[Federal Register Volume 79, Number 101 (Tuesday, May 27, 2014)]
[Rules and Regulations]
[Pages 30240-30353]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-11657]
[[Page 30239]]
Vol. 79
Tuesday,
No. 101
May 27, 2014
Part II
Department of Health and Human Services
-----------------------------------------------------------------------
45 CFR Parts 144, 146, 147, et al.
Patient Protection and Affordable Care Act; Exchange and Insurance
Market Standards for 2015 and Beyond; Final Rule
Federal Register / Vol. 79 , No. 101 / Tuesday, May 27, 2014 / Rules
and Regulations
[[Page 30240]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Parts 144, 146, 147, 148, 153, 154, 155, 156, and 158
[CMS-9949-F]
RIN 0938-AS02
Patient Protection and Affordable Care Act; Exchange and
Insurance Market Standards for 2015 and Beyond
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule addresses various requirements applicable to
health insurance issuers, Affordable Insurance Exchanges
(``Exchanges''), Navigators, non-Navigator assistance personnel, and
other entities under the Patient Protection and Affordable Care Act and
the Health Care and Education Reconciliation Act of 2010 (collectively
referred to as the Affordable Care Act). Specifically, the rule
establishes standards related to product discontinuation and renewal,
quality reporting, non-discrimination standards, minimum certification
standards and responsibilities of qualified health plan (QHP) issuers,
the Small Business Health Options Program, and enforcement remedies in
Federally-facilitated Exchanges. It also finalizes: A modification of
HHS's allocation of reinsurance collections if those collections do not
meet our projections; certain changes to allowable administrative
expenses in the risk corridors calculation; modifications to the way we
calculate the annual limit on cost sharing so that we round this
parameter down to the nearest $50 increment; an approach to index the
required contribution used to determine eligibility for an exemption
from the shared responsibility payment under section 5000A of the
Internal Revenue Code; grounds for imposing civil money penalties on
persons who provide false or fraudulent information to the Exchange and
on persons who improperly use or disclose information; updated
standards for the consumer assistance programs; standards related to
the opt-out provisions for self-funded, non-Federal governmental plans
and related to the individual market provisions under the Health
Insurance Portability and Accountability Act of 1996 including excepted
benefits; standards regarding how enrollees may request access to non-
formulary drugs under exigent circumstances; amendments to Exchange
appeals standards and coverage enrollment and termination standards;
and time-limited adjustments to the standards relating to the medical
loss ratio (MLR) program. The majority of the provisions in this rule
are being finalized as proposed.
DATES: This rule is effective July 28, 2014 except for amendments to 45
CFR 155.705 which are effective May 27, 2014.
FOR FURTHER INFORMATION CONTACT: For general matters and matters
related to Parts 144, 146, 147, 148 and 154: Jacob Ackerman, (301) 492-
4179.
For matters related to reinsurance, under Part 153: Adrianne
Glasgow, (410) 786-0686.
For matters related to risk corridors, under Part 153: Jaya
Ghildiyal, (301) 492-5149.
For matters related to non-interference with Federal law and non-
discrimination standards, and Navigator, non-Navigator assistance
personnel, and certified application counselor program standards, under
Part 155, subparts B and C: Tricia Beckmann, (301) 492-4328.
For matters related to civil money penalties for noncompliant
consumer assistance entities, under Part 155, subpart C: Emily Ames,
(301) 492-4246.
For matters related to enrollment of a qualified individual, under
Part 155, subpart E: Jack Lavelle, (410) 786-0639.
For matters related to civil money penalties for false or
fraudulent information or improper use of information, under Part 155,
subpart C; exemptions under Part 155, subparts D and G, and matters
related to eligibility appeals, under Part 155, subparts F and H:
Christine Hammer, (301) 492-4431.
For matters related to special enrollment periods under Part 155,
Subpart E: Spencer Manasse, (301) 492-5141.
For matters related to the Small Business Health Options Program,
under Part 155, subpart H: Christelle Jang, (410) 786-8438.
For matters related to the required contribution percentage for
affordability exemptions, under Part 155, subpart G: Ariel Novick,
(301) 492-4309.
For matters related to cost sharing, under Part 156, subpart B: Pat
Meisol, (410) 786-1917.
For matters related to quality standards, under Parts 155 and 156:
Nidhi Singh Shah, (301) 492-5110.
For matters related to enforcement remedies, under Part 156: Cindy
Yen, (301) 492-5142.
For matters related to minimum essential coverage, under Part 156,
subpart G: Cam Clemmons, (410) 786-1565.
For all other matters related to Parts 155 and 156: Leigha Basini,
(301) 492-4380.
For matters related to the medical loss ratio program, under Part
158: Julie McCune, (301) 492-4196.
SUPPLEMENTARY INFORMATION:
Electronic Access
This Federal Register document is also available from the Federal
Register online database through Federal Digital System (FDsys), a
service of the U.S. Government Printing Office. This database can be
accessed via the internet at http://www.gpo.gov/fdsys.
Table of Contents
I. Executive Summary
II. Background
A. Legislative Overview
B. Stakeholder Consultation and Input
C. Structure of Final Rule
III. Provisions of the Proposed Regulations and Analysis and
Responses to Public Comments
A. Part 144--Requirements Relating to Health Insurance Coverage
B. Part 146--Requirements for the Group Health Insurance Market
C. Part 147--Health Insurance Reform Requirements for the Group
and Individual Health Insurance Markets
Guaranteed Availability and Guaranteed Renewability of Coverage
(Sec. Sec. 147.104 and 147.106)
a. No Effect on Other Laws
b. Product Discontinuance and Uniform Modification of Coverage
Exceptions to Guaranteed Renewability Requirements
D. Part 148--Requirements for the Individual Health Insurance
Market
1. Conforming Changes to Individual Market Regulations
(Sec. Sec. 148.101 through 148.128)
2. Fixed Indemnity Insurance in the Individual Health Insurance
Market (Sec. 148.220)
E. Part 153--Standards Related to Reinsurance, Risk Corridors,
and Risk Adjustment Under the Affordable Care Act
1. Provisions and Parameters for the Permanent Risk Adjustment
Program
2. Provisions and Parameters for the Transitional Reinsurance
Program
3. Provisions for the Temporary Risk Corridors Program (Sec.
153.500)
F. Part 154--Health Insurance Issuer Rate Increases: Disclosure
and Review Requirements
G. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
1. Subpart B--General Standards Related to the Establishment of
the Exchange Non-Interference With Federal Law and Non-
Discrimination Standards (Sec. 155.120)
2. Subpart C--General Functions of an Exchange
a. Civil Money Penalties for Violations of Applicable Exchange
Standards by Consumer Assistance Entities in Federally-Facilitated
Exchanges (Sec. 155.206)
[[Page 30241]]
b. Navigator, Non-Navigator Assistance Personnel, and Certified
Application Counselor Program Standards (Sec. Sec. 155.210,
155.215, and 155.225)
c. Payment of Premiums (Sec. 155.240)
d. Privacy and Security of Personally Identifiable Information
(Sec. 155.260)
e. Bases and Process for Imposing Civil Money Penalties for
Provision of False or Fraudulent Information to an Exchange or
Improper Use or Disclosure of Information (Sec. 155.285)
3. Subpart D--Exchange Functions in the Individual Market:
Eligibility Determinations for Exchange Participation and Insurance
Affordability Programs
a. Verification Process Related to Eligibility for Insurance
Affordability Programs (Sec. 155.320)
b. Eligibility Redetermination During a Benefit Year (Sec.
155.330)
4. Subpart E--Exchange Functions in the Individual Market:
Enrollment in Qualified Health Plans
a. Enrollment of Qualified Individuals in a QHP (Sec. 155.400)
b. Initial and Annual Open Enrollment Periods (Sec. 155.410)
c. Special Enrollment Periods (Sec. 155.420)
d. Termination of Coverage (Sec. 155.430)
5. Subpart F--Appeals of Eligibility Determinations for Exchange
Participation and Insurance Affordability Programs
a. General Eligibility Appeals Requirements (Sec. 155.505)
b. Dismissals (Sec. 155.530)
c. Employer Appeals Process (Sec. 155.555)
6. Subpart G--Exchange Functions in the Individual Market:
Eligibility Determinations for Exemptions
a. Required Contribution Percentage
b. Options for Conducting Eligibility Determinations for
Exemptions (Sec. 155.625)
7. Subpart H--Exchange Functions: Small Business Health Options
Program
a. Functions of a SHOP (Sec. 155.705)
b. Enrollment Periods under SHOP (Sec. 155.725)
c. SHOP Employer and Employee Eligibility Appeals Requirements
(Sec. 155.740)
8. Subpart O--Quality Reporting Standards for Exchanges
a. Quality Rating System (Sec. 155.1400)
b. Enrollee Satisfaction Survey System (Sec. 155.1405)
H. Part 156--Health Insurance Issuer Standards under the
Affordable Care Act, Including Standards Related to Exchanges
1. Subpart B--Essential Health Benefits Package
a. Prescription Drug Benefits (Sec. 156.122)
b. Cost-Sharing Requirements (Sec. 156.130)
2. Subpart C--General Functions of an Exchange
a. QHP Issuer Participation Standards (Sec. 156.200)
b. Enrollment Process for Qualified Individuals (Sec. 156.265)
3. Subpart G--Minimum Essential Coverage
a. Other Coverage that Qualifies as Minimum Essential Coverage
(Sec. 156.602)
b. Requirements for Recognition as Minimum Essential Coverage
for Types of Coverage Not Otherwise Designated Minimum Essential
Coverage in the Statute or This Subpart (Sec. 156.604)
4. Subpart I--Enforcement Remedies in Federally-Facilitated
Exchanges
a. Available Remedies; Scope (Sec. 156.800)
b. Bases and Process for Imposing Civil Money Penalties in
Federally-Facilitated Exchanges (Sec. 156.805)
c. Notice of Non-compliance (Sec. 156.806)
d. Bases and Process for Decertification of a QHP Offered by an
Issuer Through a Federally-Facilitated Exchange (Sec. 156.810)
5. Subpart L--Quality Standards
a. Establishment of Standards for HHS-Approved Enrollee
Satisfaction Survey Vendors for Use by QHP Issuers in Exchanges
(Sec. 156.1105)
b. Quality Rating System (Sec. 156.1120)
c. Enrollee Satisfaction Survey (Sec. 156.1125)
I. Part 158--Issuer Use of Premium Revenue: Reporting and Rebate
Requirements
1. Subpart A--Disclosure and Reporting
a. ICD-10 Conversion Expenses (Sec. 158.150)
2. Subpart B--Calculating and Providing the Rebate
a. MLR and Rebate Calculations in States with Merged Individual
and Small Group Markets (Sec. Sec. 158.211, 158.220, 158.231)
b. Accounting for Special Circumstances (Sec. 158.221)
c. Distribution of De Minimis Rebates (Sec. 158.243)
IV. Provisions of Final Regulations
V. Waiver of Delay in Effective Date
VI. Collection of Information Requirements
A. ICRs Regarding Recertification for Certified Application
Counselors (Sec. 155.225)
B. ICRs Regarding Consumer Authorization (Sec. Sec. 155.210 and
155.215)
C. ICRs Regarding Enrollee Satisfaction & Marketplace Surveys
(Sec. Sec. 155.1200, 156.1105, and 156.1125)
D. ICR Regarding Quality Rating System (Sec. 156.1120)
E. ICRs Regarding Quality Standards for Exchanges (Sec. Sec.
155.1400 and 155.1405)
F. ICR Regarding Medical Loss Ratio Requirements (Sec. Sec.
158.150, 158.211, 158.220, 158.221, and 158.231)
G. ICRs Regarding Civil Money Penalties (Sec. Sec. 155.206 and
155.285)
H. ICRs Regarding Fixed Indemnity Plans, Minimum Essential
Coverage, Certifications of Creditable Coverage and HIPAA Opt-Out
Election Notice, Notice of Discontinuation, Notice of Renewal
(Sec. Sec. 146.152, 146.180, 147.106, 148.122, 148.220, and
156.602)
I. Emergency Clearance: Public Information Collection
Requirements Submitted to the Office of Management and Budget (OMB)
VII. Regulatory Impact Analysis
A. Summary
B. Executive Orders 13563 and 12866
1. Need for Regulatory Action
2. Summary of Impacts
3. Anticipated Benefits, Costs and Transfers
C. Regulatory Alternatives
1. Collecting ESS Data at the Product Level Instead of Each
Product Per Metal Tier
2. Using Medicaid CAHPS[supreg] As Is Instead of Adding
Additional and New Questions to the ESS
3. Collecting QRS Data for Each Product Per Metal Tier Instead
of at the Product Level
4. Using the Medicare Advantage (MA) CAHPS[supreg] Instrument
and Star System
D. Regulatory Flexibility Act
E. Unfunded Mandates Reform Act
F. Federalism
G. Congressional Review Act
VIII. Regulations Text
Abbreviations
Affordable Care Act--The collective term for the Patient Protection
and Affordable Care Act (Pub. L. 111-148) and the Health Care and
Education Reconciliation Act of 2010 (Pub. L. 111-152)
AV--Actuarial Value
CAHPS[supreg]--Consumer Assessment of Healthcare Providers and
Systems
CFR--Code of Federal Regulations
CMP--Civil Money Penalty
CMS--Centers for Medicare & Medicaid Services
CSR--Cost-Sharing Reductions
EHB--Essential Health Benefits
ERISA--Employee Retirement Income Security Act of 1974 (Pub. L.
93-406)
ESS--Enrollee Satisfaction Survey
FFE--Federally-facilitated Exchange
FF-SHOP--Federally-facilitated Small Business Health Options
Program
HCC--Hierarchical Condition Category
HHS--United States Department of Health and Human Services
HIPAA--Health Insurance Portability and Accountability Act of
1996 (Pub. L. 104-191)
IRS--Internal Revenue Service
MLR--Medical Loss Ratio
NAIC--National Association of Insurance Commissioners
OMB--United States Office of Management and Budget
OPM--United States Office of Personnel Management
PHS--Act Public Health Service Act
PRA--Paperwork Reduction Act of 1995
QHP--Qualified health plan
QRS--Quality Rating System
SHOP--Small Business Health Options Program
The Code--Internal Revenue Code of 1986
I. Executive Summary
Since January 1, 2014, qualified individuals and small employers
have been able to obtain private health insurance through Affordable
Insurance Exchanges, or ``Exchanges'' (also known as Health Insurance
Marketplaces, or ``Marketplaces'').\1\ The Exchanges
[[Page 30242]]
provide competitive marketplaces where individuals and small employers
can compare available private health insurance options on the basis of
price, quality, and other factors. The Exchanges help enhance
competition in the health insurance market, improve choice of
affordable health insurance, and give small businesses the same
purchasing power as large businesses.
---------------------------------------------------------------------------
\1\ The word ``Exchanges'' refers to both State Exchanges, also
called State-based Exchanges, and Federally-facilitated Exchanges
(FFEs). In this final rule, we use the terms ``State Exchange'' or
``FFE'' when we are referring to a particular type of Exchange. When
we refer to ``FFEs,'' we are also referring to State Partnership
Exchanges, which are a form of FFEs.
---------------------------------------------------------------------------
Individuals who enroll in QHPs through individual market Exchanges
may be eligible to receive premium tax credits to make health insurance
purchased through an Exchange more affordable and cost-sharing
reductions (CSRs) that lower out-of-pocket expenses for health care
services. The premium tax credits, combined with the new insurance
reforms, have significantly increased the number of individuals with
health insurance coverage. The premium stabilization programs--risk
adjustment, reinsurance, and risk corridors--protect against adverse
selection in the newly enrolled population. These programs, in
combination with the MLR program and market reforms extending
guaranteed availability (also known as guaranteed issue) protections,
prohibiting the use of factors such as health status, medical history,
gender, and industry of employment to set premium rates, will help to
ensure that every American has access to high quality, affordable
health insurance.
This final rule addresses various requirements applicable to health
insurance issuers, Exchanges, Navigators, non-Navigator assistance
personnel, and other entities under the Affordable Care Act.
Specifically, the rule establishes standards related to product
discontinuation and renewal, quality reporting, non-discrimination
standards, minimum certification standards and responsibilities of QHP
issuers, the Small Business Health Options Program (SHOP), and
enforcement remedies in Federally-facilitated Exchanges (FFEs). It also
finalizes: A modification of HHS's allocation of reinsurance
collections if those collections do not meet our projections; certain
changes to allowable administrative expenses in the risk corridors
calculation; modifications to the way we calculate the annual limit on
cost sharing so that we round this parameter down to the nearest $50
increment; an approach to indexing the required contribution used to
determine eligibility for an exemption from the shared responsibility
payment under section 5000A of the Internal Revenue Code; grounds for
imposing CMPs on persons who provide false or fraudulent information to
the Exchange and on persons who improperly use or disclose information;
updated standards for Exchange consumer assistance programs; standards
related to the opt-out provisions for self-funded, non-Federal
governmental plans and related to the individual market provisions
under the Health Insurance Portability and Accountability Act of 1996
(HIPAA); amendments to Exchange appeals standards and coverage
enrollment and termination standards; and time-limited adjustments to
the standards relating to the MLR program.
Product Discontinuance and Uniform Modification of Coverage
Exceptions to Guaranteed Renewability Requirements: Under sections 2702
and 2703 of the Public Health Service Act (PHS Act), as added by the
Affordable Care Act, health insurance issuers in the group and
individual markets must guarantee the availability and renewability of
coverage unless an exception applies. In this final rule, we establish
criteria for determining when modifications made by an issuer to the
health insurance coverage for a product would and would not constitute
the discontinuation of an existing product and the creation of a new
product. The same criteria would apply to determine whether the rate
filing is subject to submission and review under 45 CFR part 154. We
also direct that issuers use standard consumer notices in a format
designated by the Secretary when discontinuing or renewing a product in
the group or individual market. Additionally, we clarify that the
guaranteed availability and renewability requirements should not be
construed to supersede other provisions of Federal law in certain
circumstances.
Conforming Changes to Individual Market Provisions: Sections 2741
through 2744 of the PHS Act were added by HIPAA to improve the
portability and continuity of coverage in the individual health
insurance market. These provisions are implemented through regulations
in 45 CFR part 148. In this final rule, we amend the individual market
provisions in Part 148 to reflect the amendments made by the Affordable
Care Act. These amendments are for clarity only.
Fixed Indemnity Insurance in the Individual Market: Consistent with
previously released guidance, we amend the criteria for fixed indemnity
insurance to be treated as an excepted benefit in the individual health
insurance market.\2\ The amendments eliminate the requirement that
individual fixed indemnity insurance must pay on a per-period basis (as
opposed to a per-service basis), and require on a prospective basis,
among other things, that it be sold only to individuals who have other
health coverage that is minimum essential coverage to be considered an
excepted benefit.
---------------------------------------------------------------------------
\2\ FAQs about Affordable Care Act Implementation (Part XVIII)
and Mental Health Parity Implementation, Q11 (January 9, 2014).
Available at: http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/AffordableCareAct_implementation_faqs18.html and http://www.dol.gov/ebsa/faqs/faq-AffordableCareAct18.html.
---------------------------------------------------------------------------
HIPAA Opt-Out for Self-Funded, Non-Federal Governmental Plans:
Prior to enactment of the Affordable Care Act, sponsors of self-funded,
non-Federal governmental plans were permitted to elect to exempt those
plans from (``opt out of'') certain provisions of title XXVII of the
PHS Act. Consistent with previously released guidance, we finalize
amendments to the non-Federal governmental plan regulations (45 CFR
146.180) to reflect the amendments made by the Affordable Care Act to
these provisions, with clarifications specifying that, in the case of a
plan sponsor submitting opt-out elections for more than one
collectively bargained health plan, each such plan must be listed in
the opt-out election, and in the case of a plan sponsor submitting opt-
out elections for group health plans that are not subject to a
collective bargaining agreement, the sponsor must submit separate
election documents for each such plan.\3\
---------------------------------------------------------------------------
\3\ Amendments to the HIPAA opt-out provision (formerly section
2721(b)(2) of the Public Health Service Act) made by the Affordable
Care Act (September 21, 2010). Available at: http://www.cms.gov/CCIIO/Resources/Files/Downloads/opt_out_memo.pdf.
---------------------------------------------------------------------------
Essential Health Benefits (EHB) Prescription Drug Coverage: Under
45 CFR 156.122(c), a plan providing EHB must have procedures in place
that allow an enrollee to request and gain access to a clinically
appropriate drug not covered by the plan. In this final rule, we are
revising paragraph (c) to require that the plan's procedures include an
expedited process for exigent circumstances that requires the health
plan to make its coverage determination within no more than 24 hours
after it receives the request and that requires the health plan to
provide the drug for the duration of the exigency.
Premium Stabilization Programs: The Affordable Care Act establishes
three premium stabilization programs--risk adjustment, reinsurance, and
risk
[[Page 30243]]
corridors--to protect against adverse selection. The Affordable Care
Act directs that a permanent risk adjustment program be established in
each State to mitigate the impacts of possible adverse selection and
stabilize premiums in the individual and small group markets as and
after insurance market reforms are implemented. The Affordable Care Act
also directs that a transitional reinsurance program be established in
each State to help stabilize premiums by helping to pay the cost of
treating high-cost enrollees in the individual market from 2014 through
2016. The Affordable Care Act directs the Secretary to establish and
administer a temporary risk corridors program. In this final rule, we
modify and finalize our proposal to allocate contributions collected
under that program in the event of a shortfall in collections. In that
event, we will allocate reinsurance contributions first to the
reinsurance payment pool, and second to administrative expenses and the
U.S. Treasury. We also finalize the proposal, unchanged, to increase
the ceiling on allowable administrative costs and the floor on profits
by 2 percent in the risk corridors calculation to account for
uncertainty and changes in the market prior to and during benefit year
2015.
Exchange Establishment and QHP Issuer Standards: The rule amends
oversight standards regarding QHP decertification and CMPs. It also
directs that QHP issuers provide enrollees with an annual notice of
coverage changes. This rule creates a process for survey vendors to
appeal an HHS decision not to approve its application to become an
enrollee satisfaction survey (ESS) vendor, as well as standards for
revoking HHS-approval of ESS vendors. Finally, it establishes standards
for the ESS and quality rating system (QRS) related to the display of
such information by Exchanges and the submission of validated data by
QHP issuers.
We align the start of employer election periods in FF-SHOPs for
plan years beginning in 2015 with the start of open enrollment in the
corresponding individual market Exchange for the 2015 benefit year and,
in all SHOPs, eliminate the 30-day minimum time frames for the employer
and employee annual election periods. We also allow State Insurance
Commissioners the opportunity to recommend that, in 2015, a SHOP not
provide employers with the option of selecting a level of coverage as
described in section 1302(d)(1) of the Affordable Care Act and making
all QHPs at that level of coverage available to their employees if the
commissioner can adequately explain that it is his or her expert
judgment, based on a documented assessment of the full landscape of the
small group market in his or her State, that not implementing employee
choice would be in the best interest of small employers and their
employees and dependents, given the likelihood that implementing
employee choice would cause issuers to price products and plans higher
in 2015 due to the issuers' beliefs about adverse selection. We allow
the opportunity for a person appealing a determination of SHOP
eligibility to withdraw an appeal by telephone, if the appeals entity
is capable of accepting telephonic signatures.
Civil Money Penalties for False Information or Improper Use of
Information: The final rule specifies the grounds for imposing CMPs on
persons who provide false or fraudulent information to the Exchange and
on persons who use or disclose information in violation of section
1411(g) of the Affordable Care Act. The grounds for imposing a penalty
include: Negligent failure to provide correct information, knowing and
willful provision of false or fraudulent information, and knowing and
willful use or disclosure of information in violation of section
1411(g). This section specifies the factors used to determine the
amount of the CMP to be imposed against a person. The section also
provides for the requirements for notices which must be provided to a
person if HHS proposes to impose a CMP, and the processes a person may
follow should the person wish to challenge HHS' determination that a
CMP should be imposed, including a process pursuant to which a person
may request a hearing before an administrative law judge. We also amend
current privacy and security regulations at 45 CFR 155.260 to reference
the new CMP provisions associated with knowingly and willfully using or
disclosing information in violation of section 1411(g) of the
Affordable Care Act.
Civil Money Penalties for Consumer Assistance Entities: The final
rule provides that HHS may impose CMPs against Navigators, non-
Navigator assistance personnel, certified application counselor
designated organizations, and certified application counselors in FFEs,
if these entities and/or individuals violate Federal requirements
applicable to their activities.
Navigator, Non-Navigator Assistance Personnel, and Certified
Application Counselor Program Standards: In this final rule, we specify
certain types of State laws applicable to Navigators, non-Navigator
assistance personnel, and certified application counselors that HHS
considers to prevent the application of the provisions of title I of
the Affordable Care Act within the meaning of section 1321(d) of the
Affordable Care Act. We also make several changes to update the
standards applicable to these consumer assistance entities and
individuals, such as prohibiting them from specified marketing or
solicitation activities. We require Navigators and non-Navigator
assistance personnel to obtain authorization before accessing a
consumer's personally identifiable information and to prohibit them
from charging consumers for their services. We also require that
certified application counselors be recertified on at least an annual
basis, and prohibit certified application counselors and certified
application counselor designated organizations from receiving
consideration, directly or indirectly, from health insurance issuers or
stop loss insurance issuers in connection with the enrollment of
consumers in QHPs or non-QHPs. We further provide that, in specific
circumstances, certified application counselor designated organizations
can serve targeted populations without violating the broad non-
discrimination requirement related to Exchange functions.
Indexing of Cost-Sharing Requirements: Under Sec. Sec. 156.130(a)
and 156.130(b), the annual limitation on cost sharing and the annual
limitation on deductibles in the small group market for years after
2014 are to be indexed by the premium adjustment percentage. We
established our methodology for calculating the premium adjustment
percentage in the 2015 Payment Notice. In this final rule, we provide
for the annual limitation on cost sharing to be updated based on the
premium adjustment percentage by rounding down to the nearest $50
increment. We are eliminating the annual limit on deductibles for small
group plans, consistent with the Protecting Access to Medicare Act of
2014 (Pub. L. 113-93), which was signed into law on April 1, 2014.
Required Contribution Percentage: Under section 5000A of the Code,
an applicable individual must maintain minimum essential coverage for
each month, qualify for an exemption, or make a shared responsibility
payment. An individual may qualify for an exemption from the shared
responsibility payment if the amount that he or she would be required
to pay towards minimum essential coverage (required contribution)
exceeds a particular percentage (the required
[[Page 30244]]
contribution percentage) of his or her household income. Under section
5000A of the Code, the required contribution percentage for 2014 is 8
percent, and for each plan year beginning in a calendar year after
2014, the percentage, as determined by the Secretary of Health and
Human Services (the Secretary), that reflects the excess of the rate of
premium growth between the preceding calendar year and 2013 over the
rate of income growth for the same period. In the preamble to this
final rule, we establish a methodology for determining the percentage
reflecting the excess of the rate of premium growth over the rate of
income growth for plan years after 2014. We also establish a required
contribution percentage for 2015 of 8.05 percent. For calendar years
after 2015, the required contribution percentage will be published in
the annual HHS notice of benefit and payment parameters.
Eligibility Appeals: The rule amends standards related to
eligibility appeals provisions in subparts F and H of Part 155. To
facilitate the efficient conclusion of an appeal at the request of the
appellant, we amend the withdrawal procedure to permit withdrawals made
via telephonic signature.
Minimum Essential Coverage: We clarify that entities other than
plan sponsors (for example, issuers) can apply for their coverage to be
recognized as minimum essential coverage, pursuant to the process
outlined in 45 CFR 156.604 and guidance thereunder.
Medical Loss Ratio: The MLR program created pursuant to the
Affordable Care Act generally requires issuers to rebate a portion of
premiums if their MLR fails to meet the applicable MLR standard in a
State and market for the applicable reporting year. An issuer's MLR is
the ratio of claims plus quality improvement activities to premium
revenue, with the premium adjusted by the amounts paid for taxes,
licensing and regulatory fees, and the premium stabilization programs.
On December 1, 2010, we published an interim final rule entitled
``Health Insurance Issuers Implementing Medical Loss Ratio (MLR)
Requirements under the Patient Protection and Affordable Care Act'' (75
FR 74864), which established standards for the MLR program. Since then,
we have made several revisions and technical corrections to those
rules. In this final rule, we modify the timeframe for which issuers
can include their ICD-10 conversion costs in their MLR calculation. We
also modify the regulation to clarify how issuers would calculate MLRs
and rebates in States that require the individual and small group
markets to be merged. We note that the standards for ICD-10 conversion
costs and merged markets also apply to the risk corridors program.
Further, we modify the regulation to account for the special
circumstances of the issuers affected by the HHS transitional policy
and the issuers impacted by systems challenges during the
implementation of the Exchanges.
II. Background
A. Legislative Overview
The Patient Protection and Affordable Care Act (Pub. L. 111-148)
was enacted on March 23, 2010. The Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and revised
several provisions of the Patient Protection and Affordable Care Act,
was enacted on March 30, 2010. In this final rule, we refer to the two
statutes collectively as the ``Affordable Care Act.''
The Affordable Care Act reorganizes, amends, and adds to the
provisions of title XXVII of the PHS Act relating to group health plans
and health insurance issuers in the group and individual markets.
Section 1201 of the Affordable Care Act added sections 2702 and
2703 of the PHS Act. Section 2702 of the PHS Act generally requires an
issuer that offers health insurance coverage in the individual or group
market in a State to offer coverage to and accept every individual or
employer in the State that applies for such coverage. Section 2703 of
the PHS Act generally requires an issuer to renew or continue in force
coverage in the group or individual market at the option of the plan
sponsor or the individual.
Prior to enactment of the Affordable Care Act, HIPAA amended the
PHS Act to improve access to individual health insurance coverage for
certain eligible individuals who previously had group coverage, and to
guarantee the renewability of all coverage in the individual market.
These reforms were added as sections 2741 through 2744 of the PHS Act.
HIPAA also added PHS Act provisions permitting sponsors of self-
funded, non-Federal governmental plans to elect to exempt those plans
from (``opt out of'') certain provisions of title XXVII of the PHS Act.
This election was authorized under section 2721(b)(2) of the PHS Act,
which is now designated as section 2722(a)(2) of the PHS Act by the
Affordable Care Act.
Section 2718 of the PHS Act, as added by the Affordable Care Act,
generally requires health insurance issuers to submit an annual MLR
report to HHS and provide rebates to consumers if they do not achieve
specified MLRs.
Sections 2722 and 2763 of the PHS Act, as implemented in 45 CFR
146.145(b) and 148.220, provide that the requirements of parts A and B
of title XXVII of the PHS Act shall not apply to any individual
coverage or any group health plan (or group health insurance coverage)
in relation to its provision of excepted benefits. Excepted benefits
are described in section 2791(c) of the PHS Act. One category of
excepted benefits, called ``noncoordinated excepted benefits,''
includes coverage for only a specified disease or illness, and hospital
indemnity or other fixed indemnity insurance. Benefits in this category
are excepted only if they meet certain conditions specified in the
statute and regulations.
Section 1302(b) requires the Secretary to define EHB, including
prescription drugs.
Section 1302(c) of the Affordable Care Act establishes an annual
limitation on cost sharing for 2014, and provides that this limitation
is to be increased for each year after 2014 by the percentage by which
the average per capita premium for health insurance coverage in the
United States for the preceding year exceeds the average per capita
premium for 2013. Under section 1302(c), this limitation is to be
rounded to the next lowest multiple of $50.
Section 1311(b) of the Affordable Care Act provides that each State
has the opportunity to establish an Exchange that: (1) Facilitates the
purchase of insurance coverage by qualified individuals through QHPs;
(2) provides for the establishment of a SHOP designed to assist
qualified employers in the enrollment of their qualified employees in
QHPs; and (3) meets other requirements specified in the Affordable Care
Act.
Section 1311(c)(3) of the Affordable Care Act requires the
Secretary to develop a rating system to rate QHPs offered through an
Exchange on the basis of quality and price. Section 1311(c)(4) of the
Affordable Care Act directs the Secretary to establish an ESS system
that would evaluate the level of enrollee satisfaction of members in
QHPs offered through an Exchange, for each QHP with more than 500
enrollees in the previous year. Sections 1311(c)(3) and 1311(c)(4) of
the Affordable Care Act further require an Exchange to provide
information to individuals and employers from the rating and ESS
systems on the Exchange's Web site. We have already promulgated
regulations in 45 CFR 155.200(d) that direct Exchanges to oversee
implementation of ESSs and ratings of health care quality and
[[Page 30245]]
outcomes, and 45 CFR 156.200(b)(5) \4\ that directs QHP issuers that
participate in Exchanges to report health care quality and outcomes
information and to implement an ESS consistent with the Affordable Care
Act.
---------------------------------------------------------------------------
\4\ Patient Protection and Affordable Care Act; Establishment of
Exchanges and Qualified Health Plans; Exchange Standards for
Employers; Final Rule, 77 FR 18310 (Mar. 27, 2012) (to be codified
at 45 CFR parts 155, 156, & 157).
---------------------------------------------------------------------------
Sections 1311(d)(4)(K) and 1311(i) of the Affordable Care Act
direct all Exchanges to establish a Navigator program.
Section 1312(a)(2) of the Affordable Care Act provides that a
qualified employer may provide support for coverage of employees under
a QHP by selecting any level of coverage under section 1302(d) to be
made available to employees through a SHOP. Section 1312(a)(2) further
provides that employees of an employer who makes such an election may
choose to enroll in a QHP that offers coverage at that level.
Section 1321(a) of the Affordable Care Act provides authority for
the Secretary to establish standards and regulations to implement the
statutory requirements related to Exchanges, QHPs and other components
of title I of the Affordable Care Act. Section 1321(a)(1) directs the
Secretary to issue regulations that set standards for meeting the
requirements of title I of the Affordable Care Act with respect to,
among other things, the establishment and operation of Exchanges.
Section 1321(a)(2) requires the Secretary to engage in consultation to
ensure balanced representation among interested parties.
Section 1321 of the Affordable Care Act provides for State
flexibility in the operation and enforcement of Exchanges and related
requirements. Section 1321(d) provides that nothing in title I of the
Affordable Care Act shall be construed to preempt any State law that
does not prevent the application of title I of the Affordable Care Act.
Section 1311(k) specifies that Exchanges may not establish rules that
conflict with or prevent the application of regulations promulgated by
the Secretary.
Section 1321(c)(1) requires the Secretary of HHS (referred to
throughout this rule as the Secretary) to establish and operate an FFE
within States that either: (1) Did not elect to establish an Exchange;
or (2) as determined by the Secretary, did not have any required
Exchange operational by January 1, 2014.
Section 1321(c)(2) of the Affordable Care Act provides that the
provisions of section 2723(b) of the PHS Act \5\ shall apply to the
enforcement under section 1321(c)(1) of requirements of section
1321(a)(1), without regard to any limitation on the application of
those provisions to group health plans. Section 2723(b) of the PHS Act
authorizes the Secretary to impose CMPs as a means of enforcing the
individual and group market reforms contained in Part A of title XXVII
of the PHS Act when, in the Secretary's determination, a State fails to
substantially enforce these provisions.
---------------------------------------------------------------------------
\5\ Section 1321(c) of the Affordable Care Act erroneously cites
to section 2736(b) of the PHS Act instead of 2723(b) of the PHS Act.
This was clearly a typographical error, and we have interpreted
section 1321(c) of the Affordable Care Act to incorporate section
2723(b) of the PHS Act.
---------------------------------------------------------------------------
Section 1341 of the Affordable Care Act requires the establishment
of a transitional reinsurance program in each State to help pay the
cost of treating high-cost enrollees in the individual market from 2014
through 2016. Section 1342 of the Affordable Care Act directs the
Secretary to establish a temporary risk corridors program that provides
for the sharing in gains or losses resulting from inaccurate rate
setting from 2014 through 2016 between the Federal government and
certain participating health plans. Section 1343 of the Affordable Care
Act establishes a permanent risk adjustment program that provides for
payments to health insurance issuers that attract higher-risk
populations, such as those with chronic conditions, and charges issuers
that attract lower-risk populations thereby reducing incentives for
issuers to avoid higher-risk enrollees.
Section 1411(f)(1) of the Affordable Care Act provides that the
Secretary, in consultation with the Secretary of the Treasury, the
Secretary of Homeland Security, and the Commissioner of Social
Security, shall establish procedures by which the Secretary or one of
such other Federal officers hears and makes decisions with respect to
appeals of any determination under subsection (e) and redetermines
eligibility on a periodic basis in appropriate circumstances. Section
1411(f)(2) of the Affordable Care Act provides that the Secretary shall
establish a separate appeals process for employers who are notified
under section 1411(e)(4)(C) of the Affordable Care Act that the
employer may be liable for a tax imposed by section 4980H of the
Internal Revenue Code of 1986 (the Code) with respect to an employee
because of a determination that the employer does not provide minimum
essential coverage through an employer-sponsored plan or that the
employer does provide that coverage but it is not affordable coverage
with respect to an employee.
Section 1411(h) of the Affordable Care Act sets forth CMPs to which
any person may be subject if that person provides inaccurate
information as part of an Exchange application or improperly uses or
discloses an applicant's information.
Section 1501(b) of the Affordable Care Act added section 5000A to
the Code. That section, as amended by the TRICARE Affirmation Act of
2010 (Pub. L. 111-159, 124 Stat. 1123) and Public Law 111-173 (124
Stat. 1215), requires nonexempt individuals to either maintain minimum
essential coverage or make a shared responsibility payment for each
month beginning in 2014. It also describes categories of individuals
who may qualify for an exemption from the individual shared
responsibility payment. Section 1311(d)(4)(H) of the Affordable Care
Act specifies that the Exchange will, subject to section 1411 of the
Affordable Care Act, grant certifications of exemption from the
individual shared responsibility payment specified in section 5000A of
the Code. Standards relating to these provisions were established in
IRS regulations titled, ``Shared Responsibility Payment for Not
Maintaining Minimum Essential Coverage Final Rule,'' published in the
August 30, 2013 Federal Register (78 FR 53646) and HHS regulations
titled, ``Exchange Functions: Eligibility for Exemptions; Miscellaneous
Minimum Essential Coverage Provisions Final Rule,'' published in the
July 1, 2013 Federal Register (78 FR 39494).
B. Stakeholder Consultation and Input
HHS has consulted with stakeholders on policies related to the
operation of Exchanges, including the SHOP and the premium
stabilization programs. HHS has held a number of listening sessions
with consumers, providers, employers, health plans, the actuarial
community, and State representatives to gather public input. HHS
consulted with stakeholders through regular meetings with the National
Association of Insurance Commissioners (NAIC), regular contact with
States through the Exchange Establishment grant and Exchange Blueprint
approval processes, technical health care quality measurement experts,
health care survey development experts, and meetings with Tribal
leaders and representatives, health insurance issuers, trade groups,
consumer advocates, employers, and other interested parties. In
addition, HHS received public comment on various notices published in
the Federal
[[Page 30246]]
Register relating to health care quality in the Exchanges,\6\ enrollee
experience measures and domains,\7\ and the QRS, which provided
valuable feedback on quality reporting and quality rating
requirements.\8\ We considered all of the public input as we developed
the policies in this final rule.
---------------------------------------------------------------------------
\6\ Request for Information Regarding Health Care Quality for
Exchanges: http://www.gpo.gov/fdsys/pkg/FR-2012-11-27/pdf/2012-28473.pdf.
\7\ Request for Domains, Instruments, and Measures for
Development of a Standardized Instrument for Use in Public Reporting
of Enrollee Satisfaction With Their Qualified Health Plan and
Exchange: http://www.gpo.gov/fdsys/pkg/FR-2012-06-21/html/2012-15162.htm.
\8\ Patient Protection and Affordable Care Act; Exchanges and
Qualified Health Plans, Quality Rating System (QRS) Framework,
Measures and Methodology; Notice with Comment, 78 FR 69418 (Nov. 19,
2013).
---------------------------------------------------------------------------
C. Structure of Final Rule
The regulations outlined in this final rule will be codified in 45
CFR parts 144, 146, 147, 148, 153, 154, 155, 156, and 158. Part 144
outlines requirements relating to health insurance coverage. Part 146
outlines the group health insurance market requirements of the PHS Act
added by HIPAA and other statutes, including opt-out provisions for
sponsors of self-funded, non-Federal governmental plans. Part 147
outlines health insurance reform requirements for the group and
individual markets added by the Affordable Care Act, including
standards related to guaranteed availability and guaranteed
renewability of coverage. Part 148 outlines the individual health
insurance market requirements of the PHS Act added by HIPAA and other
statutes, including standards related to guaranteed availability with
respect to certain eligible individuals and guaranteed renewability for
all individuals. Part 153 outlines standards related to the reinsurance
and risk corridors programs. Part 154 outlines standards related to the
disclosure and review of rate increases. Part 155 outlines standards
related to the operations and functions of an Exchange, including
standards related to non-discrimination, accessibility, and enforcement
remedies; standards applicable to the consumer assistance functions
performed by Navigators, non-Navigator assistance personnel, and
certified application counselors; standards related to eligibility
appeals; standards related to exemptions; standards related to quality
reporting; and standards related to SHOP. Part 156 outlines health
insurance issuer responsibilities, including EHB prescription drug
standards; the methodology for calculating the annual limit on cost-
sharing for years after 2014; minimum certification standards;
standards for recognition of certain types of coverage as minimum
essential coverage; quality standards for QHPs; and other QHP issuer
responsibilities. Part 158 outlines standards related to the MLR
program, including standards related to treatment of ICD-10 conversion
costs, standards related to adjustments for issuers affected by the HHS
transitional policy and issuers that incurred costs due to the
technical issues during the implementation of the Exchanges, and
standards related to MLR reporting and rebate calculations in States
with merged individual and small group markets.
III. Provisions of the Proposed Regulations and Analysis and Responses
to Public Comments
The proposed rule titled, ``Patient Protection and Affordable Care
Act; Exchange and Insurance Market Standards for 2015 and Beyond,'' was
published in the Federal Register on March 21, 2014 (79 FR 15808), with
comment period ending April 21, 2014 (referred to in this preamble as
the ``proposed rule''). In total, we received approximately 220
comments on the proposed rule. Comments represented a wide variety of
stakeholders, including but not limited to States, tribes, tribal
organizations, health plans, consumer groups, employer groups,
healthcare providers, industry experts, and members of the public.
Some comments were general public comments on the Affordable Care
Act and the government's role in health care, but not specific to the
proposed rule. We have not addressed such comments, and others that are
not directly related to the proposed rule, because they are outside the
scope of this final rule.
In this final rule, we provide a summary of each proposed
provision, a summary of and responses to the public comments received,
and the provisions we are finalizing.
Comment: Some commenters were concerned that the 30-day comment
period did not provided sufficient opportunity for public review and
comment on the proposed rule. One commenter stated that the proposed
rule included many distinct policy issues, each of which should be
addressed in separate rulemaking.
Response: HHS provided a 30-day comment period, which is consistent
with the Administrative Procedure Act and the policy established by the
Assistant Secretary for Administration (ASA) and the Office of
Management and Budget (OMB). Additionally, HHS discussed nearly all of
the proposed policies in the preamble to the HHS Notice of Benefit and
Payment Parameters for 2015 final rule published on March 11, 2014 (79
FR 13744).\9\ HHS believes that interested stakeholders had adequate
opportunity to provide comment on the policies established in this
final rule.
---------------------------------------------------------------------------
\9\ Patient Protection and Affordable Care Act; HHS Notice of
Benefit and Payment Parameters for 2015, 79 FR 13744 (March 11,
2014).
---------------------------------------------------------------------------
A. Part 144--Requirements Relating to Health Insurance Coverage
Definitions of Product and Plan (Sec. 144.103)
See the discussion in section III.C.1.b, ``Product Discontinuance
and Uniform Modification of Coverage Exceptions to Guaranteed
Renewability Requirements.''
B. Part 146--Requirements for the Group Health Insurance Market
1. HIPAA Opt-Out Provisions for Plan Sponsors of Self-Funded, Non-
Federal Governmental Plans (Sec. 146.180)
We proposed to codify the requirement that self-funded, non-Federal
governmental plans may no longer elect to be exempt from (``opt out
of'') requirements of title XXVII of the PHS Act related to limitations
on preexisting condition exclusion periods; requirements for special
enrollment periods; and prohibitions on health status discrimination.
Self-funded, non-Federal governmental plans may, however, continue to
opt-out of requirements related to benefits for newborns and mothers;
parity in mental health and substance use disorder benefits; required
coverage for reconstructive surgery following mastectomies; and
coverage of dependent students on a medically necessary leave of
absence.
We also proposed to streamline the submission process by requiring
that opt-out elections be submitted electronically in a format
specified by the Secretary in guidance. We solicited comment on these
proposals, including ways to improve the electronic submission process.
The proposed rule provided a special effective date for self-
funded, non-Federal governmental plans maintained pursuant to a
collective bargaining agreement ratified before March 23, 2010 (the
date of enactment of the Affordable Care Act) that had opted out of the
requirement categories which are no longer available for exemption.
These collectively bargained plans may continue to be exempt from the
[[Page 30247]]
requirements until the first plan year following the expiration of such
agreement.
The effect of the Affordable Care Act amendments on the HIPAA opt-
out provisions was discussed in previous CMS guidance released on
September 21, 2010.\10\
---------------------------------------------------------------------------
\10\ Amendments to the HIPAA opt-out provision (formerly section
2721(b)(2) of the Public Health Service Act) made by the Affordable
Care Act (September 21, 2010). Available at: http://www.cms.gov/CCIIO/Resources/Files/Downloads/opt_out_memo.pdf.
---------------------------------------------------------------------------
We noted that under the current regulations, plan sponsors of
collectively bargained plans may submit one opt-out election for all
group health plans subject to the same collective bargaining agreement.
We solicited comment on whether the plan sponsor in such circumstances
should be required to list all plans subject to the agreement. We also
solicited comment on whether a single opt-out submission should be
permitted in the case of multiple group health plans not subject to
collective bargaining.
Comment: One commenter supported a requirement that plan sponsors
of collectively bargained plans must list in their opt-out election all
group health plans subject to the collective bargaining agreement.
Response: We establish this requirement in new paragraph (b)(1)(ix)
of Sec. 146.180. Sponsors of group health plans not subject to
collective bargaining will continue to be required to file a separate
election for each group health plan.
We solicited comments on whether the regulation should be modified
to allow plan sponsors of multiple group health plans not subject to
collective bargaining to submit one election for all of its group
health plans. We did not receive any comments on this issue;
accordingly, we are adding regulation text to clarify the current
requirement that a separate election must be filed for each group
health plan not subject to collective bargaining.
We will continue to accept opt-out elections via U.S. Mail or
facsimile until December 31, 2014. During this time, opt-out elections
will continue to be accepted by mail to: Centers for Medicare &
Medicaid Services (CMS), Center for Consumer Information and Insurance
Oversight (CCIIO), Attn: HIPAA Opt-Out, 200 Independence Avenue SW.,
Room 733H-02, Washington, DC 20201. Elections may also continue to be
submitted via facsimile at 301-492-4462. For elections submitted via
U.S. mail, CMS will continue to use the postmark on the envelope in
which the election is submitted to determine that the election is
timely filed. If the latest filing date falls on a Saturday, Sunday, or
a State or Federal holiday, CMS accepts a postmark or a fax on the next
business day. Questions regarding the opt-out process can be submitted
to CMS at [email protected]. CMS's Center for Consumer
Information and Insurance Oversight makes publicly available on its Web
site a list of self-funded, non-Federal governmental plans that have
submitted an opt-out election and the PHS Act provisions subject to the
election.\11\
---------------------------------------------------------------------------
\11\ See List of HIPAA Opt-Out Elections for Self-Funded Non-
Federal Governmental Plans. Available at: http://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/hipaa-optout-nfgp-list-05-06-2014.pdf.
---------------------------------------------------------------------------
Summary of Regulatory Changes
We are finalizing the revisions proposed in Sec. 146.180 of the
proposed rule, with the following modifications. In paragraph (b), we
add paragraph (b)(1)(ix) to state that, in the case of plan sponsor
submitting one opt-out election for multiple group health plans subject
to the same collective bargaining agreement, the opt-out election must
list each group health plan subject to the agreement. Also in paragraph
(b), we add paragraph (b)(1)(x) to state that, in the case of a plan
sponsor submitting more than one opt-out election for plans that are
not collectively bargained, a separate opt-out election must be
submitted for each such plan. In paragraph (c)(3), we delete the
special rule for timely filing with respect to opt out elections
submitted by U.S. mail, and instead specify a special rule for timely
filing that applies to electronic filings. The special rule indicates
that, if the latest filing date falls on a Saturday, Sunday, or a State
or Federal holiday, CMS accepts filings submitted the next business
day.
C. Part 147--Health Insurance Reform Requirements for the Group and
Individual Health Insurance Markets
Guaranteed Availability and Guaranteed Renewability of Coverage
(Sec. Sec. 147.104 and 147.106)
a. No Effect on Other Laws
We proposed that nothing in the guaranteed availability
requirements should be construed to require an issuer to offer coverage
where other Federal laws operate to prohibit the issuance of such
coverage. Similarly, we proposed that nothing in the guaranteed
renewability requirements should be construed to require an issuer to
renew or continue in force coverage for which continued eligibility
would otherwise be prohibited under applicable Federal law. We offered
several examples of statutory exceptions to the guaranteed availability
and renewability requirements in the preamble to the proposed rule (78
FR 15815-6), and noted that only Federal law, not State law, can create
such exceptions. We solicited comment on these clarifications, as well
as other clarifications that may be helpful.
Additionally, we proposed a technical correction in Sec.
147.104(b)(1)(i) to delete duplicate regulatory text added in earlier
rulemaking.\12\ We also proposed other minor regulatory revisions in
paragraph (b)(1)(i) for clarity.
---------------------------------------------------------------------------
\12\ Patient Protection and Affordable Care Act; Maximizing
January 1, 2014 Coverage Opportunities, 78 FR 76212 (December 17,
2013).
---------------------------------------------------------------------------
Comment: Some commenters recommended the final rule enumerate all
current Federal prohibitions on the sale of health insurance coverage
that would create exceptions to the guaranteed availability and
renewability requirements.
Response: We believe it is neither appropriate nor practical to
outline every specific exception to the guaranteed availability and
renewability requirements and that a general rule of construction
provides sufficient guidance to stakeholders.
Comment: One commenter sought clarification on situations where
issuers offering coverage through an Exchange can sell coverage to
individuals who are enrolled in Medicare and recommended that HHS add
additional questions within the eligibility application to prevent
individuals from receiving advance payments of the premium tax credit
(APTC) who are also enrolled in Medicare.
Response: Section 1882(d)(3) of the Social Security Act (the
``Medicare anti-duplication provision'') prohibits the sale of an
individual market insurance policy that duplicates Medicare benefits to
anyone known to be entitled to benefits under Part A (receiving free
Part A) or enrolled in Part B or Premium Part A. This prohibition
applies to individual health insurance coverage sold both through and
outside an Exchange. This final rule clarifies that this prohibition
creates an exception to the guaranteed availability provision where the
prohibition would be violated by a sale.
While the Medicare anti-duplication provision prohibits the sale or
issuance of a policy, it does not provide for discontinuance or non-
renewal of a policy already issued, such as when an individual covered
by an individual market policy becomes covered by
[[Page 30248]]
Medicare. As stated in the individual market regulations at 45 CFR
148.122(b)(2), implementing the HIPAA guaranteed renewability
provision, Medicare eligibility or entitlement is not a basis for non-
renewal or termination of individual health insurance coverage. For
ease of reference we are adding Sec. 147.106(g)(2) of this final rule,
which repeats the regulatory language in Sec. 148.122(b)(2). We note,
however, that nothing in the Medicare anti-duplication provision or the
guaranteed availability or renewability regulations prohibits an issuer
from coordinating benefits under an individual health insurance policy
with Medicare benefits in the case of a beneficiary. HHS will consider
including questions in the FFE enrollment application to address this
issue.
Summary of Regulatory Changes
We are finalizing the proposed provisions with the following
modification. We add Sec. 147.106(g)(2) to restate the standard under
the HIPAA guaranteed renewability regulations at Sec. 148.122(b)(2)
that Medicare eligibility or entitlement is not a basis for non-renewal
or termination of an individual's health insurance coverage in the
individual market.
b. Product Discontinuance and Uniform Modification of Coverage
Exceptions to Guaranteed Renewability Requirements
We proposed standards to define whether certain modifications to
coverage constitute ``uniform modifications'' within the meaning of the
PHS Act. These provisions were proposed in the guaranteed renewability
regulations at 45 CFR 146.152, 147.106, and 148.122. Under the proposed
rule, they would apply to issuers offering health insurance coverage in
the group and individual markets, including both grandfathered and non-
grandfathered health plans.
Specifically, we proposed that a modification made by an issuer
solely pursuant to applicable Federal or State law would be considered
a modification of the same product, and offered several examples of
changes in response to Federal law that would constitute a modification
of coverage.
We further proposed that if an issuer makes changes to the health
insurance coverage for a product that are not pursuant to applicable
Federal or State law, the modifications would also be considered a
uniform modification of coverage if the resulting product meets all of
the following criteria:
The product is offered by the same health insurance issuer
(within the meaning of section 2791(b)(2) of the PHS Act);
The product is offered as the same product type (for
example, preferred provider organization (PPO) or health maintenance
organization (HMO));
The product covers a majority of the same counties in its
service area;
The product has the same cost-sharing structure, except
for variation in cost sharing solely related to changes in cost and
utilization of medical care, or to maintain the same level of coverage
described in sections 1302(d) and (e) of the Affordable Care Act (for
example, bronze, silver, gold, platinum or catastrophic); and
The product provides the same covered benefits, except for
changes in benefits that cumulatively impact the rate for the product
by no more than 2 percent (not including changes required by applicable
Federal or State law).
These proposed criteria were intended to provide flexibility for
issuers to make reasonable adjustments to coverage, while ensuring
predictability and continuity for consumers and minimizing unnecessary
terminations of coverage.
We proposed that States have flexibility to apply additional
criteria that broaden the scope of what is considered a uniform
modification, but that narrower State standards would be preempted.
We also proposed to add a provision in Sec. 147.106(e)(1) to
restate the uniform modification of coverage provision for individual
health insurance coverage under Sec. 148.122(g). This was proposed for
ease of reference and to facilitate issuer compliance.
To provide clear information to consumers and help ensure they
understand the changes and choices available to them in the individual
and group markets, we proposed that issuers provide standard notices in
a form and manner prescribed by the Secretary when discontinuing or
renewing coverage. Contemporaneously with the proposed rule, we
released draft standard notices that issuers would be required to use
in each of these situations, and requested public comment.\13\ In the
standard notices guidance, we noted that States would have the option
of developing State-required notices for issuers to use in place of the
Federal notices, if approved by CMS. State notices approved for use
could not be modified in any way by the issuer.
---------------------------------------------------------------------------
\13\ Standard Notices When Discontinuing or Renewing a
Particular Product in the Group or Individual Market (March 14,
2014). Available at: http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/draft-discontinuance-renewal-notices-03-14-14.pdf.
---------------------------------------------------------------------------
Finally, we stated that HHS or the applicable State will review
rate increases for existing products that an issuer withdrew and
attempted to re-file within a 12-month period as new products in order
to avoid rate review as if they were simply renewed, if the changes to
the discontinued product do not differ from the uniform modification
criteria outlined above. We indicated that the same criteria set forth
under the guaranteed renewability standards will be used to determine
whether the re-filed product is considered to be the same ``product''
for purposes of determining whether the rate filing is subject to
submission and review under 45 CFR Part 154. We requested comment on
whether this clarification, or a reference to the uniform modification
criteria, should be incorporated into the rate review regulations.
Comment: Some commenters recommended the proposed uniform
modification of coverage provisions and standard notice requirements
not apply in the large group market. They noted that large employers
are sophisticated purchasers that typically negotiate customized
products for their employees and that will receive little value from
these protections. One commenter recommended the requirements not apply
to grandfathered health plans, noting that grandfathered plans are
already, as part of the requirements related to maintaining
grandfathered status, subject to restrictions on benefit changes that
make the proposed provisions unnecessary.
Response: We recognize that purchasers in the large group market
have greater leverage than those in the individual and small group
markets. The guaranteed renewability statute contemplates these market
differences by placing the requirement that modifications must be
``consistent with State law and effective on a uniform basis'' only on
products in the individual and small group markets, but not on products
in the large group market.\14\ For these reasons, we do not believe
that the same interpretation, providing additional protection of
renewability, is necessary in the large
[[Page 30249]]
group market and are finalizing the regulation to apply only to
coverage in the individual and small group markets.
---------------------------------------------------------------------------
\14\ The PHS Act guaranteed renewability sections enacted under
HIPAA, section 2712 for the group market and 2742 for the individual
market, both include exceptions for uniform modifications of
coverage. We recognize that PHS Act section 2703 excludes reference
in some paragraphs to the individual market. However, we note that
the provisions of PHS Act section 2742 still apply, and we believe
that the uniform modification exception is still applicable in the
individual market.
---------------------------------------------------------------------------
We also note that, based on the statutory language requiring the
changes to be ``effective on a uniform basis,'' we are adding
regulation text explicitly stating that the interpretation of uniform
modification provided for in this rule also requires that the
modifications be made uniformly.
Because the guaranteed renewability statutes applicable to
grandfathered individual market policies and group health insurance
plans, PHS Act sections 2742 and 2712, respectively, use the same terms
as the statute enacted under the Affordable Care Act at PHS Act section
2703, we decline to interpret the requirements differently for
grandfathered plans. We note that in proposing to amend Sec. 146.152,
we unintentionally proposed to replace paragraph (g) with the new
paragraph regarding notice of renewal of coverage, rather than adding a
new paragraph (h). In this final rule, we correctly add the new
paragraph as paragraph (h). Similarly, we note that in proposing to
amend Sec. 148.122, we unintentionally proposed to replace paragraph
(h) with the new paragraph regarding notice of renewal of coverage,
rather than adding a new paragraph (i). In this final rule, we
correctly add the new paragraph as paragraph (i).
Comment: The proposed rule provided that coverage modifications
made ``solely pursuant to applicable Federal or State law'' would be
considered a uniform modification of coverage. Some commenters
requested clarification that references to Federal or State law also
include Federal or State regulations or guidance. Another commenter
urged HHS to allow issuers to increase out-of-pocket maximums based on
annual index adjustments to the annual limitation on cost sharing
without triggering a product discontinuance.
Response: The regulation text of the proposed rule specified that
modifications made ``solely pursuant to applicable Federal or State
law'' would be considered uniform modifications of coverage. We did not
intend the word ``law'' to limit the scope of this provision to
statutory requirements. Therefore, we are modifying the regulation text
to explicitly state that, for coverage modifications to meet this
standard, they must be made ``solely pursuant to applicable Federal or
State requirements.'' Such requirements could be based on statutes,
rules, regulations and any other applicable authority imposing binding
requirements on issuers.
In response to the comment addressing the example we provided in
the proposed rule of what would be considered ``solely pursuant to
applicable Federal or State law,'' we also are adding language
providing more detail on what constitutes a modification ``made solely
pursuant to applicable Federal and State requirements.'' Specifically,
the modification must be made within a reasonable time period after a
Federal or State requirement is imposed or modified, and it must also
be directly related to the imposition or modification of a Federal or
State requirement. For example, if State legislation newly requires a
minimum level of benefits (for example, imposing a new minimum visit
limit on specific benefits) reducing covered benefits to meet the
minimum requirement would not be directly related to the new
requirement because the lesser coverage of the benefit coverage was
previously permissible, and the modification did not have to be made in
order for the issuer to comply with the State law. Accordingly, the
modification would not be considered to have been ``made solely
pursuant to'' the new requirement. Such a modification would have to
meet the other criteria in the final rule to be considered a uniform
modification of coverage.
Comment: We received comments that requested clarification about
whether and how the guaranteed renewability provisions apply to stand-
alone dental plans (SADPs).
Response: Pursuant to Sec. 146.145(b)(3) and Sec. 148.220(b)(1),
if an SADP is provided under a separate policy, certificate, or
contract of insurance or is otherwise not an integral part of a group
health plan, it would constitute excepted benefits and, therefore,
generally would not be subject to the requirements of the PHS Act,
including the guaranteed renewability requirements.
However, in the 2015 Letter to Issuers in the Federally-facilitated
Marketplaces (2015 Letter to Issuers),\15\ we indicated that we will
apply the guaranteed renewability standards to determine whether a plan
offered in 2014 is the same plan for purposes of recertifying the plan
for sale in 2015 through the Federally-facilitated Exchange, and that
this standard would also apply to the determination of whether SADPs
are being renewed for purposes of recertification. This does not in any
way change the status of SADPs as excepted benefits. We are merely
using the uniform modification standard for the purpose of identifying
SADPs that can be recertified and renewed, rather than certified as
different plans from those that were Exchange-certified in 2014.
---------------------------------------------------------------------------
\15\ 2015 Letter to Issuers in the Federally-facilitated
Marketplaces (March 14, 2014), available at: http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2015-final-issuer-letter-3-14-2014.pdf.
---------------------------------------------------------------------------
In the 2015 Payment Notice, we established the national annual
limit on cost sharing for the pediatric dental EHB when offered through
an SADP of $350 for one covered child and $700 for two or more covered
children. We acknowledge that, given the change to the annual limit on
cost sharing, SADP issuers may need to modify the cost sharing of their
currently certified plans in order to meet the annual limit established
for implementation in 2015.
We interpret any uniform cost-sharing changes made to conform to
the new national annual limit on cost sharing as meeting the uniform
modification standard, because these modifications would meet the
requirements under Sec. 147.106(e)(2) of this final rule, which
provides that, ``modifications made uniformly and solely pursuant to
applicable Federal or State requirements are considered a uniform
modification of coverage.'' We further note that the general
applicability of the annual limitation on cost sharing, if applied to
all plans, would affect all consumers.
Therefore, we would consider an SADP that is uniformly modified to
reduce its annual limitation on cost sharing pursuant to the change in
regulations to meet the standards in paragraph (e)(2) as being a
renewal with a uniform modification of the same plan for the purposes
of recertification.
Comment: Several commenters urged HHS to more clearly distinguish
whether the proposed uniform modification provisions would be applied
to ``products'' or ``plans.'' Commenters explained that if our proposed
rule were interpreted to apply to modifications made at the plan level,
issuers would be forced to discontinue all plans associated with a
product in order to make any plan-level changes (such as creating
identical new plans to reflect network pricing)--causing significant
market disruption and many unnecessary terminations of coverage for
existing enrollees.
Response: We interpret the guaranteed renewability provisions of
section 2703 of the PHS Act to apply at the product-level. This
statute, which closely resembles the guaranteed renewability statutes
enacted under HIPAA, uses the terms ``health insurance coverage,''
which, as defined at section 2791 of the PHS Act, means ``benefits
consisting of medical care (provided directly, through insurance or
[[Page 30250]]
reimbursement, or otherwise and including items and services paid for
as medical care) under any hospital or medical service policy or
certificate, hospital or medical service plan contract, or health
maintenance organization contract offered by a health insurance
issuer.'' We interpret the references to ``health insurance coverage''
throughout section 2703 of the PHS Act to mean what is referred to in
the commercial health insurance context as a health insurance
``product.''
To clarify the application of these provisions in response to the
above comments, we are codifying definitions of ``product'' and
``plan'' for purposes of this rule. Because similar language and
concepts apply in the guaranteed availability statutes and regulations,
we will apply these definitions to those regulations as well, by
codifying the definitions at Sec. 144.103. These definitions are
adopted largely from the Web portal and the rate review regulations.
Under this final rule, for purposes of guaranteed availability and
guaranteed renewability, the term ``product'' means a discrete package
of health insurance coverage benefits that a health insurance issuer
offers using a particular product network type (for example, health
maintenance organization (HMO), preferred provider organization (PPO),
exclusive provider organization (EPO), point of service (POS), or
indemnity) within a service area. This term generally reflects the
definition of ``health insurance coverage'' in the PHS Act, which
primarily refers to a specific contract of covered benefits, rather
than a specific level of cost-sharing imposed.\16\
---------------------------------------------------------------------------
\16\ See PHS Act section 2791(b)(1).
---------------------------------------------------------------------------
For purposes of guaranteed availability and guaranteed
renewability, the term ``plan'' means, with respect to an issuer and a
product, the pairing of the health insurance coverage benefits under
the product with a particular level of coverage (as described in
sections 1302(d) and (e) of the Affordable Care Act) and service area.
The combination of all plans within a product constitutes the total
product that must be made available under guaranteed availability and
renewed under guaranteed renewability to anyone in the service area of
the plan in question, while the combined service areas of all plans
constitute the service area of the product. If a product, or a plan
under a product, does not have a defined service area, then the service
area is the entire State in which the product is offered. To avoid any
confusion, we also will change the reference to `termination of plan''
to ``termination of product'' at Sec. 146.152.(b)(4), Sec.
147.106(b)(4), and Sec. 148.122(c)(3), and make a technical
grammatical correction to Sec. 146.152.(b)(4) and Sec. 148.122(c)(3).
This technical correction changes an ``and'' to an ``or,'' because an
issuer is only required to comply with one and not both of the
referenced paragraphs.
Under these definitions, an issuer must guarantee availability and
guarantee renewability at the option of the plan sponsor or individual
of the particular product that they purchased in the group or
individual market, including each of the plans available in the sponsor
or individuals service area that are part of all the plans that
comprise the product at the time of renewal. The product discontinuance
and uniform modification exceptions to guaranteed renewability also
apply at the product level. An issuer may discontinue offering a
particular product in a market only if the issuer uniformly withdraws
the product from that market. Similarly, an issuer may modify the
health insurance coverage for a product if the issuer ensures the
modification is effective uniformly for all plans within that product.
Issuers have flexibility, however, to make modifications at the plan
level or to discontinue plans within a product consistent with the
provisions of (e)(2) or (3).
As further described in subsequent responses to comments in this
section, we are clarifying how three of the proposed criteria--related
to cost-sharing, benefits, and service area--apply primarily at the
plan level rather than the product level.
Comment: A few commenters sought clarification about the changes
that could be made under the criterion related to product type. Two
commenters raised particular questions about changes with respect to
combined product arrangements, such as adding a point of service (POS)
option to a health maintenance organization (HMO) product or removing
an exclusive provider organization (EPO) benefit from a preferred
provider organization (PPO) product. One commenter recommended that
restrictions on product type be limited to situations when a product
transitions to or from an HMO.
Response: While an issuer may offer particular benefits within a
product using various network options, HHS believes most products
generally are based on a single primary network type. For example, an
HMO product with a POS option is nonetheless an HMO product, and a PPO
product with an EPO benefit is nonetheless a PPO product. Accordingly,
a product will not cease to be offered as the same product type solely
because it adds or removes certain secondary network options. We
believe referring to ``product network type'' more accurately conveys
the intent of this requirement and make that revision in the final
rule. We also provide the examples of HMO, PPO, EPO, POS and indemnity
as product network types in the definition of ``product'' in Sec.
144.103 of this final rule.
Comment: Regarding the proposed service area criterion, a number of
commenters recommended focusing only on service area reductions, rather
than expansions. One commenter expressed concern about discriminatory
service areas and suggested HHS establish standards to prevent issuers
from dropping coverage in areas that are expected to have higher health
risk. Two commenters noted that, in many States, product service areas
are not filed with the State insurance department, presenting
challenges for State regulators to administer requirements related to
service areas.
Response: Under the proposed rule, for modifications to be
considered uniform modifications of coverage, a product must continue
to cover a majority of the same counties in its service area. This
standard prevents significant reductions in a product's service area;
however, service area expansions of any degree would satisfy this
standard, provided that a majority of the original product service area
remains covered. We acknowledge the concerns but believe the standard
established in this final rule balances consumers' interest in coverage
stability and issuers' interest in flexibility to appropriately manage
their provider networks. We note that, since 1996, the HIPAA guaranteed
renewability provisions (sections 2712(b)(5) and 2742(b)(4) of the PHS
Act, as codified prior to enactment of the Affordable Care Act) have
allowed issuers to non-renew or discontinue coverage under a network
plan if there is no longer any enrollee in connection with the plan who
lives, resides, or works within the service area of issuer (or in the
area for which the issuer is authorized to do business).
In response to these comments, we are finalizing the rule so that
the provision now requires that, ``The product continues to cover a
majority of the same service area'' to be considered a uniform
modification of coverage. We are making this change in recognition that
a service area can be based on units other than counties, consistent
with Sec. 147.102(b)(3), which indicates that
[[Page 30251]]
geographical rating areas can be based on counties, zip codes, or
metropolitan statistical areas.
Comment: Many commenters requested clarification about the extent
of changes that could be made to a plan's cost-sharing structure. Some
commenters interpreted the provision as limiting changes in the type of
cost-sharing used (for example, a co-payment versus coinsurance) and
recommended that issuers be allowed to revise specific cost-sharing
amounts (for example, based on historical or anticipated utilization of
a particular benefit). Other commenters requested flexibility to modify
cost sharing as long as the plan maintains the same metal level,
meaning the same actuarial value metal tier (or catastrophic coverage).
Response: As stated above, we interpret the guaranteed renewability
provisions of section 2703 of the PHS Act to apply at the product-
level. But, in accordance with our definitions of ``product'' and
``plan,'' we note that cost-sharing applies at the plan level. Similar
to the proposed rule, this final rule provides that, for a modification
to be considered a uniform modification of coverage, each plan within
the product must continue to have the same cost-sharing structure as
before the modification, except for any variation in cost sharing
solely related to changes in cost and utilization of medical care
(medical inflation or demand for services based on inflationary
increases in the cost of medical care), or to the extent that changes
are necessary to maintain the same level of coverage (that is, bronze,
silver, gold, platinum, or catastrophic). This provision is intended to
establish basic parameters around cost sharing modifications to protect
consumers from extreme changes in deductibles, copayments, coinsurance,
while preserving issuer flexibility to make reasonable and customary
adjustments from year to year. Further, States have flexibility to
permit broader changes to cost sharing within the uniform modification
provisions, as discussed below. We do not adopt the suggestion to allow
all types of changes to cost sharing within a metal level, since this
could be subject to manipulation and potential abuse. HHS will monitor
compliance with this provision and may issue future guidance if
necessary.
Comment: The proposed rule provided that one of the criteria for
uniform modification is that the product provides the same covered
benefits, except for changes in benefits that cumulatively impact the
rate for the product by no more than 2 percent (not including changes
required by applicable Federal or State law). Some commenters sought
clarification that benefit changes could either increase or decrease
the rate by 2 percentage points without exceeding the 2 percent rate
variation threshold. One commenter asked whether issuers could adjust
for medical inflation when making this assessment. Other commenters
requested clarification whether the provision includes both benefit
enhancements and reductions. Some commenters requested clarification
that benefit changes in response to Federal or State requirements, such
as the addition of the pediatric dental benefit and State-mandated
benefits, are excluded from the 2 percent rate variation threshold. One
commenter recommended applying a separate rate change threshold to each
EHB category and providing States and Exchanges the discretion to
override benefit modifications that have the potential to substantially
harm the consumer.
Response: While benefit changes occur at the product level,
consumers are affected by plan-adjusted index rates based on those
changes. We believe that benefit changes that affect the rate for any
plan within a product by more than 2 percent, regardless of whether
they increase or decrease the rate, are significant to the consumer and
should therefore constitute a new product offering. Therefore, in
accordance with our definitions of ``product'' and ``plan'' for
purposes of this rule and in response to these comments, we are
finalizing the rule to state that, to be a uniform modification under
this part of the rule, changes that cumulatively impact the plan-
adjusted index rate for any plan within the product must be within an
allowable variation of +/-2 percentage points. This provision applies
only to changes in covered benefits, not cost sharing. It includes
changes both to EHB and non-EHB benefits covered under the plan, as
well as increases or decreases in covered benefits. However, rate
changes that are directly attributable to compliance with applicable
Federal or State legal requirements concerning covered benefits (such
as those related to the requirement to provide EHB) are excluded for
purposes of determining the cumulative rate impact.
Comment: Several commenters favored auto-enrollment of individuals
whose product is discontinued, where issuers would ``map'' enrollees to
another product offered by that issuer that most closely resembles the
individuals' previous product. The commenters indicated this practice
is common in the commercial market and Medicare Advantage and promotes
continuity of coverage.
Response: Nothing in this final rule prevents an issuer from auto-
enrolling individuals whose product is being discontinued into another
available product offered by that issuer, as long as the issuer meets
all of the requirements for product discontinuance under the guaranteed
renewability regulations. This includes providing at least 90 days'
notice of the discontinuation in writing and offering each individual
the option to purchase, on a guaranteed availability basis, any other
coverage offered by the issuer.
There are some instances in which an individual may lose coverage
under his or her particular plan but not under the product. For
example, an issuer may decide to no longer offer a particular plan
within a product or to modify a plan's service area within a product
such that the plan no longer covers certain individuals. If these plan-
level changes do not give rise to a product-level discontinuance under
this final rule, the product remains guaranteed renewable at the option
of the plan sponsor or individual, as long other plans within that
product cover their service area. Again, nothing in this rule prevents
an issuer from re-enrolling individuals into another plan that covers
their service area under the same product in which the individuals are
enrolled. HHS expects that issuers would re-enroll individuals in a new
plan providing the same metal level of coverage as their previous plan
within the same product. If a plan at that metal level is not
available, HHS expects that issuers will re-enroll individuals in a
plan that is most similar in metal level to the individual's previous
plan under the same product for that service area.
We note that this does not address the operations of an Exchange,
which may specify additional standards and processes for product
termination, termination of enrollment, and re-enrollment in QHPs
through an Exchange.
Comment: Several commenters expressed support for using the uniform
modification standards to determine whether a rate filing for a product
that is discontinued and another product re-filed the following year is
subject to submission and review under 45 CFR Part 154, noting that
this is an important protection to prevent gaming of the rate review
requirements. Some commenters specifically recommended the
clarification be incorporated into the rate review regulations.
Response: In response to comments, we have amended the definition
of ``product'' in Sec. 154.102 to provide that the term includes any
product that is discontinued and newly filed within a
[[Page 30252]]
12-month period in a market within a State that meets the standards of
Sec. 147.106(e)(2) or (3) (relating to uniform modification of
coverage).
Comment: Many commenters supported the flexibility in the proposed
rule for States to broaden, but not narrow, the scope of what is
considered a uniform modification of coverage. Some commenters sought
clarification about the meaning of ``broaden'' in this context. Other
commenters recommended that State laws that prevent issuers from
discontinuing or uniformly modifying coverage be expressly preempted by
the Federal standards.
Response: After further consideration of this issue, we have
determined not to finalize the ability of States to apply additional
criteria that broaden the scope of what would be considered a uniform
modification in connection with some of the criteria provided for in
this rule, because the characteristics of a product defined in those
criteria are so integral to the product that they cannot be altered
without fundamentally changing the health insurance coverage for that
product. These include the criteria that a product must continue to
offered by the same issuer (paragraph (c)(3)(i)), maintain the same
product network type (paragraph (c)(3)(ii)), and provide, subject to
specific exceptions, the same covered benefits (paragraph (c)(3)(v)).
Modifications that result in a product that does not meet these
criteria will not constitute a uniform modification under this final
rule. This final rule does, however, continue to provide States
flexibility to broaden the definition of uniform modification of
coverage based on the criteria related to service area and cost-sharing
structure. Thus, States could designate a lower threshold for meeting
the service area standard than the requirement to continue to cover at
least a majority of the same service area standard established in this
final rule for which a product must maintain the same service area, or
permit greater changes to a plan's cost-sharing structure, and still
permit the changes to be considered a uniform modification under this
final rule. We reiterate our statement from the preamble to the final
rule published on February 27, 2013 under section 2703 of the PHS Act
(78 FR 13419) that a State standard or requirement that prohibits an
issuer from uniformly modifying coverage in accordance with this final
rule would prevent the application of a Federal requirement and
therefore be preempted.
Comment: Some commenters supported the proposal to require standard
consumer notices when issuers discontinue or renew coverage. Other
commenters felt the notices were overly prescriptive and advocated for
issuer flexibility to modify the notices. For example, commenters
suggested HHS provide model notice language or specify minimum content
requirements. Many commenters requested issuers have the ability to
customize the notices in order to provide specific information to help
consumers make informed purchase decisions, such as information about
premiums, a description of benefit changes, and the policy year and
enrollment deadlines. Some commenters recommended eliminating the
renewal notice requirement altogether. Other commenters argued that
States are in the best position to regulate on product discontinuance
and renewal and suggested that notice requirements be left to the
States.
Response: While we acknowledge the advantages of tailored consumer
communications, and recognize the importance of State involvement, the
final rule adopts the proposed language that notices be provided in a
form and manner specified by the Secretary. We plan to address the
notices in future guidance and intend to address the use of State-
specific notices at that point in time.
Comment: Several commenters recommended that notices be sent only
to the group or individual market policyholder, arguing that it would
be administratively burdensome for issuers and confusing for employees
and dependents to receive information about product renewal and
discontinuation when they are not the primary decision makers.
Response: The final rule maintains the requirement that
discontinuation notices must be provided to all enrollees under the
plan or coverage. Section 2703(c)(1) of the PHS Act requires an issuer
that elects to discontinue offering a particular product to provide at
least 90 days' notice of the discontinuation in writing to each plan
sponsor or individual provided that particular product and to ``all
participants and beneficiaries covered under such coverage.'' We note
that an issuer may satisfy this requirement by providing the notice
only to the subscriber.
By contrast, renewal notices are not required to be provided to
participants, beneficiaries, or enrollees. Both the proposed rule and
this final rule make clear that notices of renewal must only be
provided to the plan sponsor (for example, employer) in the small group
market or the individual market policyholder in the individual market.
Comment: Several commenters recommended that renewal notices be
sent prior to the beginning of the open enrollment period, rather than
90 days before the end of the plan or policy year, to better align with
the options and schedule of the Exchange.
Response: The statute and regulations establish a 90-day notice
requirement only for product discontinuation. In the final rule, we
have added in Sec. 148.122(i) a requirement that renewal notices be
delivered at least 60 calendar days before the date of renewal of the
coverage for grandfathered products in the individual market and, in
Sec. 147.106(f)(2) and Sec. 146.152(h), for all products in the small
group market. For non-grandfathered products in the individual market,
in response to the commenters' request to coordinate the notices with
enrollment in the Exchange, we are requiring in Sec. 147.106(f)(1) the
renewal notices be delivered before the first day of the annual open
enrollment period. We believe this provides sufficient advance notice
for consumers in non-grandfathered individual policies to review other
options for coverage. Since the small group market has continuous year-
round open enrollment, the 60 day advanced notice of renewal provides
sufficient notice to employers. Many grandfathered policies in the
individual market have non-calendar policy years that do not line up
with the annual open enrollment period in the individual market.
Accordingly, the 60 day advanced notice requirement is more appropriate
for these policies.
Comment: Some commenters noted that the Federal notices will
duplicate renewal notices developed by issuers, States, and Exchanges,
and emphasized the need for coordination to prevent consumer confusion.
Response: We agree and encourage issuers, States, and Exchanges to
coordinate enrollee communications to the extent possible.
Summary of Regulatory Changes
We are finalizing the uniform modification provisions proposed in
Sec. 147.106 of the proposed rule with the following modifications and
made corresponding changes in Sec. 146.152 and Sec. 148.122. We are
adding regulation text explicitly stating that the interpretation of
uniform modification provided for in this rule also requires that the
modifications be made uniformly. We add language amending and
clarifying the term ``pursuant to applicable Federal and State law'';
replace ``product type'' with ``product network type''; and to specify
that the product must continue to cover at least a majority of the same
service area, and delete the reference to ``counties.'' We
[[Page 30253]]
only finalize the ability of States to apply additional criteria that
broaden the scope of what would be considered a uniform modification in
connection with the criteria involving service area and cost-sharing
structure. We clarify that the criteria related to cost-sharing and
covered benefits apply at the plan-level. We do not finalize the
interpretation of uniform modification or the corresponding renewal
notice requirements with respect to issuers in the large group market,
only with respect to issuers offering coverage in the individual and
small group markets.
We also are adding definitions of ``product'' and ``plan'' at Sec.
144.103; changing the reference to ``termination of plan'' to
``termination of product'' at Sec. 146.152(b)(4), Sec. 147.106(b)(4),
and Sec. 148.122(c)(3); and are amending the definition of ``product''
in the rate review regulations to reflect the interpretation of uniform
modification, as applied in the rate review context.
D. Part 148--Requirements for the Individual Health Insurance Market
1. Conforming Changes to Individual Market Regulations (Sec. Sec.
148.101 through 148.128)
We proposed conforming revisions to the individual market
provisions contained in 45 CFR Part 148 to remove provisions that are
superseded by the prohibition on preexisting condition exclusions under
new section 2704 of the PHS Act, added by the Affordable Care Act.\17\
We proposed these amendments generally apply when the final rule
becomes effective. Under our proposal, however, the requirement to
issue certificates of creditable coverage would continue to apply until
December 31, 2014. This would allow individuals to continue to offset a
preexisting condition exclusion that could potentially be imposed by a
group health plan with a plan year from December 31, 2013 to December
30, 2014. We indicated that these amendments were for clarity only and
that they were consistent with amendments to the group market
provisions and with previous CMS guidance.\18\ We solicited comment on
these proposals.
---------------------------------------------------------------------------
\17\ The Affordable Care Act adds section 715(a)(1) of ERISA and
section 9815(a)(1) of the Code to incorporate the provisions of part
A of title XXVII of the PHS Act, including section 2704 of the PHS
Act, into ERISA and the Code, and to make them applicable to group
health plans and health insurance issuers providing health insurance
coverage in connection with group health plans. PHS Act section 2704
applies to grandfathered and non-grandfathered group health plans
and group health insurance coverage, and non-grandfathered
individual health insurance coverage. It does not apply to
grandfathered individual health insurance coverage. For more
information on grandfathered health plans, see section 1251 of the
Affordable Care Act and its implementing regulations at 26 CFR
54.9815-1251T, 29 CFR 2590.715-1251, and 45 CFR 147.140.
\18\ See Ninety-Day Waiting Period Limitation and Technical
Amendments to Certain Health Coverage Requirements Under the
Affordable Care Act, 78 FR 10296 (February 24, 2014). See also
Questions and Answers Related to Health Insurance Market Rules, Q2.
Available at: http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/qa_hmr.html.
---------------------------------------------------------------------------
Comment: Two commenters stated that certificates of creditable
coverage might continue to be needed in limited circumstances after
2014, such as when a dependent is added to a grandfathered individual
health insurance plan, which is not subject to the prohibition on
preexisting condition exclusions. The commenters recommended that
certificates be required to be provided upon request after December 31,
2014.
Response: While certain plans in the individual market, such as
grandfathered health plans that are individual health insurance
coverage and transitional individual market plans, may impose
preexisting condition exclusions after 2014, such plans are not
required to give credit for prior coverage against a preexisting
condition exclusion period. Accordingly, there are no circumstances in
which a certificate of creditable coverage will be relevant after
December 30, 2014.
Summary of Regulatory Changes
We are finalizing the amendments proposed in Sec. Sec. 148.101
through 148.128 of the proposed rule without change.
2. Fixed Indemnity Insurance in the Individual Health Insurance Market
(Sec. 148.220)
As indicated in previous CMS guidance, which described our intended
approach, we proposed to amend the criteria for fixed indemnity
insurance to be treated as an excepted benefit in the individual health
insurance market. Excepted benefits are exempt from many of the
requirements of title XXVII of the PHS Act.
Specifically, under the proposed rule, individual fixed indemnity
policies would be considered an excepted benefit if the benefits are
provided under a separate policy, certificate, or contract of insurance
and all of the following criteria are met: (1) The benefits are
provided only to individuals who have other health coverage that is
minimum essential coverage within the meaning of section 5000A(f) of
the Code; (2) there is no coordination between the provision of
benefits and an exclusion of benefits under any other health coverage;
(3) the benefits are paid in a fixed dollar amount per day of
hospitalization or illness or per service (for example, $100/day or
$50/visit) regardless of the amount of expenses incurred and without
regard to the amount of benefits provided with respect to the event or
service under any other health coverage; and (4) a notice is displayed
prominently in the plan materials in at least 14-point type that has
the following language: ``THIS IS A SUPPLEMENT TO HEALTH INSURANCE AND
IS NOT A SUBSTITUTE FOR MAJOR MEDICAL COVERAGE. LACK OF MAJOR MEDICAL
COVERAGE (OR OTHER MINIMUM ESSENTIAL COVERAGE) MAY RESULT IN AN
ADDITIONAL PAYMENT WITH YOUR TAXES.''
This proposal was intended to prevent disruption and address
stakeholder concerns that many fixed indemnity insurance policies
marketed today in the individual market do not qualify as excepted
under the regulations at Sec. 148.220(b)(3) and, as further described
in a frequently asked question (FAQ) published on January 24, 2013,
because they pay on a per-service rather than a per-period basis.\19\
We solicited comment on this approach, including comments on the
proposed notice language.
---------------------------------------------------------------------------
\19\ See FAQs about Affordable Care Act Implementation (Part
XI), Q7, available at http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Affordable Care Act_implementation_faqs11.html and
http://www.dol.gov/ebsa/faqs/faq-Affordable Care Act11.html.
---------------------------------------------------------------------------
We explained that, to meet the standard that fixed indemnity
insurance must be sold only to individuals who have other health
coverage that is minimum essential coverage, the issuer would have to
be ``reasonably assured'' that an individual purchasing a fixed
indemnity policy has minimum essential coverage. We sought comment on
the extent of verification issuers may need for reasonable assurance,
including the possibility of consumer self-attestation. We also sought
comment on whether the ``other health coverage that is minimum
essential coverage'' standard was sufficient protection or if another
standard may be appropriate (for example, requiring that fixed
indemnity insurance be sold to individuals with other health coverage
that meets the EHB requirements).
We noted that under a safe harbor approach established by the
Departments of HHS, Labor, and the Treasury (the Departments) for
supplemental health insurance coverage to be considered an excepted
benefit, the supplemental coverage must be issued by an entity that
does not
[[Page 30254]]
provide the primary coverage under the plan.\20\ We indicated that were
considering adopting a similar standard for individual fixed indemnity
insurance to qualify as excepted and sought comment.
---------------------------------------------------------------------------
\20\ See CMS Insurance Standards Bulletin 08-01 (available at
http://www.cms.gov/CCIIO/Resources/Files/Downloads/hipaa_08_01_508.pdf); the Department of Labor's Employee Benefits Security
Administration's Field Assistance Bulletin No. 2007-04 (available at
http://www.dol.gov/ebsa/pdf/fab2007-4.pdf); and Internal Revenue
Service Notice 2008-23 (available at http://www.irs.gov/irb/2008-7_IRB/ar09.html).
---------------------------------------------------------------------------
Finally, we indicated that, in our view, most fixed indemnity
products offered in the individual market today would largely satisfy
these proposed criteria. We solicited comment, nonetheless, on how the
proposal might affect existing market arrangements. We also solicited
comment on whether applying the provisions for policy years beginning
on or after January 1, 2015 would provide a sufficient transition
period, and whether keeping the current regulatory criteria in place on
a permanent or temporary basis could help to alleviate any potential
market disruption.
Comment: Several commenters questioned HHS's legal authority to
impose the requirement that fixed indemnity insurance must be sold as
supplement to minimum essential coverage in order to be an excepted
benefit. They noted that Congress created another category of excepted
benefits for supplemental coverage. Some commenters indicated that
imposing the supplemental requirement was an encroachment of States'
regulatory authority since States have the primary authority to
regulate excepted benefits. One commenter stated that the proposal
contravenes the holding of the Supreme Court that the government cannot
compel individuals to engage in economic activity. One commenter stated
that the requirement that fixed indemnity insurance be sold only as
supplemental coverage to minimum essential coverage should be removed,
and that Federal and State regulators, along with consumer and carrier
representatives, should work together to develop requirements that will
protect consumers and also retain coverage options.
Response: We do not agree with these comments. As with all excepted
benefits, what the coverage provides, rather than how it is labelled,
is determinative of whether it is treated as excepted benefits.
Accordingly, we have developed standards for when coverage would be
considered exempt from the requirements of the Affordable Care Act and
other provisions in Title XXVII of the PHS Act. In so doing, we have
not encroached on State's regulatory authority to regulate excepted
benefits. Under this final rule, States will continue to have primary
enforcement authority over such benefits, using the Federal definition
as a floor, consistent with the overall framework for implementing
Title XXVII of the PHS Act. We note that the statutory category which
includes fixed indemnity coverage as an excepted benefit conditions its
status on the coverage being ``independent, noncoordinated'' benefits,
presuming the existence of other coverage. For purposes of the
individual market, we are clarifying that there must be such other
coverage, and that the other coverage in question must be minimum
essential coverage. Additionally, requiring that fixed indemnity
insurance in the individual market must be sold as supplemental to
minimum essential coverage in order to be an excepted benefit does not
compel any individual to purchase minimum essential coverage or
otherwise engage in any economic activity. We will continue to work in
partnership with States, along with consumer and issuer
representatives, as we always have, to develop and fine-tune approaches
to all Affordable Care Act provisions, including revisiting any aspect
of these fixed indemnity provisions, as appropriate and necessary.
Comment: One commenter made the general assertion that the purpose
of the excepted benefits provisions in the Affordable Care Act was not
to indicate that the types of coverage listed as excepted benefits are
excepted from the provisions of the Affordable Care Act, but to allow a
health plan to include such categories of coverage under a health plan
without having to conform this coverage (that is, the excepted
benefits) to the provisions of the Affordable Care Act that apply to
the health plan.
Response: Section 2722 of the PHS Act (42 U.S.C. 300gg-21) reads in
relevant part in subparagraph (c)(2): ``The requirements of subparts 1
and 2 shall not apply to any individual coverage or any group health
plan (or group health insurance coverage) in relation to its provision
of excepted benefits described in section 2791(c)(3) of this title.''
We believe this statutory language is clear that the excepted benefits
provisions apply to any individual coverage that meets the definition
of any of the excepted benefits listed in section 2791(c)(3),
including, but not limited to, hospital and other fixed indemnity
policies. (We also believe that subparagraphs 2722(b), (c)(1), and
(c)(3) are similarly clear that the excepted benefits provisions apply
to any individual coverage in relation to its provision of any of the
excepted benefits listed therein. In this final rule, we are making a
relatively minor change to the introductory text (changing ``individual
health insurance coverage'' to ``individual coverage''), to bring it
into conformance with the wording of the statute.
Comment: One commenter asserted that, because coverage provided as
an excepted benefit can only be provided in relation to a health plan,
proposed section 148.220(b)(4)(i), which states that fixed indemnity
insurance is an excepted benefit only if, among other criteria, the
individual has minimum essential coverage, is superfluous.
Response: We disagree that the statute and current regulations
already provided that fixed indemnity coverage (or any other excepted
benefit listed in the statute) is only an excepted benefit if provided
in relation to another health plan (although as noted above, this is
implicit).
Comment: While one commenter agreed with the inclusion of Sec.
148.220(b)(4)(ii) and (iii) as requirements in order for fixed-
indemnity policies to qualify as excepted benefits, several commenters
believed it would be beneficial to add in subparagraph (b)(4)(ii), a
requirement that benefits may not be reduced on account of funds
received from any other source. The commenter asserted that, in order
to qualify as excepted benefits, a fixed indemnity policy should pay
without regard to any other sources of payment.
Response: We do not believe such a requirement would be necessary.
Subparagraph (b)(4)(ii) is intended to address the statutory provision
in the PHS Act at section 2791(c)(3) that hospital indemnity or other
fixed indemnity insurance is an excepted benefit if the benefits are
offered as independent, noncoordinated benefits. In this context, we
interpret ``noncoordinated'' as meaning noncoordinated with other
coverage, as opposed to noncoordinated with other sources of financial
support, such as friends or family members.
Comment: One commenter questioned whether it is the intent of HHS
to regulate, and through such regulation prohibit, the sale of fixed
indemnity policies on a stand-alone basis.
Response: It is not the intent of HHS to regulate or prohibit the
sale of fixed-indemnity policies on a stand-alone basis. Rather, the
fixed indemnity insurance provisions set forth the circumstances under
which such a
[[Page 30255]]
policy would or would not qualify as excepted benefits. In the preamble
to the proposed regulation, we mentioned that this proposal for
determining whether fixed indemnity policies are excepted benefits is
consistent with previously released guidance describing our intended
approach.
Comment: One commenter argued that it would not make sense to
require purchasers of fixed-indemnity coverage to have minimum
essential coverage in order for the fixed indemnity coverage to be an
excepted benefit, when there is no such requirement for other types of
coverage to be an excepted benefit.
Response: As noted in the preamble to the proposed regulation, we
proposed that fixed indemnity policies in the individual market be
permitted to pay on a per-medical-service basis, to accommodate the
concerns of several stakeholders. In order to accommodate those
concerns in a reasonable way, we are requiring that individuals who
purchase fixed-indemnity policies in the individual market have other
minimum essential coverage in order for the fixed indemnity policy to
be an excepted benefit. Because we are not expanding the definition of
any other type of excepted benefit as we are here, we do not believe it
is necessary to impose new conditions on other categories of excepted
benefits that the purchaser have other minimum essential coverage.
Comment: The majority of commenters supported the disclosure
requirement in order to inform consumers of the nature and extent of
fixed indemnity insurance coverage. One commenter recommended that the
notice requirement be expanded to indicate that the consumer has been
advised on the difference between major medical coverage and fixed
indemnity insurance and has been informed on how to acquire major
medical coverage from the carrier. Another commenter stated that the
last line of the HHS proposed disclosure notice could easily mislead
consumers and cause them to think supplemental coverage is somehow tied
to the tax provisions of the individual shared responsibility payment,
and recommended that it be replaced with this line: ``This policy does
not provide the minimum essential coverage that individuals may be
required to have under the Affordable Care Act.'' One commenter
requested clarification that the requirement that the notice be
displayed in plan materials does not specifically require the notice be
inserted in the filed contract forms. Several commenters recommended
that the disclosure language be consumer tested. One commenter objected
to a Federal prescription of specific wording.
Response: We believe the proposed content of the notice is
sufficient to meet its objectives. To ensure that the objectives are
met, we believe the standardized language is necessary. With respect to
where the notice is displayed, we believe, for policies issued after
January 1, 2015, the most appropriate place is in the application for
coverage, as this is the most likely document in which a purchaser of
fixed indemnity coverage would actually see the notice. Therefore, in
this final rule, we are requiring that the notice be displayed in the
application. As described below, policies issued before January 1, 2015
are not required to come into compliance with the notice requirements
until the first renewal on or after January 1, 2015. For policies
issued before January 1, 2015, we believe it would be appropriate for
the notice to be delivered shortly before the first renewal date
occurring on or after January 1, 2015, but we defer to State law on the
timing. In an effort to minimize industry burden, we are not requiring
that fixed indemnity insurers, in order for the coverage to be an
excepted benefit, insert the notice in filed contract forms or into any
other specific document.
Comment: Many commenters opined that an attestation would be
sufficient but others suggested that issuers be required to request
documentation from the consumer verifying that they have minimum
essential coverage. One commenter requested that the attestation be
required upon renewal of the fixed indemnity coverage, noting that
individuals could lose their minimum essential coverage after the
initial attestation. Another commenter recommended that the attestation
be expanded to have the consumer attest that the difference between
major medical coverage and fixed indemnity insurance had been explained
to them and had been informed on how to purchase major medical
coverage.
Response: Although methods in addition to attestation might help
ensure that individuals have and maintain minimum essential coverage,
we seek to balance this objective against the burden of verification.
Therefore, this final rule requires that the purchaser of fixed
indemnity coverage attest that he or she has minimum essential
coverage, but does not require any further documentation. In this final
rule, this is a one-time attestation upon issuance of the policy that
does not have to be re-performed upon renewal of the policy or any
other time. For policies issued before January 1, 2015, we believe it
would be appropriate for the one-time attestation to be collected from
the policyholder shortly before the first renewal occurring on or after
October 1, 2016, but we defer to State law on the timing. We do not
believe it is necessary that the attestation be expanded to have
consumers attest that the difference between major medical coverage and
fixed indemnity insurance had been explained to them and they had been
notified about how to purchase major medical coverage.
Comment: We proposed that individuals must have minimum essential
coverage in order to be sold fixed indemnity insurance coverage but
solicited comments on whether that was sufficient protection. As an
alternative standard, we sought comment on whether individuals could be
required to have a policy that provided all of the EHB. Many commenters
opined that the requirement to have minimum essential coverage is
sufficient protection. One commenter noted that minimum essential
coverage is a defined term in the Affordable Care Act and can be
applied nationally. Other commenters felt that the protection should be
expanded to require individuals to have coverage that complied with the
EHB requirement in order to be sold fixed indemnity insurance.
Response: We believe it is appropriate and sufficient to require
that fixed indemnity insurance be sold as supplemental to minimum
essential coverage, in order to be an excepted benefit. As having
minimum essential coverage is generally the standard for determining
whether an individual complies with the shared responsibility
provision, we believe it is also the appropriate standard for this
purpose.
Comment: One commenter requested clarification that fixed indemnity
insurance can pay in a combination of per day and per service amounts,
in addition to being able to pay per day or per service amounts.
Response: We believe such a clarification would be helpful, and
have changed ``or'' to ``and/or'' in this final rule. As part of this
clarification, we are revising the phrase ``per day of hospitalization
or illness'' so it reads ``per period of hospitalization or illness.''
This clarification makes this provision of the individual market rule,
consistent with the corresponding provision in the group market rule on
hospital and fixed indemnity policies.
Comment: One commenter indicated that it should be clear that the
fixed indemnity insurance provisions apply to individual products as
defined in the PHS Act regardless of whether the products are filed as
group products
[[Page 30256]]
under State law. The commenter noted that there can be conflicting
definitions of group and individual products under State and Federal
law.
Response: The PHS Act defines individual market in terms of health
insurance (that is, not in terms of excepted benefits), and defines
individual health insurance coverage. Nonetheless, our intention is
that Sec. 148.220 applies to excepted benefits sold in the
``individual market'' as that term is defined in Sec. 144.103, absent
the reference to ``health insurance.'' This would preempt any State law
that classifies an individual product as a ``group'' product (for
example, individual products sold through associations).
Comment: Several commenters stated that fixed indemnity insurers
should be permitted to sell policies to certain categories of
individuals other than those who have minimum essential coverage, such
as healthy and young or middle aged individuals with moderate income
who cannot afford high-deductible coverage under the Affordable Care
Act, but can afford a limited indemnity plan, those who qualify for a
hardship exemption from the individual shared responsibility payment,
and those who feel they cannot afford the price of minimum essential
coverage offered to their dependents through an employer's health plan.
These commenters asserted that eliminating a valid and possibly
affordable option to provide these individuals with a source of
assistance during a medical emergency is of concern. Several commenters
believe the requirement to have minimum essential coverage will cause
negative consequences for individuals living in States where the
Medicaid expansion was not adopted, and who earn too much money to
qualify for Medicaid but not enough to qualify for exchange subsidies,
and to undocumented residents who are neither eligible for subsidies
nor eligible to access the exchanges to acquire minimum essential
coverage. Finally, one commenter observed that, according to the code
at 26 U.S.C. 5000(A)(f)(4), residents of U.S. territories shall be
``treated as having minimum essential coverage.'' Therefore, the
commenter asked that we clarify in the final rule that fixed indemnity
insurance sold to residents of the U.S. territories are treated as
having minimum essential coverage, for purposes of the requirement that
fixed indemnity insurance must be sold to individuals who have minimum
essential coverage in order for the fixed indemnity coverage to be an
excepted benefit.
Response: While we do not agree that fixed indemnity insurers
should be permitted to sell policies to every category of individuals
who do not have minimum essential coverage, we accept the commenter's
suggestion that those who are treated as having minimum essential
coverage due to their status as residents of U.S. territories should be
able to purchase fixed indemnity insurance without actually having
minimum essential coverage. We believe it is consistent with the nature
of Code section 5000A(f)(4)(B), to treat such individuals similarly to
individuals who actually have minimum essential coverage, for purposes
of whether a fixed indemnity insurer may sell them a policy without
losing excepted benefits status. Therefore, we have incorporated this
provision into this final rule. We believe that expanding this
principle any further to other populations would erode the objective of
attempting to ensure that as many individuals as possible enroll in
minimum essential coverage. We also note that individuals who have
hardship exemptions to the shared responsibility payment are permitted
under Federal law to purchase a catastrophic plan, which typically
provides economical health insurance benefits.
Comment: Several commenters stated that as an alternative to the
proposed requirement that fixed indemnity coverage be sold only to
individuals who have minimum essential coverage in order for the fixed
indemnity coverage to be an excepted benefit, fixed indemnity insurance
should be considered excepted benefits if offered, marketed, and sold
as supplemental insurance.
Response: We do not believe that merely offering, marketing, and
selling fixed indemnity policies as supplemental benefits, will
effectively address the confusion about these policies that many
consumers have, or will effectively contribute to the Affordable Care
Act's goal of maximizing the number of individuals who have
comprehensive, major medical coverage.
Comment: One commenter was concerned that ``transitional
policies,'' that is, policies that do not conform with certain
Affordable Care Act requirements first applicable in 2014, but continue
to be renewed for policy years ending on or before October 1, 2016 as a
result of CMS' March 5, 2014 bulletin on Extension of Transitional
Policy through October 1, 2016, might not constitute minimum essential
coverage.
Response: Such transitional policies are small employer or
individual market policies that constitute minimum essential coverage.
Comment: We sought comment on whether to add a requirement that a
fixed indemnity policy must be issued by a different issuer than
minimum essential coverage, in order for the fixed indemnity insurance
to be an excepted benefit. Several commenters supported adding such a
requirement, stating that doing so would be an appropriate
interpretation of the requirement that fixed indemnity insurance be
independent. Other commenters did not agree that this requirement be
added. One such commenter did not believe that the problem of an issuer
of major medical coverage carving out benefits for the purpose of
selling an enrollee a fixed indemnity plan, exists in the commenter's
local area, while others stated that, under the Affordable Care Act
requirements, issuers offering major medical coverage in the individual
and small group markets must include essential health benefits in their
major medical coverage.
Response: We agree with the commenters that such a requirement
might harm consumers by limiting their choice of fixed indemnity
issuers. Thus, we are not including such a requirement in this final
rule. However, we remind commenters that section 2791(c)(3) of the
Public Health Service Act, which prohibits fixed indemnity polices from
coordinating with other coverage, would still apply.
Comment: One commenter did not object to the proposed provisions
taking effect for policy years beginning on or after January 1, 2015.
Several commenters stated that the proposed provisions should apply to
coverage issued on or after July 1, 2015, rather than coverage issued
on or after January 1, 2015. One commenter stated that the provisions
should apply to policies issued after December 31, 2015. One commenter
noted that a January 1, 2015 date is unrealistic in light of the time
needed for filing new products and applications, as well as the
workload on State Insurance Departments in the coming months as they
review filings and rates for insurance products to be sold in 2015.
Response: In order to provide sufficient time for such insurers to
prepare to meet the new minimum essential coverage and notice
requirements, these two new requirements will apply to policies first
issued on or after January 1, 2015. The notice requirement will also
apply to existing policies starting with policy years beginning on or
after January 1,
[[Page 30257]]
2015. Prior to that date, upon the final rule taking effect, the other
criteria in section 148.220 will replace the existing regulatory
criteria (as interpreted in our January 24, 2013 FAQ) for fixed
indemnity insurance to be an excepted benefit.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 148.220 of the
proposed rule with the following modifications. In the introductory
text, we clarify that the requirements of parts 146 and 147 do not
apply to ``any individual coverage'' (as opposed to individual health
insurance coverage) that meet the relevant requirements of that
section, consistent with statutory language. In paragraph (b)(4)(i), we
indicate that the fixed indemnity benefits must be provided only to
individuals who attest, in their application, that they have other
health coverage that is minimum essential coverage, or that they are
treated as having minimum essential coverage based on their status as a
bona fide resident of any possession of the United States pursuant to
Code section 5000A(f)(4)(B). In paragraph (b)(4)(iii), we clarify that
the fixed indemnity benefit must be paid in a fixed dollar amount per
period of hospitalization or illness ``and/or'' per service. In Sec.
148.220(b)(4)(iv), we clarify that the notice to fixed indemnity
policyholders must be displayed in the application. In new paragraph
(b)(4)(v), we state that the requirement of paragraph (b)(4) (iv)
applies to all hospital or other fixed indemnity insurance policy years
beginning on or after January 1, 2015 and the requirement of paragraph
(b)(4)(i) applies to hospital or other fixed indemnity insurance
policies issued on or after January 1, 2015, and to hospital or other
fixed indemnity policies issued before that date, upon their first
renewal occurring on or after October 1, 2016.
E. Part 153--Standards Related to Reinsurance, Risk Corridors, and Risk
Adjustment Under the Affordable Care Act
As noted in the proposed rule, both the reinsurance and risk
adjustment programs are subject to the fiscal year 2015 sequestration.
The risk adjustment and reinsurance programs will be sequestered at a
rate of 7.3 percent in fiscal year 2015. The Federal government's 2015
fiscal year begins on October 1, 2014. HHS, in coordination with the
OMB, has determined that, pursuant to section 256(k)(6) of the Balanced
Budget and Emergency Deficit Control Act of 1985 as amended, and the
underlying authority for these programs, funds that are sequestered in
fiscal year 2015 from the reinsurance and risk adjustment programs will
become available for payment to issuers in fiscal year 2016 without
further Congressional action. Should Congress fail to enact deficit
reduction that replaces the Joint Committee reductions, these programs
would be sequestered in future fiscal years, and any sequestered
funding would become available in the fiscal year following that in
which it was sequestered.
Comment: Several commenters asked that HHS clarify the details
regarding the payment of sequestered funds, particularly for risk
adjustment. One commenter suggested that reinsurance payments that
might have otherwise been sequestered be made by prioritizing
collections for reinsurance payments over collections for the U.S.
Treasury. One commenter noted that a short delay in risk adjustment and
reinsurance payments would not pose major problems for issuers.
Response: As we stated in the proposed rule, we aim to make
payments of sequestered fiscal year 2015 funds for the reinsurance and
risk adjustment programs as soon as practicable in fiscal year 2016,
which begins on October 1, 2015. We note that we cannot sequester
amounts from reinsurance collections for the U.S. Treasury because the
U.S. Treasury collections are not budgetary resources. Therefore, they
are not subject to sequestration and do not affect HHS's required
reductions under the sequestration law. We will provide further
clarification regarding how the amount of sequestered funds will be
calculated and paid in future guidance.
1. Provisions and Parameters for the Permanent Risk Adjustment Program
We have received input from commenters suggesting that the
coefficients in our risk adjustment models may not fully capture the
relative actuarial risk of certain hierarchical condition categories
(HCCs), in part because those conditions may be subject to changing
therapies and higher trends in medical inflation. Although some
inaccuracy in our coefficients is inevitable due to lags in the data,
we believe that we will be able to mitigate this problem if we
recalculate, on an annual basis, the weights assigned to the various
HCCs and demographic factors in our risk adjustment models using the
most recent data available, even in the years where we do not fully
recalibrate the models. We intend to propose such a reweighting in the
HHS notice of benefit and payment parameters for 2016, and we will
consider having those updated coefficients apply also for the 2015
benefit year. These adjusted models would be subject to public notice
and comment.
2. Provisions and Parameters for the Transitional Reinsurance Program
The Affordable Care Act directs that a transitional reinsurance
program be established in each State to help stabilize premiums for
coverage in the individual market from 2014 through 2016. In the 2014
Payment Notice and the 2015 Payment Notice, we expanded on the
standards set forth in subparts C and E of the Premium Stabilization
Rule, and established the reinsurance payment parameters and uniform
reinsurance contribution rate for the 2014 and 2015 benefit years. In
this final rule, we finalize our allocation proposal, with one
modification, so that, in the event of a shortfall in our collections,
reinsurance contributions will first be allocated to the reinsurance
payment pool, and second to administrative expenses and the U.S.
Treasury.
In the 2014 Payment Notice and the 2015 Payment Notice, we provided
that, if total contributions collected for 2014 and 2015 exceed $12.02
billion and $8.025 billion, respectively, we would allocate $2 billion
to the U.S. Treasury, $20.3 or $25.4 million, as applicable, to
administrative expenses, and all remaining contributions for
reinsurance payments, thus prioritizing excess contributions towards
reinsurance payments. Due to the uncertainty in our estimates of
reinsurance contributions to be collected, and to help assure that the
reinsurance payment pool is sufficient to provide the premium
stabilization benefits intended by the statute, we proposed to adopt a
similar prioritization in the event that reinsurance collections fall
short of our estimates. Specifically, we proposed that, if collections
fall short of our estimates for a particular benefit year, we would
allocate contributions that are collected first to the reinsurance
payment pool and administrative expenses, until our targets for
reinsurance payments and administrative expenses are met. Once those
targets are met, the remaining contributions collected for that benefit
year would be allocated toward the U.S. Treasury.
We sought comment on this proposal, including our legal authority
to implement a prioritization of reinsurance contributions to
reinsurance payments over payments to the U.S. Treasury.
[[Page 30258]]
Comment: Several commenters supported our allocation proposal with
respect to reinsurance collections if they fell short of our estimates
for a particular benefit year. The commenters stated that the proposed
allocation would further the premium stabilization effects of the
program and provide more certainty that reinsurance payments will be
fully funded. One commenter stated that section 1341 of the Affordable
Care Act provides HHS with the discretion to allocate reinsurance
contributions as HHS determines appropriate to carry out the goals of
the statute and that the use of contributions first for reinsurance
payments furthers the program's goal of stabilizing premiums. This
commenter noted that section 1341 of the Affordable Care Act imposes
few requirements on the expenditure of reinsurance contributions,
stating that the statute does not specify that payments must be made to
issuers and to the U.S. Treasury simultaneously, or that the U.S.
Treasury must receive its full funding before reinsurance pool payments
are made. Additionally, the commenter stated that section 1341 is
silent on how reinsurance contributions are to be distributed if there
are insufficient collections to satisfy the statutory obligations,
providing HHS with flexibility to interpret and implement the statute
and to decide the priority, method, and timing of the allocation of
contributions. One commenter asked that we allocate contributions first
to reinsurance payments and administrative expenses, and then roll over
any excess funds for the subsequent benefit year, postponing the
allocation of any contributions to the U.S. Treasury until the end of
the reinsurance program. Some commenters suggested that under the
revised allocation policy administrative expenses should have the same
priority as payments to U.S. Treasury.
Response: Section 1341 of the Affordable Care Act directs that a
transitional reinsurance program be established in each State for a
three-year period to reduce premiums and to ensure market stability for
enrollees in the individual market as the new consumer protections and
market reforms are implemented in 2014. The statute does not, however,
prescribe how HHS should approach the distribution of reinsurance
contributions if insufficient amounts are collected to fully fund all
three components of the program (that is, reinsurance payments,
administrative expenses, and payments to the U.S. Treasury). We agree
that HHS has discretion to implement the program to determine the
priority, method, and timing for the allocation of reinsurance
contributions collected. Section 1341(b)(3)(B)(iii) uses mandatory
language with respect to the collection of amounts for the reinsurance
payment pool and states that the total contribution amounts ``shall . .
. equal $10,000,000,000'' for 2014 and specific, lesser amounts for
2015 and 2016. Thus, the statute explicitly directs the Secretary to
collect these amounts for the reinsurance payment pool (based on the
best estimates of the NAIC). On the other hand, the statute uses more
permissive language in sections 1341(b)(3)(B)(ii) and (iv) with respect
to the collection of amounts for administrative expenses and payments
for the U.S. Treasury (that is, ``can'' and ``reflects'',
respectively). We believe that this language, as well as language
directing that amounts collected pursuant to section 1341(b)(3)(B)(iv)
be collected ``in addition to the aggregate contribution amounts under
clause (iii),'' as well as the general authority granted to the
Secretary under section 1341(b)(3)(A) to design the method for
determining the contribution amount toward reinsurance payments, gives
the Secretary discretion to prioritize the collections for the
reinsurance program. We also believe that it is significant that
prioritizing the allocation of reinsurance contributions to the
reinsurance payment pool furthers the statutory goals for this program
by bringing more certainty to the individual market and helping
moderate future premium increases.
We are therefore finalizing our proposal, with one modification--we
will not allocate reinsurance collections to administrative expenses or
the U.S. Treasury until the reinsurance payment pool for a benefit year
is funded. Thus, if our reinsurance collections fall short of our
estimates for a particular benefit year, we will allocate reinsurance
contributions collected first to the reinsurance payment pool, with any
remaining amounts being then allocated to administrative expenses and
the U.S. Treasury, on a pro rata basis. For example, as described in
Table 1, for the 2014 benefit year, reinsurance contributions will go
first to the reinsurance payment pool, up to $10 billion, and any
additional contributions collected will be allocated to administrative
expenses and the U.S. Treasury, on a pro rata basis, up to the total
$12.02 billion.
Table 1--Proportion of Reinsurance Contributions Collected Under the Uniform Reinsurance Contribution Rate for
the 2014 Benefit Year for Reinsurance Payments, Payments to the U.S. Treasury, and Administrative Expenses
----------------------------------------------------------------------------------------------------------------
If total contribution
If total contribution collections under the If total contribution
collections under the 2014 uniform collections under the
2014 uniform reinsurance 2014 uniform
Proportion or amount for: reinsurance contribution rate are reinsurance
contribution rate are more than $10 billion, contribution rate are
less than or equal to but less than or equal more than $12.02
$10 billion to $12.02 billion billion
----------------------------------------------------------------------------------------------------------------
Reinsurance payments................. Total collections...... $10 billion............ Total collections less
$2.02 billion (U.S.
Treasury and
administrative
expenses).
Payments to the U.S. Treasury........ $0..................... 99.0 percent of the $2 billion.
total collections less
$10 billion ($2
billion/$2.02 billion).
Administrative expenses.............. $0..................... 1.0 percent of the $20.3 million.
total collections less
$10 billion ($20.3
million/$2.02 billion).
----------------------------------------------------------------------------------------------------------------
Similarly, for the 2015 benefit year, in the event of a shortfall
in our collections, reinsurance contributions will go first to the
reinsurance payment pool, up to $6 billion, and any additional
contributions collected will
[[Page 30259]]
be allocated to administrative expenses and the U.S. Treasury on a pro
rata basis, up to the total $8.025 billion.
Table 2--Proportion of Reinsurance Contributions Collected Under the Uniform Reinsurance Contribution Rate for
the 2015 Benefit Year for Reinsurance Payments, Payments to the U.S. Treasury, and Administrative Expenses
----------------------------------------------------------------------------------------------------------------
If total contribution
If total contribution collections under the If total contribution
collections under the 2015 uniform collections under the
2015 uniform reinsurance 2015 uniform
Proportion or amount for: reinsurance contribution rate are reinsurance
contribution rate are more than $6 billion, contribution rate are
less than or equal to but less than or equal more than $8.025
$6 billion to $8.025 billion billion
----------------------------------------------------------------------------------------------------------------
Reinsurance payments................. Total collections...... $6 billion............. Total collections less
$2.025 billion (U.S.
Treasury and
administrative
expenses).
Payments to the U.S. Treasury........ $0..................... 98.8 percent of the $2 billion.
total collections less
$6 billion($2 billion/
$2.025 billion).
Administrative expenses.............. $0..................... 1.2 percent of the $25.4 million.
total collections less
$6 billion($25.4
million/$2.025
billion).
----------------------------------------------------------------------------------------------------------------
We note that, in the 2015 Payment Notice, we amended 45 CFR
153.405(c) to provide a bifurcated contribution collection schedule,
under which contributing entities will submit reinsurance contributions
via two payments. The first payment would have covered the contribution
amount allocated to reinsurance payments and administrative expenses;
the second payment would have covered the contribution amount allocated
to payments to the U.S. Treasury for the applicable benefit year. In
light of our revised allocation policy, contributions collected in the
second collection will now be allocated for reinsurance payments to the
extent the first collection does not fully fund the reinsurance payment
pool. Therefore, for example, for the 2014 benefit year, if the first
collection resulted in a total collection of $9 billion, contributions
collected via the second collection up to $1 billion would be allocated
for reinsurance payments. As we noted in the 2014 Payment Notice (78 FR
15460), we have considered comments about deferring payments to the
U.S. Treasury, but concluded that we have no authority to defer the
collection of reinsurance contributions for those payments to the end
of the program.
Comment: In the 2015 Payment Notice, we established the reinsurance
payment parameters for 2015. For 2015, we established an attachment
point of $70,000, a reinsurance cap of $250,000, and a target
coinsurance rate of 50 percent. Several commenters on this rule urged
us to increase the premium stabilization effects of reinsurance by
lowering the 2015 attachment point.
Response: We intend to propose changes to the reinsurance
parameters for 2015 generally consistent with these recommendations.
Specifically, in the proposed 2016 Payment Notice, we intend to propose
to lower the 2015 attachment point from $70,000 to $45,000. We may also
propose to modify the target 2015 coinsurance rate based on estimates
of roll-over of funding from 2014 and estimates of collections and
payments for 2015. These proposals will be subject to notice and
comment rulemaking.
Summary of Regulatory Changes
We are finalizing this provision as proposed, with one
modification: if reinsurance collections fall short of our estimates
for a particular benefit year, we will allocate the reinsurance
collections for that benefit year first to the reinsurance payment
pool, and second to administrative expenses and payments to the U.S.
Treasury on a pro rata basis.
3. Provisions for the Temporary Risk Corridors Program (Sec. 153.500)
In the 2015 Payment Notice, we indicated that we would consider
additional adjustments to the risk corridors program for benefit year
2015. We did so recognizing that issuers of QHPs could face
administrative costs and risk pool uncertainties from a number of
sources in 2015. We believe those QHP issuers will face pricing
uncertainties related to:
Uncertainties in the number of renewals of plans that do
not comply with 2014 market reforms and rating rules--States continue
to weigh whether to permit transitional plans or whether to extend the
transitional policy, and in States where those decisions have been
publicized, the willingness of issuers in those States to continue to
offer transitional plans remains unclear;
The effects on the risk pool of the phase-out of high risk
pools--this phase-out leads to uncertainty in the estimate of likely
claims costs from these individuals;
The greater difficulty and additional time it will take to
fully assess the risk profile of 2014 enrollees given the six-month
initial open enrollment period--issuers will have a shorter 2014 claims
history on which to base modeling; and
Uncertainty estimating the number of individuals in
reinsurance-eligible plans, and the number of covered lives for which
reinsurance contributions will be paid.
As we discussed in the proposed rule, because relevant data will be
difficult to obtain in the near term, we believe these uncertainties
will continue through the summer of 2014, while issuers are in the
process of setting their rates for the 2015 benefit year.
We also recognized in the proposed rule that issuers of QHPs may
face additional administrative costs in order to complete the
transition into compliance with the 2014 market rules. In particular,
issuers continue to face unanticipated infrastructure requirements
around Exchanges in all States, including the distributed data
collection methodology for risk adjustment and reinsurance.
Therefore, in the proposed rule, we proposed to implement a
national adjustment to the risk corridors formula set forth in subpart
F of part 153 for each of the individual and small group markets by
increasing the ceiling on allowable administrative costs (currently set
at 20 percent, plus the
[[Page 30260]]
adjustment percentage, of after-tax premiums) by 2 percentage points.
We also proposed to increase the profit margin floor in the risk
corridors formula (currently set at 3 percent, plus the adjustment
percentage, of after-tax premiums) by 2 percentage points. These
increases to the profit floor and administrative cost ceiling in the
risk corridors formula would increase a QHP issuer's risk corridors
ratio if claims costs are unexpectedly high, thereby increasing risk
corridors payments or decreasing risk corridors charges.
We proposed these increases for 2015 for QHP issuers in every State
because we believed that many of these additional administrative costs
and risk pool uncertainties will be faced by issuers in all States, not
just States adopting the transitional policy. Finally, under our
authority under section 2718(c) of the PHS Act, we proposed that the
MLR formula not take into account any additional risk corridors
payments resulting from this adjustment. We requested comment on all
aspects of this proposal.
Comment: Several commenters supported our proposal to implement the
proposed adjustment on a nationwide basis so that it would apply
equally to QHP issuers in all States. No commenters suggested a
regional or State-level approach.
Response: We are finalizing the adjustment as proposed, and will
apply the adjustment on a nationwide basis.
Comment: One commenter stated its support of the proposed
adjustment to raise the ceiling on administrative costs, but questioned
the necessity of the proposed adjustment to profits.
Response: We believe that an upward adjustment to the profit floor
is necessary to account for unanticipated risk pool effects related to
State decisions to adopt the transitional policy, the phase-out of high
risk pools, and the six-month initial enrollment period, which would
not be reflected in an issuer's administrative costs.
Comment: A few commenters urged HHS to increase the magnitude of
the proposed adjustment, and to extend the duration of the adjustment
so that it would apply beyond the 2015 benefit year. One commenter
believed that issuers could face significant operations and risk pool
challenges for the 2015 benefit year, and recommended that HHS raise
the ceiling on allowable administrative costs by 5 percentage points,
instead of 2 percentage points, as proposed in the proposed rule. The
commenters did not specifically indicate or estimate any additional or
greater administrative costs or pricing uncertainties that would
necessitate an increase beyond the proposed 2 percentage point
increase. Several other commenters supported our proposal, stating that
the 2 percentage point increase is reasonable to address additional
administrative costs and operational uncertainties in the 2015 benefit
year. One commenter noted that the proposed adjustment would suitably
help smaller issuers forced to amortize fixed additional administrative
costs over a smaller operational base.
Response: We are finalizing the proposed 2 percentage point
increase to the risk corridors allowable administrative cost ceiling
and profit floor for benefit year 2015. Based on our internal estimates
and the methodology used to determine the administrative cost
adjustment to the MLR formula discussed elsewhere in this final rule,
we believe that this 2 percentage point increase will suitably account
for additional administrative costs and pricing uncertainties that QHP
issuers will experience in benefit year 2015.
Comment: One commenter requested that we modify the risk corridors
formula so that reinsurance payments are not deducted from allowable
costs, in order to enhance the protections of the risk corridors
program.
Response: Section 1342(c)(1)(B) of the Affordable Care Act states
that allowable costs in the risk corridors calculation are to be
reduced by risk adjustment and reinsurance payments received under
sections 1341 and 1343. Therefore, we are maintaining the current
definition of ``allowable costs'' for the risk corridors program.
Comment: A number of commenters expressed concern with HHS's
intention to implement the risk corridors program in a budget neutral
manner, as described in the preamble to the proposed rule. These
commenters were concerned that an approach that makes risk corridors
payments only when sufficient risk corridors charges are received could
result in reduced risk corridors payments to issuers. The commenters
questioned how much the payment formula specified in the final rules
for 2014 and 2015 may be relied upon in setting premiums, if payments
might be reduced. Several commenters believed that an approach
implementing the risk corridors program in a budget neutral manner was
counter to the intent of Section 1342 of the Affordable Care Act, which
states that the Secretary of HHS will establish a risk corridors
program that is similar to the Medicare Part D risk corridors program,
which is not budget neutral. One commenter believed that implementing
the risk corridors program in a budget neutral manner would result in
issuers sharing in the gains and losses of other issuers, would
unintentionally affect market dynamics, and could result in solvency
problems for some issuers if risk corridors receipts are insufficient
to fully fund risk corridors payments.
Response: We recognize the commenters' concerns. To provide greater
clarity on how 2014 and 2015 payments will be made, we issued a
bulletin on April 11, 2014, titled ``Risk Corridors and Budget
Neutrality,'' describing how we intend to administer risk corridors in
a budget neutral way over the three-year life of the program, rather
than annually. Specifically, if risk corridors collections in the first
or second year are insufficient to make risk corridors payments as
prescribed by the regulations, risk corridors collections received for
the next year will first be used to pay off the payment reductions
issuers experienced in the previous year in a proportional manner, up
to the point where issuers are reimbursed in full for the previous
year, and remaining funds will then be used to fund current year
payments. If any risk corridors funds remain after prior and current
year payment obligations have been met, they will be held to offset
potential insufficiencies in risk corridors collections in the next
year.
As we stated in the bulletin, we anticipate that risk corridors
collections will be sufficient to pay for all risk corridors payments.
That said, we appreciate that some commenters believe that there are
uncertainties associated with rate setting, given their concerns that
risk corridors collections may not be sufficient to fully fund risk
corridors payments. In the unlikely event of a shortfall for the 2015
program year, HHS recognizes that the Affordable Care Act requires the
Secretary to make full payments to issuers. In that event, HHS will use
other sources of funding for the risk corridors payments, subject to
the availability of appropriations.
Comment: One commenter asked that HHS apply this adjustment to all
States for benefit year 2014. The commenter believed that this
adjustment was necessary for the 2014 benefit year because of changes
in the composition of the risk pools that were not anticipated when
rates for the 2014 benefit year were developed.
Response: In the 2015 Payment Notice, we implemented an adjustment
to the risk corridors formula for the 2014 benefit year that would help
to further mitigate any unexpected losses for issuers of plans subject
to risk corridors attributable to the effects of the transitional
policy. In States that adopt the transitional policy, this
[[Page 30261]]
adjustment would increase a QHP issuer's risk corridors ratio and its
risk corridors payment amount to help offset losses that might occur
under the transitional policy as a result of increased claims costs and
unanticipated changes in the risk pool that were not accounted for when
setting 2014 premiums. For the reasons discussed in the 2015 Payment
Notice, we believe that this adjustment will suitably offset any losses
that QHP issuers may incur as a result of the transitional policy, and
that no further risk corridors adjustments are necessary for the 2014
benefit year.
Comment: One commenter requested that HHS allow non-QHPs to
participate in the risk corridors program, so that plans that comply
with requirements of the Affordable Care Act could receive risk
corridors protections that would help to ameliorate changes in the risk
pool resulting from the transitional policy.
Response: We believe the risk corridors program is intended to
share risk and stabilize premiums for QHPs (and certain substantially
similar off-Exchange plans). Therefore, we decline to expand the
participation criteria for this risk corridors adjustment. Data from
all individual and small group market plans that comply with the
Affordable Care Act market reforms will be included in a QHP issuer's
risk corridors calculation as described in 45 CFR part 153, subpart F.
However, consistent with our existing regulations set forth in subpart
F of part 153, any risk corridors payment or charge amount, including
any adjusted payment or charge amount resulting from the adjustment
implemented in this final rule or the 2015 Payment Notice, will be
calculated for a QHP issuer in proportion to the premium revenue that
the issuer receives from its QHPs, as defined in Sec. 153.500.
Comment: One commenter requested clarification about whether HHS
intends to implement risk corridors budget neutrality on a national or
a State level. The commenter believed that budget neutrality should be
applied on an individual State level, because applying budget
neutrality on a national level would add uncertainty to the rate
setting process.
Response: The risk corridors program is a Federally administered
program that applies uniformly to all States.
Summary of Regulatory Changes
We are finalizing our policy to increase the administrative cost
ceiling and the profit margin floor by 2 percentage points, as
proposed.
F. Part 154--Health Insurance Issuer Rate Increases: Disclosure and
Review Requirements
Definition of Product (Sec. 154.102)
See the discussion in section III.C.1.b, ``Product Discontinuance
and Uniform Modification of Coverage Exceptions to Guaranteed
Renewability Requirements.''
G. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
1. Subpart B--General Standards Related to the Establishment of the
Exchange Non-Interference With Federal Law and Non-Discrimination
Standards (Sec. 155.120)
Under 45 CFR 155.120(c), States and Exchanges, when carrying out
the requirements of Part 155, must comply with any applicable non-
discrimination statutes, and must not discriminate on the basis of
race, color, national origin, disability, age, sex, gender identity or
sexual orientation. The non-discrimination provisions of Sec.
155.120(c) apply not just to the Exchanges themselves, but to Exchange
contractors and all Exchange activities (including but not limited to
marketing, outreach and enrollment), Navigators, non-Navigator
assistance personnel, certified application counselors, and
organizations designated to certify their staff and volunteers as
certified application counselors (78 FR 42829). Under 45 CFR 155.105(f)
this non-discrimination requirement applies to the FFEs.
In the proposed rule, we proposed creating a limited exception to
these non-discrimination requirements for an organization receiving
Federal funds to provide services to a defined population under the
terms of Federal legal authorities (for example, a Ryan White HIV/AIDS
Program or an Indian health provider) that participates in the
certified application counselor program under 45 CFR 155.225, to permit
that organization to limit its provision of certified application
counselor services to the same defined population without violating the
non-discrimination provisions in existing Sec. 155.120(c). The intent
of this proposal was to allow such organizations to provide certified
application counselor services and assist their defined populations in
enrolling in health coverage offered through the Exchanges consistent
with the Federal legal authorities under which such organizations
operate.
To the extent that one of these organizations decides to take
advantage of this exception, but is approached for certified
application counselor services by an individual who is not included in
the defined population that the organization serves, we proposed that
the organization must refer the individual to other Exchange-approved
resources, such as the toll-free Exchange call center, a Navigator,
non-Navigator assistance personnel, or another designated certified
application counselor organization, that is able to provide assistance
to the individual. However, to the extent that one of these
organizations decides that it will not take advantage of this proposed
exception, we proposed that the non-discrimination provisions in
existing Sec. 155.120(c) would apply. Therefore, if an organization
decides that it will provide certified application counselor services
to individuals that are not included in the defined population that it
serves, it must provide those services to all individuals consistent
with the non-discrimination provisions in existing Sec. 155.120(c).
We also proposed to make a number of technical changes to existing
Sec. 155.120(c) to accommodate this new limited exception.
Comment: Commenters generally supported the proposed exception to
the non-discrimination standards to allow an organization receiving
Federal funds to limit their provision of assister services to that
population. Several commenters requested that HHS clarify that these
organizations are prohibited from discriminating against individuals
who are within their defined population that the organization serves
under the terms of Federal legal authorities.
Response: With respect to the clarification requested from
commenters, we are revising paragraph (c)(2) of Sec. 155.120 to
clarify that organizations that limit their provision of certified
application counselor services to a defined population under this
exception must still comply with the non-discrimination provisions in
paragraph (c)(1) with respect to the provision of these services to
that defined population. For example, a Ryan White organization that
participates in the certified application counselor program and limits
its provision of certified application services to its target
population under Federal legal authorities cannot discriminate among
members of that target population on the basis of race, color, national
origin, disability, age, sex, or any of the other prohibited factor in
45 CFR 155.120(c) when providing those certified application counselor
services.
We are also making technical revisions to Sec. 155.120(c) to
clarify here
[[Page 30262]]
that paragraph (1)(i) is included to highlight to organizations their
obligations under other laws. Each organization needs to determine what
other non-discrimination laws, which may be Federal or State laws,
apply to them. We note that the reference to statutes incorporates
regulatory requirements issued pursuant to statute. Paragraph (1)(ii),
on the other hand, references the non-discrimination obligations that
exist under this Rule.
Consistent with this technical revision, we have made a change to
the text of Sec. 155.120(c) to clarify that the exception to the non-
discrimination requirement at Sec. 155.120(c)(2) only applies in
regard to the non-discrimination provisions created under this Rule. We
cannot create exceptions in regard to requirements that exist under
other laws.
Comment: One commenter recommended extending the exception to
organizations that provide services to defined populations that speak
languages other than English, regardless of receipt of Federal funds to
provide services to these populations.
Response: We understand the desire for organizations interested in
targeting specific populations to have flexibility to limit their
provision of certified application counselor services to these
populations. However, we believe it is appropriate to limit the
exception to organizations that receive Federal funds to provide
services to a defined population under Federal legal authorities
because their beneficiaries are generally defined under Federal law.
Although other organizations may choose to target the services they
generally provide to specific populations, we do not believe it is
appropriate to extend the exception in Sec. 155.120(c)(2) to these
organizations. If all organizations were allowed to target certified
application counselor services to specific, defined populations, the
situation could arise where a consumer may not be able to readily
access certified application counselor services because the consumer is
not a part of a target population being serviced through the
organizations in their area.
Summary of Regulatory Changes
We are finalizing our proposals to make technical changes to Sec.
155.120(c) and add a new limited exception to the non-discriminations
provision in Sec. 155.120(c). We are also further revising new Sec.
155.120(c)(2) to clarify that organizations that limit their provision
of certified application counselor services to a defined population
under this exception must still comply with the non-discrimination
provisions in paragraph (c)(1)(ii) with respect to the provision of
these services to that defined population.
2. Subpart C--General Functions of an Exchange
a. Civil Money Penalties for Violations of Applicable Exchange
Standards by Consumer Assistance Entities in Federally-Facilitated
Exchanges (Sec. 155.206)
In Sec. 155.206, as part of HHS's enforcement authority under
section 1321(c)(2) of the Affordable Care Act, we proposed to provide
for the imposition of CMPs on Navigators, non-Navigator assistance
personnel, and certified application counselors and certified
application counselor designated organizations in FFEs, including State
Partnership Exchanges, that do not comply with applicable Federal
requirements. We explained that this proposal was designed to deter
these entities and individuals from failing to comply with the Federal
requirements that apply to them, and to ensure that consumers
interacting with the Exchange receive high-quality assistance and
robust consumer protection. We noted that as a general principle, while
HHS intends to assess CMPs when appropriate, consistent with this final
rule, we also intend to continue to work collaboratively with consumer
assistance entities and personnel to prevent noncompliance issues and
address any that arise before they reach the level where CMPs might be
assessed.
The Secretary, under the authority of sections 1311(i) and
1321(a)(1) of the Affordable Care Act, has previously established a
range of consumer assistance programs to help consumers apply for and
enroll in QHPs and insurance affordability programs through the
Exchange. These consumer assistance programs include the Navigator
program described at section 1311(i) of the Affordable Care Act and 45
CFR 155.210; the consumer assistance, outreach, and education functions
authorized by section 1321(a)(1) of the Affordable Care Act and
established at 45 CFR 155.205(d) and (e), which can include a non-
Navigator assistance personnel program; and the certified application
counselor program authorized by section 1321(a)(1) of the Affordable
Care Act and set forth at 45 CFR 155.225. Under these authorities and
the authority granted to the Secretary by section 1321(c)(1) of the
Affordable Care Act, the FFE has implemented a Navigator and certified
application counselor program in all States that did not elect to
establish an Exchange, and has implemented a non-Navigator assistance
program in some of those States through an enrollment assistance
contract.
Under section 1321(c)(2) of the Affordable Care Act, the provisions
of section 2723(b) of the PHS Act \21\ apply to the Secretary's
enforcement, under section 1321(c)(1) of the Affordable Care Act, of
the standards established by the Secretary under section 1321(a)(1) of
the Affordable Care Act for meeting the requirements under title I of
the Affordable Care Act, including the establishment and operation of
Exchanges, without regard to any limitation on the application of the
provisions of section 2723(b) of the PHS Act to group health plans.
Section 2723(b) of the PHS Act provides the Secretary with authority to
assess CMPs against health insurance issuers that fail to meet certain
Federal requirements set forth in the PHS Act that apply to group
health plans, in circumstances where, in the Secretary's determination,
the State that regulates the issuer has failed to ``substantially
enforce'' those requirements. We interpret the cross-reference to
section 2723(b) of the PHS Act in section 1321(c)(2) of the Affordable
Care Act as providing the Secretary with authority to assess CMPs to
enforce requirements established under section 1321(a)(1) of the
Affordable Care Act against any entity subject to those requirements,
under circumstances where the Secretary is exercising her authority
under section 1321(c)(1) of the Affordable Care Act. For purposes of
this final rule, we would consider that any State that has not elected
to establish an Exchange, and in which the Secretary has therefore had
to establish and operate an Exchange under section 1321(c)(1), is not
``substantially enforcing'' the requirements related to Exchanges that
the Secretary has established under section 1321(a)(1).
---------------------------------------------------------------------------
\21\ Section 1321(c)(2) of the Affordable Care Act erroneously
cites to section 2736(b) of the PHS Act instead of 2723(b) of the
PHS Act. This was clearly a typographical error, and we have
therefore interpreted section 1321(c)(2) of the Affordable Care Act
to incorporate section 2723(b) of the PHS Act.
---------------------------------------------------------------------------
Accordingly, HHS has the authority under section 1321(c)(2) of the
Affordable Care Act to assess CMPs against Navigators, non-Navigator
assistance personnel, and certified application counselors and
certified application counselor designated organizations in FFEs,
including State Partnership Exchanges, for violations of the
requirements of the Navigator, non-Navigator, and certified application
counselor programs that the Secretary
[[Page 30263]]
established under section 1321(a)(1) of the Affordable Care Act. This
rule sets forth the circumstances under which the Secretary would
exercise this authority, and is based on the enforcement scheme laid
out in section 2723(b) of the PHS Act, and the implementing regulations
at 45 CFR 150.301 et seq.
In Sec. 155.206(a), we proposed to establish the scope and purpose
of the CMP provisions and explained when and against whom HHS would
assess a CMP under this rule. At Sec. 155.206(a)(2), we proposed that
HHS could permit an entity or individual to whom it has issued a notice
of assessment of CMP to enter into a corrective action plan instead of
paying the CMP. We specified that permitting an entity to enter into a
corrective action plan would not limit HHS's authority to require
payment of the assessed CMP if the corrective action plan is not
followed. We explained that this approach would allow us not only to
penalize violations if necessary, but also to prioritize working
collaboratively with consumer assistance entities to ensure that
improvements are made and future violations are prevented. We also
explained that this approach would be consistent with the limitation on
imposing CMPs that is set forth at PHS Act section
2723(b)(2)(C)(iii)(II).
We requested comments on whether we should provide for an expedited
process through which HHS may assess and impose CMPs, if extenuating
circumstances exist or if necessary to protect the public. We also
considered implementing an approach that would give the HHS Office of
Inspector General (OIG) concurrent authority with CMS to enforce
violations under this section, and we requested comments on such an
approach and how it might be structured.
In Sec. 155.206(b), we proposed that the individuals and entities
who would be subject to HHS' enforcement authority under this proposal
would include the following entities in FFEs, including in State
Partnership Exchanges: Navigators, non-Navigator assistance personnel
(also referred to as in-person assistance personnel) authorized under
Sec. 155.205(d) and (e), and certified application counselors and
organizations designated as certified application counselor
organizations. We explained that we refer to these individuals and
entities as ``consumer assistance entities,'' but these CMPs could be
assessed against both entities and individuals. We requested comment on
whether all of the individuals and entities listed in proposed Sec.
155.205(b) should be subject to CMPs, and on whether other entities and
individuals should be added to that list.
In Sec. 155.206(c), we proposed the grounds on which HHS could
assess CMPs on the entities and individuals specified in Sec.
155.206(b). Section 1321(c)(2) of the Affordable Care Act authorizes
the Secretary to enforce the requirements of section 1321(a)(1) of the
Affordable Care Act, which include the requirements established by the
Secretary regarding Exchange consumer assistance functions. This
statutory provision authorizes HHS to assess a CMP or, in lieu of a
CMP, a corrective action plan against Navigators, non-Navigator
assistance personnel, certified application counselors, and certified
application counselor organizations in FFEs if HHS determines that
these individuals or entities are not in compliance with the Exchange
standards applicable to them. We proposed that these Exchange standards
would include any applicable regulations implemented under title I of
the Affordable Care Act, as interpreted through applicable HHS
guidance, such as the regulations governing consumer assistance tools
and programs of an Exchange at Sec. 155.205; those governing
Navigators at Sec. 155.210 and Navigators in FFEs at Sec. 155.215;
those governing certified application counselors at Sec. 155.225; and
those under Sec. 155.215 governing non-Navigator assistance personnel
in FFEs; as well as any applicable HHS guidance interpreting an
existing regulatory or statutory provision.
We note that Sec. 155.285 of this final rule extends CMPs to
consumer assistance entities who misuse or impermissibly disclose
personally identifiable information in violation of section 1411 of the
Affordable Care Act. Therefore, we have not addressed penalties for
those actions here. That section also extends CMPs to anyone providing
false or fraudulent information on an Exchange application.
Consequently, some conduct by consumer assistance entities may warrant
CMPs under either Sec. 155.285 or Sec. 155.206, and in such cases we
believe HHS has discretion to determine whether to assess a CMP under
this regulation or under Sec. 155.285 of this subpart. However, we
proposed in Sec. 155.206(c) that HHS would not assess a CMP under this
section if a CMP has already been assessed for the same conduct under
Sec. 155.285.
In Sec. 155.206(d), we proposed the basis for initiating an
investigation of a potential violation. We proposed that HHS could
initiate an investigation based on any information it receives
indicating that a consumer assistance entity might be in noncompliance
with applicable Exchange standards.
In Sec. 155.206(e), (f) and (g), we proposed the process that HHS
would follow to investigate potential violations in order to determine
whether the consumer assistance entity has engaged in noncompliance of
applicable Exchange standards. Under Sec. 155.206(e), we proposed that
if HHS learns of a potential violation through the means described in
paragraph (d) in this section and determines that further investigation
is warranted, HHS would provide written notice of its investigation to
the consumer assistance entity. Such notice would describe the
potential violation, provide 30 days from the date of the notice for
the consumer assistance entity to respond and provide HHS with
information and documents, including information and documents to
refute an alleged violation, and would state that a CMP might be
assessed if the consumer assistance entity fails to refute the
allegations in HHS' determination.
In Sec. 155.206(f), we proposed a process for a consumer
assistance entity to request an extension from HHS when the entity
cannot prepare a response to HHS's notice of investigation within the
30 days provided in the notice. We proposed that if HHS granted the
extension, the responsible entity would be required to respond to the
notice of investigation within the time frame specified in HHS's letter
granting the extension of time, and failure to respond within 30 days,
or within the extended time frame, could result in HHS's imposition of
the CMP that would apply based upon HHS's initial determination of a
potential violation as set forth in the notice of investigation under
Sec. 155.206(e).
In Sec. 155.206(g), we proposed that HHS could review and consider
documents or information received or collected in accordance with
paragraph (d)(1) of this section or provided by the consumer assistance
entity in response to receiving a notice in accordance with paragraph
(e)(2) of this section. We also proposed that HHS may conduct an
independent investigation into the alleged violation, which may include
site visits and interviews, if applicable, and may consider the results
of this investigation in its determination.
In Sec. 155.206(h), we proposed the factors that HHS would use to
determine the appropriate CMP amount, and to determine whether it would
be appropriate to offer the entity or individual an opportunity to
enter into a corrective action plan in place of the CMP. These proposed
factors included HHS's assessment of the consumer
[[Page 30264]]
assistance entity's previous or ongoing record of compliance; the
gravity of the violation, as determined in part by the frequency of the
violation and the financial harm incurred by a consumer; and the
culpability of the consumer assistance entity, as determined, in part,
by whether the entity received payment for committing the violation.
Section 2723(b)(2)(C)(i) of the PHS Act limits the amount of CMPs
authorized under section 1321(c)(2) of the Affordable Care Act to $100
for each day for each individual directly affected. Therefore in Sec.
155.206(i), we proposed that the maximum daily amount of penalty
assessed for each violation would be $100 for each day, for each
consumer assistance entity, for each individual directly affected by
the entity's non-compliance. We also proposed that, consistent with the
approach under existing rules at 45 CFR 156.805(c), where HHS cannot
determine the number of individuals directly affected, HHS may
reasonably estimate this number based on available information, such as
data from an FFE Navigator grantee's quarterly or weekly report
concerning the number of consumers assisted. We requested comment on
whether we should implement a cap on the total penalty that could be
assessed by HHS.
In proposed Sec. 155.206(j), we proposed that nothing in this
section would limit HHS's authority to settle any issue or case
described in the notice furnished in accordance with paragraph (e), or
to compromise on any CMP provided for in this section.
Section 2723(b)(2)(C)(iii) of the PHS Act places certain
limitations on CMPs authorized under section 1321(c)(2) of the
Affordable Care Act, including the limitation that HHS will not assess
a CMP where the entity did not know, or exercising reasonable diligence
would not have known, of the violation. We proposed to implement these
limitations in Sec. 155.206(k). We also proposed, based on the HIPAA
enforcement structure at 45 CFR 150.341, that the burden is on the
consumer assistance entity to establish that the circumstances
triggering these limitations existed.
In Sec. 155.206(l), we proposed standards for notifying consumer
assistance entities of the intent to assess a CMP, which notice would
include an explanation of the entity's right to an appeal pursuant to
the process set forth at 45 CFR Part 150, Subpart D, as provided in
proposed Sec. 155.206(m). We sought comment on whether all aspects of
that process should be applicable to appeals of these CMPs. Finally, in
Sec. 155.205(n), we proposed that HHS may require payment of the
proposed CMP if the consumer assistance entity does not timely request
a hearing.
We also requested comment on whether other provisions of 45 CFR
Part 150 should be adopted and made applicable to the proposed
enforcement scheme, and whether a specific limitations period should
apply, and if so, what limitations period would be appropriate for
violations of applicable Exchange standards by consumer assistance
entities in FFEs.
Comment: We received many comments in support of the proposed CMP
provisions under Sec. 155.206. Some commenters expressed appreciation
that the proposed rule struck a balance between holding consumer
assistance entities accountable and protecting the public from
wrongdoing, on the one hand, while not being overly punitive, on the
other. A few commenters were concerned that the threat of CMPs might
discourage participation in the Navigator, non-Navigator assistance
personnel, or certified application counselor programs. Some commenters
expressed concern that CMPs for violations of consumer assistance
entity requirements would be an extreme response to such noncompliance,
and one commenter expressed the view that the imposition of financial
responsibility on consumer assistance entities muddies the distinction
between these entities and agents and brokers.
Response: We do not see similarities between these penalties and
the licensing, errors and omissions coverage, or other financial
responsibility requirements that States may impose on agents and
brokers as a prerequisite to performing the duties of an agent or
broker. Consumer assistance entities will have no required fees or
payments under this section unless they violate the Federal
requirements that apply to them as described in Sec. 155.206(c). On
the other hand, States may require agents and brokers to pay licensing,
errors and omissions coverage, or other financial responsibilities up
front before acting as a licensed agent or broker. Any CMPs assessed
under this provision would be penalties for noncompliance, aimed at
discouraging and rectifying violations of Federal requirements by
consumer assistance entities in the FFEs, rather than financial
conditions of participation in the Navigator, non-Navigator assistance
personnel, or certified application counselor programs for the FFEs.
Additionally, we believe that many aspects of the final rule help
ensure that individuals and entities are not deterred from performing
consumer assistance functions in good faith, while also serving to
protect members of the public from potential wrongdoing by consumer
assistance entities. For example, the rule requires HHS to make
individualized inquiries into the nature and consequences of each
violation, and provides consumer assistance entities being investigated
with the opportunity to explain the reasons behind their conduct.
Further, the rule provides HHS with the opportunity to work
collaboratively with entities by entering into a corrective action plan
in lieu of paying a CMP, and HHS will continue to assist entities with
avoiding and informally resolving any violations.
Comment: A number of commenters recommended that HHS extend the CMP
provisions to cover consumer assistance entities operating in State
Exchanges, work in conjunction with State Exchanges when implementing
this section, or require State Exchanges to implement similar
provisions. Some commenters appeared to suggest that HHS should have
the ability to assess CMPs against consumer assistance entities in
State Exchanges where the State fails to substantially enforce the
Federal standards applicable to consumer assistance entities.
Response: Given the nature of the relationship between HHS and
consumer assistance entities in FFEs, including the existence of formal
agreements or grants between HHS and the FFE consumer assistance
entities subject to these CMPs, and HHS's responsibility for providing
training, technical assistance, and support to consumer assistance
entities in FFEs, we believe that HHS is in the best position to
exercise primary enforcement authority for Federal requirements that
apply to consumer assistance entities in FFEs, including State
Partnership Exchanges. At this time, we are not extending the CMP
provisions under Sec. 155.206 to apply to consumer assistance entities
working in State Exchanges. We will instead look to each State Exchange
to exercise its authority to enforce any Federal requirements
applicable to these assistance programs in the State Exchange. We may
take additional action in the future.
Comment: Some commenters believed that the proposed grounds for
assessing CMPs in proposed Sec. 155.206(c) would not permit CMPs for
violations of State Partnership Exchange rules where those rules differ
from FFE rules.
Response: The CMP provisions under Sec. 155.206 are directed at
consumer assistance entities that violate Federal requirements for
assisters in FFEs, including assisters in State Partnership Exchanges.
Under current
[[Page 30265]]
Sec. 155.210(c)(1)(iii), as well as provisions finalized in this
rulemaking at Sec. 155.215(f) and Sec. 155.225(d)(8), the consumer
assistance entities subject to those regulations must meet any State
licensing, certification, or other standards prescribed by the State,
if applicable, so long as such standards do not prevent the application
of the provisions of title I of the Affordable Care Act. Although HHS
has authority under these provisions to enforce State requirements
applicable to consumer assistance entities because the State
requirements are incorporated into the entities' Federal regulatory
requirements, at this time we do not intend to enforce State
requirements using Sec. 155.206. We believe that States are in the
best position to enforce their own requirements.
Comment: We requested comment on whether CMS should have concurrent
enforcement authority under the provisions of Sec. 155.206 with the
HHS Office of the Inspector General (OIG), and if so, what process OIG
would follow in enforcing these CMPs. The vast majority of commenters
who responded to this request recommended against concurrent
enforcement authority and believed that CMS is better situated than OIG
to enforce CMPs for noncompliant consumer assistance entities. These
commenters reasoned that because of CMS's expertise and familiarity
with the outreach and enrollment process, as well as CMS's working
relationships with consumer assistance entities, CMS would be the most
effective enforcement authority and is in a better position to
effectively collaborate with consumer assistance entities and pursue
corrective action, when appropriate, to resolve issues that may arise.
Only one commenter expressed a preference for including concurrent
enforcement authority in Sec. 155.206 so that the OIG could exercise
enforcement authority under appropriate circumstances.
Response: We agree with the commenters who recommended against
concurrent enforcement authority that, at least initially, CMS should
have sole responsibility for CMP enforcement against noncompliant
consumer assistance entities under this section. CMPs assessed under
this section would be penalties for programmatic violations, and we
agree that CMS is in the best position to investigate and enforce its
own program standards. Additionally, consumer assistance entities who
provide false or fraudulent information in an Exchange application on a
consumer's behalf, or who improperly use or disclose a consumer's
personally identifiable information, might be in violation of another
CMP provision finalized in this rule, 45 CFR 155.285, which provides
concurrent enforcement authority for CMS and OIG. Therefore, certain
consumer assistance entity violations might fall under OIG
jurisdiction, when appropriate. Additionally, as we indicated in the
preamble to the proposed rule, we intend to continue to work
collaboratively with consumer assistance entities to address
noncompliance issues before they reach the level where a CMP might be
assessed. Consequently, we do not anticipate that CMS will assess a
large volume of CMPs against consumer assistance entities for
noncompliance with Federal requirements. However, we note that we are
not foreclosing the possibility that we would pursue the addition of
OIG concurrent enforcement authority for these provisions at some point
in the future.
Comment: We also requested comments on whether we should implement
an expedited process through which HHS might assess and impose CMPs if
extenuating circumstances exist or if necessary to protect the public.
One commenter did not believe an expedited process was necessary
because the regulation as proposed contained sufficient mechanisms to
prevent or address abuse by consumer assistance entities. Another
commenter suggested that an expedited process should only be
implemented at the request of the entity being investigated to ensure
that no entity was denied adequate time to gather evidence and respond
to the investigation.
Response: We agree with the commenters' concerns. To ensure that
consumer assistance entities are afforded adequate due process, we have
not provided for an expedited investigative process in finalizing these
provisions. Where exceptional circumstances exist, or if necessary to
protect the public, HHS has the option to take swift action to address
consumer assistance entity noncompliance by using remedies available
pursuant to its agreements with these entities, such as the terms and
conditions of Federal Navigator grants, agreements with Enrollment
Assistance Program entities that provide non-Navigator in-person
assistance, or agreements between HHS and certified application
counselor designated organizations. If the circumstances warrant, we
also will consider referring cases to appropriate law enforcement
officials. Additionally, as we noted in the preamble to the proposed
rule, we intend to continue to work collaboratively with consumer
assistance individuals and entities to prevent noncompliance issues and
address any problems that arise before they reach the level where CMPs
might be assessed.
Comment: Many commenters supported HHS's intention to prioritize
the use of alternative remedies over assessment of CMPs. A large number
of commenters strongly supported giving consumer assistance entities
the opportunity to enter into a corrective action plan to correct the
violation instead of paying a CMP. Some recommended that HHS require
these entities to participate in a corrective action plan before
assessing a CMP.
Response: We agree that alternative remedies should be used where
appropriate, and we have crafted this provision to include flexibility
for HHS to help prevent and resolve noncompliance issues in lieu of
collecting a CMP. However, we do not believe that requiring corrective
action plans from consumer assistance entities will be a suitable
response to every instance of noncompliance. For example, if a consumer
assistance entity's conduct is so egregious that in order to protect
the public we have terminated our relationship with the entity pursuant
to our agreement or contract with the entity, a corrective action plan
may not be appropriate. Therefore, we are finalizing Sec. 155.206(a)
as proposed.
Comment: We requested comment on whether all of the consumer
assistance individuals and entities listed in proposed Sec. 155.206(b)
should be subject to CMPs, and on whether other entities and
individuals should be added to that list. Many commenters supported the
inclusion of Navigator individuals and organizations, non-Navigator
assistance personnel and entities, and certified application counselor
designated organizations and individual certified application
counselors operating in an FFE, as proposed. Several commenters
recommended that volunteers serving as Navigators, non-Navigator
assistance personnel, or certified application counselors should be
exempt from CMPs under this section. One commenter argued that the
Volunteer Protection Act protects volunteer certified application
counselors from liability under this section. Another commenter
suggested that Exchange employees should also be subject to CMPs.
Response: We believe that the consumer protection interests that
are served by the CMP provisions under Sec. 155.206 are equally
important whether they apply to volunteer or paid staff providing
application assistance. The
[[Page 30266]]
application of the Volunteer Protection Act of 1997 to CMPs assessed
against volunteers of Navigator, non-Navigator assistance, or certified
application counselor organizations would be examined by courts or
other reviewing entities on a case-by-case basis. We further clarify
that no Navigators, non-Navigator assistance personnel, or certified
application counselors in the FFEs would be volunteers for the Federal
government because the consumer assistance entities with which they are
affiliated provide services to the public, not to the Federal
government.
While we will monitor the activities of FFE employees carefully and
reserve the right to add them to this rule in the future, we do not
believe it is necessary to extend these penalties to FFE employees at
this time, because in our view, the range of employment-based remedies
available to the FFE provides adequate enforcement authority in the
event of employee misconduct. In addition, FFE employees might be
subject to CMPs under Sec. 155.285 if they provide false or fraudulent
information in an Exchange application or misuse consumers' personally
identifiable information. We are finalizing Sec. 155.206(b) as
proposed.
Comment: Many commenters addressed our proposed grounds for
assessing CMPs at Sec. 155.206(c). Some commenters worried that the
proposed grounds for assessing penalties were stated too broadly, and
did not provide adequate notice to consumer assistance entities and
personnel regarding the specific requirements and standards that would
apply when a determination is made as to whether a CMP should be
assessed for noncompliance. These commenters recommended that we
specify the statutory and regulatory requirements with which consumer
assistance entities and personnel must comply to avoid potential CMPs,
and various commenters suggested that these might include the
regulatory requirements specific to consumer assistance entities at 45
CFR 155.205, 155.210, 155.215, and 155.225; statutory and regulatory
nondiscrimination requirements at 42 U.S.C. 18116, 45 CFR 155.105(f),
and 155.120(c); and the Affordable Care Act requirements on health
insurance consumer information at 42 U.S.C. 300gg-93, and affordable
choices of health benefit plans at 42 U.S.C. 18031.
Response: We agree that more specificity regarding the FFE
requirements and standards that, if violated, might trigger CMPs under
this section would help provide adequate notice to consumer assistance
entities and help prevent inadvertent violations of those standards.
Therefore, we have modified Sec. 155.206(c) to make more clear that
the requirements and standards applicable to consumer assistance
entities under this section refer to the Federal regulatory
requirements applicable to consumer assistance entities that have been
promulgated by the Secretary pursuant to section 1321(a)(1) of the
Affordable Care Act, as well as the terms of any agreements, contracts,
and grant terms and conditions between the consumer assistance entity
and HHS, to the extent that these documents interpret those Federal
regulatory requirements or set forth procedures for compliance with
them. We note that HHS has authority to assess CMPs under section
1321(c)(2) of the Affordable Care Act only to enforce requirements that
the Secretary establishes under section 1321(a)(1) of the Affordable
Care Act. Therefore, Federal requirements that have not been
established pursuant to section 1321(a)(1) of the Affordable Care Act
could not be enforced pursuant to this section.
We have not included in the final rule a more specific list of the
requirements that could be enforced under this section because we
anticipate that these may change over time. However, we anticipate that
any list of such requirements would include, but not be limited to, the
requirements specific to consumer assistance entities at 45 CFR
155.205(c)-(e), 155.210, 155.215, and 155.225; the Exchange
nondiscrimination requirements at 45 CFR 155.105(f) and 155.120(c); and
the Exchange privacy and security requirements implemented pursuant to
45 CFR 155.260. Consumer assistance entities would also be required to
comply with other future requirements when any such requirements go
into effect.
Comment: Some commenters were concerned that consumer assistance
entities might be penalized for inadvertent, technical, or
administrative errors, or misunderstandings, and wanted to ensure that
consumer assistance personnel would not be responsible for errors due
to system issues, complex and changing systems, policies, workarounds,
as well as lack of information from issuers. Other commenters expressed
concern about being found in noncompliance on the basis of
subregulatory guidance or frequently answered questions (FAQs) that
they may not have seen or known about. Some commenters suggested that
HHS develop a publicly available, searchable database or warehouse of
rules and processes. Additional commenters requested that we provide
clarity regarding the level of violation that might trigger
investigation, and asked that we limit the use of CMPs to cases of
egregious behavior, such as when the violation was a result of willful
neglect or results in significant harm to a consumer.
Response: We expect that the changes we have made to proposed Sec.
155.206(c) in this final rule will help provide clarity regarding the
standards consumers assistance entities must meet in order to avoid any
potential CMPs under this section. We also understand commenters'
concerns about changes in best practices and FAQs. As we explained
above, HHS's enforcement authority under this section extends only to
requirements that are established under section 1321(a)(1) of the
Affordable Care Act. From time to time, we have issued and will
continue to issue best practices, FAQs, and other subregulatory
guidance interpreting these requirements. We further note that we offer
anyone being investigated under this section an opportunity to respond
under Sec. 155.206(e) and (g), and consumer assistance entities may
use this opportunity to discuss any barriers they may have encountered
to fulfilling their duties as required, including confusion regarding
requirements as interpreted through subregulatory guidance. Finally,
pursuant to section 2723(b)(2)(C)(iii) of the PHS Act, we have provided
in Sec. 155.206(k) that no penalties will be assessed for any period
of time during which a consumer assistance entity neither knew nor
exercising reasonable diligence should have known of the violation, or
any time afterwards if the violation was corrected within 30 days and
due to reasonable cause and not wilful neglect.
Comment: Some commenters asked us to further define ``reasonably
determined,'' the standard in Sec. 155.206(c) for HHS's finding that a
consumer assistance entity has failed to comply with applicable Federal
regulatory requirements.
Response: In Sec. 155.206(c), we proposed that a reasonable
determination would be ``based on the outcome of the investigative
process outlined in paragraphs (d) through (i) of this section.'' This
standard is meant to capture the fact that a CMP would not immediately
be imposed, but instead imposed only after HHS provides a process
involving notice, consideration of any additional information or
documentation submitted by the consumer assistance entity pursuant to
Sec. 155.206(e), consideration of the factors outlined in Sec.
155.206(h), and the consumer assistance entity's right to a
[[Page 30267]]
hearing pursuant to Sec. 155.206(m). If HHS identifies circumstances
that meet the standard set in Sec. 155.206(c), it will send a notice
informing the consumer assistance entity of the assessment of a CMP
under Sec. 155.206(l). The consumer assistance entity then has the
right to request a hearing in front of an Administrative Law Judge in
accordance with Sec. 155.206(m) before the CMP is levied.
Comment: Several commenters advocated against the duplication of
penalties in instances where certain types of violations may already
subject them to other types of penalties. A few commenters noted that
the Health Insurance Portability and Accountability Act already governs
certain critical aspects of compliance related to protected health
information.
Response: We understand commenters' concern about the potential for
a violation to be punished twice under different enforcement schemes,
and we have amended Sec. 155.206(h) to include a factor allowing HHS
to take into consideration whether other remedies or penalties have
been assessed and/or imposed for the same conduct or occurrence. It
would be the responsibility of the consumer assistance entity to bring
such information to HHS's attention.
Comment: Several commenters emphasized the need for consumer
assistance training about CMP implementation, and more robust training
regarding any rules whose violation might trigger a CMP investigation,
including circumstances in which consumers' personally identifiable
information (PII) can be collected, and appropriate uses and storage of
PII. A few commenters were concerned that the restrictions on retaining
consumer PII might prevent consumer assistance entities from keeping
sufficient information to refute allegations of misconduct.
Response: We believe that the protection of consumer information is
one of the most critical duties of consumer assistance entities.
Section 155.215(b)(2)(xi) requires all Navigators in FFEs, including
State Partnership Exchanges, as well as all non-Navigator assistance
personnel to which Sec. 155.215 applies, to receive training on the
privacy and security standards applicable under Sec. 155.260 for
handling and safeguarding consumers' personally identifiable
information. Section 155.215(b)(1)(iii) requires that all Navigators in
FFEs, including State Partnership Exchanges, and all non-Navigator
assistance personnel to which Sec. 155.215 applies, complete and
achieve a passing score on all approved certification examinations
prior to carrying out any consumer assistance functions under Sec.
155.205(d) and (e) or Sec. 155.210. And Sec. 155.225(d)(3) requires
certified application counselors to comply with the Exchange's privacy
and security standards adopted consistent with Sec. 155.260, and
applicable authentication and data security standards. To implement
these requirements, HHS has included detailed privacy and security
requirements in its agreements, contracts, and grant terms and
conditions with the consumer assistance entities that are carrying out
functions in States with an FFE, including a State Partnership
Exchange. We recognize that these strong consumer protections restrict
the personal consumer information that consumer assistance entities are
able to retain and therefore limit the information available to them in
preparing a response to a notice of investigation in Sec. 155.206(e).
If any consumer assistance entity feels limited in their ability to
respond to a notice of investigation, we encourage them to explain any
rules and policies that prevented them from retaining information they
believe would have been exculpatory. HHS may take such explanations
into account under the factors outlined in Sec. 155.206(h).
Comment: We received a number of comments on our proposed bases for
initiating an investigation of a potential violation in Sec.
155.206(d). Commenters supported explicitly allowing any entity,
individual, or individual's authorized representative to file a
complaint with HHS alleging that a consumer assistance entity has
violated the FFE rules applicable to them. Some commenters asked HHS to
clarify the process for filing complaints, including whether complaints
filed at other HHS offices for other enforcement purposes would, if
applicable, be shared with the office responsible for initiating
investigations under Sec. 155.206 and trigger investigations under
this section. Other commenters asked that we require consumer
assistance entities to post information about the complaint process to
ensure that consumers understand their rights about how to file a
complaint.
Response: We anticipate providing further guidance regarding how
and where individuals and entities may file complaints against consumer
assistance entities or individuals. To ensure that the basis for
initiating an investigation is sufficiently broad, we have modified
proposed Sec. 155.206(d)(1) to clarify that all information received
or learned by HHS, whether through communications from sources outside
HHS or not, could trigger an investigation into consumer assistance
entity noncompliance. For example, if HHS discovers possible
noncompliance by reviewing data or information already available to it
through its own monitoring efforts, rather than by reviewing new
information given to it by external, non-HHS sources, under final Sec.
155.206(d)(1) that information could serve as the basis for initiating
an investigation. We have also modified proposed Sec.
155.206(d)(1)(iii) to align it with language in Sec. 155.206(d)(1) and
Sec. 155.206(d)(2) indicating that HHS may consider information ``that
a consumer assistance entity may have engaged or may be engaging'' in
noncompliance as described in Sec. 155.206(c). We are finalizing the
rest of Sec. 155.206(d) as proposed.
Comment: A few commenters asked for clarification regarding the
standards HHS will use to determine whether an investigation is
warranted. As proposed, Sec. 155.206(e) required HHS to provide
consumer assistance entities notice of an investigation and 30 days to
respond with evidence, each time HHS learns of a potential violation.
Instead, commenters requested that HHS make a preliminary assessment of
complaints to determine their credibility before initiating a formal
investigation under Sec. 155.206(e), to avoid imposing unnecessary
administrative burdens on consumer assistance entities, and to prevent
individuals and organizations from submitting complaints with the
purpose of disrupting Exchange operations.
Response: We agree with commenters that HHS should not issue notice
to a consumer assistance entity, with the accompanying 30 days to
respond to the allegation, until HHS has determined that a formal
investigation is warranted. We have amended Sec. 155.206(e) to specify
that HHS will provide a written notice to the consumer assistance
entity when HHS performs a formal investigation, rather than each time
it learns of a potential violation.
Comment: One commenter agreed that the CMP process, as proposed,
provides a reasonable time frame to close out investigations. Another
commenter asked that the time frame for consumer assistance entities to
respond to the notice of investigation be increased from 30 days to 60
days.
Response: We believe 30 days to respond to HHS's notice of
investigation in Sec. 155.206(e) is a reasonable amount of time,
particularly because the consumer assistance entity may request an
extension of another 30 days under Sec. 155.206(f) if the entity
cannot prepare a response within the initial 30-day
[[Page 30268]]
period. Therefore, we are finalizing the 30-day response period in
Sec. 155.206(e) as proposed.
Comment: Commenters generally supported the proposed factors in
Sec. 155.206(h) for determining noncompliance and the amount of any
CMPs assessed. Several commenters appreciated the case-by-case nature
of this process, and agreed that the determination should take into
account factors like the consumer assistance entity's previous or
ongoing record of compliance, the gravity and frequency of the
violation, and any financial harm incurred by the consumer. One
commenter suggested that HHS should assess penalties only if the
violation is intentional and causes harm, and another asked that CMPs
be suspended if the entity was acting in good faith on behalf of the
individual assisted. One commenter recommended that we move the factor
regarding the degree of culpability of the consumer assistance entity,
proposed at Sec. 155.206(h)(2)(i), from the list of factors that HHS
may consider under Sec. 155.206(h)(2), to the list of factors that HHS
must consider under Sec. 155.206(h)(1).
Response: We believe that the factors as proposed in Sec.
155.206(h) are responsive to commenters concerns. For example, HHS is
required to take into account the harm caused by a violation under
Sec. 155.206(h)(1)(ii), which provides that HHS must take into account
the gravity of the violation, which may be determined in part by
whether the violation caused, or could reasonably be expected to cause,
adverse impacts, and the magnitude of those impacts. We based these
factors on a longstanding interpretation of what ``gravity of the
violation'' means and what it may include under the HIPAA enforcement
scheme at 45 CFR 150.317. HHS may also take into account the degree of
culpability of the consumer assistance entity under Sec.
155.206(h)(2)(i). We believe this factor will generally play an
important role in HHS's determination of whether CMPs should be
assessed, but we are finalizing this factor as proposed because the
mandatory factors in Sec. 155.206(h)(1) track the requirements of
section 2723(b)(2)(C)(ii) of the PHS Act, while the permissive factors
in Sec. 155.206(h)(2) are not statutory requirements. Additionally, we
believe that the limitations on CMPs described in Sec. 155.206(k)
provide sufficient protections for consumer assistance entities acting
in good faith on behalf of consumers. Therefore, we are finalizing the
other factors listed in Sec. 155.206(h) as proposed, with the
addition, as discussed above, of a factor regarding whether other
remedies or penalties have been assessed and/or imposed for the same
conduct or occurrence.
Comment: One commenter requested clarity regarding whether HHS
could assess a lesser amount per day than the maximum of $100, and
recommended against the assessment of a lesser amount. One commenter
suggested that when the number of individuals directly affected by the
violation cannot be determined, there should be a maximum placed on the
estimate calculated by HHS, based on the size of the consumer
population previously assisted by the entity. One commenter requested
that HHS exclude from the time frame for which a penalty is assessed
any time during which the investigation is being conducted, provided
the entity or individual stops the behavior at issue during that
period.
Response: The maximum penalty provided in Sec. 155.206(i) is the
per-day limit on the amount of any CMP that may be assessed. HHS may
determine that a lesser amount is appropriate, based on an analysis of
the relevant factors in Sec. 155.206(h). We believe that a reasonable
estimate of individuals directly affected, as we explained in the
preamble to the proposed rule, would be based on available information,
such as the data from a Federal Navigator grantee's quarterly or weekly
report concerning the number of consumers assisted. Therefore, we do
not think it is necessary to place a maximum on such an estimate based
on the size of the population assisted by the entity. In addition, we
have not included a requirement that would toll the maximum penalty
from accruing while HHS conducts its investigation because of the
possibility that consumers may continue to be affected by previous
misconduct during this period, even if the entity has stopped the
behavior at issue. However, under Sec. 155.206(k)(1)(ii), HHS cannot
assess penalties for any period of time after a consumer assistance
entity knew, or exercising reasonable diligence would have known, of
the failure, if the violation was due to reasonable cause and not due
to willful neglect and the violation was corrected within 30 days of
the first day that any of the consumer assistance entities against whom
the penalty would be imposed knew, or exercising reasonable diligence
would have known, that the violation existed. Additionally, HHS may
consider a consumer assistance entity's cessation of misconduct when
determining whether penalties should be assessed and in what amount,
under Sec. 155.206(h)(2)(ii). Taken together, we believe these factors
strike the right balance to ensure that any CMPs assessed by HHS are
reasonable and appropriate.
Comment: We requested comment on whether we should provide a cap on
the total penalty that could be assessed by HHS in addition to the
maximum per day penalty. The majority of commenters who responded to
this request recommended that we implement such an aggregate cap. These
commenters were concerned that the lack of such a cap might chill
participation, particularly for those organizations with fewer
resources, and might unduly penalize consumer assistance entities for
mistakes made due to lack of sophistication or confusion during the
initial open enrollment period. A few commenters recommended against
implementing an aggregate penalty cap because the cost-benefit of CMPs
for certain violations might not serve as an adequate deterrent. One
commenter recommended a tiered system of caps based on the time frame
of the violation.
Response: We agree with commenters that if we were to set an
aggregate cap for CMPs assessed against a consumer assistance entity,
CMPs might not serve as a sufficient deterrent for certain types of
misconduct or noncompliance. Therefore, we are finalizing Sec.
155.206(i) as proposed. However, we have modified the text of Sec.
155.206(h) to make clear that, as was discussed in the preamble to the
proposed rule, the factors listed are to be used not just to determine
whether CMPs are warranted under the circumstances surrounding the
violation, but also to determine the amount of any CMPs assessed. We
believe this change will help HHS ensure that the amount of any penalty
assessed is in proportion to the consumer assistance entity's
violation.
Comment: One commenter suggested that the CMPs collected by HHS
related to consumer harm should be distributed to consumers as
restitution.
Response: Section 2723(b)(2)(G) of the PHS Act states that
penalties collected under paragraph (b) of that Act must be ``expended
for the purpose of enforcing the provisions with respect to which the
penalty was imposed.'' HHS does not interpret restitution to consumers
to fall within this statutory purpose, and therefore does not interpret
the statute to permit restitution to consumers. Accordingly, we do not
provide for consumer restitution as an alternative use of CMPs
collected under this authority.
Comment: One commenter expressed support for our proposal in Sec.
155.206(j) that HHS retain authority to settle or
[[Page 30269]]
compromise on any penalties provided for in this section.
Response: We agree that HHS should have the flexibility to settle
or compromise on any penalties that could be collected. We are
therefore finalizing Sec. 155.206(j) as proposed.
Comment: Many commenters supported our proposal in Sec. 155.206(k)
to implement the limitations that HHS will not assess a CMP where the
entity did not know, or exercising reasonable diligence would not have
known, of the violation; or for any period of time after a consumer
assistance entity knew, or exercising reasonable diligence would have
known, of the failure, if the violation was due to reasonable cause and
not due to willful neglect and the violation was corrected within 30
days of the first day that any of the consumer assistance entities
against whom the penalty would be imposed knew, or exercising
reasonable diligence would have known, that the violation existed. Some
commenters expressed that these limitations would help encourage a
broader group of organizations with varying degrees of experience to
participate as consumer assistance entities, and ensure that CMPs are
reserved for the most egregious offenses. Several commenters also
supported our proposal to place the burden on demonstrating the
existence of the factors that trigger these limitations on the consumer
assistance entity.
Response: We agree with these comments, and are finalizing Sec.
155.206(k)(1) and (2) as proposed. We believe these limitations will
help balance the interests of HHS, the Exchange, and consumers to have
consumer assistance entities exercise reasonable diligence in
understanding and executing their obligations, while not unnecessarily
penalizing consumer assistance entities who are acting in good faith.
Comment: We requested comment on whether a statute of limitations
should apply to actions under this section. One commenter responded to
this request, suggesting that a statute of limitations period would be
appropriate and recommending a period of 5 years.
Response: We agree that a statute of limitations period is
appropriate. We believe such a period will help give assurance to
consumer assistance entities that any violations will not be actionable
indefinitely, particularly since we understand that some commenters are
concerned about the potential for these penalties to discourage program
participation. Additionally, HHS's goals in issuing this CMP rule are
to encourage program compliance, prevent misconduct, and remedy
violations promptly. We do not think these goals will be served by
prosecuting violations many years after they have occurred.
The regulations finalized elsewhere in this rulemaking at Sec.
155.285 regarding application fraud and misuse of PII have adopted a
six-year statute of limitations following the date of the occurrence.
We believe that consistency with Sec. 155.285 regarding the statute of
limitations period is important because the same conduct by a consumer
assistance entity in an FFE might trigger CMPs under either that
provision or under Sec. 155.206. Additionally, we believe that six
years provides ample time for HHS to discover, investigate, and assess
any potential CMP against a consumer assistance entity. We have
therefore added a new Sec. 155.206(k)(3) to provide for a six-year
statute of limitations period.
Comment: We requested comment on whether all aspects of 45 CFR Part
150, Subpart D should apply to appeals of CMPs assessed under Sec.
155.206. No commenters responded to this request, although one
commenter supported the proposed appeals process. One commenter
recommended that CMPs should continue to accrue pending an appeal in
the event the imposition of CMPs is upheld on appeal and the Exchange
participant failed to correct the instance of noncompliance following
the imposition.
Response: We are finalizing Sec. 155.206(m)-(n) as proposed. We do
not believe it is necessary to provide that CMPs should continue to
accrue pending appeal. If HHS receives or learns of any information
indicating that a consumer assistance entity may have engaged or may be
engaging in noncompliant activity in violation of Sec. 155.206(c),
including any violation for the period following an initial assessment,
such as the period during which an appeal is pending, HHS could
initiate a new investigation and assess new CMPs as appropriate.
Comment: Several commenters agreed with our proposal that where
conduct by consumer assistance entities may warrant CMPs under either
Sec. 155.285 or Sec. 155.206, HHS has discretion to determine whether
to assess a CMP under Sec. 155.285 or under Sec. 155.206. Other
commenters recommended that consumer assistance entities be exempt from
penalties under Sec. 155.285. A few argued that consumer assistance
entities do not actually provide information as part of the process of
applying for coverage or an exemption, and therefore it was difficult
to see how they could provide false or fraudulent information in
violation of section 1411(b) of the Affordable Care Act.
Response: We disagree that consumer assistance entities should be
exempt from the provisions of Sec. 155.285. Any Navigator, non-
Navigator assistance personnel, or certified application counselor who
misuses consumer information in violation of section 1411(g) of the
Affordable Care Act, or who knowingly enters false or fraudulent
information in a consumer's application with or without the knowledge
of the consumer, might be in violation of either Sec. 155.285 or Sec.
155.206. Therefore, we maintain that where conduct by a consumer
assistance entity may warrant CMPs under either Sec. 155.285 or Sec.
155.206, HHS should have discretion to determine whether to assess a
CMP under Sec. 155.285 or under Sec. 155.206. We have also finalized
the portion of Sec. 155.206(c) that indicates that HHS will not assess
a CMP under Sec. 155.206 if a CMP has been assessed for the same
conduct under Sec. 155.285. If a consumer assistance entity is in a
situation where CMPs could be imposed under both Sec. 155.285 and
Sec. 155.206, when determining whether to assess CMPs under Sec.
155.285, HHS will take the possibility that it may be penalizing
conduct that is being investigated or has already been penalized under
Sec. 155.206 into account as a factor under Sec. 155.285(b)(1)(viii).
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.206 of the
proposed rule, with the following modifications. We modified proposed
Sec. 155.206(c) to more clearly explain that HHS could assess a CMP
against a consumer assistance entity for failure to comply with the
Federal regulatory requirements applicable to the consumer assistance
entity that have been implemented pursuant to section 1321(a)(1) of the
Affordable Care Act, including provisions of any agreements, contracts,
and grant terms and conditions that interpret those Federal regulatory
requirements or establish procedures for compliance with them. We added
language to final Sec. 155.206(d)(1), to specify that information
learned, not just received, by HHS indicating that a consumer
assistance entity may have engaged or may be engaging in activity
specified in paragraph (c) may warrant an investigation. We modified
Sec. 155.206(d)(1)(iii) to align with language elsewhere in this
section that HHS may consider information ``that a consumer assistance
entity may have engaged or may be engaging'' in noncompliance under
Sec. 155.206(c),
[[Page 30270]]
rather than information concerning ``potential involvement'' in such
activity. We revised Sec. 155.206(e) to specify that HHS must provide
a written notice to a consumer assistance entity of its investigation,
rather than requiring HHS to provide a written notice to an entity each
time HHS learns of a potential violation. We revised Sec. 155.206(h)
to clarify that, consistent with the preamble discussion of the
proposed rule, the factors listed are to be used not just to determine
whether CMPs are warranted, but also to determine the amount of any
CMPs assessed. In Sec. 155.206(h)(1)(i), we removed the erroneous
reference to corrective action plans ``under section (c) of this
section.'' We also included a new factor at Sec. 155.206(h)(2)(iii)
that allows HHS to take into consideration whether other remedies or
penalties have been assessed and/or imposed for the same conduct or
occurrence, and adjusted the numbering of the final factor (``Other
such factors as justice may require'') from Sec. 155.206(h)(2)(iii) to
Sec. 155.206(h)(2)(iv). In Sec. 155.206(i), we changed ``the
Exchange'' to ``HHS'' for consistency with the rest of the section. We
added new Sec. 155.206(k)(3) to provide for a six-year statute of
limitations period. We corrected some numbering errors throughout Sec.
155.206(l). We also made several minor wording changes throughout final
Sec. 155.206, to replace ``Federally-facilitated Exchanges'' with ``a
Federally-facilitated Exchange'' and to use the abbreviation ``CMP''
consistently.
b. Navigator, Non-Navigator Assistance Personnel, and Certified
Application Counselor Program Standards (Sec. Sec. 155.210, 155.215,
and 155.225)
1. Provisions Related to Non-Federal Requirements for Navigators, Non-
Navigator Assistance Personnel, and Certified Application Counselors
(Sec. Sec. 155.210, 155.215, and 155.225)
In the proposed rule, we proposed amending Sec. 155.210(c)(1)(iii)
to add new paragraphs (A) through (F) to specify a non-exhaustive list
of certain non-Federal requirements that would prevent the application
of the provisions of title I of the Affordable Care Act within the
meaning of section 1321(d) of the Affordable Care Act, with respect to
the Navigator program. We also proposed amending Sec. 155.215(f) to
make clear that we would consider the same types of non-Federal
requirements listed in proposed Sec. 155.210(c)(1)(iii)(A) through (F)
(except for 155.210(c)(1)(iii)(D)) to prevent the application of the
provisions of title I of the Affordable Care Act within the meaning of
section 1321(d) of the Affordable Care Act, when applied to non-
Navigator assistance personnel subject to Sec. 155.215. Similarly,
with respect to the certified application counselor program, we
proposed amending Sec. 155.225(d) to add a new paragraph (d)(8) to
specify that certified application counselors must meet any licensing,
certification or other standards prescribed by the State or Exchange,
if applicable, so long as such standards do not prevent the application
of the provisions of title I of the Affordable Care Act within the
meaning of section 1321(d) of the Affordable Care Act. We further
proposed in Sec. 155.225(d)(8) to specify a non-exhaustive list of
non-Federal requirements, similar to those listed in proposed Sec.
155.210(c)(1)(iii)(A) through (F) (except for 155.210(c)(1)(iii)(D)),
that would prevent the application of the provisions of title I of the
Affordable Care Act within the meaning of section 1321(d) of the
Affordable Care Act, when applied to certified application counselors.
We explained that the proposed amendments were intended as a non-
exhaustive list of certain non-Federal requirements that prevent the
application of the provisions of title I of the Affordable Care Act in
one or more of the following three ways: (1) On their face, they
prevent Navigators, non-Navigator assistance personnel subject to Sec.
155.215, and certified application counselors or their designated
organizations from performing their Federally required duties; (2) on
their face, they make it impossible for an Exchange to implement the
consumer assistance programs it is authorized or required to operate in
a manner consistent with Federal requirements; and (3) they conflict
with Federal standards or requirements in specific factual
circumstances based on how a non-Federal requirement is applied or
implemented. In addition, we recognized that a Federal court may also
find other non-Federal requirements that we did not expressly mention
in the proposed rule to be preempted within the meaning of section
1321(d) of the Affordable Care Act. We further explained that the
proposed provisions would not preclude a State from establishing or
implementing State law protections for its consumers, so long as such
laws do not prevent the application of Federal requirements for the
applicable consumer assistance programs. As an example, we stated that
a State may require assisters to undergo fingerprinting or background
checks before they can operate in a State, so long as a State's
implementation of these additional requirements does not prevent the
Exchange from implementing these programs in the State consistent with
Federal standards or make it impossible for the assisters to perform
their Federally-required duties.
First, in proposed Sec. Sec. 155.210(c)(1)(iii)(A) and
155.225(d)(8)(i), we proposed to specify that non-Federal requirements
which require Navigators, non-Navigator assistance personnel subject to
Sec. 155.215, and certified application counselors to refer consumers
to other entities not required to provide them with fair, accurate, and
impartial information or act in the consumer's best interests, would
prevent the application of the provisions of title I of the Affordable
Care Act within the meaning of section 1321(d) of the Affordable Care
Act because such non-Federal requirements would conflict with an
assister's duty to provide fair, accurate, and impartial information or
to act in the consumer's best interests. Second, we proposed to specify
under Sec. Sec. 155.210(c)(1)(iii)(B) and 155.225(d)(8)(ii) that non-
Federal requirements that prevent Navigators, non-Navigator assistance
personnel subject to Sec. 155.215, and certified application
counselors from providing services to all persons to whom they are
required to provide assistance would also prevent the application of
the provisions of title I of the Affordable Care Act because assisters
are required to provide information and services in a fair and
impartial manner and to provide information to employees about the full
range of QHP options for which they are eligible, which we have
interpreted to mean that assisters must have the ability to help any
individual who presents themselves for assistance. With respect to
proposed Sec. Sec. 155.210(c)(1)(iii)(A) and (B), we explained that
where a State has elected to establish and operate only a SHOP Exchange
pursuant to 45 CFR 155.100(a)(2), and has opted under 45 CFR 155.705(d)
to permit Navigator duties at Sec. 155.210(e)(3) and (4) in the State
SHOP-only Exchange to be fulfilled through referrals to agents and
brokers, we would not consider the State's exercise of this option
under Sec. 155.705(d) to prevent the application of the provisions of
title I of the Affordable Care Act, since that option is authorized
under Federal law. Third, under Sec. Sec. 155.210(c)(1)(iii)(C) and
155.225(d)(8)(iii), we proposed to specify that non-Federal
requirements that prevent Navigators, non-Navigator assistance
personnel subject to
[[Page 30271]]
Sec. 155.215, and certified application counselors from providing
advice regarding substantive benefits or comparative benefits of
different health plans, would also prevent the application of the
provisions of title I of the Affordable Care Act because assisters are
required to provide information about QHPs, and to facilitate either
selection of or enrollment in a QHP, and CMS interprets these
requirements to mean that assisters must be prepared to discuss the
terms and features of any coverage for which a consumer is or might be
eligible, consistent with each consumer's expressed interests and
needs. As proposed, these three provisions would apply to Navigators,
non-Navigator assistance personnel subject to Sec. 155.215, and
certified application counselors (or certified application counselor
designated organizations) that are operating in State Exchanges or in
FFEs. Fourth, under Sec. Sec. 155.210(c)(1)(iii)(D), we proposed that
a non-Federal requirement that required a Navigator (but not a
certified application counselor or non-Navigator assistance personnel)
to hold an agent or broker license or to carry errors and omissions
coverage (typically held only by licensed professionals such as agents
and brokers) would also prevent the application of the provisions of
title I of the Affordable Care Act because imposing these requirements
on all Navigators in a State would mean that all Navigators would fall
under only one type of entity listed in Sec. 155.210(c)(2),
specifically, agents and brokers, in violation of the requirement set
forth under Sec. 155.210(c)(2)(i) that there be two types of Navigator
entities in each Exchange, and that at least one type must be a
community and consumer-focused nonprofit group. We explained that we
believed that the four provisions listed above should apply in both
FFEs and State Exchanges because they address requirements that, in
HHS's view, would facially conflict with Federal requirements or
standards.
The proposed rule also specified two additional provisions
regarding certain non-Federal requirements that would prevent the
application of the provisions of title I of the Affordable Care Act
with respect to FFEs only. We explained that these two provisions would
not apply in State Exchanges since we had observed an enhanced ability
for a State Exchange to work with other offices within the State to
establish Exchange standards and coordinate the implementation of State
law applicable to assisters in a manner that does not conflict with
Federal standards or prevent the State Exchange from implementing
consumer assistance programs consistent with Federal requirements.
Under proposed Sec. Sec. 155.210(c)(1)(iii)(E) and 155.225(d)(8)(iv),
we proposed to specify that non-Federal requirements that impose
standards that would prohibit individuals or entities from acting as
Navigators, non-Navigator assistance personnel, or certified
application counselors or certified application counselor designated
organizations, when they would be eligible to participate in these
respective capacities under FFE standards, would prevent the
application of the provisions of title I of the Affordable Care Act
within the meaning of section 1321(d) of the Affordable Care Act. We
illustrated this provision in two examples. First, we explained that a
non-Federal requirement that prohibits consumer assistance entities and
individuals from receiving any consideration, directly or indirectly,
from a health insurance issuer offering health insurance coverage in or
outside of an Exchange, even if not in connection with the enrollment
of individuals into a QHP, would not only exceed applicable Federal
conflict-of-interest standards but would also render ineligible certain
entities, such as hospitals and community health care clinics, that
would otherwise be eligible to serve as Navigators, non-Navigator
assistance personnel subject to Sec. 155.215, or certified application
counselors and organizations. Second, we explained that a non-Federal
law that prohibits an individual or entity from serving in an assister
program on the basis that the individual or entity does not maintain
its principal place of business in that State (which could include an
organization that is organized in the State, but maintains its
principal place of business outside of the State), would prevent the
FFE from implementing consumer assistance programs that it is required
or authorized to implement.\22\
---------------------------------------------------------------------------
\22\ The preamble discussion to the proposed rule addressed only
non-Federal requirements that would interpret ``principal place of
business'' to mean that an organization could have only one
principal place of business nationwide, similar to the legal concept
that may be used in determining corporate citizenship for purposes
of establishing diversity jurisdiction in Federal court, as required
under 28 U.S.C. 1332(c).
---------------------------------------------------------------------------
Finally, under proposed Sec. Sec. 155.210(c)(1)(iii)(F) and
155.225(d)(8)(v), we proposed to specify that in an FFE, non-Federal
requirements that, as applied or as implemented in the State, prevent
the application of Federal standards applicable to Exchanges,
Navigators, non-Navigator assistance personnel subject to Sec.
155.215, or certified application counselors and certified application
counselor designated organizations, would prevent the application of
the provisions of title I of the Affordable Care Act within the meaning
of section 1321(d). For example, with respect to the Navigator program,
if a State with an FFE implemented a requirement that prevented the
only Navigator entity operating in the State from continuing to perform
its Federally-required duties, then such a provision, as applied, would
prevent the Exchange from operating a Navigator program as required by
section 1311(i)(1) of the Affordable Care Act and Sec. 155.210(a). As
a second example, we explained that if a State imposed certain
requirements as mandatory conditions for continuing to perform any
applicable Federally-required duties, such as additional training or
background or fingerprinting checks, which, on their face, we consider
as generally permissible, but also set a deadline for compliance that
made it impossible for any individual or entity approved by the FFE to
comply on a timely basis, despite good faith efforts to comply, then as
long as those assisters were prevented from fulfilling any of their
Federally-required duties until they could come into compliance with
the State requirements, the FFE would be prevented from operating the
consumer assistance programs that it is required or authorized to
implement consistent with Federal standards.
Comment: A large number of commenters commended HHS for listing
specific examples of non-Federal standards that would, in HHS's view,
prevent the application of the provisions of title I of the Affordable
Care Act, within the meaning of its section 1321(d). The commenters
stated that the level of specificity in the proposed provisions and
accompanying preamble provided important clarity regarding the types of
non-Federal requirements that would prevent Navigators, non-Navigator
assistance personnel and certified application counselors from
performing their Federally-required duties. In expressing their
support, these commenters stated that enrollment into Exchange coverage
and insurance affordability programs during the initial open enrollment
period was aided in significant part by assistance offered through in-
person assistance programs, and that these proposed regulations should
be finalized to help facilitate the continued ability of assisters to
provide in-person
[[Page 30272]]
assistance during the 2014 coverage year as well as during the next
Exchange open enrollment period in fall 2014 and beyond.
A few commenters objected to the proposed provisions and asserted
that they were overly broad, and/or exceed the authority of HHS, in
violation of the Tenth Amendment of the U.S. Constitution and the
McCarran-Ferguson Act that provides, ``[t]he business of insurance, and
every person engaged therein, shall be subject to the laws of the
several States which relate to the regulation or taxation of such
business.'' (15 U.S.C. 1012(a) (1945)) Citing 15 U.S.C. 1012(b), these
commenters asserted that the McCarran-Ferguson Act exempts the business
of insurance from most Federal regulation, providing that Federal
statutes cannot be construed to invalidate, impair or supersede State
insurance law unless they specifically relate to the business of
insurance.
Response: We agree that Navigators, non-Navigator assistance
personnel, and certified application counselors have played and will
continue to play an important role in providing application assistance
to consumers, with respect to enrollment in both QHPs and insurance
affordability programs. It is therefore important, in the view of HHS,
to provide guidance regarding which types of non-Federal laws would,
within the meaning of section 1321(d) of the Affordable Care Act,
prevent the application of the Federal requirements to which assisters
and Exchanges are subject. The finalized provisions are a non-
exhaustive list of non-Federal requirements that, in the view of HHS,
prevent the application of the provisions of title I of the Affordable
Care Act. We are therefore finalizing, with a few modifications,
proposed Sec. Sec. 155.210(c)(1)(iii)(A)-(D) and (F) and
155.225(d)(8)(i)-(iii) and (v).
We are not finalizing proposed Sec. Sec. 155.210(c)(1)(iii)(E) and
155.225(d)(8)(iv). The concerns raised by commenters about the breadth
of these provisions, and the questions raised in comments raised about
the interpretations we provided in the preamble to the proposed rule of
the substantive Federal requirements whose application would be
prevented by certain non-Federal requirements, have instead provided us
with an opportunity to further define those substantive Federal
requirements, consistent with our preamble discussion in the proposed
rule, through the addition of language in Sec. Sec. 155.210(d)(4) and
(e)(7) and Sec. Sec. 155.225(b)(3) and (g)(2) in the final rule.
With respect to the proposed requirement that Navigators, non-
Navigator assistance personnel subject to Sec. 155.215 and certified
application counselors maintain a physical presence in the Exchange
service area, we are finalizing this requirement under Sec. Sec.
155.210(e)(7) and 155.215(h) with respect to Navigators and non-
Navigator assistance personnel subject to Sec. 155.215, but we are not
finalizing this requirement with respect to certified application
counselors under proposed Sec. 155.225(b)(1)(iii). We are also
modifying the proposed regulation text in Sec. Sec. 155.210(e)(7),
155.215(h) and are finalizing a new provision at Sec. 155.225(b)(3) to
clarify that in an FFE, Navigators, non-Navigator assistance personnel
subject to 155.215 and certified application counselors, respectively,
are not required to maintain their principal place of business in the
Exchange service area, defined as the entire area served by the
Exchange. A requirement that these assister entities maintain their
principal place of business within the Exchange service area for an FFE
would limit the pool of entities which would be eligible to serve in
this capacity, and could prevent the FFE from fully implementing the
consumer assistance programs that it is required (or authorized) to
implement, within the meaning of section 1321(d) of the Affordable Care
Act.
With respect to the requirement under existing Sec. Sec.
155.210(d)(4) and 155.215(a)(2)(i) (which applies Sec. 155.210(d)(4)
to non-Navigator assistance personnel subject to Sec. 155.215 by
cross-reference), and finalized in this rule at Sec. 155.225(g)(2),
that Navigators, non-Navigator assistance personnel subject to Sec.
155.215 and certified application counselors, respectively, are
prohibited from receiving any consideration directly or indirectly from
a health insurance issuer (or stop-loss insurance issuer) in connection
with enrollment of any individuals in a QHP or non-QHP, we are
modifying the text in Sec. 155.210(d)(4) and adding text in Sec.
155.225(g)(2) to clarify that in the FFE, this requirement does not
mean that a health care provider shall be ineligible to operate in an
assister program solely because it receives consideration from a health
insurance issuer for health care services provided. We make these
clarifications to make it easier for the public to understand the
purpose and scope of the applicable Federal standards in the FFE and to
identify circumstances in which additional non-Federal requirements
would be in conflict with Federal requirements. This places in
regulation text previous interpretations of these provisions, in which
we have stated that ``the prohibition on receiving direct or indirect
consideration from a health insurance or stop loss insurance issuer
[applies to] consideration received for enrolling individuals or
employees in health insurance plans or stop loss insurance inside or
outside the Exchanges; it does not apply to consideration received by a
provider to support specific activities, such as the provision of
medical services, that are not connected to the enrollment of
individuals or employees in QHPs.'' (78 FR 42832) In addition, this
prohibition does not apply in situations where an individual or entity
that is otherwise eligible to serve as a Navigator, non-Navigator
assistance personnel subject to Sec. 155.215, certified application
counselor or certified application counselor designated organization,
in accordance with applicable Exchange standards, receives
consideration from a health insurance or stop loss insurance issuer
that is not in connection with the enrollment of any individual(s) in a
QHP or non-QHP.
We do not agree that HHS is exceeding its authority in finalizing
the proposed provisions. These provisions set forth HHS's
interpretation of the preemption standard established by Congress in
section 1321(d) of the Affordable Care Act, which provides that State
laws that do not prevent the application of the provisions of title I
of the Affordable Care Act are not preempted. This preemption standard
applies to all of the Federal requirements applicable to Navigators,
non-Navigator assistance personnel and certified application
counselors, as well as to all of the Federal requirements that
Exchanges implementing these programs must follow, as all these
standards are authorized and established under title I of the
Affordable Care Act. In section 1321(d) of the Affordable Care Act,
therefore, in HHS's view, Congress made clear that while States
continue to have authority to enact laws that affect programs
established under the provisions of title I of the Affordable Care Act,
that authority is not unlimited. Rather, States do not have the
authority to enact laws that prevent the application of the provisions
of title I of the Affordable Care Act, including the provisions that
provide authority and establish Federal requirements for the Navigator
programs, non-Navigator programs, and certified application counselor
programs.
[[Page 30273]]
Moreover, in promulgating the provisions in this final rule, HHS is
simply interpreting how the preemption standard that Congress
established in section 1321(d) of the Affordable Care Act applies to a
non-exhaustive list of certain non-Federal requirements for these
assister programs. HHS has a unique understanding of the statutes it
administers and is responsible for interpreting, and Congress has
expressly delegated to HHS, under section 1321(a)(1) of the Affordable
Care Act, authority for issuing Federal regulations setting standards
for meeting the requirements under the Affordable Care Act with respect
to the establishment and operation of Exchanges, including the
establishment and operation of the Navigator, non-Navigator, and
certified application counselor programs. HHS expects that this final
rule will provide valuable guidance to both States and assisters, as
well as other stakeholders, by helping to resolve questions about the
types of non-Federal laws that, in HHS's view, would prevent the
application of the provisions of title I of the Affordable Care Act,
within the meaning of section 1321(d) of the Affordable Care Act. We
recognize that a Federal court might find that other non-Federal
requirements not listed in this rule would prevent the application of
Federal requirements within the meaning of section 1321(d).
Comment: Some commenters, while supporting the provisions
generally, also expressed concerns that the proposed regulations do not
address non-Federal laws that create obstacles to the implementation of
the goals of Federal law. Commenters urged us to specifically address
requirements that impose unreasonable burdens for assisters in the
performance of their Federally-required duties and expressed concern
that by not doing so, HHS could be seen as interpreting section 1321(d)
of the Affordable Care Act to preempt State law only when it is
impossible for an assister or an Exchange to comply with both Federal
and non-Federal requirements. Some of these commenters requested that
HHS clarify that it does not mean to suggest that a non-Federal
requirement that imposes an unreasonable burden on assisters or serves
as an obstacle to the implementation of Federal law could not prevent
the application of the provisions of title I of the Affordable Care
Act, within the meaning of section 1321(d) of the Affordable Care Act.
Response: These provisions contain a non-exhaustive list of
circumstances under which HHS would consider a non-Federal requirement
applicable to Navigators, non-Navigator assistance personnel, or
certified application counselors to prevent the application of
provisions of title I of the Affordable Care Act, within the meaning of
section 1321(d) of the Affordable Care Act. There may be other types of
non-Federal requirements, not specified in these provisions, that would
also prevent the application of Federal requirements related to the
assister programs. We do not intend to suggest that non-Federal
requirements which place unreasonable burdens on assisters and assister
entities or that create obstacles to the implementation of Federal law
could not also prevent the application of title I of the Affordable
Care Act within the meaning of section 1321(d) of the Affordable Care
Act.
Comment: Some commenters supported the proposed regulations'
acknowledgement of the State's role in imposing State-level
registration and other reasonable consumer protections for its
residents. However, a few commenters asserted that the proposed
provisions would prevent States from establishing additional consumer
protections and would therefore conflict with section 1321(d) of the
Affordable Care Act.
Response: We clearly expressed in the preamble to the proposed
rule, and reiterate here, that we do not intend the provisions
regarding non-Federal requirements for assisters to suggest that a
State cannot establish or implement additional State law protections
for its consumers, such as requiring registration, passing
fingerprinting and background checks, or completing State training,
provided that its implementation of these additional requirements does
not prevent the Exchange from implementing Navigator, non-Navigator and
certified application counselor programs in the State consistent with
Federal standards or prevent assisters in these programs from meeting
Federal requirements. We acknowledge, however, that there is an
apparent tension between the general permissibility of additional, non-
conflicting State requirements and the language in proposed Sec. Sec.
155.210(c)(1)(iii)(E) and 155.225(d)(8)(iv), in which we proposed that
non-Federal requirements that would render ineligible any assister
entities or individuals that would otherwise be eligible to participate
in an FFE would prevent the application of Federal requirements for
assisters. Because these provisions could have been construed, contrary
to our intent, as limiting the States' authority or ability to
implement reasonable consumer protection measures in addition to those
established by the FFE, we have decided not to finalize them. Instead,
as we explain above, we are adding language to other provisions of the
regulations governing the Navigator, non-Navigator, and certified
application counselor programs to codify our interpretations of those
provisions, consistent with our preamble discussion in the proposed
rule and in other preambles (see 78 FR 42832), so that our existing
policies related to these provisions are clarified.
First, we are adding language to current Sec. 155.210(d)(4), which
applies to non-Navigator assistance personnel subject to Sec. 155.215
by cross-reference, as well as to new Sec. 155.225(g)(2) (which is
being finalized in this rulemaking) to codify the principle we
previously espoused in the preamble to the proposed rule: that a
hospital or other health care provider shall not be ineligible to
participate in the Navigator, non-Navigator assistance personnel, or
certified application counselor program solely because it receives
payment for health services from health insurance issuers. Our approach
to finalizing this provision reflects the fact that HHS continues to
have concerns regarding certain types of non-Federal requirements that
were described in the preamble to the proposed rule. Specifically, we
continue to have concerns about non-Federal requirements that would
prohibit a hospital or other health care provider from participating in
an assister program solely because it receives payment for health
services from a health insurance issuer, because such non-Federal
requirements could prevent the Exchange from operating an assister
program that includes individuals and entities that are otherwise
extremely well qualified.
We also continue to have concerns about non-Federal requirements
that require Navigators, non-Navigator assistance personnel subject to
Sec. 155.215, and certified application counselors or certified
application counselor designated organizations to maintain their
principal place of business in the State, even though we are not
finalizing the specific provisions that were directed at these types of
non-Federal requirements in proposed Sec. Sec. 155.210(c)(1)(iii)(E)
and 155.225(d)(8)(iv). We have therefore decided to add text to the
Federal standards being finalized in this rulemaking at Sec. Sec.
155.210(e)(7) and 155.215(h) to clarify that although Navigators and
non-Navigator personnel subject to Sec. 155.215 must maintain a
physical presence in the Exchange service area, they shall not be
rendered ineligible to participate in the
[[Page 30274]]
applicable assister program merely because their principal place of
business is outside of the Exchange service area. While we are not
finalizing the proposed requirement in Sec. 155.225(b)(1)(iii)) which
would have required an organization to maintain a physical presence in
the Exchange service area in order to be designated as a certified
application counselor organization by an Exchange, we are finalizing in
Sec. 155.225(b)(3) the clarification that an organization shall not be
rendered ineligible to participate in the applicable assister program
merely because its principal place of business is outside of the
Exchange service area. We hope that by codifying these principles
through amendments to the regulations governing these assister
programs, we will resolve any confusion caused by our proposals at
Sec. Sec. 155.210(c)(1)(iii)(E) and 155.225(d)(8)(iv), while at the
same time addressing the concerns about non-Federal requirements that
motivated these proposals and were presented in the preamble discussion
related to those proposals.
Comment: Several commenters recommended that the list of provisions
specifying non-Federal requirements that would prevent the application
of the provisions of title I of the Affordable Care Act remain non-
exhaustive and that HHS should continue to engage in monitoring of non-
Federal requirements and their effects on consumer assistance functions
that are required or permitted in an Exchange. A few commenters urged
HHS to monitor the implementation of non-Federal requirements and their
effects on assister programs, with one commenter suggesting that HHS be
more proactive by delineating a process for how it will review non-
Federal standards in the event that these provisions become finalized
as proposed.
Response: We agree that, at this time, HHS should not attempt to
provide an exhaustive list of provisions specifying the types of non-
Federal requirements that would prevent the application of Federal
requirements. We agree that continued monitoring of the passage and
implementation of non-Federal requirements as they apply to Navigators,
non-Navigator assistance personnel subject to Sec. 155.215, and
certified application counselors is critical to ensuring the
implementation and ultimate success of consumer assistance functions of
an Exchange to provide meaningful assistance to all consumers who seek
such assistance. HHS has monitored, and will continue to monitor, new
and existing non-Federal requirements as they are issued and
implemented, and will continue to assess whether such laws prevent the
application of the provisions of title I of the Affordable Care Act.
Comment: We received comments on whether all the proposed
provisions regarding non-Federal requirements should apply in State
Exchanges or whether only some of the provisions would apply to State
Exchanges, as proposed. A few commenters expressed support for applying
certain of the proposed provisions in all types of Exchanges, while
applying other types of provisions only in FFEs (including State
Partnership Exchanges). Others recommended that the provisions should
apply consistently ``across-the-board'' to all Exchanges because doing
so would create a bright line across all Exchanges and make it easier
for all stakeholders to administer the various consumer assistance
programs in an efficient, cohesive fashion and would minimize confusion
if a State transitions from an FFE to a State Exchange.
Response: In light of the fact that we are not finalizing proposed
Sec. Sec. 155.210(c)(1)(iii)(E) and 155.225(d)(8)(iv) in this final
rule (and our related decision to instead clarify certain Federal
standards as they apply to assisters in the FFE, as discussed above),
there are five preemption provisions being finalized in this rule under
renumbered Sec. Sec. 155.210(c)(1)(iii)(A)-(E) and four preemption
provisions being finalized in both Sec. 155.215(f)(1)-(4) and Sec.
155.225(d)(8)(i)-(iv). We agree with commenters that these specific
provisions, as finalized, should be directed at non-Federal
requirements in all Exchanges, including State Exchanges. We continue
to anticipate, based on our observations thus far, that a State
Exchange would have an enhanced ability to coordinate with other State
offices to ensure that State law applicable to assisters does not
prevent the application of Federal requirements applicable to
Navigators, non-Navigators and certified application counselors.
However, we acknowledge that it is possible that a non-Federal
requirement, as applied or implemented in a State, could prevent a
State Exchange from operating the consumer assistance programs it is
required (or authorized) to implement, or otherwise prevent the
Exchange from implementing applicable consumer assistance programs
consistent with Federal requirements, or could prevent consumer
assistance entities or individuals in the State from performing their
Federally-required duties. Rather than rule out the possibility that an
``as-applied'' conflict could occur with respect to a State Exchange,
as captured in the provisions that were proposed at Sec. Sec.
155.210(c)(1)(iii)(F) and 155.225(d)(8)(v) to be applicable only in an
FFE, we are extending the applicability of these provisions, now
renumbered as Sec. Sec. 155.210(c)(1)(iii)(E) and 155.225(d)(8)(iv),
and reformatted in Sec. 155.215(f)(4), so that they apply equally to
all types of Exchanges. Therefore, in finalizing these provisions, we
have removed the reference to a ``Federally-facilitated Exchange.''
We are also amending Sec. 155.210(e)(2) in the final rule, to
specify, consistent with our discussion in the preamble to the proposed
rule (see, for example, 79 FR 15828-15829), that in addition to the
existing requirements under this provision and 155.210(e)(3) that
Navigators must provide information and services in a fair, accurate,
and impartial manner and must facilitate selection of a QHP, the duties
of a Navigator include providing information that assists consumers
with submitting the eligibility application; clarifying the
distinctions among health coverage options, including QHPs; and helping
consumers make informed decisions during the health coverage selection
process. Under existing provisions at 45 CFR 155.215(a)(2)(i), these
duties will also apply to non-Navigators subject to Sec. 155.215. In
addition, in this rulemaking, we are finalizing a new Sec.
155.225(c)(1), to make certified application counselors subject to a
similar set of duties.
We have also made a minor change to the parallel provisions for
Navigators, non-Navigator personnel subject to Sec. 155.215, and
certified application counselors that are being finalized under Sec.
155.210(c)(1)(iii)(E), Sec. 155.215(f)(4) and Sec. 155.225(d)(8)(iv).
Specifically, we changed the reference to standards that would, as
applied or as implemented in a State, prevent the application of
Federal requirements applicable to the Exchange's implementation of the
respective Navigator, non-Navigator assistance personnel or certified
application counselor program ``consistent with Federal requirements,''
by deleting ``consistent with Federal requirements'' to eliminate
redundancy.
Comment: Several commenters expressed support for the clear and
specific acknowledgement in proposed Sec. 155.215(f) that non-
Navigator assistance personnel subject to Sec. 155.215 must meet non-
Federal requirements, as applicable, except when such non-Federal
requirements prevent the application of the provisions of title I of
the Affordable Care Act. As originally proposed,
[[Page 30275]]
Sec. 155.215(f) did not specify the types of non-Federal requirements
which would prevent the application of title I of the Affordable Care
Act, but instead incorporated them by reference to applicable
provisions under proposed Sec. 155.210(c)(1)(iii). A few commenters
requested that HHS, in the interest of added clarity and ease of
comprehension, revise proposed Sec. 155.215(f) to spell out in the
text of this provision the non-exhaustive list of non-Federal
requirements that would prevent the application of the provisions of
title I of the Affordable Care Act as applied to non-Navigator
assistance personnel, rather than cross-referencing the applicable
provisions under Sec. 155.210(c)(1)(iii), as we had originally
proposed.
Response: We agree with the comment that, consistent with section
1321(d) of the Affordable Care Act, non-Navigator assistance personnel
subject to Sec. 155.215 must meet any non-Federal requirements that
may apply to them, so long as such requirements do not prevent the
application of the provisions of title I of the Affordable Care Act. In
the interest of added clarity and comprehension, we have modified this
provision to add subparagraphs (1) through (4) to Sec. 155.215(f), in
which we list the previously cross-referenced provisions proposed in
the Navigator rule at Sec. 155.210(c)(1)(iii).
Comment: Several commenters supported the clear and specific
acknowledgement in proposed Sec. 155.225(d)(8) that certified
application counselors and their designated organizations must meet
non-Federal requirements, as applicable, except when such non-Federal
requirements prevent the application of the provisions of title I of
the Affordable Care Act. A few commenters asserted that the certified
application counselor program operating in an FFE should not be subject
to non-Federal requirements because, in the commenters' view, this
program was created under HHS's regulatory authority--not by statute.
Response: We are finalizing the provisions of Sec. 155.225(d)(8)
with modifications consistent with those made to the parallel Navigator
and non-Navigator provisions. These finalized provisions establish that
certified application counselors must meet licensing, certification, or
other standards prescribed by a State or Exchange, so long as they do
not prevent the application of the provisions of title I of the
Affordable Care Act.
It is unclear to HHS why some commenters believe that a certified
application counselor program operating in an FFE should not be subject
to non-Federal requirements simply because it was established through
an HHS regulation implementing the Affordable Care Act, rather than
being expressly provided for by the statute. As we have previously
explained, the Secretary established the certified application
counselor program under the authority provided in section 1321(a)(1) of
the Affordable Care Act. Section 1321(a)(1) directs and authorizes the
Secretary to issue regulations setting standards for meeting the
requirements under title I of the Affordable Care Act, with respect to,
among other things, the establishment and operation of Exchanges.
Therefore, the certified application counselor program is authorized by
the statute, even if the program was established through rulemaking.
Whether a certified application counselor organization should be
subject to non-Federal requirements will turn on application of the
preemption standard set forth in section 1321(d) of the Affordable Care
Act, namely whether the non-Federal requirement prevents the
application of the provisions of title I of the Affordable Care Act,
regardless of whether it is operating in an FFE.
Comment: Some commenters asserted that since 45 CFR 155.225(a)
established that ``the Exchange must have a certified application
counselor program that complies with the requirements of this
section,'' it follows that it is the responsibility of ``the Exchange''
to regulate certified application counselors, and therefore any State
that has opted for HHS to operate an FFE has relinquished authority to
regulate the certified application counselor program in the State. In
support of this view, the commenters noted a Federal court decision at
St. Louis Effort for AIDS, et al. v. Huff, No. 13-4246-CV-C-ODS, 2014
WL 273201, at *9 (W.D. Mo. Jan. 23, 2014) (order granting preliminary
injunction). This decision is currently on appeal before the United
States Court of Appeals for the Eighth Circuit, St. Louis Effort for
AIDS v. Huff, No. 14-1520 (8th Cir. Appeal docketed Mar. 6, 2014).
Accordingly, commenters recommended that proposed Sec. 155.225(d)(8)
be modified to state: ``meets any licensing, certification, or other
standards prescribed by the State or Exchange, as applicable''
(emphasis added).
Response: The issue presented in these comments is the subject of
pending litigation before the United States Court of Appeals for the
Eighth Circuit in St. Louis Effort for AIDS v. Huff, No. 14-1520 (8th
Cir. Appeal docketed Mar. 6, 2014). In light of that ongoing
litigation, we are refraining from making the recommended change to
Sec. 155.225(d)(8) of the final rule at this time. We will consider
making changes in the future.
Comment: We received several comments in support of proposed
Sec. Sec. 155.210(c)(1)(iii)(A) and 155.225(d)(8)(i), with a few of
these commenters noting that these provisions could bring an ancillary
benefit of enhancing conflict-of-interest rules and mitigating the risk
that assisters might receive ``kickbacks'' from entities not required
to act impartially. Several of these commenters requested that we
modify the provision to mirror the characterization included in the
preamble by adding ``insurance agents and brokers'' explicitly into the
rule text, in addition to retaining ``other entities not required to
provide fair, accurate, and impartial information.'' On the other hand,
a few commenters objected to the characterization in the preamble
discussion of the proposed rule that, in their view, implied that
licensed health insurance agents and brokers are permitted to engage in
unfair acts or make false and misleading statements. The commenters
explained that in most States, licensing and unfair trade practices
laws require agents and brokers to refrain from engaging in deceptive
behavior or making misrepresentations regarding benefits and terms of
coverage.
A few commenters, while supporting the proposed provision's
specification that mandated referrals to third parties not required to
provide information in a fair, impartial, accurate manner are in
conflict with applicable Federal standards, also requested that we
explain that this provision applies only to non-Federal requirements
that mandate such referrals, and asked that we confirm that assisters
would be permitted to refer consumers to agents and brokers voluntarily
in specific circumstances, such as when the consumer's needs exceed the
assister's expertise, or when the assister or entity lacks the capacity
and resources to assist all individuals who seek assistance. In
addition, a few commenters recommended that HHS clarify that this
provision should not be construed to mean that assisters are barred
from making referrals to entities not required to provide fair,
accurate, and impartial information. These commenters suggested, for
example, that assisters should be permitted to make such referrals when
a consumer requests a specific recommendation regarding which plan to
choose, because making a specific plan recommendation might violate an
assister's duties under the
[[Page 30276]]
applicable Federal standards, and doing so might also violate certain
State laws that prohibit anyone other than a licensed health insurance
agent or broker from recommending a plan. In addition, a few commenters
asserted that it is appropriate for Navigators to fulfill requirements
to assist small employers with enrollment through referral to agents
and brokers in instances where Navigators do not have expertise in
small business insurance, because agents and brokers continue to be an
important source of information and enrollment assistance for both
individuals and for small employers.
Response: We are finalizing this provision as proposed, with one
modification with respect to proposed Sec. 155.225(d)(8)(i). We do not
believe that the regulation, or our discussion in the preamble to the
proposed rule, suggests that agents and brokers engage in unfair or
deceptive practices. We nonetheless believe that that the proposed
language describing ``entities not required to act in the best
interests of applicants assisted'' was confusing on this point, and
have replaced it, consistent with the changes we are finalizing in this
rule to 155.225(c)(1), with a reference to ``entities not required to
provide fair, accurate, and impartial information.'' We decline to
mention agents and brokers explicitly in the regulation text, because,
as some commenters point out, agents and brokers may be required to act
impartially and may be subject to standards that would require them to
provide fair, accurate, and impartial information in a way that is
similar to Exchange-approved consumer assistance entities and
individuals.
We agree with the commenters who supported our view in the proposed
rule that a non-Federal requirement mandating that Navigators, non-
Navigator assistance personnel subject to Sec. 155.215, and certified
application counselors refer consumers to third parties not obligated
to provide fair, accurate, and impartial information would conflict
with the Federal duties required of Navigators, non-Navigator
assistance personnel subject to Sec. 155.215, and certified
application counselors and their designated organizations under various
authorities: for Navigators, sections 1311(i)(3)(B) and 1311(i)(5) of
the Affordable Care Act, as well as 45 CFR 155.210(e)(2) and
155.215(a)(1)(iii); for Non-Navigator assistance personnel, 45 CFR
155.215 (a)(2)(i) and (iv); and for certified application counselors,
45 CFR 155.225(c)(1) as amended in this final rule. In light of the
regulation text changes, discussed in greater detail below, that we
make under Sec. 155.225(c)(1) to align that provision more
consistently with the standards that apply across Exchange consumer
assistance programs, and to explicitly specify that certified
application counselors must provide information ``in a fair, accurate,
and impartial manner,'' we are clarifying the language of final Sec.
155.225(d)(8)(i). Specifically, we are finalizing Sec.
155.225(d)(8)(i) to specify that a referral to a third party that is
not required to ``act in the best interest'' of applicants assisted, as
required under Sec. 155.225(d)(4), or to a third party that is not
required to provide information in a fair, accurate, and impartial
manner, as required under the clarifications to Sec. 155.225(c)(1)
that we make in this final rule, would prevent certified application
counselors from meeting Federal standards that apply to them. To
reiterate and, in recognition of the fact that a third party may be
required to act in the best interest of the applicants they assist or
provide information in a fair, accurate, and impartial manner to the
same extent that a certified application counselor is required to, we
would not construe a non-Federal requirement that required such a
referral to that particular type of third party to prevent the
application of the provisions of title I of the Affordable Care Act.
In addition, these comments present us with the opportunity to
explain that we interpret certain Federal standards applicable to
Navigators, non-Navigator assistance personnel subject to Sec.
155.215, and certified application counselors and their designated
organizations to prohibit these assisters from making specific plan
recommendations. With respect to Navigators and the non-Navigator
assistance personnel who are subject to Sec. 155.215, the
recommendation of a specific plan would be inconsistent with CMS's
interpretation of 45 CFR 155.210(e)(2) and (3) (applicable to
Navigators in all Exchanges) and 45 CFR 155.215(a)(1)(iii) (applicable
to Navigators in an FFE) and (a)(2)(i) and (iv) (applicable to non-
Navigator assistance personnel subject to Sec. 155.215, which require
these assisters to provide information in a fair, accurate, and
impartial manner, including by acknowledging other programs; to provide
information to individuals and employees about the full range of QHP
options and insurance affordability programs for which they are
eligible; and to facilitate selection of a QHP. With respect to
certified application counselors, the recommendation of a specific plan
would violate their duties to act in the best interests of the consumer
(45 CFR 155.225(d)(4)), to provide information to individuals and
employees about the full range of QHP options and insurance
affordability programs for which they are eligible, and help to
facilitate their enrollment in QHPs and insurance affordability
programs (45 CFR 155.225(c)(1) and (3)). Specifically, in our view,
permitting assisters to recommend a specific plan would undermine one
overall purpose of consumer assistance programs, which is to provide
interpretive guidance that enables consumers to become fully informed
and health literate, to assess the full range of their coverage options
and the strengths and weaknesses of different options or plans based on
the information provided to them, and ultimately to be able to make
their own informed choices about which coverage option best meets their
needs and budget. Further, Federal standards require an assister to act
to ``facilitate'' plan selection or enrollment (as applicable), which
we interpret to mean that the act of plan selection and enrollment
itself rests with the consumer (see our previously expressed
interpretations of these requirements in preamble at 78 FR 42844-45).
Consistent with these principles, we are amending Sec. 155.210(e)(2)
in the final rule, to specify that in addition to the existing
requirement under this provision that Navigators provide information
and services in a fair, accurate, and impartial manner, the duties of a
Navigator include providing information that assists consumers with
submitting the eligibility application; clarifying the distinctions
among health coverage options, including QHPs; and helping consumers
make informed decisions during the health coverage selection process.
We are also adding these standards through amendments to Sec.
155.225(c)(1) in the final rule, to clarify the existing duty of
certified application counselors to provide information to individuals
and employees about the full range of QHP options and affordability
programs for which they are eligible which includes providing fair,
impartial, and accurate information that assists consumers with
submitting the eligibility application; clarifying the distinctions
among health coverage options, including QHPs; and helping consumers
make informed decisions during the health coverage selection process.
While consumers need to make the ultimate decision regarding the
type of coverage that best meets their health care needs and budget,
assisters may
[[Page 30277]]
facilitate enrollment in a QHP by providing comprehensive information
about the substantive benefits and features of a plan, clarifying the
similarities and distinctions among plans, and assisting consumers with
making informed decisions in the plan selection process, consistent
with the consumer's expressed interests and needs. Therefore, as part
of facilitating a consumer's enrollment in a QHP, or selection of a
QHP, Navigators, non-Navigator assistance personnel subject to Sec.
155.215, and certified application counselors may provide information
to the consumer that includes, but is not limited to, information
regarding plan features such as deductibles, coinsurance and
copayments, coverage limitations or exclusions, identifying plans for
which an eligible consumer may receive CSRs or other Federal financial
assistance (for example, Ryan White HIV/AIDS Program premium and cost-
sharing assistance) and information about whether a particular provider
or hospital is included within a plan's network. Offering this type of
information is particularly important for consumers, who, without such
assistance, might otherwise not complete the enrollment process or
might not have all of the information they need to make a plan
selection.
To the extent an assister is asked by a consumer to recommend a
plan, we interpret the above-cited authorities as requiring the
assister to refrain from providing a recommendation or otherwise
steering a consumer to a particular plan. In addition, if a consumer
asks an assister to recommend a specific plan, an assister should
remind the consumer that they are prohibited from making plan
recommendations because Federal standards require them to remain fair
and impartial. The assister may, consistent with the consumer's
expressed needs and desires, determine that it is appropriate to inform
the consumer of the general availability of licensed, Exchange-trained
health insurance agents and brokers as a resource that could provide
specific plan recommendations, if licensed health insurance agents or
brokers are permitted to do so under State law. The assister may direct
the consumer to listings of agents and brokers; however, the assister
should not make a referral to any specific agent or broker or specific
set of agents or brokers.
With one limited exception,\23\ assisters may not fulfill their
Federally-required duties through referrals to agents and brokers. As
we have stated previously, Navigators subject to Sec. 155.215 (that
is, Navigators in the FFEs and State Partnership Exchanges) and non-
Navigator assistance personnel subject to Sec. 155.215 must be
prepared to serve both SHOP and the individual market Exchange,
including small businesses with SHOP (see Sec. 155.215(b)(1)(v) and 78
FR 42835-36). Certified application counselors in the FFEs are expected
to assist employees with SHOP options and are permitted, but not
required, to assist small employers with SHOP.\24\ In the event that a
particular consumer's individual needs go beyond the assister's
expertise, or the assister or entity lacks the resources to assist all
individuals who present themselves for assistance, an assister may,
consistent with the consumer's expressed needs and desires, determine
that it is in the consumer's best interests to inform the consumer of
the general availability of other consumer assistance entities who may
possess the requisite expertise and capacity to assist them, including
the Exchange Call Center, non-Navigator assistance personnel or
certified application counselors. With respect to the FFEs, we note
that HHS maintains on its Web site and at its Call Center a public
registry of Exchange-approved consumer assistance resources in each
FFE, including Navigators, non-Navigators, and certified application
counselor organizations. HHS also maintains on its Web site links to
agent and broker trade association Web sites, which would allow a
consumer to look up agents and brokers in a particular local area. We
encourage State Exchanges to make consumer assistance resources
publicly available in a similar manner and understand that many, if not
most, State Exchanges have done so.
---------------------------------------------------------------------------
\23\ Sec. 155.705(d) permits a State operating a State SHOP-
only Exchange to allow Navigators to fulfill certain Navigator
duties under Sec. 155.210(e)(3) and (4) through referrals to agents
and brokers.
\24\ See question 40 at http://marketplace.cms.gov/help-us/common-qandas-about-cac-designation.pdf.
---------------------------------------------------------------------------
Comment: Many commenters indicated support for proposed Sec. Sec.
155.210(c)(1)(iii)(B) and 155.225(d)(8)(ii) and agreed that non-Federal
requirements that prevent Navigators, non-Navigator assistance
personnel subject to 155.215, and certified application counselors from
providing services to any individual who presents him or herself for
assistance would prevent the application of the provisions of title I
of the Affordable Care Act and should be interpreted as in conflict
with the requirement for Navigator and non-Navigator assistance
personnel subject to Sec. 155.215 to provide information and services
fairly and impartially. However, a few commenters asserted that one
type of non-Federal requirement discussed in the preamble to the
proposed rule, which would require assisters to suggest or encourage
any consumer who is insured, or previously bought insurance through the
aid of an agent or broker, to consult with that agent or broker before
enrolling in a plan, serves a legitimate purpose because it is designed
to prevent consumers from making uninformed or impulsive decisions.
These commenters asserted that these non-Federal requirements do not
prevent assisters from performing their Federal obligations because
they require merely ``advising'' an insured consumer that they should
consider talking to an insurance professional before changing health
plans and do not necessarily result in the assister being unable to
perform application and enrollment assistance for these types of
consumers, to the extent that these consumers reject the assister's
advice to consult with an agent or broker. Some commenters argued that
certain non-Federal requirements of this nature strike the right
balance and should not be viewed as preventing assisters from
performing their Federally-mandated duties. Specifically, these
commenters reasoned that although certain non-Federal requirements of
this nature require an assister to advise an individual to consult
first with a health insurance professional with whom they may have
consulted previously, they permit an assister to continue to provide
services to that insured individual if that individual expresses a
preference not to consult with that health insurance professional.
Response: We are not persuaded by comments suggesting that
assisters can uphold their duties to provide information in a fair and
impartial manner and act in the consumer's best interests if they are
required to advise a consumer to consult with an insurance professional
when they learn that the consumer is insured or previously purchased
health insurance with the aid of an agent or broker. While such non-
Federal requirements might be intended to prevent consumers from making
impulsive or uninformed decisions, the same is true of the Federal
standards for Navigators, non-Navigator assistance personnel, and
certified application counselors. These Federal standards are designed
to ensure that these Exchange-approved assisters help a consumer make a
fully informed decision.
[[Page 30278]]
Specifically, assisters must provide information in a fair, accurate,
and impartial manner, provide information on the full range of QHP
options for which they are eligible, clarify distinctions among QHPs,
and act in the consumer's best interests. Assisters must also provide
fair, impartial, and accurate information that assists consumers with
submitting the eligibility application; clarify the distinctions among
health coverage options, including QHPs; and help consumers make
informed decisions during the health coverage selection process, as
specified in the modifications made to Sec. 155.210(e)(2) (which is
made applicable to certain non-Navigators through reference in Sec.
155.215(a)(2)(i)) and Sec. 155.225(c)(1) of this final rule.
Further, we note that under existing regulations at Sec.
155.210(d)(4) and 155.215(a)(2)(i) and regulations finalized in this
final rule at Sec. 155.225(g)(2), Navigators, non-Navigator assistance
personnel subject to Sec. 155.215, and certified application
counselors are subject to a conflict of interest standard which
prohibits them from receiving consideration, directly or indirectly, in
connection with enrollment in a QHP or non-QHP; and the requirement
that one of these assisters refer or direct a consumer to another
individual, such as an agent or broker, who receives such consideration
in connection with QHP enrollment, would be inconsistent with this
conflict of interest requirement under Federal law.
Comment: One commenter asserted that proposed Sec. Sec.
155.210(c)(1)(iii)(B) and 155.225(d)(8)(ii)'s specification that
prohibitions against an assister's ability to provide services to any
individual who presents him or herself for assistance would prevent the
application of the provisions of title I of the Affordable Care Act,
were too broadly worded because they referred to ``services''
generically, and suggested that the provision be revised to read
``services required of [assisters] by the Affordable Care Act to all
persons to whom they are required to provide assistance.'' The
commenter further asserted that the consumer assistance programs
created under the Affordable Care Act are intended to assist the
uninsured, and therefore consumers such as employers and employees with
employer-sponsored insurance offered through the small group market as
well as those shopping in the individual market who already have
insurance are not the types of consumers to whom assisters are intended
or required to provide assistance.
Response: We are not modifying the regulation text in the manner
suggested by the commenter. We do not agree with the commenter's view
that the consumer assistance programs were created to serve the
uninsured exclusively. As we explained in the preamble to the proposed
rule, we interpret the requirement that Navigators and non-Navigator
assistance personnel subject to Sec. 155.215 provide information and
services fairly and impartially to require that that these assisters
provide services to all consumers seeking assistance and have explained
in preambles to prior rulemakings that all Navigators and non-Navigator
assistance personnel should have the ability to help any individual who
presents him or herself for assistance (see 78 FR 20589 and 78 FR
42830). Further, Sec. 155.215(b)(1)(v) requires that Navigators in
FFEs and State Partnership Exchanges, and non-Navigator assistance
personnel subject to Sec. 155.215 be prepared to serve both the
individual market Exchange and SHOP. In addition, section 1311(i)(3)(D)
of the Affordable Care Act and Sec. 155.210(e)(4) provide that
Navigators are required to assist ``any enrollee with a grievance,
complaint, or question regarding their health plan, coverage, or a
determination under such plan or coverage'' (emphasis added).\25\
Similarly, if a non-Federal requirement barred certified application
counselors from assisting an employee with Exchange coverage, then such
a requirement would prevent them from performing all of their Federal
duties in amended Sec. 155.225(c)(1) and in existing Sec.
155.225(c)(2) to provide information to employees about the full range
of QHP options for which they are eligible--including providing fair,
impartial, and accurate information that assists consumers with
submitting the eligibility application; clarifying the distinctions
among health coverage options, including QHPs; and helping consumers
make informed decisions during the health coverage selection process
and assist employees to apply for coverage in a QHP through the
Exchange and for insurance affordability programs. Accordingly,
assisters would violate these various Federal standards if they
withheld application or enrollment services from a consumer on the
basis of any particular status, including status as an insured
individual.
---------------------------------------------------------------------------
\25\ Sec. 155.705(d) permits a State operating a State SHOP-
only Exchange to allow Navigators to fulfill certain Navigator
duties under Sec. 155.210(e)(3) and (4) through referrals to agents
and brokers.
---------------------------------------------------------------------------
Comment: We solicited specific comments related to the exception
noted in proposed Sec. Sec. 155.210(c)(1)(iii)(A) and (B) with respect
to non-Federal requirements for Navigators in States with a State SHOP-
only Exchange and a FFE for the individual market. A commenter
supported our approach in the proposed rule to provide an exception in
proposed Sec. Sec. 155.210(c)(1)(iii)(A) and (B) to account for
existing Federal regulations that allow SHOP-only State Exchanges to
permit Navigators to fulfill certain requirements through referral to
agents and brokers.
Response: We are finalizing Sec. Sec. 155.210(c)(1)(iii)(A) and
(B) and Sec. 155.225(d)(8)(i) and (ii), as proposed, without
modification. As we explained in the preamble to the proposed
rulemaking promulgating Sec. 155.705(d), we believe that building and
operating just a SHOP allows a State to move towards operating both a
SHOP and an individual market Exchange. (78 FR 37044) Additionally,
where the State elects to establish and operate only a SHOP Exchange,
there will be two separate Navigator programs operating in the State: a
Federal Navigator program for the individual market, and a State
Navigator program for the SHOP. In conjunction with the various other
areas of flexibility provided to States electing to operate a State
SHOP-only Exchange, we continue to believe that it is prudent to give a
State SHOP-only Exchange the flexibility to choose to focus its
Navigator program on outreach and education to small employers by
permitting SHOP Navigators to satisfy their duties under Sec. Sec.
155.210(e)(3) and (4) through referrals to agents and brokers. Giving
States this extra level of flexibility could further incentivize States
to operate a SHOP Exchange as an intermediate step towards establishing
and operating both a SHOP and an individual market Exchange in the
future, because it could reduce operational costs in running a SHOP,
and could help leverage existing coordination regarding small group
market enrollment activities with the agent and broker community in the
State, as may be applicable. While we recognize that allowing
Navigators to fulfill two of their duties via referrals to agents and
brokers might appear somewhat inconsistent with our general view that
referrals to third parties who are not required to act impartially
would prevent Navigators from meeting Federal standards, we believe
that the benefit of providing administrative flexibility to a State
SHOP-only Exchange's operation in this regard, and thus providing
perhaps greater incentive to States to operate a SHOP-only
[[Page 30279]]
Exchange, compensates for the potential fact that a SHOP Navigator, if
he or she makes referrals to agents and brokers, might be referring
consumers to individuals who might not have the same duty to provide
fair and impartial information. We therefore note, as we did in the
preamble to the proposed rule, that we would not consider State laws or
regulations that permit a State SHOP-only Exchange to take the option
authorized under Federal regulations at Sec. 155.705(d) to prevent the
application of the provisions of title I of the Affordable Care Act.
Comment: We received a number of comments in support of proposed
Sec. Sec. 155.210(c)(1)(iii)(C) and 155.225(d)(8)(iii) and the view
expressed in those proposals that non-Federal requirements that
prohibit assisters from providing advice regarding substantive benefits
or comparative benefits of different health plans would prevent
assisters from fulfilling their duty to facilitate selection of or (as
applicable) enrollment in a QHP. In support of these proposals,
commenters reasoned that while consumers should make the ultimate
decision about what type of coverage meets their health care needs and
budget, providing comprehensive information about the substantive
benefits and features of a plan, clarifying the distinctions among
plans, and assisting consumers with making informed decisions in the
plan selection process, consistent with the consumer's expressed
interests and needs, are critical components of facilitating enrollment
in a QHP, particularly for consumers, who, without such assistance,
might not complete the enrollment process. However, many commenters
indicated that the inclusion of the word ``advice'' in the proposed
provision improperly implies that assisters are permitted to make
recommendations regarding plan selection or are permitted to
``negotiate'' insurance, which are duties preserved for licensed health
insurance agents and brokers in most States. To address this concern,
these commenters recommended that we replace the word ``advice'' with
``information.'' On the other hand, many other commenters urged
retention of the word ``advice'' because the use of this term in non-
Federal laws and regulations is ambiguous enough to pose a conflict
with an assister's duties under Federal requirements, given the nature
of the information that assisters must provide in order to facilitate
selection (or enrollment) in a QHP.
Response: In light of these comments, we are finalizing this
provision with a few modifications. We reiterate that as an aspect of
assisters' Federally-required duties under Sec. Sec. 155.210(e)(2) and
(3) (Navigators in all Exchanges), 155.215(a)(1)(iii) (Navigators in
FFEs), 155.215(a)(2)(iv) (Non-Navigators in FFEs), and 155.225(c)(1)
and (3) (certified application counselors in all Exchanges) to
facilitate (as applicable) selection of a QHP or enrollment of eligible
individuals in QHPs and insurance affordability programs and to provide
information about coverage options, they are required to engage in
substantive discussions about the terms and features of any coverage
for which a consumer is or might be eligible, consistent with the
consumer's expressed interests and needs. (See 79 FR 15829). This
includes, but is not limited to, providing information regarding
features such as deductibles, coinsurance and copayments, coverage
limitations or exclusions, plans for which an eligible consumer may
receive CSRs, and/or whether a particular provider or hospital is
included within a plan's network. (79 FR 15829). We understand the
difficulty faced by assisters to understand where the line should be
drawn between a prohibition on ``advice'' and the ``information'' they
are required to give to perform their duties, given the nature of the
information that assisters must provide to fulfill their duties to
provide fair and impartial information concerning enrollment in QHPs
and insurance affordability programs and facilitate enrollment. In
light of the need for further clarity, we have modified the applicable
existing Federal standards, as we explained above, to clarify
explicitly in the regulation text that providing fair, impartial, and
accurate information that assists consumers with submitting the
eligibility application, clarifying the distinctions among health
coverage options, including QHPs, and helping consumers make informed
decisions during the health plan coverage process, are components of an
assister's Federally required duties. We are making these additions to
the applicable Federal regulations for Navigators at Sec.
155.210(e)(2), which applies to non-Navigator assistance personnel
subject to Sec. 155.215 by a cross-reference at Sec.
155.215(a)(2)(i), and to the applicable certified application counselor
regulations at Sec. 155.225(c)(1).
In addition, we agree that while consumers need to make the
ultimate decision about what type of coverage meets their health care
needs and budget, providing comprehensive information about the
substantive benefits and features of a plan, clarifying the
similarities and distinctions among plans, and assisting consumers with
making informed decisions in the plan selection process, consistent
with the consumer's expressed interests and needs, are a critical part
of assisters' required duties, particularly for consumers, who, without
such assistance, might otherwise not complete the enrollment process or
might not have all of the information they need to make a plan
selection. Therefore, a non-Federal requirement that prohibits
assisters from providing ``advice'' regarding substantive benefits or
comparative features of different health plans would prevent the
application of the provisions of title I of the Affordable Care Act,
insofar as such a requirement, as interpreted or applied under State
law, would prohibit assisters from doing any of the following: (1)
Providing fair, impartial, and accurate information that assists
consumers with submitting the eligibility application; (2) clarifying
the distinctions among health coverage options, including QHPs; or (3)
helping consumers make informed decisions during the health coverage
selection process. We have always interpreted the Affordable Care Act
and our regulations implementing its provisions to prohibit Navigators,
non-Navigator personnel subject to Sec. 155.215, and certified
application counselors from recommending a particular plan or steering
a consumer toward a particular plan or plans as because of their
specified duties to distribute fair and impartial information to
consumers and act in the consumer's best interests, while at the same
time requiring them to provide consumers with all relevant and
applicable information about the coverage options available to them.
For example, we have stated that a Navigator cannot make the decision
for an applicant as to which QHP to select, but they may play an
important role in facilitating a consumer's enrollment in a QHP by
providing fair, impartial, and accurate information that assists
consumers with submitting the eligibility application, clarifying the
distinctions among QHPs, and helping qualified individuals make
informed decisions during the health plan selection process (78 FR
20583; see also 79 FR 15829).
Comment: We received a number of comments in support of our
proposal at Sec. 155.210(c)(1)(iii)(D) that non-Federal requirements
that would require Navigators to hold an agent or broker license or
carry errors or omissions insurance would prevent the application of
the requirement at
[[Page 30280]]
155.210(c)(2) that there to be at least two types of Navigator
entities, including at least one community and consumer-focused
nonprofit organization. However, many commenters stated that this
provision should be modified to apply more broadly to include other
types of assisters, such as non-Navigator assistance personnel subject
to Sec. 155.215, certified application counselors and certified
application counselor designated organizations. Further, a number of
commenters recommended broadening the scope of the proposed provision
to include other types of financial responsibility requirements, such
as surety bond requirements or security deposits. These commenters
noted that in some cases Navigators and other assisters have reported
difficulty in obtaining surety bonds because issuers have been
unwilling to underwrite a business service for which it is difficult to
assess risk. Further, commenters described how some Navigators
experienced so much difficulty in obtaining a surety bond from a vendor
that they could only meet a non-Federal surety bond requirement by
purchasing errors and omissions coverage. They reasoned that the
potential imposition of civil money penalties for violations of privacy
and security standards under Sec. 155.260 or program standards (as
proposed in Sec. Sec. 155.206 and 155.285), as well as the
availability of a special enrollment period for assister misconduct in
accordance with Sec. 155.420(d)(10), would be sufficient remedies in
the event that an assister causes consumer harm, such that a surety
bond would not be necessary to protect consumers. On the other hand, a
few commenters indicated that the proposed rule's scope was appropriate
and indicated that non-Federal requirements that require some form of
financial responsibility, such as a surety bond, serve as an added
consumer protection to make a consumer whole in the event of fraud or
some other wrongdoing on the part of the assister. These commenters
further reasoned that requiring assisters to hold a surety bond or
other proof of financial responsibility does not necessarily inhibit a
community and consumer-focused nonprofit organization from
participating in any consumer assistance program because surety bonds
are generally available to all types of businesses.
Response: We are finalizing this provision as proposed, with one
modification. We appreciate commenters' concerns about the lack of
parity that results from not extending this provision to non-Navigator
assistance personnel subject to Sec. 155.215 and certified application
counselors. At this time, however, we decline to extend this provision
to these other types of consumer assistance programs because we are not
able to discern a facial conflict between non-Federal requirements that
would require non-Navigator assistance personnel or certified
application counselors to hold an agent or broker license or carry
errors and omissions insurance coverage and the Federal standards
applicable to these programs. However, we recognize that within the
meaning of the statutory preemption standard set forth at section
1321(d) of the Affordable Care Act and proposed Sec. Sec.
155.210(c)(1)(iii)(F) and 155.225(d)(8)(v), there might be specific
factual circumstances in which these types of non-Federal requirements
would prevent these individuals or entities from fulfilling their
Federally required duties or would prevent an Exchange from operating
the non-Navigator or certified application counselor programs that it
is required (or authorized) to implement consistent with Federal
requirements. In such cases, non-Federal requirements that require non-
Navigator assistance personnel subject to Sec. 155.215 or certified
application counselors or their designated organizations to hold an
agent or broker license or carry errors and omissions insurance or
other forms of financial responsibility might prevent the application
of the provisions of title I of the Affordable Care Act.
In addition, at this time, we believe it is appropriate to limit
the scope of this provision so that it is directed only at non-Federal
laws requiring Navigators to hold an agent or broker license and are
not finalizing the reference to laws that require Navigators to carry
errors or omissions insurance, as proposed. As we explained in the
preamble to the proposed rule, requiring that each Navigator be a
licensed agent or broker would mean, in effect, that all Navigators
would be agents and brokers, and would therefore prevent the
application of Sec. 155.210(c)(2), which established the requirement
that in all Exchanges, at least two types of entities, including one
community and consumer-focused nonprofit group, must serve as
Navigators. HHS has previously advised (see 77 FR 18331-32) that such
requirements would prevent the application of Sec. 155.210(c)(2).
Since we understand, based on the comments, that in at least some
jurisdictions, errors and omissions insurance coverage is not
exclusively available to agents and brokers and other types of
professionals might carry it, we cannot discern a facial conflict
between a non-Federal requirement requiring errors and omissions
insurance and Federal requirements applicable to Navigators or the
Exchange. However, as we made clear in prior rulemaking and now make
explicit here in finalizing the regulation text, any non-Federal
requirement that would, in effect, require all Navigators to be
licensed agents or brokers would prevent the application of the Federal
standards that apply to an Exchange's operation of the Navigator
program (specifically, would prevent the application of 45 CFR
155.210(c)(2)) and therefore would prevent the application of the
provisions of title I of the Affordable Care Act. By removing the
reference to errors and omissions coverage, we do not intend to
foreclose the possibility that there might be specific factual
circumstances under which a non-Federal financial responsibility
requirement that does not facially conflict with a Federal requirement
might, as applied or implemented, prevent the application of Federal
requirements for Navigators within the meaning of section 1321(d) of
the Affordable Care Act.
Comment: Many commenters indicated support for proposed Sec. Sec.
155.210(c)(1)(iii)(E) and 155.225(d)(8)(iv) and the accompanying
preamble discussion illustrating HHS's views regarding situations in
which non-Federal requirements prevent otherwise eligible and qualified
Exchange-approved assisters from operating in a State with an FFE. In
particular, these commenters stated that non-Federal requirements that
prohibit consumer assistance entities from receiving any consideration,
directly or indirectly, from a health insurance issuer, even if not in
connection with QHP enrollment, are unnecessary and have precluded some
extremely qualified organizations from serving as an Exchange-approved
assister organization. A few commenters recommended that HHS explain
the interplay of this proposed provision and existing Sec.
155.210(d)(4) (applicable to Navigators and, through155.215(a)(2)(i),
to non-Navigator assistance personnel subject to Sec. 155.215) and the
parallel provision under proposed Sec. 155.225(g)(2) (for certified
application counselors and their designated organizations) prohibiting
these assisters from receiving any consideration directly or indirectly
from any health insurance issuer or issuer of stop loss insurance in
connection with the enrollment of any individuals (or employees, for
Navigators) in a QHP or
[[Page 30281]]
a non-QHP. The commenters explained that it appeared that these Federal
standards were ``somewhat in conflict'' with the proposed rule's
preamble discussion which stated that in HHS's view, a non-Federal
requirement that imposes prohibitions on receiving any financial
compensation from a QHP issuer even if not in connection with
enrollment, would go beyond these Federal conflict-of-interest rules.
Response: As discussed above, we are not finalizing proposed
Sec. Sec. 155.210(c)(1)(iii)(E) and 155.225(d)(8)(iv). We are
convinced by the concerns raised by commenters that it may not be
possible to specify through rulemaking where the line should be drawn
between non-Federal eligibility standards that prevent the application
of Federal requirements and those that do not. These types of non-
Federal requirements will likely need to be analyzed on a case by case
basis. For example, a non-Federal requirement that, in its application,
effectively limits the pool of assisters in the Exchange, to such an
extent that the Exchange cannot operate its consumer assistance
functions effectively, might prevent the application of the provisions
of title I of the Affordable Care Act within the meaning of section
1321(d) of the Affordable Care Act. As already addressed in detail
above, we are not finalizing Sec. Sec. 155.210(c)(1)(iii)(E) and
155.225(d)(8)(iv), but have determined that the better approach is to
clarify in regulation text two standards that we discussed in the
preamble connected to these proposed provisions. First, we specify that
in an FFE, an entity that seeks to become a Navigator entity, non-
Navigator assistance personnel entity subject to Sec. 155.215, or
certified application counselor organization shall not be ineligible to
operate as an assister entity solely because its principal place of
business is outside of the Exchange service area. Second, we specify
that in an FFE, no health care provider shall be ineligible to operate
as a Navigator, non-Navigator assistance personnel subject to Sec.
155.215, or a certified application counselor solely because it
receives consideration from a health insurance issuer for health care
services provided. We are finalizing these standards, consistent with
discussions set forth in preamble discussions in the proposed rule and
in prior rulemaking (78 FR 42832), through the provisions at Sec. Sec.
155.210(e)(7), 155.215(h) and 155.225(b)(3), with respect to the
principal place of business standard, and in Sec. 155.210(d)(4) (made
applicable to non-Navigator assistance personnel through Sec.
155.215(a)(2)(i)) and Sec. 155.225(g)(2), with respect to the
consideration standard.
Comment: We received an overwhelming number of comments that
supported including proposed Sec. Sec. 155.210(c)(1)(iii)(F) and
155.225(d)(8)(v) in the final rule because the provisions appropriately
recognized that other non-Federal requirements not specified expressly
in other proposed provisions might also prevent the application of
title I of the Affordable Care Act, if, as implemented or applied in a
State, they would prevent assisters from performing their Federally
required duties or prevent the Exchange from implementing the consumer
assistance programs consistent with Federal standards. A few commenters
recommended that this provision apply to State Exchanges in addition to
FFEs. Several commenters identified a myriad of other types of non-
Federal requirements that, in the commenters' view, should be expressly
included in the finalized regulations under these provisions, such as:
establishing requirements for current Navigator grantees after
Navigator grants have been awarded, setting unreasonable or duplicative
training requirements, setting unreasonable time limitations on meeting
State standards, imposing unreasonable costs on Navigators or other
assisters, imposing credit rating reporting requirements, requiring a
GED or high school diploma, or implementing State requirements in a
manner that is unduly burdensome for Navigators or that disadvantages
certain Navigator entities.
Response: We are finalizing proposed Sec. Sec.
155.210(c)(1)(iii)(F) and 155.225(d)(8)(v), which is now renumbered in
this final rule under Sec. Sec. 155.210(c)(1)(iii)(E) and
155.225(d)(8)(iv), as proposed, with a few modifications. We agree with
the commenters who found that the proposed provisions appropriately
recognize that non-Federal requirements, including but not limited to
registration requirements, fingerprinting or background checks, and
additional training, may not be in conflict with Federal standards on
their face, but nevertheless could, as implemented or applied in a
State, ultimately prevent assisters from meeting the Federal standards
that apply to them or interfere with the Exchange's ability to operate
the consumer assistance programs it is required (or authorized) to
implement consistent with Federal requirements. In such circumstances,
the non-Federal requirements would, in HHS's view, prevent the
application of the provisions of title I of the Affordable Care Act
within the meaning of section 1321(d). Consistent with our approach in
the proposed rule, we do not think it is necessary or appropriate to
enumerate in the final regulation text every type of non-Federal
requirement that would fall under this provision. We view this
provision largely as interpreting one way that the statutory preemption
standard under section 1321(d) of the Affordable Care Act could apply
to non-Federal requirements pertaining to assister programs in an
Exchange. We decline to specify every conceivable type of non-Federal
requirement which would, as applied or on its face, prevent the
application of Federal requirements for assisters or assister programs
in an Exchange. In many cases, the identification of such non-Federal
requirements will depend on highly fact-specific circumstances that
would be impractical, if not impossible, to enumerate in an exhaustive
list. As explained in greater detail above, we agree with the
recommendation that this provision should apply to State Exchanges in
addition to FFEs because the preemption standard under section 1321(d)
of the Affordable Care Act is generally applicable to all types of
Exchanges. Therefore, in finalizing this provision, we have removed the
reference that would have limited its applicability to FFEs. In
addition, we have revised the provision to incorporate language
included in preamble discussion to the proposed rule to state that a
non-Federal requirement would also prevent the application of the
provisions of title I of the Affordable Care Act if, as applied or
implemented in the State, it prevents the Exchange's implementation of
the applicable assister program consistent with Federal requirements
under section 1311(i) of the Affordable Care Act, and 45 CFR 155.205,
155.210, 155.215, and 155.225. For example, if a State registration
requirement is implemented in a way that makes it impossible for any
individuals or entities to operate as an Exchange-approved assister,
that requirement would prevent the Exchange from operating the consumer
assistance program that it is required (or authorized) to implement. As
such, we believe it is important to clarify this possibility explicitly
in the regulation text.
Comment: A few commenters recommended that HHS specify that non-
Federal requirements that prohibit certain health centers from
performing voter registration activity would also prevent the
application of title I of the Affordable Care Act, since the National
[[Page 30282]]
Voter Registration Act of 1993 (``NVRA'') requires States to designate
all offices in the State that provide ``public assistance'' (which may
include health centers who are Exchange-approved consumer assistance
entities) as ``voter registration agencies'' to perform voter
registration activities (42 U.S.C. 1973gg-5(a)(2)(A)).
Response: Because title I of the Affordable Care Act does not
address voter registration activities, HHS expresses no view in this
rulemaking regarding whether State laws regulating voter registration
activities would be preempted by the NVRA.
2. Navigator, Non-Navigator Assistance Personnel, and Certified
Application Counselor Program Standards (Sec. Sec. 155.210, 155.215,
and 155.225)
In the proposed rule, we also proposed a number of provisions to
bring the standards for Navigators, non-Navigator assistance personnel
subject to Sec. 155.215, and certified application counselors into
alignment. Specifically, with respect to Navigators and non-Navigator
assistance personnel subject to Sec. 155.215, we proposed that they
must obtain consumer authorization before accessing an applicant's
personally identifiable information (PII), and that a record of
authorization be provided, just as is already the case for certified
application counselors under Sec. 155.225(f). In addition, we proposed
that Navigators and non-Navigator assistance personnel subject to Sec.
155.215 must not charge any applicant or enrollee, or request or
receive any form of remuneration from or on behalf of an applicant or
enrollee, for application or other assistance related to the applicable
assister's duties, just as is already the case for certified
application counselors under Sec. 155.225(g). With respect to the
certified application counselor program, we proposed that certified
application counselors must be recertified on at least an annual basis
and complete Exchange-required training, just as is already the case
for Navigators in FFEs and State Partnership Exchanges and Non-
Navigator assistance personnel subject to Sec. 155.215, under Sec.
155.215(b). Further, we proposed that certified application counselors
and their organizations would be prohibited from receiving
consideration, directly or indirectly, from health insurance issuers or
stop loss issuers in connection with the enrollment of any individuals
in a QHP or a non-QHP, just as is already the case for all Navigators
and for non-Navigator assistance personnel subject to Sec. 155.215,
under Sec. Sec. 155.210(d)(4) and 155.215(a)(2)(i).
We also proposed a number of new standards for Navigators, non-
Navigator assistance personnel subject to Sec. 155.215, and certified
application counselors. First, we proposed to require that these
entities and individuals maintain a physical presence in their Exchange
service area. We also proposed the following prohibitions on their
conduct: providing compensation to individual Navigators, non-Navigator
assistance personnel subject to Sec. 155.215, or certified application
counselors on a per-application, per-individual assisted, or per-
enrollment basis; providing gifts, including gift cards or cash, unless
they are of a nominal value, or providing promotional items that market
or promote the products or services of a third party, to any applicant
or potential enrollee in connection with or as an inducement for
application assistance or enrollment; soliciting any consumer for
application or enrollment assistance by going door-to-door or through
other unsolicited means of direct contact, including calling a consumer
to provide application or enrollment assistance without the consumer
initiating the contact; and initiating any telephone call to a consumer
using an automatic telephone dialing system, or an artificial or
prerecorded voice.
Comment: Commenters generally supported the alignment of provisions
applicable to Navigators, non-Navigator assistance personnel subject to
Sec. 155.215, and certified application counselors. However, some
commenters raised concerns that applying the newly proposed provisions
at Sec. 155.225(g)(3)-(6), without modification, to certified
application counselors would be overly burdensome and would discourage
individuals and organizations from serving as certified application
counselors or certified application counselor entities.
Response: We understand the concerns raised by commenters about
potential burdens that the new provisions might place on certified
application counselors. However, we are finalizing the certified
application counselor provisions consistent with the finalization of
parallel provisions for Navigators and the non-Navigator assistance
personnel that are subject to Sec. 155.215. The purpose of aligning
these provisions is to ensure that consumers are all afforded the same
protections, no matter which type of assister they seek services from.
As a result, we are not modifying the provisions specifically
applicable to certified application counselors, except to bring them
generally into alignment with the way we have finalized the parallel
provisions for Navigators and the non-Navigator assistance personnel
subject to Sec. 155.215. There are two instances where the provisions
are not parallel because it is not appropriate due to fundamental
differences between the certified application counselor program and the
Navigator and non-Navigator assistance personnel programs. We are not
finalizing any restriction for certified application counselors
regarding the use of Exchange funds to purchase gifts and promotional
items because certified application counselors are generally not
expected to receive Exchange funds. These distinctions are further
discussed below.
Comment: Commenters agreed with and supported the proposal at Sec.
155.210(d)(5) prohibiting Navigators and non-Navigator assistance
personnel subject to Sec. 155.215 (applicable through a cross-
reference to Sec. 155.210(d) in Sec. 155.215(a)(2)(i)) from charging
for application assistance services. Some commenters requested
clarification that this does not otherwise prohibit an assister from
charging for other services the assister might provide, such as
clinical or legal services.
Response: Given support from commenters for the provision
prohibiting Navigators and non-Navigator assistance personnel from
charging consumers for application or other assistance services, we are
finalizing this provision without change. We note that the language in
the provision specifically limits this prohibition to charging for
application assistance or other assistance provided as part of
Navigator duties. We interpret the cross-reference in Sec.
155.215(a)(2)(i) to this provision in Sec. 155.210(d) to similarly
limit the prohibition to charging for application assistance or other
assistance provided as part of the duties of non-Navigator assistance
personnel who are subject to Sec. 155.215. We also note that this
provision would not prohibit Navigators or non-Navigator assistance
personnel subject to Sec. 155.215 from charging consumers for
services, such as clinical health care services or legal aid services,
that are not provided as part of their duties as Navigators or non-
Navigator assistance personnel.
Comment: We requested comment on the proposal to prohibit
compensation paid to Navigators (proposed at Sec. 155.210(d)(6)), non-
Navigators subject to Sec. 155.215 (applicable through a cross-
reference to Sec. 155.210(d) in Sec. 155.215(a)(2)(i)), or certified
application counselors (at Sec. 155.225(g)(3)) on a per-application,
per-individual-assisted, or per-enrollment basis. We also asked
[[Page 30283]]
whether there might be other alternatives for building rewards for
performance without creating adverse incentives. Several commenters
agreed that compensation paid to individual assistance personnel on a
per-application, per individual-assisted, or per-enrollment basis could
provide adverse incentives and invite behavior that is not in the best
interest of consumers. These commenters recommended, for the same
reasons, that we extend the prohibition so that Exchange-funded
assister entities, and not just individual assisters, should not be
compensated on a per-application, per individual-assisted, or per-
enrollment basis. Other commenters raised concerns about this
prohibition, noting that some State Exchanges are already using
compensation models that would be prohibited by the proposed rule, and
recommending that these States should be allowed to continue using
their current compensation models. These commenters requested that, at
a minimum, States currently using these compensation models be given an
adequate transition period, with one recommendation being that this
standard not become effective before the start of open enrollment for
2016 coverage in the individual market Exchanges. In general,
commenters opposed to this prohibition recommended that HHS further
evaluate these compensation models, and assess their effects in States
using them, prior to regulating their use.
Response: We appreciate the concerns raised by commenters regarding
this provision. We are finalizing these provisions, but have edited
them to apply only to Navigators, non-Navigator assistance personnel,
and certified application counselors in FFEs. We moved proposed Sec.
155.210(d)(6) to Sec. 155.215(i) and specified that it is applicable
only to Navigators in FFEs, including State Partnership Exchanges, and
to non-Navigator assistance personnel in FFEs and State Partnership
Exchanges, by indicating that it applies only to Navigators and non-
Navigator assistance personnel operating in an Exchange operated by HHS
during the exercise of its authority under Sec. 155.105(f). This
provision is not applicable to Navigators and non-Navigator assistance
personnel in State Exchanges, even if those non-Navigator assistance
personnel are funded with Exchange Establishment Grants. We have made a
similar edit to Sec. 155.225(g)(3), by indicating that this provision
applies only beginning November 15, 2014, and only to certified
application counselors operating in an FFE, including a State
Partnership Exchange.
We are making these modifications in an effort to balance the
interests of the FFEs and State Exchanges. We understand that there are
some State Exchanges currently using these types of compensation models
for Navigators, non-Navigator assistance personnel, and/or certified
application counselors. These States have noted successful enrollment
efforts with these compensation models, and it is not our intent to
disrupt compensation practices that are currently used or authorized by
State Exchanges. However, for assisters operating in the FFEs,
including State Partnership Exchanges, we have an interest and a
concern in ensuring that they are not incentivized to hurry through an
assistance session with a consumer, and possibly to avoid assisting
those consumers who may have complex situations that require them to
have extra time for completing an application. Additionally, these
compensation structures create an incentive for Navigators, non-
Navigator assistance personnel, and certified application counselors to
focus primarily on facilitating enrollment in or selection of a QHP, as
applicable, which is only one of the several duties required of
Navigators and certified application counselors, and is not a required
duty under Federal regulations for non-Navigator assistance personnel
(although non-Navigator assistance personnel subject to Sec. 155.215
may provide this assistance).\26\ We will continue to evaluate and
monitor the use of these compensation models in State Exchanges, while
we give further consideration to whether the proposed prohibitions
should apply to all Navigators, non-Navigator assistance personnel, and
certified application counselors in all Exchanges.
---------------------------------------------------------------------------
\26\ Non-Navigator assistance personnel subject to Sec. 155.215
are only required to carry out one of the Navigator duties set forth
at Sec. 155.210(e), the duty at Sec. 155.210(e)(2) to provide
fair, accurate, and impartial information and services that
acknowledge other health programs; however non-Navigator assistance
personnel subject to Sec. 155.215 are not prohibited from carrying
out the other duties outlined for Navigators at Sec. 155.210(e).
---------------------------------------------------------------------------
For all assisters to whom the final provisions will apply, the
provisions prohibiting compensation on a per-application, per-
individual-assisted, or per-enrollment basis will become applicable
November 15, 2014 to coincide with the beginning of the 2015 open
enrollment period for the individual market Exchanges.
Comment: Commenters generally supported the principle behind
prohibiting Navigators (at proposed Sec. 155.210(d)(7)), non-Navigator
assistance personnel subject to Sec. 155.215 (through the cross
reference to Sec. 155.210(d) in Sec. 155.215(a)(2)(i)), and certified
application counselors (at Sec. 155.225(g)(4)) from providing gifts,
unless they are of nominal value, or providing promotional items that
market or promote the products or services of a third party to
applicants or potential enrollees as an inducement for application
assistance or enrollment. However, most commenters who responded to
this proposal raised concerns that the proposed language was too broad
and would prohibit creative outreach and education strategies both
relating to the FFE and to other community services. For example, some
commenters raised a concern about whether this provision would prohibit
an organization from reimbursing travel costs for consumers traveling
long distances to receive application assistance, or from providing
supplies or materials for legitimate care purposes (for example,
diabetic testing supplies or medication samples) which in many cases
would exceed $15. One commenter, on the other hand, raised a concern
that this provision expressly allows the provision of gifts up to $15
in value, since we defined nominal value in the proposed rule as a cash
value of $15 of less, or an item worth $15 or less, based on the retail
purchase price of the item regardless of the actual cost. In addition,
commenters worried that the third-party promotional item prohibition
would prevent assisters from providing promotional materials about the
Exchange or other community resources, noting that promotional
materials about other community resources can help connect consumers
with additional supportive services. Commenters indicated that the use
of gifts and promotional items have helped them successfully encourage
individuals to seek application assistance, and therefore that a
prohibition on using these tools in connection with application
assistance would be too proscriptive. Many commenters recommended
expressly excluding outreach and education activities from the
prohibition on third-party promotional items. Commenters also requested
clarification about parameters regarding the provision of gifts and
third-party promotional items.
Response: In light of the numerous comments received regarding this
issue, we are modifying this provision to make clear that gifts and
third-party promotional items are prohibited only when they are used to
induce
[[Page 30284]]
enrollment. In other words, gifts and third-party promotional items are
prohibited when they are conditioned on an applicant's enrollment in
coverage with the help of the assister or the assister's organization.
This means that while nominal gifts and third-party promotional items
may be provided as a way of encouraging consumers to seek or receive
application assistance, they cannot be conditioned on a consumer's
actually enrolling in coverage. We agree with commenters that
prohibiting gifts and third-party promotional items in connection with
application assistance would potentially prohibit assisters from
providing items promoting other available community services, such as
an item which promotes the services of a school, hospital, or clinic in
the community, simply because it was provided at the same time a
consumer is present for Exchange application assistance. We do not want
to prohibit assisters from providing items that are inherently
beneficial to consumers only because a consumer is present for Exchange
application assistance and not for other services.\27\ Therefore,
promotional items may be provided so long as they are not provided to
induce enrollment. We have finalized Sec. 155.210(d)(6) (renumbered
from Sec. 155.210(d)(7) of the proposed rule) and Sec. 155.225(g)(4)
to reflect this policy, and have omitted the language prohibiting the
provision of gifts or third-party promotional items ``in connection
with'' enrollment, and finalized the prohibition on providing them ``as
an inducement for enrollment.'' We have also omitted the provisions'
reference to application assistance, and only finalized the language
relating to inducing enrollment.
---------------------------------------------------------------------------
\27\ As previously noted, though, Navigators are not permitted
to solicit customers for their other, non-Navigator-related services
in connection with their Navigator duties (79 FR 15831). Therefore,
while Navigators may provide items that are inherently beneficial to
a consumer at the same time the consumer is receiving application
assistance, these items may not be used as a means of soliciting the
consumers for their other, non-Navigator-related services.
---------------------------------------------------------------------------
Further, the nominal value limit does not apply to third-party
promotional items, so these items may exceed $15 in value. We note that
we would consider items such as diabetic testing supplies to be third-
party promotional items to the extent that they have the effect of
promoting the brand for the supplies that are provided. We also note
that there may be other Federal laws regarding providing promotional-
items to consumers, and these regulations do not supersede those laws.
Therefore, assisters should ensure their compliance with all applicable
laws.
We are also modifying this provision to make clear that
reimbursement for legitimate expenses, such as (but not limited to)
expenses for travel or postage that a consumer incurs in seeking
Exchange application assistance may exceed the nominal value threshold
of $15. We anticipate that the circumstances where such reimbursement
exceeds this amount will be rare. However, we acknowledge that
commenters have indicated there may be times when consumers might incur
expenses that exceed $15 when seeking Exchange application assistance,
and we would not want to prohibit a reimbursement for legitimate
expenses that exceed this amount.
Because we are modifying the provisions to be less proscriptive, we
are also adding a new provision at Sec. 155.210(d)(7) (applicable to
non-Navigator assistance personnel to whom Sec. 155.215 applies
through a cross-reference to Sec. 155.210(d) in Sec.
155.215(a)(2)(i)) to clarify that in no event is it permissible for a
Navigator or for non-Navigator assistance personnel subject to Sec.
155.215 to use Exchange funds to purchase gifts or third-party
promotional items for provision to applicants or potential enrollees.
Pursuant to Affordable Care Act section 1311(d)(5)(B), all Exchanges,
both FFEs (including State Partnership Exchanges) and State Exchanges,
are prohibited from using any funds intended for the administrative and
operational expenses of the Exchange for promotional giveaways. HHS
would consider any funds used by an Exchange to pay for Navigator
grants, to contract with or otherwise pay non-Navigator assistance
personnel subject to Sec. 155.215 carrying out the consumer assistance
functions under 45 CFR 155.205(d) and (e), and any Federal Exchange
Establishment grant funds used to pay for non-Navigator activities,\28\
to be funds intended for the administrative and operational expenses of
the Exchange. Therefore, Navigators and non-Navigator assistance
personnel subject to Sec. 155.215 are prohibited from using funding
received from an Exchange to purchase items for promotional giveaways.
In this final rule, therefore, we are also prohibiting Navigators and
non-Navigator assistance personnel subject to Sec. 155.215 from using
Exchange funds to purchase gifts, including gift cards and cash, and
promotional items.
---------------------------------------------------------------------------
\28\ While section 1311(i)(6) of the Affordable Care Act
prohibits Exchanges from using Exchange Establishment grant funds on
Navigator grants, these funds can be used to fund the activities of
non-Navigator assistance personnel (see 78 FR 20583-84).
---------------------------------------------------------------------------
We are not including a provision regarding the use of Exchange
funds by certified application counselors because certified application
counselors generally are not expected or required to receive Exchange
funds.
Comment: Commenters generally supported our proposals at Sec. Sec.
155.210(d)(8) and 155.225(g)(5) prohibiting Navigators, certified
application counselors, and non-Navigator assistance personnel subject
to Sec. 155.215 (through the cross-reference in Sec. 155.215(a)(2)(i)
to Sec. 155.210(d)), from soliciting any consumer for application or
enrollment assistance by going door-to-door or through other
unsolicited means of direct contact. However, most commenters who
addressed these provisions were concerned that the proposals might also
prohibit solicitation with respect to outreach and education
activities. Commenters noted that the proposed language would inhibit
outreach activities that have proven effective with respect to Medicaid
and CHIP outreach. Additional commenters noted that some organizations
have had great success during the 2014 open enrollment with door-to-
door outreach and that at times some consumers were ready to enroll and
wanted immediate application assistance. These commenters are concerned
that the proposed language would prohibit these methods going forward.
Some commenters requested that we clarify the definitions of
``application or enrollment assistance'' and ``unsolicited means'' to
help establish clear parameters of what is and is not prohibited.
Response: We agree that that door-to-door consumer education and
outreach can be a useful and effective method for improving public
awareness about the Affordable Care Act, insurance affordability
programs, and the Exchanges. We have edited the final provisions at
Sec. 155.210(d)(8) and Sec. 155.225(g)(5) to clarify that the
prohibitions on door-to-door solicitation for ``application or
enrollment assistance'' prohibit assisters from engaging in door-to-
door solicitation for the purpose of offering in-home application or
enrollment assistance; they do not prohibit assisters from going door-
to-door to conduct general consumer education or outreach, including to
let the community know that the organization is available to provide
application and enrollment assistance services to the public. In final
Sec. 155.210(d)(8) and Sec. 155.225(g)(5), therefore, we specified
that outreach
[[Page 30285]]
and education activities may be conducted by going door-to-door or
through other unsolicited means of direct contact, including calling a
consumer.
We clarify that nothing in these provisions would prohibit a
Navigator, non-Navigator assistance personnel, or certified application
counselor from providing in-home application assistance, if such
assistance is requested by a consumer. We note that in cases where a
consumer is ill or has a disability that would make meeting an assister
outside of the consumer's home difficult or impossible, in-home
application and enrollment assistance might be appropriate. In these or
other cases in which the consumer prefers in-home assistance or such
assistance is appropriate for the consumer, the request for in-home
assistance must come from the consumer and the consumer must give their
consent. In such cases, we also recommend that two assistance personnel
should go to the home, not one, because this is a best practice that
promotes the safety of both the consumer and the assister.
We further explain that by ``unsolicited means,'' we refer to any
means of contacting consumers directly to help them apply for or enroll
in coverage through the Exchange, where the consumer did not initiate,
request, or give prior consent to the contact, although we reiterate
that this provision does not apply to public education and outreach
activities. Additionally, we have added language to allow for assisters
to contact consumers for application assistance in cases where the
individual assister or assister entity has a relationship with the
consumer, but we note that other State or Federal laws may apply with
regards to these preexisting relationships, and those laws must also be
complied with.
Comment: Commenters acknowledged the concerns that HHS addressed
through the proposal that would prohibit Navigators (at Sec.
155.210(d)(9)), non-Navigator assistance personnel (through the cross
reference to Sec. 155.210(d) in Sec. 155.215(a)(2)(i)), and certified
application counselors (at Sec. 155.225(g)(6)), from making robocalls,
or calls that use an automatic telephone dialing system or an
artificial or prerecorded voice, when initiating contact with
consumers. However, commenters were concerned that the language of this
proposal might be overly broad and might prohibit effective uses of
such tools in ways that have strong benefits for consumers. For
example, some organizations have used such tools to provide notice to
consumers about upcoming enrollment events, sometimes partnering with
other community organizations to target certain populations. Other
organizations pointed out that in the future, such tools might be
useful to remind consumers when it is time to re-enroll in coverage.
Some commenters noted that many States already have laws that would
apply to assisters to protect consumers from unwanted solicitation, and
therefore further prohibitions are unnecessary. Many commenters
provided recommendations for revising the proposed language and
requested that certain clarifications be made if the proposed provision
is finalized. For example, commenters recommended revising the language
to allow the use of these tools for consumers who have previously
provided contact information via an outreach or education event, or for
consumers who may have a pre-existing relationship with the
organization itself (for example, as a patient or a client). Health
centers, in particular, requested a clarification that this provision
would not prohibit their use of these tools in their capacity as a
health center since, for example, automated dialing is frequently used
to remind health center patients about upcoming appointments. Some
commenters also noted that certain ``in-reach'' activities that use
these types of tools are required of organizations in order for them to
be eligible for HRSA grants provided in the Health Center Outreach and
Enrollment Assistance program, and therefore this proposed provision
could create a conflict for these organizations.
Response: We understand that many entities operating as Navigators,
non-Navigator assistance entities subject to Sec. 155.215, and
certified application counselors also function as other types of
organizations with an existing client base, such as community health
clinics, hospitals, or primary care associations. These prohibitions on
assister conduct are not meant to disrupt any outreach or in-reach
strategies that these organizations use to connect with their client
base outside of their work as Exchange Navigators, non-Navigator
assistance personnel, or certified application counselors. Therefore,
we clarify that the provision prohibiting Navigators (at Sec.
155.210(d)(9)), non-Navigator assistance personnel (through the cross-
reference to Sec. 155.210(d) in Sec. 155.215(a)(2)(i)), and certified
application counselors (at Sec. 155.225(g)(6)) from making calls using
an automatic dialing system would not prohibit a health center from
automatically dialing patients to remind them of upcoming health care
appointments. We also appreciate commenters' interest in using
automatic calls to communicate with consumers with whom they already
have a relationship. Therefore, we are finalizing Sec. 155.210(d)(9)
and Sec. 155.225(g)(6) with an exception added for cases where the
individual assister or assister entity has a pre-existing relationship
with the consumer. Although the edited regulation text at Sec.
155.210(d)(9) refers to Navigators, we interpret the cross-reference in
Sec. 155.215(a)(2)(i) to Sec. 155.210(d) mean that that provision
also applies to non-Navigator assistance personnel to whom Sec.
155.215 applies. We are also noting that other State or Federal laws
may apply with regards to these pre-existing relationships, and those
laws must also be complied with, and have included this caveat in the
final Sec. 155.210(d)(9) and Sec. 155.225(g)(6). We will monitor and
evaluate this practice.
Comment: Some commenters requested that the disclosure of an
assister's functions and responsibilities required under existing Sec.
155.225(f)(1) and new Sec. Sec. 155.210(e)(6)(i) and 155.215(g)(1)
also include disclosure of the nondiscrimination requirements
applicable to the assister.
Response: We agree that the nondiscrimination requirements
applicable to the assister, such as those described in Sec. 155.120(c)
and Sec. 155.105(f), would be appropriate information to include as
part of the disclosure. While Sec. 155.210(e)(6), Sec. 155.215(g),
and Sec. 155.225(f) require assisters to inform consumers about the
assister's functions and responsibilities, we have not outlined
specific content for this disclosure in these provisions.
Comment: Commenters supported the proposed requirements that all
Navigators (at Sec. 155.210(e)(6)) and the non-Navigator assistance
personnel subject to Sec. 155.215 (at Sec. 155.215(g)) obtain
authorization from consumers before accessing their personally
identifiable information, together with our proposal in these
provisions, as well as in the proposed amendment to existing Sec.
155.225(f), that the Exchange must establish a reasonable retention
period for maintaining these records. In FFEs, we proposed that this
period would be three years, unless a different retention period has
already been provided under other applicable Federal law. Some
commenters recommended that we identify a specific period of time for
which the authorization will be valid, such as two years, so that the
authorization will automatically expire at the end of that time frame,
as well as a separate period of time after the expiration for which the
assister must
[[Page 30286]]
maintain the record of the authorization. Some commenters requested a
retention period of only one year because plan years operate on a 12-
month cycle.
Response: We are modifying these provisions to specify that in
FFEs, the minimum retention period for the authorization form is no
less than six years, unless a longer retention period has already been
provided in applicable Federal law in the FFEs, including State
Partnership Exchanges. The six-year minimum retention period is
consistent with the statute of limitations that has been included in
the CMP provisions being finalized in this rule under 45 CFR 155.206
and 155.285, because we recognize that it may be relevant to some CMP
investigations whether authorization for the disclosure of a consumer's
personally identifiable information was given to an assister. We also
note that there are record retention requirements already applicable to
Navigators in the FFEs and State Partnership Exchanges under Federal
grant laws, such as 45 CFR 92.42 and 45 CFR 74.53. Since we are
specifying a minimum retention period of six years in this final rule,
if a shorter retention period is provided under other applicable
Federal requirements, the six-year minimum provided in Sec.
155.210(e)(6)(ii), Sec. 155.215(g)(2), and Sec. 155.225(f)(2) will
apply. We have modified these provisions to reflect this policy by
indicating that in FFEs, the retention period is no less than six
years, unless a different and longer retention period has already been
provided under other applicable Federal law. Because we are aligning
the requirement to obtain the authorization and maintain a record of
the authorization so that there are consistent requirements for
Navigators, non-Navigator assistance personnel subject to Sec.
155.215, and certified application counselors, we think it is
appropriate to apply a consistent retention period standard to all
three assister types as well and are therefore modifying the provisions
for consistency across all three assister types.
We are not adding language to include an automatic expiration date
for the authorization because it could become burdensome for a consumer
consistently seeking services from the same assister to have to
routinely fill out a new authorization form, and for the assister to
have to maintain each new form for a minimum of six years. We do note,
however, that consumers are allowed to revoke their authorization at
any time, and may place a time restriction on the authorization, if
they desire.
Comment: Many commenters requested that we create a standard
authorization form for assisters to use, rather than leaving it to
assisters to create their own form, which commenters believed would
cause assisters to incur considerable costs. Commenters also
recommended that low literacy levels should be taken into consideration
when creating the form, and that the form be translated into at least
the top 15 languages to meet the needs of limited English proficient
consumers served in an FFE.
Response: We support the commenters' suggestion to have a model
form to use for obtaining this authorization, and share the commenters'
concerns about the costs to assisters of creating an authorization form
if there were no model form available. We note that, for Navigators in
FFEs, including State Partnership Exchanges, a model form is included
in the grant award materials, and for certified application counselors
in FFEs and State Partnership Exchanges, a model form is among the
documents provided to certified application counselor designated
organizations upon designation by the Exchange; in both cases, these
forms are provided in both English and Spanish versions. HHS intends to
develop a model form for use by non-Navigator assistance personnel in
FFEs and State Partnership Exchanges in the future. We will take into
consideration the comments regarding literacy levels and language
translations as we develop a model authorization form for use by non-
Navigator assistance personnel subject to Sec. 155.215, and as we
review the current Navigator and certified application counselor model
forms for the FFEs and State Partnership Exchanges.
Comment: Some commenters requested that the disclosure to consumers
include information about the permissible and impermissible ways an
assister may use a consumer's personally identifiable information, as
well as how consumers may opt out of follow-up from the assister.
Response: These regulations do not require specific content in the
consumer authorization form. However, we note that the model
authorization form currently provided in the FFE and State Partnership
Exchange Navigator grant award materials and to certified application
counselor designated organizations in the FFEs, including State
Partnership Exchanges, includes information about how a consumer's
personally identifiable information may be used, as well as an option
for consumers to authorize follow-up contact from the Navigator or
certified application counselor, as applicable. As we develop a model
form for non-Navigator assistance personnel in the FFEs and State
Partnership Exchanges, we will also consider including these same
content elements.
Comment: Commenters submitted several requests and recommendations
regarding the form of the authorization. Many commenters requested that
the authorization be allowed to be collected and maintained in
electronic form to help reduce the costs and burden associated with
paper forms. Some commenters also requested that a voice-recorded
authorization be allowed when assisters are helping consumers over the
phone. Additionally, several commenters requested that Exchanges be
permitted to retain the record of authorization on behalf of the
assister, noting that some State Exchanges are already doing this.
Response: We note that these regulations do not specify acceptable
formats for obtaining the authorization or for maintaining its record.
Additionally, to allow for the flexibility in State Exchanges requested
by commenters, we have modified the proposed language specifying that
the authorization be provided ``in a form and manner as determined by
the Secretary'' to indicate that the authorization must instead be
provided in a form and manner as determined by the Exchange. As a
result of this change, each Exchange will have discretion to determine
the appropriate form and manner for these authorizations. In response
to commenters' concerns about whether these regulations would prohibit
a State Exchange from retaining these authorizations on behalf of their
assisters, we have also revised the language in this provision of the
final rule to indicate that the form and manner of the assistance
entity's or personnel's maintenance of the authorization is to be
determined by the Exchange. This modification will allow State
Exchanges that have chosen to retain these authorizations on behalf of
their assisters to continue to do so, provided it is consistent with
the ``form and manner as determined by the Exchange.''
We acknowledge that the language regarding the form and manner of
obtaining or maintaining the authorization was not included with
respect to certified application counselors at proposed Sec.
155.225(f)(2). To align the provision with those provisions applicable
to Navigators and non-Navigator assistance personnel subject to Sec.
155.215, we are adding this language to Sec. 155.225(f)(2).
[[Page 30287]]
Finally, we are deleting the cross references in proposed Sec.
155.210(e)(6)(ii) to 45 CFR 92.42 and 45 CFR 74.53 due to the potential
for these cross references to become obsolete or inaccurate in the
future. We believe the remaining phrase ``other applicable Federal
law'' will capture the intent of the cross references to ensure that
Navigators comply with retention periods for maintaining these records
in accordance with all Federal laws that may apply. This cross
reference was only included in the proposed provision applicable to
Navigators; therefore no change is necessary to the provisions at Sec.
155.215(g)(2) or Sec. 155.225(f)(2).
Comment: Several commenters raised concerns about the requirement
for Navigators, non-Navigator assistance entities subject to Sec.
155.215, and certified application counselor designated organizations
to maintain a physical presence in their Exchange service area under
proposed Sec. 155.210(e)(7) and Sec. 155.225(b)(1)(iii). Commenters
claimed that this proposed provision eliminates vital flexibility for
consumer assistance personnel, noting that these assistance personnel
often provide effective service over the phone or internet. Commenters
pointed out that in large, rural, or frontier States, consumers often
rely on remote assistance. Commenters also mentioned that some State
Exchanges are working on software that would allow assistance personnel
to help clients remotely, by facilitating screen sharing and split
screen views for assistance personnel and clients, and these commenters
expressed the concern that the proposed language would inhibit such
technological innovations. Commenters requested that, at a minimum,
clarification be provided that this provision will not affect the
ability of assisters to provide remote assistance to consumers.
However, there were a few commenters who supported this requirement,
and recommended that the provision be broadened to require Navigator
organizations, non-Navigator assistance entities subject to Sec.
155.215, and certified application counselor organizations to maintain
a principal place of business within their Exchange service area.
Response: The proposed requirement that Navigators, non-Navigator
assistance personnel subject to Sec. 155.215, and certified
application counselors maintain a physical presence in their service
area so that face-to-face assistance can be provided was designed to
ensure that these consumer assistance personnel understand and are able
to meet the specific needs of the communities they serve, to foster
trust between these consumer assistance personnel and community
members, and to encourage participation in the Navigator, non-Navigator
assistance, and certified application counselor programs by individuals
whose backgrounds and experiences reflect those of the communities they
serve.
In light of the comments we received indicating that this
requirement may be too restrictive for certified application counselor
organizations already providing remote assistance, we are not
finalizing proposed Sec. 155.225(b)(1)(iii) which would have required
certified application counselor organizations to maintain a physical
presence in the Exchange service area. We understand that unique
circumstances may exist that would make remote assistance more
effective or practical than face-to-face assistance, particularly when
a certified application counselor is providing services to individuals
or populations that might otherwise be difficult to reach. We continue
to believe that face-to-face, in-person assistance is important, and we
encourage certified application counselors to provide this type of
assistance as much as possible. We will continue to evaluate the
effectiveness of remote assistance offered by certified application
counselors and certified application counselor organizations, to
determine whether a physical presence requirement may be necessary in
the future.
We are finalizing these requirements at Sec. 155.210(e)(7) and
Sec. 155.215(h) that Navigators and non-Navigator assistance personnel
subject to Sec. 155.215 must maintain a physical presence in the
Exchange service area, so that face-to-face assistance can be provided
to applicants and enrollees. We believe this provision will improve the
ability of Navigators and non-Navigator assistance personnel subject to
Sec. 155.215 to provide culturally competent application and
enrollment assistance. As we explained in the preamble to the proposed
rule, this requirement may also facilitate State consumer protection
efforts.
We agree with commenters that remote application and enrollment
assistance can be extremely important and effective, especially as a
way to provide this assistance to consumers in rural or remote areas.
Therefore, we want to make clear that nothing in this provision
prohibits Navigators or non-Navigator assistance personnel subject to
Sec. 155.215 from providing assistance via the telephone, Internet, or
through other remote means, as long as the organization with which they
are affiliated also maintains a physical presence in the Exchange
service area, consistent with Sec. 155.210(e)(7) and Sec. 155.215(h).
We also clarify that Exchange service area refers to the entire area
served by the Exchange, and not to smaller regions within the area
served by the Exchange.
We disagree with comments suggesting that these assister
organizations should be required to maintain a principal place of
business within their Exchange service area. Many trusted national
organizations have State or local branches that operate as Navigators,
non-Navigator assistance personnel subject to Sec. 155.215, or
certified application counselors, and who, partly because of their
physical presence in the State, are able to provide high-quality
assistance tailored to the needs of their communities. Therefore, we
are finalizing Sec. 155.210(e)(7) as proposed with a modification to
specify that in an FFE, no individual or entity shall be ineligible to
operate as a Navigator solely because its principal place of business
is outside of the Exchange service area. With respect to the certified
application counselor program, we are adding a new Sec. 155.225(b)(3)
to specify that in an FFE, no individual or entity shall be ineligible
to operate in this program solely because its principal place of
business is outside of the Exchange service area.
We indicated in the preamble to the proposed rule that we were
proposing to make the same provision specifying that Navigators
maintain a physical presence in their Exchange service area under Sec.
155.210(e)(7) also applicable to non-Navigator assistance personnel
subject to Sec. 155.215, and we proposed adding a new paragraph under
Sec. 155.215 for that purpose. However, the rule text of the proposed
rule omitted the new paragraph under Sec. 155.215. In the final rule,
therefore, we are correcting this oversight, and adding this standard
to Sec. 155.215 as a new paragraph Sec. 155.215(h) to specify that
all non-Navigator assistance personnel subject to Sec. 155.215 who
operate in FFEs must maintain a physical presence in the Exchange
service area, so that face-to-face assistance can be provided to
applicants and enrollees. Similarly, we are modifying this provision to
add a specification that no individual or entity shall be ineligible to
operate as non-Navigator assistance personnel subject to Sec. 155.215
solely because its principal place of business is outside of the
Exchange service area.
Summary of Regulatory Changes
We revised Sec. 155.210(c)(1)(iii) to remove reference to ``errors
and
[[Page 30288]]
omissions insurance'' and replaced it with ``any requirement that, in
effect, would require all Navigators in the Exchange to be licensed
agents and brokers.''
We are not finalizing proposed Sec. Sec. 155.210(c)(1)(iii)(E) and
155.225(d)(8)(iv).
We renumbered proposed Sec. Sec. 155.210(c)(1)(iii)(F) and
155.225(d)(8)(v) as new Sec. Sec. 155.210(c)(1)(iii)(E) and
155.225(d)(8)(iv). We modified newly renumbered Sec. Sec.
155.210(c)(1)(iii)(E) and 155.225(d)(8)(iv) to extend these provisions
to all Exchanges by removing the reference to ``in a Federally-
facilitated Exchange'' and by specifying that non-Federal standards
that would, as applied or implemented in a State, prevent the
application of Federal requirements applicable to Navigators (or non-
Navigator assistance personnel subject to Sec. 155.215), or certified
application counselors or designated organizations or, as added in this
final rule, ``the Exchange's implementation of the [respective
assister] program'' would prevent the application of the provisions of
title I of the Affordable Care Act. We revise Sec. 155.215(f) to add
subparagraphs (1) through (4) explicitly under that provision, rather
than incorporating by reference parallel provisions in the applicable
Navigator standards under Sec. 155.210(c)(1)(iii), as was proposed.
We revised Sec. Sec. 155.210(d)(4) and 155.225(g)(2) to add that
in an FFE no health care provider individual or entity shall be
ineligible to operate as Navigators (or non-Navigator assistance
personnel subject to Sec. 155.215), or certified application
counselors or certified application counselor designated organizations
solely on the basis of receiving consideration from a health insurance
issuer for health care services provided.
We also revised Sec. 155.210(e)(7) to provide that in an FFE, no
individual or entity shall be ineligible to operate as a Navigator
solely because its principal place of business is outside of the
Exchange service area. We added Sec. 155.215(h) to create a parallel
provision to Sec. Sec. 155.210(e)(7) for non-Navigator assistance
personnel subject to Sec. 155.215, as was discussed in the preamble to
the proposed rule. We did not finalize Sec. 155.225(b)(1)(iii), but we
added a new Sec. 155.225(b)(3) to specify that in an FFE, no
individual or entity shall be ineligible to operate as a certified
application counselor or designated organization solely because its
principal place of business is outside of the Exchange service area.
We moved Sec. 155.210(d)(6) to Sec. 155.215(i) and limited this
provision, as well as Sec. 155.225(g)(3), to Navigators, non-Navigator
assistance personnel, and certified application counselors operating in
FFEs, including State Partnership Exchanges, and revised these
provisions to specify that they do not take effect until November 15,
2014.
We renumbered proposed Sec. 155.210(d)(7) to Sec. 155.210(d)(6),
and revised newly renumbered Sec. 155.210(d)(6) along with Sec.
155.225(g)(4) to clarify that gifts, gift cards, or cash, and
promotional items that market or promote the products or services of a
third party provided by assisters to consumers are prohibited for the
purposed of inducing enrollment, and that gifts, gift cards, or cash
may exceed nominal value for the purpose of providing reimbursement for
legitimate expenses incurred by a consumer in effort to receive
Exchange application assistance, such as (but not limited to) travel or
postage expenses. We also add new Sec. 155.210(d)(7) to prohibit the
use of Exchange funds to purchase gifts or gift cards, or promotional
items that market or promote the products or services of a third party,
that would be provided to any applicant or potential enrollee.
We revised Sec. Sec. 155.210(d)(8) and 155.225(g)(5) to clarify
that the prohibitions on door-to-door solicitation for application or
enrollment assistance do not prohibit Navigators, non-Navigator
assistance personnel, or certified application counselors from going
door-to-door to conduct general consumer education or outreach, or from
soliciting consumers with whom the assister has a preexisting
relationship so long as other applicable State and Federal laws are
complied with.
We revised Sec. Sec. 155.210(d)(9) and 155.225(g)(6) to clarify
that the prohibitions on using an automatic telephone dialing system or
an artificial or prerecorded voice to initiate a telephone call to a
consumer, do not prohibit Navigators, non-Navigator assistance
personnel, or certified application counselors from using those means
to communicate with consumers with whom they already have a
relationship, so long as other applicable State and Federal laws are
complied with.
We revised Sec. Sec. 155.210(e)(2) and 155.225(c)(1) to add that
the duties of Navigators, non-Navigator assistance personnel subject to
Sec. 155.215, and certified application counselors includes a duty to
provide information in a fair, accurate, and impartial manner to
individuals and employees about the full range of QHP options and
insurance affordability programs for which they are eligible, which
includes providing fair, impartial, and accurate information that
assists consumers with submitting the eligibility application,
clarifying the distinctions among QHPs, and helping consumers make
informed decisions during the health coverage selection process.
We made technical edits to preserve the grammatical pattern that
appears in the existing list at Sec. 155.210(d)(1)-(4) and extended it
through Sec. 155.210(d)(9) by placing semicolons after each
subparagraph and moving the ``or'' following proposed Sec.
155.210(d)(5) to follow Sec. 155.210(d)(8).
We revised Sec. Sec. 155.210(e)(6)(ii) and 155.215(g)(2) to change
the word ``Secretary'' to ``Exchange'' to allow for State Exchanges to
determine their own appropriate form and manner for obtaining the
consumer authorization that is required for a Navigator or non-
Navigator assistance personnel to obtain access to the consumer's
personally identifiable information. We also specified that the
Navigator and non-Navigator assistance personnel subject to Sec.
155.215 must maintain a record of the authorization provided ``in a
form and manner as determined by the Exchange,'' and that the period is
no less than six years (not three years, as proposed), unless a
different and longer retention period has already been provided. In
Sec. 155.210(e)(6)(iii), we removed reference to 45 CFR 92.42 and 45
CFR 74.53 and retain only ``other applicable Federal law.'' We also
revised Sec. 155.225(f)(2) to add parallel language to require
certified application counselors to obtain and maintain record of the
authorization in a form and manner as determined by the Exchange, and
to specify that the retention period is no less than six years, unless
a different and longer retention period has already been provided under
other applicable Federal law.
We revised proposed Sec. 155.225(d)(8)(i) to replace the phrase
``act in the best interest of applicants'' with the phrase ``provide
fair, accurate, and impartial information.''
c. Payment of Premiums (Sec. 155.240)
In order to address situations in which enrollees have mid-month
changes in enrollment, we proposed in Sec. 155.240(e) standards for
providing partial month premiums. First, we proposed to provide
flexibility for Exchanges to establish a standardized methodology for
partial month premiums or to rely on issuers to prorate premiums in
accordance with
[[Page 30289]]
State law and issuer policies. Second, we proposed in Sec.
155.240(e)(1) that, for the FFE, the premium for coverage lasting less
than one month must equal the product of the premium for one month of
coverage divided by the number of days in the month and the number of
days for which coverage is being provided in the month.
Comment: We received several comments expressing general support
for the proposed provisions in Sec. 155.240(e). Commenters also
specifically supported the proposed methodology for partial month
premiums in the Federally-facilitate Exchange. Commenters viewed the
methodology proposed in Sec. 155.240(e)(1) as an equitable and
beneficial solution to a common issue that consumers face with respect
to their health insurance premiums. The methodology proposed for the
FFE was also noted as being simple and easy for consumers to
understand. Additionally, several of these commenters requested that
HHS require all Exchanges to use the partial month premium methodology
originally proposed for the FFE to promote consistency across
Exchanges.
Response: We appreciate the support received for the proposed
provisions in Sec. 155.240(e). We maintain that Exchanges are in the
best position to determine the methodology used for partial month
premiums within their jurisdiction. However, in the case of the FFE,
the methodology we proposed is appropriate given the Exchange's unique
circumstances. Specifically, CMS jointly administers the FFEs currently
operating in multiple States, each of which may have different rules
for proration and, therefore, the administrative burden to enforce
varying rules across these States would be overwhelming without the
implementation of a single, standard approach. For example, in order to
provide the appropriate amount of advance premium tax credit to the
issuer, the issuer must inform the Exchange of the premium amount
charged to each individual. Without a standardized approach in the FFE,
this information would come to us in a variety of forms in accordance
with various State laws and issuer practices for partial month
premiums, which would be burdensome to manage. Consequently, we note
that the standards for partial month premiums in the FFE apply even if
State requirements in those FFE States differ from this final rule.
There is also a customer service advantage to using a single
methodology because it makes it easier for customer service
representatives to explain one clear, comprehensive policy for all
consumers throughout the FFE. Because of the high degree of variability
across the States in the FFE, we maintain that the proposed methodology
for calculating prorated premiums is the most efficient and equitable
approach. We are finalizing the regulation as proposed.
Comment: A few members of the issuer community provided comment on
the implementation of the proposed provision for the FFE. We received
comments requesting that HHS limit premium proration to the FF-SHOP and
not extend the policy to the individual market FFE. Commenters argued
that current standard industry practices are simpler and more cost
effective for issuers because they do not require reconciliation of
daily proration. A commenter also noted that, because the Exchange will
not perform premium aggregation in the individual market, there is no
need to adopt a standard method for proration of premiums. Commenters
noted that implementing the proposed policy would require
reconfiguration of issuer information technology systems, including
billing mechanisms, which takes significant time and investment;
therefore, commenters requested that implementation not occur before
the 2015 benefit year. These commenters also requested that the
requirement not be implemented retroactively and, instead, for months
prior to the effective date of this policy, issuers have the
flexibility to use their own proration methodology or follow State law.
Response: While premium aggregation is a compelling reason to adopt
premium proration, there are numerous other reasons to adopt it as
noted in the comment response above and in the proposed rule's
preamble. We previously have been asked by States and issuers for
guidance in this area and implementing a standard policy for the FFE
will establish a clear standard with which issuers can comply and for
consumers to understand. Issuers have also told us that proration of
partial month premiums is a methodology that can be implemented. We
believe that having a policy in place is vastly preferable to operating
without any guidance and we remain committed to working closely with
issuers on implementation. In order to ensure that issuers have
sufficient time to implement this proposal, the FFE will implement it
effective January 1, 2015. Issuers may also choose to implement the
policy immediately. We also note that, in response to the comment, we
will not seek retroactive implementation of the partial month premium
policy for the FFE but note that State Exchanges have flexibility to
determine how to implement their policy in this area.
Comment: One commenter expressed concern that the preamble to this
section specified the events for which an Exchange may require
proration of premiums, such as voluntary withdrawal. The commenter
believed that these policies are more suitably addressed at the State
level, where they can reflect a State's unique market dynamics.
Response: The examples used in the preamble to the proposed rule
were illustrative of the policy but not intended to replace our
previous guidance for partial month enrollments found at 45 CFR 155.420
and 155.430.
Comment: Finally, one commenter requested clarification as to
whether a prorated premium could count as a first month's premium (for
example, in the case of a newborn) and how that would also impact the
3-month grace period provided in Sec. 156.270(d) and (e).
Response: A partial month premium does count as a first month's
premium. Additionally, payment of a prorated premium in full can be
considered payment in full for the purpose of the 3-month grace period
in Sec. 156.270(d) and (e).
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.240 without
modification.
d. Privacy and Security of Personally Identifiable Information (Sec.
155.260)
We proposed amending Sec. 155.260(g) to add a reference to Sec.
155.285, which is being added as part of this final rule. Section
155.285 specifies the grounds for imposing CMPs, the notice required to
be given to a person when a civil money penalty is assessed, and
factors to be used to determine the amount of CMPs assessed, as well as
some aspects of the process for imposing CMPs. We proposed this
addition to Sec. 155.260(g) to clearly link these two regulatory
provisions and to ensure that readers fully understand how CMPs will be
assessed for any improper use or disclosure of information.
Comment: We received some comments in support of the proposed
amendments to Sec. 155.260(g). However, a few commenters also
requested additional amendments to the provision. For example, one
commenter requested that we amend Sec. 155.260(g) to clarify that
outreach and follow-up efforts made by community assisters is not
impeded by the reference to Sec. 155.285. Specifically, the commenter
encouraged HHS to specify that, with
[[Page 30290]]
receipt of express consumer consent, PII can be used to conduct
outreach to follow up with individuals who still need to complete
applications or for outreach to help individuals maintain and renew
existing health coverage. Another commenter suggested that the
provision note that the use and retention of PII is permissible with
the consumer's consent, in order to ensure consistency with the
Navigator provisions at Sec. 155.210(e)(6) and Sec. 155.225(f) which
permit such use. The commenter also requested amendments to Sec.
155.260(a) and (b) to specify that retention of PII is permissible with
the consent of the consumer.
Response: We acknowledge the importance of consumer assistance
entities being able to contact consumers in order to follow-up
regarding applications for coverage or annual renewals. However, Sec.
155.260 as proposed, does not impede these types of outreach. Rather,
Sec. 155.260 prohibits improper use and disclosure of information, as
described in the preamble to the proposed rule at Sec. 155.285.
Similarly, a Navigator's use of information as described in Sec.
155.210(e)(6) and Sec. 155.225(f) is not prohibited under Sec.
155.260(g) and we do not see the need to include further clarification
of that in the rule. Finally, the requested amendments to Sec.
155.260(a) and (b) are outside the scope of this proposed rule.
Therefore, we intend to finalize Sec. 155.260(g) as proposed.
Comment: Some commenters expressed concern about the proposed
amendment. Commenters thought the reference to Sec. 155.285 was
duplicative and that the application of Sec. 155.260 may, in some
cases, be broader than the specific prohibitions on disclosure intended
by section 1411(g) of the Affordable Care Act and should not be linked
to Sec. 155.260.
Response: We disagree with the contention that the reference to
Sec. 155.285 in Sec. 155.260 is duplicative. The cross-reference
links the improper use and disclosure of PII to the imposition of CMPs
as prescribed in section 1411(g) and (h) of the Affordable Care Act.
Therefore, we finalize the provision as proposed.
Comment: We received many comments to both Sec. 155.260 and Sec.
155.285 requesting clarification about the role of PII with respect to
CMPs.
Response: Because of the relationship between Sec. 155.260 and
Sec. 155.285, we address comments on Sec. 155.206 in the preamble
related to Sec. 155.285(a) of this final rule.
Summary of Regulatory Changes
We are finalizing the addition to Sec. 155.260 as proposed, with a
minor change where we have inserted the numerical penalty amount
instead of a reference to section 1411(h) of the Affordable Care Act
where the maximum penalty is specified.
e. Bases and Process for Imposing Civil Money Penalties for Provision
of False or Fraudulent Information to an Exchange or Improper Use or
Disclosure of Information (Sec. 155.285)
In Sec. 155.285(a), in accordance with the grounds on which
penalties may be imposed as specified in section 1411(h) of the
Affordable Care Act, we proposed the circumstances under which HHS may
impose CMPs on a person if HHS determines that the person has provided
false or fraudulent information as prohibited by section 1411(h)(1) or
improperly used or disclosed information in violation of section
1411(g). In Sec. 155.285(a)(1)(i), we proposed that if any person
fails to provide correct information under section 1411(b) of the
Affordable Care Act and such failure is attributable to negligence or
disregard of any regulations of the Secretary, the person may be
subject to a CMP. Under proposed Sec. 155.285(a)(1)(i), if a person
fails to make a reasonable attempt to provide accurate, complete and
comprehensive information and as a result provides incorrect
information, the person may be subject to a CMP.
Second, in Sec. 155.285(a)(1)(ii), we proposed that if a person
knowingly and willfully provides false or fraudulent information under
section 1411(b) of the Affordable Care Act, the person may be subject
to a CMP. We noted that if consumer assistance personnel such as an
agent, broker, Navigator, certified application counselor, or non-
Navigator assistance personnel, were to in some manner directly provide
false or incorrect information required under section 1411(b), they may
also be subject to a CMP. Third, in Sec. 155.285(a)(1)(iii), we
proposed that if a person knowingly and willfully uses or discloses
information in violation of Affordable Care Act section 1411(g), the
person may be subject to a CMP. In Sec. 155.285(a)(1)(iii)(A) through
(C), we proposed types of activities that would be in violation of
section 1411(g) of the Affordable Care Act and in Sec. 155.285(a)(2),
we proposed a definition of the term ``person.''
In Sec. 155.285(b), we proposed the factors that HHS may take into
consideration when determining the amount of CMPs to impose. In Sec.
155.285(b)(3), we implemented the reasonable cause exception of section
1411(h)(1)(A)(ii) of the Affordable Care Act pursuant to which no
penalty will be imposed under Sec. 155.285(a)(1)(i) if HHS determines
that there was a reasonable cause for the failure to provide correct
information required on an Exchange application and that the person
acted in good faith.
In Sec. 155.285(c), we proposed maximum penalties for each
different type of violation. In Sec. 155.285(d), we proposed standards
for a notice of intent to issue a CMP that HHS must send to the person
against whom the CMP may be imposed. In Sec. 155.285(d)(1)(i)-(viii),
we proposed eight elements that must be included in the notice. We
proposed that the person may request a hearing before an ALJ on the
proposed penalty by filing a request pursuant to the procedure that
will be outlined in the notice of intent to impose a penalty that the
person receives.
In Sec. 155.285(e), we proposed the consequences for a person who
fails to request a hearing in a timely manner. We proposed that HHS may
assess the proposed CMP 60 calendar days after the date of issuance
printed on the notice of intent to issue a CMP. In Sec. 155.285(e)(1),
we proposed that HHS will notify the person in writing of any penalty
that has been imposed, the means by which the person can satisfy the
penalty, and the date on which the penalty is due. We proposed in Sec.
155.285(e)(2) that a person has no right to appeal a penalty with
respect to which the person has not timely requested a hearing.
In Sec. 155.285(f), we proposed to use the existing appeals
framework in regulation at 45 CFR Part 150, Subpart D. In Sec.
155.285(g), we proposed that CMS and OIG will share enforcement
authority to impose the CMPs in Sec. 155.285.
In Sec. 155.285(h), we proposed a settlement authority provision
to ensure CMS is able to settle any issue or case described in Sec.
155.285(a) if necessary. Finally, in Sec. 155.285(i), we proposed a
six year statute of limitations, beginning from the date on which the
violation occurred, within which HHS may impose a CMP against a person.
Comment: We received some comments regarding Sec. 155.285(a)'s
reference to basing the imposition of a CMP on ``credible evidence'' if
HHS ``reasonably determines'' that someone has violated the rule. The
commenters recommended that, because a CMP could be potentially
significant, the standard should be based on a preponderance of the
evidence. The commenters also noted that this
[[Page 30291]]
standard is consistent with the Administrative Procedures Act.
Response: We maintain that the standard proposed in Sec.
155.285(a) is appropriate in light of the fact that a CMP is not
immediately imposed but, instead, imposed only after a process
involving notice and the right to a hearing is provided. If HHS
identifies circumstances that meet the standard set in Sec.
155.285(a), the resultant action is a notice informing the person of
the potential imposition of a CMP. The person then has the right to
request a hearing in front of an ALJ in accordance with hSec.
155.285(d)(2) before the CMP is levied. For these reasons, we finalize
the standard as proposed.
Comment: We received one comment regarding the definition of
negligence, provided in Sec. 155.285(a)(i)(A). The commenter sought
clarification as to what is considered a ``reasonable'' attempt to
provide accurate, complete, and comprehensive information.
Response: The proposed definition of ``negligence'' is modeled on
section 6662 of the Internal Revenue Code and was incorporated based on
the similarities between providing information on tax filing forms and
completing an application for Exchange coverage. This definition should
provide CMS and the public with ample history on which they may rely to
assess negligence in this context. We also believe this definition is
appropriate because it holds actions that are made through honest
mistake and error (which are protected by the reasonable cause
provision in Sec. 155.285(b)(3)) not culpable for a violation. We
finalize the definition as proposed.
Comment: We received many comments regarding the imposition of CMPs
under Sec. 155.206 and Sec. 155.285. Some commenters recommended that
HHS retain discretion to impose CMPs under both sections, citing some
violations under Sec. 155.285 will also violate consumer assistance
standards and, in those instances, HHS should levy penalties under both
provisions. These commenters noted that allowing penalties under both
provisions will give Navigators and assisters in the Federally-
facilitate Exchange an extra incentive to maintain the privacy of those
they assist. Another group of commenters recommended that where
violations of Sec. 155.206 and Sec. 155.285 overlap, HHS should use
its discretion to impose a CMP under only one section. Similarly, many
commenters in this cohort urged HHS to exempt consumer assistance
entities from Sec. 155.285, explaining that assistance personnel do
not actually provide information as part of the process of applying for
coverage or an exemption, and therefore it was difficult to see how
they could provide false or fraudulent information in violation of
Sec. 155.285. These commenters considered imposing violations for
consumer assistance entities under both sections would be duplicative.
Response: We disagree that consumer assistance personnel should be
exempt from the provisions of 45 CFR 155.285. Any Navigator, non-
Navigator assistance personnel, or certified application counselor who
encourages a consumer to submit false or fraudulent information and
then enters that information into the application for the consumer, or
enters false or fraudulent information without the knowledge of the
consumer, might be in violation of either Sec. 155.285 or Sec.
155.206. Therefore, we maintain that where conduct by a consumer
assistance entity may warrant CMPs under either Sec. 155.285 or Sec.
155.206, HHS should have discretion to determine whether to impose a
CMP under Sec. 155.285 or under Sec. 155.206. If a consumer
assistance entity is in a situation where CMPs could be imposed under
both Sec. 155.206 and Sec. 155.285, CMS will take that into account
as a factor under Sec. 155.285(b)(1)(viii).
Comment: Commenters expressed a general concern that the provisions
of Sec. 155.285 might have a chilling effect on consumer assistance
entities, particularly those that rely on voluntary participation.
These commenters urged us to limit CMPs to egregious violations of
selected requirements where there are no other enforcement mechanisms
in place. Commenters felt that fewer people might be willing to become
assisters if they feared being held responsible for CMPs, particularly
for information provided and attested to by applicants.
Response: We understand the concerns raised by commenters about the
potential for these penalties to discourage participation as a consumer
assistance entity. However, we are finalizing the provisions, and their
application to consumer assistance entities, as proposed. The purpose
of these provisions is to ensure consumer information is safeguarded,
no matter where it is in the eligibility or enrollment process or
whether the consumer seeks the assistance of a consumer assistance
entity. HHS's goal in issuing the CMP rule is to encourage program
compliance, prevent misconduct, and remedy violations promptly. We do
not think these goals will be served by lessening the proposed
standards for imposing CMPs.
Comment: We received comments expressing support for the grounds
proposed for imposing CMPs. These commenters viewed the authority to
impose CMPs as an effective way to safeguard the use of consumer
information. However, many commenters also sought clarification about
what constitutes improper use and disclosure of PII under the NPRM and
in relation to section 1411(g) of the Affordable Care Act. Several of
these commenters requested that Sec. 155.285 be amended to note that,
with receipt of consent, PII can be used to conduct outreach to follow
up with individuals who still need to complete applications or for
outreach to help individuals maintain and renew existing health
coverage. Other commenters feared any relaxation of PII standards would
compromise consumer information and cause harm.
Response: Protection of consumer information is one of the most
critical duties of consumer assistance entities and Exchanges. Section
155.260 provides privacy and security standards handling and
safeguarding consumers' PII. Section 155.260 also provides that the
Secretary can determine additional uses and disclosures of PII and
develop a framework through which Exchanges can seek the Secretary's
approval of other requested uses and disclosures of eligibility and
enrollment PII that would ensure the efficient operation of the
Exchange, comply with other applicable law and policy, and require the
consent of the individual subject of the PII prior to the requested use
or disclosure. Uses and disclosures of information that are not
permitted by Sec. 155.260 or otherwise permitted by statute or
regulation, therefore, are prohibited. Those prohibited uses and
disclosures are the focus of the penalties imposed in Sec. 155.285 to
the extent they are knowing and willful. But, we note that some uses
and disclosures, as specified in rule, are permissible with the
specific consent of the consumer.
Comment: We received several comments on the definition of
``person'' in Sec. 155.285(a)(2). Some commenters found the broad
definition of ``person'' warranted for imposing CMPs for violations of
section 1411(g) of the Affordable Care Act. However, a portion of
commenters requested that HHS exclude assisters from the definition of
``person.'' We also received one comment noting that the inclusion of
QHP issuers potentially creates confusion regarding the source of
required application information provided to establish eligibility to
purchase a QHP.
Response: Exchanges involve the coordination of a wide variety of
individuals and entities for their
[[Page 30292]]
success. Therefore, our definition of ``person'' is broad to encompass
each of these and the possibility that they could engage in the actions
enumerated in Sec. 155.285(a)(1). We want to ensure that these
individuals and entities are on notice of the penalties they could
incur for the misuse of information. The inclusion of assisters and
similar consumer assistance entities within Sec. 155.285 is discussed
in detail above in the comment response to questions regarding the
application of Sec. 155.206 and Sec. 155.285 to assisters. Finally,
the inclusion of QHP issuers in the definition is purposeful for the
reasons noted above and we do not share the concern of the commenter
that this creates confusion. Many of the entities included in the
definition are required to provide information for use by the Exchange,
including QHP issuers; however, it is only the provision of false or
fraudulent information or improper use or disclosure of information
that is penalized. We finalize the definition as proposed.
Comment: We received many comments in support of the proposed
provisions of Sec. 155.285(b), which lists the factors used to
determine the amount of CMPs imposed. A few commenters suggested
additional factors to be considered including, whether the violation
resulted in other legal consequences for an individual, attempts at
taking corrective action, and the extent to which assistance personnel
were deceived by the consumer into providing false or incorrect
information.
Response: We appreciate the support we received for the proposed
factors used to determine the amount of CMPs imposed. We have
considered the factors commenters suggested and find that only minor
revisions to the proposed set of factors are necessary. For example, we
have added one additional factor at subparagraph (b)(1)(viii) to
include a factor allowing HHS to take into consideration whether other
remedies or penalties have been imposed for the same conduct or
occurrence. We have also clarified the scope of the factors in
subparagraphs (b)(2)(i) and (ii) to account for violations that could
have resulted in financial harm or could have caused harm to an
individual's reputation, respectively. We note that harm to an
individual's reputation could include, for example, actions impacting a
consumer's credit rating or incurring costs on behalf of another person
without their knowledge or consent. Additionally, Sec. 155.285 does
not require a corrective action plan, so we do not include corrective
steps taken in the factors provided. We believe the extent to which
assistance personnel were deceived by the consumer is adequately
encompassed in subparagraph (b)(2). Therefore, we finalize the
provisions with the modifications to Sec. 155.285(b)(1)(viii) and
(b)(2)(i) and (ii) as noted above.
Comment: We received considerable support for the reasonable cause
provision proposed in Sec. 155.285(b)(3). In addition, several
commenters sought clarification or safe harbors regarding circumstances
where false information is provided due to a mistake or
misunderstanding. We received a couple comments requesting a safe
harbor specifically for QHP issuers who rely on information provided to
them from both the Exchange and consumers, since QHP issuers may have
no way to verify information independently. Another commenter sought a
safe harbor for conduct relating to calendar years 2014 and 2015
because of the uncertain environment issuers worked in during initial
open enrollment. Commenters believed that levying a CMP in such cases
would be too severe.
Response: Section 155.285(b)(3) states that no penalty will be
imposed if HHS determines that there was a reasonable cause for the
failure to provide correct information and that the person acted in
good faith. The situations commenters cited would likely fall within
this exception. We note that violations must be knowing and willful and
information provided merely by mistake and in good faith is not subject
to a CMP.
Comment: We received a handful of comments regarding the imposition
of penalties, as described in Sec. 155.285(c). A few commenters
expressed general support for the proposed provisions. One commenter
shared concern that there is no maximum penalty defined, which could
cause financial devastation to some consumer assistance entities. A
couple commenters requested more clarity on what constitutes a
submission of information and questioned whether an application which
is started on the phone but completed online results in two submissions
or one. Another commenter was concerned about permitting HHS to
estimate the number of consumers affected by the violation to calculate
the maximum penalty. The commenter supported, instead, using the number
of consumers directly affected by the violation or placing a maximum on
the estimate calculated by HHS based on the size of the consumer
population served by the consumer assistance entity to prevent
unreasonable penalties for the assister community. Finally, one
commenter requested clarification that Sec. 155.285(c) does not limit
penalties under State law or a State's ability to take action to
protect consumers.
Response: Although Sec. 155.285(c) provides a maximum cap per
violation, there is no global cap on CMPs. CMPs are intended to
discourage the misuse of information; therefore, we believe that
providing a global cap on CMPs would defeat there intended purpose. In
response to the questions received, we note that one application, no
matter the number of modes used to complete it, is considered one
submission for purposes of imposing a CMP. This concern is further
mitigated by the availability of an appeal prior to the imposition of a
penalty during which this issue may be explored. We finalize the
provisions as proposed. Finally, in response to the request for clarity
about the role of State law in relation to Sec. 155.285, we note that
the standards in Sec. 155.285 do not limit a State's ability to impose
penalties or protect consumers under State law.
Comment: In response to Sec. 155.285(d), we received a comment
requesting that notices be written clearly and be culturally and
linguistically.
Response: All Exchange-related notices, including those related to
CMPs, must comply with the requirements for notices established in
Sec. 155.230.
Comment: Some commenters requested that Sec. 155.285(e) be amended
to provide additional time to request a hearing. The commenters noted,
that under the proposed regulation, there are no additional options for
an individual who misses the 60-day timeframe to request a hearing. One
commenter suggested permitting additional time to request a hearing
under a good cause exception. Another commenter suggested permitting an
additional 60-day period to request a hearing following the due date of
a CMP payment. The commenter noted that a payment date may provide more
effective notice to the individual and also that many entities may have
segregated chains of duty and the appropriate person may not be
notified in time to request a hearing.
Response: We disagree with commenters that 60 days from the date of
the notice in Sec. 155.285(d) is insufficient for an individual to
request a hearing. We believe 60 days to be neither too short to
provide adequate notice nor too long to delay the process of imposing a
CMP. We finalize the provision as proposed.
Comment: As proposed in Sec. 155.206, several commenters
recommended that CMS first require any consumer assistance entity that
is alleged to have provided false information or
[[Page 30293]]
improperly used or disclosed information to enter into a corrective
action plan before a CMP could be issued.
Response: We believe that Sec. 155.285 provides HHS or OIG
sufficient flexibility to offer an entity or individual an opportunity
to take corrective action or propose a plan of corrective action to
avoid penalties prior to HHS or OIG issuing a notice of intent to
impose a civil money penalty. Particularly, HHS might offer an
opportunity for corrective action in relation to minor infractions that
expose entities or individuals to a penalty under Sec. 155.285.
Comment: Some commenters requested clarification regarding payment
methodologies and timeframes for CMPs. For example, one commenter
questioned whether the entirety of the penalty would be due upon
payment of taxes or upon notification of being found guilty of a
violation.
Response: We do not provide this level of detail in the regulation
at this time. We will address this issue in the future.
Comment: One commenter expressed disagreement with the proposed
six-year statute of limitations in Sec. 155.285(i). The commenter
noted that between IRS review, issuer validation of payments, and other
methods of cross-referencing and auditing, each incident of a violation
should be able to be discovered within two years. The commenter also
noted that a longer statute of limitations may lead to collection
procedures, such as wage garnishments, to collect unpaid debt, which
can extend the efforts needed to collect the money for a CMP.
Response: We believe the six-year statute of limitations period is
appropriate. This period is not indefinite and, therefore, will
hopefully not discourage efforts by consumer assistance entities.
However, HHS's goal in issuing the CMP rule is to encourage program
compliance, prevent misconduct, and remedy violations promptly and,
therefore, we do not want to provide a period that is too short to
encourage strict compliance with the rule and provide protection for
PII. We believe six years provides sufficient time for HHS to discover
and investigate any potential CMPs and acknowledges the reality that in
many situations, misuse of a consumer's personally identifiable
information may not be discovered by a consumer and reported to HHS for
some time after the unlawful use.
Comment: Several commenters advocated against duplication of
penalties in instances where certain types of violations may already
subject them to other types of penalties. A few commenters noted that
the Health Insurance Portability and Accountability Act already governs
certain critical aspects of compliance related to the protection of
consumer personal information.
Response: We understand commenters' concern about the potential
duplication of penalties, and have amended Sec. 155.285(b)(1) to
include a factor allowing HHS to take into consideration whether other
remedies or penalties have been imposed for the same conduct or
occurrence. It would be the responsibility of the entity to bring such
information to HHS's attention. However, we also note that HHS will
consider referring cases to appropriate law enforcement officials based
on the facts and circumstances of the violation.
Comment: One commenter requested clarification regarding whether an
individual would be held accountable for repayment of an overpayment of
the advance premium tax credit or CSRs paid on a consumer's behalf, in
addition to a CMP.
Response: The provisions of Sec. 155.285 concern only the
imposition of CMPs and not payment or repayment of advance payments of
the premium tax credit or CSRs as a result of the misuse of
information. This provision has no effect on the Department of
Treasury's authority to recoup overpayments of the advance payment of
the premium tax credit or CSRs paid on a consumer's behalf.
Comment: We received one comment that, although, we reference PII,
it is not defined in regulation.
Response: There are various definitions of PII, and we believe the
adoption of any one of them at this stage may unduly limit HHS's
ability to adequately redress violations of the rule. Given the
advanced state of technology and developments in the way information
may be manipulated, combined, and ultimately used to re-identify
persons based on de-identified data, we believe that PII is an evolving
concept that may not be fully captured in a single definition. We,
therefore, will not provide a specific definition of PII in the text of
Sec. 155.285 at this time. We do note that OMB Memoranda M-07-16 (May
22, 2007) generally defines PII as information which can be used to
distinguish or trace an individual's identity, such as their name,
social security number, biometric records, alone, or when combined with
other personal or identifying information that is linked or linkable to
a specific individual, such as date and place of birth, mother's maiden
name.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.285 of the
proposed rule regarding CMPs, with the following modifications: In an
effort to prevent confusion, in Sec. 155.285(c) we have removed the
references to section 1411(h)(1) and (2) of the Affordable Care Act and
have instead inserted the numerical maximum penalty amounts. In Sec.
155.285(a)(1)(ii), we have added ``or fraudulent'' after ``knows to be
false'' to make the text consistent with section 1411(h)(1) of the
Affordable Care Act. In Sec. 155.285(b)(1) and (2), we have added
language to clarify that the factors in these provisions are
``including, but not limited to'' the factors listed in their
subparagraphs. In Sec. 155.285(b)(1)(viii), we have added a factor
allowing HHS to take into consideration whether other remedies or
penalties have been imposed for the same conduct or occurrence. We have
clarified the scope of the factors in subparagraphs (b)(2)(i) and (ii)
to account for violations that could have resulted in actual or
potential financial harm or could have resulted in actual or potential
harm to an individual's reputation, respectively. We have made a minor
change to the wording in Sec. 155.285(d)(2) by substituting the word
``appeal'' for ``request.'' We have also made a technical correction to
substitute ``the notice of intent to issue a civil money penalty'' in
Sec. 155.285(d)(2) with a cross reference to Sec. 155.285(f). In
Sec. 155.285(f), we have rephrased the paragraph to read ``HHS has
proposed to impose'' rather than ``HHS has imposed.'' Finally, we are
substituting the reference to ``CMS'' with ``HHS'' in (g)(1) and, in
consultation with OIG, we are finalizing concurrent jurisdiction with
respect to Sec. 155.285(a)(1)(ii) and not Sec. 155.285(a)(1)(iii) at
this time.
3. Subpart D--Exchange Functions in the Individual Market: Eligibility
Determinations for Exchange Participation and Insurance Affordability
Programs
a. Verification Process Related to Eligibility for Insurance
Affordability Programs (Sec. 155.320)
In Sec. 155.320(d)(4), we established an option under which a
State Exchange could rely on HHS to conduct verifications of enrollment
in an eligible employer-sponsored plan and eligibility for qualifying
coverage in an eligible employer-sponsored plan for purposes of
eligibility for advance payments of the premium tax credit. This option
was made available for eligibility determinations that are effective on
or after January 1, 2015. However, we have
[[Page 30294]]
determined that the benefit gained by having HHS provide this function
is outweighed by the information technology development and
administrative and consumer complexity that would be introduced for a
State through this approach. As such, we proposed to strike paragraph
(d)(4).
Comment: We received comments from several State Exchanges urging
HHS to retain the option of the employer-sponsored coverage
verification process. Many of the comments focused on the need for
State Exchanges to develop functionality and administrative capacity to
verify employer-sponsored coverage in the absence of this Federally-
managed service and the administrative and financial burden this would
place on State Exchanges. One commenter suggested retaining the service
at the Federal level would take advantage of economies of scale rather
than burdening each State Exchange, individually. Several States noted
that their system builds and operating budgets could not accommodate
this change in time for the 2015 benefit year and recommended that, if
HHS does finalize the proposal, HHS postpone eliminating the service
for an additional year.
Response: We appreciate the comments received from State Exchanges
on this proposed rule change. We understand the administrative costs
and development burden associated with providing verifications for
Exchange determinations. However, even with the Federally-managed
service, State Exchanges and HHS would need to develop a way to send,
receive, and process the information and provide dual customer service
functionality to communicate with consumers. In addition, the State
Exchange would need to modify systems to integrate the HHS verification
response into what should be a near-real-time eligibility process.
Therefore, we do not believe that there are significant efficiencies to
be gained by providing this service to State Exchanges. However, we do
understand the time and budget constraints some State Exchanges face in
order to adjust their processes to accommodate this change and agree
that additional time is needed for States to come into compliance with
this requirement. Therefore, we are finalizing the provision as
proposed, removing the original regulatory language at Sec.
155.320(d)(4), but extending the flexibility previously provided at 78
FR 42257 to permit State Exchanges to implement the sample-based
reviews for employer-sponsored coverage for eligibility determinations
for insurance affordability programs starting January 1, 2016.
Comment: Additionally, some commenters shared concern that employer
coverage data currently available to States is insufficient to perform
this verification and that a comprehensive national resource is needed
to sufficiently perform the verification. Without such a source, the
commenters noted that States would have to employ and administer an
alternative data source, causing a lack of uniform documentation and
verification across Exchanges. The commenters suggested that HHS allow
self-attestation to be sufficient verification until HHS can make
available approved data sources for verification.
Response: Verification standards for employer-sponsored coverage
are provided in 45 CFR 155.320(d)(2) and include: (1) Federal
employment data from the Office of Personnel Management, which is
currently provided to State Exchanges by HHS, (2) SHOP data that is
available to the State Exchange, and (3) any electronic data sources
that are available to the Exchange and which have been approved by HHS.
We remain committed to working with State Exchanges to develop
effective solutions for verifying enrollment in an eligible employer-
sponsored plan and eligibility for qualifying coverage in an eligible
employer-sponsored plan, and will work to make any additional
electronic data sources that become available to HHS equally available
to State Exchanges.
Summary of Regulatory Changes
We are finalizing the changes to Sec. 155.320(d)(4) as proposed
but note that we are extending the flexibility previously provided at
78 FR 42257 to permit State Exchanges to implement the sample-based
reviews for employer-sponsored coverage for eligibility determinations
for insurance affordability programs starting January 1, 2016.
b. Eligibility Redetermination During a Benefit Year (Sec. 155.330)
In the proposed rule, we proposed a technical correction in
paragraph (d)(2)(ii) of Sec. 155.330 to remove the reference to
paragraph (e)(3) of this section. In the final rule, titled, ``Medicaid
and Children's Health Insurance Programs: Essential Health Benefits in
Alternative Benefit Plans Eligibility Notices, Fair Hearing and Appeal
Processes and Premiums and Cost Sharing; Exchanges: Eligibility and
Enrollment, 78 FR 32319, we previously removed paragraph (e)(3) from
this section. As such, we clarified in the proposed rule that paragraph
(d)(2)(ii) should only refer to the standards specified in paragraph
(e)(2) of this section.
Summary of Regulatory Changes
We did not receive any comments on this proposal and are finalizing
the provision as proposed.
4. Subpart E--Exchange Functions in the Individual Market: Enrollment
in Qualified Health Plans
a. Enrollment of Qualified Individuals in a QHP (Sec. 155.400)
In Sec. 155.400, we proposed to add paragraph (e) to establish
that Exchanges may, and the FFE would, require payment of the first
month's premium to effectuate enrollments.
We also proposed to add paragraph (f), which would authorize
Exchanges to provide requirements to QHP issuers regarding the
instructions for processing electronic enrollment-related transactions.
Additionally, in Sec. 156.265 we proposed to establish a
requirement for issuers in the FFEs to collect premiums no later than
the day before the coverage effective date. Our intention was to give
the Exchange the flexibility to establish policy and process rules
regarding premium payment.
Comment: One commenter suggested that the Exchange should not
provide instructions to issuers regarding payment of the first month's
premium for enrollments. The commenter recommended that the Exchange
should allow issuers to establish their own business rules on first
month's premium for enrollments. However, another commenter supported
establishing a date by which an enrollee must make a first premium
payment to effectuate coverage creating greater transparency for
payment deadlines and reducing cancellations of coverage due to failure
to pay in a timely manner. We also received a comment that urged us to
amend the regulation to allow payment of the first premium up to the
day before the coverage effective date, rather than allowing plans to
set payment dates that are earlier than this day. The commenter also
suggested that issuers should be required to provide timely invoicing
for consumers,
Response: We recognize that decisions regarding payment of the
first month's premium have traditionally been a business decisions made
by issuers. Accordingly, we are not finalizing Sec. 156.265(d)(2)
which would revise premium payment dates for first
[[Page 30295]]
month's premiums in the FFE, and are deleting current Sec.
156.265(d)(2). We will therefore redesignate Sec. 156.265(d)(1) as
Sec. 156.265(d). However, because we appreciate the comment about
giving consumers adequate time to pay their first month's premium, we
maintain the proposed Sec. 155.400(e) in the final rule to allow
Exchanges to establish a consistent process throughout each Exchange
regarding first month's premium. In particular, each Exchange can
determine how to handle first month's premium payment dates for special
enrollment periods that may occur close to or after the effective date.
We believe giving each Exchange the flexibility to establish uniform
guidance for all issuers for first month's premium for enrollments will
benefit the Exchange, issuers, and consumers by ensuring a consistent
operational procedure. It is our expectation that QHP issuers will send
consumers their bills within one to two business days after receiving
enrollment transactions to accomplish the goal of timely effectuating
coverage.
Comment: We received several comments that acknowledged
establishing a payment due date the day before coverage is effective in
most situations, but there are several scenarios that commonly occur
today that make this approach challenging and in some cases, impossible
to implement. For example, the birth of a child can cause retroactive
coverage in which the premium cannot be paid by the effective date, or
an individual may lose minimal essential coverage and be given an
effective date with only one day prior to coverage effectiveness in
which to pay. There are also instances where the consumer does not
receive the bill until after the due date. One commenter voiced concern
that some States give 10 day grace periods and recommended that we
should allow the FFE the same flexibility offered to SBEs when it comes
to how the first premium payment effectuates coverage.
Response: For similar reasons given above, we are not finalizing
Sec. 156.265(d)(2) which would establish premium payment dates for
first month's premiums and expect the FFE to address this in
subregulatory guidance.
Summary of Regulatory Changes
We are finalizing Sec. 155.400(e) and (f) of the proposed rule
without modification. Additionally, we are finalizing the provisions
proposed in Sec. 156.265(d)(1) of the proposed rule as the entire
paragraph (d), and we are not finalizing any Sec. 156.265(d)(2),
allowing each Exchange to establish its own premium payment dates.
b. Initial and Annual Open Enrollment Periods (Sec. 155.410)
In 45 CFR 155.410(d), we specified that starting in 2014, the
Exchange must provide a written annual open enrollment notification to
each enrollee no earlier than September 1, and no later than September
30. In 45 CFR 155.335(d), we specified that notice of annual
redetermination for coverage effective January 1, 2015 be provided as a
single, consolidated notice with the notice specified in 45 CFR
155.410(d). In the 2015 Payment Notice, we amended 45 CFR 155.410(e) to
specify that for the benefit year beginning on January 1, 2015, the
annual open enrollment period begins on November 15, 2014. Accordingly,
we believe that it is appropriate to modify the timing of the notice of
annual open enrollment and annual redetermination. We proposed two
options for this notice: (1) shifting the period during which the
notice would be sent by a month, so that the notice would be sent no
earlier than October 1, and no later than October 31, and (2) shifting
the period during which the notice would be sent by a month and
lengthening this period so that the notice would be sent no earlier
than October 1, and no later than November 15, provided that electronic
notices are available for any consumer who contacts the Exchange on
November 15. We sought comment on which of these options we should
implement, or if we should implement another option.
Comment: We received many comments from States, issuers, and
consumer advocates about the timeline for issuing the notice of annual
open enrollment and annual redetermination. The majority of comments
from States and the issuer community support the extended timeframe of
October 1 to November 15. States noted the additional flexibility to
decide when to send the notice as a benefit to the extended timeframe.
Issuers also saw a benefit to extending the timeframe because it would
allow for additional attempts to contact enrollees if the first contact
was unsuccessful. Several consumer advocacy groups found the shorter
timeframe of October 1 to October 31 preferable because it would permit
consumers two weeks advance notice before open enrollment and
additional time for consumers to contact enrollment assisters and
assemble any documents needed for redetermination.
A limited number of commenters supported timeframes outside the two
proposed options. One supported keeping the original timeframe for
sending the notice no earlier than September 1 and no later than
September 30; another sought flexibility to send notices no earlier
than August 1. We also received a comment expressing concern over
shifting the timeframe either way due to misalignment between open
enrollment notices, issuer 90-day renewal notices, and Exchange
redetermination notices.
Response: In order to best meet the needs of Exchanges, which are
responsible for sending the notices, and consumers, who need enough
information about open enrollment in a timely manner, we are finalizing
Sec. 155.410(d) to state that, starting in 2014, the Exchange must
provide a written notice of annual open enrollment and redetermination
to each enrollee no earlier than the first day of the month before the
open enrollment period begins and no later than the first day of the
open enrollment period. This reflects the second of our proposed
options.
Comment: We received one comment recommending that the notice be
provided to existing enrollees as well as: (1) Potential enrollees who
submitted applications after the close of the last open enrollment
period and were subsequently determined eligible for a QHP but unable
to enroll, (2) individuals who had applied for a special enrollment
period but were denied during the past year, (3) individuals who had
requested enrollment information from the Exchange during the period
between open enrollment periods, and (4) individuals who were
terminated from a QHP during the period between open enrollments
periods.
Response: This comment is outside the scope of the provisions
included in the proposed rule; however, we note that Sec. 155.335(c)
provides that the Exchange must provide every qualified individual with
an annual redetermination notice that, for coverage effective January
1, 2015, must be provided as a single, coordinated notice including
notice of the annual open enrollment period. Therefore, outreach will
extend to individuals beyond current enrollees. We also note that
Exchanges have the flexibility to conduct outreach beyond the
individuals cited in the rule.
Comment: One commenter requested the addition of language
clarifying that States may set an open enrollment period for the
Exchange that is broader than the Federal open enrollment period.
Response: This comment is beyond the scope of this rulemaking and
we direct the commenter to the open
[[Page 30296]]
enrollment period rule at 45 CFR 155.410.
Summary of Regulatory Changes
We are amending Sec. 155.410(d) to state that, starting in 2014,
the Exchange must provide written notice of annual open enrollment to
each enrollee no earlier than the first day of the month before the
open enrollment period begins and no later than the first day of the
open enrollment period.
c. Special Enrollment Periods (Sec. 155.420)
In 45 CFR 155.420, we set forth provisions for special enrollment
periods. In the proposed rule, we proposed amending Sec.
155.420(b)(2)(ii), (d)(1), (d)(6)(iii) and (e), which pertain to the
special enrollment period for loss of coverage; Sec. 155.420(b)(2)(i)
and (iii), which pertain to effective dates for certain special
enrollment periods; and Sec. 155.420(c), which pertains to the length
of the special enrollment periods.
In paragraph (b)(2)(i), we proposed to provide flexibility for
coverage effective dates in the case of birth, adoption, placement for
adoption, or placement in foster care. We require the Exchange to
ensure that coverage is effective for a qualified individual or
enrollee on the date of birth, adoption, placement for adoption, or
placement in foster care, unless Exchanges permit the qualified
individual or enrollee to elect a later coverage effective date. If the
Exchange permits the qualified individual or enrollee to elect a later
coverage effective date, the Exchange must ensure coverage is effective
on the date elected by the qualified individual or enrollee.
In Sec. 147.104(b)(2), we specified that a health insurance issuer
in the individual market must provide, with respect to individuals
enrolled in non-calendar year individual health insurance policies, a
limited open enrollment period. Accordingly, in order to align Exchange
regulations with those of the broader insurance market, in paragraph
(d)(1), we proposed that the Exchange permit qualified individuals and
their dependents to enroll in or change from one QHP to another if they
are enrolled in a non-calendar year individual health insurance policy
in 2014 described in Sec. 147.104(b)(2), even if issuers of such non-
calendar year policies offer to renew the policy. Thus, consumers whose
individual health insurance policies would renew outside the Exchange
open enrollment period would have an opportunity to enroll in an
Exchange, just as they would if their policies were offered for renewal
during the Exchange open enrollment period. Without this addition,
consumers with individual health insurance policies renewing outside
the Exchange open enrollment period would be required to renew such
policies, and wait to terminate the policies during the Exchange open
enrollment period, should they wish to enroll through the Exchange,
thus disadvantaging these consumers as compared to consumers enrolled
in calendar year individual market policies.
In 26 CFR 1.5000A-2(b)(1)(ii)(C), the Secretary of the Treasury
specified that coverage of pregnancy-related services under section
1902(a)(10)(A)(i)(IV) and (a)(10)(A)(ii)(IX) of the Social Security Act
(42 U.S.C. 1396a(a)(10)(A)(i)(IV), (a)(10)(A)(ii)(IX)) was not minimum
essential coverage. In order to ensure that women losing eligibility
for coverage of pregnancy-related services as described above are not
left without an option to enroll in a QHP after the conclusion of
Medicaid eligibility, in paragraph (d)(1), we proposed that the
Exchange permit qualified individuals and their dependents to enroll in
a new QHP if they lose eligibility for such pregnancy-related services.
We solicited comments regarding whether there are other situations in
which an individual loses coverage that is not defined as minimum
essential coverage and should be provided with a special enrollment
period.
We proposed to add to paragraph (c) to specify that the Exchange
must permit qualified individuals and their dependents to access the
special enrollment periods described in paragraph (d)(1) for up to 60
days prior to the end of the qualified individual's or his or her
dependent's existing coverage. This is consistent with existing
regulations in paragraph (d)(6)(iii) that are specific to an individual
who is enrolled in an eligible employer-sponsored plan who is
determined newly eligible for advance payments of the premium tax
credit based in part on a finding that such individual is ineligible
for qualifying coverage in an eligible employer-sponsored plan. To
improve the clarity and structure of this rule, we proposed to move the
language in paragraph (d)(6)(iii) regarding the 60 days prior access to
the special enrollment period to paragraph (c). The proposed change, to
paragraph (d)(1) that would expand the ability to report a change and
select a plan in advance to all individuals who are described in
paragraph (d)(1) is designed to allow an individual who is losing
eligibility for coverage outside the Exchange to transition to coverage
offered through an Exchange without a gap in coverage, but with
protections to ensure that advance payments of the premium tax credit
are not provided in advance of the loss of eligibility for minimum
essential coverage outside the Exchange. Accordingly, we note that
individuals are not eligible for advance payments of the premium tax
credit until they are no longer enrolled in minimum essential coverage
outside the Exchange. While consumers will be able to report the loss
of coverage and select a QHP offered on the Exchange in advance of the
loss, their coverage effective date will be no earlier than the first
day of the month following the loss of coverage (for example, if the
loss of minimum essential coverage is on May 31, 2014 and the consumer
reports the loss on March 5, 2014, coverage will not be effective until
June 1, 2014). Lastly, we proposed to make conforming changes to
paragraphs (b)(2)(ii) and (e) to align with the changes in terminology
proposed in paragraph (d)(1).
In paragraphs (d)(4), (d)(5), (d)(9) and (d)(10), we provide
special enrollment periods for errors of the Exchange or HHS, contract
violations by the QHP, exceptional circumstances and misconduct by a
non-Exchange entity. Existing paragraph (b)(2)(iii) specifies that for
a plan selection made during one of the special enrollment periods
under paragraphs (d)(4), (d)(5), and (d)(9), coverage must be effective
on an appropriate date based on the circumstances of the special
enrollment period, in accordance with guidelines issued by HHS, and
provides two options for that effective date. We proposed to add
special enrollment periods triggered under paragraph (d)(10) to those
special enrollment periods for which these special coverage effective
dates are available. In order to ensure that the Exchange has
sufficient flexibility with which to address the types of scenarios
that may trigger these special enrollment periods, we proposed to amend
paragraph (b)(2)(iii) to remove the restriction to these two options.
The resulting proposed regulatory text would allow the Exchange to set
an effective date based on what is appropriate to the circumstances, in
accordance with any guidelines issued by HHS. Similarly, in order to
ensure that the Exchange sets the length of these same special
enrollment periods to be appropriate to the circumstances of the
specific enrollment period, we proposed to modify paragraph (c) to
specify that the Exchange may define the length of these special
enrollment periods as appropriate based on the circumstances of the
special enrollment period, in accordance with any guidelines issued
[[Page 30297]]
by HHS. We believe that this flexibility is important to ensure that
the special enrollment periods can be implemented as intended.
Section 155.420(e) clarifies what qualifies as loss of coverage for
purposes of the special enrollment period described in paragraph
(d)(1). We proposed to modify this paragraph to clarify that voluntary
termination does not qualify as loss of coverage for purposes of a
special enrollment period, since the intent of this special enrollment
period is to ensure that an individual who is losing coverage can
transition to the Exchange without interruption, and not to allow an
individual to switch from another form of coverage to the Exchange
during the year when the other form of coverage remains available and
he or she does not qualify for another special enrollment period
described in this section. We solicited comments regarding this
clarification.
Comment: We received comments both in support of, and opposed to,
the proposed language providing flexibility for Exchanges to allow
either retroactive coverage back to the date of the birth, adoption,
placement for adoption, or placement in foster care, or a coverage
effective date later than the date of the birth, adoption, placement
for adoption, or placement in foster care.. Some commenters supported
providing prospective enrollment at the option of the Exchange, and the
consumer. Other commenters opposed allowing retroactive coverage and
preferred that Exchanges follow regular effective dates. One commenter
suggested we clarify that coverage may be effective no later than the
first of the month following the occurrence of the triggering event.
Additionally, commenters sought clarification on the length of time
before the coverage may become effective following the triggering event
Response: Section 1311(c)(6)(C) of the Affordable Care Act which
references section 9801 of the Internal Revenue Code of 1986 requires
retroactivity for birth, adoption, or placement for adoption, and we
received commenter support for allowing retroactive or prospective
enrollment at the option of the Exchange. We therefore are finalizing
paragraph (b)(2)(i) with the clarification that coverage may be
effective no later than the first of the month following the occurrence
of the triggering event at the option of the consumer. Without this
clarification there is a potential for adverse selection whereby a
consumer could choose an effective date on which they knew services
would be utilized. Accordingly, we are finalizing this provision with
the clarification. State Exchanges have flexibility when and if they
will provide the option.
Comment: One commenter recommended allowing for mid-month coverage
effective dates in the case of loss of minimum essential coverage, as
described in paragraph (d)(1) of this section.
Response: We do not intend to allow for mid-month coverage
effective dates in the case of loss of minimum essential coverage at
this time. The language in (c)(2)(i) provides consumers with adequate
flexibility to avoid a gap in coverage. We appreciate the comment and
may consider mid-month coverage effective dates in future rulemaking.
Comment: Commenters encouraged clarification on effective dates
provided in Sec. 155.420(b)(2)(iii). Specifically, commenters
recommended allowing for retroactive effective dates back to when the
triggering event occurred and recommended retroactivity be at the
option of the consumer.
Response: The language proposed in this section does not prohibit
Exchanges from providing retroactive coverage for special enrollment
periods as described in paragraphs (d)(4), (d)(5), (d)(9), or (d)(10)
of this section. Rather, the proposed language provides flexibility for
Exchanges to determine the appropriate effective date based on the
circumstances of the special enrollment period. Exchanges may provide
retroactive coverage at the choice of the consumer provided it is
deemed appropriate by the Exchange. Accordingly, we are finalized this
paragraph as proposed.
Comment: Commenters asked that HHS consistently define and apply
effective dates and lengths of special enrollment periods to increase
consistent application across enrollees. One commenter requested HHS
develop a minimum length of 60 days for all special enrollment periods.
Response: As provided in paragraph (b)(2)(iii) of this section,
Exchanges must ensure that coverage is effective on an appropriate date
based on the circumstances of the special enrollment period. Due to the
unique circumstances of each special enrollment period, it could be
harmful to the consumer to implement a general effective date policy.
If a consumer does not agree with a special enrollment decision they
may request an appeal of the effective date as provided in Sec.
155.505(b)(1)(i). Therefore, we are finalizing this paragraph as
proposed.
Comment: One commenter recommended that special enrollment periods
conclude at the end of the enrollment period, or when an individual
selects a QHP, whichever is sooner.
Response: The current regulation at Sec. 155.410(a)(1) provides
that ``The Exchange must provide an initial open enrollment period and
annual open enrollment periods consistent with this section, during
which qualified individuals may enroll in a QHP and enrollees may
change QHPs.'' This regulation does not provide for limiting consumers'
opportunity to enroll during the specified enrollment periods. Because
the language recommended by the commentator would directly conflict
with Sec. 155.410(a)(1), we decline to accept this recommendation.
Comment: One commenter requested the length of the special
enrollment period provided in Sec. 155.420(d)(6)(iii) be extended to
allow the employee time to receive the notice of their COBRA rights.
The commenter also requested clarification that a consumer could elect
COBRA coverage prior to their coverage effective date.
Response: We believe that providing the individual with the
flexibility provided in (c)(2)(ii) of this section to select an
Exchange QHP based on their anticipated loss of qualifying employer
sponsored coverage up to 60 days in advance of the loss combined with
the 60 day special enrollment period provided in (c)(1) of this section
will minimize any potential gap in coverage resulting from a loss of
employment notwithstanding the required timeline associated with the
employer notifying the group plan administrator and the group plan
administration notifying the employee of their COBRA rights. On May 2,
2014 we published a bulletin that provided a special enrollment period
for persons eligible or COBRA and COBRA beneficiaries. Additionally, on
May 2, 2014 the Department of Labor released revised model notices for
group health plans to provide to covered employees and their families
which provides updated information on COBRA benefits and the Exchange.
Finally, we note that an individual could elect to enroll in COBRA
coverage and enroll in Exchange coverage when he or she loses employer-
sponsored coverage, and disenroll from COBRA when Exchange coverage
becomes effective. The consumer is not eligible for advance payments of
the premium tax credit or CSRs while enrolled in COBRA. Accordingly, we
are finalizing as proposed.
Comment: One commenter requested that HHS extend the proposal to
allow individuals prior access to a special enrollment period for
individuals who are gaining access to a new QHP as a result of a move.
[[Page 30298]]
Response: While we did not solicit comments on this provision. In
future rulemaking we may allow consumers eligible for special
enrollment periods other than those provided in (c)(2)(i) of this
section to report in advance.
Comment: Commenters supported the proposed flexibility provided for
consumers to select a plan in advance of the triggering events
described in paragraphs (d)(1) and (d)(6)(iii) of this section, which
pertain to the loss of coverage or qualifying coverage in an eligible
employer-sponsored plan, respectively to prevent a gap in coverage.
Response: Given commenter support, we are finalizing this provision
with clarification. We note that a consumer who loses coverage as
described in paragraphs (d)(1) or (d)(6)(iii) may report a loss of
coverage 60 days before or 60 days after the loss. If plan selection
occurs on or before the date of the loss, the effective date will be
the first day of the month following plan selection. If plan selection
is made after the date of the loss, Exchanges may choose to either
follow regular effective dates under paragraph (b)(1) of this section
or allow for an effective date of the first of the month following plan
selection, as the previous rule allowed for both scenarios. The FFE
allows for coverage to be effective the first day of the month
following plan selection when plan selection is made after the loss.
For purposes of (d)(1) and (d)(6)(iii), the date of the ``loss of
coverage'' means the last day a consumer would have coverage. Exchanges
will have the flexibility provided under (b)(3)(i) of this section to
allow for earlier effective dates if all issuers in the service area
agree.
Comment: Multiple commenters supported the proposed additions to
establish a special enrollment period for consumers who are enrolled in
non-calendar year individual health insurance policies. Commenters
requested HHS align the length of the special enrollment period in
accordance with 45 CFR 147.104(b)(2). Additionally, commenters
requested this special enrollment period be provided to consumers whose
transitional policy, or group health plan, is renewing.
Response: Section 147.104(b)(2) allows consumer to report the non-
renewal in the plan 30 days prior to the date the policy year ends
while 147.104(b)(4) provides 60 days for the special enrollment period.
The proposed rule allows consumers to report their intent not to renew
a non-calendar year policy (including a transitional policy) 60 days in
advance of the date the policy year ends and select a plan although the
coverage effective date will not be until the first day of the month
following the termination date. Additionally, the proposed rule
provides 60 days from that date to select a QHP through the Exchange.
We are finalizing this provision in the proposed rule without
modification. Since the intention of this provision is to align with
the market rules, we are citing directly to Sec. 147.104(b)(2). In
addition, on May 2, 2014 we released guidance allowing consumers in
this scenario to report a loss of coverage to the Exchange under the
authority provided in paragraph (d)(9) of this section.
Comment: Commenters were supportive of the newly established
special enrollment period for women losing pregnancy-related Medicaid
coverage.
Response: We are finalizing the language as proposed.
Comment: Commenters requested special enrollment periods be
established for a variety of triggering events including; pregnancy,
tobacco cessation after six months which may impact the consumer's
premium, same sex couples who enter into a legally recognized
relationship other than marriage, individuals who make an individual
responsibility payment for not having coverage in 2014, and persons who
are victims of domestic violence. Additionally, commenters requested
HHS regulate on certain special enrollment periods which exist in sub-
regulatory guidance including; benefit display errors and loss of
exemptions.
Response: We did not solicit comment on this provision and the
comments received are out of scope with this regulation. However,
Exchanges retain the flexibility provided in paragraph (d)(4) and
(d)(9) of this section to define errors of the Exchange and provide
special enrollment periods for exceptional circumstances to provide
such special enrollment periods as determined appropriate by the
Exchange. For instance, the Federally-facilitated Exchange recently
provided guidance that survivors of domestic abuse are eligible for a
limited duration special enrollment period as a result of guidance
released by the Internal Revenue Service.
Comment: Multiple commenters responded to our solicitation
regarding situations other than loss of eligibility of pregnancy-
related services in which an individual loses coverage that is not
defined as minimum essential coverage and should be provided a special
enrollment period. Suggestions included; AmeriCorps, Indian Health
Service, student health coverage that is not designated minimum
essential coverage, foreign health coverage that is not designated
minimum essential coverage, excepted benefits offered by an employer,
medically needy Medicaid coverage, and family planning Medicaid
services.
Response: To ensure individuals who lose certain types of limited
Medicaid coverage which generally meets their primary and specialty
health care needs, but which is not recognized as minimum essential
coverage, have the option to enroll in a QHP at the conclusion of
Medicaid eligibility, we are expanding the special enrollment period to
include loss of medically needy as well as pregnancy-related coverage
which is not recognized as minimum essential coverage. With respect to
the loss of medically needy coverage, we are limiting beneficiaries to
one special enrollment period per calendar year based on loss of
medically needy coverage. This enables individuals with only medically
needy coverage to enroll in a QHP outside of the open enrollment
period, but avoids permitting individuals to switch QHPs multiple times
a year each time they reach the end of their medically needy budget
period within the same calendar year. We are not extending a special
enrollment period to individuals who lose Medicaid coverage of family
planning services, as such coverage is limited to a narrow set of
benefits which does not meet the covered individuals' primary or
specialty health care needs, other than family planning services. HHS
may provide a special enrollment period for other similar situations in
future rulemaking or guidance. In addition, on May 2, 2014 we published
a bulletin that provided a special enrollment period for individuals
who are beginning service in the AmeriCorps State and National, VISTA,
or NCCC programs and for individuals who are concluding their service
in the AmeriCorps State and National, VISTA, or NCCC programs and are
losing access to short-term limited duration coverage or self-funded
coverage.
Comment: We received comments requesting we clarify the criteria
for qualifying events described in paragraphs (d)(4), (d)(5), (d)(9),
and (d)(10). Commenters also requested clarification on the process for
notifying consumers who are impacted by an exchange error.
Response: We believe the ability for Exchanges to respond
appropriately to the circumstances surrounding an individual's special
enrollment period is necessary. CMS has previously issued
[[Page 30299]]
guidance describing guidelines on the criteria for special enrollment
periods which fall under the authority of paragraphs (d)(4), (d)(9),
and (d)(10) in the FFE.
Comment: Commenters recommended amending paragraph (d)(6)(i) to
include individuals who are not current Exchange enrollees. Such
revision would allow the following groups of consumers to utilize the
special enrollment period; people who live in States that did not adopt
Medicaid expansion, people who divorce during the year, victims of
domestic violence that occurs after May 31, 2014, people who experience
the death of a spouse, and people who lose a job but did not enroll in
employer-sponsored coverage because of high costs.
Response: We note that many individuals in these circumstances may
have other triggering events that would qualify them for an existing
special enrollment period. However, we remain concerned that expanding
paragraph (d)(6)(iii) could result in adverse selection and
destabilization of the individual insurance market. We have provided
sub-regulatory guidance on special enrollment periods under paragraph
(d)(4) and (d)(9) of this section including for COBRA beneficiaries,
survivors of domestic abuse, and people who divorce during the year and
may continue to do so in the future. Accordingly, we are finalizing as
proposed without additional modification.
Comment: We received comments both for and against the proposed
addition to paragraph (e) of this section stating that voluntary
termination does not qualify an individual for a loss of coverage
special enrollment period.
Response: The proposed language clarifies existing regulations that
termination includes voluntary termination by an enrollee. The
intention of paragraph (e) of this section is to stabilize the market
by preventing individuals from voluntarily terminating their coverage
and then utilizing the loss of minimum essential coverage special
enrollment period provided in paragraph (d)(1) of this section.
Accordingly, we are finalizing as proposed.
Summary of Regulatory Changes
We are finalizing the provisions proposed in section Sec. 155.420
of the proposed rule with the following modifications. In paragraph
(b)(2)(i), we provide that coverage must be effective on the date of
the birth, adoption or placement for adoption, placement for foster
care, or the Exchange may allow the consumer to select a coverage
effective date of the first of the month following the date of birth,
adoption, placement for foster care, or placement for adoption. In
paragraph (b)(2)(ii), we clarify that coverage is effective the first
day of the month following plan selection. In paragraph (b)(2)(iii) we
provide flexibility for Exchanges to ensure coverage is effective based
on the specific circumstances of the special enrollment period. We also
have added a new paragraph (b)(2)(iv) that clarifies a consumer's
ability to select a plan 60 days before and after a loss of coverage
described in subparagraph (d)(1) and (d)(6)(iii). Finally, in paragraph
(d)(1), we define the date of the loss of coverage for each triggering
event described under paragraph and establish a special enrollment
period for individuals losing medically needy coverage.
d. Termination of Coverage (Sec. 155.430)
We proposed to add paragraph (e) to Sec. 155.430 to establish the
difference between a termination and a cancellation and establish the
significance of a reinstatement action in the context of QHP coverage
offered through an Exchange. Specifically, we proposed to specify that
a cancellation is a specific type of termination action taken that ends
a qualified individual's coverage on or before the effective date, thus
rendering coverage as never effective. In contrast, a termination is an
action taken after the effective date of coverage that ends an
enrollee's coverage effective on a date after the coverage effective
date. In a cancellation, the effect of the QHP's action would be that a
qualified individual does not receive coverage from the QHP, whereas in
a termination the QHP covers the enrollee for some period of time and
would be liable for covered services that the enrollee received during
the time period between the coverage effective date and the termination
date, under the terms of the coverage. A reinstatement action is a
correction of an erroneous termination or cancellation action resulting
in restoration of an enrollment with no break in coverage.
In addition to establishing the difference between cancellations
and terminations, we also proposed that an Exchange may establish
operational standards for QHP issuers for implementing terminations,
cancellations, and reinstatements. Enrollment systems for both SBEs and
the FFE continue to evolve, and we believe that the Exchange's ability
to issue operational instructions will enable both the Exchange and the
issuer community to respond more effectively to changing systems and
changing processes. We believe the effectiveness of this approach has
been demonstrated in other programs administered by CMS, specifically
the Medicare Advantage and Medicare Part D programs.
Further, we proposed to clarify in paragraph (d)(6) that the
termination effective date for a QHP would be the day before the
effective date of coverage in a different QHP even in cases of
retroactive enrollments. This could occur when a consumer is granted a
special enrollment period to change QHPs with a retroactive coverage
effective date under 155.420(b)(2)(iii). For coverage that is
terminated retroactively, CMS would adjust any applicable payments to
the original QHP issuer based on the retroactive termination date, in
order to recoup any advance payments of the premium tax credit and
cost-sharing reductions made to the former issuer for the enrollee. The
Exchange would be required to ensure that the former issuer refunds or
credits any premium paid to the issuer by the enrollee and reverse
claim payments for services rendered during the retroactive coverage
period. We sought comment on whether to add a specific requirement to
this effect on issuers in Part 156.
Conversely, in the case of a retroactive coverage date, CMS would
provide the gaining issuer any applicable advance payments of the
premium tax credit and CSRs based on the retroactive coverage effective
date. CSR reconciliation would occur for all CSRs provided beginning
with the retroactive coverage date. The gaining issuer would collect
the enrollee's portion of the premium for all months of coverage and
would be required to adjudicate the enrollee's claims incurred during
the retroactive period, and provide any applicable CSRs.
Comment: We received several comments supporting the provision
ensuring that consumers receive the benefit of the advance payments of
the premium tax credits and CSRs to which they are entitled and
refunded any premiums from the issuer from which the consumer
terminated coverage. However, some commenters opposed the requirement
for issuers to refund out-of-pocket payments since those payments are
made by consumers directly to providers. Another commenter asked for
clarification of the impact of a retroactive termination and effective
date on deductibles and accumulators.
Response: The Exchange must ensure that appropriate actions are
taken following a retroactive termination. Under the policy finalized
in this rule, when a retroactive termination and
[[Page 30300]]
enrollment results in the enrollee changing issuers, the Exchange must
ensure that the former issuer refunds or credits any premium paid to
the issuer by or for the enrollee for coverage after the retroactive
date, reverses any claims for services provided after the retroactive
termination date, and recoups payments made to providers for services
provided to the enrollee after the retroactive termination date. The
former issuer must also ensure that providers refund to the enrollee
any cost sharing paid by or for the enrollee (other than CSRs to be
reimbursed by the Federal government). CMS will also recoup any advance
payments of the premium tax credit and CSRs provided to the issuer for
the enrollee back to the retroactive termination date
The gaining issuer in turn, should collect the enrollee's portion
of the premium and is responsible for any covered services incurred, in
each case for the period following the retroactive effective date of
coverage. CMS will also provide the gaining issuer any applicable
advance payments of the premium tax credit and CSRs for the enrollee
back to the retroactive effective date of coverage. (We intend to
provide additional guidance regarding how issuers should handle a claim
that spans a period of time in which the enrollee has coverage from two
separate issuers in such circumstances.) Providers are responsible for
billing the gaining issuer for any covered services incurred back the
retroactive enrollment date, and the issuer must ensure that the
provider collects only the cost sharing for the covered service to
reflect the enrollee's cost-sharing obligation for the service under
the gaining issuer. We acknowledge that such an adjustment may result
in the enrollee owing the provider additional funds, depending on the
cost sharing and benefit structure of the new plan. We note that
consistent with 45 CFR 156.410(c)(1) and our CMS Bulletin to Exchanges
on the Availability of Retroactive Advance Payments of the PTC and CSRs
in 2014 Due to Exceptional Circumstances, dated February 27, 2014, any
refund or credit for any excess cost sharing or premium paid for or on
behalf of the individual must be provided (or begin to be provided in
the case of a credit) with 45 calendar days of the date of discovery of
the excess cost sharing or premium paid.
If an applicant switches QHP issuers, we do not require out-of-
pocket amounts paid under the prior plan to carry over to the new QHP
issuer, but defer to issuers and State laws with regard to how out-of-
pocket payments under the former issuer's plan should be accounted for
in the deductibles and limitations on cost sharing under the new
issuer's plan.
Comment: We received a comment recommending that if a consumer
enrolls in a different QHP with the same issuer, the issuer should not
be required to reverse claim payments, and should not be required to
refund out-of-pocket payments, but could instead apply any cost-sharing
paid to the new QHP's annual limitation on cost sharing. The same
commenter also sought clarification on how out-of-pocket payments for
prescription drugs, most of which are adjudicated at the point of sale,
will be handled in the case of a change in QHP issuers with a
retroactive effective date.
Response: We are finalizing the proposed provision as proposed,
noting that the processes set forth in the final rule are designed to
ensure that consumers are provided the CSRs and advance payments of the
premium tax credit for which they determined eligible, and are refunded
any excess premiums paid or out-of-pocket payments made by or for the
enrollee for covered benefits and services incurred. Applying enrollee
cost sharing or other out-of-pocket spending already paid to the new
QHP's accumulators, such as deductibles, or limitations on cost sharing
or out-of-pocket spending, will not always be equivalent to providing a
refund. For example, for an enrollee that does not exceed the
deductible for a benefit year, simply accumulating excess cost sharing
already paid may mean the enrollee will have paid more in cost sharing
than required under the new plan. However, we recognize that, when the
enrollee switch plans within the same issuer (or between variations of
the same plan), reversing the claims and providing refunds may not be
the most efficient way of adjusting the enrollee's portion of the
premium and any differences in cost sharing. Therefore, in such
circumstances, the Exchange and the issuer will be considered to be in
compliance with the policy set forth in this rule as long the
enrollee's premium payments and cost sharing are adjusted to reflect
the enrollee's obligations under the new plan or variation and
providers are made whole. Thus, the issuer may elect to make the
enrollee whole for cost sharing directly through a refund or credit
without requiring the provider to provide any refund directly to the
enrollee, and may net provider payments to reflect the provider's
obligations and payments due. Furthermore, consistent with 45 CFR
156.425(b), in the case of a change in assignment to a different plan
variation (or standard plan without CSRs) of the same QHP in the course
of a benefit year under this section, the QHP issuer must ensure that
any cost sharing paid by the applicable individual under the previous
plan variations (or standard plan without CSRs) for that benefit year
is taken into account in the new plan variation.
Under the policy and processes set forth in this final rule,
prescription claims should be treated in the same manner as other
claims.
Comment: Many commenters supported the new definitions for
terminations and cancellations to codify the existing practices
included in the enrollment standards as well as the inclusion of a
definition for reinstatement. One commenter did not recommend guidance
to issuers to follow operational instructions issued by the Exchange
given the limited nature of retroactive effective dates that result in
a termination. However, another commenter recommended that that HHS
require, not solely permit, Exchanges to establish operational
procedures for issuers in these circumstances and place a requirement
on issuers to follow the established procedures. In doing so, all
issuers participating in the Exchange would be required to comply with
similar procedures on terminations, cancellations, and reinstatements
to ensure a consistent process. Additionally, the commenter stated that
simplifying the procedures among QHP issuers would be in the consumers'
interest and avoid consumer confusion, especially in situations where
members of the household may be in different QHPs.
Response: We agree that if an Exchange establishes operational
instructions for implementing terminations, cancellations, and
reinstatements, then issuers should be required to follow such
procedures. However, we still believe it is up to the Exchange to
determine whether or not to establish procedures. Therefore, we are
finalizing Sec. 155.430(e) as proposed, while adding a corresponding
paragraph (j) to Sec. 156.270, to specify that QHP issuers must follow
the transaction rules established by the Exchange in accordance with
Sec. 155.430(e).
Comment: We received a comment requesting that CMS reconsider the
implementation of the 90-day grace period and require that health plans
pay any claims during the entire grace period.
Response: We note that the comment is outside the scope of this
rulemaking. Requirements for issues regarding grace
[[Page 30301]]
periods are addressed at 45 CFR Sec. 156.270.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.430 of the
proposed rule without modification. However, we are adding Sec.
156.270(j) to specify that QHP issuers must follow the transaction
rules established by the Exchange in accordance with Sec. 155.430(e)
based on comments we solicited and ensuring a consistency of
operational procedures among issuers in the Exchange.
5. Subpart F--Appeals of Eligibility Determinations for Exchange
Participation and Insurance Affordability Programs
a. General Eligibility Appeals Requirements (Sec. 155.505)
In Sec. 155.505, we proposed a technical correction to paragraph
(b)(4) by removing ``; and'' at the end of the paragraph and adding a
period in its place.
Summary of Regulatory Changes
We receive no comments on this proposal and are finalizing the
provision as proposed.
b. Dismissals (Sec. 155.530)
In Sec. 155.530, we proposed to amend paragraph (a)(1) to provide
an additional method for appellants to withdraw appeal requests. The
existing provision requires an appellant who wishes to withdraw his or
her appeal request to do so in writing (hard copy or electronic). We
proposed to include the alternative for an appellant to withdraw his or
her appeal by telephone, if the appeals entity is capable of accepting
telephonic withdrawals. In paragraphs (a)(1)(i)(A) and (B), we proposed
the requirements for providing a telephonic withdrawal process.
Specifically, we proposed that the appeals entity must record in full
the appellant's statement and telephonic signature made under penalty
of perjury, and provide a written (in hard copy or electronically)
confirmation to the appellant documenting the telephonic interaction.
We sought comment on this proposed amendment, including the proposed
requirements for accepting telephonic withdrawals and the potential
misalignment with Medicaid fair hearing rules caused by this proposed
amendment.
Comment: Nearly all the comments we received in response to the
proposal to provide the option for telephonic withdrawals were
supportive. This included many positive comments from State Exchanges.
Commenters noted the additional method to withdraw appeals would ease
the burden on appeals entities by protecting resources while providing
an efficient means for consumers to end their appeal at their
discretion. We also received support from consumer advocate groups for
the proposed provision requiring written documentation of the
telephonic interaction as well as the proposed requirement that the
appellant's telephonic statement be recorded in full and include a
telephonic signature made under penalty of perjury. However, we also
received a comment requesting that we not finalize the provisions
requiring the appellant's telephonic statement be recorded in full and
a written confirmation because they are burdensome and duplicative. The
commenter suggested that simply providing written documentation of a
telephonic withdrawal with an option for the appellant to request to
vacate the withdrawal within a specific period of time is sufficient.
Response: We agree with commenters that incorporating this option
for telephonic withdrawals will assist appeals entities in maintaining
an efficient process by providing a convenient method for appellants to
end an appeal at their option, thereby, protecting resources for other
appeals-related activities. We understand the concern that the
requirements for providing a telephonic withdrawal process are
significant and call for both a full recording of the appellant's
telephonic withdrawal and a confirmation of the telephonic withdrawal
sent in writing. However, the appellant's right to a hearing is the
central concern of the appeals process and any mechanism for
relinquishing the right to the hearing must include sufficient
safeguards. The requirement for both a recording and a written
confirmation of the telephonic withdrawal are meant to ensure that the
appellant's right to a hearing is safeguarded. Further, we note that
the preamble to the proposed rule acknowledged that the requirement to
provide confirmation of a telephonic withdrawal can be met through
issuance of the dismissal notice, which is required to contain
instructions on how to request to vacate the dismissal in accordance
with Sec. 155.530(b)(3). Therefore, we finalize the provision for
telephonic withdrawal as proposed.
Comment: A few commenters cited the potential vulnerabilities of
appellants under a telephonic withdrawal process. For instance,
appellants may be vulnerable to coaching by appeals entity staff to
withdraw their appeal over the telephone. Similarly, an appellant may
feel pressured to withdraw an appeal prematurely after an informal
resolution if the appeals entity initiates such a discussion with the
appellant by telephone. However, the commenter also acknowledged that
if an appellant initiates the call to withdraw the appeal, no such
concern exists. One commenter recommended that HHS create scripted
information about the significance of withdrawing an appeal that
includes an attestation of understanding by the consumer to be used by
Exchange appeals entities to help protect appellants.
Response: While there is potential for undue influence on an
appellant to close an appeal in some cases, we also realize that
appeals entities aim to run an efficient process. As noted above, we
believe the process we have proposed fairly balances these concerns and
provides sufficient protections for appellants, including the
requirement that telephonic withdrawals be recorded in full, made under
penalty of perjury, and confirmed in writing. In addition, withdrawals
result in dismissal notices under Sec. 155.530(b), which provide for
the opportunity to request to vacate a dismissal for good cause. With
these protections in place, we are confident that appellant's interests
will be safeguarded.
Comment: We received one comment on the alignment of our proposed
policy with Medicaid fair hearing rules. The commenter opposed the
potential misalignment caused by the proposed provision and noted that
only permitting a written withdrawal, as in the current rule and in
Medicaid fair hearing rules, is a strong consumer protection measure.
Response: Although the option to implement telephonic withdrawals
will put the Exchange rules out of alignment with the Medicaid fair
hearing rules, it is our intent to provide a modernized appeals process
that can take advantage of technology and still safeguard appellant
rights, as noted above. CMS is considering its policy regarding written
and telephonic withdrawals in Medicaid and may issue future guidance on
this issue. However, we note that as a result of this current
incongruence in rules, appeals entities must ensure that appellants are
afforded the appropriate rights. Individuals appealing denials of
Medicaid eligibility may not withdraw their appeal via telephone, even
if the appeals entity meets the requirements for providing such a
process under the Exchange rule. Current appellants of Medicaid
eligibility determinations may only withdraw an appeal in writing in
accordance with 42 CFR 431.223(a).
Comment: Some commenters suggested that the written confirmation
[[Page 30302]]
of the telephonic withdrawal should include a mechanism for challenging
the validity of the telephonic signature.
Response: As noted in the preamble to the proposed rule, the
requirement to provide confirmation of a telephonic withdrawal can be
met through issuance of the dismissal notice, which is required to
contain instructions on how to request to vacate the dismissal in
accordance with Sec. 155.530(b)(3). However, even if the appeals
entity decides to provide confirmation of the telephonic withdrawal in
a notice separate from the dismissal notice, a dismissal notice,
including instructions on requesting to vacate a dismissal, is required
in the case of a withdrawal nonetheless. Therefore, all appellants who
provide a telephonic withdrawal will receive instructions on requesting
to vacate the dismissal, which would have the effect of reopening the
appeal.
Comment: We received one comment suggesting that telephonic
withdrawals only be accepted through the Exchange toll-free number and
that assisters, Navigators, and certified application counselors not be
authorized to accept telephonic withdrawals.
Response: If an appeals entity wishes to provide telephonic
withdrawals in accordance with the final requirements, the appeals
entity must maintain a phone line, capable of recording calls from
appellants for the purposes of withdrawing an appeal. Whether that
phone line is the same as the Exchange's customer service number or not
is at the discretion of the appeals entity. We also note that, although
appellants may seek assistance from assisters, Navigators, and
certified application counselors, these consumer support entities are
not authorized to operate any portion of the Exchange appeals process,
including accepting telephonic withdrawals.
Summary of Regulatory Changes
We are finalizing the provision as proposed and note, as in the
proposed rule, that this change also impacts employer appeal
withdrawals by cross-reference at Sec. 155.555(f)(1).
c. Employer Appeals Process (Sec. 155.555)
We proposed to amend Sec. 155.555 by redesignating paragraphs
(d)(1) through (d)(4) to more clearly delineate between the
requirements associated with valid appeal requests versus invalid
appeal requests. We note that under this proposed redesignation,
paragraph (d)(4) would become new paragraph (d)(2), stating that upon
receipt of an invalid appeal request, the appeals entity must promptly
and without undue delay send written notice to the employer that the
appeal request is not valid because it fails to meet the requirements
of this section. New paragraph (d)(2) would also provide introductory
language for the requirements provided in paragraphs (d)(2)(i) through
(iv). The result of these proposed revisions would be to separate the
requirements for valid appeal requests in redesignated paragraph (d)(1)
and the requirements for invalid appeal requests in new paragraph
(d)(2).
Summary of Regulatory Changes
We received no comments on the proposed redesignations and are
finalizing the redesignations as proposed.
6. Subpart G--Exchange Functions in the Individual Market: Eligibility
Determinations for Exemptions
a. Required Contribution Percentage
Under section 5000A of the Code, an individual must maintain
minimum essential coverage for each month, qualify for an exemption, or
make a shared responsibility payment. Sections 5000A(d) and (e) provide
for nine categories of exemptions, and authorize the Secretary to
determine individuals' eligibility for some of the exemptions,
including the hardship exemption. Sections 1.5000A-3(a) through (h) of
26 CFR enumerate the circumstances in which an individual may be exempt
from the shared responsibility payment. These grounds for exemption
include: (1) under 26 CFR 1.5000A-3(e), the individual lacks affordable
coverage because the individual's annualized required contribution for
minimum essential coverage for the month exceeds the required
contribution percentage of the individual's household income; (2) under
26 CFR 1.5000A-3(h), the individual has in effect a hardship exemption
certification issued by an Exchange because, based on the individual's
projected household income, the individual is not eligible for
affordable minimum essential coverage; and (3) as described in 45 CFR
155.605(g)(5), the individual and one or more employed members of his
or her family have been determined eligible for affordable self-only
employer-sponsored coverage through their respective employers, but the
aggregate cost of employer-sponsored coverage for all the employed
members of the family exceeds 8 percent of household income for that
calendar year. Determining eligibility for these exemptions requires
comparison between the individual's share of the costs for obtaining
minimum essential coverage and a certain percentage of the individual's
household income, actual or projected, for the taxable year (the
required contribution percentage). Under section 5000A(e)(1)(A) of the
Code, the required contribution percentage is 8 percent. Section
5000A(e)(1)(D) of the Code and 26 CFR 1.5000A-3(e)(2)(ii) further
provide that, for plan years beginning in any calendar year after 2014,
the percentage will be the percentage determined by the Secretary to
reflect the excess of the rate of premium growth between the preceding
calendar year and 2013 over the rate of income growth for that period.
As discussed below, in this final rule, we establish a methodology
for determining the excess of the rate of premium growth over the rate
of income growth for a period, and establish the required contribution
percentage for the 2015 calendar year. For calendar years after 2015,
the required contribution percentage will be published in the annual
HHS notice of benefit and payment parameters. We also define the
required contribution percentage under Sec. 155.600(a) to mean the
product of 8 percent and the rate of premium growth over the rate of
income growth for the calendar year, rounded to the nearest one-
hundredth of one percent. Finally, we modify Sec. 155.605(g)(5), which
currently sets the required contribution percentage at 8 percent, so
that the required contribution percentage for purpose of section 5000A
in future years reflects the required contribution percentage for the
applicable calendar year.
Methodology for Determining the Excess of the Rate of Premium Growth
Over the Rate of Income Growth
In the proposed rule, we outlined and requested comments on
methodologies for determining the excess of the rate of premium growth
over the rate of income growth. We discussed an approach under which
the rate of premium growth over the rate of income growth for a
particular calendar year would be calculated as the quotient of (x) one
plus the rate of premium growth between the preceding calendar year and
2013, divided by (y) one plus the rate of income growth between the
preceding calendar year and 2013. We sought comment on whether we
should constrain this ratio to be greater than or equal to one, as well
as the impact of these constraints on the excess of the rate of premium
growth over the rate of income growth. We sought comment on this and
other approaches for determining the excess of the rate of premium
growth over the rate of income growth, and in particular, whether the
excess of the rate of premium growth over income growth should be
[[Page 30303]]
calculated based on the difference between the growth rates, the ratio
of the growth rates, or through other methods, and whether the result
should be subject to other adjustments.
In response to comments, we are finalizing the methodology outlined
in the proposed rule, such that the rate of premium growth over the
rate of income growth for a particular calendar year will be the
quotient of (x) one plus the rate of premium growth between the
preceding calendar year and 2013, carried out to ten significant
digits, divided by (y) one plus the rate of income growth between the
preceding calendar year and 2013, carried out to ten significant
digits. The quotient will be carried out to ten significant digits, and
multiplied by the required contribution percentage for 2014 (8
percent). The result will then be rounded to the nearest hundredth of a
percent, to yield the required contribution percentage for the calendar
year. We do not constrain this percentage to be greater than or equal
to one, or subject it to other adjustments or constraints.
Comment: Several commenters supported our proposal that we perform
this calculation using a ratio rather than a difference. One commenter
suggested the formula be the quotient of (x) one plus the rate of
premium growth between the preceding calendar year and 2013, over (y)
one plus the difference between the rate of premium growth between the
preceding calendar year and 2013, and the rate of income growth between
the preceding calendar year and 2013, stating that this would minimize
volatility of the formula. Some commenters supported permitting the
ratio to be less than one, while another commenter suggested that the
ratio should be constrained to be greater than or equal to one, to
avoid the required contribution increasing when both premium growth and
income growth are negative. One commenter suggested a ceiling on the
index factor of 1.1 to ensure that premium contributions do not
increase by more than 1 percent of consumers' incomes.
Response: We believe that the methodology described above most
accurately measures the relationship between changes in premiums and
income. While we recognize some of the policy concerns raised by
commenters, we believe that any constraints on the ratio could result
in the required contribution percentage not fully reflecting the growth
rates of premiums and income, which we believe is the general intent of
the statute.
Comment: Some commenters recommended delaying any adjustments to
the required contribution percentage. One commenter stated that
adjustments to the required contribution percentage and to the
applicable percentages used to calculate the premium tax credits under
section 36B of the Code should be delayed until at least 2016, to
permit fuller assessments of the consequences of these adjustments.
Another commenter suggested delaying any increase in premium
contributions for the foreseeable future, noting significant technical
and administrative costs, such as revising online calculators and
coding Exchange functions.
Response: While we recognize the commenters' concerns, we believe
the required contribution percentage should track premium and income
changes from year to year, and delaying this adjustment would conflict
with the general intent of the statute. We also anticipate that the
operational changes associated with these adjustments will be
manageable.
Premium Growth: In the proposed rule, we sought comment on whether
we should use the premium adjustment percentage as a measure of premium
growth for the purpose of calculating the adjustment to the required
contribution percentage, and whether that adjustment should be
constrained through the use of ceilings or floors. We also sought
comment on whether other data sources or methods should be used to
measure premium growth.
Taking into consideration the comments received, we are finalizing
our proposal to measure the rate of premium growth for a calendar year
by using the premium adjustment percentage for the year, without any
adjustments or constraints. We provided in the 2015 Payment Notice \29\
that the premium adjustment percentage, described at 45 CFR 156.130(e),
will be published each year in the HHS notice of benefit and payment
parameters, and will be used to adjust certain cost-sharing parameters
established by the Affordable Care Act. As established in the 2015
Payment Notice, the premium adjustment percentage for 2015 is
4.213431463 percent.
---------------------------------------------------------------------------
\29\ Patient Protection and Affordable Care Act; HHS Notice of
Benefit and Payment Parameters for 2015, 79 FR 13744 (March 11,
2014).
---------------------------------------------------------------------------
Comment: Several commenters supported setting the rate of premium
growth equal to the premium adjustment percentage. One commenter stated
we should not consider constraining the annual rate of premium growth
to equal or exceed zero, while another commenter argued that premium
growth should constrained to be a positive number. Another commenter
suggested that HHS use actual, rather than projected, growth in private
insurance premiums, and suggested that HHS delay implementation of any
adjustment until the 2016 plan year, when a number of significant
market changes would have concluded and when actual premium growth
between 2014 and 2015 will be known. One commenter was concerned that
the trend in employer plan premiums may understate premium growth in
the individual market.
Response: The premium adjustment percentage is calculated based on
projections of average per enrollee employer-sponsored insurance
premiums from the National Health Expenditure Accounts (NHEA), which
are calculated by the CMS Office of the Actuary. As discussed in the
2015 Payment Notice, these projected premiums reflect premiums from
nearly the entire private health insurance market. However, because
these projected premiums will exclude premiums from the individual
market, which are likely to be subject to a number of short-term
effects related to implementation of market reforms, we believe these
projections provide an appropriate measure of average per capita
premiums for health insurance coverage for the initial years. However,
as noted in the proposed rule, after the initial year(s) of
implementation of market reforms, we may propose to change the
methodology for calculating the premium adjustment percentage.
Income Growth: In the proposed rule, we discussed measuring the
rate of income growth for a calendar year as the percentage by which
the per capita GDP for the preceding calendar year exceeds the per
capita GDP for 2013, carried out to ten significant digits. We stated
that we were considering using the projections of per capita GDP used
for the NHEA.\30\ We sought comment on alternative sources of income
data that we should consider, and whether adjustments should be made to
our data source, or to the methodology outlined in the proposed rule.
We also sought comment on whether we should seek to measure income
growth per person under the age of 65 or per worker.
---------------------------------------------------------------------------
\30\ See Table 1 in http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2012.pdf.
---------------------------------------------------------------------------
In response to comments, in this final rule, we are establishing as
the measure of income growth for a calendar year the percentage by
which the per capita GDP for the preceding calendar year exceeds the
per capita GDP for 2013, carried out to ten significant digits, using
the
[[Page 30304]]
projections of per capita GDP used for the NHEA. Under this
methodology, the rate of income growth for 2015 is 3.608458790 percent.
This measure is based on data sources that are consistent with the data
sources used for determining premium projections, resulting in a
consistent estimate of the ratio of premiums to income. In future years
we may consider alternative income measures.
Comment: Commenters supported using per capita GDP for the purpose
of calculating income growth, stating that this is a widely used
measure of income. One commenter noted that it would not be technically
sound to measure growth in GDP per person under age 65 or per worker,
because GDP estimates are not available for those subsets of the
population. Another commenter suggested that we consider whether per
capita GDP sufficiently accounts for inflation and housing costs, and
whether it overstates the income growth rate for lower income
populations. Another commenter urged HHS not to use wage growth.
Response: Following consideration of comments received, we believe
that growth in per capita GDP provides the most comprehensive and
accurate measure of income growth available at this time. This measure
is also consistent with the data that the CMS Office of the Actuary
uses to project premiums for the NHEA. We may consider revising this
measure in the future to account for future circumstances or data
availability, including if alternative income measures or subsets of
GDP become available.
Comment: One commenter stated that in order to avoid an increase in
the required contribution percentage during a recession, the annual
change in per capita GDP should be constrained to equal or exceed zero,
and that benchmark revisions should not be allowed to affect the
calculation of the rate of income growth. Another commenter suggested
that the formula should account for negative income changes, such that
in a year where income decreases, there should be a decrease in the
affordability threshold. Another commenter opposed negative income
growth, because it would increase the required contribution percentage
during times of economic decline.
Response: We acknowledge that in a recession a negative change in
per capita GDP could result in an increase in the ratio of premiums to
income. However, we note that such occurrences have been rare in recent
decades, and constraining income growth to be positive would risk the
required contribution percentage not fully reflecting the growth rates
of premiums and income, which we believe is the general intent of the
statute.
Required Contribution Percentage for 2015
The required contribution percentage for 2014 is 8.00 percent.
Based on the methodology finalized in this final rule, the rate of
premium growth over the rate of income growth for 2015 is
1.04213431463/1.0360845879 or 1.005839028. This results in a required
contribution percentage for 2015 of 8.00*1.005839028, or 8.05 percent,
when rounded to the nearest one-hundredth of one percent.
Summary of Regulatory Changes
We define the required contribution percentage under Sec.
155.600(a) to mean the product of eight percent and the rate of premium
growth over the rate of income growth for the calendar year, rounded to
the nearest one-hundredth of one percent. We are also amending Sec.
155.605(g)(5), so that the required contribution percentage for this
exemption in future years reflects the required contribution percentage
for the applicable calendar year.
b. Options for Conducting Eligibility Determinations for Exemptions
(Sec. 155.625)
In Sec. 155.625, we established an option under which a State
Exchange could adopt an eligibility determination for an exemption from
the shared responsibility payment that was made by HHS, provided that
certain conditions were met. We proposed to revise Sec. 155.625 to
remove the option for a State Exchange to adopt an eligibility
determination for an exemption from the shared responsibility payment
made by HHS for applications submitted on or after November 15, 2014.
Under this proposal, HHS would continue to provide support in this area
for applications up until that date.
Comment: We received several comments, many from State Exchanges,
urging HHS not to eliminate the option described in Sec. 155.625(b).
Commenters opposed this change because of the burden, in terms of cost,
time and resources it would put on State Exchanges to accommodate the
provision of exemption determinations. Several commenters from State
Exchanges noted that resources have already been allocated and
timelines already established for the systems development and shared
the concern that States will not have the resources or administrative
capacity to carry out this function by November 15, 2014. Under the
proposed timeline, one commenter anticipated that State Exchanges
would, at best, only be able to implement a paper-based and manual
exemption eligibility determination process. One commenter shared the
belief that the current process could be modified to HHS' concerns by
asking the consumer to include the information that only State
Exchanges have, such as the lowest cost bronze plan. A majority of
commenters agreed that, if HHS proceeds with the proposed change, State
Exchanges need additional time to develop their own exemption
processes; therefore, commenters suggested that implementation begin
November 15, 2015. Finally, one commenter agreed that having a single
entity conduct exemption determinations makes the most sense but, to
achieve this, HHS must provide clear implementation standards to guide
State Exchanges and consumers for uniform application of the law.
Response: We appreciate the comments received on this proposed
change, particularly those from State Exchanges. We acknowledge the
impact of such a change on State Exchanges in terms of administrative
costs and development timelines. As noted below, we are providing
Exchanges additional time to make this change.
Additionally, and as previously stated in the proposed rule, we
support this change because the current procedure introduces
significant information technology development and administrative
burden into a process that could otherwise be executed at a single
entity. For example, it requires coordinated information sharing
systems between State Exchanges and HHS to send, receive, and process
the information needed to make an exemption determination, particularly
for those exemptions that require information only held by the State
Exchange, such as the cost of the lowest-cost bronze plan net of
advance payments of the premium tax credit. Furthermore, the current
process requires dual customer service responsibilities at both HHS and
the State Exchange, which creates challenges for consumers and Exchange
customer service representatives. Therefore, we do not believe that
there are significant efficiencies to be gained by HHS providing this
service to State Exchanges.
HHS is committed to providing technical assistance to State
Exchanges to develop the capacity to handle the minimum functions of
granting certificates of exemption. HHS has
[[Page 30305]]
developed and released a set of model paper applications that can be
adopted by State Exchanges and will consider providing additional
guidance, such as example standard operating procedures, to assist
State Exchanges as they develop their own exemption processes. We do
understand the time and budget constraints State Exchanges face in
order to adjust their processes to accommodate this change and agree
that additional time is needed for State Exchanges to come into
compliance with this requirement. Accordingly, we are finalizing the
provision with an amendment to eliminate the option for HHS to provide
exemption determinations for State Exchanges for applications submitted
after the start of open enrollment for the 2016 plan year.
Summary of Regulatory Changes
We are amending Sec. 155.625(a) and (b) to state that the Exchange
may adopt an exemption eligibility determination made by HHS for
applications submitted before the start of open enrollment for the 2016
plan year.
7. Subpart H--Exchange Functions: Small Business Health Options Program
a. Functions of a SHOP (Sec. 155.705)
Sections 155.705(b)(2) and (3) currently provide that, for plan
years beginning on or after January 1, 2015, all SHOPs must make
available to qualified employers the option of selecting an actuarial
value level of coverage as described in section 1302(d)(1) of the
Affordable Care Act and make all QHPs at that level available to
qualified employees (``employee choice''). Additionally, pursuant to
section 1312(a)(2) of the Affordable Care Act, qualified employers may
provide support for coverage of employees under a QHP by selecting any
level of coverage under section 1302(d) to be made available to
employees, and each employee of an employer that elects a level of
coverage may choose to enroll in a QHP that offers coverage at that
level. Based on communications with issuers and State Insurance
Commissioners early in 2014, HHS became concerned that, in some
circumstances, implementing employee choice in 2015 might significantly
disrupt some small group markets, and it might therefore have a
negative effect on the ability of small business owners to access
coverage.
To address these concerns, we proposed to amend Sec. 155.705(b)(2)
and (3) to provide for a one year transition policy under which a SHOP
would be permitted to not implement employee choice in 2015 under
specific circumstances: (1) if employee choice would result in
significant adverse selection in the State's small group market that
could not be fully remediated by the single risk pool or premium
stabilization programs; or (2) if there is an insufficient number of
issuers offering QHPs or qualified SADPs to allow for meaningful plan
choice among QHPs or qualified SADPs for all actuarial value levels in
the State's SHOP. We proposed that meaningful choice would mean
sufficient competition in the market to allow for participation in the
SHOP from multiple issuers throughout the State.
We proposed that a State regulatory agency, such as the State
Department of Insurance, could submit a recommendation to the State's
SHOP (or in the case of an FF-SHOP, to the Secretary) showing why
either of the two proposed circumstances applied in 2015. We sought
comment on whether the State regulatory agency recommendation should
include a mitigation plan describing the process the State regulatory
agency would take to ensure that full implementation of employee choice
in 2016 would not result in the occurrence of either proposed
circumstance. We proposed that the State would be required to provide
in the recommendation to the SHOP concrete evidence that one of the two
proposed circumstances applied. The SHOP would then evaluate the
State's recommendation and determine whether the State's small group
market would be significantly adversely affected as a result of the
implementation of employee choice.
In the preamble to the proposed rule, we also recognized the
importance of the timing of a State regulatory agency's recommendation
and the SHOP's decision regarding employee choice under this proposal.
Whether or not employee choice is available in a SHOP may be relevant
information for issuers to consider as they make QHP submissions, but
State regulatory agencies also need time to evaluate market dynamics
before they can make a recommendation about whether the SHOP should not
implement employee choice in 2015. We considered establishing a
deadline for the State regulatory agency's recommendation to the SHOP.
We considered a timeline under which State regulatory agencies would
make recommendations prior to the close of the initial QHP
certification application window, with sufficient time for issuers to
decide whether or not to participate in SHOP for the following plan
year. We also considered a second timeline as follows: (1) All issuers
interested in participating in SHOP would apply during the initial
application window; (2) State regulatory agencies then would have a
specific window of time within which to make a recommendation regarding
whether to not implement employee choice in 2015 based on the
applications received; (3) the SHOP would then have a specific window
of time to decide whether to implement employee choice in 2015 based on
that recommendation; (4) issuers could, based upon the SHOP's decision,
decide whether to maintain, modify, or withdraw their QHP applications.
In the FF-SHOPs, under this second scenario, issuers would be able to
submit applications after the initial deadline to apply for QHP
certification had passed.
We are finalizing this provision with the following modifications.
First, based on a careful re-evaluation of the two conditions under
which the State regulatory agency could make the proposed
recommendation, we have recognized that some issuers have concerns
about the potential for adverse selection in the small group market
under employee choice and these concerns might cause them to price
their products and plans higher than they might otherwise price them if
the SHOP did not offer employee choice. Therefore, in the final rule,
we specify that a State Insurance Commissioner could recommend to the
SHOP that employee choice not be implemented in that State in 2015 if
the Commissioner can adequately explain that this would be in the best
interest of small employers and their employees and dependents, given
the likelihood that implementing employee choice would cause issuers to
price their products and plans higher than they would otherwise price
them. Second, we are finalizing the first timeline in the proposed
rule, and are requiring that a State Insurance Commissioner make its
recommendation to the SHOP, and that the SHOP make its decision about
implementing employee choice, sufficiently in advance of the end of the
QHP certification application window such that issuers can make
informed decisions about whether to participate in the SHOP. In the FF-
SHOPs, State Insurance Commissioner must submit to HHS their
recommendation on or before June 2, 2014. This will provide HHS (as
operator of the FF-SHOPs) sufficient time to review any
recommendations. HHS anticipates that its decision regarding the
implementation of employee choice in States with an FF-SHOP would be
made by June 10, 2014, which would provide sufficient time for
[[Page 30306]]
issuers to decide whether to participate in the SHOP for the following
year.
Comment: We received several comments in support of providing an
opportunity for a State to recommend that a SHOP not implement employee
choice in 2015, so that States and issuers could develop a Statewide
plan for a full and successful implementation of employee choice in
2016. We also received several comments opposing the proposal, stating
that employee choice is both statutorily required and is a core element
necessary to establish SHOP's value and attract participation by small
employers. One commenter urged HHS to not implement employee choice in
2015 only when there is clear harm that outweighs any of the value
presented by employee choice and there is no other way to mitigate such
harm. Several commenters expressed concern that an additional year
without employee choice will not reduce the ultimate impact of any
adverse selection concerns, but will just postpone its effects until
2016. Commenters expressed concern that the deferral of employee choice
could go on for years, and could possibly be permanent.
Response: We believe that the option to permit a State to recommend
that employee choice not be implemented, if the State fulfills the
regulatory requirements, might be important to preserve market
stability in certain States in 2015. We recognize that some State
Insurance Commissioners and issuers have concerns about the potential
for adverse selection in the small group market in light of the fact
that employee choice will be a new feature in many markets and issuers
at this point in time may feel that they do not have sufficient data
available concerning expected enrollee risk in an employee choice
environment. This may lead issuers to price coverage more
conservatively than they otherwise would price it, even taking into
account premium stabilization programs and other considerations.
Further, we understand that some State Insurance Commissioners believe
that this potential for adverse selection will result in less robust
issuer participation in a SHOP that offers employee choice.
Therefore, consistent with the proposal that this policy reflect
issuer and State concerns about adverse selection we are finalizing
Sec. 155.705(b)(3)(vi) to allow a SHOP to elect to provide employers
only with the option set forth at paragraph (b)(3)(ii)(B), or in the
case of a FF-SHOP, only with the option set forth at paragraph
(b)(3)(iv)(B) only if the State's Insurance Commissioner can adequately
explain that it is his or her expert judgment, based on a documented
assessment of the full landscape of the small group market in his or
her State, that not implementing employee choice in 2015 would be in
the best interest of small employers and their employees and
dependents, given the likelihood that implementing employee choice
would cause issuers to price products and plans higher in 2015 due to
the issuers' beliefs about adverse section. This transitional policy
only applies for plan years beginning in 2015. We expect that by 2016,
States and issuers will be able to learn from the experiences of
issuers in a wider range of SHOPs that have implemented employee choice
so that any adverse selection concerns will no longer be material. For
example, we believe that by 2016, issuers will have much more
information on which to make pricing and plan design decisions for an
employee choice environment. HHS anticipates that the conditions for a
State to recommend a transition in employee choice will apply in a
subset of markets, and HHS remains committed to implementing employee
choice in all SHOPs by 2016. In any event, in light of the statutory
language providing that employee choice should be implemented in all
SHOPs, this policy will not be extended beyond 2015. HHS will approve
an FF-SHOP State's recommendations with the understanding that the
transitional policy applies for one year.
While the rule would also permit State-based SHOPs to decide
against implementing employee choice in 2015, HHS believes it is
unlikely that State-based SHOPs will opt not to implement employee
choice in 2015 because most of them currently offer employee choice.
We are not finalizing the proposal that States include a statement
describing how the plan to increase meaningful choice or reduce adverse
selection concerns for 2016 and beyond in their recommendation because
HHS anticipates that the conditions that would support the State
recommendation required under this final rule will not apply in most
markets.
Comment: One commenter does not support allowing States to not
implement employee choice because the participation provision in 45 CFR
Sec. 156.200(g) requires issuers with more than a 20 percent share of
the State's small group market share participate in the FF-SHOP as a
condition of participating in the FFE individual market. Therefore,
most issuers participating in the FFE are unlikely to decline
participating in an FF-SHOP. The commenter expressed the view that
employee choice would make it easier for plans that do not meet the 20
percent threshold to participate in an FF-SHOP, thus expanding the
competitive choices available to small business employees.
Response: 45 CFR 156.200(g) was finalized to help provide employers
a choice of QHPs in FF-SHOPs. While employee choice may encourage
rather than limit choice of issuers and plans, we believe that States
are in the best position to make an assessment of the choice of issuers
and plans that are available at this time.
Comment: We received several comments on the proposed circumstance
under which a State Insurance Commissioner could recommend that the
SHOP not implement employee choice based on significant adverse
selection that could not be remediated by the single risk pool or the
premium stabilization programs. One commenter recommended that adverse
selection could be addressed by limiting choice within one issuer.
Another commenter stated that risk adjustment would eliminate the risk
of adverse selection, but that this would not happen until several
months after the State must submit its recommendation regarding
employee choice. Another expressed concern about employers continuing
to offer grandfathered health plans.
Response: We generally agree with the commenters who questioned
including the adverse selection circumstance as drafted in the proposed
rule and agree that the single risk pool, risk adjustment program, and
other considerations are likely to address adverse selection concerns
in the small group market, including small group markets in which the
SHOP offers employee choice. Nonetheless, we recognize that some State
Insurance Commissioners and issuers have concerns about the potential
for adverse selection in the small group market due to employee choice,
given that this will be a new feature in many markets and issuers at
this point in time may feel that they do not have sufficient data
available concerning expected enrollee risk in an employee choice
environment. This may lead to issuers to price products and plans more
conservatively than they otherwise would price, even taking into
account premium stabilization programs and other considerations. We
also understand that some State Insurance Commissioners believe that
issuer concerns about adverse selection will result in less robust
issuer participation in a SHOP that offers employee choice.
Accordingly, in this final rule, we have modified the proposed
recommendation that the State Insurance Commissioner would submit
regarding adverse
[[Page 30307]]
selection to better capture the circumstances under which issuers'
concerns about adverse selection might negatively affect the small
group market.
Comment: Several commenters provided recommendations about how to
define meaningful choice. Such definitions ranged from ensuring
employees have a choice among health plans within those metal levels to
ensuring there was at least one plan in every metal level.
Response: In response to concerns from commenters, HHS is not
finalizing the provision of the proposed rule that would permit the
State Insurance Commissioner to recommend that the SHOP not implement
employee choice based on a lack of meaningful choice among QHPs or
SADPs. Instead, HHS is modifying the proposal to permit State Insurance
Commissioners to submit a written recommendation to the SHOP adequately
explaining that it is the State Insurance Commissioner's expert
judgment, based on a documented assessment of the full landscape of the
small group market in his or her State, that not implementing employee
choice would be in the best interests of small employers and their
employees and dependents, given the likelihood that implementing
employee choice would cause issuers to price products and plans higher
in 2015 due to the issuers' beliefs about adverse selection. A State
Commissioner's recommendation must be based on concrete evidence,
including but not limited to discussions with those issuers expected to
participate in the SHOP in 2015.
Comment: Several commenters are concerned about whether HHS will be
ready to fully implement employee choice in the FF-SHOPs and
recommended that concerns about operational readiness be added to the
list of circumstances under which a State may recommend not
implementing employee choice in 2015. They also stated that FF-SHOP
functionality and design would also need to be completed well in
advance of the launch and must be scalable to all FF-SHOP States.
Response: HHS, with the assistance of appropriate vendors, has
finalized business requirements necessary for the launch of the FF-SHOP
online portal for 2015. We do not expect that operational and
technological processes will pose a limitation to implementing employee
choice and premium aggregation services in the FF-SHOPs.
Comment: Some commenters support allowing a SHOP to have the
discretion of determining whether employee choice would have to exist
for both medical QHPs and SADPs. One commenter stated that SADPs do not
have the protections of the single risk pool, risk corridors, and risk
adjustment, which differentiates SADPs from QHPs.
Response: Because of operational limitations in the build of the
FF-SHOP online portal, employee choice will either be implemented or
not implemented for both SADPs and QHPs in the FF-SHOPs, depending on
whether State Insurance Commissioners submit recommendations consistent
with this final rule. However, State-based SHOPs could choose to
provide employee choice for medical QHPs and SADPs, or vice versa for
the 2015 plan year, if their IT systems can accommodate employee choice
variation by plan type, and if a recommendation from a State Insurance
Commissioner consistent with this final rule would support that
approach.
Comment: Some commenters recommended that HHS require that the
State's recommendation include concrete, specific details of employee
choice's estimated impact on the small group market. One commenter
specifically recommended that the requirement for concrete evidence be
included in regulatory text. Other commenters recommended that HHS
adopt a more simplified waiver process giving States, including State-
based SHOPs, greater discretion and flexibility in choosing SHOP
options that meet local needs. These commenters stated that HHS should
not include requirements, criteria, or standards that prescribe or
limit State flexibility or State decision-making processes regarding
implementation of employee choice. Additionally, some commenters urged
HHS to require that a State's recommendation include a mitigation plan
describing how any adverse effects of not implementing employee choice
in 2015 would be addressed so that these conditions do not persist into
2016. One commenter recommended that the requirement for a mitigation
plan should indicate how the State intends to increase stand-alone
dental plan participation in the employee choice market. Some
commenters believe that all States should be required to have a public
review and comment period on the State's recommendation to not
implement employee choice in 2015 and that all evidence should be
subject to public review and comment.
Response: We are finalizing language in this rule requiring that
the State's recommendation must be sent by the State's Insurance
Commissioner to HHS (as operator of the FF-SHOP) or to the State-based
SHOP and must be based on documented assessment of the full landscape
of the State's small group market. HHS is not being prescriptive about
the specific types of evidence that must be included in this documented
assessment, as this evidence may vary based on the State's small group
market. However, the documented assessment of the full landscape of the
State's small group market in a State must support the Insurance
Commissioner's expert judgment that not implementing employee choice
would be in the best interests of small employers and their employees
and dependents, given the likelihood that implementing employee choice
would cause issuers to price products and plans higher in 2015 due to
the issuers' beliefs about adverse selection. A State Insurance
Commissioner's recommendation would need to be based on concrete
evidence, including but not limited to discussions with those issuers
expected to participate in the SHOP in 2015. Nonetheless, in order that
SHOPs will make an informed, fair decision about whether to approve a
State's recommendation, HHS has included in this final rule text the
overarching standards on which the State Insurance Commissioner must
base its recommendation. We think that the finalized standard
accommodates the unique variation of States' small group markets and
provides flexibility to States in making their recommendation to a
SHOP. The timeline and schedule that is being finalized in this rule
does not make it feasible for FF-SHOPs to solicit public input on a
State's recommendation not to implement employee choice. However,
State-based SHOPs and State Insurance Commissioners who make
recommendations about not implementing employee choice in 2015 may
choose to have a public comment period on their proposed
recommendation. If a State elects to hold a public comment period, it
must submit a summary of all comments received with its recommendation
to not implement employee choice in 2015 to the relevant SHOP.
Comment: We received several comments about how to address the
timing issue presented in the preamble of the proposed rule. Some
commenters prefer the timing option whereby the State agency would have
to make recommendations prior to the close of the initial QHP
certification application window, and stated that this provides time
for QHPs to make informed participation decisions. One commenter
recommended that the decision and announcement of a State's
recommendation regarding employee
[[Page 30308]]
choice be made no later than one month prior to the deadline for filing
rates for the 2015 benefit year to assure actuarially sound rates. One
commenter preferred the second proposed timeline from the preamble of
the proposed rule whereby issuers would have the option to maintain,
modify, or withdraw their products from the SHOP market after the
SHOP's employee choice decision has been made. Another commenter asked
how issuers would file rates without knowing whether employee choice is
required and was concerned that the timing of the letters from the
States and the State decision were not in alignment with the QHP
certification timelines.
Response: HHS is finalizing in this rule that a State Insurance
Commissioner should submit a recommendation to the SHOP, and that the
SHOP should make a decision based on that recommendation, sufficiently
in advance of the close of the QHP certification application window
such that issuers can make informed decisions about whether to
participate in the SHOP. In a FF-SHOP, State Insurance Commissioners
must submit to HHS the recommendation on or before June 2, 2014, and
HHS will make a decision based on any recommendations submitted by that
deadline before the close of the QHP certification application window.
Only States interested in not implementing employee choice would need
to make a recommendation. State Insurance Commissioners making such
recommendations should submit them via email to [email protected]. HHS
expects that no later than June 10, 2014, the FF-SHOP will post the
list of States approved for their transition of employee choice for one
year, creating a public record. HHS will make publicly available the
State's recommendation to the FF-SHOP and the results of its review in
a written decision explaining whether HHS agreed with the State's
recommendation. This timeline ensures that HHS' decisions will be made
prior to the close of the initial QHP certification application window
for the FF-SHOPs, with sufficient time for issuers to decide whether or
not to participate in the FF-SHOP in 2015.
This timeline reduces uncertainty for issuers because issuers will
know if employee choice is being offered in a SHOP prior to the end of
the QHP application period. Issuers will be able to make a decision
about SHOP participation based on final information about whether
employee choice will be implemented and will be less likely to seek to
modify their rates or withdraw their applications.
State-based SHOPs will be required to follow the same timeline as
FF-SHOPs, but exact dates for State Insurance Commissioner
recommendations and SHOP decisions may differ from the FF-SHOP.
Summary of Regulatory Changes
We are finalizing the provision as proposed, with the modification
that a SHOP's decision not to implement employee choice in 2015 should
be based on a written recommendation submitted by the State Insurance
Commissioner adequately explaining that it is the Insurance
Commissioner's expert judgment, based on a documented assessment of the
full landscape of the small group market in his or her State, that not
implementing employee choice would be in the best interests of small
employers and their employees and dependents, given the likelihood that
implementing employee choice would cause issuers to price products and
plans higher in 2015 due to the issuers' beliefs about adverse
selection. A State Insurance Commissioner's recommendation must be
based on concrete evidence, including but not limited to discussions
with those issuers expected to participate in the SHOP in 2015. We
clarify that this policy only applies in 2015 by adding the word
``only.'' We also changed in Sec. 155.705(b)(3)(vi) the word options
to be singular as one option is available for FF-SHOPs and another for
State-based SHOPs. Finally, we have established in the final rule the
first of two proposed timelines under which States to make their
recommendations to SHOP.
b. Enrollment Periods Under SHOP (Sec. 155.725)
We proposed amendments to Sec. 155.725(c) and (e) to amend the
dates for the annual open enrollment periods for qualified employers
and qualified employees in all SHOPs, both State-based and Federally-
facilitated. In proposed Sec. Sec. 155.725(c)(1), we proposed to align
the start of annual employer election periods in all SHOPs for plan
years beginning in 2015 with the start of open enrollment in the
corresponding individual market Exchange for the 2015 benefit year.
Under the proposal, the annual employer and employee election periods
would begin no sooner than November 15, 2014 with employers making
selections first, followed by employees. We are finalizing this
proposal with one modification. Based on comments we received through
the public comment period, we are modifying Sec. 155.725(c)(1) to
limit this provision to FF-SHOPs. State-based SHOPs may start their
annual employer election periods earlier than November 15, 2014. We
further clarify that nothing in this rule eliminates the rolling
monthly enrollments in the SHOPs outlined at 45 CFR 155.725(b) and the
requirement also outlined at 45 CFR 155.725(b) that a plan year in the
SHOP be 12 months.
We note that pursuant to Sec. 147.104(b)(1)(i), group coverage
purchased in the SHOP between November 15 and December 15 of each year
is not subject to employer contribution or group participation rules.
As explained in Chapter 5 of the 2015 Letter to Issuers published on
March 14, 2014, FF-SHOPs do not enforce minimum participation
requirements between November 15 and December 15 of each year, but they
are enforced upon initial enrollment and at renewal outside of this
window. Aligning the start of the annual employer election period in
the FF-SHOPs with the start of the individual market Exchange such that
the employer election period would begin no sooner than November 15,
2014, will provide qualified employers and employees with a period of
time to enroll for 2015 coverage when the FF-SHOP minimum participation
provisions are not enforced. State-based SHOPs wishing to begin annual
employer election periods prior to November 15 may extend the window of
time when employers are not subject to employer contribution or group
participation rules. For example, a State-based SHOP may extend the
window of time during which minimum contribution and participation
rules are not applicable from October 15 through December 15, so long
as November 15 through December 15 is included in the time period.
In Sec. Sec. 155.725(c)(2) and 155.725(e), we proposed to remove
the required minimum lengths of both the annual employer election
period and the employee open enrollment period to provide additional
flexibility to all SHOPs and qualified employers. The existing minimum
standards may make it difficult for groups participating in the SHOP to
renew coverage in a timely manner, as under those minimums, it might
take 75 days or longer to complete a group renewal. This proposal will
permit employers to expedite their enrollment timeline. Also, this
proposal increases a qualified employer's access to the most up-to-date
rate information by permitting alignment with the quarterly rate update
cycle. We are finalizing these provisions as proposed.
Comment: We received several comments on our proposal to align the
start of the employer election periods
[[Page 30309]]
for plan years beginning in 2015 with the start of open enrollment in
the corresponding individual market Exchange for the 2015 plan year, as
amended in the 2015 Payment Notice, so that the annual employer and
employee election periods would begin no sooner than November 15, 2014.
Some commenters supported having a uniform timeline for enrollment in
the individual Exchange and SHOPs, to reduce confusion, improve
efficiencies, and possibly bring about cost savings. Another commenter
believed that there are too many election periods for different
populations and therefore recommends that the annual open enrollment
period be more spread out. One commenter recommended that employers be
able to make decisions whether to participate in the SHOP prior to
November 15 so that employees can shop in both Exchanges beginning
November 15. We also received several comments recommending that State-
based SHOPs should have the flexibility to maintain their own employer
election periods to remain in alignment with the broader small group
market in the State. Several commenters noted that aligning the timing
of the SHOP employer election period for 2015 with the individual
market annual open enrollment period may pose challenges for certain
State-based SHOPs, and encouraged HHS to maintain the flexibility
afforded to State-based SHOPs discussed in the preamble to the Exchange
Establishment final rule at 77 FR 18402-18403. For example, commenters
observed that some State-based SHOPs see benefits from dedicating staff
to separate enrollment periods for individuals and employees of
qualified employers, rather than administering these enrollment periods
concurrently.
Response: To ensure States have the flexibility to operate their
State-based SHOPs in a manner that works in their small group markets,
we are finalizing this provision as proposed, but limiting it to FF-
SHOPs. State-based SHOPs will be able to begin their employer and
employee election periods in a manner that works with their small group
markets.
Comment: Some comments were received in support of the proposal to
remove the 30-day minimum timeframe for the employer and employee
annual election period. However, several comments were also received
stating that removing this minimum timeframe would cause system and
human resource strain by forcing SHOP enrollment into a more compressed
timeframe. Some commenters also stated that this approach does not
compare favorably with traditional small group insurance coverage. One
commenter stated that employers need a minimum of 30 days to evaluate
their options, costs, and budget forecasts for the upcoming year and
employees would then need a similar timeframe to make a decision by the
15th of the month.
Response: We believe that removing the 30-day minimum timeframe
requirement provides the most flexibility to SHOPs, employers and
employees, and allows consumers to obtain SHOP coverage in a quicker
timeframe. This flexibility allows employers and employees to complete
their shopping in a more condensed time, if desired. We note that
nothing in this final rule removes the ability of a State-based SHOP or
an employer to establish enrollment periods lasting at least 30 days.
Summary of Regulatory Changes
We are finalizing the amendments proposed in Sec. 155.725 of the
proposed rule with the modification that the provision aligning the
annual employer election period with the start of the start of open
enrollment in the corresponding individual market Exchange for the 2015
benefit year applies only in FF-SHOPs. State-based SHOPs may start
their annual employer election periods earlier than November 15, 2014.
c. SHOP Employer and Employee Eligibility Appeals Requirements (Sec.
155.740)
We proposed to amend Sec. 155.740(g) by redesignating paragraphs
(g)(1) through (g)(3) to more clearly delineate the requirements
associated with valid appeals separately from those associated with
invalid appeals.
We proposed to amend Sec. 155.740(i)(1)(i) by cross-referencing
the withdrawal standards proposed in the individual market at Sec.
155.530(a)(1). Under current rules, an appellant who wishes to withdraw
his or her appeal request must do so in writing (hard copy or
electronic). The amended provision would allow an appellant to withdraw
his or her appeal request in writing or by telephone, if the appeals
entity is capable of accepting telephonic withdrawals.
Comment: We received a handful of comments regarding the proposed
change to the SHOP appeals withdrawal procedure and all were supportive
of the change. As with the individual market provision, commenters
cited the benefits to having a telephonic withdrawal option, including
increased efficiency for appellants to conclude the appeals process.
Commenters also noted with support the importance of recording the
telephonic interaction and providing written confirmation of the
withdrawal along with instructions on how to request to vacate a
withdrawal in order to protect the appellant's right to a hearing.
Response: We agree with commenters that incorporating this option
for telephonic withdrawals for SHOP employer and employee appeals will
assist appeals entities in maintaining an efficient process by
providing a convenient method for appellants to end an appeal at their
option. We also consider the requirements to record the appellant's
telephonic withdrawal and the telephonic signature under penalty of
perjury in full along with sending written confirmation of the
withdrawal to be critical safeguards for appellants and appreciate the
support commenters expressed for these aspects of the process. We,
therefore, finalize the provision for telephonic withdrawal as
proposed.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.740 without
modification.
8. Subpart O--Quality Reporting Standards for Exchanges
In Sec. 155.1400, we proposed that the Exchange must prominently
display on its Web site, in accordance with 45 CFR 155.205(b)(1)(v),
quality rating information assigned for each QHP under the QRS, as
calculated by HHS and in a form and manner specified by HHS, starting
in 2016. We stated our intentions to have a beta testing period in 2015
to provide early feedback to Exchanges and QHP issuers and begin public
reporting of quality rating information during the 2016 open enrollment
period for the 2017 coverage year. The standards for QHP issuers
regarding the collection and submission of validated quality measures
data for the QRS are described in Part 156, Subpart L of this final
rule.
Comment: Many commenters agreed with the proposed provision and
supported our approach for HHS to provide calculated quality rating
information for display on an Exchange Web site on an annual basis for
the open enrollment period. One commenter requested clarification as to
whether HHS will select and calculate the QRS rating for both the FFE
and State Exchanges, or whether the State Exchanges will be able to
select and calculate their own QRS ratings independent of HHS.
Commenters suggested that State Exchanges be allowed to calculate
quality ratings
[[Page 30310]]
using the same approach as the FFE but with data for plans operating
within the State's Exchange and that beta test data be used to compare
QHP quality rating results from HHS with State Exchange results to
determine relative comparability in national versus State approaches.
Response: We clarify that HHS will be obtaining data from all QHP
issuers from all Exchanges consistent with Sec. 156.1120(a) and using
a standardized methodology to calculate QHP quality ratings for display
on the FFE Web site and to provide for display to State Exchanges on
their Web sites. We believe that an approach where each Exchange
displays quality ratings calculated by HHS based on a standard scoring
methodology allows for reliable, uniform, and comparable QHP ratings
across Exchanges. The HHS-calculated scores and rating information
provided to a State Exchange by HHS will be for the QHPs offered on the
Exchange in that State. We anticipate sharing the validated QRS summary
measure level data with State Exchanges; however State Exchanges will
be required to display the HHS-calculated quality ratings for QHPs
offered on the Exchange in their respective States. At the same time,
we believe it is important that States have opportunity to build on
this uniform strategy by displaying additional quality measures that
reflect local priorities and we anticipate issuing future guidance that
will include standards for States who wish to exercise this
flexibility.
Comment: Many commenters urged HHS to require that State Exchanges
display the data directly on their Web sites instead of linking to a
Federal Web site.
Response: We understand commenters' concerns regarding providing
consumers direct access to QHP quality data on the Exchange Web site
where they are choosing a plan and these comments will help inform
consumer testing and final guidance regarding display of quality rating
information. We agree that health plan quality-related information
should be provided to consumers in an easily understandable format and
manner to support the comparison of plan options. We intend to provide
details regarding display requirements in future technical guidance and
will work with State Exchanges that do not have the technical capacity
to display data directly on their Web sites during the initial
implementation phase-in period.
Comment: Several commenters supported flexibility for States to
display additional quality data and recommended that such data be
collected and displayed consistently with the Federal measures. Other
commenters expressed concern regarding States posting additional data
because of the potential for conflicting measures to confuse consumers.
They also expressed concern about consumer comprehension of displayed
QRS data and allowing for approaches to meet diverse needs including
regional, cultural, language, and demographic differences. One
commenter suggested criteria for establishing governing principles for
States choosing to display additional quality information, such as
requiring States to only use NQF-endorsed measures or required measures
for QHP accreditation. Another commenter suggested that States such as
California that have implemented their own QHP quality ratings be used
to inform quality reporting on the FFE.
Response: We maintain in the final rule that the Exchange must
prominently display the Federal QRS rating information, as calculated
by HHS, and results from the ESS for each QHP on its Web site. We
believe that the Federal quality standards regarding QRS establishes a
foundation for a uniform, national strategy for monitoring quality
activities in the Exchanges with a core set of measures and standard
approaches to health plan quality reporting. We also believe it is
important that States have the opportunity to build on this uniform
strategy with the display of additional measures that reflect local
priorities. We anticipate issuing future guidance that will include
standards for States who wish to exercise this flexibility. However, we
clarify that HHS would not include any State-level data in calculations
for the Federal QRS. HHS is currently conducting research and consumer
testing regarding display of consumer-friendly information and
terminology of health plan quality data and as we noted in the proposed
rule, we intend to issue technical guidance including standardized
display requirements in the near future. We will work with States to
prevent display of both Federal and State-level quality measure data in
a manner that confuses consumers.
Comment: Many commenters supported a five-star display for QRS
ratings that would ensure consistency across commercial and Medicare
markets and increase enrollee familiarity with the rating systems. One
commenter recommended that CMS report QHP summary ratings at half-star
levels (for example, 3.5, 4.0, 4.5) to enable consumers to better
distinguish between plans, similar to the Medicare Advantage and Part D
ratings.
Response: As stated in the proposed rule, we intend to display star
ratings that would be similar in style and format to that of Medicare
Advantage and Prescription Drug Plan ratings. These comments regarding
display requirements will inform the future technical guidance that we
intend to issue in the near future. For more detailed information on
the proposed QRS scoring specifications approach, including the
proposed process of scoring QHPs and converting scores into ratings on
a five-star scale, we refer commenters to the March 28, 2014, draft QRS
Scoring Specifications document available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/Downloads/QRS-Scoring-Specification.pdf.
Comment: We also received a number of comments on quality measures
for dental plans, sampling design and methodology for the ESS, quality
rating and survey measure sets, QRS framework, process for selection of
ESS vendors and quality reporting for QHPs offered outside the
Exchange.
Response: We have not addressed such comments, and others that are
not directly related to the proposed rule, because they are outside the
scope of this rulemaking.
Summary of Regulatory Changes
For the reasons described above, we are finalizing the provision as
proposed.
b. Enrollee Satisfaction Survey System (Sec. 155.1405)
In Sec. 155.1405, we proposed that the Exchange would prominently
display results from the ESS on its Web site, in accordance with Sec.
155.205(b)(1)(iv), as calculated by HHS, and in a form and manner
specified by HHS, starting in 2016. We also proposed that the display
of the QRS information (which incorporates member experience data from
the ESS) by an Exchange would meet the requirement of displaying the
ESS information and satisfy the standard outlined in 45 CFR
155.205(b)(1)(iv). The standards for QHP issuers regarding the
collection and submission of validated data for the ESS are described
in Part 156, Subpart L of this final rule.
Comment: The majority of commenters supported the proposed display
requirement for Exchanges in Sec. 155.1405. Several commenters did not
support the approach to provide State Exchanges the flexibility to make
ESS beta test results publicly available in 2015 because these results
are intended
[[Page 30311]]
for process improvement and not official. Some commenters supported
allowing all Exchanges to make the beta test information available in
2015 to identify best practices and provide access to information to
support consumer choice. One commenter suggested requiring several
criteria to be met prior to publicly presenting ESS 2015 beta test
results.
Response: We agree that the purpose of the 2015 ESS beta test
results is primarily for process improvement. However, we also believe
that if reliable QHP-level assessment scores are available in the ESS
beta test results, this information could provide important early
feedback to Exchanges and consumers. We intend to provide State
Exchanges and QHP issuers with the ESS beta test results with
appropriate disclaimers including that beta test results are not
finalized and are part of the survey development process. HHS would not
require nor restrict a State Exchange from posting this information on
its Web site but would encourage inclusion of appropriate disclaimers
to inform the consumer about the limitations of the data (for example,
the information reflects beta test results that are not finalized and
are part of the survey development process). HHS does not plan on
posting the 2015 ESS beta test results on the FFE Web site.
Comment: Many commenters urged HHS to have a uniform policy for ESS
scoring calculations and for display and require that complete ESS
results, by metal-tier level, be made publicly available on all
Exchange Web sites for consumers, accessible to researchers and
advocates. One commenter expressed concern with displaying all ESS
results including those scores not used in the QRS because of concerns
that the survey may not capture information regarding a QHP's quality
that are applicable to areas that a health plan can directly influence.
Response: We intend to provide the HHS standardized, calculated
full ESS results to State Exchanges and to display the results at the
product-level on the FFE Web site and will provide further details
regarding display of the data, to consumers, in future technical
guidance. As noted in the proposed rule, we believe that by displaying
the QRS information (which incorporates member experience data from the
ESS), an Exchange would meet the requirement, during the initial years
of implementation, of displaying the ESS information and satisfy the
standards outlined in 45 CFR 155.205(b)(1)(iv) and 45 CFR 155.1405.
Therefore, State Exchanges will have the flexibility, in the initial
years, to decide whether to display the full ESS results, as calculated
by HHS. In the initial years, we believe that display of ESS results
should align with the QRS and be presented at the product-level. We
anticipate using the metal level data, as reported to HHS, to inform
ESS implementation in future years and will re-examine the possibility
of displaying the ESS results at a more granular level following an
analysis of the 2015 beta test results. We believe that the ESS will
provide valuable information regarding QHPs offered on Exchanges to
consumers since it is largely based on the industry standard
CAHPS[supreg] 5.0 Health Plan Survey that assesses commercial and
Medicaid health plans. In addition, we are considering different ways
to make QHP quality data, including ESS results, publicly available and
accessible to consumers in a meaningful way.
Comment: A few commenters urged HHS to require State Exchanges to
have a plan preview period for review of the ESS results. Some
commenters requested that HHS provide access to full ESS results to
issuers during a plan preview period, similar to QRS measure data. One
commenter urged HHS to offer a three month plan preview period for QRS
and ESS results at a different time than review of quality ratings for
Medicare Advantage plans.
Response: We appreciate the comments in support of HHS imposing a
requirement on State Exchanges to have a plan preview period for review
of the QRS and ESS results and may consider adopting this approach in
future rulemaking. We note that some State Exchanges already have
instituted a plan preview process for issuers to have the opportunity
to review and correct data provided for display on Exchange Web sites.
HHS also intends to host a plan preview period of QRS and ESS data for
all QHP issuers participating in all Exchanges. We intend to balance
alignment of data collection, submission, and plan preview timeframes
for the QRS and ESS with existing processes, with the goal of minimal
burden to issuers and State Exchanges.
Summary of Regulatory Changes
We are finalizing this provision as proposed.
H. Part 156--Health Insurance Issuer Standards Under the Affordable
Care Act, Including Standards Related to Exchanges
1. Subpart B--Essential Health Benefits Package
a. Prescription Drug Benefits (Sec. 156.122)
Section 156.122(c) requires issuers that provide EHB to have
procedures in place that allow an enrollee to request and gain access
to clinically appropriate drugs not covered by the plan. In the
proposed rule, we sought comment on amending the sought comment on
amending the formulary exceptions standards under Sec. 156.122(c) to
require that these processes can be expedited when necessary based on
exigent circumstances, such as when an enrollee is suffering from a
serious health condition or an enrollee is in a current course of
treatment using a non-formulary drug. We considered, for example,
whether issuers should be required to render decisions regarding
formulary exceptions requests within 24 hours following the issuers'
receipt of the exceptions requests, as suggested in the ``2014 Letter
to Issuers on Federally-facilitated and State Partnership Exchanges''
(2014 Letter to Issuers).\31\ As clarification, the prescription drug
standard in Sec. 156.122(a)(1) was not intended to discourage issuers
from offering clinically appropriate drugs to enrollees, including
combination drugs. We sought comment on what specific standards would
be appropriate for defining this expedited exceptions process, and on
all other aspects of this proposal.
---------------------------------------------------------------------------
\31\ See Appendix C of the 2014 Letter to Issuers on Federally-
facilitated and State Partnership Exchanges (April 5, 2013).
Available at: http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2014_letter_to_issuers_04052013.pdf.
---------------------------------------------------------------------------
Comment: Some commenters supported the proposal to add additional
parameters in regulation for the exceptions process and had
recommendations regarding the parameters, including the timing of the
reviews and the need for expedited reviews due to exigent
circumstances. Many commenters supported a general 72-hour review
timeframe and a 24-hour review timeframe due to exigency when the life
or immediate health of the insured is at stake. Several of these
commenters recommended other standards in use today, such as the
standards in the Medicare Part D program or Department of Labor
standards for coverage determinations, and supported greater
uniformity. Of those commenters who supported
[[Page 30312]]
greater uniformity, the majority of commenters favored a process
similar to that in Medicare Part D. Conversely, some commenters did not
support any additional regulatory standards regarding the exceptions
process. These commenters cited the timing of the rulemaking, potential
for conflicting State law, desire for flexibility in prescription drug
management practices, and desire for a better understanding of drug
access issues.
Response: We have heard from several stakeholders about enrollee
difficulty in accessing, understanding, and using issuers' exception
processes under Sec. 156.122(c), since there is currently no
requirement for uniformity across plans. Based on comments regarding
the need for a uniform standard, we are finalizing standards for a
health plan's exceptions process that includes a process for exigent
circumstances. Specifically, we are modifying Sec. 156.122(c) to
include a policy that allows an enrollee (or enrollee's designee) or
the enrollee's prescribing physician (or other prescriber) to request
an expedited exceptions process based on exigent circumstances that are
defined as when an enrollee is suffering from a health condition that
may seriously jeopardize the enrollee's life, health, or ability to
regain maximum function or when an enrollee is undergoing a current
course of treatment using a non-formulary drug. We are also finalizing
a requirement that issuers must provide a decision on an exception
request based on exigent circumstances and notify the enrollee (and the
prescribing physician or other prescriber as appropriate) of the
determination no later than 24 hours after receiving the request. We
believe that this policy will better ensure enrollee access to critical
medications in a timely manner. These provisions are effective for the
2015 plan year.
Comment: Commenters asked for clarification on operational
considerations for implementing any specific exceptions process
requirements, including a definition of ``exigent,'' when any
timeframes begin, how long the enrollee has access to the medication if
granted an exception, and if the enrollee is required to have access to
the drug throughout the review processes.
Response: The timeframe for expedited (24-hour) review begins when
the issuer or its designee receives an exception request based on
exigent circumstances. An enrollee or the enrollee's prescribing
physician (or other prescriber) should strive to submit a complete
request; however, issuers should not fail to commence review if they
have not yet received information that is largely procedural but not
necessary to begin review. Further, issuers should not request
irrelevant or overly burdensome information.
We believe an exigency exists when an enrollee is suffering from a
health condition that may seriously jeopardize the enrollee's life,
health, or ability to regain maximum function or when an enrollee is
undergoing a current course of treatment using a non-formulary drug.
Either the enrollee (or enrollee's designee) or prescribing physician
(or other prescribing provider as appropriate) may submit the request
for an expedited review based on exigent circumstances. Issuers must be
equipped to intake these requests in writing, electronically, and
telephonically.
As part of the request for an expedited review based on exigent
circumstances, the prescribing physician or other prescriber should
support the request by including an oral or written statement that (1)
an exigency exists and the basis for the exigency (that is, the harm
that could reasonably come to the enrollee if the requested drug were
not provided within the timeframes specified by the issuer's standard
drug exceptions process), and (2) a justification supporting the need
for the non-formulary drug to treat the enrollee's condition, including
a statement that all covered formulary drugs on any tier will be or
have been ineffective, would not be as effective as the non-formulary
drug, or would have adverse effects.
Following a favorable decision on the expedited request, the
enrollee must be provided access to the prescribed drug without
unreasonable delay. Therefore, issuers need to be prepared to
communicate rapidly with pharmacies and pharmacy benefit managers, as
applicable. At a minimum, we expect issuers to update certificates of
coverage to reflect the availability of this process and to be able to
provide instruction to enrollees or their designees and providers or
their designees regarding how to use the process. While these review
standards are specific to the expedited review process, we encourage
issuers to have a similar type of review process in place for their
non-expedited review under Sec. 156.122(c).
While some commenters recommended that issuers be required to
provide coverage of the drug in question pending the outcome of the
expedited request, we are also cognizant that some commenters opposed
the proposal altogether and that we are finalizing an expedited
timeframe for coverage determination under this process due to exigency
as no more than 24 hours. Therefore, while we encourage issuers to
provide the drug pending the outcome of the exceptions request, we are
not requiring it at this time.
We are also concerned about enrollees having to continue to make
requests under Sec. 156.122(c) throughout the plan year to access the
same clinically appropriate drug not on the plan's formulary, whether
for each refill or otherwise, and for exceptions granted pursuant to
the exigent circumstance exceptions process, issuers must make the drug
available to the enrollee for the duration of the exigency. We will
monitor this issue to consider whether we should propose additional
standards through rulemaking.
Comment: Some commenters requested clarification as to whether
drugs accessed through the exceptions process under Sec. 156.122(c)
should count towards the plan's annual limit on cost sharing as
established under Sec. 156.130(a), and other commenters noted concerns
about cost-sharing and tiering for drugs accessed through the
exceptions process. Other commenters commented on a variety of other
issues related to the EHB prescription drug policy that were not
mentioned in the proposed rule.
Response: Because these issues are not specifically related to the
exigent circumstance exceptions process standards for Sec. 156.122(c)
and the preamble to the proposed rule, we consider them to be outside
the scope of the rulemaking but will take them under consideration for
future rulemaking.
Comment: Commenters noted that there is no requirement to cover
combination drugs considered first line therapy, but other commenters
supported efforts to better ensure access to combination drugs, as well
as requested requirements related to new drugs. Some commenters
requested clarification that combination drugs do not have any special
regulatory status in plans that must comply with EHB standards.
Response: The requirements at Sec. 156.122(a)(1) were intended to
be the minimum standard for an issuer providing EHB. The intention of
the exceptions process at Sec. 156.122(c) is for enrollees to request
and gain access to clinically appropriate drugs that are not on the
plan's formulary, which could include combination drugs considered
first line therapies and new drugs, particularly when these drugs are
supported by sound science and widely accepted guidelines. While there
is no mandate that a health plan cover these drugs under Sec.
156.122(a)(1), in absence of coverage under Sec. 156.122(a)(1),
combination drugs or new drugs may be
[[Page 30313]]
determined to be clinically appropriate for an enrollee under Sec.
156.122(c). We do not intend for this policy to create any special
regulatory status for combination drugs.
Comment: Some commenters recommended that HHS use its enforcement
authority for non-compliance with the exceptions process. Some
commenters also recommended that HHS collect tracking data on the use
of the exceptions process and provide assistance to enrollees who were
denied coverage through the exceptions process.
Response: Because States generally are the primary enforcers of the
EHB prescription drug policy, we are not collecting nationwide data on
the use of the exceptions process. Enrollees who are having difficulty
accessing a health plan's exceptions process should first contact the
issuer and then contact the State's Department of Insurance if
necessary.
Summary of Regulatory Changes
Based on comments received, we are finalizing revisions to Sec.
156.122(c) to require that a health plan's procedures include an
expedited exceptions process based on exigent circumstances that is
defined as when an enrollee is suffering from a health condition that
may seriously jeopardize the enrollee's life, health, or ability to
regain maximum function or when an enrollee is undergoing a current
course of treatment using a non-formulary drug and that the health plan
must make its coverage determination on such requests within no more
than 24 hours after receiving them and continue to provide the drug for
the duration of the exigency.
b. Cost-Sharing Requirements (Sec. 156.130)
Under Sec. 156.130(a), cost sharing for 2014 for self-only
coverage may not exceed the annual dollar limit described in section
223(c)(2)(A)(ii)(I) of the Code. The proposed rule also provided that
under Sec. 156.130(b), for a plan year beginning in calendar year
2014, the annual deductible for a health plan in the small group market
for self-only coverage could not exceed $2,000. However, Sec.
156.130(b) is being removed from the regulation text to comply with
Public Law 113-93, which eliminated the limits on deductibles for plans
in the small group market.
For 2015 and later years, the annual limitation on cost sharing is
to be increased by an amount equal to the product of the annual dollar
amount described in section 223(c)(2)(A)(ii)(I) of the Code and the
premium adjustment percentage established pursuant to paragraph (e) of
that section. (The limitation for other than self-only coverage is
twice the limitation for self-only coverage.) Under Sec. 156.130(d),
any increase in these annual limits that does not result in a multiple
of $50 is to be rounded to the next lowest multiple of 50 dollars.
Section 156.130(e) provides that the premium adjustment percentage
is the percentage (if any) by which the average per capita premium for
health insurance coverage for the preceding calendar year exceeds such
average per capita premium for health insurance for 2013, and that this
percentage will be published annually in the HHS notice of benefit and
payment parameters. The 2015 Payment Notice established our methodology
for calculating the premium adjustment percentage.
In calculating limitations on cost sharing and small group
deductible in the proposed 2015 Payment Notice, we rounded these
limitations up to the next lowest multiple of $50. However, we
subsequently learned that the IRS convention for interpreting similar
language for a number of longstanding tax parameters--such as indexing
methodologies for the alternative minimum tax and the standard
deduction--is to round down to the nearest applicable multiple. For
example, the Department of the Treasury, in a rule on how employers
should calculate average annual full-time-equivalent wages for purposes
of the small employer health insurance tax credit, provides that if the
result is not a multiple of $1,000, employers should round the result
to the next lowest multiple of $1,000.\32\
---------------------------------------------------------------------------
\32\ See 26 CFR 1.45R-2(f)(1).
---------------------------------------------------------------------------
As a result, we proposed to align our rounding rules with those
used by the Department of the Treasury and the Internal Revenue
Service, by amending Sec. 156.130(d) to specify that when indexing the
annual limitation on cost sharing and the annual limitation on small
group deductibles for years after 2014, we will round to the multiple
of 50 dollars that is lower than the number calculated by the formula.
Under the proposed amendment, using the 2015 premium adjustment
percentage of 4.213431463 percent we established in the 2015 Payment
Notice and the 2014 maximum annual limitation on cost sharing of $6,350
for self-only coverage, which was published by the IRS on May 2,
2013,\33\ the 2015 maximum annual limitation on cost sharing would be
$6,600 for self-only coverage and $13,200 for other than self-only
coverage.
---------------------------------------------------------------------------
\33\ See http://www.irs.gov/pub/irs-drop/rp-13-25.pdf.
---------------------------------------------------------------------------
Similarly, under the proposed amendment to Sec. 156.130(d), we
applied the premium adjustment percentage for 2015 to calculate the
annual limit on deductibles for the small group market for 2015.
However, after the proposed rule was published, on April 1, 2014, the
President signed into law Protecting Access to Medicare Act for 2014,
which includes a provision that eliminates the annual limitation on
deductibles for plans in the small group market. Therefore, there is no
annual limitation on deductibles for small group plans, and the premium
adjustment percentage is no longer applicable.
Comment: A number of commenters supported our proposal to round the
annual limitation on cost sharing down to a lower multiple of $50, to
be consistent with the practice at the Department of the Treasury. A
few commenters requested that HHS use this final rule to amend the
regulation to reflect new law, which eliminates the annual limit on
deductibles for small group plans.
Response: We agree with the comments and are removing references to
an annual limit on deductibles for plans in the small group market from
our regulations. We also note that issuers do not need to make any
changes to their 2014 plan cost-sharing structures as a result of this
change.
Summary of Regulatory Changes
We are finalizing our proposal regarding rounding as proposed, and
we are removing from our regulations references to the annual limit on
deductibles for plans in the small group market under Sec. 156.130(b)
from Sec. 156.130(c) and (d), and are removing Sec. 156.130(b). The
2015 maximum annual limitation on cost sharing is $6,600 for self-only
coverage and $13,200 for other than self-only coverage.
2. Subpart C--General Functions of an Exchange
a. QHP Issuer Participation Standards (Sec. 156.200)
In Sec. 156.200(b)(5), we proposed technical amendments to clarify
that implementing and reporting for the QRS and implementing a quality
improvement strategy are conditions of participation in an Exchange.
Specifically, we proposed to include a reference to sections 1311(c)(3)
and (c)(1)(E) of the Affordable Care Act to correctly align with other
quality standards listed as part of QHP certification standards,
including the ESS.
[[Page 30314]]
We also proposed to amend Sec. 156.200 to add paragraph (h) to
require that, in order to receive QHP certification, the offering
issuer attest that, subsequent to receiving such certification, it will
comply with all operational requirements contained in Part 156,
Subparts D, E, H, K, L, and M. We proposed to add paragraph (h) to
ensure that issuers seeking QHP certification understand and have fully
committed to compliance with all operational requirements.
Summary of Regulatory Changes
We received comments in support of the proposed amendments and
therefore are finalizing Sec. 156.200(b)(5) and (h) as proposed.
b. Enrollment Process for Qualified Individuals (Sec. 156.265)
We refer readers to the preamble in connection with Sec. 155.400
of this final rule for a discussion of comments on Sec. 156.265.
3. Subpart G--Minimum Essential Coverage
a. Other Coverage That Qualifies as Minimum Essential Coverage (Sec.
156.602)
The Affordable Care Act added section 5000A of the Code, which
requires all non-exempt individuals to maintain minimum essential
coverage or pay the individual shared responsibility payment. Section
5000A(f) of the Code defines minimum essential coverage as any of the
following: (1) Coverage under a specified government sponsored program;
(2) coverage under an eligible employer-sponsored plan; (3) coverage
under a health plan offered in the individual market within a State;
(4) coverage under a grandfathered health plan. In addition, section
5000A(f)(1)(E) of the Code directs the Secretary, in coordination with
the Secretary of the Treasury, to designate other health benefits
coverage as minimum essential coverage.
The Treasury Department and the IRS published final regulations
under Code section 5000A on August 30, 2013 (78 FR 53646).\34\ On July
1, 2013, HHS published final regulations implementing certain functions
of an Exchange for determining eligibility for and granting certain
exemptions from the individual shared responsibility payment (78 FR
39494).\35\ The HHS final regulations, codified in 45 CFR 156.602 and
156.604, also designate certain types of coverage as minimum essential
coverage, and outline substantive and procedural requirements for other
types of coverage to apply for recognition as minimum essential
coverage.
---------------------------------------------------------------------------
\34\ Shared Responsibility Payment for Not Maintaining Minimum
Essential Coverage, 78 FR 53646 (August 30, 2013).
\35\ Patient Protection and Affordable Care Act; Exchange
Functions: Eligibility for Exemptions; Miscellaneous Minimum
Essential Coverage Provisions, 78 FR 39494 (July 1, 2013).
---------------------------------------------------------------------------
We proposed to amend Sec. 156.602 by adding paragraph (e) to
designate certain types of foreign group health coverage for
expatriates as minimum essential coverage. These proposed provisions
would codify previous CMS guidance published on October 31, 2013,\36\
with some additional detail.
---------------------------------------------------------------------------
\36\ See CCIIO Sub-Regulatory Guidance: Process for Obtaining
Recognition as Minimum Essential Coverage (October 31, 2013).
Available at: http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/mec-guidance-10-31-2013.pdf.
---------------------------------------------------------------------------
We are not finalizing this section of the proposed rule at this
time. We will consider finalizing the proposal in the future, and will
address comments received on the proposal at that time. In the interim,
stakeholders and others can rely on the published October 31, 2013
guidance.
Summary of Regulatory Changes
We are not finalizing the provision proposed in Sec. 156.602(e) of
the proposed rule at this time.
b. Requirements for Recognition as Minimum Essential Coverage for Types
of Coverage Not Otherwise Designated Minimum Essential Coverage in the
Statute or This Subpart (Sec. 156.604)
We proposed a technical correction in Sec. 156.604 to clarify that
health insurance issuers and plan administrators, in addition to
sponsors of coverage and government agencies, may apply to HHS on
behalf of a plan or coverage for recognition as minimum essential
coverage.
Summary of Regulatory Changes
We received no comments on this proposal and are finalizing the
provision as proposed.
4. Subpart I--Enforcement Remedies in Federally-Facilitated Exchanges
a. Available Remedies; Scope (Sec. 156.800)
In Sec. 156.800(d), we proposed that HHS may consult and share
information about QHP issuers with other Federal and State regulatory
and enforcement entities to the extent that the consultation and
information is necessary for HHS to determine whether an enforcement
remedy under subpart I is appropriate.
Comment: We received multiple comments in support of our proposed
regulation, including comments that requested we consider expanding
this authority to include sharing information about QHP issuers to
other State and Federal regulatory and enforcement entities that may
need this information for their oversight purposes.
Response: Because we intend to share information about QHP issuers
used for oversight and enforcement activities with other State and
Federal regulatory and enforcement entities, and such entities have
legitimate oversight and enforcement purposes for using such
information, we agree that it is not necessary or appropriate for us to
limit the ways in which such entities could use the information we
would be sharing in a manner that would prohibit legitimate oversight
and enforcement activities. We are finalizing the regulation
accordingly.
Summary of Regulatory Changes
We are finalizing Sec. 156.800(d) as proposed, with the
modification of removing ``to the extent that the consultation and
information is necessary for HHS to determine whether an enforcement
remedy under subpart I is appropriate'' and replacing it with ``to the
extent that the consultation and information is necessary for purposes
of State or Federal oversight activities.''
b. Bases and Process for Imposing Civil Money Penalties in Federally-
Facilitated Exchanges (Sec. 156.805)
We did not receive comments on the proposed addition of Sec.
156.805(d)(3) and are finalizing the provision as proposed.
c. Notice of Non-Compliance (Sec. 156.806)
We proposed adding Sec. 156.806 to explain that HHS will provide a
written notice to the issuer, to include a description of the potential
violation, a 30-day period for the QHP issuer to respond and to provide
additional information to refute an alleged violation.
Comment: Some commenters requested that we permit extensions to the
30-day period for QHP issuers to respond and to provide additional
information to refute an alleged violation. One of these commenters
also requested that we allow QHP issuers to have 60 days, rather than
the proposed 30 days, to respond and provide additional information.
Response: We believe that 30 days provides QHP issuers with
sufficient opportunity to respond and provide
[[Page 30315]]
additional information to refute an alleged violation. Additionally, a
QHP issuer that fails to act within the 30-day period will have an
opportunity to request a hearing under Subpart J of 45 CFR Part 156.
The QHP issuer will have the opportunity present its arguments and
supporting documents at the time of the hearing.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.806 of the
proposed rule without modification.
d. Bases and Process for Decertification of a QHP Offered by an Issuer
Through a Federally-Facilitated Exchange (Sec. 156.810)
In Sec. 156.810, we proposed several modifications to better align
our bases for decertification, including bases for expedited
decertifications, with regulatory provisions which have been finalized
and to clarify certain regulatory text. We proposed rewording paragraph
(a)(6) to clarify that the certification criteria means the standards
under subpart C of this part. We also proposed in Sec. 156.810(d) that
the FFE will be able to pursue an expedited decertification for
violation of paragraph (a)(6). Additionally, we proposed clarifying in
paragraph (a)(9) that violation of State or Federal law relating to
internal claims and appeals and external review processes are bases for
decertification under this paragraph. We proposed aligning the
standards set forth under subparts K and M with the bases for
decertification. We proposed adding a paragraph (12) to reflect that
HHS may decertify a QHP if the QHP issuer substantially fails to meet
the requirements related to the cases forwarded to QHP issuers under
Subpart K, and adding a paragraph (13) to reflect that HHS may
decertify a QHP if the QHP issuer substantially fails to meet the
requirements in Subpart M.
Comment: We received general comments supporting our modifications
to Sec. 156.810, including the inclusion of Sec. 156.810(a)(6) as a
basis for expedited decertification and clarification that HHS may
pursue decertifications for violations of applicable standards under
Subpart C of 45 CFR Part 156. In addition, we received comments
requesting that HHS not include violations of the provisions set forth
under Subparts K and M as bases for decertification because the
commenters indicated that not all of the provisions proposed under
these Subparts have been finalized. One of the commenters requested
that we extend the good faith policy adopted for 2014 until all
provisions under these Subparts have been finalized.
Response: We recognize that there may be instances in which new
regulations proposed under Subparts K or M have not yet been finalized.
In such instances, HHS would not enforce these regulations until they
have been finalized absent a separate authority to enforce these
regulations. In the meantime, there are provisions set forth under
Subparts K and M that have been finalized and are enforceable, and
accordingly, we believe that our proposed modification to include those
provisions in Sec. 156.810 is appropriate.\37\ In the 2015 Letter to
Issuers, we stated that we did not intend to extend the 2014 good faith
compliance safe harbor.
---------------------------------------------------------------------------
\37\ Patient Protection and Affordable Care Act; Program
Integrity: Exchange, SHOP, and Eligibility Appeals, 78 FR 54070
(August 30, 2013) (to be codified at 45 CFR parts 147, 153, 155, and
156).
---------------------------------------------------------------------------
Comment: One commenter requested that we expressly limit expedited
decertifications to violations that put QHP enrollees' ability to
access necessary medical items or services at risk or substantially
compromise the operation of the Exchange.
Response: We believe there may a few rare situations in which
expedited decertifications may be necessary, but which may not be
resulting from violations that put QHP enrollees' ability to access
necessary medical items or services at risk or substantially compromise
the operation of the Exchange. For example, if a QHP issuer loses its
ability offer a QHP based on an applicable State law or State action,
HHS would need a mechanism to remove the QHP from the Exchange
expeditiously. Recognizing that such possibility should be rare, but
possible, we decline to limit expedited decertifications as requested,
and finalize this section as proposed.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.810 of the
proposed rule, correcting only the numbering of the added provisions in
paragraph (a).
5. Subpart L--Quality Standards
a. Establishment of Standards for HHS-Approved Enrollee Satisfaction
Survey Vendors for Use by QHP Issuers in Exchanges (Sec. 156.1105)
We proposed to amend Sec. 156.1105 to include monitoring and
appeals processes for HHS-approved ESS vendors that would apply for
plan years beginning 2015. In paragraph (d), we proposed that HHS will
monitor HHS-approved ESS vendors to ensure ongoing compliance with the
application and approval standards in paragraphs (a) and (b). Further,
we proposed that if HHS determines that an approved vendor is non-
compliant with the standards outlined in paragraph (b), they may be
removed from the approved list described in paragraph (c) and/or the
submitted survey results may be ineligible to be included for ESS
results. Lastly, we proposed in paragraph (e) an appeals process for an
ESS vendor that submits an application to HHS for approval, as
described in paragraph (a), and is not approved. Specifically, we
proposed that an ESS vendor may appeal HHS's decision by notifying HHS
in writing within 15 days of the notification of not being approved by
HHS and submitting additional documentation demonstrating how the
vendor meets the standards in paragraph (b). HHS would review the
submitted documentation and make a final approval determination within
30 days from receipt of the additional documentation. An ESS vendor
that becomes approved via the appeals process would be included in the
approved list, described in paragraph (c).
Comment: Many commenters supported the provisions in Sec. 156.1105
relating to the monitoring and appeals processes for ESS vendors.
Several commenters requested clarification how, if HHS determines
survey results ineligible to be included in ESS results because of a
non-compliant vendor, the affected QHP's global quality rating would be
calculated and displayed. Commenters urged HHS to minimize such
circumstances when results would not be published and to have adequate
disclaimers explaining the reason for ESS results that are unavailable.
A few commenters urged HHS to add a hold harmless provision to mitigate
the harm on compliant QHPs who should not be penalized due to vendor
behavior and to have alternative processes in such circumstances such
as permit use of prior year's scores.
Response: We clarify that, if HHS determines an ESS vendor to be
non-compliant with the required standards and its survey results are
deemed ineligible to be included in ESS results, HHS would designate
those ESS measures that are included in the QRS as not being available
for the current reporting year. Similar to the business relationships
that issuers have with survey vendors to administer other
CAHPS[supreg]-like surveys for other products (for example, Medicare
Advantage), we expect issuers to work closely with their contracted
vendors to mitigate harm on compliant QHPs. In such circumstances, we
will work with affected QHP issuers
[[Page 30316]]
and ESS vendors and consider approaches so that having unavailable ESS
data is minimized (that is, opportunity to re-administer the survey
using a compliant vendor). These standards and processes have been
informed by our experience with the Medicare CAHPS[supreg] survey
vendor program, under which it has been a rare occurrence for a vendor
to be found non-complaint and its survey results deemed ineligible. We
maintain and finalize the standards in 156.1105 as proposed.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.1105 of the
proposed rule without modification.
b. Quality Rating System (Sec. 156.1120)
In Sec. 156.1120, we proposed standards for QHP issuers offering
coverage on Exchanges to collect and report the necessary information
to implement the QRS pursuant to section 1311(c)(3) of the Affordable
Care Act. In paragraph (a), we proposed data submission requirements
for a QHP issuer for the information necessary to calculate the quality
ratings for coverage offered on Exchanges under the QRS, and in Sec.
156.1120(b), we proposed to direct a QHP issuer to annually submit data
necessary to calculate the QHP's quality ratings to HHS and the
Exchange, on a timeline and in a standardized form and manner specified
by HHS. In paragraph (a)(1), we proposed that a QHP issuer must submit
data to calculate quality ratings for each QHP that has been offered in
an Exchange for at least one year. In paragraph (a)(2), we proposed to
direct a QHP issuer to submit data that has been validated in a form
and manner specified by HHS.
In paragraph (a)(3), we proposed that a QHP issuer must include
information in its data submission only for those QHP enrollees at the
reporting level specified by HHS that is necessary to calculate the
quality ratings.
We noted that multi-State plans, as defined in Sec. 155.1000(a),
are subject to reporting QRS data for calculation of quality ratings by
HHS, as described in paragraph (a). The U.S. Office of Personnel
Management (OPM) will provide guidance on quality reporting to issuers
with whom it holds multi-State plan contracts.
Lastly, in paragraph (c), we proposed that an issuer may reference
its QHP's quality rating information in its marketing materials, in a
manner specified by HHS. Similarly, in the subsequent section 156.1125
regarding the ESS, we proposed a similar marketing standard in Sec.
156.1125(c) that a QHP issuer may reference the ESS results for its
QHPs in its marketing materials, in a manner specified by HHS.
Comment: Many commenters expressed concern that the proposed data
validation process provides an unfair advantage to NCQA, would lead to
NCQA having a monopoly and eliminate competition among accrediting
entities. Commenters also noted that the proposed approach could
disadvantage those issuers seeking accreditation from the other two
recognized accrediting entities. Some commenters stated that some
issuers may incur additional fees for services already purchased by
URAC which may increase consumer premiums and affect their ability to
continue participating in Exchanges.
Response: We acknowledge that in the initial years of QRS
implementation, some QHP issuers may incur additional costs and burden
for data validation since the QRS measure stewards may not be aligned
with their chosen accrediting entity. However, we believe that the
majority of QHP issuers offering coverage through the Exchanges in the
initial years already have established relationships with HEDIS
(Healthcare Effectiveness Data and Information Set) compliance auditors
such that there should be minimal overall costs and burdens to the
health care system. We refer commenters to the relevant estimated
burden and costs in the Marketplace Quality Standards PRA package that
is associated with the NPRM and available at http://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html. We believe that aligning QRS measure validation
requirements with the existing processes of the measure stewards
provides consistency to ensure that valid and appropriate data are used
to calculate quality rating information for public reporting. HHS
anticipates refining the QRS over time as we gain experience about
measures that are the most appropriate to the Exchange and approaches
to quality measurement and health plan reporting evolve. As the QRS
matures, we intend to consider changes to measures as well as ways to
minimize the burden of QRS data collection, validation and submission.
In addition, we are exploring ways to further streamline and align the
accreditation standards with the quality reporting requirements to
reduce duplicative and overlapping requirements.
Comment: Several commenters requested clarification of the data
validation process and suggested alignment and coordination with the
measure stewards so that there would not be multiple, independent audit
requirements. They did not support having independent third party
validation and monitoring by HHS because of concerns of duplicative
requirements and cost. One commenter expressed concern regarding
combining the HEDIS and CAHPS[supreg] validation processes causing
issues with coordination with vendors and unnecessary burden.
Response: We clarify that we intend to direct QHP issuers to follow
the data validation process of the QRS measure stewards. We do not
intend to combine data validation processes for HEDIS and CAHPS[supreg]
or ESS measure data; however, we clarify that, consistent with Sec.
156.1125(b)(2), the survey sample data that the QHP issuer will need to
provide to their contracted ESS vendor would need to be validated in a
form and manner specified by HHS. We anticipate directing QHP issuers
to use an independent third party to perform this validation. We intend
to allow issuers to use the same third party validator used for QRS
measures for validating the ESS survey sample, similar to the HEDIS
CAHPS[supreg] process. We anticipate releasing technical guidance in
2014 to provide further details regarding data validation, finalized
measures and measure specifications. We agree with commenters and
believe that it is important to align and coordinate with existing data
validation and submission requirements.
Comment: Several commenters requested that if HHS uses proprietary
measures related to one accrediting entity, that HHS require that those
data sets and quality measures be made freely available to all QHP
issuers and to recognized accrediting entities to avoid imposing
additional regulatory costs on those issuers seeking accreditation
through the other entities. Some commenters requested consideration of
allowing reporting of either HEDIS or quality measure data from the
other two accrediting entities.
Response: We understand commenters' concerns regarding the need to
make information on the QRS measure data sets available to all QHP
issuers. We intend to provide details including QRS quality measure
specifications (which will include details on the underlying measures
that comprise the QRS) in technical guidance to be posted on an HHS Web
site. Any organization may use the QRS measure specifications to report
its performance without charge, and health plans may share their
results. However, to designate the results as HEDIS data,
[[Page 30317]]
the results must have been audited by an NCQA-Certified HEDIS Auditor.
A successful audit ensures reliability and comparability of results for
measures that are designated as HEDIS. We believe that requiring
submission of a standard set of QRS quality measures, validated in a
consistent manner as specified by the measure stewards, for all QHP
issuers is critical to the goals of the QRS including the ability to
provide reliable, comparable, and uniform quality data to consumers
regardless of the Exchange. In addition, we considered non-HEDIS health
plan quality measures during the measure selection process. However,
based on the measure selection and measure set evaluation criteria,
that were developed using the National Quality Forum (NQF) Measure
Evaluation Criteria and the Measures Application Partnership (MAP)
Measure-Selection Criteria (which factored in importance, performance
gap, reliability and validity, feasibility and alignment) the majority
of proposed measures to be included in the QRS for the initial years
are HEDIS measures. As noted in the proposed rule, after considering
public comments and review of the measures outlined in the November 19,
2013 Federal Register Notice with Comment \38\ on the QRS framework
(QRS Notice), we intend to finalize the quality measures and anticipate
publishing the finalized 2015 QRS measure set in the near future on a
HHS Web site. We anticipate greater availability over time of more
robust, data-driven clinical quality measures specified for health
plans and which provide meaningful information regarding changes in a
patient's health outcome and intend to continue to seek feedback
regarding evolution of the QRS. In addition, we are exploring ways to
further streamline and align the accreditation standards with the
quality reporting requirements to reduce duplication and minimize the
burden of QRS data collection, validation and submission.
---------------------------------------------------------------------------
\38\ Patient Protection and Affordable Care Act; Exchanges and
Qualified Health Plans, Quality Rating System (QRS) Framework,
Measures and Methodology; Notice with Comment, 78 FR 69418 (Nov. 19,
2013).
---------------------------------------------------------------------------
Comment: One commenter requested that the QHP rating information be
accessible in an easy electronic format and that the rating methodology
be released to issuers at the same time as the scores are released to
allow issuers to estimate their own ratings.
Response: We agree and clarify that the QRS and ESS information
will be easy to access in an electronic format. We intend to minimize
burden by providing QRS and ESS information to issuers in an electronic
format such as through Electronic File Transfers so that the vast
majority of stakeholders would be able to easily download and view the
data. Further we clarify that the 2015 beta test QRS scoring
specifications and technical guidance which will include the ESS
scoring methodology, would be released in 2014, in advance of the
release of scores, to provide issuers ample time to estimate ratings if
they so choose.
Comment: Many commenters suggested revisions to the QRS measure
set. Some commenters urged CMS to incorporate all CAHPS[supreg]
measures from the ESS into the QRS and not just a subset.
Response: As we noted earlier in the rule, we appreciate comments
related to the QRS measure set, as well as the ESS measures, and they
will inform future modifications and evolution of Exchange quality
reporting; however, these comments are outside the scope of this
rulemaking.
Comment: Several commenters supported the proposed approach for
product-level reporting for the QRS in the initial years because more
granular reporting would not be feasible due to potential sample size
issues. One commenter urged CMS to clarify what it means by product-
level reporting and to align the level of reporting with the process
used by accreditors. Many commenters recommended collection and
reporting for the QRS at the metal tier level because consumer
experience will be different for plans at different metal levels and
this information is critical for enrollees' ability to make informed
decisions about a particular plan.
Response: Although we acknowledge that consumer experience and
characteristics may be different for QHPs at different metal levels, we
believe that it is necessary, in the initial years of implementation,
to provide a balanced approach regarding the level of data collection
and public display for the QRS and ESS. We believe that there are fewer
potential sample size issues with ESS reporting versus QRS reporting
based on the populations eligible to participate in the ESS (that is,
most measures include the entire enrollee population) and the
limitations of eligible populations for the majority of QRS clinical
quality measures (that is, most measures do not include the entire
patient population, rather a subset of the population for which a
clinical action is being measured). We also believe it is important to
align the initial reporting of QRS information with the product-level
requirements for QHP accreditation requirements. While we are
maintaining the requirement that ESS data be submitted at the metal
tier level, we anticipate aligning the public display of the ESS
results with the QRS at the product-level for consistency across the
quality measures and associated accreditation standards. We will re-
examine the possibility of displaying the ESS results at a more
granular level following an analysis of the 2015 beta test results. HHS
is currently researching implementation of a process to collect data in
a way that would allow us to assess the feasibility of level of
coverage (for example, platinum, gold, silver, bronze, and
catastrophic) reporting for the QRS as Exchanges mature and QHP
enrollment grows. We maintain in the final rule that a QHP issuer must
submit data at the level that will be specified by HHS but reiterate
that the level of data submission may not align with the level of
public reporting during the initial implementation of the QRS and ESS
to provide greater flexibility regarding calculating scores based on
different factors including adequate sample sizes and reliable
measurement data.
Comment: Many commenters urged HHS to review and monitor the
content of marketing materials as part of ongoing compliance reviews.
Some commenters did not support the proposed marketing provision
without accompanying HHS guidelines and a review process for marketing
materials.
Response: We are finalizing the marketing provisions for the QRS
and ESS, in Sec. 156.1120 and Sec. 156.1125 respectively, as
proposed. We believe that it is important to set initial guidelines
regarding referencing the QRS ratings and ESS results in issuer
marketing materials for its respective QHPs and will be issuing future
technical guidance that provides details regarding use and display of
QRS and ESS results in issuer marketing materials. We note that we will
consider effective and streamlined approaches of reviewing marketing
materials as QHP issuer monitoring and oversight activities evolve in
future years. As we stated in the Exchange final rule, States have
significant experience with, and existing infrastructure to support
monitoring and oversight of health plan marketing activities. We
encourage a streamlined approach of incorporating review of a QHP
issuer's marketing materials referencing quality ratings and ESS
results as part of an Exchange's monitoring and oversight activities.
Comment: Some commenters supported the proposal to allow data
collection based on combined populations if the plan offerings are the
[[Page 30318]]
same inside and outside the Exchange to enhance sample size and
reliability of data. Several commenters did not support the proposed
approach because of potential differences that may be reflected in
quality, confusion for consumers and skewed QRS results. One commenter
noted that some issuers may only offer QHPs on the Exchanges and
therefore may not have the ability to combine data with products
offered outside the Exchange. Commenters urged HHS to reconsider the
proposed approach and consider alternatives such as comparison within a
peer group.
Response: We agree with commenters regarding potential differences
in enrollee characteristics of QHPs offered inside and outside the
Exchange that may impact QRS and ESS results. We believe that it is
important for the reliability and validity of the QRS to have adequate
sample sizes and have the appropriate enrollee data to reflect
meaningful information and differences regarding QHP quality to
consumers selecting plans in the Exchange. During the 2015 beta testing
period, we will not use data from QHPs outside the Exchange. We will
assess the impact that this approach has on quality ratings in the beta
test and will consider the feasibility of alternative approaches to
ensure appropriate sample size and reliability of data. We anticipate
issuing future guidance on whether plan offerings outside the Exchange
that would be considered the same as one that is certified as a QHP and
offered through the Exchange, as defined in Sec. 153.500, can be
included in the QRS and ESS.
Comment: Several commenters supported alignment of accreditation
standards with QRS, ESS and QIS reporting. One commenter supported
continued use of HEDIS and CAHPS[supreg] measures to ensure alignment
with accrediting entities.
Response: We agree with commenters and note that to minimize burden
and costs, it is important that alignment of QHP accreditation
standards and quality reporting in the Exchanges be achieved as much as
possible. We are considering updating standards for recognized
accrediting entities and QHP accreditation in the near future and will
solicit comment at that time regarding the potential of deeming QHP
issuers and recognized accrediting entities in compliance with the
accreditation requirements related to clinical quality measures and
patient experience ratings by meeting the ESS and QRS requirements. We
expect to continue use of robust, evidence-based measures including
HEDIS, CAHPS[supreg] and other measures that reflect the National
Quality Strategy priorities.
Comment: Many commenters supported the proposed timeframes of QRS
and ESS implementation including 2015 beta testing and public reporting
during the 2016 open enrollment period for the 2017 coverage year. A
few commenters urged HHS to finalize the QRS measures and measure
specifications to provide to issuers by May 2014 at the latest so that
issuers would have sufficient time to collect and submit data in time
for beta testing. A few commenters expressed concern that consumers
would have to wait until the 2016 open enrollment period to access
quality rating information. And some commenters requested further delay
for implementation because of the disproportionate financial and staff
burden on new and smaller plans.
Response: We believe that the 2015 beta testing and 2016 public
reporting timeframes are appropriate and consistent with QHP issuer
accreditation requirements for the FFE and most State Exchanges to
report clinical quality and CAHPS[supreg] data in 2016. In addition, we
believe the proposed timeframes offer a balanced approach to providing
consumers with meaningful, tested QHP quality information and providing
issuers ample time to prepare for collection and submission of
validated data. The majority of plans already have established
processes and experience for similar, existing quality reporting and we
acknowledge that new and smaller plans may have increased burden;
however, we believe that the phase in implementation of QRS and ESS
beginning in 2015 with beta testing is the appropriate approach. We
anticipate publishing the finalized QRS measure set soon after the
publication of this final rule.
Summary of Regulatory Changes
We are finalizing the proposed provision with the following
modification: In paragraph Sec. 156.1120(a)(3), we replace ``at the
reporting level specified by HHS'' with ``at the level specified by
HHS'' to better distinguish between the level at which collection of
QRS data as well as the level of public display of QRS data that would
be required.
c. Enrollee Satisfaction Survey (Sec. 156.1125)
At Sec. 156.1125(a), we proposed to direct QHP issuers to contract
with an HHS-approved ESS vendor, as identified by Sec. 156.1105, to
administer the ESS of the QHP's enrollees. We also proposed to direct a
QHP issuer to authorize its contracted ESS vendor to report survey
results to HHS and the Exchange on the issuer's behalf. In paragraph
(b), we proposed several data requirements to clarify the standards for
collection and submission of ESS data. At Sec. 156.1125(b)(1), we
proposed to direct a QHP issuer to collect data of eligible enrollees
for each QHP with more than 500 enrollees in the previous year that has
been offered in an Exchange for at least one year following a survey
sampling methodology provided by HHS. In paragraph (b)(2), we proposed
to direct a QHP issuer to submit data, necessary to conduct the ESS,
that has been validated in a form and manner specified by HHS.
In paragraph (b)(3), we proposed to direct a QHP issuer to include
only those QHP enrollees at the reporting level specified by HHS, for
data submitted for the ESS.
In paragraph (d), we proposed to direct a QHP issuer to submit data
necessary to conduct the survey to its contracted ESS vendor on a
timeline and in a form and manner specified by HHS. We stated our
intention to align the timeframes of the proposed reporting
requirements for the ESS and the QRS.
We also noted that Multi-State Plans, as defined in 45 CFR
155.1000(a), are subject to providing the data described in paragraph
(b). The OPM will provide guidance on ESS reporting to issuers with
whom it holds Multi-State Plan contracts.
Comment: The majority of commenters supported the proposed approach
of aligning the ESS with existing CAHPS[supreg] surveys and processes.
Some commenters requested that we leverage the annual, existing
CAHPS[supreg] survey to meet the ESS requirement. One commenter
requested clarification of how the CAHPS[supreg] 5.0 Adult Medicaid
Survey would be modified for the Exchanges.
Response: We have leveraged existing CAHPS[supreg] surveys and
processes in the development of the ESS (or QHP Enrollee Survey). In
addition, we are considering approaches and will seek comment in future
rulemaking for further alignment of QHP issuer accreditation and
quality reporting in the Exchanges, including but not limited to ESS
reporting. We clarify that the QHP Enrollee Survey includes all of the
CAHPS[supreg] Health Plan 5.0 (Adult Medicaid) items with additional
items based on a comprehensive review of the literature and related
surveys, focus groups, stakeholder discussions, and input from a
technical expert panel, as we described in the PRA supporting
statements available under CMS Form
[[Page 30319]]
Number 10488 at http://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html.
Comment: One commenter urged HHS to use the term ``experience'',
rather than ``satisfaction'' when describing the survey because
``experience'' is considered a more objective and relevant source of
data. A few commenters sought clarification regarding enrollee
eligibility for the ESS and the QHP sample size requirements. Two
commenters recommended larger sample sizes to ensure adequate response
rates and to align with commercial CAHPS[supreg] or other satisfaction
surveys.
Response: We have used the term ESS in this rule to mirror the
statutory language of section 1311(c)(4) of the Affordable Care Act.
However, the name of the ESS survey that will be administered to
enrollees is ``QHP Enrollee Experience Survey''. We incorporate the
size requirement in 156.1125(b) to align with the statutory language in
section 1311(c)(4) that requires the development of an ESS to evaluate
enrollee satisfaction with QHPs offered through an Exchange, ``for each
such qualified health plan that had more than 500 enrollees in the
previous year.'' We agree that adequate sample sizes and response rates
are needed for statistically valid measurement rates. For more
information on our approach to adequate sample size and response rates
for the survey, we refer commenters to the PRA supporting statements
available under CMS Form Number 10488 at http://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html.
Comment: A few commenters supported collecting and reporting ESS
measure data at the metal tier level to provide meaningful,
disaggregated information to consumers. However, several commenters
acknowledged that sample sizes could be too small to ensure valid and
reliable measurement, especially in the early years of the Exchanges
and therefore urged HHS to follow the same approach as QRS data
collection, at the product-level.
Response: We believe that, similar to the approach for QRS data
collection and reporting, it is important to have a balanced approach
that will allow for us to provide useful information to consumers while
ensuring that the data is statistically significant and reliable. We
agree with commenters and acknowledge that sample sizes may be too
small to report at the metal-tier level and therefore maintain in the
final rule the intention to publicly display ESS measure data at the
product-level in alignment with the QRS. However, we note that we
believe that there are fewer potential sample size issues with ESS
reporting versus QRS reporting based on the populations eligible to
participate in the ESS. Most measures for the ESS include the entire
enrollee population, while the majority of QRS measures are limited
because they would not extend to the entire patient population. Similar
to the QRS, we clarify that we intend to require QHPs to submit data at
a level specified by HHS that will allow for us to determine the
feasibility of using more granular levels for data reporting and public
display in the future. At this point in time, we anticipate requiring
the submission of ESS data at the more granular metal tier level and
will be issuing technical guidance in the near future that provides
further details regarding the ESS data reporting process.
Marketplace Survey
Sections 1313 and 1321(a) of the Affordable Care Act provide the
Secretary with general authority to establish standards and regulations
related to Exchanges, QHPs, and other components of title I of the
Affordable Care Act. In Sec. 155.1200(b)(3), we direct State Exchanges
to submit performance monitoring data on an annual basis, which would
include information on consumer satisfaction. Pursuant to this legal
authority, HHS proposed a consumer experience survey, or the
Marketplace survey, to assess consumer experience with the Exchanges
\39\ including obtaining information regarding aspects such as the
application and eligibility determination process for Medicaid/
Children's Health Insurance Program (CHIP) coverage and the Insurance
Affordability Programs.
---------------------------------------------------------------------------
\39\ Agency Information Collection Activities: Health Insurance
Marketplace Consumer Experience Surveys: Enrollee Satisfaction
Survey and Marketplace Survey Data Collection; Notice, 78 FR 65658
(Nov. 1, 2013).
---------------------------------------------------------------------------
Comment: Many commenters supported establishing the Marketplace
survey and directing State Exchanges to submit survey sampling data to
HHS. Commenters also urged HHS to provide full access to the public of
survey results, similar to the ESS. A few commenters recommended
inclusion of Medicaid eligibles and data based on various demographics
such as gender, language preference, and disability status.
Response: We maintain that the purpose of the Marketplace survey is
to inform the quality improvement of Exchanges; we, therefore, intend
to provide Exchanges with the results of the Marketplace survey and
will consider ways to make this information available to the public. We
appreciate the comments regarding suggestions for sampling data
criteria which will inform future years of Marketplace survey
implementation and may consider directing State Exchanges to submit
survey sampling data to HHS. For more information on the Marketplace
Survey, we refer commenters to the PRA supporting statements available
under the CMS Form Number 10488 at http://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html.
Summary of Regulatory Changes
We are finalizing the proposals for ESS and Marketplace Surveys
with the following modification: In paragraph Sec. 156.1125(b)(3), we
replace ``at the reporting level specified by HHS'' with ``at the level
specified by HHS'' to better distinguish between the level at which
collection and submission of ESS data by QHP issuers that would be
required, as opposed to the level of public display or reporting of ESS
data by Exchanges that would be required.
I. Part 158--Issuer Use of Premium Revenue: Reporting and Rebate
Requirements
1. Subpart A--Disclosure and Reporting
a. ICD-10 Conversion Expenses (Sec. 158.150)
In September 2012, the Secretary changed the date on which issuers
are required to adopt ICD-10 as the standard medical code set from
October 1, 2013 to October 1, 2014. Subsequently, the Protecting Access
to Medicare Act of 2014 (Pub. L. 113-93), enacted on April 1, 2014,
mandated that this date be further delayed to October 1, 2015. Because
the ICD-10 implementation date has been postponed past 2013, issuers
may incur conversion costs beyond 2013 that would otherwise have been
incurred only in 2012 and 2013. Therefore, in the proposed rule, we
proposed to permit issuers to continue including their ICD-10
conversion costs as activities that improve health care quality (QIA),
up to 0.3 percent of an issuer's earned premium in the relevant State
and market, through the MLR reporting year in which ICD-10
implementation is required by the Secretary.
Comment: We received several comments supporting inclusion of ICD-
10 conversion costs in QIA past 2013, as well as several comments
opposing inclusion of these costs past 2014. Some commenters supporting
the extension
[[Page 30320]]
also requested that the 0.3 percent cap be raised to 0.4 percent.
Response: Because data continue to show that ICD-10 expenses have
not, on average, exceeded 0.3 percent of premium, we are not raising
the cap to 0.4 percent. In addition, because we recognize that the
recent Congressional delay of the ICD-10 implementation date to 2015
may cause issuers to continue to incur implementation costs, such as
concurrently maintaining ICD-9 and ICD-10 systems and performing
additional testing, we are continuing to allow inclusion of ICD-10
conversion costs in QIA through the MLR reporting year in which ICD-10
implementation is required by the Secretary.
Summary of Regulatory Changes
We are finalizing the changes to Sec. 158.150 as proposed.
2. Subpart B--Calculating and Providing the Rebate
a. MLR and Rebate Calculations in States with Merged Individual and
Small Group Markets (Sec. Sec. 158.211, 158.220, 158.231)
In the proposed rule, we proposed to amend Sec. 158.220(a) and
Sec. 158.231(a) to specify that the individual and small group market
data must always be aggregated if a State requires these two markets to
be merged, and to amend Sec. 158.211 to clarify that if a State
establishes a higher MLR standard for the merged market, this higher
standard must be used to calculate any rebates for the merged market.
Comment: We received one comment supporting the requirement to use
the higher State MLR standards in calculating rebates. We received no
comments specific to the proposed data aggregation standard in States
that require the individual and small group markets to be merged.
Response: We appreciate the comment regarding the higher State MLR
standards.
Summary of Regulatory Changes
We are finalizing the amendments proposed in Sec. Sec. 158.211,
158.220, and 158.231 of the proposed rule without modification.
b. Accounting for Special Circumstances (Sec. 158.221)
On November 14, 2013, the Federal government announced a policy
under which, if certain conditions were met, it would decline to
enforce certain specified 2014 market reforms against certain non-
grandfathered health insurance coverage in the individual or small
group market renewed between January 1, 2014 and October 1, 2014, and
requested that States adopt a similar non-enforcement policy.\40\ CMS
noted in the Proposed 2015 Payment Notice (78 FR 72322) that this
transitional policy would not have been anticipated by issuers in
setting rates for 2014 and stated that we were exploring modifications
to different programs (including but not limited to the MLR program) to
help mitigate the impact of this policy.
---------------------------------------------------------------------------
\40\ Letter to Insurance Commissioners, Center for Consumer
Information and Insurance Oversight, November 14, 2013. Available
at: http://www.cms.gov/CCIIO/Resources/Letters/Downloads/commissioner-letter-11-14-2013.pdf.
---------------------------------------------------------------------------
As we explained in the proposed rule, issuers that provided
transitional coverage may have incurred additional administrative
costs, such as expenses related to developing and sending required
consumers notices, and creating and submitting new policy and rate
filings. As further stated in the proposed rule, we also recognize that
issuers of QHPs in the individual and small group markets may have
incurred costs due to technical issues during the launch of the State
Exchanges and FFEs.
Therefore, in the proposed rule, we proposed to account for the
special circumstances of plans affected by the transitional policy and
plans affected by the technical issues during the launch of the State
Exchanges and FFEs by amending Sec. 158.221 to allow for an adjustment
to the MLR calculation for such issuers. Specifically, we proposed to
allow issuers offering transitional coverage in the individual and
small group markets to multiply the incurred claims and expenses for
quality improving activities incurred in 2014 in the MLR numerator by
1.0001. We also proposed to allow issuers offering coverage through the
State and Federal Exchanges in the individual and small group markets
to multiply the incurred claims and expenses for quality improving
activities incurred in 2014 in the MLR numerator by 1.0004. These
adjustments would only extend to issuers in the individual and/or small
group markets that offered transitional coverage or participated in the
State Exchanges and FFEs, and only for the 2014 reporting year. A
transitional policy cost adjustment to the formula for calculating an
issuer's MLR would not apply in States that did not implement the
transitional policy, or in States that did, to issuers that did not
elect to implement it. Similarly, the proposed adjustment to the
formula for calculating an issuer's MLR related to the initial Exchange
technical issues would not be available to issuers that did not elect
to participate in the Exchanges.
Comment: Some commenters expressed support for adjustments to the
MLR formula for plans affected by the transitional policy and plans
affected by the technical issues during the launch of the State and
Federal Exchanges. These commenters also expressed concern that the
adjustments are inadequate, but none provided specific data to support
this assertion or suggested specific alternative adjustments.
Commenters requested that both adjustments also be provided for 2013;
one of these commenters requested that the adjustment related to
Exchange technical issues continue in 2015; while two of these
commenters requested that the adjustment related to transitional policy
continue while transitional coverage remains in force. One commenter
additionally recommended that instead of multiplying the MLR numerator
by an adjustment factor, CMS permit issuers to deduct actual
administrative costs related to Exchange implementation from the MLR
denominator. Another commenter recommended this alternative approach
(that is, to permit a deduction of actual administrative expenses) for
costs related to the transitional policy, and recommended that CMS
waive the Exchange user fee for issuers affected by Exchange
implementation problems instead of the proposed adjustment. Both these
commenters argued that such alternative approaches would benefit
issuers who meet or exceed the MLR standard.
In contrast, other commenters expressed concern that adjustments to
the MLR formula may undermine the MLR program's effectiveness in
keeping premiums down, and urged CMS not to extend the proposed
adjustments beyond 2014. One commenter further requested that issuers
be required to demonstrate that they in fact incurred additional
administrative costs.
Response: The proposed adjustments were based on the best data
available to us, and the types of expenses we considered were the types
of expenses described by the commenters. Absent more specific and
substantiated recommendations with accompanying supporting data, we do
not have a basis for increasing the adjustments. Further, the costs
issuers incurred in connection with the transitional policy are often
one-time and will decline over time, and the same is true of the
Exchanges-related costs as the functioning of the Exchanges improves in
2015. Lastly, we recognize that the proposed adjustments to the MLR
numerator only provide relief to issuers that did not meet the MLR
standard, since such adjustments would merely cause issuers meeting the
[[Page 30321]]
MLR standard to exceed the standard by a larger percentage than they
already did. However, we find that the alternative adjustments to the
MLR denominator suggested by some commenters have similar limitations.
In addition, such alternative adjustments would be more
administratively burdensome to implement than the proposed uniform
adjustments, and would be more susceptible to abuse. We believe that
the proposed adjustments appropriately account for the special
circumstances related to implementation of the transitional policy and
initial technical problems of the Exchanges, while still requiring
issuers to comply with the statutory MLR requirement.
Summary of Regulatory Changes
We are finalizing the amendments proposed in Sec. 158.221 of the
proposed rule without modification.
c. Distribution of De Minimis Rebates (Sec. 158.243)
The MLR December 7, 2011 final rule defines the threshold amounts
below which rebates are considered to be de minimis and sets forth the
provisions for distribution of such rebates. In the proposed rule, we
proposed to amend the provisions for de minimis rebates in Sec.
158.243 to clarify how issuers must distribute rebates where: (1) all
of an issuer's rebates are de minimis, or (2) distribution of de
minimis rebates to enrollee(s) whose rebates are not de minimis would
result in an enrollee receiving a rebate that exceeds the enrollee's
annual premium. In these two situations, we proposed requiring the
issuer to distribute de minimis rebates to enrollees in the policies
that generated the de minimis rebates, and not to aggregate such
rebates and distribute them to other enrollees whose rebates are not de
minimis.
Comment: We received several comments opposing the proposed
amendments to the de minimis provisions. The commenters argue that
requiring distribution of any de minimis rebates directly to enrollees
is contrary to the rationale behind the MLR de minimis provision. The
commenters assert that the administrative burden of directly
distributing de minimis rebates would exceed the benefit to consumers.
One of these commenters recommended including the total amount of de
minimis rebates, when all of an issuer's rebates are de minimis, in
premium rate calculations for the following year. This commenter also
recommended that in cases where distribution of de minimis rebates to
enrollee(s) whose rebate are not de minimis would result in an enrollee
receiving a rebate that exceeds the enrollee's annual premium, the
issuer be allowed to place the excess of the aggregated de minimis
rebate over premium in a reserve fund, and use it first toward the cost
of operating this fund, and second in premium rate calculations for the
following year. Another commenter recommended that issuers be allowed
to distribute the de minimis rebates to the State for use in health
education.
Response: We acknowledge the commenters' concern that the
administrative costs of directly distributing de minimis rebates may
impose administrative costs in excess of the rebate amounts. At this
time, few, if any, enrollees are known to be affected by the two
situations described in the proposed rule. Therefore, in order to
consider alternative approaches to the treatment of de minimis rebates
in these two situations, we are not finalizing the proposed
clarifications and will address this issue in future rulemaking.
Summary of Regulatory Changes
We are not finalizing the amendments proposed in Sec. 158.243 of
the proposed rule at this time.
IV. Provisions of Final Regulations
For the most part, this final rule incorporates the provisions of
the proposed rule. Those provisions of this final rule that differ from
the proposed rule are as follows:
Changes to Sec. 144.103
Adds definitions of ``product'' and ``plan'' and clarifies
that standards for uniform modification related to benefits and cost
sharing apply at the plan-level.
Changes to Sec. 146.152
Applies the definition of uniform modification of coverage
and renewal notice requirements to issuers offering coverage in the
small group market.
Indicates that a State may only broaden the uniform
modification standard criteria addressing cost-sharing structure and
service area.
Adds language to clarify and amend the term ``pursuant to
applicable Federal or State requirements.''
Deletes the reference to ``counties'' in the service area
criterion.
Changes to Sec. 146.180
Adds that an opt-out election for multiple self-funded,
non-Federal governmental plans subject to a single collective
bargaining agreement must specify each group health plan subject to the
agreement.
Adds that a sponsor submitting opt-out elections for
multiple self-funded, non-Federal governmental plans that are not
subject to a collective bargaining agreement, must submit a separate
opt-out election document for each such plan.
Replaces the special rule for timely filings of opt-out
elections by U.S. mail with a special rule for timely filings of opt-
out elections in electronic format, and provides that if the latest
filing date falls on a Saturday, Sunday, or a State or Federal holiday,
CMS accepts filings submitted the next business day.
Changes to Sec. 147.106
Applies the definition of uniform modification of coverage
and renewal notice requirements only to issuers offering coverage in
the individual and small group markets.
Adds language to clarify and amend the term ``pursuant to
applicable Federal or State requirements.''
Indicates that a State may only broaden the uniform
modification standard criteria addressing cost-sharing structure and
service area.
Deletes the reference to ``counties'' in the service area
criterion.
Adds that Medicare eligibility or entitlement is not a
basis for nonrenewal or termination of an individual's health insurance
coverage in the individual market.
Changes to Sec. 148.122
Applies the definition of uniform modification of coverage
and renewal notice requirements to issuers offering coverage in the
individual market.
Adds language to clarify and amend the term ``pursuant to
applicable Federal or State requirements.''
Indicates that a State may only broaden the uniform
modification standard criteria addressing cost-sharing structure and
service area.
Deletes the reference to ``counties'' in the service area
criterion.
Changes to Sec. 148.220
Aligns introductory text with the statutory language.
Clarifies that, to be an excepted benefit, fixed indemnity
insurance in the individual market can be provided only to individuals
who attest in their application (1) that they have other health
coverage that is minimum essential coverage; or (2). that they are
treated as having minimum essential coverage due to their status as a
bona fide resident of any possession of the United States pursuant to
Code section 5000A(f)(4)(B).
Clarifies that fixed indemnity insurance pays in a fixed
dollar amount per period of hospitalization or illness, per service, or
both.
[[Page 30322]]
Requires notice to be displayed in the application for the
fixed indemnity insurance (as opposed to the plan materials).
Adds a new paragraph specifying an applicability date for
the minimum essential coverage and notice requirements to policies
issued on or after January 1, 2015. For policies issued before that
date, this paragraph also specifies an applicability date for the
notice requirement to plan years beginning on or after January 1, 2015,
and for the attestation requirement, to plan years beginning on or
after October 1, 2016.
Changes to the Allocation of Reinsurance Contributions
Modifies our allocation of reinsurance collections if
those collections fall short of our estimates for a particular benefit
year: we will allocate the reinsurance collections for that benefit
year first to the reinsurance payment pool, and second to
administrative expenses and the U.S. Treasury.
Changes to Sec. 155.120
Makes technical revisions to Sec. 155.120(c) to clarify
that organizations must comply with other, non-Exchange, applicable
non-discrimination statutes.
Revises Sec. 155.120(c)(2) to clarify that organizations
that limit their provision of certified application counselor services
to a defined population under this exception must still comply with the
non-discrimination provisions in paragraph (c)(1)(ii) with respect to
the provision of these services to that defined population.
Changes to Sec. 155.206
Clarifies that the requirements applicable to consumer
assistance entities under this section refer to the applicable Federal
regulatory requirements that have been implemented pursuant to section
1321(a)(1) of the Affordable Care Act, including provisions of any
agreements, contracts, and grant terms and conditions between HHS and
the consumer assistance entity that interpret those statutory and
regulatory requirements or establish procedures for compliance with
them.
Clarifies that HHS must provide a written notice to a
consumer assistance entity of its investigation, rather than requiring
HHS to provide a written notice to an entity each time HHS learns of a
potential violation.
Adds a factor allowing HHS to take into consideration
whether other remedies or penalties have been imposed for the same
conduct or occurrence.
Provides a six-year statute of limitations period.
Changes to Sec. 155.210
Removes the provision specifying non-Federal standards
that prohibit any individual or entity from acting as Navigators that
would be eligible to participate under standards applicable to the FFE.
Renumbers and extends to all Exchanges the provision
regarding non-Federal standards that would, as applied or implemented
in a State, prevent the application of Federal requirements applicable
to Navigators. Adds specification for requirements that prevent the
Exchange's implementation of the Navigator program consistent with
Federal requirements.
Revises the provision specifying requirements to carry
errors and omissions coverage and replaces it with ``any requirement
that, in effect, would render all Navigators in the Exchange to be
licensed agents and brokers.''
Adds that in an FFE, no health care provider individual or
entity shall be ineligible to operate as a Navigator solely because it
receives consideration from a health insurance issuer for health care
services provided.
Adds that in an FFE, no individual or entity shall be
ineligible to operate as a Navigator solely on the basis that it does
not maintain its principal place of business in the Exchange service
area.
Moves the provision prohibiting compensation on a per-
application, per-individual-assisted, or per-enrollment basis to Sec.
155.215 to apply only in the FFE.
Adds that gifts, gift cards, or cash may exceed nominal
value for the purpose of providing reimbursement for legitimate
expenses incurred by a consumer in effort to receive Exchange
application assistance, such as, but not limited to, travel or postage
expenses.
Adds that Exchange funds cannot be used to purchase gifts
or gift cards, or promotional items that market or promote the products
or services of a third party.
Adds that consumers may be solicited by going door-to-door
or other unsolicited means of direct contact, including calling a
consumer if there is a pre-existing relationship and other applicable
laws are complied with.
Adds that outreach and education activities may include
going door-to-door or other unsolicited means of direct contact,
including calling a consumer.
Adds that automatic telephone dialing system or an
artificial or prerecorded voice may be used to initiate contact
consumers if there is a pre-existing relationship and other applicable
laws are complied with.
Changes the requirement to obtain authorization to access
a consumer's personally identifiable information in a form and manner
determined by the Secretary to a form and manner determined by the
Exchange, adds that the authorization must be retained in a form and
manner determined by the Exchange, and clarifies the retention period
is no less than six years. Removes explicit reference to Federal
regulations at 45 CFR 92.42 and 45 CFR 74.53.
Clarifies that the duty to provide information in a fair,
accurate and impartial manner includes providing fair, impartial, and
accurate information that assists consumers with submitting the
eligibility application, clarifying the distinctions among QHPs, and
helping consumers make informed decisions during the health coverage
selection process.
Changes to Sec. 155.215
Expressly enumerates, rather than incorporates applicable
provisions under Sec. 155.210 by reference, the provisions regarding
non-Federal standards that would prevent the application of the
provisions of title I of the Affordable Care Act as applied to the non-
Navigator assistance personnel program subject to Sec. 155.215.
Removes the provision specifying non-Federal standards
that prohibit any individual or entity from acting as non-Navigator
assistance personnel subject to Sec. 155.215 that would be eligible to
participate under standards applicable to the FFE.
Extends to all Exchanges the provision regarding non-
Federal standards that would, as applied or implemented in a State,
prevent the application of Federal requirements applicable to non-
Navigator assistance personnel subject to Sec. 155.215. Adds
specification for requirements that prevent the Exchange's
implementation of the non-Navigator assistance program consistent with
Federal requirements.
Adds that in an FFE, no health care provider individual or
entity shall be ineligible to operate as non-Navigator assistance
personnel solely because it receives consideration from a health
insurance issuer for health care services provided.
Adds that in an FFE, no individual or entity shall be
ineligible to operate as non-Navigator assistance personnel solely on
the basis that it does not maintain its principal place of business in
the Exchange service area.
[[Page 30323]]
Adds a provision prohibiting compensation on a per-
application, per-individual-assisted, or per-enrollment basis to Sec.
155.215 to apply only in the Federally-facilitated Exchange.
Adds an effective date of November 15, 2014 for the
prohibition on compensation on a per-application, per-individual-
assisted, or per-enrollment basis.
Changes the requirement to obtain and maintain
authorization to access a consumer's personally identifiable
information in a form and manner determined by the Secretary to a form
and manner determined by the Exchange, and clarifies the retention
period is no less than six years.
Changes to Sec. 155.225
Adds duty to provide information to individuals and
employees about the full range of QHP options and insurance
affordability programs for which they are eligible, which includes
providing fair, impartial, and accurate information that assists
consumers with submitting the eligibility application, clarifying the
distinctions among QHPs, and helping consumers make informed decisions
during the health coverage selection process.
Revises provision specifying referrals to third parties
not required to act in the best interest of applicants assisted to
those not required to provide fair, accurate, and impartial
information.
Removes the provision specifying non-Federal standards
that prohibit any individual or entity from acting as certified
application counselors that would be eligible to participate under
standards applicable to the FFE.
Renumbers and extends to all Exchanges the provision
regarding non-Federal standards that would, as applied or implemented
in a State, prevent the application of Federal requirements applicable
to certified application counselors. Adds specification for
requirements that prevent the Exchange's implementation of the
certified application counselor program consistent with Federal
requirements.
Adds that in an FFE, no health care provider individual or
entity shall be ineligible to operate as certified application
counselors solely because it receives consideration from a health
insurance issuer for health care services provided.
Removes proposed requirement to maintain a physical
presence in the Exchange service area. Adds that in an FFE, no
individual or entity shall be ineligible to operate as a certified
application counselor solely on the basis that it does not maintain its
principal place of business in the Exchange service area.
Adds that gifts, gift cards, or cash may exceed nominal
value for the purpose of providing reimbursement for legitimate
expenses incurred by a consumer in effort to receive Exchange
application assistance, such as, but not limited to, travel or postage
expenses.
Adds that consumers may be solicited by going door-to-door
or other unsolicited means of direct contact, including calling a
consumer if there is a pre-existing relationship and other applicable
laws are complied with.
Adds that outreach and education activities may include
going door-to-door or other unsolicited means of direct contact,
including calling a consumer.
Adds that automatic telephone dialing system or an
artificial or prerecorded voice may be used to initiate contact
consumers if there is a pre-existing relationship and other applicable
laws are complied with.
Adds an effective date of November 15, 2014 for the
prohibition on compensation on a per-application, per-individual-
assisted, or per-enrollment basis, and limits the application of this
provision to certified application counselors in FFEs.
Adds a requirement to obtain and maintain authorization to
access a consumer's personally identifiable information in a form and
manner determined by the Secretary to a form and manner determined by
the Exchange, and changes the retention period for the authorization to
access a consumer's personally identifiable information to no less than
six years.
Changes to Sec. 155.260
Inserts the numerical penalty amount instead of a
reference to section 1411(h) of the Affordable Care Act where the
maximum penalty is specified.
Changes to Sec. 156.265
Revises the provisions proposed in 156.265(d)(1) of the
proposed rule as the entire paragraph (d), and removes all
156.265(d)(2), allowing each Exchange to establish its own premium
payment dates.
Changes to Sec. 156.270
Directs that QHP issuers must follow the transaction rules
established by the Exchange in accordance with Sec. 155.430(e).
Changes to Sec. 155.285
Removes the references to sections 1411(h)(1) and (2) of
the Affordable Care Act and instead inserts the numerical maximum
penalty amounts.
Adds a factor allowing HHS to take into consideration
whether other remedies or penalties have been imposed for the same
conduct or occurrence at Sec. 155.285(b)(1)(viii).
Changes to Sec. 155.410
Clarifies that starting in 2014, the Exchange must provide
written notice of annual open enrollment to each enrollee no earlier
than the first day of the month before the open enrollment period
begins and no later than the first day of the open enrollment period.
Changes to Sec. 155.420
Clarifies that later coverage effective dates for birth,
adoption, placement for adoption, or placement for foster care will be
effective the first of the month.
Clarifies that earlier effective dates are allowed if all
issuers in an Exchange agree to effectuate coverage only on the first
day of the specified month.
Adds that consumers may report a move in advance of the
date of the move.
Establishes a special enrollment period for individuals
losing medically needy coverage.
Changes to Sec. 155.625
Clarifies, in paragraphs (a) and (b), that the Exchange
may adopt an exemption eligibility determination made by HHS for
applications submitted before the start of open enrollment for 2016.
Changes to Sec. 155.705
Revises the conditions under which a SHOP may permit a
one-year transition to employee choice.
Adds a time frame for submission of the State Insurance
Commissioner's recommendation that employee choice not be implemented
and for the SHOP's decision based on that recommendation.
Clarifies that the transitional policy only applies in
2015.
Revised in 155.705(b)(3)(vi) that options should be
singular as one option is available for FF-SHOPs and another for State-
based SHOPs
Changes to Sec. 155.725
Limits the annual employer and employee election period,
which begins no sooner than November 15, 2014, so that it applies only
in FF-SHOPs.
Changes to Sec. 156.122
Requires a health plan's exception process to include the
ability to expedite the reviews for exigent circumstances.
[[Page 30324]]
Changes to Sec. 156.130
Removes the annual limitation on deductibles for small
group plans.
Changes to Sec. 156.1120 and Sec. 156.1125
Clarifies, for the QRS and the ESS, the distinction
between the required level of data submission and collection by QHP
issuers, specified by HHS, and the level of public reporting or display
by Exchanges.
Changes to Sec. 158.243
Does not finalize requirements for distribution of de
minimis rebates.
V. Waiver of Delay in Effective Date
Section 553(d) of the APA (5 U.S.C. 553(d)) requires that a final
rule be effective not less than 30 days from the date of its
publication in the Federal Register and the Congressional Review Act (5
U.S.C. 801(a)(3)), which requires a 60-day delayed effective date for
major rules. This 30-day delay in effective date can be waived,
however, if otherwise provided by an agency for good cause found and
published with the rule. For the reasons set forth below, we find good
cause to waive the 30-day delay in effective date in connection with
the amendments made in this rule at Sec. 155.705 related to employee
choice, because the delay is impracticable and contrary to the public
interest.
A 30-day delay in the effectiveness of the amendments made to Sec.
155.705 in this rule would mean that, in States with an FF-SHOP, State
Insurance Commissioners could not comply with the deadline to recommend
that employee choice not be implemented, and for a SHOP to make a
decision based on that recommendation, as set forth in the rule.
Pursuant to Sec. 155.705(b)(3)(vii), HHS requires that both the State
Insurance Commissioner's recommendation and the SHOP's decision be
completed prior to the end of the window within which QHPs can submit
applications for QHP certification, and that in States with an FF-SHOP,
the State Insurance Commissioner's recommendations must be submitted on
or before June 2, 2014. The QHP certification application window for
the FFE is expected to open on May 27, 2014, and is expected to close
on June 27, 2014. This would mean that issuers would not know whether
employee choice would be available in a State within an FF-SHOP prior
to the close of the QHP application window. Accordingly, issuers would
be unable to make fully informed decisions about SHOP participation and
appropriate product pricing when compiling and submitting their QHP
certification applications, including the rate information included in
their applications. This uncertainty regarding implementation of
employee choice potentially could result in fewer QHPs being offered in
the State's FF-SHOP or products being unnecessarily priced higher than
necessary, which would negatively affect the small employers that would
participate in the FF-SHOP, as well as their employees. In order to
avoid these potential harms to small employers and employees, we
believe the 30-day delay in the effective date of this provision would
be impracticable and contrary to the public interest.
Additionally, it was impracticable for HHS to have proposed this
approach sooner. The full scope of the issuer and State concerns about
implementing employee choice that motivated the amendments to Sec.
155.705 were not made known to HHS until early 2014. HHS previously had
anticipated that its 2013 decision not to require employee choice in
SHOPs in 2014 would provide issuers of QHPs and SADPs with ample time
to prepare to fully implement employee choice for plan years beginning
in 2015. However, early in 2014, HHS learned that some issuers and
State Departments of Insurance continued to be concerned about the
potential effect of employee choice on State small group markets.
Because employee choice is, for the most part, a relatively new concept
in the small group market and because many issuers and States do not
have a lot of experience in an employee choice environment, we
understand that some issuers believe they do not have sufficient
information to make pricing and plan design decisions for 2015 that
would not adversely affect small group market consumers.
For the reasons outlined above, CMS finds good cause under the APA,
5 U.S.C. 553(d)(3) to waive the delay in effective date and proceed
directly with the issuance of a final rule with an immediate effective
date.
VI. Collection of Information Requirements
Under the Paperwork Reduction Act (PRA) of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. This
final rule contains information collection requirements (ICRs) that are
subject to review by OMB. In order to fairly evaluate whether an
information collection should be approved by OMB, section 3506(c)(2)(A)
of the Paperwork Reduction Act of 1995 requires that we solicit comment
on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of these issues, which
contain ICRs. All comments received on these ICRs will be addressed at
the time the 30-day notice is published to solicit public comments.
A. ICRs Regarding Recertification for Certified Application Counselors
(Sec. 155.225)
Under Sec. 155.225(d)(7), certified application counselors are
required to be recertified on at least an annual basis after
successfully completing recertification training as required by the
Exchange. Each Exchange is required to establish its own
recertification process and standards consistent with these
requirements. We expect that establishing a process for recertification
will include creating a recertification request form (or similar
document) in Exchanges that directly certify certified application
counselors. We estimate that up to 18 State Exchanges will develop
their own recertification request form.\41\ We estimate that the
development of a recertification request form, as may be applicable for
Exchanges that directly certify certified application counselors, will
take a health policy analyst (at $49.35 labor cost per hour) up to 1
hour to create, a senior manager (at $79.08 cost per hour) up to .5
hours (30 minutes) for review, and an attorney up to .5 hours (at
$90.15 labor cost per hour) for legal review. We estimate that the one-
time burden will be two hours with a cost burden of $134 for each
Exchange, and the total burden for 18 State Exchanges will be 36 hours
with a cost burden of $2,412.
---------------------------------------------------------------------------
\41\ We estimate 18 State Exchanges (which includes Utah's SHOP)
will develop their own processes for recertification. HHS will
establish a single process in all FFEs.
---------------------------------------------------------------------------
There are recordkeeping requirements associated with developing and
maintaining a request form. We estimate that the time burden associated
with maintaining a copy of the request form will be .016 hours (1
minute); we assume that a mid-level health policy analyst will maintain
electronic copies
[[Page 30325]]
of the form at minimal cost, which we estimate as $0.79 as a one-time
requirement for the Exchange. The total burden for 18 Exchanges is
estimated to be 1.08 hours and the total cost burden will be $14.22.
There will also be third-party disclosure requirements for 18 State
Exchanges associated with reviewing each certified application
counselor's recertification request, which will require the Exchange to
notify the individual of the result of its review and issue a new
certificate for each individual who successfully completes
recertification. This notice requirement will apply to the Exchange on
an annual basis. We estimate that it will take a mid-level health
policy analyst in the Exchange up to .08 hours (5 minutes) to notify an
individual. The estimated cost burden is $4.11 for each individual
notice, including the certificate. For purposes of this analysis, we
estimate that there will be approximately 30,000 certified application
counselors nationwide, or approximately 10,600 application counselors
in 18 State Exchanges. The total cost burden will be approximately
$2,422 for each State Exchange. The total burden for 18 State Exchanges
will be approximately 883 hours and the total cost burden will be
$43,593. There will be recordkeeping requirements associated with
issuing each individual notice. We estimate that the time burden
associated with maintaining a copy of the notice and certificate will
be .016 hours (1 minute); we assume that a mid-level health policy
analyst, with a labor cost of $49.35 an hour, will maintain electronic
copies of the form at minimal cost, which we estimate as $0.79 per
notice for each individual certified application counselor. The total
recordkeeping burden for 10,600 certified application counselors in 18
State Exchanges is estimated to be 170 hours and the total cost burden
will be $8,374, or $265 per Exchange.
For Exchanges that designate organizations to directly certify
certified application counselors under Sec. 155.225(b)(1), there will
be requirements associated with implementing a recertification process
under the applicable Exchange's standards. We expect that this process
will include creating and issuing a recertification request form (or
similar document) for an organization's certified application
counselors to submit to indicate their intention to be recertified and
provide an updated conflicts of interest disclosure or other
attestations as may be required. We estimate that up to 5,000
designated organizations will develop their own recertification request
form. We estimate that the development of a recertification request
form will take a health policy analyst (at $49.35 labor cost per hour)
up to 1 hour to create, a senior manager (at $79.08 labor cost per
hour) up to .5 hours (30 minutes) for review, and an attorney (at
$90.15 labor cost per hour) up to .5 hours (30 minutes) for legal
review. We estimate that the one-time cost burden will be $134 for each
organization. The total one-time burden for 5,000 organizations
nationwide will be 10,000 hours and the total cost burden will be
$670,000.
There will be recordkeeping requirements associated with developing
and maintaining a request form. We estimate that the time burden
associated with maintaining a copy of the request form will be .016
hours (1 minute); we assume that a mid-level health policy analyst with
a labor cost of $49.35 an hour will maintain electronic copies of the
form at minimal cost, which we estimate as $0.79 as a one-time
requirement for each organization. The total one-time burden for 5,000
organizations nationwide is estimated to be 80 hours and the total cost
burden will be $3,950.
There will also be third-party disclosure requirements for
designated organizations associated with reviewing each certified
application counselor's recertification request, which will require the
organization to notify the individual of the result of its review and
issue a new certificate as appropriate. This notice requirement will
apply to the organization on an annual basis. For purposes of
estimating the burden on designated organizations, we assume that of
the estimated 30,000 certified application counselors nationwide,
approximately 19,400 will be directly certified by designated
organizations, or four certified applications counselors on average per
designated organization. We estimate that it will take a mid-level
health policy analyst up to .08 hours (5 minutes) to notify an
individual and issue a new certificate. The estimated cost burden is
$4.11 for each individual notice. For an estimated 19,400 certified
application counselors nationwide, or approximately four certified
application counselors on average in each organization, the total cost
burden will be approximately $16.44 for each organization. The total
burden for 5,000 designated organizations nationwide will be
approximately 1,617 hours and the total cost burden will be
approximately $79,734.
There will be recordkeeping requirements associated with issuing a
certificate. We estimate that the time burden associated with
maintaining a copy of each certificate issued at recertification will
be .016 hours (1 minute). We assume that a mid-level health policy
analyst with a labor cost of $49.35 an hour will maintain electronic
copies of the form at minimal cost, which we estimate as $0.79 per
certificate for each organization. The total recordkeeping cost per
organization will be $3.16. The total burden for 5,000 organizations
nationwide will be 323 hours and the total cost burden will be
approximately $ 15,326.
There will be third-party disclosure requirements for individual
certified application counselors associated with completing the
requirements for recertification, whether done directly through the
Exchange or through an Exchange-designated certified application
counselor organization. Such recertification requirements will include
completing Exchange required training and might also include satisfying
other requirements consistent with the Exchange-established processes,
such as providing conflicts of interest disclosures, other attestations
and submitting a recertification request form (or similar document) and
other attestations. These requirements will apply to certified
application counselors on an annual basis. Although nothing prohibits
individual certified application counselors or organizations from being
funded through sources such as applicable private, State, or Federal
programs, we expect that certified application counselors will not be
guaranteed any specific funding. We estimate the professional wage of
certified application counselors for this type of work as equivalent to
that of an eligibility interviewer for assistance from government
programs and agency resources. We estimate that it will take a
certified application counselor with a labor cost of $26.65 an hour up
to 0.17 hours (10 minutes) to complete and submit the recertification
request to the organization or Exchange, as applicable. The estimated
cost burden will be $4.53 for each individual seeking recertification.
We estimate that there will be approximately 30,000 recertification
requests provided, for a total burden of 5,000 hours and a total cost
burden of $135,915 for all certified application counselors nationwide.
There will be third-party disclosure requirements associated with
taking recertification training. We expect that an individual certified
application counselor will provide proof to the organization or
Exchange that he or she has successfully completed the recertification
training, in accordance with the Exchange's process. We
[[Page 30326]]
estimate that it will take a certified application counselor with a
labor cost of $26.65 an hour up to .03 hours (2 minutes) to provide the
training certificate to the organization or Exchange, as may be
required. The total estimated cost burden is $0.80 for each individual
seeking recertification. We estimate that there will be approximately
30,000 training certificates provided, and the total burden will be
1,000 hours, with a total cost burden of $24,000 for all certified
application counselors nationwide.
In addition, there will be recordkeeping requirements associated
with the training certification. We expect each person who receives
training will obtain and maintain a record of training certification.
We estimate that the time burden associated with maintaining proof of
training certification is .016 hours (1 minute), since we assume this
proof will be maintained through electronic copies, at minimal cost.
The total cost estimated for each individual to maintain proof of
training certification will be $0.43. The total burden will be 500
hours and the total cost burden will be $12,900 for all certified
application counselors nationwide.
B. ICRs Regarding Consumer Authorization (Sec. Sec. 155.210 and
155.215)
For purposes of the ICRs associated with these provisions, we use
the same labor cost estimates that were used in the final Navigator and
non-Navigator assistance personnel standards rule (Patient Protection
and Affordable Care Act; Exchange Functions: Standards for Navigators
and Non-Navigator Assistance Personnel, July 17, 2013, 78 FR 42842).
Navigator personnel and non-Navigator assistance personnel to which
Sec. 155.215 applies are estimated to have a labor cost of $20 per
hour. Project leads for Navigator and non-Navigator assistance entities
to which Sec. 155.215 applies are estimated to have a labor cost of
$29 per hour. Senior executives for Navigator and non-Navigator
assistance entities to which Sec. 155.215 applies are estimated to
have a labor cost of $48 per hour. These are estimates commonly used
for estimating paperwork burden and do not represent a recommendation
or a requirement of how much Navigator and non-Navigator personnel to
which Sec. 155.215 applies are to be paid. There is nothing in the
regulations that require any of these workers to be paid any specific
amount.
In the ICR currently approved under OMB control number 0938-1220,
we noted that there were 105 Navigator grantee organizations at that
time in FFEs, including SPEs, and we estimated that there were 3,000
individuals working as Navigators. We estimated the number of non-
Navigator assistance project leads to be 300 and 1,800 for personnel
and we use those estimates here as well.
In accordance with Sec. 155.210(e)(6) and Sec. 155.215(g),
Navigators, as well as those non-Navigator personnel to whom Sec.
155.215 applies, will be required to maintain procedures to inform
consumers of the functions and responsibilities of Navigators and non-
Navigator assistance personnel (as applicable), and to obtain
authorization for the disclosure of consumer information to the
Navigator or non-Navigator assistance personnel (as applicable). This
will be a one-time requirement for the organization. We estimate that
it will take a Navigator or non-Navigator assistance personnel project
lead up to 2 hours to create the form for providing authorization to
applicants, and a Navigator or non-Navigator senior executive up to 1
hour to review the procedure, for a total time burden of up to 3 hours.
We estimate the cost burden associated with creating this procedure
will be $106 per organization. The total cost for all 105 Navigator
grantee organizations is estimated to be $11,130. The total cost for
all 300 non-Navigator assistance personnel organizations is estimated
to be $31,800.
There are also recordkeeping requirements associated with
developing and maintaining a model agreement and authorization form.
Each organization is expected to maintain a copy of the executed forms.
We estimate that the time burden associated with maintaining a copy of
executed agreement and authorization forms for each consumer will be
0.016 hours (1 minute); we assume these will be maintained through
electronic copies with minimal cost.
In addition, there will be burdens on individual Navigators, as
well as those non-Navigator assistance personnel to whom Sec. 155.215
applies. Under Sec. 155.210(e)(6) and Sec. 155.215(g), respectively,
Navigators and non-Navigator assistance personnel will be required to
inform consumers of the functions and responsibilities of Navigators
and non-Navigator assistance personnel and obtain authorization for the
disclosure of consumer information to a Navigator or non-Navigator
assistance personnel prior to obtaining the consumer's personally
identifiable information. In the final rule on certified application
counselors (78 FR 42824, 42854-42855), we estimated that it will take a
certified application counselor 0.25 hours (15 minutes) to provide
consumers with information about the functions and responsibilities of
a certified application counselor, obtain their authorizations, and
provide any applicable conflict of interest disclosures. Because here
we are only estimating the time required to provide consumers with
information about the functions and responsibilities of a Navigator or
non-Navigator assistance personnel and obtain their authorization, we
estimate that it will take a Navigator or non-Navigator assistance
personnel 0.1667 hours (10 minutes) to perform this task. The total
cost estimate for the consumer authorization process for Navigators and
non-Navigator assistance personnel therefore will be $3.33. The total
time burden on all 3,000 Navigators is estimated to be approximately
500 hours, and the total cost burden on all 3,000 Navigators is
estimated to be $9,990. The total time burden on all 1,800 non-
Navigator assistance personnel is estimated to be 300 hours, and the
total cost burden on all 1,800 non-Navigator assistance personnel is
estimated to be $5,994.
C. ICRs Regarding Enrollee Satisfaction & Marketplace Surveys
(Sec. Sec. 155.1200, 156.1105 and 156.1125)
In Sec. 156.1105 of this rule, we establish a monitoring and
appeals process for HHS-approved ESS vendors. Specifically, in Sec.
156.1105(d), we establish a process in which HHS will monitor approved
vendors for ongoing compliance. HHS may require additional information
from approved vendors to be periodically submitted in order to ensure
continued compliance. We estimate that HHS will receive applications
from approximately 40 ESS vendors. We estimate that it will take no
longer than one hour for each vendor (at a cost of $24.10 per hour) to
comply with any additional monitoring by HHS. Therefore, we estimate a
total annual burden of 40 hours for all vendors for a total cost burden
estimate of $964.00.
In Sec. 156.1105(e) of this rule, we establish a process by which
an ESS vendor that is not approved by HHS can appeal HHS's
determination. It is estimated that filing an appeal with HHS will take
no longer than one hour. We estimate that five survey vendors that
apply may not be approved and all of those vendors will appeal HHS's
determination and submit additional documentation to HHS. Therefore, we
estimate five responses, for a total of five burden hours, for a total
cost of $120.50.
The burden estimate associated with quality standards for QHP
issuers related to the ESS outlined in
[[Page 30327]]
Sec. 156.1125 will include the time and effort required for QHP
issuers to collect, submit and validate ESS data on an annual basis.
The burden and cost related to the survey respondents and ESS vendors
associated with the ESS has been approved under OMB Control Number
0938-1221. In addition, we estimate that each QHP will need an average
of 54 hours or $1,349.60 for the ESS to be administered by mail, phone
and/or by web for its QHPs. Assuming a total of 575 QHP issuers, we
estimate that the annual burden will be 31,050 hours or $776,020.
The burden with the Marketplace survey under Sec. 155.1200(b)(3)
will include the time, cost and effort related to survey respondents
and has been approved under OMB Control Number 0938-1221. In addition,
we will revise the information collection currently approved under OMB
Control Number 0938-1119 to account for any additional burden for an
Exchange if sampling data is needed from State Exchanges for CMS to
administer the Marketplace survey.
D. ICR Regarding Quality Rating System (Sec. 156.1120)
The burden and cost estimates associated with quality standards for
QHP issuers related to the QRS outlined in Sec. 156.1120 include
estimates for QRS measure data collection, validation, and submission
to CMS. We estimate that a total of 575 QHP issuers will collect and
report QRS measure data, by product type, using administrative data
sources and medical records. Using the BLS labor category estimates for
a general operations manager, computer programmer, business operations
specialist, registered nurse, and medical records and health
information analyst, the estimated annual cost and hourly burden for a
QHP issuer will be 1650 hours or $117,424, for an issuer who has
performance measures data collection experience. We estimate that
approximately eighty percent of all issuers, or 460 issuers, have such
experience. We anticipate additional software purchases to generate
measure data and rates and increased third-party data validation fees
for issuers that do not have the experience in data collection and
reporting for the QRS as required in Sec. 156.1120. Therefore, we
estimate that the additional cost burden for each of the remaining 115
issuers will be approximately $102,500 in the initial year as they
develop their data collection systems and processes, for a total of
approximately $11,787,500. We estimate 948,750 hours or $67,518,800 as
the total annual burden for the anticipated 575 QHP issuers to collect
and report QRS data.
E. ICRs Regarding Quality Standards for Exchanges (Sec. Sec. 155.1400
and 155.1405)
In Sec. 155.1400 and Sec. 155.1405, we direct that each Exchange
must display, on its Web site, quality rating and ESS result
information for QHPs offered on the Exchange. We estimate 18 State
Exchanges and the FFE will collect the relevant QRS and ESS information
for display. The burden estimate associated with these standards will
include collection of the necessary data by each Exchange to display on
its Web site. This burden and cost for Exchanges are currently approved
under OMB Control Number 0938-1156 in the total estimates related to
Sec. 155.205(b) which requires the Exchange to maintain an up-to-date
Internet Web site that provides information including ESS and quality
ratings, on available QHPs offered on the Exchange. The provisions of
this final rule will not affect the burden.
F. ICR Regarding Medical Loss Ratio Requirements (Sec. Sec. 158.150,
158.211, 158.220, 158.221, and 158.231)
This rule amends the MLR provisions regarding the treatment of ICD-
10 conversion costs. This rule further provides MLR calculation
adjustments for issuers affected by the transitional policy announced
in the CMS letter dated November 14, 2013 and for issuers participating
in the Exchanges. This rule also clarifies how issuers are to calculate
their MLRs in States that require the small group market and individual
market to be merged. Both MLRs and rebates are reported on the MLR
annual reporting form.
The burden for the existing information collection requirement is
approved under OMB Control Number 0938-1164. This includes the annual
reporting form and instructions that are currently used by issuers to
submit MLR information to HHS. The MLR annual reporting form collects
information on all distributed and owed rebate amounts. Prior to the
July 31, 2015 deadline for the submission of the annual MLR report for
the 2014 MLR reporting year, and in accordance with the PRA, HHS plans
to solicit public comment and seek OMB approval for an updated MLR
annual form that will reflect the changes in MLR calculations. We do
not anticipate that the amendments finalized in this rule will increase
the burden on issuers because the changes utilize data that is a subset
of information that issuers already submit to HHS.
G. ICRs Regarding Civil Money Penalties (Sec. Sec. 155.206 and
155.285)
Section 155.206 describes the bases and processes HHS proposes to
use to impose CMPs on noncompliant consumer assistance personnel and
organizations. Section 155.285 describes the bases and processes HHS
proposes to use to impose CMPs on persons who provide false or
fraudulent information required under section 1411(b) of the Affordable
Care Act or who knowingly and willfully use or disclose information in
violation of section 1411(g) of the Affordable Care Act. The ICRs in
these provisions are exempt from PRA requirements in accordance with 5
CFR 1320.4(a)(2) because this information will be collected during the
conduct of an administrative action or investigation involving an
agency against specific individuals or entities.
H. ICRs Regarding Fixed Indemnity Insurance, Notice of Discontinuation,
Notice of Renewal, Certifications of Creditable Coverage and HIPAA Opt-
Out Election Notice, (Sec. Sec. 146.152, 146.180, 147.106, 148.122,
148.124, and 148.220)
In Sec. 148.220 of this rule, we require that issuers of
individual market fixed indemnity insurance provide a notice stating
that the coverage is not a substitute for major medical coverage and
that lack of minimum essential coverage may result in an additional
payment with one's taxes. For policies issued after January 1, 2015 the
notice must be included in the application for coverage and for
policies issued before that date, the notice must be delivered shortly
before the first renewal date occurring on or after January 1, 2015.
HHS has provided the exact text of the notice and it will not need to
be customized. Sections 146.152, 147.106 and 148.122 of this rule
provide that issuers that discontinue a product in the group or
individual market, and issuers that provide the option to renew
coverage in the small group or individual market, must provide written
notices to enrollees in a form and manner specified by the Secretary.
HHS will provide the exact text of the notices in future guidance and
they will not need to be customized. The burden associated with these
notices are not subject to the Paperwork Reduction Act of 1995 in
accordance with 5 CFR 1320.3(c)(2).
Certifications of creditable coverage under Sec. 148.124 will no
longer be required to be provided starting December 31, 2014. The
burden is currently approved under OMB Control Number 0938-0702. In the
individual
[[Page 30328]]
market, the anticipated reduction in annual burden hours will be
835,517, with an anticipated reduction in cost of $25,625,306. The
burden for HIPAA Opt-out Election notices under Sec. 146.180 is
currently approved under OMB Control Number 0938-0702 as well.
Electronic submission of opt-out election notice will also reduce costs
for plans by eliminating the need for mailing paper forms.
I. Emergency Clearance: Public Information Collection Requirements
Submitted to the Office of Management and Budget (OMB)
In compliance with section 3506(c)(2)(A) of the Paperwork Reduction
Act of 1995, the Centers for Medicare & Medicaid Services (CMS),
Department of Health and Human Services, is publishing a summary of
this proposed information collection for public comment. Interested
persons are invited to send comments regarding this collection's
proposed burden estimates or any other aspect of this collection of
information, including any of the following subjects: (1) The necessity
and utility of the proposed information collection for the proper
performance of the agency's functions; (2) the accuracy of the
estimated burden; (3) ways to enhance the quality, utility, and clarity
of the information to be collected; and (4) the use of automated
collection techniques or other forms of information technology to
minimize the information collection burden.
In compliance with section 3506(c)(2)(A) of the Paperwork Reduction
Act of 1995, we have also submitted to the Office of Management and
Budget (OMB) the proposed information collection for their emergency
review. While the collection is necessary to ensure compliance with an
initiative of the Administration, we are requesting emergency review
under 5 CFR 1320(a)(2)(i) because public harm is reasonably likely to
result if the regular clearance procedures are followed. The approval
of this data collection process is essential to ensuring that States
seeking to transition to employee choice in 2015 can submit
recommendations to the SHOP by the deadline established in this final
rule, which, in the FF-SHOPs, is on or before June 2, 2014. Without an
emergency clearance process, many States seeking to not implement
employee choice in 2015 will not be able to submit their recommendation
and have it reviewed in a timely manner by the SHOP. Given the short
time until the QHP certification window opens and closes, it is
critical that the information concerning this process be posted by the
day of publication of this final rule so issuers are aware if their
particular States will not be implementing employee choice in 2015
before they decide to participate and submit their final rates for
certification during the initial QHP certification window. If CMS is
required to delay recommendation collection and review, this will
severely impede its ability to implement this transitional policy in
the FF-SHOPs.
ICR Regarding 2015 Transition to Employee Choice (Sec. 155.705)
For the FF-SHOP States that would like to submit a recommendation
that the FF-SHOP not implement employee choice in 2015, pursuant to
Sec. 155.705(b)(2), there will be a formal application process. This
process will include the submission of a recommendation by the State's
Insurance Commissioner. The written recommendation must adequately
explain that it is the State Insurance Commissioner's expert judgment,
based on a documented assessment of the full landscape of the small
group market in his or her State, that not implementing employee choice
would be in the best interests of small employers and their employees
and dependents, given the likelihood that implementing employee choice
would cause issuers to price products and plans higher in 2015 due to
the issuers' beliefs about adverse selection. A State Insurance
Commissioner's recommendation would need to be based on concrete
evidence, including but not limited to discussions with those issuers
expected to participate in the SHOP in 2015.
We estimate that the development of an application by the Insurance
Commissioner will take up to 40 hours to create (at $50.00 labor cost
per hour). We estimate that up to 16 States will submit the application
and the one-time cost burden will be $2,000 for each State. The total
burden for all States is estimated to be 640 hours or $32,000.
We are requesting OMB review and approval of this emergency
collection by May 27, 2014, with a 180-day approval period. Written
comments and recommendations for this emergency request only will be
considered from the public if received by the date and address noted
below.
Copies of the supporting statement and any related forms can be
found at: http://www.cms.hhs.gov/PaperworkReductionActof1995 or can be
obtained by emailing your request, including your address, phone
number, OMB number, and CMS document identifier, to:
[email protected], or by calling the Reports Clearance Office at:
410-786-1326.
When commenting on this proposed information collection, please
reference the CMS document identifier and the OMB control number. To be
assured consideration, comments and recommendations must be received in
one of the following ways by May 23, 2014:
1. Electronically. You may submit your comments electronically to
http://www.regulations.gov. Follow the instructions for ``Comment or
Submission'' or ``More Search Options'' to find the information
collection document(s) accepting comments.
2. By regular mail. You may mail written comments to the following
address:
CMS, Office of Strategic Operations and Regulatory Affairs, Division of
Regulations Development, Attention: Document Identifier (CMS-10523),
Room C4-26-05, 7500 Security Boulevard, Baltimore, Maryland 21244-1850,
and,
OMB Office of Information and Regulatory Affairs, Attention: CMS Desk
Officer, New Executive Office Building, Room 10235, Washington, DC
20503, Fax Number: 202-395-6974.
VII. Regulatory Impact Analysis
A. Summary
This final rule addresses various requirements applicable to health
insurance issuers, Exchanges, Navigators, non-Navigator assistance
personnel, and other entities under the Affordable Care Act.
Specifically, the rule establishes standards related to product
discontinuation and renewal, quality reporting, non-discrimination
standards, minimum certification standards and responsibilities of QHP
issuers, the SHOP, and enforcement remedies in FFEs. It also provides a
number of amendments relating to the premium stabilization programs,
calculation of annual limit on cost sharing, the MLR program, certified
application counselor programs, affordability exemptions, standards
regarding how enrollees may request access to non-formulary drugs under
exigent circumstances, and guaranteed availability and renewability of
coverage requirements. Additionally, it establishes the grounds for
imposing CMPs on persons who provide false or fraudulent information to
the Exchange and on persons improperly using or disclosing information;
and modifies standards related to opt-out provisions for self-funded
non-Federal
[[Page 30329]]
governmental plans and individual market provisions under HIPAA.
CMS has crafted this rule to implement the protections intended by
Congress in an economically efficient manner. We have examined the
effects of this rule as required by Executive Order 12866 (58 FR 51735,
September 1993, Regulatory Planning and Review), the Regulatory
Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section
1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of
1995 (Pub. L. 104-4), Executive Order 13132 on Federalism, and the
Congressional Review Act (5 U.S.C. 804(2)). In accordance with OMB
Circular A-4, CMS has quantified the benefits, costs and transfers
where possible, and has also provided a qualitative discussion of some
of the benefits, costs and transfers that may stem from this final
rule.
B. Executive Orders 13563 and 12866
Executive Order 12866 (58 FR 51735) directs agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects; distributive impacts; and equity). Executive
Order 13563 (76 FR 3821, January 21, 2011) is supplemental to and
reaffirms the principles, structures, and definitions governing
regulatory review as established in Executive Order 12866.
Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as an action that is likely to result in a final
rule--(1) having an annual effect on the economy of $100 million or
more in any one year, or adversely and materially affecting a sector of
the economy, productivity, competition, jobs, the environment, public
health or safety, or State, local or tribal governments or communities
(also referred to as ``economically significant''); (2) creating a
serious inconsistency or otherwise interfering with an action taken or
planned by another agency; (3) materially altering the budgetary
impacts of entitlement grants, user fees, or loan programs or the
rights and obligations of recipients thereof; or (4) raising novel
legal or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in the Executive Order.
A regulatory impact analysis (RIA) must be prepared for major rules
with economically significant effects ($100 million or more in any 1
year), and a ``significant'' regulatory action is subject to review by
the OMB. HHS has concluded that this rule is likely to have economic
impacts of $100 million or more in any one year, and therefore meets
the definition of ``significant rule'' under Executive Order 12866.
Therefore, HHS has provided an assessment of the potential costs,
benefits, and transfers associated with this final regulation.
1. Need for Regulatory Action
Starting in 2014, qualified individuals and qualified employers are
able to obtain coverage provided through Exchanges. The provisions,
amendments and clarifications in this final rule address stakeholder
concerns and inquiries and help ensure smooth functioning of health
insurance markets and Exchanges and ensure that individuals have access
to high quality and affordable health insurance coverage. In addition,
this rule amends the methodologies for calculating the MLR to address
ICD-10 conversion costs, MLR and rebate calculations in States that
require the individual and small group markets to be merged, and to
accommodate the special circumstances of issuers affected by the
transitional policy announced in the CMS letter dated November 14,
2013, and issuers participating in the State and Federal Exchanges.
2. Summary of Impacts
In accordance with OMB Circular A-4, Table VII.1 below depicts an
accounting statement summarizing CMS's assessment of the benefits,
costs, and transfers associated with this regulatory action. The period
covered by the RIA is 2014-2018.
HHS anticipates that the provisions of this final rule will help
ensure that all consumers have access to quality and affordable health
care coverage and are able to make informed choices, ensure smooth
operation of Exchanges, ensure that premium stabilization programs work
as intended, provide flexibility to SHOPs and employers, and protect
consumers from fraudulent and criminal activities and help to mitigate
issuers' unexpected administrative costs and uncertainties around
operations and the risk pool, and to stabilize the market as it
continues to transition to full compliance with Affordable Care Act
requirements. Affected entities such as QHP issuers, Navigators and
non-Navigator assistance personnel, designated certified application
counselor organizations, certified application counselors, survey
vendors, and States may incur costs to comply with the provisions in
this final rule, including administrative costs related to notices,
surveys, training, and recertification requirements. In accordance with
Executive Order 12866, HHS believes that the benefits of this
regulatory action justify the costs.
Table VII.1--Accounting Table
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Benefits:
----------------------------------------------------------------------------------------------------------------
Qualitative:
* Ensure access to affordable and quality health insurance coverage for all individuals.
* Minimize unnecessary terminations of coverage and ensure predictability and continuity for consumers.
* Allow consumers to make informed choices.
* Lower out-of-pocket costs for individuals who purchase fixed indemnity insurance.
* Possible reduction in cost sharing due to adjustment in methodology for calculating annual limitations on cost-
sharing.
* Help ensure sufficiency of funds in the reinsurance payment pool.
* Ensure consumer protection and privacy and security of PII.
* Discourage fraudulent or criminal activity by consumer assistance personnel and entities.
* Provide additional flexibility to FF-SHOPs and employers and allow employers to select plans with updated rate
information.
* Improve consistency of MLR calculations among issuers in States with merged individual and small group markets
and improve accuracy of rebate payments.
----------------------------------------------------------------------------------------------------------------
[[Page 30330]]
Costs: Estimate Year Discount Period
dollar rate percent covered
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($millions/ $48.78 million \1\ 2013 7 2014-2018
year) $49.52 million \1\ 2013 3 2014-2018
----------------------------------------------------------------------------------------------------------------
Net annual costs to enrollees related to ESS and Marketplace survey; recertification of certified application
counselors by States; costs to States to submit recommendations to not implement employee choice in 2015;
administrative costs incurred by survey vendors to appeal application denials; administrative costs to QHP
issuers related to data submissions for QRS and ESS administration; costs related to notice and disclosure
requirements for certified application counselor recertification; consumer authorization for Navigators and non-
Navigator personnel; and a reduction in costs for issuers in the individual market due to discontinuation of
certification of creditable coverage.
----------------------------------------------------------------------------------------------------------------
Qualitative:
* Costs to certified application counselors to obtain required training for recertification.
* Reduction in costs to consumers due to ability to make requests to dismiss appeals by telephone.
* Costs to issuers to comply with the standards for expedited review of a formulary exception request based on
exigent circumstances.
----------------------------------------------------------------------------------------------------------------
Transfers: Estimate Year Discount Period
dollar rate percent covered
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($millions/ $2.93 million 2013 7 2014-2018
year) $2.99 million 2013 3 2014-2018
----------------------------------------------------------------------------------------------------------------
Net annual transfer of rebate dollars to enrollees from shareholders or nonprofit stakeholders, resulting from
adjustment in MLR methodology for issuers in States with merged individual and small group markets.
----------------------------------------------------------------------------------------------------------------
Qualitative:
* Possible reduction in rebates paid by issuers to enrollees due to adjustment in MLR methodology for issuers
affected by the November 2013 transitional policy and unexpected costs during the implementation of the
Exchanges, and to account for ICD-10 conversion costs.
* Possible transfer of transitional reinsurance program funds collected by the Federal government to non-
grandfathered reinsurance-eligible plans in the individual market.
* Possible increase in total risk corridors payment amounts made by the Federal government and decrease in total
risk corridors receipts.
----------------------------------------------------------------------------------------------------------------
\1\ Note: Approximately $13 million in costs are estimated in the RIA below and the remaining costs related to
ICRs are estimated in section VI above.
3. Anticipated Benefits, Costs and Transfers
The impacts of the existing regulations that are being amended and
clarified in this final rule have already been addressed in RIAs
included in previous rulemaking. This RIA only includes the impacts of
new provisions and any changes to previous estimates as a result of
amendments to existing provisions.
Benefits
Provisions of this final rule will help ensure that all individuals
have access to affordable and quality health insurance coverage and the
necessary information to make informed choices. Making quality rating
and ESS information available to consumers will allow them to make
informed choices and provide issuers with an incentive to improve
quality of care and consumer experience. The results from the
Marketplace survey will drive quality improvement in Exchanges by
collecting information on the consumer experience with the Exchange. In
addition, the quality rating and ESS information will also provide
regulators and stakeholders with information to use for monitoring and
oversight purposes. The amendments to special enrollment periods will
ensure that individuals who experience loss of coverage or exceptional
circumstances have continued access to healthcare. The provisions
regarding the formulary exceptions process will ensure that enrollees
will have continued access to necessary prescription drugs.
The provisions of this final rule also establish minimum Federal
standards that determine whether coverage modifications constitute
continuance of an existing product in a market within a State for
products offered both through and outside of an Exchange in the
individual and small group markets. This will minimize unnecessary
terminations of coverage and ensure predictability and continuity for
consumers, while providing issuers the flexibility to make the
necessary adjustments to coverage. The notices of product
discontinuance and renewal will ensure that consumers have necessary
information regarding their choices and the changes in coverage.
The amendments for fixed indemnity insurance will allow such plans
to be sold as secondary to other health insurance coverage that meets
the definition of minimum essential coverage. Such plans may also be
sold to individuals who are deemed to have minimum essential coverage
based on their status as bona fide residents of U.S. territories. This
will allow individuals that buy such coverage to lower their out-of-
pocket costs.
The adjustments to the transitional reinsurance program will help
ensure that the reinsurance payment pool is sufficient to provide the
premium stabilization benefits intended by the statute. This policy may
lower premiums by reducing the uncertainty associated with reinsurance
payments to individual market plans eligible for reinsurance payments.
The adjustments to the risk corridors formula for the 2015 benefit year
will help to mitigate issuers' unexpected administrative costs and
uncertainties around operations and the risk pool, and to stabilize the
market as it continues to transition to full compliance with Affordable
Care Act requirements.
The provisions in this final rule will ensure that non-Federal
requirements do not prevent Navigators, non-Navigator assistance
personnel, certified application counselors and organizations from
providing information and assisting individuals to make informed
choices and obtain health insurance coverage. The provisions in this
rule also specify some of the standards for Navigator and certified
application counselor conduct that will ensure consumer protection
[[Page 30331]]
and ensure that Navigators provide information and services concerning
enrollment in QHPs in a fair and impartial manner and that certified
application counselors act in consumers' best interests. The rule will
also provide HHS with the authority to impose CMPs on Navigators, non-
Navigator assistance personnel, certified application counselors, and
certified application counselor organizations in the FFE who violate
certain Exchange standards applicable to them. This will ensure that
consumers interacting with the Exchange receive high-quality assistance
and robust consumer protections. The provisions to impose CMPs for
provision of false or fraudulent information, and improper use or
disclosure of information will also ensure privacy and security of
consumers' PII.
Aligning the start of annual employer election periods in the FF-
SHOPs with the start of open enrollment in the corresponding individual
market Exchange will benefit issuers. A uniform QHP filing and review
timeline for both markets for 2015 will reduce confusion and provide
efficiencies to scale in review, providing potential resource savings
to QHP issuers. Removing the required minimum lengths of both the
employer election period and the employee open enrollment period will
provide additional flexibility to State-based SHOPs and employers and
allow employers to select plans with the most up-to-date rate
information.
The amendment to provide a one-year transition policy under which a
SHOP will be permitted to not implement employee choice in 2015 will
alleviate State and issuer concerns that employee choice would cause
issuers to price their products and plans higher in 2015 due to
issuers' beliefs about adverse selection. Allowing for this
transitional policy in 2015 will provide minimal disruption to small
group markets.
The amendment to our methodology for calculating the annual
limitation on cost sharing may reduce cost sharing paid by some
enrollees in the individual market.
The amendments to the MLR methodology in States that require the
small group market and individual market to be merged will improve the
consistency of MLR calculations among issuers in those States and
improve the accuracy of rebate payments.
The methodology for determining the required contribution
percentage will provide that determinations of affordability exemptions
will take into account the rate of premium growth over the rate of
income growth. We do not anticipate that this approach will
significantly alter the number of individuals who are expected to
enroll in health insurance plans or make shared responsibility
payments.
Costs
Affected entities will incur costs to comply with the provisions of
this final rule. Costs related to ICRs subject to PRA are discussed in
detail in section VI and include administrative costs incurred by
survey vendors to appeal application denials; costs to QHP issuers
related to data submissions for QRS, ESS administration; costs related
to notice and disclosure requirements for certified application
counselor recertification, consumer authorization for Navigators and
non-Navigator assistance personnel; costs to States to submit a
recommendation for a 2015 transition to employee choice; and a
reduction in costs for issuers in the individual market due to
discontinuation of certification of creditable coverage. In this
section, we discuss other costs related to the provisions of this rule.
Each Exchange must establish its own recertification process for
certified application counselors and designated certified application
counselor organizations. We expect that establishing a process for
recertification will include updating recertification training
materials in all Exchanges. We estimate that up to 18 State Exchanges
will develop their own training materials. We expect that an Exchange
will develop training materials for recertification on an annual basis.
We assume that it will take a mid-level health insurance analyst (with
an hourly labor cost of $49.35) 8 hours to update the training, 4 hours
for a computer programmer (at $52.50 per hour) to update the online
training module and 1 hour by a senior manager (at $79.08 per hour) to
review. The total cost for each State Exchange is estimated to be
approximately $680, and the total cost for18 State Exchanges will be
approximately $12,240.
The requirement for appeals entities to dismiss an appeal if the
request is received via telephonic signature (if the appeals entity is
capable of accepting telephonic withdrawals) will make the process more
efficient and may reduce costs to the appellant.
The ESS will impact enrollees responding to the survey, survey
vendors and QHP issuers offering coverage in the Exchanges. In 2014, a
psychometric test of the survey will be carried out, while in 2015 a
beta test will be performed. The cost to issuers is addressed in
section VI. We anticipate that in 2014, 4,200 enrollees will
participate in the psychometric test and in 2015 onwards, 6,000,040
enrollees will complete the survey. The total cost in 2014 of
administering the survey to enrollees is estimated to be approximately
$45,549 and the total cost to enrollees and survey vendors is estimated
to be approximately $6,507,964 in 2015 and future years. In 2014, only
one survey vendor will conduct the psychometric test and in the
following years, about 40 vendors are expected to conduct the
survey.\42\ In addition, each QHP issuer will have to contract with an
ESS vendor. We estimate approximately $16,000 as the annual cost for a
QHP issuer to contract with an ESS vendor, for a total annual cost of
$9.2 million for 575 QHP issuers.
---------------------------------------------------------------------------
\42\ Detailed burden estimates can be found in the Supporting
Statement for the Health Insurance Marketplace Consumer Experience
Surveys: Enrollee Satisfaction Survey and Marketplace Survey Data
Collection, found at https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html.
---------------------------------------------------------------------------
The Marketplace survey will be administered by a survey vendor
under contract with HHS. A psychometric test will be conducted in 2014
with a beta test in 2015. Consumers will incur burden to respond to the
survey. We estimate that each response will take 0.4 hours for a total
of 3,150 responses requiring 1,260 hours in 2014 and a total of 61,200
responses requiring 24,480 hours in 2015 onwards. Total costs will be
approximately $30,366 in 2014 and $589,968 in following years.\43\
---------------------------------------------------------------------------
\43\ Detailed burden estimates can be found in the Supporting
Statement for the Health Insurance Marketplace Consumer Experience
Surveys: Enrollee Satisfaction Survey and Marketplace Survey Data
Collection, found at https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html.
---------------------------------------------------------------------------
Issuers that provide EHB should already have procedures in place
that allow an enrollee to request and gain access to clinically
appropriate drugs not covered by the plan. This final rule includes
standards for a health plan's exception process that includes an
expedited process for exigent circumstances. This final rule requires
issuers to provide a decision on an exception request based on exigent
circumstances and notify the enrollee or the enrollee's designee and
the prescribing physician (or other prescriber as appropriate) of the
determination no later than 24 hours after receiving the request.
Depending on their current formulary exceptions processes, some issuers
may incur costs to modify them to comply with these requirements.
[[Page 30332]]
Transfers
Previously, the MLR regulation permitted inclusion of ICD-10
conversion costs in quality improving activity expenses only through
the 2013 MLR reporting year. However, the date by which issuers are
required to adopt ICD-10 as the standard medical code has been
postponed past 2013. Therefore, this final rule permits issuers to
include their ICD-10 conversion costs through the MLR reporting year in
which the Secretary requires conversion to be completed. Based on the
2012 MLR data, we estimate that the ICD-10 provision reduced total
rebates for 2012 by less than 2 percent.
This final rule also accounts for the special circumstances of
issuers affected by the CMS November 2013 transitional policy by
allowing those issuers to multiply the incurred claims and expenses for
quality improving activities incurred in 2014 in the MLR numerator by
1.0001. This adjustment is limited to issuers that provided
transitional coverage in the individual or small group markets in
States that adopted the transitional policy. In addition, this final
rule accounts for the special circumstances of the issuers that
provided coverage through the State and Federal Exchanges by allowing
those issuers to multiply the incurred claims and expenses for quality
improving activities incurred in 2014 in the numerator by 1.0004. This
adjustment is limited to issuers offering coverage in the individual or
small group markets through the Exchanges. Based on the 2012 MLR data,
we estimate that the adjustment for issuers affected by the
transitional policy and for issuers affected by the Exchanges rollout
may reduce the total rebates by 0.5 percent for 2014.
In addition, this final rule amends the MLR methodology to clarify
how issuers must calculate MLRs in States that require the small group
market and individual market to be merged for MLR calculation purposes.
This will improve the consistency of MLR calculations among issuers in
those States and improve the accuracy of rebate payments. Currently,
only Massachusetts and Vermont require the small group market and
individual market to be merged Vermont requirements take effect in
2014). If an issuer met the respective MLR standards in the separate
markets, then this provision will not have any impact on rebates.
However, if an issuer met the MLR standards only in one market and
merging the two markets results in the issuer meeting (or being unable
to meet) the MLR standards in the merged market, the issuer may have to
pay lower (or higher) rebates and there will be a transfer from
enrollees to issuers (or from issuers to enrollees). Based on the 2012
MLR data, we anticipate that this change may result in issuers paying
an additional $3.8 million in rebates.
This rule revises the allocation of reinsurance contributions
collected for the 2014 and 2015 benefit years so that if reinsurance
collections fall short of our estimates, reinsurance collections are
allocated first to the reinsurance pool, and second to administrative
expenses and the U.S. Treasury on a pro rata basis. We expect that this
policy will not have a significant effect on transfers, because we
estimate that we will collect the full amount of reinsurance
contributions to fully fund the reinsurance payment pool. This policy
may lower premiums by reducing the uncertainty associated with
reinsurance payments to individual market plans eligible for
reinsurance payments. The Affordable Care Act creates a temporary risk
corridors program for the years 2014, 2015, and 2016 that applies to
QHPs, as defined in Sec. 153.500. The risk corridors program creates a
mechanism for sharing gains and losses between the Federal government
and QHP issuers. The Affordable Care Act establishes the risk corridors
program as a Federal program; consequently, HHS will operate the risk
corridors program under Federal rules. The risk corridors program will
help protect against inaccurate rate setting in the early years of the
Exchanges by limiting the extent of issuer losses and gains. For the
2015 benefit year, we are adjusting the risk corridors formula to help
mitigate QHP issuers' unexpected administrative costs. Although our
initial modeling suggests that this adjustment can increase the total
risk corridors payment amount made by the Federal government and
decrease risk corridors receipts, we believe that this temporary
program will be budget neutral on the net over three years.
C. Regulatory Alternatives
Under the Executive Order, CMS is required to consider alternatives
to issuing rules and alternative regulatory approaches. CMS considered
the regulatory alternatives below:
1. Collecting ESS Data at the Product Level Instead of Each Product Per
Metal Tier
Under this alternative, HHS would have required QHPs to collect ESS
data from a single sample for each product (versus each product in each
metal tier). This option would have reduced the cost for issuers who
offer the same product in multiple tiers. However, collecting data at
the product level would have prevented consumers from understanding
differences in enrollee satisfaction at the individual product per tier
level, which may vary with differences in cost sharing. This would have
reduced the benefits that consumers derive from ESS data.
2. Using Medicaid CAHPS[supreg] As Is Instead of Adding Additional and
New Questions to the ESS
Under this alternative, HHS would have required QHPs to collect
enrollee satisfaction information using the Medicaid CAHPS[supreg]
instrument without further enhancement. The ESS will include more
questions than the Medicaid CAHPS[supreg]--including detailed questions
about the patient's costs--that are particularly appropriate to
Exchange enrollees. Eliminating these questions would have reduced the
cost to issuers, but also would have reduced benefits that consumers
derive from the ESS data.
3. Collecting QRS Data for Each Product Per Metal Tier Instead of at
the Product Level
Under this alternative, HHS would have required QHPs to collect the
QRS data at the same level (individual product per metal tier) as they
collect ESS information. Assuming that QHPs offer each product in two
metal tiers this option would have doubled the cost to QHPs of
collecting QRS data. However, it might not have appreciably increased
consumer information about QHPs in the early years of the Exchanges if
the quality of care in the same product does not differ significantly
within tiers (that is, the variation should only be by the
configuration of cost sharing within a limited range of actuarial
value). Further, a QHP's enrollment size at the product metal level may
be too small in the early years of Exchange implementation to ensure
reliable results.
4. Using the Medicare Advantage (MA) CAHPS[supreg] Instrument and Star
System
Under this alternative, HHS would have required QHPs to collect
enrollee satisfaction information from Exchange enrollees using the MA
CAHPS[supreg] instrument. The ESS presently includes 29 more questions
than MA CAHPS[supreg]. Use of the MA CAHPS[supreg] would have reduced
the cost to consumers and also the QHP cost of data entry. However, the
MA CAHPS[supreg] instrument and Star ratings are designed for a
different population and are not necessarily suitable to measure
experience among
[[Page 30333]]
Exchange enrollees. It also would have had limited applicability for
use by consumers for QHP comparison and selection purposes.
CMS believes that the options adopted for this final rule will be
more efficient ways to extend the protections of the Affordable Care
Act to enrollees without imposing significant burden on issuers and
States.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) requires agencies that issue a
rule to analyze options for regulatory relief of small businesses if a
rule has a significant 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 nonprofit organization that is not dominant
in its field, or (3) a small government jurisdiction with a population
of less than 50,000 (States and individuals are not included in the
definition of ``small entity''). HHS uses as its measure of significant
economic impact on a substantial number of small entities a change in
revenues of more than 3 percent to 5 percent.
As discussed in the Web Portal interim final rule with comment
period published on May 5, 2010 (75 FR 24481), HHS examined the health
insurance industry in depth in the RIA we prepared for the proposed
rule on establishment of the Medicare Advantage program (69 FR 46866,
August 3, 2004). In that analysis it was determined that there were
few, if any, insurance firms underwriting comprehensive health
insurance policies (in contrast, for example, to travel insurance
policies or dental discount policies) that fell below the size
thresholds for ``small entity'' established by the SBA. Based on data
from MLR annual report submissions for the 2012 MLR reporting year,\44\
out of 510 companies offering comprehensive health insurance policies
nationwide, there are 58 small entities, each with less than $35.5
million in earned premiums, that offer individual or group health
insurance coverage and will therefore be subject to the provisions of
this final rule.\45\ Forty three percent of these small entities belong
to holding groups, and many if not all of these small entities are
likely to have other lines of business (for example, insurance business
other than health insurance, and business other than insurance) that
will result in their revenues exceeding $35.5 million. Based on this
analysis, HHS expects that the provisions of this final rule will not
affect a substantial number of small issuers.
---------------------------------------------------------------------------
\44\ These data can be accessed at http://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html.
\45\ The size threshold for ``small'' business established by
the SBA is currently $35.5 million in annual receipts for health
insurance issuers. See ``Table of Small Business Size Standards
Matched To North American Industry Classification System Codes,''
effective July 23, 2013, U.S. Small Business Administration,
available at http://www.sba.gov.
---------------------------------------------------------------------------
The amendments to the annual employer and employee election periods
in the SHOPs, including removing the required minimum lengths of both
the employer election period and the employee open enrollment period
will benefit State-based SHOPs and employers. HHS does not anticipate
that this will impose any costs on small employers.
Some of the entities that voluntarily act as Navigators and non-
Navigator assistance personnel subject to Sec. 155.215, or as
designated certified application counselor organizations, may be small
entities and will incur costs to comply with the provisions of this
final rule. It should be noted that HHS, in its role as the operator of
the FFEs, does not impose any fees on these entities for participating
in their respective programs, nor are there fees for taking the
Federally required training or completing continuing education or
recertification in FFEs. Further, the cost burden related to continuing
education and recertification, and recordkeeping will generally be
considered an allowed cost that will be covered by the Navigator grants
for the FFEs, and these grant funds may be drawn down as the grantee
incurs such costs. The costs associated with these proposals may also
be covered by other compensation provided by an Exchange, such as
payments through contracts to non-Navigator assistance personnel.
Though it is very likely that all costs associated with these proposals
will be largely covered by affected entities' and individuals' funding
sources, HHS cannot guarantee that all such costs will be covered
because of the possibility of budget limitations applicable to the FFE
in any given period, and because there may be variations in how State
Exchanges provide funding for these programs. To the extent that all
such costs will not be covered by these funding sources, other outside
sources may also be available to cover unfunded costs that remain.
Costs incurred by designated certified application counselor
organizations related to continuing education and recertification and
recordkeeping are expected to be low. In some circumstances funds from
sources outside of the Exchange, including Federal funds such as Health
Resources and Services Administration (HRSA) grants to health centers,
or private or State funds may be available to cover certified
application counselor costs.
E. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act (UMRA) of 1995
requires that agencies assess anticipated costs and benefits before
issuing any final rule that includes a Federal mandate that could
result in expenditure in any one year by State, local or tribal
governments, in the aggregate, or by the private sector, of $100
million in 1995 dollars, updated annually for inflation. In 2014, that
threshold level is approximately $141 million.
UMRA does not address the total cost of a final rule. Rather, it
focuses on certain categories of cost, mainly those ``Federal mandate''
costs resulting from--(1) imposing enforceable duties on State, local,
or tribal governments, or on the private sector; or (2) increasing the
stringency of conditions in, or decreasing the funding of, State,
local, or tribal governments under entitlement programs.
This final rule includes mandates on State governments and the
private sector. Issuers, non-Navigator assistance personnel, certified
application counselors and Exchanges are expected to incur costs of
approximately $13 million in 2014 and approximately $85 million in 2015
onwards to comply with the provisions of this final rule. However,
beginning in 2015, issuers in the individual market will experience a
reduction in costs of approximately $26 million due to the
discontinuation of the certification of creditable coverage. Consistent
with policy embodied in UMRA, this final rule has been designed to be
the least burdensome alternative for State, local and tribal
governments, and the private sector while achieving the objectives of
the Affordable Care Act.
F. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a final rule that imposes
substantial direct requirement costs on State and local governments,
preempts State law, or otherwise has Federalism implications.
Since States are the primary regulators of health insurance
coverage, State laws will continue to apply to health insurance
coverage and the business of insurance. A State's authority to pass and
implement
[[Page 30334]]
additional State requirements that affect programs established under
the provisions of title I of the Affordable Care Act is not unlimited,
however, but extends only to the implementation of requirements that
would not prevent the application of the provisions of title I of the
Affordable Care Act, including but not limited to those provisions
which provide authority for functions of an Exchange, such as the
application assistance provided by Navigator programs, non-Navigator
programs and certified application counselor programs.
The final rule provides that non-Navigator assistance personnel
subject to Sec. 155.215, and certified application counselors must
meet any licensing, certification or other standards prescribed by the
State so long as such standards do not prevent the application of the
provisions of title I of the Affordable Care Act, within the meaning of
section 1321(d) of the Affordable Care Act. The final rule also
includes a non-exhaustive list of non-Federal requirements applicable
to Navigators, non-Navigator assistance personnel subject to Sec.
155.215, and certified application counselors that, in HHS's view,
prevent the application of the provisions of title I of the Affordable
Care Act, within the meaning of section 1321(d) of the Affordable Care
Act. They include non-Federal requirements that require referrals to
entities or individuals not required to provide impartial information
or act in a consumer's best interest; non-Federal requirements that
prevent Navigators, non-Navigator assistance personnel subject to Sec.
155.215, or certified application counselors from providing services to
all individuals seeking assistance; non-Federal requirements that
prevent these assisters from providing information regarding
substantive benefits or comparative benefits of different health plans;
non-Federal requirements that facially, or as applied, make it
impossible to fulfill required duties; non-Federal standards that
would, as applied or as implemented in a State, prevent an Exchange's
implementation of the programs for Navigators, non-Navigator personnel
subject to Sec. 155.215 and certified application counselors
consistent with Federal requirements; and non-Federal requirements that
Navigators hold an agent or broker license or requirements that, in
effect, would require all Navigators in the Exchange to be licensed
agents and brokers. These provisions provide HHS's interpretation of
how the preemption standard that Congress established in section
1321(d) of the Affordable Care Act applies to this non-exhaustive list
of non-Federal requirements for these assister programs.
The final rule establishes Federal standards to determine whether
coverage modifications constitute the continuance of an existing
product in a market within a State for coverage offered both through
and outside of an Exchange in the individual and small group markets.
Some States may have different definitions of what changes to a health
insurance product constitute modifications and what changes constitute
terminations and re-filings of new products. The definitions finalized
in this rule will preempt any conflicting State definitions. The
guaranteed renewability sections of the PHS Act provide in pertinent
part that a uniform modification of coverage must be ``consistent with
State law.'' We interpret this statutory language as governing the
extent or type of modifications that may legally be made under State
law. As discussed in the preamble to the final rule published on
February 27, 2013 under section 2703 of the PHS Act (78 FR 13419),
State laws that prevent issuers from uniformly modifying coverage to
comply with Federal law requirements would, in effect, prevent the
application of such requirements and therefore be preempted. States,
however, have the flexibility to broaden the scope of two of the
criteria for what is considered a uniform modification, but not narrow
its scope.
Some States already have requirements for and publicly report
health plan quality and outcomes data, and we want to encourage State
flexibility and innovation, consistent with the Affordable Care Act. In
addition to prominently displaying quality rating information for each
QHP, as calculated by HHS in accordance with the QRS, a State Exchange
may display additional QHP quality-related information, as appropriate.
In compliance with the requirement of Executive Order 13132 that
agencies examine closely any policies that may have Federalism
implications or limit the policymaking discretion of the States, HHS
has engaged in efforts to consult with and work cooperatively with
affected States. HHS has consulted with stakeholders on policies
related to the operation of Exchanges, including the SHOP and the
premium stabilization programs. HHS has held a number of listening
sessions with State representatives to gather public input. HHS
consulted with State representatives through regular meetings with the
NAIC and regular contact with States through the Exchange Establishment
grant and Exchange Blueprint approval processes.
Throughout the process of developing this final rule, HHS has
attempted to balance the States' interests in regulating health
insurance issuers and other entities, such as Navigators, non-Navigator
assistance personnel, and certified application counselors with
creating a Federal baseline for protecting the consumers' interests. By
doing so, it is HHS' view that it has complied with the requirements of
Executive Order 13132. Under the requirements set forth in section 8(a)
of Executive Order 13132, and by the signatures affixed to this rule,
HHS certifies that the CMS Center for Consumer Information and
Insurance Oversight has complied with the requirements of Executive
Order 13132 for the attached final rule in a meaningful and timely
manner.
G. 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 shall submit to
each House of the Congress and to the Comptroller General a report
containing a copy of the rule along with other specified information,
and has been transmitted to Congress and the Comptroller General for
review.
List of Subjects
45 CFR part 144
Health care, Health insurance, Reporting and record keeping
requirements.
45 CFR Part 146
Health care, Health insurance, Reporting and recordkeeping
requirements.
45 CFR Part 147
Health care, Health insurance, Reporting and recordkeeping
requirements, State regulation of health insurance.
45 CFR Part 148
Administrative practice and procedure, Health care, Health
insurance, Penalties, Reporting and recordkeeping requirements.
45 CFR Part 153
Administrative practice and procedure, Adverse selection, Health
care, Health insurance, Health records, Organization and functions
[[Page 30335]]
(Government agencies), Premium stabilization, Reporting and
recordkeeping requirements, Reinsurance, Risk adjustment, Risk
corridors, Risk mitigation, State and local governments.
45 CFR Part 154
Administrative practice and procedure, Claims, Health care, Health
insurance, Health plans, Penalties, Reporting and recordkeeping
requirements.
45 CFR Part 155
Administrative practice and procedure, Health care access, Health
insurance, Reporting and recordkeeping requirements, State and local
governments, Cost-sharing reductions, Advance payments of premium tax
credit, Administration and calculation of advance payments of the
premium tax credit, Plan variations, Actuarial value.
45 CFR Part 156
Administrative appeals, Administrative practice and procedure,
Administration and calculation of advance payments of premium tax
credit, Advertising, Advisory Committees, Brokers, Conflict of
interest, Consumer protection, Cost-sharing reductions, Grant programs-
health, Grants administration, Health care, Health insurance, Health
maintenance organization (HMO), Health records, Hospitals, American
Indian/Alaska Natives, Individuals with disabilities, Loan programs-
health, Organization and functions (Government agencies), Medicaid,
Payment and collections reports, Public assistance programs, Reporting
and recordkeeping requirements, State and local governments, Sunshine
Act, Technical assistance, Women, and Youth.
45 CFR Part 158
Administrative practice and procedure, Claims, Health care, Health
insurance, Health plans, Penalties, Reporting and recordkeeping
requirements, Premium revenues, Medical loss ratio, Rebating.
For the reasons set forth in the preamble, the Department of Health
and Human Services amends 45 CFR parts 144, 146, 147, 148, 153, 154,
155, 156, and 158 as set forth below:
PART 144--REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE
0
1. The authority citation for part 144 continues to read as follows:
Authority: Secs. 2701 through 2763, 2791, and 2792 of the Public
Health Service Act, 42 U.S.C. 300gg through 300gg-63, 300gg-91, and
300gg-92.
0
2. Section 144.103 is amended by adding new definitions of ``plan'' and
``product'' in alphabetical order to read as follows:
Sec. 144.103 Definitions.
* * * * *
Plan means, with respect to an issuer and a product, the pairing of
the health insurance coverage benefits under the product with a metal
tier level (as described in sections 1302(d) and (e) of the Affordable
Care Act) and service area. The product comprises all plans offered
within the product, and the combination of all plans offered within a
product constitutes the total service area of the product.
* * * * *
Product means a discrete package of health insurance coverage
benefits that a health insurance issuer offers using a particular
product network type within a service area.
* * * * *
PART 146--REQUIREMENTS FOR THE GROUP HEALTH INSURANCE MARKET
0
3. The authority citation for part 146 continues to read as follows:
Authority: Secs. 2702 through 2705, 2711 through 2723, 2791, and
2792 of the PHS Act (42 U.S.C. 300gg-1 through 300gg-5, 300gg-11
through 300gg-23, 300gg-91, and 300gg-92).
0
4. Section 146.152 is amended by--
0
a. Revising paragraphs (b)(4), (c)(1) and (f); and
0
b. Adding new paragraph (h).
The revision and addition read as follows:
Sec. 146.152 Guaranteed renewability of coverage for employers in the
group market.
* * * * *
(b) * * *
* * * * *
(4) Termination of product. The issuer is ceasing to offer coverage
in the market in accordance with paragraph (c) or (d) of this section
and applicable State law.
* * * * *
(c) * * *
(1) The issuer provides notice in writing, in a form and manner
specified by the Secretary, to each plan sponsor provided that
particular product in that market (and to all participants and
beneficiaries covered under such coverage) of the discontinuation at
least 90 days before the date the coverage will be discontinued;
* * * * *
(f) Exception for uniform modification of coverage. (1) Only at the
time of coverage renewal may issuers modify the health insurance
coverage for a product offered to a group health plan in the
following--
(i) Large group market; and
(ii) Small group market if, for coverage available in this market
(other than only through one or more bona fide associations), the
modification is consistent with State law and is effective uniformly
among group health plans with that product.
(2) For purposes of paragraph (f)(1)(ii) of this section,
modifications made uniformly and solely pursuant to applicable Federal
or State requirements are considered a uniform modification of coverage
if:
(i) The modification is made within a reasonable time period after
the imposition or modification of the Federal or State requirement; and
(ii) The modification is directly related to the imposition or
modification of the Federal or State requirement.
(3) For purposes of paragraph (f)(1)(ii) of this section, other
types of modifications made uniformly are considered a uniform
modification of coverage if the health insurance coverage for the
product in the small group market meets all of the following criteria:
(i) The product is offered by the same health insurance issuer
(within the meaning of section 2791(b)(2) of the PHS Act);
(ii) The product is offered as the same product network type (for
example, health maintenance organization, preferred provider
organization, exclusive provider organization, point of service, or
indemnity);
(iii) The product continues to cover at least a majority of the
same service area;
(iv) Within the product, each plan has the same cost-sharing
structure as before the modification, except for any variation in cost
sharing solely related to changes in cost and utilization of medical
care, or to maintain the same metal tier level described in sections
1302(d) and (e) of the Affordable Care Act; and
(v) The product provides the same covered benefits, except for any
changes in benefits that cumulatively impact the rate for any plan
within the product within an allowable variation of +/-2 percentage
points (not including changes pursuant to applicable Federal or State
requirements).
[[Page 30336]]
(4) A State may only broaden the standards in paragraphs
(f)(3)(iii) and (iv) of this section.
* * * * *
(h) Notice of renewal of coverage. If an issuer in the small group
market is renewing grandfathered coverage as described in paragraph (a)
of this section, or uniformly modifying grandfathered coverage as
described in paragraph (f) of this section, the issuer must provide to
each plan sponsor written notice of the renewal at least 60 calendar
days before the date the coverage will be renewed in a form and manner
specified by the Secretary.
0
5. Section 146.180 is revised to read as follows:
Sec. 146.180 Treatment of non-Federal governmental plans.
(a) Opt-out election for self-funded non-Federal governmental
plans--(1) Requirements subject to exemption. The PHS Act requirements
described in this paragraph are the following:
(i) Limitations on preexisting condition exclusion periods in
accordance with section 2701 of the PHS Act as codified before
enactment of the Affordable Care Act.
(ii) Special enrollment periods for individuals and dependents
described under section 2704(f) of the PHS Act.
(iii) Prohibitions against discriminating against individual
participants and beneficiaries based on health status under section
2705 of the PHS Act, except that the sponsor of a self-funded non-
Federal governmental plan cannot elect to exempt its plan from
requirements under section 2705(a)(6) and 2705(c) through (f) that
prohibit discrimination with respect to genetic information.
(iv) Standards relating to benefits for mothers and newborns under
section 2725 of the PHS Act.
(v) Parity in mental health and substance use disorder benefits
under section 2726 of the PHS Act.
(vi) Required coverage for reconstructive surgery following
mastectomies under section 2727 of the PHS Act.
(vii) Coverage of dependent students on a medically necessary leave
of absence under section 2728 of the PHS Act.
(2) General rule. For plan years beginning on or after September
23, 2010, a sponsor of a non-Federal governmental plan may elect to
exempt its plan, to the extent the plan is not provided through health
insurance coverage (that is, it is self-funded), from one or more of
the requirements described in paragraphs (a)(1)(iv) through (vii) of
this section.
(3) Special rule for certain collectively bargained plans. In the
case of a plan that is maintained pursuant to a collective bargaining
agreement that was ratified before March 23, 2010, and whose sponsor
made an election to exempt its plan from any of the requirements
described in paragraphs (a)(1)(i) through (iii) of this section, the
provisions of paragraph (a)(2) of this section apply for plan years
beginning after the expiration of the term of the agreement.
(4) Examples--(i) Example 1. A non-Federal governmental employer
has elected to exempt its self-funded group health plan from all of the
requirements described in paragraph (a)(1) of this section. The plan
year commences September 1 of each year. The plan is not subject to the
provisions of paragraph (a)(2) of this section until the plan year that
commences on September 1, 2011. Accordingly, for that plan year and any
subsequent plan years, the plan sponsor may elect to exempt its plan
only from the requirements described in paragraphs (a)(1)(iv) through
(vii) of this section.
(ii) Example 2. A non-Federal governmental employer has elected to
exempt its collectively bargained self-funded plan from all of the
requirements described in paragraph (a)(1) of this section. The
collective bargaining agreement applies to five plan years, October 1,
2009 through September 30, 2014. For the plan year that begins on
October 1, 2014, the plan sponsor is no longer permitted to elect to
exempt its plan from the requirements described in paragraph (a)(1) of
this section. Accordingly, for that plan year and any subsequent plan
years, the plan sponsor may elect to exempt its plan only from the
requirements described in paragraphs (a)(1)(iv) through (vii) of this
section.
(5) Limitations. (i) An election under this section cannot
circumvent a requirement of the PHS Act to the extent the requirement
applied to the plan before the effective date of the election.
(A) Example 1. A plan is subject to requirements of section 2727 of
the PHS Act, under which a plan that covers medical and surgical
benefits with respect to a mastectomy must cover reconstructive surgery
and certain other services following a mastectomy. An enrollee who has
had a mastectomy receives reconstructive surgery on August 24. Claims
with respect to the surgery are submitted to and processed by the plan
in September. The group health plan commences a new plan year each
September 1. Effective September 1, the plan sponsor elects to exempt
its plan from section 2727 of the PHS Act. The plan cannot, on the
basis of its exemption election, decline to pay for the claims incurred
on August 24.
(B) [Reserved]
(ii) If a group health plan is co-sponsored by two or more
employers, then only plan enrollees of the non-Federal governmental
employer(s) with a valid election under this section are affected by
the election.
(6) Stop-loss or excess risk coverage. For purposes of this
section--
(i) Subject to paragraph (a)(6)(ii) of this section, the purchase
of stop-loss or excess risk coverage by a self-funded non-Federal
governmental plan does not prevent an election under this section.
(ii) Regardless of whether coverage offered by an issuer is
designated as ``stop-loss'' coverage or ``excess risk'' coverage, if it
is regulated as group health insurance under an applicable State law,
then for purposes of this section, a non-Federal governmental plan that
purchases the coverage is considered to be fully insured. In that
event, a plan may not be exempted under this section from the
requirements described in paragraph (a)(1) of this section.
(7) Construction. Nothing in this part should be construed as
imposing collective bargaining obligations on any party to the
collective bargaining process.
(b) Form and manner of election--(1) Election requirements. The
election must meet the following requirements:
(i) Be made in an electronic format in a form and manner as
described by the Secretary in guidance.
(ii) Be made in conformance with all of the plan sponsor's rules,
including any public hearing requirements.
(iii) Specify the beginning and ending dates of the period to which
the election is to apply. This period can be either of the following
periods:
(A) A single specified plan year, as defined in Sec. 144.103 of
this subchapter.
(B) The ``term of the agreement,'' as specified in paragraph (b)(2)
of this section, in the case of a plan governed by collective
bargaining.
(iv) Specify the name of the plan and the name and address of the
plan administrator, and include the name and telephone number of a
person CMS may contact regarding the election.
(v) State that the plan does not include health insurance coverage,
or identify which portion of the plan is not funded through health
insurance coverage.
(vi) Specify each requirement described in paragraph (a)(1) of this
section from which the plan sponsor elects to exempt the plan.
(vii) Certify that the person signing the election document,
including (if
[[Page 30337]]
applicable) a third party plan administrator, is legally authorized to
do so by the plan sponsor.
(viii) Include, as an attachment, a copy of the notice described in
paragraph (f) of this section.
(ix) In the case of a plan sponsor submitting one opt-out election
for all group health plans subject to the same collective bargaining
agreement, include a list of plans subject to the agreement.
(x) In the case of a plan sponsor submitting opt-out elections for
more than one group health plan that is not subject to a collective
bargaining agreement, submit a separate election document for each such
plan.
(2) ``Term of the agreement'' defined. Except as provided in
paragraphs (b)(2)(i) and (ii) of this section, for purposes of this
section ``term of the agreement'' means all group health plan years
governed by a single collective bargaining agreement.
(i) In the case of a group health plan for which the last plan year
governed by a prior collective bargaining agreement expires during the
bargaining process for a new agreement, the term of the prior agreement
includes all plan years governed by the agreement plus the period of
time that precedes the latest of the following dates, as applicable,
with respect to the new agreement:
(A) The date of an agreement between the governmental employer and
union officials.
(B) The date of ratification of an agreement between the
governmental employer and the union.
(C) The date impasse resolution, arbitration or other closure of
the collective bargaining process is finalized when agreement is not
reached.
(ii) In the case of a group health plan governed by a collective
bargaining agreement for which closure is not reached before the last
plan year under the immediately preceding agreement expires, the term
of the new agreement includes all plan years governed by the agreement
excluding the period that precedes the latest applicable date specified
in paragraph (b)(2)(i) of this section.
(3) Construction--(i) Dispute resolution. Nothing in paragraph
(b)(1)(ii) of this section should be construed to mean that CMS
arbitrates disputes between plan sponsors, participants, beneficiaries,
or their representatives regarding whether an election complies with
all of a plan sponsor's rules.
(ii) Future elections not preempted. If a plan must comply with one
or more requirements described in paragraph (a)(1) of this section for
a given plan year or period of plan coverage, nothing in this section
should be construed as preventing a plan sponsor from submitting an
election in accordance with this section for a subsequent plan year or
period of plan coverage.
(c) Filing a timely election--(1) Plan not governed by collective
bargaining. Subject to paragraph (c)(4) of this section, if a plan is
not governed by a collective bargaining agreement, a plan sponsor or
entity acting on behalf of a plan sponsor must file an election with
CMS before the first day of the plan year.
(2) Plan governed by a collective bargaining agreement. Subject to
paragraph (d)(4) of this section, if a plan is governed by a collective
bargaining agreement that was ratified before March 23, 2010, a plan
sponsor or entity acting on behalf of a plan sponsor must file an
election with CMS before the first day of the first plan year governed
by a collective bargaining agreement, or by the 45th day after the
latest applicable date specified in paragraph (b)(2)(i) of this
section, if the 45th day falls on or after the first day of the plan
year.
(3) Special rule for timely filing. If the latest filing date
specified under paragraphs (c)(1) or (c)(2) of this section falls on a
Saturday, Sunday, or a State or Federal holiday, CMS accepts filings
submitted on the next business day.
(4) Filing extension based on good cause. CMS may extend the
deadlines specified in paragraphs (c)(1) and (2) of this section for
good cause if the plan substantially complies with the requirements of
paragraph (e) of this section.
(5) Failure to file a timely election. Absent an extension under
paragraph (c)(4) of this section, a plan sponsor's failure to file a
timely election under paragraph (c)(1) or (2) of this section makes the
plan subject to all requirements of this part for the entire plan year
to which the election would have applied, or, in the case of a plan
governed by a collective bargaining agreement, for any plan years under
the agreement for which the election is not timely filed.
(d) Additional information required--(1) Written notification. If
an election is timely filed, but CMS determines that the election
document (or the notice to plan enrollees) does not meet all of the
requirements of this section, CMS may notify the plan sponsor, or other
entity that filed the election, that it must submit any additional
information that CMS has determined is necessary to meet those
requirements. The additional information must be filed with CMS by the
later of the following dates:
(i) The last day of the plan year.
(ii) The 45th day after the date of CMS's written notification
requesting additional information.
(2) Timely response. For submissions via hard copy via U.S. Mail,
CMS uses the postmark on the envelope in which the additional
information is submitted to determine that the information is timely
filed as specified under paragraph (d)(1) of this section. If the
latest filing date falls on a Saturday, Sunday, or a State or Federal
holiday, CMS accepts a postmark on the next business day.
(3) Failure to respond timely. CMS may invalidate an election if
the plan sponsor, or other entity that filed the election, fails to
timely submit the additional information as specified under paragraph
(d)(1) of this section.
(e) Notice to enrollees--(1) Mandatory notification. (i) A plan
that makes the election described in this section must notify each
affected enrollee of the election, and explain the consequences of the
election. For purposes of paragraph (e) of this section, if the
dependent(s) of a participant reside(s) with the participant, a plan
need only provide notice to the participant.
(ii) The notice must be in writing and, except as provided in
paragraph (e)(2) of this section with regard to initial notices, must
be provided to each enrollee at the time of enrollment under the plan,
and on an annual basis no later than the last day of each plan year (as
defined in Sec. 144.103 of this subchapter) for which there is an
election.
(iii) A plan may meet the notification requirements of paragraph
(e) of this section by prominently printing the notice in a summary
plan description, or equivalent description, that it provides to each
enrollee at the time of enrollment, and annually. Also, when a plan
provides a notice to an enrollee at the time of enrollment, that notice
may serve as the initial annual notice for that enrollee.
(2) Initial notices. (i) If a plan is not governed by a collective
bargaining agreement, with regard to the initial plan year to which an
election under this section applies, the plan must provide the initial
annual notice of the election to all enrollees before the first day of
that plan year, and notice at the time of enrollment to all individuals
who enroll during that plan year.
(ii) In the case of a collectively bargained plan, with regard to
the initial plan year to which an election under this section applies,
the plan must provide the initial annual notice of the election to all
enrollees before the first day of the plan year, or within 30 days
after the latest applicable date specified in paragraph (b)(2)(i) of
this section if
[[Page 30338]]
the 30th day falls on or after the first day of the plan year. Also,
the plan must provide a notice at the time of enrollment to individuals
who--
(A) Enroll on or after the first day of the plan year, when closure
of the collective bargaining process is reached before the plan year
begins; or
(B) Enroll on or after the latest applicable date specified in
paragraph (b)(2)(i) of this section if that date falls on or after the
first day of the plan year.
(3) Notice content. The notice must include at least the following
information:
(i) The specific requirements described in paragraph (a)(1) of this
section from which the plan sponsor is electing to exempt the plan, and
a statement that, in general, Federal law imposes these requirements
upon group health plans.
(ii) A statement that Federal law gives the plan sponsor of a self-
funded non-Federal governmental plan the right to exempt the plan in
whole, or in part, from the listed requirements, and that the plan
sponsor has elected to do so.
(iii) A statement identifying which parts of the plan are subject
to the election.
(iv) A statement identifying which of the listed requirements, if
any, apply under the terms of the plan, or as required by State law,
without regard to an exemption under this section.
(f) Subsequent elections--(1) Election renewal. A plan sponsor may
renew an election under this section through subsequent elections. The
timeliness standards described in paragraph (c) of this section apply
to election renewals under paragraph (f) of this section.
(2) Form and manner of renewal. Except for the requirement to
forward to CMS a copy of the notice to enrollees under paragraph
(b)(1)(viii) of this section, the plan sponsor must comply with the
election requirements of paragraph (b)(1) of this section. In lieu of
providing a copy of the notice under paragraph (b)(1)(viii) of this
section, the plan sponsor may include a statement that the notice has
been, or will be, provided to enrollees as specified under paragraph
(e) of this section.
(3) Election renewal includes provisions from which plan not
previously exempted. If an election renewal includes a requirement
described in paragraph (a)(1) of this section from which the plan
sponsor did not elect to exempt the plan for the preceding plan year,
the advance notification requirements of paragraph (e)(2) of this
section apply with respect to the additional requirement(s) of
paragraph (a) of this section from which the plan sponsor is electing
to exempt the plan.
(4) Special rules regarding renewal of an election under a
collective bargaining agreement--(i) If protracted negotiations with
respect to a new agreement result in an extension of the term of the
prior agreement (as provided under paragraph (b)(2)(i) of this section)
under which an election under this section was in effect, the plan must
comply with the enrollee notification requirements of paragraph (e)(1)
of this section, and, following closure of the collective bargaining
process, must file an election renewal with CMS as provided under
paragraph (c)(2) of this section.
(ii) If a single plan applies to more than one bargaining unit, and
the plan is governed by collective bargaining agreements of varying
lengths, paragraph (c)(2) of this section, with respect to an election
renewal, applies to the plan as governed by the agreement that results
in the earliest filing date.
(g) Requirements not subject to exemption--(1) Genetic information.
Without regard to an election under this section that exempts a non-
Federal governmental plan from any or all of the provisions of
Sec. Sec. 146.111 and 146.121, the exemption election must not be
construed to exempt the plan from any provisions of this part that
pertain to genetic information.
(2) Enforcement. CMS enforces these requirements as provided under
paragraph (j) of this section.
(h) Effect of failure to comply with certification and notification
requirements--(1) Substantial failure--(i) General rule. Except as
provided in paragraph (h)(1)(iii) of this section, a substantial
failure to comply with paragraph (e) or (g)(1) of this section results
in the invalidation of an election under this section with respect to
all plan enrollees for the entire plan year. That is, the plan is
subject to all requirements of this part for the entire plan year to
which the election otherwise would have applied.
(ii) Determination of substantial failure. CMS determines whether a
plan has substantially failed to comply with a requirement of paragraph
(e) or (g)(1) of this section based on all relevant facts and
circumstances, including previous record of compliance, gravity of the
violation and whether a plan corrects the failure, as warranted, within
30 days of learning of the violation. However, in general, a plan's
failure to provide a notice of the fact and consequences of an election
under this section to an individual at the time of enrollment, or on an
annual basis before a given plan year expires, constitutes a
substantial failure.
(iii) Exceptions--(A) Multiple employers. If the plan is sponsored
by multiple employers, and only certain employers substantially fail to
comply with the requirements of paragraph (e) or (g)(1) of this
section, then the election is invalidated with respect to those
employers only, and not with respect to other employers that complied
with those requirements, unless the plan chooses to cancel its election
entirely.
(B) Limited failure to provide notice. If a substantial failure to
notify enrollees of the fact and consequences of an election is limited
to certain individuals, the election under this section is valid only
if, for the plan year with respect to which the failure has occurred,
the plan agrees not to apply the election with respect to the
individuals who were not notified and so informs those individuals in
writing.
(2) Examples--(i) Example 1. A self-funded, non-Federal group
health plan is co-sponsored by 10 school districts. Nine of the school
districts have fully complied with the requirements of paragraph (e) of
this section, including providing notice to new employees at the time
of their enrollment in the plan, regarding the group health plan's
exemption under this section from requirements of this part. One school
district, which hired 10 new teachers during the summer for the
upcoming school year, neglected to notify three of the new hires about
the group health plan's exemption election at the time they enrolled in
the plan. The school district has substantially failed to comply with a
requirement of paragraph (e) of this section with respect to these
individuals. The school district learned of the oversight six weeks
into the school year, and promptly (within 30 days of learning of the
oversight) provided notice to the three teachers regarding the plan's
exemption under this section and that the exemption does not apply to
them, or their dependents, during the plan year of their enrollment
because of the plan's failure to timely notify them of its exemption.
The plan complies with the requirements of this part for these
individuals for the plan year of their enrollment. CMS would not
require the plan to come into compliance with the requirements of this
part for other enrollees.
(ii) Example 2. Two non-Federal governmental employers cosponsor a
self-funded group health plan. One employer substantially fails to
comply with the requirements of paragraph (e) of this section. While
the plan may limit the invalidation of the election to enrollees of the
plan sponsor that is
[[Page 30339]]
responsible for the substantial failure, the plan sponsors determine
that administering the plan in that manner would be too burdensome.
Accordingly, in this example, the plan sponsors choose to cancel the
election entirely. Both plan sponsors come into compliance with the
requirements of this part with respect to all enrollees for the plan
year for which the substantial failure has occurred.
(i) Election invalidated. If CMS finds cause to invalidate an
election under this section, the following rules apply:
(1) CMS notifies the plan sponsor (and the plan administrator if
other than the plan sponsor and the administrator's address is known to
CMS) in writing that CMS has made a preliminary determination that an
election is invalid, and States the basis for that determination.
(2) CMS's notice informs the plan sponsor that it has 45 days after
the date of CMS's notice to explain in writing why it believes its
election is valid. The plan sponsor should provide applicable statutory
and regulatory citations to support its position.
(3) CMS verifies that the plan sponsor's response is timely filed
as provided under paragraph (c)(3) of this section. CMS will not
consider a response that is not timely filed.
(4) If CMS's preliminary determination that an election is invalid
remains unchanged after CMS considers the plan sponsor's timely
response (or in the event that the plan sponsor fails to respond
timely), CMS provides written notice to the plan sponsor (and the plan
administrator if other than the plan sponsor and the administrator's
address is known to CMS) of CMS's final determination that the election
is invalid. Also, CMS informs the plan sponsor that, within 45 days of
the date of the notice of final determination, the plan, subject to
paragraph (i)(1)(iii) of this section, must comply with all
requirements of this part for the specified period for which CMS has
determined the election to be invalid.
(j) Enforcement. To the extent that an election under this section
has not been filed or a non-Federal governmental plan otherwise is
subject to one or more requirements of this part, CMS enforces those
requirements under part 150 of this subchapter. This may include
imposing a civil money penalty against the plan or plan sponsor, as
determined under subpart C of part 150.
(k) Construction. Nothing in this section should be construed to
prevent a State from taking the following actions:
(1) Establishing, and enforcing compliance with, the requirements
of State law (as defined in Sec. 146.143(d)(1)), including
requirements that parallel provisions of title XXVII of the PHS Act,
that apply to non-Federal governmental plans or sponsors.
(2) Prohibiting a sponsor of a non-Federal governmental plan within
the State from making an election under this section.
PART 147--HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND
INDIVIDUAL HEALTH INSURANCE MARKETS
0
6. The authority citation for part 147 continues to read as follows:
Authority: Secs. 2701 through 2763, 2791, and 2792 of the
Public Health Service Act (42 U.S.C. 300gg through 300gg-63, 300gg-
91, and 300gg-92), as amended.
0
7. Section 147.104 is amended by revising paragraph (b)(1)(i) and
adding paragraph (h) to read as follows:
Sec. 147.104 Guaranteed availability of coverage.
* * * * *
(b) * * *
(1) * * *
(i) Group market. (A) Subject to paragraph (b)(1)(i)(B) of this
section, a health insurance issuer in the group market must allow an
employer to purchase health insurance coverage for a group health plan
at any point during the year.
(B) In the case of a group health plan in the small group market
that cannot comply with employer contribution or group participation
rules for the offering of health insurance coverage, as allowed under
applicable State law and in the case of a QHP offered in the SHOP, as
permitted by Sec. 156.1250(c) of this subchapter, a health insurance
issuer may restrict the availability of coverage to an annual
enrollment period that begins November 15 and extends through December
15 of each calendar year.
(C) With respect to coverage in the small group market, and in the
large group market if such coverage is offered through a Small Business
Health Options Program (SHOP) in a State, coverage must become
effective consistent with the dates described in Sec. 155.725(a)(2) of
this subchapter, except as provided in paragraph (b)(1)(iii) of this
section.
* * * * *
(h) Construction. Nothing in this section should be construed to
require an issuer to offer coverage otherwise prohibited under
applicable Federal law.
0
8. Section 147.106 is amended by--
0
a. Revising paragraphs (b)(4), (c)(1), and (e);
0
b. Redesignating paragraphs (f), (g), and (h) as paragraphs (h), (i)
and (j), respectively; and
0
c. Adding new paragraphs (f) and (g).
The revisions and additions read as follows:
Sec. 147.106 Guaranteed renewability of coverage.
* * * * *
(b) * * *
(4) Termination of product. The issuer is ceasing to offer coverage
in the market in accordance with paragraph (c) or (d) of this section
and applicable State law.
* * * * *
(c) * * *
(1) The issuer provides notice in writing, in a form and manner
specified by the Secretary, to each plan sponsor or individual, as
applicable, provided that particular product in that market (and to all
participants and beneficiaries covered under such coverage) of the
discontinuation at least 90 calendar days before the date the coverage
will be discontinued.
* * * * *
(e) Exception for uniform modification of coverage. (1) Only at the
time of coverage renewal may issuers modify the health insurance
coverage for a product offered to a group health plan or an individual,
as applicable, in the following:
(i) Large group market.
(ii) Small group market if, for coverage available in this market
(other than only through one or more bona fide associations), the
modification is consistent with State law and is effective uniformly
among group health plans with that product.
(iii) Individual market if the modification is consistent with
State law and is effective uniformly for all individuals with that
product.
(2) For purposes of paragraphs (e)(1)(ii) and (iii) of this
section, modifications made uniformly and solely pursuant to applicable
Federal or State requirements are considered a uniform modification of
coverage if:
(i) The modification is made within a reasonable time period after
the imposition or modification of the Federal or State requirement; and
(ii) The modification is directly related to the imposition or
modification of the Federal or State requirement.
(3) Other types of modifications made uniformly are considered a
uniform modification of coverage if the health insurance coverage for
the product in the individual or small group market meets all of the
following criteria:
[[Page 30340]]
(i) The product is offered by the same health insurance issuer
(within the meaning of section 2791(b)(2) of the PHS Act);
(ii) The product is offered as the same product network type (for
example, health maintenance organization, preferred provider
organization, exclusive provider organization, point of service, or
indemnity);
(iii) The product continues to cover at least a majority of the
same service area;
(iv) Within the product, each plan has the same cost-sharing
structure as before the modification, except for any variation in cost
sharing solely related to changes in cost and utilization of medical
care, or to maintain the same metal tier level described in sections
1302(d) and (e) of the Affordable Care Act; and
(v) The product provides the same covered benefits, except for any
changes in benefits that cumulatively impact the plan-adjusted index
rate (as described in Sec. 156.80(d)(2) of this subchapter) for any
plan within the product within an allowable variation of +/-2
percentage points (not including changes pursuant to applicable Federal
or State requirements).
(4) A State may only broaden the standards in paragraphs
(e)(3)(iii) and (iv) of this section.
(f) Notice of renewal of coverage. (1) If an issuer in the
individual market is renewing non-grandfathered coverage as described
in paragraph (a) of this section, or uniformly modifying non-
grandfathered coverage as described in paragraph (e) of this section,
the issuer must provide to each individual written notice of the
renewal before the date of the first day of the next annual open
enrollment period in a form and manner specified by the Secretary.
(2) If an issuer in the small group market is renewing coverage as
described in paragraph (a) of this section, or uniformly modifying
coverage as described in paragraph (e) of this section, the issuer must
provide to each plan sponsor or individual, as applicable, written
notice of the renewal at least 60 calendar days before the date of the
coverage will be renewed in a form and manner specified by the
Secretary.
(g) Construction. (1) Nothing in this section should be construed
to require an issuer to renew or continue in force coverage for which
continued eligibility would otherwise be prohibited under applicable
Federal law.
(2) Medicare eligibility or entitlement is not a basis for
nonrenewal or termination of an individual's health insurance coverage
in the individual market.
* * * * *
PART 148--REQUIREMENTS FOR THE INDIVIDUAL HEALTH INSURANCE MARKET
0
9. The authority citation for part 148 is revised to read as follows:
Authority: Secs. 2701 through 2763, 2791, and 2792 of the
Public Health Service Act (42 U.S.C. 300gg through 300gg-63, 300gg-
91, and 300gg-92), as amended.
0
10. Section 148.101 is revised to read as follows:
Sec. 148.101 Basis and purpose.
This part implements sections 2741 through 2763 and 2791 and 2792
of the PHS Act. Its purpose is to guarantee the renewability of all
coverage in the individual market. It also provides certain protections
for mothers and newborns with respect to coverage for hospital stays in
connection with childbirth and protects all individuals and family
members who have, or seek, individual health insurance coverage from
discrimination based on genetic information.
0
11. Section 148.102 is revised to read as follows:
Sec. 148.102 Scope, applicability, and effective dates.
(a) Scope and applicability. (1) Individual health insurance
coverage includes all health insurance coverage (as defined in Sec.
144.103 of this subchapter) that is neither health insurance coverage
sold in connection with an employment-related group health plan, nor
short-term, limited-duration coverage as defined in Sec. 144.103 of
this subchapter.
(2) The requirements that pertain to guaranteed renewability for
all individuals, to protections for mothers and newborns with respect
to hospital stays in connection with childbirth, and to protections
against discrimination based on genetic information apply to all
issuers of individual health insurance coverage in the State.
(b) Applicability date. Except as provided in Sec. 148.124
(certificate of creditable coverage), Sec. 148.170 (standards relating
to benefits for mothers and newborns), and Sec. 148.180 (prohibition
of health discrimination based on genetic information), the
requirements of this part apply to health insurance coverage offered,
sold, issued, renewed, in effect, or operated in the individual market
after June 30, 1997.
Sec. 148.103 [Removed]
0
12. Section 148.103 is removed.
0
13. Section 148.120 is revised to read as follows:
Sec. 148.120 Guaranteed availability of individual health insurance
coverage to certain individuals with prior group coverage.
The rules for guaranteeing the availability of individual health
insurance coverage to certain eligible individuals with prior group
coverage have been superseded by the requirements of Sec. 147.104 of
this subchapter, which set forth Federal requirements for guaranteed
availability of coverage in the group and individual markets.
0
14. Section 148.122 is amended by--
0
a. Revising paragraphs (a), (c)(3), (d)(1), and (g); and
0
b. Adding new paragraph (i).
The revision and addition read as follows:
Sec. 148.122 Guaranteed renewability of individual health insurance
coverage.
(a) Applicability. This section applies to non-grandfathered and
grandfathered health plans (within the meaning of Sec. 147.140 of this
subchapter) that are individual health insurance coverage. See also
Sec. 147.106 of this subchapter for requirements relating to
guaranteed renewability of coverage with respect to non-grandfathered
health plans.
* * * * *
(c) * * *
(3) Termination of product. The issuer is ceasing to offer coverage
in the market in accordance with paragraph (d) or (e) of this section
and applicable State law.
* * * * *
(d) * * *
(1) Provides notice in writing, in a form and manner specified by
the Secretary, to each individual provided coverage of that type of
health insurance at least 90 calendar days before the date the coverage
will be discontinued.
* * * * *
(g) Exception for uniform modification of coverage. (1) An issuer
may, only at the time of coverage renewal, modify the health insurance
coverage for a product offered in the individual market if the
modification is consistent with State law and is effective uniformly
for all individuals with that product.
(2) For purposes of paragraph (g) of this section, modifications
made uniformly and solely pursuant to applicable Federal or State
requirements are considered a uniform modification of coverage if:
(i) The modification is made within a reasonable time period after
the imposition or modification of the Federal or State requirement; and
[[Page 30341]]
(ii) The modification is directly related to the imposition or
modification of the Federal or State requirement.
(3) For purposes of paragraph (g) of this section, other types of
modifications made uniformly are considered a uniform modification of
coverage if the health insurance coverage for the product meets all of
the following criteria:
(i) The product is offered by the same health insurance issuer
(within the meaning of section 2791(b)(2) of the PHS Act);
(ii) The product is offered as the same product network type (for
example, health maintenance organization, preferred provider
organization, exclusive provider organization, point of service, or
indemnity);
(iii) The product continues to cover at least a majority of the
same service area;
(iv) Within the product, each plan has the same cost-sharing
structure as before the modification, except for any variation in cost
sharing solely related to changes in cost and utilization of medical
care, or to maintain the same metal tier level described in sections
1302(d) and (e) of the Affordable Care Act; and
(v) The product provides the same covered benefits, except for any
changes in benefits that cumulatively impact rate for any plan within
the product within an allowable variation of +/- 2 percentage points
(not including changes pursuant to applicable Federal or State
requirements).
(4) A State may only broaden the standards in paragraphs
(g)(3)(iii) and (iv) of this section.
* * * * *
(i) Notice of renewal of coverage. If an issuer is renewing
grandfathered coverage as described in paragraph (b) of this section,
or uniformly modifying grandfathered coverage as described in paragraph
(g) of this section, the issuer must provide to each individual written
notice of the renewal at least 60 calendar days before the date the
coverage will be renewed in a form and manner specified by the
Secretary.
0
15. Section 148.124 is revised to read as follows:
Sec. 148.124 Certification and disclosure of coverage.
(a) General rule. The rules for providing certificates of
creditable coverage and demonstrating creditable coverage have been
superseded by the prohibition on preexisting condition exclusions. See
Sec. 147.108 of this subchapter for rules prohibiting the imposition
of a preexisting condition exclusion.
(b) Applicability. The provisions of this section apply beginning
December 31, 2014.
0
16. Section 148.126 is revised to read as follows:
Sec. 148.126 Determination of an eligible individual.
The rules for guaranteeing the availability of individual health
insurance coverage to certain eligible individuals with prior group
coverage have been superseded by the requirements of Sec. 147.104 of
this subchapter, which set forth Federal requirements for guaranteed
availability of coverage in the group and individual markets.
0
17. Section 148.128 is revised to read as follows:
Sec. 148.128 State flexibility in individual market reforms--
alternative mechanisms.
The rules for a State to implement an acceptable alternative
mechanism for purposes of guaranteeing the availability of individual
health insurance coverage to certain eligible individuals with prior
group coverage have been superseded by the requirements of Sec.
147.104 of this subchapter, which set forth Federal requirements for
guaranteed availability of coverage in the group and individual
markets.
0
18. Section 148.220 is amended by--
0
a. Revising the introductory text and paragraph (b)(3);
0
b. Redesignating paragraphs (b)(4) through (6) as paragraphs (b)(5)
through (7), respectively; and
0
c. Adding new paragraph (b)(4).
The revisions and additions read as follows:
Sec. 148.220 Excepted benefits.
The requirements of this part and part 147 of this subchapter do
not apply to any individual coverage in relation to its provision of
the benefits described in paragraphs (a) and (b) of this section (or
any combination of the benefits).
* * * * *
(b) * * *
(3) Coverage only for a specified disease or illness (for example,
cancer policies) if the policies meet the requirements of Sec.
146.145(b)(4)(ii)(B) and (C) of this subchapter regarding
noncoordination of benefits.
(4) Hospital indemnity or other fixed indemnity insurance only if--
(i) The benefits are provided only to individuals who attest, in
their fixed indemnity insurance application, that they have other
health coverage that is minimum essential coverage within the meaning
of section 5000A(f) of the Internal Revenue Code, or that they are
treated as having minimum essential coverage due to their status as a
bona fide resident of any possession of the United States pursuant to
Code section 5000A(f)(4)(B).
(ii) There is no coordination between the provision of benefits and
an exclusion of benefits under any other health coverage.
(iii) The benefits are paid in a fixed dollar amount per period of
hospitalization or illness and/or per service (for example, $100/day or
$50/visit) regardless of the amount of expenses incurred and without
regard to the amount of benefits provided with respect to the event or
service under any other health coverage.
(iv) A notice is displayed prominently in the application materials
in at least 14 point type that has the following language: ``THIS IS A
SUPPLEMENT TO HEALTH INSURANCE AND IS NOT A SUBSTITUTE FOR MAJOR
MEDICAL COVERAGE. LACK OF MAJOR MEDICAL COVERAGE (OR OTHER MINIMUM
ESSENTIAL COVERAGE) MAY RESULT IN AN ADDITIONAL PAYMENT WITH YOUR
TAXES.''
(v) The requirement of paragraph (b)(4)(iv) of this section applies
to all hospital or other fixed indemnity insurance policy years
beginning on or after January 1, 2015, and the requirement of paragraph
(b)(4)(i) of this section applies to hospital or other fixed indemnity
insurance policies issued on or after January 1, 2015, and to hospital
or other fixed indemnity policies issued before that date, upon their
first renewal occurring on or after October 1, 2016.
* * * * *
PART 153--STANDARDS RELATED TO REINSURANCE, RISK CORRIDORS, AND
RISK ADJUSTMENT UNDER THE AFFORDABLE CARE ACT
0
19. The authority citation for part 153 continues to read as follows:
Authority: Secs. 1311, 1321, 1341-1343, Pub. L. 111-148, 24
Stat. 119.
0
20. Section 153.500 is amended by revising the definition of
``Adjustment percentage'' to read as follows:
Sec. 153.500 Definitions.
* * * * *
Adjustment percentage means, with respect to a QHP:
(1) For benefit year 2014, for a QHP offered by a health insurance
issuer with allowable costs of at least 80 percent of after-tax premium
in a transitional State, the percentage specified by HHS for such QHPs
in the transitional State; and otherwise zero percent.
[[Page 30342]]
(2) For benefit year 2015, for a QHP offered by a health insurance
issuer in any State, two percent.
* * * * *
PART 154--HEALTH INSURANCE ISSUER RATE INCREASES: DISCLOSURE AND
REVIEW REQUIREMENTS
0
21. The authority citation for part 154 continues to read as follows:
Authority: Section 2794 of the Public Health Service Act (42
U.S.C. 300gg-94).
0
22. Section 154.102 is amended by revising the definition of
``Product'' to read as follows:
Sec. 154.102 Definitions.
* * * * *
Product means a package of health insurance coverage benefits with
a discrete set of rating and pricing methodologies that a health
insurance issuer offers in a State. The term product includes any
product that is discontinued and newly filed within a 12-month period
when the changes to the product meet the standards of Sec.
147.106(e)(2) or (3) of this subchapter (relating to uniform
modification of coverage).
* * * * *
PART 155--EXCHANGE ESTABLISHMENT STANDARDS AND OTHER RELATED
STANDARDS UNDER THE AFFORDABLE CARE ACT
0
23. The authority citation for part 155 continues to read as follows:
Authority: Title I of the Affordable Care Act, sections 1301,
1302, 1303, 1304, 1311, 1312, 1313, 1321, 1322, 1331, 1332, 1334,
1402, 1411, 1412, 1413, Pub. L. 111-148, 124 Stat. 119 (42 U.S.C.
18021-18024, 18031-18033, 18041-18042, 18051, 18054, 18071, and
18081-18083).
0
24. Section 155.120 is amended by revising paragraph (c) to read as
follows:
Sec. 155.120 Non-interference with Federal law and non-discrimination
standards.
* * * * *
(c) Non-discrimination. (1) In carrying out the requirements of
this part, the State and the Exchange must:
(i) Comply with applicable non-discrimination statutes; and
(ii) Not discriminate based on race, color, national origin,
disability, age, sex, gender identity or sexual orientation.
(2) Notwithstanding the provisions of paragraph (c)(1)(ii) of this
section, an organization that receives Federal funds to provide
services to a defined population under the terms of Federal legal
authorities that participates in the certified application counselor
program under Sec. 155.225 may limit its provision of certified
application counselor services to the same defined population, but must
comply with paragraph (c)(1)(ii) of this section with respect to the
provision of certified application counselor services to that defined
population. If the organization limits its provision of certified
application counselor services pursuant to this exception, but is
approached for certified application counselor services by an
individual who is not included in the defined population that the
organization serves, the organization must refer the individual to
other Exchange-approved resources that can provide assistance. If the
organization does not limit its provision of certified application
counselor services pursuant to this exception, the organization must
comply with paragraph (c)(1)(ii) of this section.
0
25. Section 155.206 is added to read as follows:
Sec. 155.206 Civil money penalties for violations of applicable
Exchange standards by consumer assistance entities in Federally-
facilitated Exchanges.
(a) Enforcement actions. If an individual or entity specified in
paragraph (b) of this section engages in activity specified in
paragraph (c) of this section, the Department of Health and Human
Services (HHS) may impose the following sanctions:
(1) Civil money penalties (CMPs), subject to the provisions of this
section.
(2) Corrective action plans. In the notice of assessment of CMPs
specified in paragraph (l) of this section, HHS may provide an
individual or entity specified in paragraph (b) of this section the
opportunity to enter into a corrective action plan to correct the
violation instead of paying the CMP, based on evaluation of the factors
set forth in paragraph (h) of this section. In the event that the
individual or entity does not follow such a corrective action plan, HHS
could require payment of the CMP.
(b) Consumer assistance entities. CMPs may be assessed under this
section against the following consumer assistance entities:
(1) Individual Navigators and Navigator entities in a Federally-
facilitated Exchange, including grantees, sub-grantees, and all
personnel carrying out Navigator duties on behalf of a grantee or sub-
grantee;
(2) Non-Navigator assistance personnel authorized under Sec.
155.205(d) and (e) and non-Navigator assistance personnel entities in a
Federally-facilitated Exchange, including but not limited to
individuals and entities under contract with HHS to facilitate consumer
enrollment in QHPs in a Federally-facilitated Exchange; and
(3) Organizations that a Federally-facilitated Exchange has
designated as certified application counselor organizations and
individual certified application counselors carrying out certified
application counselor duties in a Federally-facilitated Exchange.
(c) Grounds for assessing CMPs. HHS may assess CMPs against a
consumer assistance entity if, based on the outcome of the
investigative process outlined in paragraphs (d) through (i) of this
section, HHS has reasonably determined that the consumer assistance
entity has failed to comply with the Federal regulatory requirements
applicable to the consumer assistance entity that have been implemented
pursuant to section 1321(a)(1) of the Affordable Care Act, including
provisions of any agreements, contracts, and grant terms and conditions
between HHS and the consumer assistance entity that interpret those
Federal regulatory requirements or establish procedures for compliance
with them, unless a CMP has been assessed for the same conduct under 45
CFR 155.285.
(d) Basis for initiating an investigation of a potential violation.
(1) Information. Any information received or learned by HHS that
indicates that a consumer assistance entity may have engaged or may be
engaging in activity specified in paragraph (c) of this section may
warrant an investigation. Information that might trigger an
investigation includes, but is not limited to, the following:
(i) Complaints from the general public;
(ii) Reports from State regulatory agencies, and other Federal and
State agencies; or
(iii) Any other information that indicates that a consumer
assistance entity may have engaged or may be engaging in activity
specified in paragraph (c) of this section.
(2) Who may file a complaint. Any entity or individual, or the
legally authorized representative of an entity or individual, may file
a complaint with HHS alleging that a consumer assistance entity has
engaged or is engaging in an activity specified in paragraph (c) of
this section.
(e) Notice of investigation. When HHS performs an investigation
under this section, it must provide a written notice to the consumer
assistance entity of its investigation. This notice must include the
following:
[[Page 30343]]
(1) Description of the activity that is being investigated.
(2) Explanation that the consumer assistance entity has 30 days
from the date of the notice to respond with additional information or
documentation, including information or documentation to refute an
alleged violation.
(3) State that a CMP might be assessed if the allegations are not,
as determined by HHS, refuted within 30 days from the date of the
notice.
(f) Request for extension. In circumstances in which a consumer
assistance entity cannot prepare a response to HHS within the 30 days
provided in the notice of investigation described in paragraph (e) of
this section, the entity may make a written request for an extension
from HHS detailing the reason for the extension request and showing
good cause. If HHS grants the extension, the consumer assistance entity
must respond to the notice within the time frame specified in HHS's
letter granting the extension of time. Failure to respond within 30
days, or, if applicable, within an extended time frame, may result in
HHS's imposition of a CMP depending upon the outcome of HHS's
investigation of the alleged violation.
(g) Responses to allegations of noncompliance. In determining
whether to impose a CMP, HHS may review and consider documents or
information received or collected in accordance with paragraph (d)(1)
of this section, as well as additional documents or information
provided by the consumer assistance entity in response to receiving a
notice of investigation in accordance with paragraph (e)(2) of this
section. HHS may also conduct an independent investigation into the
alleged violation, which may include site visits and interviews, if
applicable, and may consider the results of this investigation in its
determination.
(h) Factors in determining noncompliance and amount of CMPs, if
any. In determining whether there has been noncompliance by the
consumer assistance entity, and whether CMPs are appropriate:
(1) HHS must take into account the following:
(i) The consumer assistance entity's previous or ongoing record of
compliance, including but not limited to compliance or noncompliance
with any corrective action plan.
(ii) The gravity of the violation, which may be determined in part
by--
(A) The frequency of the violation, taking into consideration
whether any violation is an isolated occurrence, represents a pattern,
or is widespread; and
(B) Whether the violation caused, or could reasonably be expected
to cause, financial or other adverse impacts on consumer(s), and the
magnitude of those impacts;
(2) HHS may take into account the following:
(i) The degree of culpability of the consumer assistance entity,
including but not limited to--
(A) Whether the violation was beyond the direct control of the
consumer assistance entity; and
(B) The extent to which the consumer assistance entity received
compensation--legal or otherwise--for the services associated with the
violation;
(ii) Aggravating or mitigating circumstances;
(iii) Whether other remedies or penalties have been assessed and/or
imposed for the same conduct or occurrence; or
(iv) Other such factors as justice may require.
(i) Maximum per-day penalty. The maximum amount of penalty imposed
for each violation is $100 for each day for each consumer assistance
entity for each individual directly affected by the consumer assistance
entity's noncompliance; and where the number of individuals cannot be
determined, HHS may reasonably estimate the number of individuals
directly affected by the violation.
(j) Settlement authority. Nothing in Sec. 155.206 limits the
authority of HHS to settle any issue or case described in the notice
furnished in accordance with paragraph (e) of this section or to
compromise on any penalty provided for in this section.
(k) Limitations on penalties. (1) Circumstances under which a CMP
is not imposed. HHS will not impose any CMP on:
(i) Any violation for the period of time during which none of the
consumer assistance entities knew, or exercising reasonable diligence
would have known, of the violation; or
(ii) The period of time after any of the consumer assistance
entities knew, or exercising reasonable diligence would have known, of
the failure, if the violation was due to reasonable cause and not due
to willful neglect and the violation was corrected within 30 days of
the first day that any of the consumer assistance entities against whom
the penalty would be imposed knew, or exercising reasonable diligence
would have known, that the violation existed.
(2) Burden of establishing knowledge. The burden is on the consumer
assistance entity or entities to establish to HHS's satisfaction that
the consumer assistance entity did not know, or exercising reasonable
diligence would have known, that the violation existed, as well as the
period of time during which that limitation applies; or that the
violation was due to reasonable cause and not due to willful neglect
and was corrected pursuant to the elements in paragraph (k)(1)(ii) of
this section.
(3) Time limit for commencing action. No action under this section
will be entertained unless commenced, in accordance with Sec.
155.206(l), within six years from the date on which the violation
occurred.
(l) Notice of assessment of CMP. If HHS proposes to assess a CMP in
accordance with this section, HHS will send a written notice of this
decision to the consumer assistance entity against whom the sanction is
being imposed, which notice must include the following:
(1) A description of the basis for the determination;
(2) The basis for the CMP;
(3) The amount of the CMP, if applicable;
(4) The date the CMP, if applicable, is due;
(5) Whether HHS would permit the consumer assistance entity to
enter into a corrective action plan in place of paying the CMP, and the
terms of any such corrective action plan;
(6) An explanation of the consumer assistance entity's right to a
hearing under paragraph (m) of this section; and
(7) Information about the process for filing a request for a
hearing.
(m) Appeal of proposed sanction. Any consumer assistance entity
against which HHS has assessed a sanction may appeal that penalty in
accordance with the procedures set forth at 45 CFR part 150, subpart D.
(n) Failure to request a hearing. (1) If the consumer assistance
entity does not request a hearing within 30 days of the issuance of the
notice of assessment of CMP described in paragraph (l) of this section,
HHS may require payment of the proposed CMP.
(2) HHS will notify the consumer assistance entity in writing of
any CMP that has been assessed and of the means by which the consumer
assistance entity may pay the CMP.
(3) The consumer assistance entity has no right to appeal a CMP
with respect to which it has not requested a hearing in accordance with
paragraph (m) of this section unless the consumer assistance entity can
show good cause in accordance with Sec. 150.405(b) of this subchapter
for failing to timely exercise its right to a hearing.
[[Page 30344]]
0
26. Section 155.210 is amended--
0
a. By revising paragraph (c)(1)(iii);
0
b. In paragraph (d)(3) by removing ``or,'' after the semicolon;
0
c. By revising paragraph (d)(4);
0
d. By adding paragraphs (d)(5) through (9) and (e)(6) and (7); and
0
e. By revising paragraph (e)(2).
The revision and additions read as follows:
Sec. 155.210 Navigator program standards.
* * * * *
(c) * * *
(1) * * *
(iii) Meet any licensing, certification or other standards
prescribed by the State or Exchange, if applicable, so long as such
standards do not prevent the application of the provisions of title I
of the Affordable Care Act. Standards that would prevent the
application of the provisions of title I of the Affordable Care Act
include but are not limited to the following:
(A) Except as otherwise provided under Sec. 155.705(d),
requirements that Navigators refer consumers to other entities not
required to provide fair, accurate, and impartial information.
(B) Except as otherwise provided under Sec. 155.705(d),
requirements that would prevent Navigators from providing services to
all persons to whom they are required to provide assistance.
(C) Requirements that would prevent Navigators from providing
advice regarding substantive benefits or comparative benefits of
different health plans.
(D) Requiring that a Navigator hold an agent or broker license or
imposing any requirement that, in effect, would require all Navigators
in the Exchange to be licensed agents or brokers.
(E) Imposing standards that would, as applied or as implemented in
a State, prevent the application of Federal requirements applicable to
Navigator entities or individuals or applicable to the Exchange's
implementation of the Navigator program.
* * * * *
(d) * * *
(4) Receive any consideration directly or indirectly from any
health insurance issuer or issuer of stop loss insurance in connection
with the enrollment of any individuals or employees in a QHP or a non-
QHP. Notwithstanding the requirements of this paragraph (d)(4), in a
Federally-facilitated Exchange, no health care provider shall be
ineligible to operate as a Navigator solely because it receives
consideration from a health insurance issuer for health care services
provided;
(5) Charge any applicant or enrollee, or request or receive any
form of remuneration from or on behalf of an individual applicant or
enrollee, for application or other assistance related to Navigator
duties;
(6) Provide gifts, including gift cards or cash, unless they are of
nominal value, or provide promotional items that market or promote the
products or services of a third party, to any applicant or potential
enrollee as an inducement for enrollment. Gifts, gift cards, or cash
may exceed nominal value for the purpose of providing reimbursement for
legitimate expenses incurred by a consumer in effort to receive
Exchange application assistance, such as, but not limited to, travel or
postage expenses;
(7) Use Exchange funds to purchase gifts or gift cards, or
promotional items that market or promote the products or services of a
third party, that would be provided to any applicant or potential
enrollee;
(8) Solicit any consumer for application or enrollment assistance
by going door-to-door or through other unsolicited means of direct
contact, including calling a consumer to provide application or
enrollment assistance without the consumer initiating the contact,
unless the individual has a pre-existing relationship with the
individual Navigator or Navigator entity and other applicable State and
Federal laws are otherwise complied with. Outreach and education
activities may be conducted by going door-to-door or through other
unsolicited means of direct contact, including calling a consumer or
(9) Initiate any telephone call to a consumer using an automatic
telephone dialing system or an artificial or prerecorded voice, except
in cases where the individual Navigator or Navigator entity has a
relationship with the consumer and so long as other applicable State
and Federal laws are otherwise complied with.
(e) * * *
(2) Provide information and services in a fair, accurate, and
impartial manner, which includes providing information that assists
consumers with submitting the eligibility application; clarifying the
distinctions among health coverage options, including QHPs; and helping
consumers make informed decisions during the health coverage selection
process. Such information must acknowledge other health programs;
* * * * *
(6) Ensure that applicants--
(i) Are informed of the functions and responsibilities of
Navigators;
(ii) Provide authorization in a form and manner as determined by
the Exchange prior to a Navigator's obtaining access to an applicant's
personally identifiable information, and that the Navigator maintains a
record of the authorization provided in a form and manner as determined
by the Exchange. The Exchange must establish a reasonable retention
period for maintaining these records. In Federally-facilitated
Exchanges, this period is no less than six years, unless a different
and longer retention period has already been provided under other
applicable Federal law; and
(iii) May revoke at any time the authorization provided the
Navigator pursuant to paragraph (e)(6)(ii) of this section.
(7) Maintain a physical presence in the Exchange service area, so
that face-to-face assistance can be provided to applicants and
enrollees. In a Federally-facilitated Exchange, no individual or entity
shall be ineligible to operate as a Navigator solely because its
principal place of business is outside of the Exchange service area.
* * * * *
0
27. Section 155.215 is amended by adding paragraphs (f) through (i) to
read as follows:
Sec. 155.215 Standards applicable to Navigators and Non-Navigator
Assistance Personnel carrying out consumer assistance functions under
Sec. Sec. 155.205(d) and (e) and 155.210 in a Federally-facilitated
Exchange and to Non-Navigator Assistance Personnel funded through an
Exchange Establishment Grant.
* * * * *
(f) State or Exchange standards. All non-Navigator entities or
individuals carrying out consumer assistance functions under Sec.
155.205(d) and (e) in an Exchange operated by HHS during the exercise
of its authority under Sec. 155.105(f) and all non-Navigator
assistance personnel funded through an Exchange Establishment Grant
under section 1311(a) of the Affordable Care Act must meet any
licensing, certification, or other standards prescribed by the State or
Exchange, if applicable, so long as such standards do not prevent the
application of the provisions of title I of the Affordable Care Act.
Standards that would prevent the application of the provisions of title
I of the Affordable Care Act include but are not limited to the
following:
(1) Requirements that non-Navigator entities or individuals refer
consumers to other entities not required to provide fair, accurate, and
impartial information.
(2) Requirements that would prevent non-Navigator entities or
individuals from providing services to all persons to
[[Page 30345]]
whom they are required to provide assistance.
(3) Requirements that would prevent non-Navigator entities or
individuals from providing advice regarding substantive benefits or
comparative benefits of different health plans.
(4) Imposing standards that would, as applied or as implemented in
a State, prevent the application of Federal requirements applicable to
non-Navigator entities or individuals or applicable to the Exchange's
implementation of the non-Navigator assistance personnel program.
(g) Consumer authorization. All non-Navigator entities or
individuals carrying out consumer assistance functions under Sec.
155.205(d) and (e) in an Exchange operated by HHS during the exercise
of its authority under Sec. 155.105(f) and all non-Navigator
assistance personnel funded through an Exchange Establishment Grant
under section 1311(a) of the Affordable Care Act must establish
procedures to ensure that applicants--
(1) Are informed of the functions and responsibilities of non-
Navigator assistance personnel;
(2) Provide authorization in a form and manner as determined by the
Exchange prior to a non-Navigator assistance personnel's obtaining
access to an applicant's personally identifiable information, and that
the non-Navigator assistance personnel maintains a record of the
authorization provided in a form and manner as determined by the
Exchange. The Exchange must establish a reasonable retention period for
maintaining these records. In Federally-facilitated Exchanges, this
period is no less than six years, unless a different and longer
retention period has already been provided under other applicable
Federal law; and
(3) May revoke at any time the authorization provided the non-
Navigator assistance personnel pursuant to paragraph (g)(2) of this
section.
(h) All non-Navigator entities carrying out consumer assistance
functions under Sec. 155.205(d) and (e) in an Exchange operated by HHS
during the exercise of its authority under Sec. 155.105(f) and all
non-Navigator assistance personnel funded through an Exchange
Establishment Grant under section 1311(a) of the Affordable Care Act
must maintain a physical presence in the Exchange service area, so that
face-to-face assistance can be provided to applicants and enrollees. In
a Federally-facilitated Exchange, no individual or entity shall be
ineligible to operate as a non-Navigator entity or as non-Navigator
assistance personnel solely because its principal place of business is
outside of the Exchange service area.
(i) Prohibition on compensation per enrollment. Beginning November
15, 2014, Navigators and Non-Navigator assistance personnel carrying
out consumer assistance functions under Sec. Sec. 155.205(d) and (e)
and 155.210, if operating in an Exchange operated by HHS during the
exercise of its authority under Sec. 155.105(f), are prohibited from
providing compensation to individual Navigators or non-Navigator
assistance personnel on a per-application, per-individual-assisted, or
per-enrollment basis.
0
28. Section 155.225 is amended--
0
a. By adding paragraph (b)(3);
0
b. By revising paragraph (c)(1);
0
c. In paragraph (d)(5) by removing ``and'' after the semicolon;
0
d. In paragraph (d)(6) by removing the period at the end of the
paragraph and adding a semicolon in its place;
0
e. By adding paragraphs (d)(7) and (8); and
0
f. By revising paragraphs (f)(1) and (2) and (g).
The revisions and additions read as follows:
Sec. 155.225 Certified application counselors.
* * * * *
(b) * * *
(3) In a Federally-facilitated Exchange, no individual or entity
shall be ineligible to operate as a certified application counselor or
organization designated by the Exchange under paragraph (b) of this
section solely because its principal place of business is outside of
the Exchange service area.
(c) * * *
(1) Provide information to individuals and employees about the full
range of QHP options and insurance affordability programs for which
they are eligible, which includes providing fair, impartial, and
accurate information that assists consumers with submitting the
eligibility application; clarifying the distinctions among health
coverage options, including QHPs; and helping consumers make informed
decisions during the health coverage selection process;
* * * * *
(d) * * *
(7) Is recertified on at least an annual basis after successfully
completing recertification training as required by the Exchange; and
(8) Meets any licensing, certification, or other standards
prescribed by the State or Exchange, if applicable, so long as such
standards do not prevent the application of the provisions of title I
of the Affordable Care Act. Standards that would prevent the
application of the provisions of title I of the Affordable Care Act
include but are not limited to the following:
(i) Requirements that certified application counselors refer
consumers to other entities not required to provide fair, accurate, and
impartial information.
(ii) Requirements that would prevent certified application
counselors from providing services to all persons to whom they are
required to provide assistance.
(iii) Requirements that would prevent certified application
counselors from providing advice regarding substantive benefits or
comparative benefits of different health plans.
(iv) Imposing standards that would, as applied or as implemented in
a State, prevent the application of Federal requirements applicable to
certified application counselors, to an organization designated by the
Exchange under paragraph (b) of this section, or to the Exchange's
implementation of the certified application program.
* * * * *
(f) * * *
(1) Are informed of the functions and responsibilities of certified
application counselors;
(2) Provide authorization in a form and manner as determined by the
Exchange prior to a certified application counselor obtaining access to
an applicant's personally identifiable information, and that the
organization or certified application counselor maintains a record of
the authorization in a form and manner as determined by the Exchange.
The Exchange must establish a reasonable retention period for
maintaining these records. In Federally-facilitated Exchanges, this
period is no less than six years, unless a different and longer
retention period has already been provided under other applicable
Federal law; and
* * * * *
(g) Fees, consideration, solicitation, and marketing. Organizations
designated by the Exchange under paragraph (b) of this section and
certified application counselors must not--
(1) Impose any charge on applicants or enrollees for application or
other assistance related to the Exchange;
(2) Receive any consideration directly or indirectly from any
health insurance issuer or issuer of stop-loss insurance in connection
with the enrollment of any individuals in a QHP or a non-QHP. In a
Federally-facilitated Exchange, no health care provider shall be
ineligible
[[Page 30346]]
to operate as a certified application counselor or organization
designated by the Exchange under paragraph (b) of this section solely
because it receives consideration from a health insurance issuer for
health care services provided;
(3) Beginning November 15, 2014, if operating in a Federally-
facilitated Exchange, provide compensation to individual certified
application counselors on a per-application, per-individual-assisted,
or per-enrollment basis;
(4) Provide gifts, including gift cards or cash, unless they are of
nominal value, or provide promotional items that market or promote the
products or services of a third party, to any applicant or potential
enrollee as an inducement for enrollment. Gifts, gift cards, or cash
may exceed nominal value for the purpose of providing reimbursement for
legitimate expenses incurred by a consumer in effort to receive
Exchange application assistance, such as, but not limited to, travel or
postage expenses.
(5) Solicit any consumer for application or enrollment assistance
by going door-to-door or through other unsolicited means of direct
contact, including calling a consumer to provide application or
enrollment assistance without the consumer initiating the contact,
unless the individual has a pre-existing relationship with the
individual certified application counselor or designated organization
and other applicable State and Federal laws are otherwise complied
with. Outreach and education activities may be conducted by going door-
to-door or through other unsolicited means of direct contact, including
calling a consumer; or
(6) Initiate any telephone call to a consumer using an automatic
telephone dialing system or an artificial or prerecorded voice, except
in cases where the individual certified application counselor or
designated organization has a relationship with the consumer and so
long as other applicable State and Federal laws are otherwise complied
with.
0
29. Section 155.240 is amended by adding paragraph (e) to read as
follows:
Sec. 155.240 Payment of premium.
* * * * *
(e) Premium calculation. The Exchange may establish one or more
standard processes for premium calculation.
(1) For a Federally-facilitated Exchange, the premium for coverage
lasting less than one month must equal the product of--
(i) The premium for one month of coverage divided by the number of
days in the month; and
(ii) The number of days for which coverage is being provided in the
month described in paragraph (e)(1)(i) of this section.
(2) [Reserved]
0
30. Section 156.260 is amended by revising paragraph (g) to read as
follows:
Sec. 155.260 Privacy and security of personally identifiable
information.
* * * * *
(g) Improper use and disclosure of information. Any person who
knowingly and willfully uses or discloses information in violation of
section 1411(g) of the Affordable Care Act will be subject to a CMP of
not more than $25,000 per person or entity, per use or disclosure,
consistent with the bases and process for imposing civil penalties
specified at Sec. 155.285, in addition to other penalties that may be
prescribed by law.
0
31. Section 155.285 is added to subpart C to read as follows:
Sec. 155.285 Bases and process for imposing civil penalties for
provision of false or fraudulent information to an Exchange or improper
use or disclosure of information.
(a) Grounds for imposing civil money penalties. (1) HHS may impose
civil money penalties on any person, as defined in paragraph (a)(2) of
this section, if, based on credible evidence, HHS reasonably determines
that a person has engaged in one or more of the following actions:
(i) Failure to provide correct information under section 1411(b) of
the Affordable Care Act where such failure is attributable to
negligence or disregard of any rules or regulations of the Secretary
with negligence and disregard defined as they are in section 6662 of
the Internal Revenue Code of 1986:
(A) ``Negligence'' includes any failure to make a reasonable
attempt to provide accurate, complete, and comprehensive information;
and
(B) ``Disregard'' includes any careless, reckless, or intentional
disregard for any rules or regulations of the Secretary.
(ii) Knowing and willful provision of false or fraudulent
information required under section 1411(b) of the Affordable Care Act,
where knowing and willful means the intentional provision of
information that the person knows to be false or fraudulent; or
(iii) Knowing and willful use or disclosure of information in
violation of section 1411(g) of the Affordable Care Act, where knowing
and willful means the intentional use or disclosure of information in
violation of section 1411(g). Such violations would include, but not be
limited to, the following:
(A) Any use or disclosure performed which violates relevant privacy
and security standards established by the Exchange pursuant to Sec.
155.260;
(B) Any other use or disclosure which has not been determined by
the Secretary to be in compliance with section 1411(g)(2)(A) of the
Affordable Care Act pursuant to Sec. 155.260(a); and
(C) Any other use or disclosure which is not necessary to carry out
a function described in a contract with a non-Exchange entity executed
pursuant to Sec. 155.260(b)(2).
(2) For purposes of this section, the term ``person'' is defined to
include, but is not limited to, all individuals; corporations;
Exchanges; Medicaid and CHIP agencies; other entities gaining access to
personally identifiable information submitted to an Exchange to carry
out additional functions which the Secretary has determined ensure the
efficient operation of the Exchange pursuant to Sec. 155.260(a)(1);
and non-Exchange entities as defined in Sec. 155.260(b) which includes
agents, brokers, Web-brokers, QHP issuers, Navigators, non-Navigator
assistance personnel, certified application counselors, in-person
assistors, and other third party contractors.
(b) Factors in determining the amount of civil money penalties
imposed. In determining the amount of civil money penalties, HHS may
take into account factors which include, but are not limited to, the
following:
(1) The nature and circumstances of the conduct including, but not
limited to:
(i) The number of violations;
(ii) The severity of the violations;
(iii) The person's history with the Exchange including any prior
violations that would indicate whether the violation is an isolated
occurrence or represents a pattern of behavior;
(iv) The length of time of the violation;
(v) The number of individuals affected or potentially affected;
(vi) The extent to which the person received compensation or other
consideration associated with the violation;
(vii) Any documentation provided in any complaint or other
information, as well as any additional information provided by the
individual to refute performing the violation; and
(viii) Whether other remedies or penalties have been imposed for
the same conduct or occurrence.
(2) The nature of the harm resulting from, or reasonably expected
to result
[[Page 30347]]
from, the violation, including but not limited to:
(i) Whether the violation resulted in actual or potential financial
harm;
(ii) Whether there was actual or potential harm to an individual's
reputation;
(iii) Whether the violation hindered or could have hindered an
individual's ability to obtain health insurance coverage;
(v) The actual or potential impact of the provision of false or
fraudulent information or of the improper use or disclosure of the
information; and
(vi) Whether any person received a more favorable eligibility
determination for enrollment in a QHP or insurance affordability
program, such as greater advance payment of the premium tax credits or
cost-sharing reductions than he or she would be eligible for if the
correct information had been provided.
(3) No penalty will be imposed under paragraph (a)(1)(i) of this
section if HHS determines that there was a reasonable cause for the
failure to provide correct information required under section 1411(b)
of the Affordable Care Act and that the person acted in good faith.
(c) Maximum penalty. The amount of a civil money penalty will be
determined by HHS in accordance with paragraph (b) of this section.
(1) The following provisions provide maximum penalties for a single
``plan year,'' where ``plan year'' has the same meaning as at Sec.
155.20:
(i) Any person who fails to provide correct information as
specified in paragraph (a)(1)(i) of this section may be subject to a
maximum civil money penalty of $25,000 for each application, as defined
at paragraph (c)(1)(iii) of this section, pursuant to which a person
fails to provide correct information.
(ii) Any person who knowingly and willfully provides false
information as specified in paragraph (a)(1)(ii) of this section may be
subject to a maximum civil money penalty of $250,000 for each
application, as defined at paragraph (c)(1)(iii) of this section, on
which a person knowingly and willfully provides false information.
(iii) For the purposes of this subsection, ``application'' is
defined as a submission of information, whether through an online
portal, over the telephone through a call center, or through a paper
submission process, in which the information is provided in relation to
an eligibility determination; an eligibility redetermination based on a
change in an individual's circumstances; or an annual eligibility
redetermination for any of the following:
(A) Enrollment in a qualified health plan;
(B) Premium tax credits or cost sharing reductions; or
(C) An exemption from the individual shared responsibility payment.
(2) Any person who knowingly or willfully uses or discloses
information as specified in paragraph (a)(1)(iii) of this section may
be subject to the following civil money penalty:
(i) A civil money penalty for each use or disclosure described in
paragraph (a)(1)(iii) of this section of not more than $25,000 per use
or disclosure.
(ii) For purposes of paragraph (c) of this section, a use or
disclosure includes one separate use or disclosure of a single
individual's personally identifiable information where the person
against whom a civil money penalty may be imposed has made the use or
disclosure.
(3) These penalties may be imposed in addition to any other
penalties that may be prescribed by law.
(d) Notice of intent to issue civil money penalty. If HHS intends
to impose a civil money penalty in accordance with this part, HHS will
send a written notice of such intent to the person against whom it
intends to impose a civil money penalty.
(1) This written notice will be either hand delivered, sent by
certified mail, return receipt requested, or sent by overnight delivery
service with signature upon delivery required. The written notice must
include the following elements:
(i) A description of the findings of fact regarding the violations
with respect to which the civil money penalty is proposed;
(ii) The basis and reasons why the findings of fact subject the
person to a penalty;
(iii) Any circumstances described in paragraph (b) of this section
that were considered in determining the amount of the proposed penalty;
(iv) The amount of the proposed penalty;
(v) An explanation of the person's right to a hearing under any
applicable administrative hearing process;
(vi) A statement that failure to request a hearing within 60
calendar days after the date of issuance printed on the notice permits
the assessment of the proposed penalty; and
(vii) Information explaining how to file a request for a hearing
and the address to which the hearing request must be sent.
(2) The person may request a hearing before an ALJ on the proposed
penalty by filing a request in accordance with the procedure to file an
appeal specified in paragraph (f) of this section.
(e) Failure to request a hearing. If the person does not request a
hearing within 60 calendar days of the date of issuance printed on the
notice described in paragraph (d) of this section, HHS may impose the
proposed civil money penalty.
(1) HHS will notify the person in writing of any penalty that has
been imposed, the means by which the person may satisfy the penalty,
and the date on which the penalty is due.
(2) A person has no right to appeal a penalty with respect to which
the person has not timely requested a hearing in accordance with
paragraph (d) of this section.
(f) Appeal of proposed penalty. Subject to paragraph (e)(2) of this
section, any person against whom HHS proposed to impose a civil money
penalty may appeal that penalty in accordance with the rules and
procedures outlined at 45 CFR part 150, subpart D, excluding Sec. Sec.
150.461, 150.463, and 150.465.
(g) Enforcement authority. (1) HHS. HHS may impose civil money
penalties up to the maximum amounts specified in paragraph (d) of this
section for any of the violations described in paragraph (a) of this
section.
(2) OIG. In accordance with the rules and procedures of 42 CFR part
1003, and in place of imposition of penalties by CMS, the OIG may
impose civil money penalties for violations described in paragraph
(a)(1)(ii) of this section.
(h) Settlement authority. Nothing in this section limits the
authority of HHS to settle any issue or case described in the notice
furnished in accordance with Sec. 155.285(d) or to compromise on any
penalty provided for in this section.
(i) Limitations. No action under this section will be entertained
unless commenced, in accordance with Sec. 155.285(d), within 6 years
from the date on which the violation occurred.
0
32. Section 155.320 is amended by revising the section heading to read
as follows and by removing paragraph (d)(4).
Sec. 155.320 Verification process related to eligibility for
insurance affordability programs.
* * * * *
0
33. Section 155.330 is amended by revising paragraph (d)(2)(ii) to read
as follows:
Sec. 155.330 Eligibility redetermination during a benefit year.
* * * * *
(d) * * *
(2) * * *
[[Page 30348]]
(ii) Comply with the standards specified in paragraph (e)(2) of
this section.
* * * * *
0
34. Section 155.400 is amended by adding paragraphs (e) and (f) to read
as follows:
Sec. 155.400 Enrollment of qualified individuals into QHPs.
* * * * *
(e) Premium payment. Exchanges may, and the Federally-facilitated
Exchange will, require payment of the first month's premium to
effectuate an enrollment.
(f) Processing enrollment transactions. The Exchange may provide
requirements to QHP issuers regarding the instructions for processing
electronic enrollment-related transactions.
0
35. Section 155.410 is amended by revising paragraph (d) to read as
follows:
Sec. 155.410 Initial and annual open enrollment periods.
* * * * *
(d) Notice of annual open enrollment period. Starting in 2014, the
Exchange must provide a written annual open enrollment notification to
each enrollee no earlier than the first day of the month before the
open enrollment period begins and no later than the first day of the
open enrollment period.
* * * * *
0
36. Section 155.420 is amended by revising paragraphs (b)(2)(i) through
(iii), (c), (d)(1), (d)(6)(iii), and (e) heading and introductory text
to read as follows:
Sec. 155.420 Special enrollment periods.
* * * * *
(b) * * *
(2) * * *
(i) In the case of birth, adoption, placement for adoption, or
placement in foster care as described in paragraph (d)(2) of this
section, the Exchange must ensure that coverage is effective for a
qualified individual or enrollee on the date of birth, adoption,
placement for adoption, or placement in foster care, or it may permit
the qualified individual or enrollee to elect a coverage effective date
of the first day of the month following the date of birth, adoption,
placement for adoption, or placement in foster care. If the Exchange
permits the qualified individual or enrollee to elect a coverage
effective date of the first day of the month following the date of
birth, adoption, placement for adoption, or placement in foster care,
the Exchange must ensure coverage is effective on such date elected by
the qualified individual or enrollee.
(ii) In the case of marriage as described in paragraph (d)(2) of
this section the Exchange must ensure that coverage is effective for a
qualified individual or enrollee on the first day of the month
following plan selection.
(iii) In the case of a qualified individual or enrollee eligible
for a special enrollment period as described in paragraphs (d)(4),
(d)(5), (d)(9), or (d)(10) of this section, the Exchange must ensure
that coverage is effective on an appropriate date based on the
circumstances of the special enrollment period.
(iv) In a case where a consumer loses coverage as described in
paragraph (d)(1) or (d)(6)(iii) of this section, if the plan selection
is made before or on the day of the loss of coverage, the Exchange must
ensure that the coverage effective date is on the first day of the
month following the loss of coverage. If the plan selection is made
after the loss of coverage, the Exchange must ensure that coverage is
effective in accordance with paragraph (b)(1) of this section or on the
first day of the month following plan selection in accordance with
paragraph (b)(2) of this section, at the option of the Exchange;
* * * * *
(c) Availability and length of special enrollment periods. (1)
General rule. Unless specifically stated otherwise herein, a qualified
individual or enrollee has 60 days from the date of a triggering event
to select a QHP.
(2) Advance availability. (i) A qualified individual or his or her
dependent who is described in paragraph (d)(1) of this section has 60
days before and after the loss of coverage to select a QHP.
(ii) A qualified individual or his or her dependent who is
described in paragraph (d)(6)(iii) of this section has 60 days before
and after the loss of eligibility for qualifying coverage in an
eligible employer-sponsored plan to select a QHP.
(3) Special rule. In the case of a qualified individual or enrollee
who is eligible for a special enrollment period as described in
paragraphs (d)(4), (d)(5), (d)(9), or (d)(10) of this section, the
Exchange may define the length of the special enrollment period as
appropriate based on the circumstances of the special enrollment
period, but in no event shall the length of the special enrollment
period exceed sixty (60) days.
(d) * * *
(1) The qualified individual or his or her dependent either:
(i) Loses minimum essential coverage. The date of the loss of
coverage is the last day the consumer would have coverage under his or
her previous plan or coverage.
(ii) Is enrolled in any non-calendar year health insurance policy
that will expire in 2014 as described in Sec. 147.104(b)(2) of this
subchapter, even if the qualified individual or his or her dependent
has the option to renew the expiring non-calendar year individual
health insurance policy. The date of the loss of coverage is the date
in 2014 of the expiration of the non-calendar year policy;
(iii) Loses pregnancy-related coverage described under section
1902(a)(10)(A)(i)(IV) and (a)(10)(A)(ii)(IX) of the Social Security Act
(42 U.S.C. 1396a(a)(10)(A)(i)(IV), (a)(10)(A)(ii)(IX)). The date of the
loss of coverage is the last day the consumer would have pregnancy-
related coverage; or
(iv) Loses medically needy coverage as described under section
1902(a)(10)(C) of the Social Security Act only once per calendar year.
The date of the loss of coverage is the last day the consumer would
have medically needy coverage.
* * * * *
(6) * * *
(iii) A qualified individual or his or her dependent who is
enrolled in an eligible employer-sponsored plan is determined newly
eligible for advance payments of the premium tax credit based in part
on a finding that such individual is ineligible for qualifying coverage
in an eligible-employer sponsored plan in accordance with 26 CFR 1.36B-
2(c)(3), including as a result of his or her employer discontinuing or
changing available coverage within the next 60 days, provided that such
individual is allowed to terminate existing coverage.
* * * * *
(e) Loss of coverage. Loss of coverage described in paragraph
(d)(1) of this section includes those circumstances described in 26 CFR
54.9801-6(a)(3)(i) through (iii) and in paragraphs (d)(1)(ii) through
(iv) of this section. Loss of coverage does not include voluntary
termination of coverage or other loss due to--
* * * * *
0
37. Section 155.430 is amended by revising paragraph (d)(6) and adding
paragraph (e) to read as follows:
Sec. 155.430 Termination of coverage.
* * * * *
(d) * * *
[[Page 30349]]
(6) In the case of a termination in accordance with paragraph
(b)(2)(v) of this section, the last day of coverage in an enrollee's
prior QHP is the day before the effective date of coverage in his or
her new QHP, including any retroactive enrollments effectuated under
Sec. 155.420(b)(2)(iii). In cases of retroactive terminations dates,
the Exchange will ensure that appropriate actions are taken to make
necessary adjustments to advance payments of the premium tax credit,
cost-sharing reductions, premiums, and claims.
* * * * *
(e) Termination, cancellation, and reinstatement. The Exchange may
establish operational instructions as to the form, manner, and method
for addressing each of the following:
(1) Termination. A termination is an action taken after a coverage
effective date that ends an enrollee's coverage through the Exchange
for a date after the original coverage effective date, resulting in a
period during which the individual was covered by the issuer.
(2) Cancellation. A cancellation is specific type of termination
action that ends a qualified individuals' enrollment on the date
coverage became effective resulting in coverage never having been
effective with the QHP.
(3) Reinstatement. A reinstatement is a correction of an erroneous
termination or cancellation action and results in restoration of an
enrollment with no break in coverage.
Sec. 155.505 [Amended]
0
38. Section 155.505 is amended in paragraph (b)(4) by removing ``;
and'' at the end of the paragraph and adding a period in its place.
0
39. Section 155.530 is amended by revising paragraph (a)(1) to read as
follows:
Sec. 155.530 Dismissals.
(a) * * *
(1) Withdraws the appeal request in writing or by telephone, if the
appeals entity is capable of accepting telephonic withdrawals.
(i) Accepting telephonic withdrawals means the appeals entity--
(A) Records in full the appellant's statement and telephonic
signature made under penalty of perjury; and
(B) Provides a written confirmation to the appellant documenting
the telephonic interaction.
(ii) [Reserved]
* * * * *
0
40. Section 155.555 is amended by--
0
a. Redesignating paragraphs (d) introductory text, (d)(1), (d)(2)
introductory text, (d)(2)(i), (ii), (iii), (d)(3), and (d)(4) as
paragraphs (d)(1) introductory text, (d)(1)(i), (d)(1)(ii) introductory
text, (d)(1)(ii)(A), (B), (C), (d)(1)(iii), and (d)(2), respectively;
and
0
b. Revising new paragraph (d)(2) introductory text.
The revision reads as follows:
Sec. 155.555 Employer appeals process.
* * * * *
(d) * * *
(2) Upon receipt of an invalid appeal request, the appeals entity
must promptly and without undue delay send written notice to the
employer that the appeal request is not valid because it fails to meet
the requirements of this section. The written notice must inform the
employer--
* * * * *
0
41. Section 155.600(a) is amended by adding a definition of ``Required
contribution percentage'' in alphabetical order to read as follows:
Sec. 155.600 Definitions and general requirements.
(a) * * *
Required contribution percentage means the product of eight percent
and the rate of premium growth over the rate of income growth for the
calendar year, rounded to the nearest one-hundredth of one percent.
* * * * *
0
42. Section 155.605 is amended by revising paragraph (g)(5) to read as
follows:
Sec. 155.605 Eligibility standards for exemptions.
* * * * *
(g) * * *
(5) Self-only coverage in an eligible employer-sponsored plan. The
IRS may allow an applicant to claim an exemption for a calendar year if
he or she, as well as one or more employed members of his or her
family, as defined in 26 CFR 1.36B-1(d), has been determined eligible
for affordable self-only employer-sponsored coverage pursuant to
section 5000A(e)(1) of the Code through their respective employers for
one or more months during the calendar year, but the aggregate cost of
employer-sponsored coverage for all the employed members of the family
exceeds the required contribution percentage of household income for
that calendar year; or
* * * * *
0
43. Section 155.625 is revised to read as follows:
Sec. 155.625 Options for conducting eligibility determinations for
exemptions.
(a) Options for conducting eligibility determinations. The Exchange
may satisfy the requirements of this subpart--
(1) Directly or through contracting arrangements in accordance with
Sec. 155.110(a); or
(2) For an application submitted before the start of open
enrollment for 2016, through the approach described in paragraph (b) of
this section.
(b) Use of HHS service. Notwithstanding the requirements of this
subpart, for an application submitted before the start of open
enrollment for 2016, the Exchange may adopt an exemption eligibility
determination made by HHS, provided that--
(1) The Exchange adheres to the eligibility determination made by
HHS;
(2) The Exchange furnishes to HHS any information available through
the Exchange that is necessary for an applicant to utilize the process
administered by HHS; and
(3) The Exchange call center and Internet Web site specified in
Sec. 155.205(a) and (b), respectively, provide information to
consumers regarding the exemption eligibility process.
0
44. Section 155.705 is amended by--
0
a. Revising paragraphs (b)(2) and (b)(3)(ii) introductory text and
(b)(3)(iv) introductory text; and
0
b. Adding paragraphs (b)(3)(vi) and (vii).
The revisions and addition read as follows:
Sec. 155.705 Functions of a SHOP.
* * * * *
(b) * * *
(2) Employer choice requirements. With regard to QHPs offered
through the SHOP for plan years beginning on or after January 1, 2015,
the SHOP must allow a qualified employer to select a level of coverage
as described in section 1302(d)(1) of the Affordable Care Act, in which
all QHPs within that level are made available to the qualified
employees of the employer, unless the SHOP makes an election pursuant
to paragraph (b)(3)(vi) of this section.
(3) * * *
(ii) Unless the SHOP makes an election pursuant to paragraph
(b)(3)(vi) of this section, for plan years beginning on or after
January 1, 2015, a SHOP:
* * * * *
(iv) Unless the Secretary makes an election pursuant to paragraph
(b)(3)(vi) of this section, for plan years beginning on or after
January 1, 2015, a Federally-facilitated SHOP will provide a qualified
employer a choice of two methods to make QHPs available to qualified
employees:
* * * * *
[[Page 30350]]
(vi) For plan years beginning in 2015 only, the SHOP may, elect to
provide employers only with the option set forth at paragraph
(b)(3)(ii)(B) of this section, or in the case of a Federally-
facilitated SHOP, only with the option set forth at paragraph
(b)(3)(iv)(B) of this section, only if the State Insurance Commissioner
submits a written recommendation to the SHOP adequately explaining that
it is the State Insurance Commissioner's expert judgment, based on a
documented assessment of the full landscape of the small group market
in his or her State, that not implementing employee choice would be in
the best interests of small employers and their employees and
dependents, given the likelihood that implementing employee choice
would cause issuers to price products and plans higher in 2015 due to
the issuers' beliefs about adverse selection. A State Insurance
Commissioner's recommendation must be based on concrete evidence,
including but not limited to discussions with those issuers expected to
participate in the SHOP in 2015.
(vii) For plan years beginning in 2015 only, a State Insurance
Commissioner should submit the recommendation specified in paragraph
(b)(3)(vi) of this section, and the SHOP should make a decision based
on that recommendation sufficiently in advance of the end of the QHP
certification application window such that issuers can make informed
decisions about whether to participate in the SHOP. In a Federally-
facilitated-SHOP, State Insurance Commissioners must submit to HHS the
recommendation specified in paragraph (b)(3)(vi) of this section on or
before June 2, 2014, and HHS will make a decision based on any
recommendations submitted by that deadline before the close of the QHP
certification application window.
* * * * *
0
45. Section 155.725 is amended by revising paragraphs (c) and (e) to
read as follows:
Sec. 155.725 Enrollment periods under SHOP.
* * * * *
(c) Annual employer election period. (1) Notwithstanding any other
paragraph in this section, for coverage beginning in 2015, in a
Federally-facilitated SHOP a qualified employer's annual election
period may begin no sooner than November 15, 2014.
(2) The SHOP must provide qualified employers with a standard
election period prior to the completion of the employer's plan year and
before the annual employee open enrollment period, in which the
qualified employer may change its participation in the SHOP for the
next plan year, including--
(i) The method by which the qualified employer makes QHPs available
to qualified employees pursuant to Sec. 155.705(b)(2) and (3);
(ii) The employer contribution towards the premium cost of
coverage;
(iii) The level of coverage offered to qualified employees as
described in Sec. 155.705(b)(2) and (3); and
(iv) The QHP or QHPs offered to qualified employees in accordance
with Sec. 155.705.
* * * * *
(e) Annual employee open enrollment period. The SHOP must establish
a standardized annual open enrollment period for qualified employees
prior to the completion of the applicable qualified employer's plan
year and after that employer's annual election period.
* * * * *
0
46. Section 155.740 is amended by--
0
a. Redesignating paragraphs (g) introductory text, (g)(1) introductory
text, (g)(1)(i), (g)(1)(ii), (g)(2), and (g)(3) as paragraphs (g)(1)
introductory text, (g)(1)(i) introductory text, (g)(1)(i)(A),
(g)(1)(i)(B), (g)(1)(ii), and (g)(2), respectively; and
0
b. Revising paragraph (i)(1)(i).
The revision read as follows:
Sec. 155.740 SHOP employer and employee eligibility appeals
requirements.
* * * * *
(i) * * *
(1) * * *
(i) Withdraws the request in accordance with the standards set
forth in Sec. 155.530(a)(1); or
* * * * *
0
47. Subpart O is added to read as follows:
Subpart O--Quality Reporting Standards for Exchanges
Sec.
155.1400 Quality rating system.
155.1405 Enrollee satisfaction survey system.
Subpart O--Quality Reporting Standards for Exchanges
Sec. 155.1400 Quality rating system.
The Exchange must prominently display the quality rating
information assigned to each QHP on its Web site, in accordance with
Sec. 155.205(b)(1)(v), as calculated by HHS and in a form and manner
specified by HHS.
Sec. 155.1405 Enrollee satisfaction survey system.
The Exchange must prominently display results from the Enrollee
Satisfaction Survey for each QHP on its Web site, in accordance with
Sec. 155.205(b)(1)(iv), as calculated by HHS and in a form and manner
specified by HHS.
PART 156--HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE
CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES
0
48. The authority citation for part 156 is revised to read as follows:
Authority: Title I of the Affordable Care Act, sections 1301-
1304, 1311-1313, 1321-1322, 1324, 1334, 1342-1343, 1401-1402, Pub.
L. 111-148, 124 Stat. 119 (42 U.S.C. 18021-18024, 18031-18032,
18041-18042, 18044, 18054, 18061, 18063, 18071, 18082, 26 U.S.C.
36B, and 31 U.S.C. 9701).
0
49. Section 156.122 is amended by revising paragraph (c) to read as
follows:
Sec. 156.122 Prescription drug benefits.
* * * * *
(c) A health plan providing essential health benefits must have
procedures in place that allow an enrollee to request and gain access
to clinically appropriate drugs not covered by the health plan.
(1) Such procedures must include a process for an enrollee, the
enrollee's designee, or the enrollee's prescribing physician (or other
prescriber) to request an expedited review based on exigent
circumstances.
(i) Exigent circumstances exist when an enrollee is suffering from
a health condition that may seriously jeopardize the enrollee's life,
health, or ability to regain maximum function or when an enrollee is
undergoing a current course of treatment using a non-formulary drug.
(ii) A health plan must make its coverage determination on an
expedited review request based on exigent circumstances and notify the
enrollee or the enrollee's designee and the prescribing physician (or
other prescriber, as appropriate) of its coverage determination no
later than 24 hours after it receives the request.
(iii) A health plan that grants an exception based on exigent
circumstances must provide coverage of the non-formulary drug for the
duration of the exigency.
(2) [Reserved]
0
50. Section 156.130 is amended by removing and reserving paragraph (b)
and revising paragraphs (c) and (d) to read as follows:
Sec. 156.130 Cost-sharing requirements.
* * * * *
(c) Special rule for network plans. In the case of a plan using a
network of
[[Page 30351]]
providers, cost-sharing paid by, or on behalf of, an enrollee for
benefits provided outside of such network shall not count toward the
annual limitation on cost-sharing (as defined in paragraph (a) of this
section).
(d) Increase annual dollar limits in multiples of 50. For a plan
year beginning in a calendar year after 2014, any increase in the
annual dollar limits described in paragraph (a) of this section that
does not result in a multiple of 50 dollars will be rounded down, to
the next lowest multiple of 50 dollars.
* * * * *
51. Section 156.200 is amended by revising paragraph (b)(5) and
adding paragraph (h) to read as follows:
Sec. 156.200 QHP issuer participation standards.
* * * * *
(b) * * *
(5) Implement and report on a quality improvement strategy or
strategies described in section 1311(c)(1)(E) of the Affordable Care
Act consistent with the standards of section 1311(g) of the Affordable
Care Act, disclose and report information on health care quality and
outcomes described in sections 1311(c)(1)(H), (c)(1)(I), and (c)(3) of
the Affordable Care Act, and implement appropriate enrollee
satisfaction surveys consistent with section 1311(c)(4) of the
Affordable Care Act;
* * * * *
(h) Operational requirements. As a condition of certification of a
QHP, an issuer must attest that it will comply with all QHP operational
requirements described in subparts D, E, H, K, L, and M of this part.
0
52. Section 156.265 is amended by revising paragraph (d) to read as
follows:
Sec. 156.265 Enrollment process for qualified individuals.
* * * * *
(d) Premium payment. A QHP issuer must follow the premium payment
process established by the Exchange in accordance with Sec. 155.240 of
the subchapter.
* * * * *
0
53. Section 156.270 is amended by adding a new paragraph (j) to read as
follows:
Sec. 156.270 Termination of coverage for qualified individuals.
* * * * *
(j) Operational instructions. QHP issuers must follow the
transaction rules established by the Exchange in accordance with Sec.
155.430(e) of this subchapter.
0
54. Section 156.604 is amended by revising paragraphs (a)(2) heading
and introductory text and (d) to read as follows:
Sec. 156.604 Requirements for recognition as minimum essential
coverage for types of coverage not otherwise designated minimum
essential coverage in the statute or this subpart.
(a) * * *
(2) Procedural requirements for recognition as minimum essential
coverage. To be considered for recognition as minimum essential
coverage, the sponsor of the coverage, government agency, health
insurance issuer, or plan administrator must submit the following
information to HHS:
* * * * *
(d) Notice. Once recognized as minimum essential coverage, the
sponsor of the coverage, government agency, health insurance issuer, or
plan administrator must provide notice to all enrollees of its minimum
essential coverage status and must comply with the information
reporting requirements of section 6055 of the Internal Revenue Code and
implementing regulations.
0
55. Section 156.800 is amended by adding paragraph (d) to read as
follows:
Sec. 156.800 Available remedies; Scope.
* * * * *
(d) Information sharing. HHS may consult and share information
about QHP issuers with other Federal and State regulatory and
enforcement entities to the extent that the consultation and
information is necessary for purposes of State or Federal oversight and
enforcement activities.
0
56. Section 156.805 is amended--
0
a. By adding paragraph (d)(3); and
0
b. By revising paragraph (e)(2).
The revisions and additions read as follows:
Sec. 156.805 Bases and process for imposing civil money penalties in
Federally-facilitated Exchanges.
* * * * *
(d) * * *
(3) HHS will deliver notice under this paragraph by either hand
delivery, certified mail, return receipt requested, or by overnight
delivery service with signature upon delivery required.
(e) * * *
(2) HHS will notify the issuer in writing of any penalty that has
been assessed under this subpart and of the means by which the QHP
issuer or another responsible entity may satisfy the CMP assessment.
* * * * *
0
57. Section 156.806 is added to read as follows:
Sec. 156.806 Notice of non-compliance.
If HHS learns of a potential violation described in Sec. 156.805
or if a State informs HHS of a potential violation, prior to imposing
any CMPs, HHS must provide a written notice to the issuer, to include
the following:
(a) Describe the potential violation.
(b) Provide 30 days from the date of the notice for the QHP issuer
to respond and to provide additional information to refute an alleged
violation.
(c) State that a civil money penalty may be assessed if the
allegations are not, as determined by HHS, refuted.
0
58. Section 156.810 is amended--
0
a. By revising paragraph (a)(6);
0
b. In paragraph (a)(9) by removing ``or'' after the semicolon;
0
c. In paragraphs (a)(10) and (11) by removing the period and adding a
semicolon in its place;
0
d. By adding new paragraphs (a)(12) and (13); and
0
e. By revising paragraph (d) introductory text.
The revisions and additions read as follows:
Sec. 156.810 Bases and process for decertification of a QHP offered
by an issuer through a Federally-facilitated Exchange.
(a) * * *
(6) The QHP no longer meets the applicable standards set forth
under subpart C of this part.
* * * * *
(12) The QHP issuer substantially fails to meet the requirements
related to the cases forwarded to QHP issuers under subpart K of this
part; or
(13) The QHP issuer substantially fails to meet the requirements
related to the offering of a QHP under subpart M of this part.
* * * * *
(d) Expedited decertification process. For decertification actions
on grounds described in paragraphs (a)(6), (7), (8), or (9) of this
section, HHS will provide written notice to the QHP issuer, enrollees,
and the State department of insurance in the State in which the QHP is
being decertified. The written notice must include the following:
* * * * *
0
59. Section 156.1105 is amended by adding paragraphs (d) and (e) to
read as follows:
Sec. 156.1105 Establishment of standards for HHS-approved enrollee
satisfaction survey vendors for use by QHP issuers in Exchanges.
* * * * *
[[Page 30352]]
(d) Monitoring. HHS will periodically monitor HHS-approved enrollee
satisfaction survey vendors to ensure ongoing compliance with the
standards in paragraph (b) of this section. If HHS determines that an
HHS-approved enrollee satisfaction survey vendor is non-compliant with
the standards required in paragraph (b) of this section, the survey
vendor may be removed from the approved list described in paragraph (c)
of this section and/or the submitted survey results may be ineligible
to be included for ESS results.
(e) Appeals. An enrollee satisfaction survey vendor that is not
approved by HHS after submitting the application described in paragraph
(a) of this section may appeal HHS's decision by notifying HHS in
writing within 15 days from receipt of the notification of not being
approved and submitting additional documentation demonstrating how the
vendor meets the standards in paragraph (b) of this section. HHS will
review the submitted documentation and make a final approval
determination within 30 days from receipt of the additional
documentation.
0
60. Section 156.1120 is added to subpart L to read as follows:
Sec. 156.1120 Quality rating system.
(a) Data submission requirement. (1) A QHP issuer must submit data
to HHS and Exchanges to support the calculation of quality ratings for
each QHP that has been offered in an Exchange for at least one year.
(2) In order to ensure the integrity of the data required to
calculate the QRS, a QHP issuer must submit data that has been
validated in a form and manner specified by HHS.
(3) A QHP issuer must include in its data submission information
only for those QHP enrollees at the level specified by HHS.
(b) Timeline. A QHP issuer must annually submit data necessary to
calculate the QHP's quality ratings to HHS and Exchanges, on a timeline
and in a standardized form and manner specified by HHS.
(c) Marketing requirement. A QHP issuer may reference the quality
ratings for its QHPs in its marketing materials, in a manner specified
by HHS.
(d) Multi-State plans. Issuers of multi-State plans, as defined in
Sec. 155.1000(a) of this subchapter, must provide the data described
in paragraph (a) of this section to the U.S. Office of Personnel
Management, in the time and manner specified by the U.S. Office of
Personnel Management.
0
61. Section 156.1125 is added to subpart L to read as follows:
Sec. 156.1125 Enrollee satisfaction survey system.
(a) General requirement. A QHP issuer must contract with an HHS-
approved enrollee satisfaction survey (ESS) vendor, as identified by
Sec. 156.1105, in order to administer the Enrollee Satisfaction Survey
of the QHP's enrollees. A QHP issuer must authorize its contracted ESS
vendor to report survey results to HHS and the Exchange on the issuer's
behalf.
(b) Data requirement. (1) A QHP issuer must collect data for each
QHP, with more than 500 enrollees in the previous year that has been
offered in an Exchange for at least one year and following a survey
sampling methodology provided by HHS.
(2) In order to ensure the integrity of the data required to
conduct the survey, a QHP issuer must submit data that has been
validated in a form and manner specified by HHS, and submit this data
to its contracted ESS vendor.
(3) A QHP issuer must include in its data submission information
only for those QHP enrollees at the level specified by HHS.
(c) Marketing requirement. A QHP issuer may reference the survey
results for its QHPs in its marketing materials, in a manner specified
by HHS.
(d) Timeline. A QHP issuer must annually submit data necessary to
conduct the survey to its contracted ESS vendor on a timeline and in a
standardized form and manner specified by HHS.
(e) Multi-State plans. Issuers of multi-State plans, as defined in
Sec. 155.1000(a) of this subchapter, must provide the data described
in paragraph (b) of this section to the U.S. Office of Personnel
Management, in the time and manner specified by the U.S. Office of
Personnel Management.
PART 158--ISSUER USE OF PREMIUM REVENUE: REPORTING AND REBATE
REQUIREMENTS
0
62. The authority citation for part 158 is revised to read as follows:
Authority: Section 2718 of the Public Health Service Act (42
U.S.C. 300gg-18), as amended.
0
63. Section 158.150 is amended by revising paragraph (b)(2)(i)(A)(6) to
read as follows:
Sec. 158.150 Activities that improve health care quality.
* * * * *
(b) * * *
(2) * * *
(i) * * *
(A) * * *
(6) Commencing with the 2012 reporting year and extending through
the first reporting year in which the Secretary requires ICD-10 as the
standard medical data code set, implementing ICD-10 code sets that are
designed to improve quality and are adopted pursuant to the Health
Insurance Portability and Accountability Act (HIPAA), 42 U.S.C. 1320d-
2, as amended, limited to 0.3 percent of an issuer's earned premium as
defined in Sec. 158.130.
* * * * *
0
64. Section 158.211 is amended by revising paragraph (a) to read as
follows:
Sec. 158.211 Requirement in States with a higher medical loss ratio.
(a) State option to set higher minimum loss ratio. For coverage
offered in a State whose law provides that issuers in the State must
meet a higher MLR than that set forth in Sec. 158.210, the State's
higher percentage must be substituted for the percentage stated in
Sec. 158.210. If a State requires the small group market and
individual market to be merged and also sets a higher MLR standard for
the merged market, the State's higher percentage must be substituted
for the percentage stated in Sec. 158.210 for both the small group and
individual markets.
* * * * *
0
65. Section 158.220 is amended by revising paragraph (a) to read as
follows:
Sec. 158.220 Aggregation of data in calculating an issuer's medical
loss ratio.
(a) Aggregation by State and by market. In general, an issuer's MLR
must be calculated separately for the large group market, small group
market and individual market within each State. However, if a State
requires the small group market and individual market to be merged,
then the data reported separately under subpart A of this part for the
small group and individual market in that State must be merged for
purposes of calculating an issuer's MLR and any rebates owing.
* * * * *
0
66. Section 158.221 is amended by adding paragraphs (b)(6) and (7) to
read as follows:
Sec. 158.221 Formula for calculating an issuer's medical loss ratio.
* * * * *
(b) * * *
(6) The numerator of the MLR in the individual and small group
markets in States that adopted the transitional policy outlined in the
CMS letter dated November 14, 2013 must be the amount specified in
paragraph (b) of this section, except that issuers that provided
transitional coverage may
[[Page 30353]]
multiply the total incurred claims and expenditures for activities that
improve health care quality incurred in 2014 in the respective State
and market by a factor of 1.0001.
(7) The numerator of the MLR in the individual and small group
markets for issuers participating in the State and Federal Exchanges
(sometimes referred to as ``Marketplaces'') must be the amount
specified in paragraph (b) of this section, except that the total
incurred claims and expenditures for activities that improve health
care quality incurred in 2014 in the respective State and market may be
multiplied by a factor of 1.0004.
* * * * *
0
67. Section 158.231 is amended by revising paragraph (a) to read as
follows:
Sec. 158.231 Life-years used to determine credible experience.
(a) The life-years used to determine the credibility of an issuer's
experience are the life-years for the MLR reporting year plus the life-
years for the two prior MLR reporting years. If a State requires the
small group market and individual market to be merged, then life-years
used to determine credibility must be the life-years from the small
group market and the individual market for the MLR reporting year plus
the life-years from the small group market and the individual market
for the two prior MLR reporting years.
* * * * *
Dated: May 12, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Approved: May 14, 2014.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2014-11657 Filed 5-16-14; 5:00 pm]
BILLING CODE 4120-01-P