[Federal Register Volume 79, Number 126 (Tuesday, July 1, 2014)]
[Proposed Rules]
[Pages 37262-37269]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-15362]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 155 and 156

[CMS-9941-P]
RIN 0938-AS32


Patient Protection and Affordable Care Act; Annual Eligibility 
Redeterminations for Exchange Participation and Insurance Affordability 
Programs; Health Insurance Issuer Standards Under the Affordable Care 
Act, Including Standards Related to Exchanges

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

ACTION: Proposed rule.

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

SUMMARY: This proposed rule would specify additional options for annual 
eligibility redeterminations and renewal and re-enrollment notice 
requirements for qualified health plans offered through the Exchange, 
beginning with annual redeterminations for coverage for plan year 2015. 
In particular, this proposed rule would provide additional flexibility 
for Marketplaces, including the ability for Marketplaces to propose 
unique approaches that meet the specific needs of their State, while 
streamlining the consumer experience.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on July 28, 2014.

ADDRESSES: In commenting, please refer to file code CMS-9941-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-9941-P, P.O. Box 8010, 
Baltimore, MD 21244-8010.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address only: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-9941-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

    4. By hand or courier. Alternatively, you may deliver (by hand or 
courier) your written comments only to the following addresses prior to 
the close of the comment period:
    a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 
20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.

If you intend to deliver your comments to the Baltimore address, call 
telephone number (410) 786-7195 in advance to schedule your arrival 
with one of our staff members.
    Comments erroneously mailed to the addresses indicated as 
appropriate for hand or courier delivery may be delayed and received 
after the comment period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT:  Benjamin Walker, (301) 492-4430.

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

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. Background
    A. Legislative Overview
    B. Stakeholder Consultation and Input
    C. Structure of the Proposed Rule
II. Provisions of the Proposed Rule
    A. Part 155--Exchange Establishment Standards and Other Related 
Standards Under the Affordable Care Act; Subpart D--Exchange 
Functions in the Individual Market: Eligibility Determinations for 
Exchange Participation and Insurance Affordability Programs
    B. Part 156--Health Insurance Issuer Standards Under the 
Affordable Care Act, Including Standards Related to Exchanges; 
Subpart M--Qualified Health Plan Issuer Responsibilities
III. Response to Comments
IV. Collection of Information Requirements
V. Regulatory Impact Statement

I. 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 proposed rule, we refer to the 
two statutes collectively as the ``Affordable Care Act.'' Subtitles A 
and C of Title I of the Affordable Care Act reorganized, amended, and 
added to the provisions of part A of Title XXVII of the Public Health 
Service Act (PHS Act) relating to group health plans and health 
insurance issuers in the group and individual markets.
    Starting on October 1, 2013 for coverage starting as soon as 
January 1, 2014, qualified individuals and qualified employers have 
been able to purchase qualified health plans (QHPs)--private health 
insurance that has been certified as meeting certain standards--through 
competitive

[[Page 37263]]

marketplaces called Exchanges or Health Insurance Marketplaces. The 
word ``Exchanges'' refers to both State Exchanges, also called State-
based Exchanges, and Federally-facilitated Exchanges (FFEs). In this 
proposed 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 FFE.
    Section 1411(f)(1)(B) of the Affordable Care Act directs the 
Secretary of Health and Human Services (the Secretary) to establish 
procedures to redetermine the eligibility of individuals on a periodic 
basis in appropriate circumstances. 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. Under section 2703 of the PHS Act, as added by the Affordable Care 
Act, health insurance issuers in the group and individual markets must 
guarantee the renewability of coverage unless an exception applies.

B. Stakeholder Consultation and Input

    HHS has consulted with stakeholders on a number of polices related 
to the operation of Exchanges, including eligibility redetermination. 
HHS has held a number of listening sessions with consumers, providers, 
employers, health plans, 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 grant process, and meetings 
with tribal leaders and representatives, health insurance issuers, 
trade groups, consumer advocates, employers, and other interested 
parties. We considered all of the public input as we developed the 
policies in this proposed rule.

C. Structure of the Proposed Rule

    The regulations outlined in this proposed rule would be codified in 
45 CFR parts 155 and 156. Part 155 specifies standards relative to the 
establishment, operation, and minimum functionality of Exchanges, 
including annual eligibility redeterminations. Part 156 specifies 
standards for health insurance issuers with respect to participation in 
an Exchange.

II. Provisions of the Proposed Regulations

A. Part 155--Exchange Establishment Standards and Other Related 
Standards Under the Affordable Care Act; Subpart D--Exchange Functions 
in the Individual Market: Eligibility Determinations for Exchange 
Participation and Insurance Affordability Programs

    Section 1411(f)(1)(B) of the Affordable Care Act directs the 
Secretary to establish procedures to redetermine the eligibility of 
individuals on a periodic basis in appropriate circumstances. 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.
    On March 27, 2012, we published a final rule entitled Patient 
Protection and Affordable Care Act; Establishment of Exchanges and 
Qualified Health Plans; Exchange Standards for Employers (77 FR 18310). 
The final rule added 45 CFR 155.335, which, together with the 
provisions in 45 CFR 155.330 on eligibility redeterminations during a 
benefit year, implements section 1411(f)(1)(B) of the Affordable Care 
Act. On July 15, 2013, we amended Sec.  155.335 in a final rule 
entitled 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 42160, 42319).
    Under the process currently defined in Sec.  155.335, the Exchange 
will provide a notice to all individuals who have been determined 
eligible for enrollment in a QHP through the Exchange (qualified 
individuals) in advance of the annual open enrollment period, 
consistent with Sec.  155.335(c). For 2015, current regulations in 
Sec.  155.335(d)(1) specify that this notice and the annual open 
enrollment period notice described in Sec.  155.410(d) be provided as a 
single, coordinated notice. For an individual who requested an 
eligibility determination for insurance affordability programs and who 
authorized the Exchange to obtain the most recent tax return 
information available from the Secretary of the Treasury for the 
purposes of annual redetermination, this notice will include a 
projected eligibility determination for insurance affordability 
programs for the following year that is computed based on the updated 
income and family size information, all other eligibility information 
currently on file with the Exchange, and plan premiums for the 
following year. Specifically, if advance payments of the premium tax 
credit (APTC) are being paid on such an enrollee's behalf and the tax 
filer authorized the Exchange to obtain updated tax data for the 
purposes of annual redetermination, the Exchange will recalculate 
advance payments of the premium tax credit and cost-sharing reductions 
(CSR) for the upcoming year in accordance with updated income and 
family size information and premium data for the applicable benchmark 
plan, as defined in 26 CFR 1.36B-3(f), calculated using premiums for 
the upcoming year. Consistent with Sec.  155.335(e), the Exchange will 
require qualified individuals to report changes. The process currently 
established in regulation allows an individual who is enrolled in a QHP 
through the Exchange and whose QHP remains available to renew coverage 
for the following year without reapplying or having to take other 
actions. This is a key element of the redetermination process, since it 
enables a streamlined renewal process for enrollees and also reduces 
administrative costs for States and the Federal government.
    Based on the authority in sections 1411(f)(1)(B) and 1321(a) of the 
Affordable Care Act, we propose to modify Sec.  155.335(a) to allow for 
an Exchange to choose one of three methods for conducting annual 
redeterminations. To accommodate proposed new paragraph (a)(2), we 
propose to renumber existing paragraph (a) as paragraph (a)(1). Then, 
in proposed paragraph (a)(2), we propose that the Exchange must conduct 
annual redeterminations using one of the sets of procedures described 
in proposed paragraphs (a)(2)(i), (a)(2)(ii), or (a)(2)(iii). First, in 
proposed paragraph (a)(2)(i), we propose that the Exchange may utilize 
the existing procedures described in Sec.  155.335(b) through (m). 
Second, in paragraph (a)(2)(ii), we propose that the Exchange may 
utilize alternative procedures specified by the Secretary for the 
applicable plan year. We note that, contemporaneously with this 
proposed rule, the Secretary is providing guidance describing 
alternative procedures that would be available to Exchanges under 
paragraph (a)(2)(ii) for annual redeterminations for coverage for plan 
year 2015 if this proposal is finalized. We are providing this guidance 
at the same time as this proposed rule given the limited amount of time 
available for Exchanges and issuers to develop and test the systems and 
processes that will be needed to

[[Page 37264]]

implement the annual redetermination process. If this proposal is 
finalized, Federally-facilitated Exchanges will adopt the alternative 
procedures specified in this guidance for plan year 2015. Also, if this 
proposal is finalized, we expect that updated guidance under paragraph 
(a)(2)(ii) may be provided on an annual basis. Third, in proposed 
paragraph (a)(2)(iii), we propose that the Exchange may utilize 
alternative procedures approved by the Secretary based on a showing by 
the Exchange that the alternative procedures would facilitate continued 
enrollment in coverage for which the enrollee remains eligible, provide 
clear information about the process to the qualified individual or 
enrollee (including any action by the qualified individual or enrollee 
necessary to obtain the most accurate redetermination of eligibility), 
and provide adequate program integrity protections. We note that 
paragraph (a)(2)(iii) is designed to enable Exchanges to propose annual 
redetermination procedures that would deliver on the key goals of the 
annual redetermination process, including those specified in this 
paragraph. We solicit comment regarding standards for approving 
alternative procedures, and on other elements of the annual 
redetermination process, as well as how it affects renewal for 
individuals who are enrolled in a QHP through the Exchange. We also 
note that special procedures may be needed for an Exchange that is 
transitioning the eligibility and enrollment functions from Federal to 
State operation, or vice versa. We will work closely with affected 
States to facilitate these transitions.
    In addition to the proposal to allow Exchanges to choose one of 
three options for performing annual redeterminations, we propose to 
make three amendments to the detailed procedures described in Sec.  
155.335 and one corresponding amendment to Sec.  155.330, which governs 
eligibility redetermination during a benefit year. First, in Sec.  
155.335(e), we propose to revise the language regarding change 
reporting to generally align with the standards in Sec.  155.330(b), so 
that Sec.  155.335(e) would specify that, except as specified in 
proposed paragraph (e), the Exchange must require a qualified 
individual to report any change with respect to the eligibility 
standards specified in Sec.  155.305 within 30 days of any such change. 
Under proposed paragraph (e)(1), the Exchange would not be permitted to 
require a qualified individual who did not request an eligibility 
determination for insurance affordability programs to report changes 
that affect eligibility for insurance affordability programs. Unlike 
Sec.  155.330, we do not propose to allow the Exchange to establish a 
reasonable threshold for changes in income, such that a qualified 
individual who experiences a change in income that is below the 
threshold would not be required to report such change, since we believe 
that reporting of all income changes is important at the time of annual 
redetermination. With this exception, the proposed standards are 
identical to those currently established in 45 CFR Sec.  155.330(b). We 
propose these changes to paragraph (e) because the existing text refers 
to reporting changes with respect to the information included in the 
annual redetermination notice, which is not required to include a 
summary of the qualified individual's application information on file, 
although an Exchange may opt to include this information. These 
proposed changes would align reporting requirements with the notice and 
ensure that Exchanges require relevant changes to be reported in a 
timely manner, consistently throughout the year.
    Second, in proposed Sec.  155.335(e)(2), we propose to amend the 
existing provision which specifies that the Exchange must allow a 
qualified individual, or an application filer, on behalf of the 
qualified individual, to report changes via the channels available for 
submission of an application, as described in Sec.  155.405(c)(2). We 
propose that this requirement would continue to apply, except that the 
Exchange would no longer be required to allow a qualified individual, 
or an application filer, on behalf of the qualified individual, to 
report changes via mail. We also propose the same change to Sec.  
155.330(b)(4), which addresses the reporting of changes in the context 
of eligibility redetermination during a benefit year. Accepting changes 
via mail would frequently require follow-up telephone contact with 
individuals attempting to report changes in order to obtain answers to 
questions that may be triggered by the reported changes. We propose 
this because of the dynamic nature of the eligibility process, under 
which, for example, the Exchange should only ask questions about an 
individual's access to qualifying coverage in an eligible employer-
sponsored plan for an individual who has a level of income for his or 
her family size that would qualify him or her for advance payments of 
the premium tax credit or cost-sharing reductions, if he or she is 
otherwise eligible. With a paper process, under this example, it 
frequently would not be possible to know in advance whether information 
about an individual's access to qualifying coverage in an eligible 
employer-sponsored plan would need to be collected based on a reported 
change in income or family size. Since change reporting via mail would 
frequently trigger subsequent telephone contact, we believe it would 
promote administrative efficiency to eliminate the requirement to 
accept change reporting via mail while encouraging use of the telephone 
option, during which a call center representative can use the dynamic 
application to ask the qualified individual any follow-up questions 
that may arise from the change report. We note that our proposed policy 
would continue to require that an Exchange must permit change reporting 
online, via telephone, and in person with the assistance of Navigators, 
certified application counselors, and other in-person assistance 
personnel, and that an Exchange could choose to permit change reporting 
via mail. If this proposal is finalized, we anticipate that the 
Federally-facilitated Exchange would not accept changes reported via 
mail for the foreseeable future. We also note that this rule does not 
propose to modify 42 CFR 435.916(a)(3)(B) or (c), which specify that a 
Medicaid agency must allow an individual to respond to an annual 
redetermination or report changes via mail.
    Third, we propose to modify the standards for re-enrollment in 
coverage in paragraph (j). First, in paragraph (j)(1), we propose that 
if an enrollee remains eligible for enrollment in a QHP through the 
Exchange upon annual redetermination, and the product under which the 
QHP in which he or she was enrolled remains available for renewal, 
consistent with 45 CFR 147.106, such enrollee will have his or her 
enrollment in a QHP under the product renewed unless he or she 
terminates coverage, including termination of coverage in connection 
with voluntarily selecting a different QHP, in accordance with Sec.  
155.430. In this situation, we propose that the QHP in which the 
enrollee will be renewed will be selected according to the following 
order of priority: First, in the same plan as the enrollee's current 
QHP, unless the current QHP is not available; second, if the enrollee's 
current QHP is not available, the enrollee's coverage will be renewed 
in a plan at the same metal level as the enrollee's current QHP; third, 
if the enrollee's current QHP is not available and the enrollee's 
product no longer

[[Page 37265]]

includes a plan at the same metal level as the enrollee's current QHP, 
the enrollee's coverage will be renewed in a plan that is one metal 
level higher or lower than the enrollee's current QHP; and fourth, if 
the enrollee's current QHP is not available and the enrollee's product 
no longer includes a plan that is at the same metal level as, or one 
metal level higher or lower than the enrollee's current QHP, the 
enrollee's coverage will be renewed in any other plan offered under the 
product in which the enrollee's current QHP is offered in which the 
enrollee is eligible to enroll.
    In paragraph (j)(2), we propose standards to address re-enrollment 
in situations in which the product under which an enrollee's QHP is 
offered is not available through the Exchange for renewal, consistent 
with 45 CFR 147.106. In this situation, the QHP issuer may still re-
enroll the enrollee in a different product offered by the same QHP 
issuer, to the extent permitted by applicable State law, unless the 
enrollee terminates coverage. To the extent that an issuer is re-
enrolling such an enrollee, we propose that the plan in which the 
enrollee will be renewed will be selected according to the following 
order of priority: First, in a plan through the Exchange at the same 
metal level as the enrollee's current QHP in the product offered by the 
issuer that is the most similar to the enrollee's current product; 
second, if the issuer does not offer another plan through the Exchange 
at the same metal level as the enrollee's current QHP, the enrollee 
will be re-enrolled in a plan through the Exchange that is one metal 
level higher or lower than the enrollee's current QHP in the product 
offered by the issuer through the Exchange that is the most similar to 
the enrollee's current product; third, if the issuer does not offer 
another plan through the Exchange at the same metal level as, or one 
metal level higher or lower than the enrollee's current QHP, the 
enrollee will be re-enrolled in any other plan offered through the 
Exchange by the QHP issuer in which the enrollee is eligible to enroll; 
and fourth, if the issuer does not offer any plan through the Exchange 
in which the enrollee is eligible to enroll, the enrollee may be re-
enrolled in a plan offered outside the Exchange by the QHP issuer under 
the product that is the most similar to the enrollee's current product, 
in which the enrollee is eligible to enroll. We note that the Exchange 
would not send an enrollment transaction for an enrollment outside the 
Exchange, and that premium tax credits and cost-sharing reductions are 
not available for enrollment that is not through the Exchange.
    The proposed changes to this provision include minor changes to 
improve clarity, amendments to reflect that renewal of coverage in a 
QHP through the Exchange intersects with Sec.  147.106, which provides 
market-wide standards for guaranteed renewability of coverage offered 
both through and outside the Exchange, and a specific order of priority 
to ensure that renewal of and re-enrollment in coverage in a plan 
through the Exchange occurs through the Exchange, and is in products 
that are as similar to the enrollee's existing product as possible, in 
order to minimize disruption, enable consumers to continue with advance 
payments of the premium tax credit and cost-sharing reductions (which 
are only available for enrollment through the Exchange) and limit 
consumer confusion. Further, the current text of paragraph (j), if read 
separately from Sec.  147.106, could give the incorrect impression that 
a QHP enrollee would have his or her coverage in a QHP renewed even if 
the product under which the QHP was offered was no longer available for 
renewal, consistent with Sec.  147.106. Accordingly, the proposed 
language is designed to clarify the dependency of renewal of coverage 
in a QHP through the Exchange on the continuing availability of the 
product under which the QHP is offered in accordance with market-wide 
standards. We solicit comments on these proposed standards and on the 
proposed order in which plans would be selected for renewal of and re-
enrollment in coverage. In particular, we solicit comment regarding 
whether paragraphs (j)(1)(iii) and (j)(2)(ii) should only prioritize a 
plan with a lower metal level, and whether in general, priority should 
be placed on plans that have a premium that is closest to the plan in 
which an enrollee is currently enrolled.

B. Part 156--Health Insurance Issuer Standards Under the Affordable 
Care Act, Including Standards Related to Exchanges; Subpart M--
Qualified Health Plan Issuer Responsibilities

    In 45 CFR 147.106(f)(1) of the final rule entitled, ``Patient 
Protection and Affordable Care Act; Exchange and Insurance Market 
Standards for 2015 and Beyond,'' published on May 27, 2014 (79 FR 
30240) (Market Standards Rule), we specified that health insurance 
issuers of non-grandfathered plans in the individual market will 
provide written notice of renewals before the first day of the next 
annual open enrollment period in a form and manner specified by the 
Secretary. Under 45 CFR 147.106(c)(1), health insurance issuers of non-
grandfathered plans in the individual market also will provide written 
notices of product discontinuances.
    We propose adding to subpart M a new Sec.  156.1255, which would 
require a health insurance issuer in the individual market that is 
renewing an enrollment group's coverage in a qualified health plan 
offered through the Exchange (including a renewal with modifications), 
or that is discontinuing a product that includes plans offered through 
the Exchange and automatically enrolling an enrollee in a QHP under a 
different product offered by the same QHP issuer through the Exchange, 
to include certain information in the renewal or discontinuation 
notices, as applicable. We propose that the additional information 
include the following: (1) Premium and premium tax credit information 
sufficient to notify the enrollment group of its expected monthly 
premium payment under the renewed coverage, in a form and manner 
specified by the Exchange, provided that if the Exchange does not 
provide this information to enrollees and does not require issuers to 
provide this information to enrollees, consistent with this section, 
such information must be provided in a form and manner specified by 
HHS; (2) an explanation of the requirement to report changes to the 
Exchange, the timeframe and channels through which changes can be 
reported, and the implications of not reporting changes; (3) for an 
enrollment group that includes an enrollee on whose behalf advance 
payments of the premium tax credit are being provided, a description of 
the reconciliation process for advance payments of the premium tax 
credit; and (4) for an enrollment group that includes an enrollee whose 
coverage includes cost-sharing reductions, if the enrollment group's 
coverage is being renewed in a QHP at a different (non-silver) metal 
level, an explanation that, unless the enrollment group changes its 
enrollment to select a new silver-level plan, cost-sharing reductions 
will not be provided for the upcoming year. In accordance with Sec.  
147.106(f)(1), renewal notices would need to be provided no later than 
the first day of the open enrollment period for the upcoming plan year. 
An issuer also may provide this notice along with the applicable 
summary of benefits and coverage notice that is provided at renewal in 
accordance with 45 CFR 147.200. We seek comment on this proposal.
    Contemporaneously with the issuance of this proposed rule, we are 
specifying the form and manner of the notices

[[Page 37266]]

described in 45 CFR 146.152, 147.106, and 148.122 by providing standard 
notices for issuers to use when discontinuing or renewing coverage. 
These notices take into account the feedback we received on the draft 
notices issued contemporaneously with the proposed Market Standards 
Rule.\1\ We believe that adding the information that would be specified 
pursuant to Sec.  156.1255 to the renewal notices required under Sec.  
147.106 would best assure that qualified individuals receive, in a 
single notice, the relevant information that they need to make informed 
decisions about whether to keep their current plan or examine other QHP 
options. Further, this approach potentially would reduce burden on 
health insurance issuers. As noted above, the Market Standards Rule 
requires that notices be provided in a form and manner specified by the 
Secretary. The guidance accompanying the standard notices that we are 
releasing for public comment contemporaneously with this proposed rule 
specifies that the form and manner may consist of standard notices 
developed by States that are enforcing the requirements of the 
Affordable Care Act, provided the State-developed notices are at least 
as protective as the standard Federal notices.
---------------------------------------------------------------------------

    \1\ CMS Insurance Standards Bulletin, Draft Notices When 
Discontinuing or Renewing a Product in the Group or Individual 
Market (March 14, 2014), http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/draft-discontinuance-renewal-notices-03-14-14.pdf.
---------------------------------------------------------------------------

    We recognize that the current notice requirements do not cover 
every situation in which an issuer may non-renew or discontinue 
coverage, consistent with the guaranteed renewability statute and 
regulations. For example, an issuer whose product no longer covers the 
service area of enrollees may non-renew those enrollees' coverage under 
that product. But, as long as the issuer's product continues to cover a 
majority of the same service area, the service area reduction would not 
trigger a product discontinuation and corresponding notice to affected 
enrollees under the current regulations. We also propose establishing a 
notice requirement that would apply to all plans subject to the 
guaranteed renewability requirements that non-renew coverage based on 
continued coverage not being available in the enrollee's service area 
as a result of changes that do not result in product discontinuances. 
These notices would be provided in a form and manner specified by HHS. 
We solicit comments on this proposal, including the appropriate 
timeframe for providing the notice.

III. Response to Comments

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

IV. Collection of Information Requirements

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 renewal 
notices associated with the 2015 plan year are provided to consumers in 
a timely manner prior to the 2015 open enrollment period. Consumers 
will need the information in these notices in order to make decisions 
regarding their coverage for the 2015 plan year.

ICRs Regarding Renewal and Re-Enrollment Notice Requirements (Sec.  
156.1255)

    Proposed Sec.  156.1255 would require that a health insurance 
issuer in the individual market that is renewing an enrollment group's 
coverage in a qualified health plan offered through the Exchange 
(including a renewal with modifications), or that is discontinuing a 
product offered through the Exchange and automatically enrolling an 
enrollee in a QHP under a different product offered by the same QHP 
issuer through the Exchange include certain information in the written 
notice specified in Sec.  147.106(c)(1) or (f)(1).
    Since there are existing requirements for issuers to send renewal 
and discontinuance notices, we only estimate the burden for QHP issuers 
to revise current notices to comply with the proposed provisions of 
this proposed rule. We estimate that there are 575 QHP issuers and 
assume that they would all revise their existing notices to comply with 
the requirements in this proposed rule.
    For renewal notices, we estimate that, for each issuer, it would 
require three hours of clerical labor (at a cost of $33.67 per hour) to 
prepare the notice and one hour for a senior manager (at a cost of 
$75.34 per hour) to review it. We also estimate that it would take a 
computer programmer 20 hours (at a cost of $52.53 per hour) to write 
and test a program to automate the notices. The total burden for each 
issuer to prepare the notice would be 24 hours with an equivalent cost 
of approximately $1,277. For all 575 QHP issuers, the total burden 
would be 13,800 hours with an equivalent cost of approximately 
$705,479.
    For re-enrollment (or discontinuance) notices, which could also be 
used in cases of other terminations or non-renewals, we estimate that, 
for each issuer, it would require three hours of clerical labor (at a 
cost of $33.67 per hour) to prepare the notice and one hour for a 
senior manager (at a cost of $75.34 per hour) to review the notice. We 
also estimate that it would take a computer programmer 9 hours (at a 
cost of $52.53 per hour) to write and test a program to automate the 
notices. The total annual burden for each issuer to prepare the notice 
would be 13 hours with an equivalent cost of approximately $649. For 
all 575 QHP issuers, the total annual burden would be 7,475 hours with 
an equivalent cost of approximately $373,237.
    States that are enforcing the Affordable Care Act may develop their 
own standard notices. However, we

[[Page 37267]]

anticipate that fewer than 10 States would opt for this alternative. 
Under 5 CFR 1320.3(c)(4), this requirement is not subject to the PRA as 
it would affect fewer than 10 entities in a 12-month period.
    We are requesting emergency OMB review 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.
    The proposed information collection requirement at Sec.  156.1255 
is but one component of a broader information collection request. We 
are also soliciting comments for the aforementioned information 
collection request in a notice published elsewhere in this issue of the 
Federal Register. The notice provides the public with 30 days to submit 
comments. Copies of the supporting statement for this information 
collection request 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 July 28, 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-10527), 
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.

V. Regulatory Impact Statement

A. Summary

    We are publishing this proposed rule to implement the protections 
intended by the Congress in the most economically efficient manner 
possible. We have examined the effects of this rule as required by 
Executive Order 13563 (76 FR 3821, January 21, 2011), Executive Order 
12866 (58 FR 51735, September 1993, Regulatory Planning and Review), 
the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-
354), 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)).

B. Executive Orders 12866 and 13563

    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 proposed 
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 rules with 
economically significant effects (for example, $100 million or more in 
any 1 year), and a ``significant'' regulatory action is subject to 
review by the OMB. We have concluded that this proposed rule is not 
likely to have economic impacts of $100 million or more in any one 
year, and therefore does not meet the definition of ``economically 
significant rule'' under Executive Order 12866.
1. Need for Regulatory Action
    This proposed rule specifies additional options for annual 
eligibility redeterminations and renewal and re-enrollment notice 
requirements for QHPs in the Exchange beginning with annual 
redeterminations for coverage for plan year 2015.
2. Summary of Impacts
    It is expected that Exchanges will adopt an alternative method for 
annual eligibility redeterminations only if the related costs are no 
more than those associated with the process currently defined in Sec.  
155.335. Therefore, we do not expect that there would be additional 
costs related to these provisions.
    QHP issuers would incur costs to prepare and send renewal notices 
to comply with the proposed provisions, as detailed in section IV. 
States that choose to develop their own renewal notices would incur 
costs to do so. Providing consumers with information such as benefit 
changes and premium amounts will enable them to make decisions 
regarding their coverage for the next plan year.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) requires agencies that issue a 
regulation 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 to 5 percent. We do not believe that this 
threshold will be reached by the provisions of this proposed rule.

D. Unfunded Mandates Reform Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires that agencies assess anticipated costs and benefits before 
issuing any 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

[[Page 37268]]

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 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 proposed rule would allow States to choose one of three 
methods for conducting annual redeterminations. We assume that States 
would choose an alternative method only if it is less costly than the 
current method. It would also require QHP issuers to include specific 
information in renewal and re-enrollment notices sent to enrollees and 
issuers would incur costs to comply with this requirement. States that 
choose to develop their own notices would incur costs to do so. 
Consistent with policy embodied in UMRA, this proposed 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.

E. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a rule that imposes substantial 
direct requirement costs on State and local governments, preempts State 
law, or otherwise has Federalism implications.
    States are the primary regulators of health insurance coverage, and 
State laws will continue to apply to health insurance coverage and the 
business of insurance. However, if any State law or requirement 
prevents the application of a Federal standard, then that particular 
State law or requirement would be preempted. State requirements that 
are more stringent than the Federal requirements would not be preempted 
by this proposed rule. Accordingly, States have significant latitude to 
impose requirements with respect to health insurance coverage that are 
more restrictive than the Federal law.

F. Congressional Review Act

    This proposed 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 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

45 CFR Part 156

    Administrative practice and procedure, Health care, Health 
insurance, Reporting and recordkeeping requirements.

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

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

0
1. 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
2. Amend Sec.  155.330 to revise paragraph (b)(4) as follows:


Sec.  155.330  Eligibility redetermination during a benefit year.

* * * * *
    (b) * * *
    (4) The Exchange must allow an enrollee, or an application filer on 
behalf of the enrollee, to report changes via the channels available 
for the submission of an application, as described in Sec.  
155.405(c)(2), except that the Exchange is permitted but not required 
to allow an enrollee, or an application filer, on behalf of the 
enrollee, to report changes via mail.
* * * * *
0
3. Amend Sec.  155.335 to revise paragraphs (a), (e), and (j) as 
follows:


Sec.  155.335  Annual eligibility redetermination.

    (a) General requirement. (1) Except as specified in paragraphs (l) 
and (m) of this section, the Exchange must redetermine the eligibility 
of a qualified individual on an annual basis.
    (2) The Exchange must conduct annual redeterminations required 
under paragraph (a)(1) of this section using one of the following:
    (i) The procedures described in paragraphs (b) through (m) of this 
section;
    (ii) Alternative procedures specified by the Secretary for the 
applicable plan year; or
    (iii) Alternative procedures approved by the Secretary based on a 
showing by the Exchange that the alternative procedures would 
facilitate continued enrollment in coverage for which the enrollee 
remains eligible, provide clear information about the process to the 
qualified individual or enrollee (including regarding any action by the 
qualified individual or enrollee necessary to obtain the most accurate 
redetermination of eligibility), and provide adequate program integrity 
protections.
* * * * *
    (e) Changes reported by qualified individuals. Except as specified 
in paragraph (e)(1) of this section, the Exchange must require a 
qualified individual to report any change with respect to the 
eligibility standards specified in Sec.  155.305 within 30 days of such 
change.
    (1) The Exchange must not require a qualified individual who did 
not request an eligibility determination for insurance affordability 
programs to report changes that affect eligibility for insurance 
affordability programs.
    (2) The Exchange must allow a qualified individual, or an 
application filer, on behalf of the qualified individual, to report 
changes via the channels available for the submission of an 
application, as described in Sec.  155.405(c)(2), except that the 
Exchange is permitted but not required to allow a qualified individual, 
or an application filer, on behalf of the qualified individual, to 
report changes via mail.
* * * * *
    (j) Re-enrollment. If an enrollee remains eligible for enrollment 
in a QHP through the Exchange upon annual redetermination--
    (1) And the product under which the QHP in which he or she is 
enrolled remains available through the Exchange for renewal, consistent 
with Sec.  147.106 of this subchapter, such enrollee will have his or 
her enrollment through the Exchange in a QHP under that product 
renewed, unless he or she terminates coverage, including termination of 
coverage in connection with voluntarily

[[Page 37269]]

selecting a different QHP, in accordance with Sec.  155.430. The 
Exchange will ensure that re-enrollment in coverage under this 
paragraph (j)(1) occurs under the same product in which the enrollee 
was enrolled, as follows:
    (i) The enrollee's coverage will be renewed in the same plan as the 
enrollee's current QHP, unless the current QHP is not available.
    (ii) If the enrollee's current QHP is not available, the enrollee's 
coverage will be renewed in a plan at the same metal level as the 
enrollee's current QHP;
    (iii) If the enrollee's current QHP is not available and the 
enrollee's product no longer includes a plan at the same metal level as 
the enrollee's current QHP, the enrollee's coverage will be renewed in 
a plan that is one metal level higher or lower than the enrollee's 
current QHP; or
    (iv) If the enrollee's current QHP is not available and the 
enrollee's product no longer includes a plan that is at the same metal 
level as, or one metal level higher or lower than the enrollee's 
current QHP, the enrollee's coverage will be renewed in any other plan 
offered under the product in which the enrollee's current QHP is 
offered in which the enrollee is eligible to enroll.
    (2) And the product under which the QHP in which he or she is 
enrolled is not available through the Exchange for renewal, consistent 
with Sec.  147.106 of this subchapter, such enrollee may be enrolled in 
a plan under a different product offered by the same QHP issuer, to the 
extent permitted by applicable State law, unless he or she terminates 
coverage, including termination of coverage in connection with 
voluntarily selecting a different QHP, in accordance with Sec.  
155.430. The Exchange will ensure that re-enrollment in coverage under 
this paragraph (j)(2) occurs as follows:
    (i) The enrollee will be re-enrolled in a plan through the Exchange 
at the same metal level as the enrollee's current QHP in the product 
offered by the issuer that is the most similar to the enrollee's 
current product;
    (ii) If the issuer does not offer another plan through the Exchange 
at the same metal level as the enrollee's current QHP, the enrollee 
will be re-enrolled in a plan through the Exchange that is one metal 
level higher or lower than the enrollee's current QHP in the product 
offered by the issuer through the Exchange that is the most similar to 
the enrollee's current product;
    (iii) If the issuer does not offer another plan through the 
Exchange at the same metal level as, or one metal level higher or lower 
than the enrollee's current QHP, the enrollee will be re-enrolled in 
any other plan offered through the Exchange by the QHP issuer in which 
the enrollee is eligible to enroll.
    (iv) If the issuer does not offer any plan through the Exchange in 
which the enrollee is eligible to enroll, the enrollee will be re-
enrolled in a plan offered outside the Exchange by the QHP issuer under 
the product that is the most similar to the enrollee's current product, 
in which the enrollee is eligible to enroll.
* * * * *

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

0
4. The authority citation for part 156 continues 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
5. Add Sec.  156.1255 to read as follows:


Sec.  156.1255  Renewal and re-enrollment notices.

    A health insurance issuer that is renewing an enrollment group's 
coverage in an individual market QHP offered through the Exchange 
(including a renewal with modifications) in accordance with Sec.  
147.106 of this subchapter, or that is discontinuing a product offered 
through the Exchange and automatically enrolling an enrollee in a QHP 
under a different product offered by the same QHP issuer through the 
Exchange in accordance with Sec.  155.335 of this subchapter, must 
include the following information in the applicable notice described in 
Sec.  147.106(c)(1) or (f)(1) of this subchapter:
    (a) Premium and premium tax credit information sufficient to notify 
the enrollment group of its expected monthly premium payment under the 
renewed coverage, in a form and manner specified by the Exchange, 
provided that if the Exchange does not provide this information to 
enrollees and does not require issuers to provide this information to 
enrollees, consistent with this section, such information must be 
provided in a form and manner specified by HHS;
    (b) An explanation of the requirement to report changes to the 
Exchange, as specified in Sec.  155.335(e) of this subchapter, the 
timeframe and channels through which changes can be reported, and the 
implications of not reporting changes;
    (c) For an enrollment group that includes an enrollee on whose 
behalf advance payments of the premium tax credit are being provided, 
an explanation of the reconciliation process for advance payments of 
the premium tax credit established in accordance with 26 CFR 1.36B-4; 
and
    (d) For an enrollment group that includes an enrollee with cost-
sharing reductions, but for whom no QHP under the product remains 
available for renewal at the silver level, an explanation that unless 
the enrollment group selects a silver-level QHP through the Exchange, 
no cost-sharing reductions will be provided.

    Dated: June 19, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: June 24, 2014.
Sylvia M. Burwell,
Secretary.
[FR Doc. 2014-15362 Filed 6-26-14; 4:15 pm]
BILLING CODE 4120-28-P