signature affixed to these regulations, OPM
certifies that it has complied with the requirements of Executive Order
13132 for the attached regulations in a meaningful and timely manner.
Congressional Review Act
This final rule is subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801, et seq.), which specifies that before a rule can
take effect, the Federal agency promulgating the rule must submit to
each House of Congress and to the Comptroller General a report
containing a copy of the rule along with other specified information.
In accordance with this requirement, OPM has transmitted this rule to
Congress and the Comptroller General for review.
List of Subjects in 5 CFR Part 800
Administrative practice and procedure, Health facilities, Health
insurance, Health professions, Reporting and recordkeeping
requirements.
U.S. Office of Personnel Management.
John Berry,
Director.
Accordingly, the U.S. Office of Personnel Management is adding part
800 to title 45, chapter VIII, Code of Federal Regulations, as follows:
PART 800--MULTI-STATE PLAN PROGRAM
Subpart A--General Provisions and Definitions
Sec.
800.10 Basis and scope.
800.20 Definitions.
Subpart B--Multi-State Plan Program Issuer Requirements
800.101 General requirements.
800.102 Compliance with Federal law.
800.103 Authority to contract with issuers.
800.104 Phased expansion.
800.105 Benefits.
800.106 Cost-sharing limits, advance payments of premium tax
credits, and cost-sharing reductions.
800.107 Levels of coverage.
800.108 Assessments and user fees.
800.109 Network adequacy.
800.110 Service area.
800.111 Accreditation requirement.
800.112 Reporting requirements.
800.113 Benefit plan material or information.
800.114 Compliance with applicable State law.
800.115 Level playing field.
800.116 Process for dispute resolution.
Subpart C--Premiums Rating Factors, Medical Loss Ratios, and Risk
Adjustment
800.201 General requirements.
800.202 Rating factors.
800.203 Medical loss ratio.
800.204 Reinsurance, risk corridors, and risk adjustment.
Subpart D--Application and Contracting Procedures
800.301 Application process.
800.302 Review of applications.
800.303 MSPP contracting.
800.304 Term of the contract.
800.305 Contract renewal process.
800.306 Nonrenewal.
Subpart E--Compliance
800.401 Contract performance.
800.402 Contract quality assurance.
800.403 Fraud and abuse.
800.404 Compliance actions.
800.405 Reconsideration of compliance actions.
Subpart F--Appeals by Enrollees of Denials of Claims for Payment or
Service
800.501 General requirements.
800.502 MSPP issuer internal claims and appeals.
800.503 External review.
800.504 Judicial review.
Subpart G--Miscellaneous
800.601 Reservation of authority.
800.602 Consumer choice with respect to certain services.
Authority: Sec. 1334 of Pub. L. 111-148, 124 Stat. 119; Pub. L.
111-152, 124 Stat. 1029.
Subpart A--General Provisions and Definitions
Sec. 800.10 Basis and scope.
(a) Basis. This part is based on the following sections of title I
of the Affordable Care Act:
1001. Amendments to the Public Health Service Act.
1302. Essential Health Benefits Requirements.
1311. Affordable Choices of Health Benefit Plans.
1324. Level Playing Field.
1334. Multi-State Plans.
1341. Transitional Reinsurance Program for Individual Market in
Each State.
1342. Establishment of Risk Corridors for Plans in Individual and
Small Group Markets.
1343. Risk Adjustment.
(b) Scope. This part establishes standards for health insurance
issuers to contract with the United States Office of Personnel
Management (OPM) to offer multi-State plans to provide health insurance
coverage on Exchanges for each State. It also establishes standards for
appeal of a decision by OPM affecting the issuer's participation in the
Multi-State Plan Program (MSPP) and standards for an enrollee in a
multi-State plan (MSP) to appeal denials of payment or services by an
MSPP issuer.
Sec. 800.20 Definitions.
For purposes of this part:
Actuarial value (AV) has the meaning given that term in 45 CFR
156.20.
Affordable Care Act means the Patient Protection and Affordable
Care Act (Pub. L. 111-148), as amended by the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152).
Applicant means an issuer or group of issuers that has submitted an
application to OPM to be considered for participation in the Multi-
State Plan Program.
Benefit plan material or information means explanations or
descriptions, whether printed or electronic, that
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describe a health insurance issuer's products. The term does not
include a policy or contract for health insurance coverage.
Cost sharing has the meaning given that term in 45 CFR 155.20.
Director means the Director of the United States Office of
Personnel Management.
EHB-benchmark plan has the meaning given that term in 45 CFR
156.20.
Exchange means a governmental agency or non-profit entity that
meets the applicable requirements of 45 CFR part 155 and makes
qualified health plans (QHPs) and MSPs available to qualified
individuals and qualified employers. Unless otherwise identified, this
term refers to State Exchanges, regional Exchanges, subsidiary
Exchanges, and a Federally-facilitated Exchange.
Federal Employees Health Benefits Program or FEHBP means the health
benefits program administered by the United States Office of Personnel
Management pursuant to chapter 89 of title 5, United States Code.
Group of issuers means:
(1) A group of health insurance issuers who are affiliated either
by common ownership and control or by common use of a nationally
licensed service mark (as defined in this paragraph); or
(2) An affiliation of health insurance issuers and an entity that
is not an issuer but that owns a nationally licensed service mark (as
defined in this paragraph).
Health insurance coverage means benefits consisting of medical care
(provided directly, through insurance or reimbursement, or otherwise)
under any hospital or medical service policy or certificate, hospital
or medical service plan contract, or HMO contract offered by a health
insurance issuer. Health insurance coverage includes group health
insurance coverage, individual health insurance coverage, and short-
term, limited duration insurance.
Health insurance issuer or issuer means an insurance company,
insurance service, or insurance organization (including an HMO) that is
required to be licensed to engage in the business of insurance in a
State and that is subject to State law that regulates insurance (within
the meaning of section 514(b)(2) of the Employee Retirement Income
Security Act (ERISA)). This term does not include a group health plan
as defined in 45 CFR 146.145(a).
HHS means the United States Department of Health and Human
Services.
Level of coverage means one of four standardized actuarial values
of plan coverage as defined by section 1302(d)(1) of the Affordable
Care Act.
Licensure means the authorization obtained from the appropriate
State official or regulatory authority to offer health insurance
coverage in the State.
Multi-State Plan or MSP means a health plan that is offered under a
contract between OPM and the MSPP issuer pursuant to section 1334 of
the Affordable Care Act and that meets the requirements of this part.
Multi-State Plan Program or MSPP means the program administered by
OPM pursuant to section 1334 of the Affordable Care Act.
Multi-State Plan Program issuer or MSPP issuer means a health
insurance issuer or group of issuers (as defined in this section) that
has a contract with OPM to offer health plans pursuant to section 1334
of the Affordable Care Act and meets the requirements of this part.
Nationally licensed service mark means a word, name, symbol, or
device, or any combination thereof, that an issuer or group of issuers
uses consistently nationwide to identify itself.
Non-profit entity means:
(1) An organization that is incorporated under State law as a non-
profit entity and licensed under State law as a health insurance
issuer; or
(2) A group of health insurance issuers licensed under State law, a
substantial portion of which are incorporated under State law as non-
profit entities.
OPM means the United States Office of Personnel Management.
Percentage of total allowed cost of benefits has the meaning given
that term in 45 CFR 156.20.
Plan year means a consecutive 12-month period during which a health
plan provides coverage for health benefits. A plan year may be a
calendar year or otherwise.
Prompt payment means a requirement imposed on a health insurance
issuer to pay a provider or enrollee for a claimed benefit or service
within a defined time period, including the penalty or consequence
imposed on the issuer for failure to meet the requirement.
Qualified Health Plan or QHP means a health plan that has in effect
a certification that it meets the standards described in subpart C of
45 CFR part 156 issued or recognized by each Exchange through which
such plan is offered pursuant to the process described in subpart K of
45 CFR part 155.
Rating means the process, including rating factors, numbers,
formulas, methodologies, and actuarial assumptions, used to set
premiums for a health plan.
Secretary means the Secretary of the Department of Health and Human
Services.
SHOP means a Small Business Health Options Program operated by an
Exchange through which a qualified employer can provide its employees
and their dependents with access to one or more qualified health plans
(QHPs).
Silver plan variation has the meaning given that term in 45 CFR
156.400.
Small employer means, in connection with a group health plan with
respect to a calendar year and a plan year, an employer who employed an
average of at least one but not more than 100 employees on business
days during the preceding calendar year and who employs at least one
employee on the first day of the plan year. In the case of plan years
beginning before January 1, 2016, a State may elect to define small
employer by substituting ``50 employees'' for ``100 employees.''
Standard plan has the meaning given that term in 45 CFR 156.400.
State means each of the 50 States or the District of Columbia.
State Insurance Commissioner means the commissioner or other chief
insurance regulatory official of a State.
Subpart B--Multi-State Plan Program Issuer Requirements
Sec. 800.101 General requirements.
An MSPP issuer must:
(a) Licensed. Be licensed as a health insurance issuer in each
State where it offers health insurance coverage;
(b) Contract with OPM. Have a contract with OPM pursuant to this
part;
(c) Required levels of coverage. Offer levels of coverage as
required by Sec. 800.107;
(d) Eligibility and enrollment. MSPs and MSPP issuers must meet the
same requirements for eligibility, enrollment, and termination of
coverage as those that apply to QHPs and QHP issuers pursuant to 45 CFR
part 155, subparts D, E, and H, and 45 CFR 156.250, 156.260, 156.265,
156.270, and 156.285;
(e) Applicable to each MSP. Ensure that each of its MSPs meets the
requirements of this part;
(f) Compliance. Comply with all standards set forth in this part;
(g) OPM direction and other legal requirements. Timely comply with
OPM instructions and directions and with other applicable law; and
(h) Other requirements. Meet such other requirements as determined
appropriate by OPM, in consultation with HHS, pursuant to section
1334(b)(4) of the Affordable Care Act.
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(i) Non-discrimination. MSPs and MSPP issuers must comply with
applicable Federal and State non-discrimination laws, including the
standards set forth in 45 CFR 156.125 and 156.200(e).
Sec. 800.102 Compliance with Federal law.
(a) Public Health Service Act. As a condition of participation in
the MSPP, an MSPP issuer must comply with applicable provisions of part
A of title XXVII of the PHS Act. Compliance shall be determined by the
Director.
(b) Affordable Care Act. As a condition of participation in the
MSPP, an MSPP issuer must comply with applicable provisions of title I
of the Affordable Care Act. Compliance shall be determined by the
Director.
Sec. 800.103 Authority to contract with issuers.
(a) General. OPM may enter into contracts with health insurance
issuers to offer at least two MSPs on Exchanges and SHOPs in each
State, without regard to any statutes that would otherwise require
competitive bidding.
(b) Non-profit entity. In entering into contracts with health
insurance issuers to offer MSPs, OPM will enter into a contract with at
least one non-profit entity as defined in Sec. 800.20 of this part.
(c) Group of issuers. Any contract to offer an MSP may be with a
group of issuers as defined in Sec. 800.20.
(d) Individual and group coverage. The contracts will provide for
individual health insurance coverage and for group health insurance
coverage for small employers.
Sec. 800.104 Phased expansion.
(a) Phase-in. OPM may enter into a contract with a health insurance
issuer to offer an MSP if the health insurance issuer agrees that:
(1) With respect to the first year for which the health insurance
issuer offers an MSP, the health insurance issuer will offer the MSP in
at least 60 percent of the States;
(2) With respect to the second such year, the health insurance
issuer will offer the MSP in at least 70 percent of the States;
(3) With respect to the third such year, the health insurance
issuer will offer the MSP in at least 85 percent of the States; and
(4) With respect to each subsequent year, the health insurance
issuer will offer the MSP in all States.
(b) Partial coverage within a State. OPM may enter into a contract
with an MSPP issuer even if the MSPP issuer's MSPs for a State cover
fewer than all the service areas specified for that State pursuant to
Sec. 800.110. For each State in which the MSPP issuer offers partial
coverage, the MSPP issuer must submit a plan for offering coverage
throughout the State. OPM will monitor the MSPP issuer's progress in
implementing the plan as part of its contract compliance activities
under subpart E of this part.
(c) Participation in SHOPs. (1) An MSPP issuer's participation in
the Federally-facilitated SHOP must be consistent with the requirements
for QHP issuers specified in 45 CFR 156.200(g).
(2) An MSPP issuer must comply with State standards governing
participation in State-based SHOPs, consistent with Sec. 800.114. For
these State-based SHOP standards, OPM retains discretion to allow an
MSPP issuer to phase-in SHOP participation in States pursuant to
section 1334(e) of the Affordable Care Act.
(d) Licensed where offered. OPM may enter into a contract with an
MSPP issuer who is not licensed in every State, provided that the
issuer is licensed in every State where it offers MSP coverage through
any Exchanges in that State and demonstrates to OPM that it is making a
good faith effort to become licensed in every State consistent with the
timeframe in paragraph (a) of this section.
Sec. 800.105 Benefits.
(a) Benefits package. (1) An MSPP issuer must offer a uniform
benefits package, including the essential health benefits (EHB)
described in section 1302 of the Affordable Care Act, for each MSP
within a State.
(2) The benefits package referred to in paragraph (a)(1) of this
section must comply with section 1302 of the Affordable Care Act, as
well as any applicable standards set by OPM or HHS.
(b) Benefits package options. (1) An MSPP issuer must offer a
benefits package, in all States, that is substantially equal to:
(i) The EHB-benchmark plan in each State in which it operates; or
(ii) Any EHB-benchmark plan selected by OPM under paragraph (c) of
this section.
(2) An issuer applying to participate in the MSPP must select one
of the two benefits package options described in paragraph (b)(1) of
this section in its application.
(3) An issuer must comply with any State standards relating to
substitution of benchmark benefits or standard benefit designs.
(c) OPM selection of benchmark plans. (1) The OPM-selected EHB-
benchmark plans are the three largest Federal Employees Health Benefits
Program (FEHBP) plan options, as identified by HHS pursuant to section
1302(b) of the Affordable Care Act, and as supplemented pursuant to
paragraphs (c)(2) through (c)(4) of this section.
(2) Any EHB-benchmark plan selected by OPM under paragraph (c)(1)
of this section lacking coverage of pediatric oral services or
pediatric vision services must be supplemented by the addition of the
entire category of benefits from the largest Federal Employee Dental
and Vision Insurance Program (FEDVIP) dental or vision plan options,
respectively, pursuant to 45 CFR 156.110(b) and section 1302(b) of the
Affordable Care Act.
(3) An MSPP issuer must follow State definitions where the State
chooses to specifically define the habilitative services and devices
category pursuant to 45 CFR 156.110(f). In the case of any State that
chooses not to define this category, if any OPM-selected EHB-benchmark
plan lacks coverage of habilitative services and devices, OPM may
determine what habilitative service and devices are to be included in
that EHB-benchmark plan.
(4) Any EHB-benchmark plan selected by OPM under paragraph (c)(1)
of this section must include, for each State, any State-required
benefits enacted before December 31, 2011, that are included in the
State's EHB-benchmark plan as described in paragraph (b)(1)(i) of this
section, or specific to the market in which the plan is offered.
(d) OPM approval. An MSPP issuer's benefits package, including its
prescription drug list, must be submitted for approval by OPM, which
will review a benefits package proposed by an MSPP issuer and determine
if it is substantially equal to an EHB-benchmark plan described in
paragraph (b)(1) of this section, pursuant to standards set forth by
OPM or HHS, including 45 CFR 156.115, 156.122, and 156.125.
(e) State payments for additional State-required benefits. If a
State requires that benefits in addition to the benchmark package be
offered to MSP enrollees in that State, then pursuant to section
1334(c)(2) of the Affordable Care Act, the State must assume the cost
of such additional benefits by making payments either to the enrollee
or on behalf of the enrollee to the MSPP issuer.
Sec. 800.106 Cost-sharing limits, advance payments of premium tax
credits, and cost-sharing reductions.
(a) Cost-sharing limits. For each MSP it offers, an MSPP issuer
must ensure that the cost-sharing provisions of the
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MSP comply with section 1302(c) of the Affordable Care Act, as well as
any applicable standards set by OPM or HHS.
(b) Advance payments of premium tax credits and cost-sharing
reductions. For each MSP it offers, an MSPP issuer must ensure that an
eligible individual receives the benefit of advance payments of premium
tax credits under section 36B of the Internal Revenue Code and the
cost-sharing reductions under section 1402 of the Affordable Care Act.
An MSPP issuer must also comply with any applicable standards set by
OPM or HHS.
Sec. 800.107 Levels of coverage.
(a) Silver and gold levels of coverage required. An MSPP issuer
must offer at least one MSP at the silver level of coverage and at
least one MSP at the gold level of coverage on each Exchange in which
the issuer is certified to offer an MSP pursuant to a contract with
OPM.
(b) Bronze or platinum metal levels of coverage permitted. Pursuant
to a contract with OPM, an MSPP issuer may offer one or more MSPs at
the bronze level of coverage or the platinum level of coverage, or
both, on any Exchange or SHOP in any State.
(c) Child-only plans. For each level of coverage, the MSPP issuer
must offer a child-only plan at the same level of coverage as any
health insurance coverage offered to individuals who, as of the
beginning of the plan year, have not attained the age of 21.
(d) Plan variations for the reduction or elimination of cost-
sharing. An MSPP issuer must comply with section 1402 of the Affordable
Care Act, as well as any applicable standards set by OPM or HHS.
(e) OPM approval. An MSPP issuer must submit the levels of coverage
plans and plan variations to OPM for review and approval by OPM.
Sec. 800.108 Assessments and user fees.
(a) Discretion to charge assessment and user fees. Beginning in
2015, OPM may require an MSPP issuer to pay an assessment or user fee
as a condition of participating in the MSPP.
(b) Determination of amount. The amount of the assessment or user
fee charged by OPM for a plan year is the amount determined necessary
by OPM to meet the costs of OPM's functions under the Affordable Care
Act for a plan year, including but not limited to such functions as
entering into contracts with, certifying, recertifying, decertifying,
and overseeing MSPs and MSPP issuers for that plan year. The amount of
the assessment or user fee charged by OPM will be offset against the
assessment or user fee amount required by any State-based Exchange or
Federally-facilitated Exchange such that the total of all assessments
and user fees paid by the MSPP issuer for the year for the MSP shall be
no greater than nor less than the amount of the assessment or user fee
paid by QHP issuers in that State-based Exchange or Federally-
facilitated Exchange for that year.
(c) Process for collecting MSPP assessment or user fees. OPM may
require an MSPP issuer to make payment of the MSPP assessment or user
fee amount directly to OPM, and the MSPP issuer will deduct the MSPP
assessment or user fee required under paragraph (a) of this section
from the amount for any State-based Exchange or Federally-facilitated
Exchange and the MSPP issuer would forward the remainder of the payment
to the State or to HHS, as appropriate.
Sec. 800.109 Network adequacy.
(a) General requirement. An MSPP issuer must ensure that the
provider network of each of its MSPs, as available to all enrollees,
meets the following standards:
(1) Maintains a network that is sufficient in number and types of
providers to assure that all services will be accessible without
unreasonable delay;
(2) Is consistent with the network adequacy provisions of section
2702(c) of the Public Health Service Act; and
(3) Includes essential community providers in compliance with 45
CFR 156.235.
(b) Provider directory. An MSPP issuer must make its provider
directory for an MSP available to the Exchange for publication online
pursuant to guidance from the Exchange and to potential enrollees in
hard copy, upon request. In the provider directory, an MSPP issuer must
identify providers that are not accepting new patients.
(c) OPM guidance. OPM will issue guidance containing the criteria
and standards that it will use to determine the adequacy of a provider
network.
Sec. 800.110 Service area.
An MSPP issuer must offer an MSP within one or more service areas
in a State defined by each Exchange pursuant to 45 CFR 155.1055. If an
Exchange permits issuers to define their service areas, an MSPP issuer
must obtain OPM's approval for its proposed service areas. Pursuant to
Sec. 800.104, OPM may enter into a contract with an MSPP issuer even
if the MSPP issuer's MSPs for a State cover fewer than all the service
areas specified for that State. MSPs will follow the same standards for
service areas for QHPs pursuant to 45 CFR 155.1055. As part of its
contract compliance activities under subpart E of this part, OPM will
consult with State regulators and the State Exchange to monitor the
MSPP issuer's progress expanding coverage statewide and will ensure
that MSPs meet QHP requirements in 45 CFR 155.1055(b).
Sec. 800.111 Accreditation requirement.
(a) General requirement. An MSPP issuer must be or become
accredited consistent with the requirements for QHP issuers specified
in section 1311 of the Affordable Care Act and 45 CFR 156.275(a).
(b) Release of survey. An MSPP issuer must authorize the
accrediting entity that accredits the MSPP issuer to release to OPM and
to the Exchange a copy of its most recent accreditation survey,
together with any survey-related information that OPM or an Exchange
may require, such as corrective action plans and summaries of findings.
(c) Timeframe for accreditation. An MSPP issuer that is not
accredited as of the date that it enters into a contract with OPM must
become accredited within the timeframe established by OPM as authorized
by 45 CFR 155.1045.
Sec. 800.112 Reporting requirements.
(a) OPM specification of reporting requirements. OPM will specify
the data and information that must be reported by an MSPP issuer,
including data permitted or required by the Affordable Care Act and
such other data as OPM may determine necessary for the oversight and
administration of the MSPP. OPM will also specify the form, manner,
processes, and frequency for the reporting of data and information. The
Director may require that MSPP issuers submit claims payment and
enrollment data to facilitate OPM's oversight and administration of the
MSPP in a manner similar to the FEHBP.
(b) Quality and quality improvement standards. An MSPP issuer must
comply with any standards required by OPM for reporting quality and
quality improvement activities, including but not limited to
implementation of a quality improvement strategy, disclosure of quality
measures to enrollees and prospective enrollees, reporting of pediatric
quality measures, and implementation of rating and enrollee
satisfaction surveys, which will be similar to standards under section
1311(c)(1)(E), (H), and (I), (c)(3), and (c)(4) of the Affordable Care
Act.
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Sec. 800.113 Benefit plan material or information.
(a) Compliance with Federal and State law. An MSPP issuer must
comply with Federal and State laws relating to benefit plan material or
information, including the provisions of this section and guidance
issued by OPM specifying its standards, process, and timeline for
approval of benefit plan material or information.
(b) General standards for MSP applications and notices. An MSPP
issuer must provide all applications and notices to enrollees in
accordance with the standards described in 45 CFR 155.205(c). OPM may
establish additional standards to meet the needs of MSP enrollees.
(c) Accuracy. An MSPP issuer is responsible for the accuracy of its
benefit plan material or information.
(d) Truthful, not misleading, no material omissions, and plain
language. All benefit plan material or information must be:
(1) Truthful, not misleading, and without material omissions; and
(2) Written in plain language, as defined in section 1311(e)(3)(B)
of the Affordable Care Act.
(e) Uniform explanation of coverage documents and standardized
definitions. An MSPP issuer must comply with the provisions of section
2715 of the PHS Act and regulations issued to implement that section.
(f) OPM review and approval of benefit plan material or
information. OPM may request an MSPP issuer to submit to OPM benefit
plan material or information, as defined in Sec. 800.20. OPM reserves
the right to review and approve benefit plan material or information to
ensure that an MSPP issuer complies with Federal and State laws, and
the standards prescribed by OPM with respect to benefit plan material
or information.
(g) Statement on certification by OPM. An MSPP issuer may include a
statement in its benefit plan material or information that:
(1) OPM has certified the MSP as eligible to be offered on the
Exchange; and
(2) OPM monitors the MSP for compliance with all applicable law.
Sec. 800.114 Compliance with applicable State law.
(a) Compliance with State law. An MSPP issuer must, with respect to
each of its MSPs, generally comply with State law pursuant to section
1334(b)(2) of the Affordable Care Act. However, the MSPs and MSPP
issuers are not subject to State laws that:
(1) Are inconsistent with section 1334 of the Affordable Care Act
or this part;
(2) Prevent the application of a requirement of part A of title
XXVII of the PHS Act; or
(3) Prevent the application of a requirement of title I of the
Affordable Care Act.
(b) Determination of inconsistency. After consultation with the
State and HHS, OPM reserves the right to determine, in its judgment, as
effectuated through an MSPP contract, these regulations, or OPM
guidance, whether the standards set forth in paragraph (a) of this
section are satisfied with respect to particular State laws.
Sec. 800.115 Level playing field.
An MSPP issuer must, with respect to each of its MSPs, meet the
following requirements in order to ensure a level playing field:
(a) Guaranteed renewal. Guarantee that an enrollee can renew
enrollment in an MSP in compliance with sections 2703 and 2742 of the
PHS Act;
(b) Rating. In proposing premiums for OPM approval, use only the
rating factors permitted under section 2701 of the PHS Act and State
law;
(c) Preexisting conditions. Not impose any preexisting condition
exclusion and comply with section 2704 of the PHS Act;
(d) Non-discrimination. Comply with section 2705 of the PHS Act;
(e) Quality improvement and reporting. Comply with all Federal and
State quality improvement and reporting requirements. Quality
improvement and reporting means quality improvement as defined in
section 1311(h) of the Affordable Care Act and quality improvement
plans or strategies required under State law, and quality reporting as
defined in section 2717 of the PHS Act and section 1311(g) of the
Affordable Care Act. Quality improvement also includes activities such
as, but not limited to, implementation of a quality improvement
strategy, disclosure of quality measures to enrollees and prospective
enrollees, and reporting of pediatric quality measures, which will be
similar to standards under section 1311(c)(1)(E), (H), and (I) of the
Affordable Care Act;
(f) Fraud and abuse. Comply with all Federal and State fraud and
abuse laws;
(g) Licensure. Be licensed in every State in which it offers an
MSP;
(h) Solvency and financial requirements. Comply with the solvency
standards set by each State in which it offers an MSP;
(i) Market conduct. Comply with the market conduct standards of
each State in which it offers an MSP;
(j) Prompt payment. Comply with applicable State law in negotiating
the terms of payment in contracts with its providers and in making
payments to claimants and providers;
(k) Appeals and grievances. Comply with Federal standards under
section 2719 of the PHS Act for appeals and grievances relating to
adverse benefit determinations, as described in subpart F of this part;
(l) Privacy and confidentiality. Comply with all Federal and State
privacy and security laws and requirements, including any standards
required by OPM in guidance or contract, which will be similar to the
standards contained in 45 CFR part 162 and applicable State law; and
(m) Benefit plan material or information. Comply with Federal and
State law, including Sec. 800.113.
Sec. 800.116 Process for dispute resolution.
(a) Determinations about applicability of State law under section
1334(b)(2) of the Affordable Care Act. In the event of a dispute about
the applicability to an MSP or MSPP issuer of a State law, the State
may request that OPM reconsider a determination that an MSP or MSPP
issuer is not subject to such State law.
(b) Required demonstration. A State making a request under
paragraph (a) of this section must demonstrate that the State law at
issue:
(1) Is not inconsistent with section 1334 of the Affordable Care
Act or this part;
(2) Does not prevent the application of a requirement of part A of
title XXVII of the PHS Act; and
(3) Does not prevent the application of a requirement of title I of
the Affordable Care Act.
(c) Request for review. The request must be in writing and include
contact information, including the name, telephone number, email
address, and mailing address of the person or persons whom OPM may
contact regarding the request for review. The request must be in such
form, contain such information, and be submitted in such manner and
within such timeframe as OPM may prescribe.
(1) The requester may submit to OPM any relevant information to
support its request.
(2) OPM may obtain additional information relevant to the request
from any source as it may, in its judgment, deem necessary. OPM will
provide the requester with a copy of any additional information it
obtains and provide an opportunity for the requester to respond
(including by submission of additional information or explanation).
(3) OPM will issue a written decision within 60 calendar days after
receiving the written request, or after the due date
[[Page 15592]]
for a response under paragraph (c)(2) of this section, whichever is
later, unless a different timeframe is agreed upon.
(4) OPM's written decision will constitute final agency action that
is subject to review under the Administrative Procedure Act in the
appropriate U.S. district court. Such review is limited to the record
that was before OPM when OPM made its decision.
Subpart C--Premiums, Rating Factors, Medical Loss Ratios, and Risk
Adjustment
Sec. 800.201 General requirements.
(a) Premium negotiation. OPM will negotiate annually with an MSPP
issuer, on a State by State basis, the premiums for each MSP offered by
that issuer in that State. Such negotiations may include negotiations
about the cost-sharing provisions of an MSP.
(b) Duration. Premiums will remain in effect for the plan year.
(c) Guidance on rate development. OPM will issue guidance
addressing methods for the development of premiums for the MSPP. That
guidance will follow State rating standards generally applicable in a
State, to the greatest extent practicable.
(d) Calculation of actuarial value. An MSPP issuer must calculate
actuarial value in the same manner as QHP issuers under section 1302(d)
of the Affordable Care Act, as well as any applicable standards set by
OPM or HHS.
(e) OPM rate review process. An MSPP issuer must participate in the
rate review process established by OPM to negotiate rates for MSPs. The
rate review process established by OPM will be similar to the process
established by HHS pursuant to section 2794 of the PHS Act and
disclosure and review standards established under 45 CFR part 154.
(f) State Effective Rate Review. With respect to its MSPs, an MSPP
issuer is subject to a State's rate review process, including a State's
Effective Rate Review Program established by HHS pursuant to section
2794 of the PHS Act and 45 CFR part 154. In the event HHS is reviewing
rates for a State pursuant to section 2794 of the PHS Act, HHS will
defer to OPM's judgment regarding the MSPs' proposed rate increase. If
a State withholds approval of an MSP and OPM determines, in its
discretion, that the State's action would prevent OPM from operating
the MSPP, OPM retains authority to make the final decision to approve
rates for participation in the MSPP, notwithstanding the absence of
State approval.
(g) Single risk pool. An MSPP issuer must consider all enrollees in
an MSP to be in the same risk pool as all enrollees in all other health
plans in the individual market or the small group market, respectively,
in compliance with section 1312(c) of the Affordable Care Act, 45 CFR
156.80, and any applicable Federal or State laws and regulations
implementing that section.
Sec. 800.202 Rating factors.
(a) Permissible rating factors. In proposing premiums for each MSP,
an MSPP issuer must use only the rating factors permitted under section
2701 of the PHS Act.
(b) Application of variations based on age or tobacco use. Rating
variations permitted under section 2701 of the PHS Act must be applied
by an MSPP issuer based on the portion of the premium attributable to
each family member covered under the coverage in accordance with any
applicable Federal or State laws and regulations implementing section
2701(a) of the PHS Act.
(c) Age rating. For age rating, an MSPP issuer must use the ratio
established by the State in which the MSP is offered, if it is less
than 3:1.
(1) Age bands. An MSPP issuer must use the uniform age bands
established under HHS regulations implementing section 2701(a) of the
PHS Act.
(2) Age curves. An MSPP issuer must use the age curves established
under HHS regulations implementing section 2701(a) of the PHS Act, or
age curves established by a State pursuant to HHS regulations.
(d) Rating areas. An MSP must use the rating areas appropriate to
the State in which the MSP is offered and established under HHS
regulations implementing section 2701(a) if the PHS Act.
(e) Tobacco rating. An MSPP issuer must apply tobacco use as a
rating factor in accordance with any applicable Federal or State laws
and regulations implementing section 2701(a) of the PHS Act.
(f) Wellness programs. An MSPP issuer must comply with any
applicable Federal or State laws and regulations implementing section
2702 of the PHS Act.
Sec. 800.203 Medical loss ratio.
(a) Required medical loss ratio. An MSPP issuer must attain:
(1) The medical loss ratio (MLR) required under section 2718 of the
PHS Act and regulations promulgated by HHS; and
(2) Any MSP-specific MLR that OPM may set in the best interests of
MSP enrollees or that is necessary to be consistent with a State's
requirements with respect to MLR.
(b) Consequences of not attaining required medical loss ratio. If
an MSPP issuer fails to attain an MLR set forth in paragraph (a) of
this section, OPM may take any appropriate action, including but not
limited to intermediate sanctions, such as suspension of marketing,
decertifying an MSP in one or more States, or terminating an MSPP
issuer's contract pursuant to Sec. 800.404.
Sec. 800.204 Reinsurance, risk corridors, and risk adjustment.
(a) Transitional reinsurance program. An MSPP issuer must comply
with section 1341 of the Affordable Care Act, 45 CFR part 153, and any
applicable Federal or State regulations under section 1341 that set
forth requirements to implement the transitional reinsurance program
for the individual market.
(b) Temporary risk corridors program. An MSPP issuer must comply
with section 1342 of the Affordable Care Act, 45 CFR part 153, and any
applicable Federal regulations under section 1342 that set forth
requirements to implement the risk corridor program.
(c) Risk adjustment program. An MSPP issuer must comply with
section 1343 of the Affordable Care Act, 45 CFR part 153, and any
applicable Federal or State regulations under section 1343 that set
forth requirements to implement the risk adjustment program.
Subpart D--Application and Contracting Procedures
Sec. 800.301 Application process.
(a) Acceptance of applications. Without regard to section 6101(b)-
(d) of title 41, United States Code, or any other statute requiring
competitive bidding, OPM may consider annually applications from health
insurance issuers, including groups of health insurance issuers as
defined in Sec. 800.20, to participate in the MSPP. If OPM determines
that it is not beneficial for the MSPP to consider new applications for
an upcoming year, OPM will issue a notice to that effect.
(b) Form and manner of applications. An applicant must submit to
OPM, in the form and manner and in accordance with the timeline
specified by OPM, the information requested by OPM for determining
whether an applicant meets the requirements of this part.
Sec. 800.302 Review of applications.
(a) Determinations. OPM will determine if an applicant meets the
requirements of this part. If OPM determines that an applicant meets
the
[[Page 15593]]
requirements of this part, OPM may accept the applicant to enter into
contract negotiations with OPM to participate in the MSPP.
(b) Requests for additional information. OPM may request additional
information from an applicant before making a decision about whether to
enter into contract negotiations with that applicant to participate in
the MSPP.
(c) Declination of application. If, after reviewing an application
to participate in the MSPP, OPM declines to enter into contract
negotiations with the applicant, OPM will inform the applicant in
writing of the reasons for that decision.
(d) Discretion. The decision whether to enter into contract
negotiations with a health insurance issuer who has applied to
participate in the MSPP is committed to OPM's discretion.
(e) Impact on future applications. OPM's declination of an
application to participate in the MSPP will not preclude the applicant
from submitting an application for a subsequent year to participate in
the MSPP.
Sec. 800.303 MSPP contracting.
(a) Participation in MSPP. To become an MSPP issuer, the applicant
and the Director or the Director's designee must sign a contract that
meets the requirements of this part.
(b) Standard contract. OPM will establish a standard contract for
the MSPP.
(c) Premiums. OPM and the applicant will negotiate the premiums for
an MSPP for each plan year in accordance with the provisions of subpart
C of this part.
(d) Benefit packages. OPM must approve the applicant's benefit
packages for an MSP.
(e) Additional terms and conditions. OPM may elect to negotiate
with an applicant such additional terms, conditions, and requirements
that:
(1) Are in the interests of MSP enrollees; or
(2) OPM determines to be appropriate.
(f) Certification to offer health insurance coverage.
(1) For each plan year, an MSPP contract will contain a
certification that specifies the Exchanges in which the MSPP issuer is
authorized to offer an MSP, as well as the specific benefit packages
authorized to be offered on each Exchange and the premiums to be
charged for each benefit package on each Exchange.
(2) An MSPP issuer may not offer an MSP on an Exchange unless its
MSPP contract with OPM includes a certification authorizing the MSPP
issuer to offer the MSP on that Exchange in accordance with paragraph
(f)(1) of this section.
Sec. 800.304 Term of the contract.
(a) Term of a contract. The term of the contract will be specified
in the MSPP contract and must be for a period of at least the 12
consecutive months defined as the plan year.
(b) Plan year. The plan year is a consecutive 12-month period
during which an MSP provides coverage for health benefits. A plan year
may be a calendar year or otherwise.
Sec. 800.305 Contract renewal process.
(a) Renewal. To continue participating in the MSPP, an MSPP issuer
must provide to OPM, in the form and manner and in accordance with the
timeline prescribed by OPM, the information requested by OPM for
determining whether the MSPP issuer continues to meet the requirements
of this part.
(b) OPM decision. Subject to paragraph (c) of this section, OPM
will renew the MSPP contract of an MSPP issuer who timely submits the
information described in paragraph (a).
(c) OPM discretion not to renew. OPM may decline to renew the
contract of an MSPP issuer if:
(1) OPM and the MSPP issuer fail to agree on premiums and benefits
for an MSP for the subsequent plan year;
(2) The MSPP issuer has engaged in conduct described in Sec.
800.404(a) of this part; or
(3) OPM determines that the MSPP issuer will be unable to comply
with a material provision of section 1334 of the Affordable Care Act or
this part.
(d) Failure to agree on premiums and benefits. Except as otherwise
provided in this part, if an MSPP issuer has complied with paragraph
(a) of this section and OPM and the MSPP issuer fail to agree on
premiums and benefits for an MSP on one or more Exchanges for the
subsequent plan year by the date required by OPM, either party may
provide notice of nonrenewal pursuant to Sec. 800.306, or OPM may in
its discretion withdraw the certification of that MSP on the Exchange
or Exchanges for that plan year. In addition, if OPM and the MSPP
issuer fail to agree on benefits and premiums for an MSP on one or more
Exchanges by the date set by OPM and in the event of no action (no
notice of nonrenewal or renewal) by either party, the MSPP contract
will be renewed and the existing premiums and benefits for that MSP on
that Exchange or Exchanges will remain in effect for the subsequent
plan year.
Sec. 800.306 Nonrenewal.
(a) Definition of nonrenewal. As used in this subpart and subpart E
of this part, ``nonrenewal'' means a decision by either OPM or an MSPP
issuer not to renew an MSPP contract.
(b) Notice required. Either OPM or an MSPP issuer may decline to
renew an MSPP contract by providing a written notice of nonrenewal to
the other party.
(c) MSPP issuer responsibilities. The MSPP issuer's written notice
of nonrenewal must be made in accordance with its MSPP contract with
OPM. The MSPP issuer also must comply with any requirements regarding
the termination of a plan that are applicable to a QHP offered on an
Exchange on which the MSP was offered, including a requirement to
provide advance written notice of termination to enrollees. If an
Exchange does not have requirements about advance written notice of
termination to enrollees, the MSPP issuer must inform current MSP
enrollees in writing of the nonrenewal of the MSP no later than 90 days
prior to termination of coverage, unless OPM determines that good cause
justifies less than 90 days' notice.
Subpart E--Compliance
Sec. 800.401 Contract performance.
(a) General. An MSPP issuer must perform an MSPP contract with OPM
in accordance with the requirements of section 1334 of the Affordable
Care Act and this part. The MSPP issuer must continue to meet such
requirements while under an MSPP contract with OPM.
(b) Specific requirements for issuers. In addition to the
requirements described in paragraph (a) of this section, the following
requirements apply to each MSPP issuer:
(1) It must have, in the judgment of OPM, the financial resources
to carry out its obligations under the MSPP;
(2) It must keep such reasonable financial and statistical records,
and furnish to OPM such reasonable financial and statistical reports
with respect to the MSP or the MSPP, as may be requested by OPM;
(3) It must permit representatives of OPM (including the OPM Office
of Inspector General), the U.S. Government Accountability Office, and
any other applicable Federal Government auditing entities to audit and
examine its records and accounts that pertain, directly or indirectly,
to the MSP at such reasonable times and places as may be designated by
OPM or the U.S. Government Accountability Office;
(4) It must timely submit to OPM a properly completed and signed
novation
[[Page 15594]]
or change-of-name agreement in accordance with subpart 42.12 of 48 CFR
part 42;
(5) It must perform the MSPP contract in accordance with prudent
business practices, as described in paragraph (c) of this section; and
(6) It must not perform the MSPP contract in accordance with poor
business practices, as described in paragraph (d) of this section.
(c) Prudent business practices. For purposes of paragraph (b)(5) of
this section, prudent business practices include, but are not limited
to, the following:
(1) Timely compliance with OPM instructions and directives;
(2) Legal and ethical business and health care practices;
(3) Compliance with the terms of the MSPP contract, regulations,
and statutes;
(4) Timely and accurate adjudication of claims or rendering of
medical services;
(5) Operating a system for accounting for costs incurred under the
MSPP contract, which includes segregating and pricing MSP medical
utilization and allocating indirect and administrative costs in a
reasonable and equitable manner;
(6) Maintaining accurate accounting reports of costs incurred in
the administration of the MSPP contract;
(7) Applying performance standards for assuring contract quality as
outlined at Sec. 800.402; and
(8) Establishing and maintaining a system of internal controls that
provides reasonable assurance that:
(i) The provision and payments of benefits and other expenses
comply with legal, regulatory, and contractual guidelines;
(ii) MSP funds, property, and other assets are safeguarded against
waste, loss, unauthorized use, or misappropriation; and
(iii) Data are accurately and fairly disclosed in all reports
required by OPM.
(d) Poor business practices. For purposes of paragraph (b)(6) of
this section, poor business practices include, but are not limited to,
the following:
(1) Using fraudulent or unethical business or health care practices
or otherwise displaying a lack of business integrity or honesty;
(2) Repeatedly or knowingly providing false or misleading
information in the rate setting process;
(3) Failing to comply with OPM instructions and directives;
(4) Having an accounting system that is incapable of separately
accounting for costs incurred under the contract and/or that lacks the
internal controls necessary to fulfill the terms of the contract;
(5) Failing to assure that the MSP properly pays or denies claims,
or, if applicable, provides medical services that are inconsistent with
standards of good medical practice; and
(6) Entering into contracts or employment agreements with
providers, provider groups, or health care workers that include
provisions or financial incentives that directly or indirectly create
an inducement to limit or restrict communication about medically
necessary services to any individual covered under the MSPP. Financial
incentives are defined as bonuses, withholds, commissions, profit
sharing or other similar adjustments to basic compensation (e.g.,
service fee, capitation, salary) which have the effect of limiting or
reducing communication about appropriate medically necessary services.
(e) Performance escrow account. OPM may require MSPP issuers to pay
an assessment into an escrow account to ensure contract compliance and
benefit MSP enrollees.
Sec. 800.402 Contract quality assurance.
(a) General. This section prescribes general policies and
procedures to ensure that services acquired under MSPP contracts
conform to the contract's quality requirements.
(b) Internal controls. OPM will periodically evaluate the
contractor's system of internal controls under the quality assurance
program required by the contract and will acknowledge in writing
whether or not the system is consistent with the requirements set forth
in the contract. OPM's reviews do not diminish the contractor's
obligation to implement and maintain an effective and efficient system
to apply the internal controls.
(c) Performance standards. (1) OPM will issue specific performance
standards for MSPP contracts and will inform MSPP issuers of the
applicable performance standards prior to negotiations for the contract
year. OPM may benchmark its standards against standards generally
accepted in the insurance industry. OPM may authorize nationally
recognized standards to be used to fulfill this requirement.
(2) MSPP issuers must comply with the performance standards issued
under this section.
Sec. 800.403 Fraud and abuse.
(a) Program required. An MSPP issuer must conduct a program to
assess its vulnerability to fraud and abuse as well as to address such
vulnerabilities.
(b) Fraud detection system. An MSPP issuer must operate a system
designed to detect and eliminate fraud and abuse by employees and
subcontractors of the MSPP issuer, by providers furnishing goods or
services to MSP enrollees, and by MSP enrollees.
(c) Submission of information. An MSPP issuer must provide to OPM
such information or assistance as may be necessary for the agency to
carry out the duties and responsibilities, including those of the
Office of Inspector General as specified in sections 4 and 6 of the
Inspector General Act of 1978 (5 U.S.C. App.). An MSPP issuer must
provide any requested information in the form, manner, and timeline
prescribed by OPM.
Sec. 800.404 Compliance actions.
(a) Causes for OPM compliance actions. The following constitute
cause for OPM to impose a compliance action described in paragraph (b)
of this section against an MSPP issuer:
(1) Failure by the MSPP issuer to meet the requirements set forth
in Sec. 800.401(a) and (b);
(2) An MSPP issuer's sustained failure to perform the MSPP contract
in accordance with prudent business practices, as described in Sec.
800.401(c);
(3) A pattern of poor conduct or evidence of poor business
practices such as those described in Sec. 800.401(d); or
(4) Such other violations of law or regulation as OPM may
determine.
(b) Compliance actions. (1) OPM may impose a compliance action
against an MSPP issuer at any time during the contract term if it
determines that the MSPP issuer is not in compliance with applicable
law, this part, or the terms of its contract with OPM.
(2) Compliance actions may include, but are not limited to:
(i) Establishment and implementation of a corrective action plan;
(ii) Imposition of intermediate sanctions, such as suspensions of
marketing;
(iii) Performance incentives;
(iv) Reduction of service area or areas;
(v) Withdrawal of the certification of the MSPP issuer to offer the
MSP on one or more Exchanges;
(vi) Nonrenewal of the MSPP contract; and
(vii) Withdrawal of approval or termination of the MSPP contract.
(c) Notice of compliance action. (1) OPM must notify an MSPP issuer
in writing of a compliance action under this section. Such notice must
indicate the specific compliance action undertaken and the reason for
the compliance action.
[[Page 15595]]
(2) For compliance actions listed in paragraphs (b)(2)(v) through
(b)(2)(vii) of this section, such notice must include a statement that
the MSPP issuer is entitled to request a reconsideration of OPM's
determination to impose a compliance action pursuant to Sec. 800.405.
(3) Upon imposition of a compliance action listed in paragraphs
(b)(2)(iv) through (b)(2)(vii) of this section, OPM must notify the
State Insurance Commissioner(s) and Exchange officials in the State or
States in which the compliance action is effective.
(d) Notice to enrollees. If OPM terminates an MSPP issuer's MSPP
contract with OPM, or OPM withdraws the MSPP issuer's certification to
offer the MSP on an Exchange, the MSPP issuer must comply with any
requirements regarding the termination of a plan that are applicable to
a QHP offered on an Exchange on which the MSP was offered, including a
requirement to provide advance written notice of termination to
enrollees. If an Exchange does not have requirements about advance
written notice of termination to enrollees, the MSPP issuer must inform
current MSP enrollees in writing of the nonrenewal of the MSP no later
than 90 days prior to termination of coverage, unless OPM determines
that good cause justifies less than 90 days' notice.
(e) Definition. As used in this subpart, ``termination'' means a
decision by OPM to cancel an MSPP contract prior to the end of its
contract term. The term includes OPM's withdrawal of approval of an
MSPP contract.
Sec. 800.405 Reconsideration of compliance actions.
(a) Right to request reconsideration. An MSPP issuer may request
that OPM reconsider a determination to impose one of the following
compliance actions:
(1) Withdrawal of the certification of the MSPP issuer to offer the
MSP on one or more Exchanges;
(2) Nonrenewal of the MSPP contract; or
(3) Termination of the MSPP contract.
(b) Request for reconsideration and/or hearing. (1) An MSPP issuer
with a right to request reconsideration specified in paragraph (a) of
this section may request a hearing in which OPM will reconsider its
determination to impose a compliance action.
(2) A request under this section must be in writing and contain
contact information, including the name, telephone number, email
address, and mailing address of the person or persons whom OPM may
contact regarding a request for a hearing with respect to the
reconsideration. The request must be in such form, contain such
information, and be submitted in such manner as OPM may prescribe.
(3) The request must be received by OPM within 15 calendar days
after the date of the MSPP issuer's receipt of the notice of compliance
action. The MSPP issuer may request that OPM's reconsideration allow a
representative of the MSPP issuer to appear personally before OPM.
(4) A request under this section must include a detailed statement
of the reasons that the MSPP issuer disagrees with OPM's imposition of
the compliance action, and may include any additional information that
will assist OPM in rendering a final decision under this section.
(5) OPM may obtain additional information relevant to the request
from any source as it may, in its judgment, deem necessary. OPM will
provide the MSPP issuer with a copy of any additional information it
obtains and provide an opportunity for the MSPP issuer to respond
(including by submitting additional information or explanation).
(6) OPM's reconsideration and hearing, if requested, may be
conducted by the Director or a representative designated by the
Director who did not participate in the initial decision that is the
subject of the request for review.
(c) Notice of final decision. OPM will notify the MSPP issuer, in
writing, of OPM's final decision on the MSPP issuer's request for
reconsideration and the specific reasons for that final decision. OPM's
written decision will constitute final agency action that is subject to
review under the Administrative Procedure Act in the appropriate U.S.
district court. Such review is limited to the record that was before
OPM when it made its decision.
Subpart F--Appeals by Enrollees of Denials of Claims for Payment or
Service
Sec. 800.501 General requirements.
(a) Definitions. For purposes of this subpart:
(1) Adverse benefit determination has the meaning given that term
in 45 CFR 147.136(a)(2)(i).
(2) Claim means a request for:
(i) Payment of a health-related bill; or
(ii) Provision of a health-related service or supply.
(b) Applicability. This subpart applies to enrollees and to other
individuals or entities who are acting on behalf of an enrollee and who
have the enrollee's specific written consent to pursue a remedy of an
adverse benefit determination.
Sec. 800.502 MSPP issuer internal claims and appeals.
(a) Processes. MSPP issuers must comply with the internal claims
and appeals processes applicable to group health plans and health
insurance issuers under 45 CFR 147.136(b).
(b) Timeframes and notice of determination. An MSPP issuer must
provide written notice to an enrollee of its determination on a claim
brought under paragraph (a) of this section according to the timeframes
and notification rules under 45 CFR 147.136(b) and (e), including the
timeframes for urgent claims. If the MSPP issuer denies a claim (or a
portion of the claim), the enrollee may appeal the adverse benefit
determination to the MSPP issuer in accordance with 45 CFR 147.136(b).
Sec. 800.503 External review.
(a) External review by OPM. OPM will conduct external review of
adverse benefit determinations using a process similar to OPM review of
disputed claims under 5 CFR 890.105(e), subject to the standards and
timeframes set forth in 45 CFR 147.136(d).
(b) Notice. Notices to MSP enrollees regarding external review
under paragraph (a) of this section must comply with 45 CFR 147.136(e),
and are subject to review and approval by OPM.
(c) Issuer obligation. An MSPP issuer must pay a claim or provide a
health-related service or supply pursuant to OPM's final decision or
the final decision of an independent review organization without delay,
regardless of whether the plan or issuer intends to seek judicial
review of the external review decision and unless or until there is a
judicial decision otherwise.
Sec. 800.504 Judicial review.
(a) OPM's written decision under the external review process
established under Sec. 800.503(a) will constitute final agency action
that is subject to review under the Administrative Procedure Act in the
appropriate U.S. district court. A decision made by an independent
review organization under the process established under Sec.
800.503(a) is not within OPM's discretion and therefore is not final
agency action.
(b) Judicial review under paragraph (a) of this section is limited
to the record that was before OPM when OPM made its decision.
Subpart G--Miscellaneous
Sec. 800.601 Reservation of authority.
OPM reserves the right to implement and supplement these
regulations with written operational guidelines.
[[Page 15596]]
Sec. 800.602 Consumer choice with respect to certain services.
(a) Assured availability of varied coverage. Consistent with Sec.
800.104, OPM will ensure that at least one of the MSPP issuers on each
Exchange in each State offers at least one MSP that does not provide
coverage of services described in section 1303(b)(1)(B)(i) of the
Affordable Care Act.
(b) State opt-out. An MSP may not offer abortion coverage in any
State where such coverage of abortion services is prohibited by State
law.
[FR Doc. 2013-04954 Filed 3-1-13; 11:15 am]
BILLING CODE 6325-64-P