[Federal Register Volume 79, Number 226 (Monday, November 24, 2014)]
[Proposed Rules]
[Pages 69802-69819]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-27793]


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OFFICE OF PERSONNEL MANAGEMENT

45 CFR Part 800

RIN 3206-AN12


Patient Protection and Affordable Care Act; Establishment of the 
Multi-State Plan Program for the Affordable Insurance Exchanges

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.

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SUMMARY: The U.S. Office of Personnel Management (OPM) is issuing a 
proposed rule to implement modifications to the Multi-State Plan (MSP) 
Program based on the experience of the Program to date. OPM established 
the MSP Program pursuant to section 1334 of the Patient Protection and 
Affordable Care Act, as amended by the Health Care and Education 
Reconciliation Act of 2010, referred to collectively as the Affordable 
Care Act. This proposed rule clarifies the approach used to enforce the 
applicable requirements of the Affordable Care Act with respect to 
health insurance issuers that contract with OPM to offer MSP options. 
This proposed rule amends MSP standards related to coverage area, 
benefits, and certain contracting provisions under section 1334 of the 
Affordable Care Act. This document also makes non-substantive technical 
changes.

DATES: Comments are due on or before December 24, 2014.

ADDRESSES: You may submit comments, identified by Regulation Identifier 
Number (RIN) 3206-AN12 using any of the following methods:
    Federal eRulemaking Portal: http://www.regulations.gov. Follow the 
instructions for submitting comments.
    Mail, Hand Delivery or Courier: National Healthcare Operations, 
Healthcare and Insurance, U.S. Office of Personnel Management, 1900 E 
Street NW., Room 3468, Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT: Cameron Stokes by telephone at (202) 
606-2128, by FAX at (202) 606-4430, or by email at [email protected].

SUPPLEMENTARY INFORMATION: The Patient Protection and Affordable Care 
Act (Pub. L. 111-148), as amended by the Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152), together known as the 
Affordable Care Act, provides for the establishment of Affordable 
Insurance Exchanges, or ``Exchanges'' (also called Health Insurance 
Marketplaces, or ``Marketplaces''), where individuals and small 
businesses can purchase qualified coverage. The Exchanges provide 
competitive marketplaces for individuals and small employers to compare 
available private health insurance options based on price, quality, and 
other factors. The Exchanges enhance competition in the health 
insurance market, improve choice of affordable health insurance, and 
give individuals and small businesses purchasing power comparable to 
that of large businesses. The Multi-State Plan (MSP) Program was 
created pursuant to section 1334 of the Affordable Care Act to increase 
competition by offering high-quality health insurance coverage sold in 
multiple States on the Exchanges. The U.S. Office of Personnel 
Management (OPM) is proposing this regulation to modify the standards 
set forth for the MSP Program under 45 CFR part 800 that was published 
as final rule on March 11, 2013 (78 FR 15560). This proposed rule will 
clarify OPM's intent in administering the Program as well as make 
regulatory changes in order to expand issuer participation and 
offerings in the Program to meet the goal of increasing competition.

Abbreviations

EHB Essential Health Benefits
FEHBA Federal Employees Health Benefits Act
FEHB Program Federal Employees Health Benefits Program
HHS U.S. Department of Health and Human Services
MSP Multi-State Plan
NAIC National Association of Insurance Commissioners
OPM U.S. Office of Personnel Management
PHS Act Public Health Service Act
QHP Qualified Health Plan
SHOP Small Business Health Options Program

Table of Contents

I. Background
    A. Affordable Insurance Exchanges
    B. Objectives of the Multi-State Plan Program
    C. Review of U.S. Office of Personnel Management's Role in 
Contracting Under the Federal Employees Health Benefits Program
    D. Overview of the Multi-State Plan Program's Statutory 
Requirements
    E. Stakeholder Interaction
II. Proposed Regulatory Approach
    A. Overview of Regulatory Approach
    B. Governing Law
III. Provisions of the Proposed Regulation
    A. General Provisions and Definitions
    B. Multi-State Plan Issuer Requirements
    C. Application and Contracting Procedures
    D. Compliance
    E. Miscellaneous
IV. Regulatory Impact Analysis
V. Paperwork Reduction Act
VI. Regulatory Flexibility Act
VII. Unfunded Mandates
VIII. Federalism

I. Background

    Section 1334 of the Affordable Care Act created the Multi-State 
Plan (MSP) Program to foster competition in the individual and small 
group health insurance markets on the Exchanges (also called Health 
Insurance Exchanges or Marketplaces) based on price, quality, and 
benefit delivery. The Affordable Care Act directs the U.S. Office of 
Personnel Management (OPM) to contract with private health insurance 
issuers to offer at least two MSP options on each of the Exchanges in 
the States and the District of Columbia.\1\ \2\ The law

[[Page 69803]]

allows MSP issuers to phase in coverage.\3\
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    \1\ Multi-State Plan option or MSP option means a discrete 
pairing of a package of benefits with particular cost sharing (which 
does not include premium rates or premium rate quotes) that is 
offered under a contract with OPM.
    \2\ Note that the U.S. Department of Health & Human Services 
(HHS) determined that State-specific requirements in the ACA do not 
apply to U.S. territories, and thus territories are not required to 
establish Exchanges. See Letter to Commissioner Gregory R. Francis, 
Division of Banking & Insurance, St. Croix, Virgin Islands, from 
Marilyn Tavenner, Administrator, Centers for Medicare and Medicaid 
Services, July 16, 2014.
    \3\ Multi-State Plan issuer or MSP issuer means a health 
insurance issuer or group of issuers that has a contract with OPM to 
offer MSP options pursuant to section 1334 of the Affordable Care 
Act.
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    In the 2014 plan year, OPM contracted with one group of issuers to 
offer more than 150 MSP options in 31 States, including the District of 
Columbia. Approximately 371,000 individuals have enrolled in an MSP 
option to date. OPM added a second group of issuers for plan year 2015 
and the MSP Program will expand into five additional States for a total 
of 36 States. The Program will offer more than 200 MSP options on the 
Exchanges during the 2015 plan year to further competition and expand 
choices available to individuals, families, and small businesses.

A. Affordable Insurance Exchanges

    The Affordable Care Act established the Exchanges where individuals 
and small businesses can purchase qualified coverage. The Exchanges 
provide competitive marketplaces for individuals and small businesses 
to compare health insurance coverage based on price, quality, and other 
factors. The goals of the Exchanges are to enhance competition in the 
health insurance market, improve choice of affordable health insurance, 
and provide individuals and small businesses purchasing power 
comparable to that of large businesses.
    The purpose of this proposed rule is to modify the MSP Program 
final rule published March 11, 2013.\4\ Proposed changes to the 
regulation include clarifications to the process by which OPM 
administers the MSP Program, pursuant to section 1334 of the Affordable 
Care Act, and revisions to select sections of the regulation that 
establish standards and requirements applicable to MSP options and MSP 
issuers.
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    \4\ Patient Protection and Affordable Care Act; Establishment of 
the Multi-State Plan Program for the Affordable Insurance Exchanges, 
78 FR 15560 (Mar. 11, 2013).
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B. Objectives of the Multi-State Plan Program

    MSP options were among several private health insurance coverage 
options offered on the Exchanges beginning in 2014. MSP options differ 
from QHPs in that MSP options are certified by OPM to be offered on an 
Exchange through the MSP Program application process and signing of a 
contract with OPM. In administering the MSP Program, OPM focuses on 
several important objectives:
     To ensure a choice of at least two options for high-
quality health insurance coverage on each Exchange;
     To promote competition on the Exchanges to the benefit of 
all consumers;
     To provide strong, effective contractual oversight of the 
issuers that offer MSP options; and
     To work cooperatively with States and HHS to ensure a 
level playing field between QHP issuers and MSP issuers.
    Pursuant to section 1334 of the Affordable Care Act, the Director 
of OPM sets standards for the MSP Program. Under section 1334(b)(2), 
MSP issuers generally are also required to comply with requirements of 
State law not inconsistent with requirements in section 1334. OPM 
accordingly aligns standards for the MSP Program with the standards set 
for QHPs and QHP issuers by States, HHS, and the Exchanges. In certain 
unique and specific circumstances, MSP Program standards differ from 
QHP requirements. OPM will continue to ensure that to the extent that 
any of the rules governing MSP options and MSP issuers differ from 
those governing QHPs and QHP issuers, the standards afford the MSP 
options and MSP issuers neither a competitive advantage nor 
disadvantage with respect to other plans offered on the Exchange. OPM 
will continue to administer the MSP Program in a manner that is 
sensitive to the significant State and Federal interests affected by 
the MSP Program and informed by input from a broad array of 
stakeholders. Accordingly, OPM appreciates the ongoing coordination and 
cooperation with States and HHS in the administration of the MSP 
Program.

C. Review of OPM's Role in Contracting Under the Federal Employees 
Health Benefits Program

    Enacted in 1959, the Federal Employees Health Benefits Act (FEHBA) 
established health benefits for Federal employees, annuitants, and 
their dependents. More than eight million employees, annuitants, and 
their family members have coverage under the Federal Employees Health 
Benefits (FEHB) Program. Enrollees can choose fee-for-service plans 
with preferred providers, local Health Maintenance Organizations, 
consumer-driven health plans, or high-deductible health plans in the 
FEHB Program. Among these options are six nationwide plans, each of 
which offers coverage in all 50 States and the District of Columbia.
    For the 2014 and 2015 plan years, OPM negotiated with issuers to 
participate in the MSP Program. The process was guided by our 
experience in the FEHB Program, although it differed in certain 
respects from the FEHB Program process to account for the differences 
between the large group market, where OPM solely operated prior to the 
MSP Program, and the individual and small group markets served by the 
Exchanges.

D. Overview of the MSP Program's Statutory Requirements

    Section 1334(a)(1) of the Affordable Care Act requires OPM to 
``enter into contracts with health insurance issuers, (which may 
include a group of health insurance issuers affiliated either by common 
ownership and control or by the common use of a nationally licensed 
service mark) . . . to offer at least 2 multi-State qualified health 
plans through each Exchange in each State.'' \5\ The Director has the 
authority to implement and administer the MSP Program ``in a manner 
similar to the manner in which the Director implements the contracting 
provisions with respect to carriers under the Federal Employees Health 
Benefit Program.'' \6\ Further, OPM may enter into these contracts 
without regard to competitive bidding laws.\7\ Each MSP Program 
contract must be for a term of at least one year, but can be 
automatically renewable in the absence of a notice of termination from 
either the MSP issuer or OPM.\8\
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    \5\ Affordable Care Act section 1334(a)(1).
    \6\ Affordable Care Act section 1334(a)(4).
    \7\ Affordable Care Act section 1334(a)(1).
    \8\ Affordable Care Act section 1334(a)(2).
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    The statute grants to OPM the authority to certify MSP options.\9\ 
Any MSP options offered under a contract negotiated with OPM are 
``deemed to be certified by an Exchange for purposes of section 
1311(d)(4)(A)'' of the Affordable Care Act and would not need to apply 
separately for certification on each Exchange,\10\ as outlined at 45 
CFR 155.1010(b)(1). The Director is authorized to withdraw approval of 
an MSP Program contract after notice and opportunity for a hearing.\11\ 
The Director also has the authority to negotiate with each MSP issuer 
``(A) a medical loss ratio; (B) a profit margin; (C) the premiums to be 
charged; and (D) such other terms and conditions of coverage as are in 
the interests of enrollees in such plans.'' \12\
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    \9\ Affordable Care Act section 1334(d).
    \10\ Id.
    \11\ Affordable Care Act section 1334(a)(7).
    \12\ Affordable Care Act section 1334(a)(4).
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    MSP issuers are required to be licensed in each State in which they 
offer an MSP option \13\ and be ``subject

[[Page 69804]]

to all requirements of State law not inconsistent with this section 
[1334], including the standards and requirements that a State imposes 
that do not prevent the application of a requirement of part A of title 
XXVII of the Public Health Service Act (PHS Act) or a requirement of 
this title [I of the Affordable Care Act].'' \14\ The Affordable Care 
Act directs that MSP issuers must comply with the minimum standards for 
FEHB Program carriers under section 8902(e) of title 5 of the United 
States Code to the extent that the standards do not conflict with 
provisions of title I of the Affordable Care Act.\15\ Congress also 
authorized OPM to establish additional standards for MSP options that 
OPM, in consultation with HHS, deems ``appropriate.'' \16\
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    \13\ Affordable Care Act section 1334(b)(2).
    \14\ Affordable Care Act section 1334(b)(2).
    \15\ Affordable Care Act section 1334(b)(3).
    \16\ Affordable Care Act section 1334(b)(4).
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E. Stakeholder Interaction

    To assess the level of interest in the MSP Program, and to 
ascertain feedback from stakeholders about the program, OPM issued a 
Request for Information June 16, 2011.\17\ OPM received 19 responses 
representing the views of 39 groups and organizations. Responses came 
from health insurance issuers (including issuers of dental and vision 
insurance), employer organizations, labor organizations, consumer 
groups, patient organizations, and provider associations. On December 
5, 2012, OPM published a notice of proposed rulemaking (77 FR 72582) 
establishing the MSP Program at part 800 of title 45, Code of Federal 
Regulations. OPM received about 350 comments from a wide variety of 
entities and individuals. Since publishing the final rule, OPM 
conducted presentations and met with numerous stakeholders to seek 
feedback on the implementation of the MSP Program. Stakeholder groups 
included representatives from the National Association of Insurance 
Commissioners (NAIC), States, tribal entities, consumer advocacy 
groups, health insurance issuers, provider associations, and trade 
groups. OPM also convened groups of individuals--representing the 
general public as well as consumer advocates--to solicit input on 
branding and marketing of the MSP Program.
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    \17\ The Request for Information is available at https://www.fbo.gov/index?s=opportunity&mode=form&id=677e422dd3f2bc983cb985eb73995b63&tab=core&_cview=1.
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    OPM is also in the process of establishing an MSP Program Advisory 
Board, the purpose of which will be to ``provide recommendations on the 
activities'' of the MSP Program.\18\ A ``significant percentage of the 
members'' of the MSP Program Advisory Board will be enrollees in an MSP 
option or representatives of such enrollees.\19\ Members of the MSP 
Program Advisory Board will exchange information, ideas, and 
recommendations regarding OPM's administration of the MSP Program. OPM 
values the participation of diverse stakeholders and encourages them to 
submit comments on this proposed rule.
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    \18\ Affordable Care Act section 1334(h).
    \19\ Id.
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II. Proposed Regulatory Approach

A. Overview of Regulatory Approach

    OPM's approach to the development of this proposed regulation seeks 
to:
     Support a program that will attract additional issuers and 
thus, offer a greater selection of MSP options on each Exchange in 
every State and the District of Columbia.
     Balance State and Federal regulatory interests in a manner 
that will enable MSP issuers to offer viable plans on the Exchanges.
     Ensure a level playing field such that neither MSP options 
nor plans offered by non-MSP issuers are advantaged or disadvantaged on 
the Exchanges.
    OPM seeks comment on whether these proposed changes to this 
regulation satisfy our goals. We are republishing the unchanged 
sections of the regulation to provide context for the proposed changes 
as well as to include non-substantive technical corrections.

B. Governing Law

    The Affordable Care Act generally requires that the MSP Program be 
governed by all State and Federal laws that apply to QHPs. The Act, 
however, grants discretion to the Director to administer the MSP 
Program in a manner that fulfills OPM's statutory responsibility to 
ensure that there are at least two issuers offering MSP options on each 
Exchange in every State and the District of Columbia. OPM recognizes 
that potential MSP issuers seek administrative simplicity and some 
uniformity of standards in the MSP Program. Accordingly, in unusual 
circumstances, it may be necessary for the Director to adopt standards 
or requirements for the MSP Program that differ from standards and 
requirements applicable to QHPs under either State or Federal law. This 
proposed regulation, however, reflects the Director's continued 
intention for the MSP options and MSP issuers to generally adhere to 
all State and Federal laws applicable to QHPs and QHP issuers, except 
to the extent any such laws are inconsistent with section 1334. We 
propose to continue to implement these regulations in OPM guidance and 
OPM's contracts with MSP issuers.

III. Provisions of the Proposed Regulation

A. Subpart A--General Provisions and Definitions

Definitions (Sec.  800.20)
    We seek comments on a definition for ``group of issuers'' that was 
defined in the final rule. We are specifically interested in whether 
this definition allows for alternative structures, such as 
decentralized health insurance issuers or organizations, to join 
together as potential applicants to offer MSP options. Under the 
definition in the MSP Program final rule, a ``group of issuers,'' for 
purposes of the MSP Program, may include: (1) A group of health 
insurance issuers who are affiliated either by common ownership and 
control or by common use of a nationally licensed service mark (as 
defined in Sec.  800.20); or (2) an affiliation of health insurance 
issuers and an entity that is not an issuer but owns a nationally 
licensed service mark.\20\ We are making an editorial correction to 
this definition under (1) to state that ``health insurance issuers that 
are affiliated.''
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    \20\ 78 FR 15588.
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    We propose to add the definition for ``Multi-State Plan option,'' 
which may also be referred to as ``MSP option.'' We propose the 
definition of ``MSP option'' as a discrete pairing of a package of 
benefits with particular cost sharing (which does not include premium 
rates or premium rate quotes) that is offered pursuant to a contract 
with OPM pursuant to section 1334 of the Affordable Care Act and meets 
the requirements of 45 CFR part 800. We also propose to remove the 
definition of ``Multi-State Plan.'' The term ``Multi-State Plan 
option'' is more precise and avoids the confusion of the varying 
definitions of the word ``plan'' in the context of health insurance. In 
the past two years, OPM refined how to use the term ``Multi-State 
Plan.'' It is our intention to not apply the term ``Multi-State Plan'' 
as a general concept, but instead as a specific descriptor used under 
this Program. OPM registered the term ``Multi-State Plan'' as a mark 
with the U.S. Patent and Trademark Office,\21\ and we intend to enforce 
its exclusive use under this Program.
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    \21\ U.S. Reg. No. 4599136.
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    We also propose to add a definition for State-level issuer. This 
definition is consistent with the statutory concept of

[[Page 69805]]

contracting with a group of issuers, and our experience reviewing MSP 
applications and negotiating contracts with MSP issuers. We propose to 
define a State-level issuer as a health insurance issuer designated by 
the MSP issuer to offer an MSP option or MSP options. The State-level 
issuer may offer health insurance coverage through one or more MSP 
options in all or part of one or more States.
    OPM invites comments on the proposed changes to the definitions 
under 45 CFR 800.20.

B. Subpart B--Multi-State Plan Issuer Requirements

Phased Expansion: Coverage in All States; Coverage State-Wide; and SHOP 
(Sec.  800.104)
    Section 1334(e) of the Affordable Care Act provides for OPM to 
phase expansion of an issuer's participation in the MSP Program. In the 
final rule, OPM largely codified the statutory language for the phase-
in standards and set standards for coverage within a State, 
participation in the Small Business Health Insurance Options Program 
(SHOP), and licensure. Since the publication of the final rule, OPM 
gained valuable insight and feedback from MSP issuers and potential MSP 
issuer applicants.
Coverage in All States
    Under Sec.  800.104(a) of the final rule, OPM established a 
standard that it may enter into a contract with a health insurance 
issuer to offer MSP options if the health insurance issuer agrees to a 
phased expansion of coverage in States. We request comment on how we 
may expand participation in the Program to meet the goal of increasing 
competition while balancing consumers' needs for coverage across an 
entire State. OPM conducted outreach to potential MSP issuers and is 
engaged in ongoing discussions with current MSP issuers to address 
expansion of access to MSP options for consumers throughout the 
country. These issuers have expressed significant concern about the 
challenges of rapidly expanding access to MSP coverage both within and 
across State lines.
    The text of section 1334 is clear in its intent that the primary 
purpose of the MSP Program is to promote competition on Exchanges by 
contracting with issuers to offer coverage in each State. Section 1334 
contemplates interest from private health insurance issuers in 
participating in the Program; however, there is no requirement for 
health insurance issuers to participate in the Program. The statute 
sets forth standards to guide the exercise of this contracting 
authority, noting that section 1334(b)(1) contemplates offering 
coverage in every State and the District of Columbia, and outlining a 
framework within which participation in the MSP Program is a feasible 
and attractive business activity. Such standards include the provisions 
under subsections (b) and (e) on offering coverage in every State. OPM 
intends to ensure that MSP coverage is available as expansively and as 
soon as practicable, but recognizes the operational challenges issuers 
may face.
    OPM has discretion over how we may implement and expand the MSP 
Program. We request comment on timeframes and other appropriate 
parameters within which an MSP issuer could reasonably expand 
participation in the Program. For example, a MSP issuer may be expected 
to expand to a certain number of states within a specified timeframe. 
In addition, we request comment on how OPM may encourage MSP issuers to 
expedite their participation on the Exchanges in which there is limited 
competition. At this time, we do not propose any changes to the 
regulatory text.
State-Wide Coverage
    The final rule established a standard for MSP coverage in a State 
under Sec.  800.104(b) that permits OPM to enter into a contract with 
an issuer that offers coverage in part of a State, but not necessarily 
the entire State. Most, but not all, of the MSP options available to 
consumers in plan years 2014 and 2015 provide coverage statewide.
    In some circumstances, issuers in particular States have not 
consistently been able to offer statewide MSP coverage. Based on 
discussions with potential MSP issuers, we believe some of the 
challenges to providing statewide coverage in all States will continue 
to impede expansion or participation in the Program. One of these 
challenges is the licensing agreements for use of a nationally licensed 
service mark among the group of issuers participating in the MSP 
Program.\22\ Section 1334 requires that a group of issuers offering MSP 
coverage must be affiliated in one of a few specific ways, including 
common use of a nationally licensed service mark. Antitrust and other 
laws that limit the permissible scope of interaction among issuers may 
make it difficult for a group of issuers under the MSP Program to 
coordinate nationally. OPM is sensitive to these constraints and 
recognizes that they may hinder development and implementation of 
issuers' plans to offer statewide MSP coverage.
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    \22\ 45 CFR 800.20. (2013).
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    OPM is committed to a goal of statewide coverage in the MSP 
Program, and intends to continue working with MSP issuers and potential 
MSP issuers to develop productive and ambitious approaches to achieving 
statewide coverage. In clarifying the status of the Program and how we 
are implementing the standards set under Sec.  800.104, we propose to 
delete the standard for an MSP issuer to submit a plan to become 
statewide. In lieu of requiring a plan, OPM intends to negotiate with 
MSP issuers to determine their MSP coverage area. In the MSP Program 
contract negotiation process, we will consider the MSP issuers' 
capacity to provide statewide coverage. OPM will take into account many 
factors when assessing an MSP issuer's capacity for offering statewide 
coverage (e.g., other business commitments, financials, Exchange QHP 
standards, and OPM's dialogue with State regulators). In addition, OPM 
will assess consumers' needs for coverage, including ensuring that MSP 
issuers' proposed service areas have been established without regard to 
racial, ethnic, language, or health status-related factors listed in 
section 2705(a) of the PHS Act, or other factors that exclude specific 
high-utilizing, high-cost, or medically underserved populations.
SHOP Coverage
    The final rule established flexibility in SHOP participation for 
MSP issuers in Sec.  800.104(c) by establishing a policy for 
participation consistent with standards set for QHP issuers. 
Specifically, we adopted standards that require MSP issuers to 
generally comply with standards in 45 CFR 156.200(g) and with State 
standards for SHOP participation if the State has set a standard that 
requires QHP issuers to participate. This policy provided OPM 
discretion to provide MSP issuers flexibility during the initial years 
of the Program to phase into the SHOP in a State-based Exchange. OPM 
provided that an MSP issuer may meet the requirements of 45 CFR 
156.200(g)(3) if a State-level issuer or any other issuer in the same 
issuer group affiliated with an MSP issuer provides coverage on the 
Federally-facilitated SHOP. We discussed this policy in-depth in the 
final rule.\23\
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    \23\ 78 FR 15565.
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    Section 1334 requires OPM to contract for coverage to be offered on 
each Exchange in each State, offering individual or small group 
coverage.

[[Page 69806]]

    Based on our current experience implementing the Program, a number 
of challenges prevent issuer participation in the MSP Program, 
including timing and resources. Very few MSP issuers have offered MSP 
SHOP options in these initial years of the Program. We solicit comment 
on when MSP issuers should be required to participate on the SHOPs.
Benefits (Sec.  800.105)
    The final rule adopted requirements in Sec.  800.105(a) that an MSP 
issuer must offer a uniform package of benefits for each MSP option 
within a State and that the package of benefits must comply with 
section 1302 of the Affordable Care Act, as well as standards set by 
OPM and any applicable standards set by HHS.
    In Sec.  800.105(b), OPM finalized a rule that allowed MSP issuers 
to offer a package of benefits in all States that is substantially 
equal to either (1) each State's Essential Health Benefits (EHB)-
benchmark plan in each State in which it operates; or (2) any EHB-
benchmark plan selected by OPM. In response to comments received on the 
proposed rule, OPM clarified that the option chosen must be applied 
uniformly in each State in which the MSP issuer proposes to offer MSP 
options.
    OPM continues to conduct outreach to potential MSP issuers and 
encourages ongoing discussions with current MSP issuers in hopes of 
expanding the Program. OPM interprets the discretion afforded to the 
Director under section 1334(a) of the Affordable Care Act, such that he 
or she may administer the Program in a way to attract issuers to the 
Program and grow the Program to meet the goal of increasing 
competition. By applying the Director's discretion to offer flexibility 
in the selection of the package of benefits, OPM hopes to reduce the 
number of obstacles and increase competition and consumer choice while 
maintaining benefit standards and protections
    After completing two application cycles for the MSP Program and 
administering the Program since January 2014, OPM is proposing to 
adjust the approach to the selection of the package of benefits to 
allow for more flexibility to attract issuers to the MSP Program with 
the expectation of expanding competition on the Exchanges. OPM is 
requesting public comment on this approach. This flexibility would 
allow an MSP issuer to make benchmark selections on a State-by-State 
basis. The issuer would also be able to offer two or more MSP options 
in each State, for example, one using the State-selected benchmark and 
one using the OPM-selected benchmark. OPM believes that allowing this 
flexibility will enable coalition building across issuers in different 
States, so that they can work together toward MSP options that meets 
the MSP Program standards. For example, an MSP issuer or potential 
issuer that chooses to offer an OPM-selected benchmark plan in one 
State may want to partner with another MSP issuer or potential issuer 
that would choose to offer a State EHB-benchmark plan in another State. 
We seek comments on whether this would have the desired effect of 
encouraging participation without causing consumer confusion or 
segmenting of risk.
    In Sec.  800.105(c)(1), OPM finalized the selection of EHB-
benchmark plans. OPM selected the three largest FEHB Program plan 
options by enrollment that are open to Federal employees and 
annuitants. These FEHB Program benchmark plans were identified by HHS 
pursuant to section 1302(b) of the Affordable Care Act. On July 3, 
2012, HHS identified the three largest FEHB Program plan options, as of 
March 31, 2012, as Blue Cross Blue Shield (BCBS) Standard Option; BCBS 
Basic Option; and Government Employees Health Association (GEHA) 
Standard Option.\24\ OPM will continue to offer flexibility to MSP 
issuers to select among these benchmark options based on their business 
strategies and perceived needs of MSP enrollees.
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    \24\ Centers for Medicare and Medicaid Services, Essential 
Health Benefits: List of the Largest Three Small Group Products by 
State, available at http://cciio.cms.gov/resources/files/largest-smgroup-products-7-2-2012.pdf.PDF (July 3, 2012).
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    In Sec.  800.105(c)(2), OPM finalized the requirement that any OPM-
selected EHB-benchmark plan lacking coverage of pediatric oral services 
or pediatric vision services must be supplemented by the addition of 
the entire category of benefits from the largest Federal Employee 
Dental and Vision Insurance Program (FEDVIP) dental or vision plan 
option, respectively, pursuant to 45 CFR 156.110(b) and section 1302(b) 
of the Affordable Care Act. On July 3, 2012, HHS identified the largest 
FEDVIP dental and vision plan options, as of March 31, 2012, to be, 
respectively, MetLife Federal Dental Plan High Option and FEP 
BlueVision High Option.\25\
---------------------------------------------------------------------------

    \25\ Id.
---------------------------------------------------------------------------

    OPM is proposing to add a clarification in the new Sec.  
800.105(c)(3). Based on outreach with potential MSP issuers and ongoing 
discussions with current MSP issuers, there is confusion about the 
prescription drug formulary standards of OPM-selected benchmarks. As is 
done in the FEHB Program, OPM will work with MSP issuers to negotiate a 
formulary that best manages the needs of MSP enrollees while focusing 
on managing costs and ensuring access. In addition, OPM will ensure 
that MSP issuers comply with any HHS standards related to drug 
formularies for QHPs and are not discriminatory in the formulary's 
design. OPM sees large variations in the formulary structures in the 
FEHB Program, and there are ongoing changes in the use of managed 
formularies. OPM also seeks comment on the feasibility of substituting 
an OPM-selected benchmark plan formulary with the formulary from the 
respective State's EHB-benchmark plan. This approach would promote 
consistency in benefits to enhance portability while maintaining a 
level playing field. By working with MSP issuers to build flexibility 
in the management of formularies, OPM believes the formulary will be 
seen as an opportunity to build a plan around the needs of enrollees 
while clarifying formulary requirements with the OPM-selected 
benchmarks.
    In the final rule at Sec.  800.105(c)(3), proposed to be 
republished as Sec.  800.105(c)(4), OPM finalized the use of State 
definitions for habilitative services where the State chooses to 
specifically define this category pursuant to 45 CFR 156.110(f). In 
this section of the final rule, OPM also reserved the authority to 
determine what to include in this category for the OPM-selected 
benchmarks where the State has not defined it and no definition exists 
in the OPM-selected benchmark. OPM is proposing to change this section 
to apply a Federal definition of habilitative services, should HHS 
choose to define the term.
    We propose to renumber Sec.  800.105(c)(4) to Sec.  800.105(c)(5). 
We are not proposing changes to this standard.
    In Sec.  800.105(d), OPM finalized the rule that an MSP issuer's 
package of benefits, including its formulary, must be submitted to and 
approved by OPM, which will determine whether a package of benefits 
proposed by an MSP issuer is substantially equal to an EHB-benchmark 
plan. OPM also plans to review an MSP issuer's package of benefits for 
discriminatory benefit design, consistently with section 1302(b)(4) of 
the Affordable Care Act and 45 CFR 156.110(d), 156.110(e), and 156.125, 
and will work closely with States and HHS to identify and investigate 
any potentially discriminatory or otherwise noncompliant benefit design 
in MSP options.
    In Sec.  800.105(e), OPM finalized the rule that the cost of 
benefits required by

[[Page 69807]]

the State in addition to those in the benchmark package would be 
assumed by the State. This policy was consistent with section 
1334(c)(2) of the Affordable Care Act. OPM now proposes to change 
``assume'' to ``defray'' to make the language align with the language 
in the statute.
Assessments and User Fees (Sec.  800.108)
    OPM has authority to collect MSP Program user fees, and continues 
to preserve its discretion to collect an MSP Program user fee. We wish 
to clarify that OPM may begin collecting the fee as early as plan year 
2015. The user fee may be used to fund OPM activities directly related 
to MSP Program certification, administration, and operational costs. We 
currently estimate that any assessment or fee would be no more than 0.2 
percent of premiums. In the Federally-facilitated Exchange, OPM is 
coordinating with HHS regarding the collection of user fees, so that 
issuers would not be affected operationally. We are revising the 
regulatory text to allow for flexibility in the process for collecting 
MSP Program assessments or user fees. We solicit comments on the 
process for collecting user fees in the State-based Exchanges. We also 
seek comments on the use of these fees.
Network Adequacy (Sec.  800.109)
    We are proposing to add that an MSP issuer must also comply with 
any additional standards related to provider directories set by HHS for 
QHP issuers.
Accreditation (Sec.  800.111)
    We revised the reference to the specific section in the Code of 
Federal Regulations to 45 CFR 156.275(a)(1) to be more precise.
Level Playing Field (Sec.  800.115)
    We revised the regulatory text to clarify that all the areas listed 
under section 1324 of the Affordable Care Act are subject to Sec.  
800.114. In addition, we are making a technical correction to Sec.  
800.114(l) to change a reference to 45 CFR part 162 to 45 CFR part 164.

C. Subpart D--Application and Contracting Procedures

Application Process (Sec.  800.301)
    In Sec.  800.301, OPM provided that health insurance issuers may 
submit applications to OPM for participation in the MSP Program. If OPM 
decided not to consider new applications for the upcoming year, it 
would issue a notice indicating so. This section also specified that 
applications would meet the form, manner, and timeframes prescribed by 
OPM.
    The edit to Sec.  800.301(a) is a technical correction that more 
accurately describes that OPM determines annually whether new issuer 
applications should be considered to participate in the MSP Program. 
This correction is meant to distinguish new applications from renewal 
applications. OPM's discretion over whether to consider issuer 
applications pertains to new issuers that want to apply to participate 
in the MSP Program for the first time. Issuers that already participate 
in the MSP Program, and would like to continue participating, may 
submit a renewal application to OPM on an annual basis. OPM will 
determine annually whether a renewal application is required.
MSP Contracting (Sec.  800.303)
    In Sec.  800.303, OPM provided that an applicant must execute a 
contract with OPM to become an MSP issuer; that OPM would establish a 
standard contract for the MSP Program; that OPM and an applicant would 
negotiate premiums for each plan year; that OPM would review for 
approval an applicant's benefit packages; that OPM may negotiate 
additional contractual terms and conditions; and that MSP issuers would 
be certified to offer MSP coverage on Exchanges.
    The edit to Sec.  800.303(f) is a technical correction to clarify 
that the MSP Program contract specifies that OPM certifies the MSP 
options that are authorized to provide coverage. We also propose a 
technical correction to Sec.  800.303(f)(2) consistent with the edit to 
(f)(1) to provide that MSP options must be certified in order to be 
offered on an Exchange. These edits more accurately describe the 
information that is reflected in the MSP Program contract with respect 
to OPM's certification process.
Nonrenewal (Sec.  800.306)
    The proposed language for Sec.  800.306(a) serves to clarify two 
different nonrenewal concepts. The term ``nonrenewal'' as described in 
the current rule more accurately describes nonrenewal of an MSP Program 
contract because it pertains to the MSP issuer. Therefore, we propose 
the term ``nonrenewal of contract'' to clarify this concept. 
Additionally, there are instances where a State-level issuer may choose 
not to renew its participation in the MSP Program contract, even though 
the MSP issuer (of which the State-level issuer is a part) will 
continue to contract with OPM. The current regulatory language does not 
contemplate this latter concept. Therefore, we propose the term 
``nonrenewal of participation'' to describe such concept. By 
distinguishing the two types of nonrenewal, the rule will better align 
with the terms described in the MSP Program contract, which already 
distinguishes these concepts. Despite this distinction, the notice 
requirements and MSP issuer responsibilities as provided in subsections 
(b) and (c) respectively, are still applicable. In subsection Sec.  
300.306(c), with respect to providing notice of termination to 
enrollees, we propose to reference Sec.  800.404(d) instead of 
duplicating the explanation of the requirements in this section. This 
will ensure consistency across the MSP Program.

D. Subpart E--Compliance

Contract Performance (Sec.  800.401)
    In addition to other MSP contract performance requirements, Sec.  
800.401 paragraphs (b)(5)-(6), (c), and (d) require an MSP issuer to 
perform its obligations under an MSP Program contract using prudent 
business practices that emphasize ethical standards and compliance with 
OPM directives and other applicable laws, regulations, and MSP contract 
provisions. The section prohibits fraud, waste, abuse, and deceptive 
business practices. It also requires an MSP issuer to adjudicate claims 
promptly and maintain a system that accurately accounts for costs 
occurring under the MSP Program. Although this section lists numerous 
prudent and poor business practices, we did not intend them to be 
exhaustive. In addition, because industry standards and State markets 
are evolving constantly, we address business practice standards in each 
MSP Program contract. Therefore, we are clarifying that OPM will 
consider an MSP issuer's specific circumstances and facts in using its 
discretion to determine if an MSP issuer has fulfilled its obligations 
pursuant to this section. We seek comment on these issues.
Contract Quality Assurance (Sec.  800.402)
    OPM proposes corrections to Sec.  800.402 paragraphs (b) and (c). 
In paragraph (b), OPM proposes to clarify that it ``may,'' instead of 
``will,'' periodically evaluate a contractor's system of internal 
controls. OPM also clarifies in paragraph (b) that it will only 
acknowledge in writing when the contractor's system of internal 
controls is inconsistent with the MSP Program contract requirements. In 
paragraph (c), OPM will correct a drafting error and clarify that MSP 
issuers must comply with the performance standards issued ``pursuant'' 
to this section.

[[Page 69808]]

Compliance Actions (Sec.  800.404)
    OPM proposes to make technical edits to Sec.  800.404 paragraphs 
(a), (b), (c) and (d). In paragraph (a)(4), we clarify that OPM may 
initiate a compliance action for violations of law or regulation as OPM 
may determine, ``including pursuant to its authority under Sec. Sec.  
800.102 and 800.114.'' This revision more accurately reflects OPM's 
approach to enforcement and compliance.
    In paragraph (b), we clarify that OPM may withdraw certification of 
the MSP option or options for noncompliance with applicable law or the 
MSP contract. Consistent with new paragraph 800.306(a)(2), we add 
``nonrenewal of participation'' as a compliance action. Accordingly, we 
renumber the two subsequent compliance actions. We also revised 
``Nonrenewal of the MSPP contract'' to ``Nonrenewal of contract'' to be 
consistent with the term as defined in new paragraph 800.306(a)(1). We 
revise paragraph (c)(2) to include nonrenewal of participation as a 
compliance action for which OPM must notify the MSP issuer of its right 
to reconsideration.
    Paragraph (d) requires an MSP issuer to comply with State and 
Exchange requirements regarding termination of a plan when an MSP 
Program contract is terminated or when OPM withdraws certification. 
Absent State or Exchange requirements, the MSP issuer must provide 
enrollees 90 days' notice. If a State or Exchange has a requirement to 
provide enrollees notice of more than 90 days, then the MSP issuer must 
comply with that standard. We clarify that these requirements are 
triggered in the event that one of the following occurs: The MSP 
Program contract is terminated, OPM withdraws certification of an MSP 
option, or if a State-level issuer's participation is not renewed.
Reconsideration of Compliance Actions (Sec.  800.405)
    OPM proposes technical edits and corrections to section 800.405. 
Section 800.405 describes the compliance actions for which the MSP 
issuer may request reconsideration. We correct paragraph (a)(1) to 
reflect that an MSP issuer may request reconsideration upon withdrawal 
of certification of the MSP option or options offered on an Exchange. 
Consistent with the approach 800.404(b), we revise (a)(2) to allow an 
MSP issuer to request reconsideration of the nonrenewal of 
participation of a State-level issuer. We renumber the subsequent 
paragraphs accordingly.

E. Subpart G--Miscellaneous

Consumer Choice With Respect to Certain Services (Sec.  800.602)
    Section 1334(a)(6) of the Affordable Care Act requires OPM to 
contract with at least one MSP issuer that excludes coverage of 
abortion services, except in the case of rape or incest, or when the 
life of the woman would be endangered. In the MSP Program final rule, 
we codified the statutory language and provided sub-regulatory guidance 
to MSP issuer applicants on how to meet this requirement in their 
benefit proposals.
    For the 2014 and 2015 plan years, OPM operationalized this policy 
by requiring each MSP issuer to offer at least one silver MSP option 
and one gold MSP option that excludes these services in each State in 
which it was under contract. MSP issuers also had discretion to cover 
these services if the issuer offered additional MSP options on the 
Exchange.
    Consumers, State regulators, and other stakeholders expressed to 
OPM the desire to have greater transparency with regard to MSP options 
that exclude non-excepted abortion services.\26\ Section 2715 of the 
PHS Act requires group health plans and health insurance issuers of 
group or individual health insurance coverage to provide ``a summary of 
benefits and coverage explanation that accurately describes the 
benefits and coverage under the applicable plan or coverage to 
applicants, enrollees, and policyholders or certificate holders.'' \27\ 
MSP issuers are required to notify consumers who purchase an MSP option 
that covers non-excepted abortion services of such coverage as part of 
the SBC at time of enrollment.\28\
---------------------------------------------------------------------------

    \26\ These are services for which Federal funding is prohibited.
    \27\ PHS Act section 2715(a) (2012).
    \28\ 45 CFR 156.280(f).
---------------------------------------------------------------------------

    We are proposing to add a new paragraph (c) to Sec.  800.602 that 
would require an MSP issuer to provide disclosure of coverage or 
exclusion of this benefit before a consumer enrolls in an MSP option. 
In addition, OPM will reserve the authority to review and approve these 
MSP notices and materials. OPM requests comments on the form and manner 
for the disclosure. Note that the question of how this coverage should 
be disclosed is not unique to MSP options; the Departments of Health 
and Human Services, Labor, and Treasury intend to issue guidance on the 
Summary of Benefits and Coverage in the future.
Disclosure of Information (Sec.  800.603)
    In order to effectively implement and operationalize the MSP 
Program, there may be circumstances in which OPM would share 
information with State entities, including State Departments of 
Insurance and Exchanges. The sharing of information is intended to keep 
such entities informed and to reflect OPM's approach to compliance. The 
addition of this new section clarifies that OPM may use its discretion 
and authority to disclose information to such State entities. In all 
cases, OPM will adhere to any applicable privacy and security standards 
for the disclosure of such information.
Technical Changes to 45 CFR Part 800
    In addition to the changes proposed for the specific sections of 
the regulation, we also propose technical corrections to streamline the 
use of ``MSP'' throughout the rules. The changes are not substantive to 
our policy. These changes apply to all sections and include the 
following:
     ``MSPP'' will be replaced with ``MSP Program;''
     ``MSPP issuer'' will be replaced with ``MSP issuer;''
     ``MSP'' will be replaced with ``MSP option'' when 
referring to the plan that makes up the specific package of benefits 
and associated cost-sharing; and
     ``MSPP contract'' will be replaced with ``MSP Program 
contract.''

IV. Regulatory Impact Analysis

    OPM has examined the impact of this proposed rule as required by 
Executive Order 12866 on Regulatory Planning and Review (September 30, 
1993) and Executive Order 13563 on Improving Regulation and Regulatory 
Review (January 18, 2011). Executive Orders 12866 and 13563 direct 
agencies to assess all costs and benefits of available regulatory 
alternatives and, if regulation is necessary, to select regulatory 
approaches that maximize net benefits (including potential economic, 
environmental, public health and safety effects, distributive impacts, 
and equity). A regulatory impact analysis must be prepared for major 
rules with economically significant effects ($100 million or more in 
any 1 year adjusted for inflation). Section 3(f) of Executive Order 
12866 defines a ``significant regulatory action'' as an action that is 
likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more in 
any one year or adversely affect in a material way a sector of the 
economy, productivity, competition, jobs, the

[[Page 69809]]

environment, public health or safety, or State, local, or tribal 
government or communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impacts of entitlement grants, 
user fees, or loan programs, or the rights and obligations of 
recipients thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
Executive Order 12866.
    OPM will continue to generally operate the MSP Program as it 
previously had in plan year 2014. The regulatory changes in this 
proposed rule are for purposes of policy clarification and any proposed 
changes will have minimal impact on the administration of the Program. 
Administrative costs of the rule are generated both within OPM and by 
issuers offering MSP options. The costs that MSP issuers may incur are 
the same as those of QHPs and, as stated in 45 CFR part 156, will 
include: Accreditation, network adequacy standards, and quality 
improvement strategy reporting. The costs associated with MSP 
certification offset the costs that issuers would face were they to be 
certified by the State, or HHS on behalf of the State, to offer QHPs 
through the Exchange. For the 2014 plan year, there are approximately 
371,000 enrolled in MSP options and with an estimated average monthly 
premium of $350, premiums collected by MSP issuers for consumers 
enrolled in MSP options is are approximately $1.4 billion this year. 
While the overall regulation and Program have a significant economic 
impact, this proposed rule provides for no substantial changes to the 
Program and will not be economically significant. The economic impact 
of this rule is not expected exceed the $100 million threshold; we 
therefore do not assess costs and benefits as required by the Executive 
Order.

V. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35; see 5 
CFR part 1320) requires that the U.S. Office of Management and Budget 
(OMB) approve all collections of information by a Federal agency from 
the public before they can be implemented. Respondents are not required 
to respond to any collection of information unless it displays a 
current valid OMB control number. OPM is not proposing any additional 
collections from MSP issuers or applicants seeking to become MSP 
issuers in this proposed rule. OPM continues to expect fewer than ten 
responsible entities to respond to all of the collections noted above. 
For that reason alone, the existing collections are exempt from the 
Paperwork Reduction Act under 44 U.S.C. 3502(3)(A)(i).

VI. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) \29\ requires agencies to 
prepare an initial regulatory flexibility analysis to describe the 
impact of the proposed rule on small entities, unless the head of the 
agency can certify that the rule would not have a significant economic 
impact on a substantial number of small entities. The RFA generally 
defines a ``small entity'' as--(1) a proprietary firm meeting the size 
standards of the Small Business Administration (SBA); (2) a not-for-
profit organization that is not dominant in its field; or (3) a small 
government jurisdiction with a population of less than 50,000. States 
and individuals are not included in the definition of ``small entity.''
---------------------------------------------------------------------------

    \29\ 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------

    The RFA requires agencies to analyze options for regulatory relief 
of small businesses, if a proposed rule has a significant impact on a 
substantial number of small entities. For purposes of the RFA, small 
entities include small businesses, small non-profit organizations, and 
small government jurisdictions. Small businesses are those with sizes 
below thresholds established by the SBA. With respect to health 
insurers, the SBA size standard is $7.0 million in annual receipts.\30\
---------------------------------------------------------------------------

    \30\ According to the SBA size standards, entities with average 
annual receipts of $7 million or less would be considered small 
entities for North American Industry Classification System (NAICS) 
Code 524114 (Direct Health and Medical Insurance Carriers) (for more 
information, see ``Table of Size Standards Matched To North American 
Industry Classification System Codes,'' effective March 26, 2012, 
U.S. Small Business Administration, available at http://www.sba.gov).
---------------------------------------------------------------------------

    OPM does not think that small businesses with annual receipts less 
than $7.0 million would likely have sufficient economies of scale to 
become MSP issuers or be part of a group of MSP issuers. Similarly, 
while the Director must enter into an MSP Program contract with at 
least one non-profit entity, OPM does not think that small non-profit 
organizations would likely have sufficient economies of scale to become 
MSP issuers or be part of a group of MSP issuers.
    OPM does not think that this proposed rule would have a significant 
economic impact on a substantial number of small businesses with annual 
receipts less than $7.0 million, because there are only a few health 
insurance issuers that could be considered small businesses. Moreover, 
while the Director must enter into an MSP contract with at least one 
non-profit entity, OPM does not think that this proposed rule would 
have a significant economic impact on a substantial number of small 
non-profit organizations, because few health insurance issuers are 
small non-profit organizations.
    OPM incorporates by reference previous analysis by HHS, which 
provides some insight into the number of health insurance issuers that 
could be small entities. Particularly, as discussed by HHS in the 
Medical Loss Ratio interim final rule (75 FR 74918), few, if any, 
issuers are small enough to fall below the size thresholds for small 
business established by the SBA. In that rule, HHS used a data set 
created from 2009 NAIC Health and Life Blank annual financial statement 
data to develop an updated estimate of the number of small entities 
that offer comprehensive major medical coverage in the individual and 
group markets. For purposes of that analysis, HHS used total Accident 
and Health earned premiums as a proxy for annual receipts. HHS 
estimated that there are 28 small entities with less than $7 million in 
accident and health earned premiums offering individual or group 
comprehensive major medical coverage. OPM concurs with this HHS 
analysis, and, thus, does not think that this proposed rule would have 
a significant economic impact on a substantial number of small 
entities.
    Based on the foregoing, OPM is not preparing an analysis for the 
RFA because OPM has determined, and the Director certifies, that this 
proposed rule would not have a significant economic impact on a 
substantial number of small entities.

VII. Unfunded Mandates

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) \31\ 
requires that agencies assess anticipated costs and benefits and take 
certain other actions before issuing a proposed rule (and subsequent 
final rule) that includes any Federal mandate that may result in 
expenditures in any one year by a 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 is 
approximately $141 million. UMRA does not address the total cost of a 
rule. Rather, it focuses on certain categories of costs, mainly those 
``Federal mandate'' costs resulting from: (1) Imposing enforceable 
duties on State, local, or tribal governments, or on the private 
sector; or (2) increasing the

[[Page 69810]]

stringency of conditions in, or decreasing the funding of, State, 
local, or tribal governments under entitlement programs.
---------------------------------------------------------------------------

    \31\ Public Law 104-4.
---------------------------------------------------------------------------

    This proposed rule does not place any Federal mandates on State, 
local, or Tribal governments, or on the private sector. This proposed 
rule would modify the MSP Program, a voluntary federal program that 
provides health insurance issuers the opportunity to contact with OPM 
to offer MSP options on the Exchanges. Section 3 of UMRA excludes from 
the definition of ``Federal mandate'' duties that arise from 
participation in a voluntary Federal program. Accordingly, no analysis 
under UMRA is required.

VIII. Federalism

    Executive Order 13132 outlines fundamental principles of 
federalism, and requires the adherence to specific criteria by Federal 
agencies in the process of their formulation and implementation of 
policies that have ``substantial direct effects'' on the States, the 
relationship between the national government and States, or on the 
distribution of power and responsibilities among the various levels of 
government. Federal agencies promulgating regulations that have these 
federalism implications must consult with State and local officials, 
and describe the extent of their consultation and the nature of the 
concerns of State and local officials in the preamble to the 
regulation.
    This proposed regulation has federalism implications, because it 
has direct effects on the States, the relationship between the national 
government and States, or on the distribution of power and 
responsibilities among various levels of government. In particular, 
under Sec.  800.114, OPM may deem a State law to be inconsistent with 
section 1334 of the Affordable Care Act, and, thus, inapplicable to an 
MSP option or MSP issuer. However, in OPM's view, the federalism 
implications of this proposed regulation are substantially mitigated 
because, OPM expects that the vast majority of States have laws that 
are consistent with section 1334 of the Affordable Care Act. 
Furthermore, Sec.  800.116 sets forth a process for dispute resolution 
if a State seeks to challenge OPM's determination that a State law is 
inapplicable to an MSP option or MSP issuer.
    In compliance with the requirement of Executive Order 13132 that 
agencies examine closely any policies that may have federalism 
implications or limit the policy making discretion of the States, OPM 
has engaged in efforts to consult with and work cooperatively with 
affected State and local officials, including attending meetings of the 
NAIC and consulting with State insurance officials on an individual 
basis. It is expected OPM will continue act in a similar fashion in 
enforcing the Affordable Care Act requirements. Throughout the process 
of administering the MSP Program and developing this proposed 
regulation, OPM has attempted to balance the States' interests in 
regulating health insurance issuers, and the statutory requirement to 
provide two MSP options in all Exchanges in the every States and the 
District of Columbia. By doing so, it is OPM's view that it has 
complied with the requirements of Executive Order 13132.
    Pursuant to the requirements set forth in section 8(a) of Executive 
Order 13132, and by the signature affixed to this proposed regulation, 
OPM certifies that it has complied with the requirements of Executive 
Order 13132 for the attached regulation in a meaningful and timely 
manner.

List of Subjects in 45 CFR Part 800

    Administrative practice and procedure, Health facilities, Health 
insurance, Health professions, Reporting and recordkeeping 
requirements.

Office of Personnel Management.
Katherine Archuleta,
Director.

    Accordingly, the U.S. Office of Personnel Management is proposing 
to revise part 800 to title 45, Code of Federal Regulations, as 
follows:

PART 800--MULTI-STATE PLAN PROGRAM

Subpart A--General Provisions and Definitions
Sec.
800.10 Basis and scope.
800.20 Definitions.
Subpart B--Multi-State Plan Program Issuer Requirements
800.101 General requirements.
800.102 Compliance with Federal law.
800.103 Authority to contract with issuers.
800.104 Phased expansion, etc.
800.105 Benefits.
800.106 Cost-sharing limits, advance payments of premium tax 
credits, and cost-sharing reductions.
800.107 Levels of coverage.
800.108 Assessments and user fees.
800.109 Network adequacy.
800.110 Service area.
800.111 Accreditation requirement.
800.112 Reporting requirements.
800.113 Benefit plan material or information.
800.114 Compliance with applicable State law.
800.115 Level playing field.
800.116 Process for dispute resolution.
Subpart C--Premiums, Rating Factors, Medical Loss Ratios, and Risk 
Adjustment
800.201 General requirements.
800.202 Rating factors.
800.203 Medical loss ratio.
800.204 Reinsurance, risk corridors, and risk adjustment.
Subpart D--Application and Contracting Procedures
800.301 Application process.
800.302 Review of applications.
800.303 MSP Program contracting.
800.304 Term of the contract.
800.305 Contract renewal process.
800.306 Nonrenewal.
Subpart E--Compliance
800.401 Contract performance.
800.402 Contract quality assurance.
800.403 Fraud and abuse.
800.404 Compliance actions.
800.405 Reconsideration of compliance actions.
Subpart F--Appeals by Enrollees of Denials of Claims for Payment or 
Service
800.501 General requirements.
800.502 MSP issuer internal claims and appeals.
800.503 External review.
800.504 Judicial review.
Subpart G--Miscellaneous
800.601 Reservation of authority.
800.602 Consumer choice with respect to certain services.
800.603 Disclosure of information.

    Authority: Sec. 1334 of Pub. L. 111-148, 124 Stat. 119; Pub. L. 
111-152, 124 Stat. 1029 (42 U.S.C. 18054).

Subpart A--General Provisions and Definitions


Sec.  800.10  Basis and scope.

    (a) Basis. This part is based on the following sections of title I 
of the Affordable Care Act:
    1001. Amendments to the Public Health Service Act.
    1302. Essential Health Benefits Requirements.
    1311. Affordable Choices of Health Benefit Plans.
    1324. Level Playing Field.
    1334. Multi-State Plans.
    1341. Transitional Reinsurance Program for Individual Market in 
Each State.
    1342. Establishment of Risk Corridors for Plans in Individual and 
Small Group Markets.
    1343. Risk Adjustment.
    (b) Scope. This part establishes standards for health insurance 
issuers to contract with the United States Office of Personnel 
Management (OPM) to offer Multi-State Plan (MSP) options to provide 
health insurance coverage on Exchanges for each State. It also

[[Page 69811]]

establishes standards for appeal of a decision by OPM affecting the 
issuer's participation in the MSP Program and standards for an enrollee 
in an MSP option to appeal denials of payment or services by an MSP 
issuer.


Sec.  800.20  Definitions.

    For purposes of this part:
    Actuarial value (AV) has the meaning given that term in 45 CFR 
156.20.
    Affordable Care Act means the Patient Protection and Affordable 
Care Act (Pub. L. 111-148), as amended by the Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152).
    Applicant means an issuer or group of issuers that has submitted an 
application to OPM to be considered for participation in the Multi-
State Plan Program.
    Benefit plan material or information means explanations or 
descriptions, whether printed or electronic, that describe a health 
insurance issuer's products. The term does not include a policy or 
contract for health insurance coverage.
    Cost sharing has the meaning given that term in 45 CFR 155.20.
    Director means the Director of the United States Office of 
Personnel Management.
    EHB-benchmark plan has the meaning given that term in 45 CFR 
156.20.
    Exchange means a governmental agency or non-profit entity that 
meets the applicable requirements of 45 CFR part 155 and makes 
qualified health plans (QHPs) and MSP options available to qualified 
individuals and qualified employers. Unless otherwise identified, this 
term refers to State Exchanges, regional Exchanges, subsidiary 
Exchanges, and a Federally-facilitated Exchange.
    Federal Employees Health Benefits Program or FEHB Program means the 
health benefits program administered by the United States Office of 
Personnel Management pursuant to chapter 89 of title 5, United States 
Code.
    Group of issuers means:
    (1) A group of health insurance issuers that are affiliated either 
by common ownership and control or by common use of a nationally 
licensed service mark (as defined in this section); or
    (2) An affiliation of health insurance issuers and an entity that 
is not an issuer but that owns a nationally licensed service mark (as 
defined in this section).
    Health insurance coverage means benefits consisting of medical care 
(provided directly, through insurance or reimbursement, or otherwise) 
under any hospital or medical service policy or certificate, hospital 
or medical service plan contract, or health maintenance organization 
contract offered by a health insurance issuer. Health insurance 
coverage includes group health insurance coverage, individual health 
insurance coverage, and short-term, limited duration insurance.
    Health insurance issuer or issuer means an insurance company, 
insurance service, or insurance organization (including a health 
maintenance organization) that is required to be licensed to engage in 
the business of insurance in a State and that is subject to State law 
that regulates insurance (within the meaning of section 514(b)(2) of 
the Employee Retirement Income Security Act (ERISA)). This term does 
not include a group health plan as defined in 45 CFR 146.145(a).
    HHS means the United States Department of Health and Human 
Services.
    Level of coverage means one of four standardized actuarial values 
of plan coverage as defined by section 1302(d)(1) of the Affordable 
Care Act.
    Licensure means the authorization obtained from the appropriate 
State official or regulatory authority to offer health insurance 
coverage in the State.
    Multi-State Plan Program issuer or MSP issuer means a health 
insurance issuer or group of issuers (as defined in this section) that 
has a contract with OPM to offer health plans pursuant to section 1334 
of the Affordable Care Act and meets the requirements of this part.
    Multi-State Plan option or MSP option means a discrete pairing of a 
package of benefits with particular cost sharing (which does not 
include premium rates or premium rate quotes) that is offered pursuant 
to a contract with OPM pursuant to section 1334 of the Affordable Care 
Act and meets the requirements of 45 CFR part 800.
    Multi-State Plan Program or MSP Program means the program 
administered by OPM pursuant to section 1334 of the Affordable Care 
Act.
    Nationally licensed service mark means a word, name, symbol, or 
device, or any combination thereof, that an issuer or group of issuers 
uses consistently nationwide to identify itself.
    Non-profit entity means:
    (1) An organization that is incorporated under State law as a non-
profit entity and licensed under State law as a health insurance 
issuer; or
    (2) A group of health insurance issuers licensed under State law, a 
substantial portion of which are incorporated under State law as non-
profit entities.
    OPM means the United States Office of Personnel Management.
    Percentage of total allowed cost of benefits has the meaning given 
that term in 45 CFR 156.20.
    Plan year means a consecutive 12-month period during which a health 
plan provides coverage for health benefits. A plan year may be a 
calendar year or otherwise.
    Prompt payment means a requirement imposed on a health insurance 
issuer to pay a provider or enrollee for a claimed benefit or service 
within a defined time period, including the penalty or consequence 
imposed on the issuer for failure to meet the requirement.
    Qualified Health Plan or QHP means a health plan that has in effect 
a certification that it meets the standards described in subpart C of 
45 CFR part 156 issued or recognized by each Exchange through which 
such plan is offered pursuant to the process described in subpart K of 
45 CFR part 155.
    Rating means the process, including rating factors, numbers, 
formulas, methodologies, and actuarial assumptions, used to set 
premiums for a health plan.
    Secretary means the Secretary of the Department of Health and Human 
Services.
    SHOP means a Small Business Health Options Program operated by an 
Exchange through which a qualified employer can provide its employees 
and their dependents with access to one or more qualified health plans 
(QHPs).
    Silver plan variation has the meaning given that term in 45 CFR 
156.400.
    Small employer means, in connection with a group health plan with 
respect to a calendar year and a plan year, an employer who employed an 
average of at least one but not more than 100 employees on business 
days during the preceding calendar year and who employs at least one 
employee on the first day of the plan year. In the case of plan years 
beginning before January 1, 2016, a State may elect to define small 
employer by substituting ``50 employees'' for ``100 employees.''
    Standard plan has the meaning given that term in 45 CFR 156.400.
    State Insurance Commissioner means the commissioner or other chief 
insurance regulatory official of a State.
    State means each of the 50 States or the District of Columbia.
    State-level issuer means a health insurance issuer designated by 
the Multi-State Plan (MSP) issuer to offer an MSP option or MSP 
options. The State-level issuer may offer health insurance coverage 
through an MSP option in all or part of one or more States.

[[Page 69812]]

Subpart B--Multi-State Plan Program Issuer Requirements


Sec.  800.101  General requirements.

    An MSP issuer must:
    (a) Licensed. Be licensed as a health insurance issuer in each 
State where it offers health insurance coverage;
    (b) Contract with OPM. Have a contract with OPM pursuant to this 
part;
    (c) Required levels of coverage. Offer levels of coverage as 
required by Sec.  800.107;
    (d) Eligibility and enrollment. MSP options and MSP issuers must 
meet the same requirements for eligibility, enrollment, and termination 
of coverage as those that apply to QHPs and QHP issuers pursuant to 45 
CFR part 155, subparts D, E, and H, and 45 CFR 156.250, 156.260, 
156.265, 156.270, and 156.285;
    (e) Applicable to each MSP issuer. Ensure that each of its MSP 
options meets the requirements of this part;
    (f) Compliance. Comply with all standards set forth in this part;
    (g) OPM direction and other legal requirements. Timely comply with 
OPM instructions and directions and with other applicable law; and
    (h) Other requirements. Meet such other requirements as determined 
appropriate by OPM, in consultation with HHS, pursuant to section 
1334(b)(4) of the Affordable Care Act.
    (i) Non-discrimination. MSP options and MSP issuers must comply 
with applicable Federal and State non-discrimination laws, including 
the standards set forth in 45 CFR 156.125 and 156.200(e).


Sec.  800.102  Compliance with Federal law.

    (a) Public Health Service Act. As a condition of participation in 
the MSP Program, an MSP issuer must comply with applicable provisions 
of part A of title XXVII of the PHS Act. Compliance shall be determined 
by the Director.
    (b) Affordable Care Act. As a condition of participation in the MSP 
Program, an MSP issuer must comply with applicable provisions of title 
I of the Affordable Care Act. Compliance shall be determined by the 
Director.


Sec.  800.103  Authority to contract with issuers.

    (a) General. OPM may enter into contracts with health insurance 
issuers to offer at least two MSP options on Exchanges and SHOPs in 
each State, without regard to any statutes that would otherwise require 
competitive bidding.
    (b) Non-profit entity. In entering into contracts with health 
insurance issuers to offer MSP options, OPM will enter into a contract 
with at least one non-profit entity as defined in Sec.  800.20.
    (c) Group of issuers. Any contract to offer MSP options may be with 
a group of issuers as defined in Sec.  800.20.
    (d) Individual and group coverage. The contracts will provide for 
individual health insurance coverage and for group health insurance 
coverage for small employers.


Sec.  800.104  Phased expansion, etc.

    (a) Phase-in. OPM may enter into a contract with a health insurance 
issuer to offer MSP options if the health insurance issuer agrees that:
    (1) With respect to the first year for which the health insurance 
issuer offers MSP options, the health insurance issuer will offer MSP 
options in at least 60 percent of the States;
    (2) With respect to the second such year, the health insurance 
issuer will offer the MSP options in at least 70 percent of the States;
    (3) With respect to the third such year, the health insurance 
issuer will offer the MSP options in at least 85 percent of the States; 
and
    (4) With respect to each subsequent year, the health insurance 
issuer will offer the MSP options in all States.
    (b) Partial coverage within a State. (1) OPM may enter into a 
contract with an MSP issuer even if the MSP issuer's MSP options for a 
State cover fewer than all the service areas specified for that State 
pursuant to Sec.  800.110.
    (2) If an issuer offers both an MSP option and QHP on the same 
Exchange, an MSP issuer must offer MSP coverage in a service area or 
areas that is equal to the greater of:
    (i) The QHP service area defined by the issuer or,
    (ii) The service area specified for that State pursuant to Sec.  
800.110 covered by the issuer's QHP.
    (c) Participation in SHOPs. (1) An MSP issuer's participation in 
the Federally-facilitated SHOP must be consistent with the requirements 
for QHP issuers specified in 45 CFR 156.200(g).
    (2) An MSP issuer must comply with State standards governing 
participation in State-based SHOPs, consistent with Sec.  800.114. For 
these State-based SHOP standards, OPM retains discretion to allow an 
MSP issuer to phase-in SHOP participation in States pursuant to section 
1334(e) of the Affordable Care Act.
    (d) Licensed where offered. OPM may enter into a contract with an 
MSP issuer who is not licensed in every State, provided that the issuer 
is licensed in every State where it offers MSP coverage through any 
Exchanges in that State and demonstrates to OPM that it is making a 
good faith effort to become licensed in every State consistent with the 
timeframe in paragraph (a) of this section.


Sec.  800.105  Benefits.

    (a) Package of benefits. (1) An MSP issuer must offer a package of 
benefits that includes the essential health benefits (EHB) described in 
section 1302 of the Affordable Care Act for each MSP option within a 
State.
    (2) The package of benefits referred to in paragraph (a)(1) of this 
section must comply with section 1302 of the Affordable Care Act, as 
well as any applicable standards set by OPM and any applicable 
standards set by HHS.
    (b) Package of benefits options. (1) An MSP issuer must offer at 
least one uniform package of benefits in each State that is 
substantially equal to:
    (i) The EHB-benchmark plan in each State in which it operates; or
    (ii) Any EHB-benchmark plan selected by OPM under paragraph (c) of 
this section.
    (2) An issuer applying to participate in the MSP Program may select 
either or both of the package of benefits options described in 
paragraph (b)(1) of this section in its application. In each State, the 
issuer may choose one EHB-benchmark for each product it offers.
    (3) An MSP issuer must comply with any State standards relating to 
substitution of benchmark benefits or standard benefit designs.
    (c) OPM selection of benchmark plans. (1) The OPM-selected EHB-
benchmark plans are the three largest Federal Employees Health Benefits 
(FEHB) Program plan options, as identified by HHS pursuant to section 
1302(b) of the Affordable Care Act, and as supplemented pursuant to 
paragraphs (c)(2) through (c)(4) of this section.
    (2) Any EHB-benchmark plan selected by OPM under paragraph (c)(1) 
of this section lacking coverage of pediatric oral services or 
pediatric vision services must be supplemented by the addition of the 
entire category of benefits from the largest Federal Employee Dental 
and Vision Insurance Program (FEDVIP) dental or vision plan options, 
respectively, pursuant to 45 CFR 156.110(b) and section 1302(b) of the 
Affordable Care Act.
    (3) In all States where an MSP issuer uses the OPM-selected EHB-
benchmark plan, the MSP issuer may manage formularies around the needs 
of anticipated or actual users, subject to approval by OPM.
    (4) An MSP issuer must follow State definitions where the State 
specifically defines the habilitative services category

[[Page 69813]]

pursuant to 45 CFR 156.110(f) or any Federal definitions where HHS 
specifically defines habilitative services. In the case of any State 
that does not define this category and absent a clearly applicable 
Federal definition, if any OPM-selected EHB-benchmark plan lacks 
coverage of habilitative services and devices, OPM may determine what 
habilitative services are to be included in that EHB-benchmark plan.
    (5) Any EHB-benchmark plan selected by OPM under paragraph (c)(1) 
of this section must include, for each State, any State-required 
benefits enacted before December 31, 2011, that are included in the 
State's EHB-benchmark plan as described in paragraph (b)(1)(i) of this 
section, or specific to the market in which the plan is offered.
    (d) OPM approval. An MSP issuer's package of benefits, including 
its formulary, must be submitted for approval by OPM, which will review 
a package of benefits proposed by an MSP issuer and determine if it is 
substantially equal to an EHB-benchmark plan described in paragraph 
(b)(1) of this section, pursuant to standards set forth by OPM and any 
applicable standards set forth by HHS, including 45 CFR 156.115, 
156.122, and 156.125.
    (e) State payments for additional State-required benefits. If a 
State requires that benefits in addition to the benchmark package be 
offered to MSP enrollees in that State, then pursuant to section 
1334(c)(2) of the Affordable Care Act, the State must defray the cost 
of such additional benefits by making payments either to the enrollee 
or to the MSP issuer on behalf of the enrollee.


Sec.  800.106  Cost-sharing limits, advance payments of premium tax 
credits, and cost-sharing reductions.

    (a) Cost-sharing limits. For each MSP option it offers, an MSP 
issuer must ensure that the cost-sharing provisions of the MSP option 
complies with section 1302(c) of the Affordable Care Act, as well as 
any applicable standards set by OPM or HHS.
    (b) Advance payments of premium tax credits and cost-sharing 
reductions. For each MSP option it offers, an MSP issuer must ensure 
that an eligible individual receives the benefit of advance payments of 
premium tax credits under section 36B of the Internal Revenue Code and 
the cost-sharing reductions under section 1402 of the Affordable Care 
Act. An MSP issuer must also comply with any applicable standards set 
by OPM or HHS.


Sec.  800.107  Levels of coverage.

    (a) Silver and gold levels of coverage required. An MSP issuer must 
offer at least one MSP option at the silver level of coverage and at 
least one MSP option at the gold level of coverage on each Exchange in 
which the issuer is certified to offer an MSP option pursuant to a 
contract with OPM.
    (b) Bronze or platinum metal levels of coverage permitted. Pursuant 
to a contract with OPM, an MSP issuer may offer one or more MSP options 
at the bronze level of coverage or the platinum level of coverage, or 
both, on any Exchange or SHOP in any State.
    (c) Child-only plans. For each level of coverage, the MSP issuer 
must offer a child-only MSP options at the same level of coverage as 
any health insurance coverage offered to individuals who, as of the 
beginning of the plan year, have not attained the age of 21.
    (d) Plan variations for the reduction or elimination of cost-
sharing. An MSP issuer must comply with section 1402 of the Affordable 
Care Act, as well as any applicable standards set by OPM or HHS.
    (e) OPM approval. An MSP issuer must submit the levels of coverage 
plans and plan variations to OPM for review and approval by OPM.


Sec.  800.108  Assessments and user fees.

    (a) Discretion to charge assessment and user fees. Beginning in 
plan year 2015, OPM may require an MSP issuer to pay an assessment or 
user fee as a condition of participating in the MSP Program.
    (b) Determination of amount. The amount of the assessment or user 
fee charged by OPM for a plan year is the amount determined necessary 
by OPM to meet the costs of OPM's functions under the Affordable Care 
Act for a plan year, including but not limited to such functions as 
entering into contracts with, certifying, recertifying, decertifying, 
and overseeing MSP options and MSP issuers for that plan year. The 
amount of the assessment or user fee charged by OPM will be offset 
against the assessment or user fee amount required by any State-based 
Exchange or Federally-facilitated Exchange such that the total of all 
assessments and user fees paid by the MSP issuer for the year for the 
MSP option shall be no greater than nor less than the amount of the 
assessment or user fee paid by QHP issuers in that State-based Exchange 
or Federally-facilitated Exchange for that year.
    (c) Process for collecting MSP assessment or user fees. OPM may 
require an MSP issuer to make payment of the MSP Program assessment or 
user fee amount directly to OPM, or may establish other mechanisms for 
the collection process.


Sec.  800.109  Network adequacy.

    (a) General requirement. An MSP issuer must ensure that the 
provider network of each of its MSP options, as available to all 
enrollees, meets the following standards:
    (1) Maintains a network that is sufficient in number and types of 
providers to assure that all services will be accessible without 
unreasonable delay;
    (2) Is consistent with the network adequacy provisions of section 
2702(c) of the Public Health Service Act; and
    (3) Includes essential community providers in compliance with 45 
CFR 156.235.
    (b) Provider directory. An MSP issuer must make its provider 
directory for an MSP option available to the Exchange for publication 
online pursuant to guidance from the Exchange and to potential 
enrollees in hard copy, upon request. In the provider directory, an MSP 
issuer must identify providers that are not accepting new patients. An 
MSP issuer must also comply with any additional standards related to 
provider directories set by HHS for QHP issuers.
    (c) OPM guidance. OPM will issue guidance containing the criteria 
and standards that it will use to determine the adequacy of a provider 
network.


Sec.  800.110  Service area.

    An MSP issuer must offer an MSP option within one or more service 
areas in a State defined by each Exchange pursuant to 45 CFR 155.1055. 
If an Exchange permits issuers to define their service areas, an MSP 
issuer must obtain OPM's approval for its proposed service areas. 
Pursuant to Sec.  800.104, OPM may enter into a contract with an MSP 
issuer even if the MSP issuer's MSP options for a State cover fewer 
than all the service areas specified for that State. MSP options will 
follow the same standards for service areas for QHPs pursuant to 45 CFR 
155.1055.


Sec.  800.111  Accreditation requirement.

    (a) General requirement. An MSP issuer must be or become accredited 
consistently with the requirements for QHP issuers specified in section 
1311 of the Affordable Care Act and 45 CFR 156.275(a)(1).
    (b) Release of survey. An MSP issuer must authorize the accrediting 
entity that accredits the MSP issuer to release to OPM and to the 
Exchange a copy of its most recent accreditation survey, together with 
any survey-related

[[Page 69814]]

information that OPM or an Exchange may require, such as corrective 
action plans and summaries of findings.
    (c) Timeframe for accreditation. An MSP issuer that is not 
accredited as of the date that it enters into a contract with OPM must 
become accredited within the timeframe established by OPM as authorized 
by 45 CFR 155.1045.


Sec.  800.112  Reporting requirements.

    (a) OPM specification of reporting requirements. OPM will specify 
the data and information that must be reported by an MSP issuer, 
including data permitted or required by the Affordable Care Act and 
such other data as OPM may determine necessary for the oversight and 
administration of the MSP Program. OPM will also specify the form, 
manner, processes, and frequency for the reporting of data and 
information. The Director may require that MSP issuers submit claims 
payment and enrollment data to facilitate OPM's oversight and 
administration of the MSP Program in a manner similar to the FEHB 
Program.
    (b) Quality and quality improvement standards. An MSP issuer must 
comply with any standards required by OPM for reporting quality and 
quality improvement activities, including but not limited to 
implementation of a quality improvement strategy, disclosure of quality 
measures to enrollees and prospective enrollees, reporting of pediatric 
quality measures, and implementation of rating and enrollee 
satisfaction surveys, which will be similar to standards under section 
1311(c)(1)(E), (H), and (I), (c)(3), and (c)(4) of the Affordable Care 
Act.


Sec.  800.113  Benefit plan material or information.

    (a) Compliance with Federal and State law. An MSP issuer must 
comply with Federal and State laws relating to benefit plan material or 
information, including the provisions of this section and guidance 
issued by OPM specifying its standards, process, and timeline for 
approval of benefit plan material or information.
    (b) General standards for MSP applications and notices. An MSP 
issuer must provide all applications and notices to enrollees in 
accordance with the standards described in 45 CFR 155.205(c). OPM may 
establish additional standards to meet the needs of MSP enrollees.
    (c) Accuracy. An MSP issuer is responsible for the accuracy of its 
benefit plan material or information.
    (d) Truthful, not misleading, no material omissions, and plain 
language. All benefit plan material or information must be:
    (1) Truthful, not misleading, and without material omissions; and
    (2) Written in plain language, as defined in section 1311(e)(3)(B) 
of the Affordable Care Act.
    (e) Uniform explanation of coverage documents and standardized 
definitions. An MSP issuer must comply with the provisions of section 
2715 of the PHS Act and regulations issued to implement that section.
    (f) OPM review and approval of benefit plan material or 
information. OPM may request an MSP issuer to submit to OPM benefit 
plan material or information, as defined in Sec.  800.20. OPM reserves 
the right to review and approve benefit plan material or information to 
ensure that an MSP issuer complies with Federal and State laws, and the 
standards prescribed by OPM with respect to benefit plan material or 
information.
    (g) Statement on certification by OPM. An MSP issuer may include a 
statement in its benefit plan material or information that:
    (1) OPM has certified the MSP option as eligible to be offered on 
the Exchange; and
    (2) OPM monitors the MSP option for compliance with all applicable 
law.


Sec.  800.114  Compliance with applicable State law.

    (a) Compliance with State law. An MSP issuer must, with respect to 
each of its MSP options, generally comply with State law pursuant to 
section 1334(b)(2) of the Affordable Care Act. However, the MSP options 
and MSP issuers are not subject to State laws that:
    (1) Are inconsistent with section 1334 of the Affordable Care Act 
or this part;
    (2) Prevent the application of a requirement of part A of title 
XXVII of the PHS Act; or
    (3) Prevent the application of a requirement of title I of the 
Affordable Care Act.
    (b) Determination of inconsistency. After consultation with the 
State and HHS, OPM reserves the right to determine, in its judgment, as 
effectuated through an MSP Program contract, these regulations, or OPM 
guidance, whether the standards set forth in paragraph (a) of this 
section are satisfied with respect to particular State laws.


Sec.  800.115  Level playing field.

    An MSP issuer must, with respect to each of its MSP options, meet 
the following requirements in order to ensure a level playing field, 
subject to Sec.  800.114:
    (a) Guaranteed renewal. Guarantee that an enrollee can renew 
enrollment in an MSP option in compliance with sections 2703 and 2742 
of the PHS Act;
    (b) Rating. In proposing premiums for OPM approval, use only the 
rating factors permitted under section 2701 of the PHS Act and State 
law;
    (c) Preexisting conditions. Not impose any preexisting condition 
exclusion and comply with section 2704 of the PHS Act;
    (d) Non-discrimination. Comply with section 2705 of the PHS Act;
    (e) Quality improvement and reporting. Comply with all Federal and 
State quality improvement and reporting requirements. Quality 
improvement and reporting means quality improvement as defined in 
section 1311(h) of the Affordable Care Act and quality improvement 
plans or strategies required under State law, and quality reporting as 
defined in section 2717 of the PHS Act and section 1311(g) of the 
Affordable Care Act. Quality improvement also includes activities such 
as, but not limited to, implementation of a quality improvement 
strategy, disclosure of quality measures to enrollees and prospective 
enrollees, and reporting of pediatric quality measures, which will be 
similar to standards under section 1311(c)(1)(E), (H), and (I) of the 
Affordable Care Act;
    (f) Fraud and abuse. Comply with all Federal and State fraud and 
abuse laws;
    (g) Licensure. Be licensed in every State in which it offers an MSP 
option;
    (h) Solvency and financial requirements. Comply with the solvency 
standards set by each State in which it offers an MSP option;
    (i) Market conduct. Comply with the market conduct standards of 
each State in which it offers an MSP option;
    (j) Prompt payment. Comply with applicable State law in negotiating 
the terms of payment in contracts with its providers and in making 
payments to claimants and providers;
    (k) Appeals and grievances. Comply with Federal standards under 
section 2719 of the PHS Act for appeals and grievances relating to 
adverse benefit determinations, as described in subpart F of this part;
    (l) Privacy and confidentiality. Comply with all Federal and State 
privacy and security laws and requirements, including any standards 
required by OPM in guidance or contract, which will be similar to the 
standards contained in 45 CFR part 164 and applicable State law; and
    (m) Benefit plan material or information. Comply with Federal and 
State law, including Sec.  800.113.

[[Page 69815]]

Sec.  800.116  Process for dispute resolution.

    (a) Determinations about applicability of State law under section 
1334(b)(2) of the Affordable Care Act. In the event of a dispute about 
the applicability to an MSP option or MSP issuer of a State law, the 
State may request that OPM reconsider a determination that an MSP 
option or MSP issuer is not subject to such State law.
    (b) Required demonstration. A State making a request under 
paragraph (a) of this section must demonstrate that the State law at 
issue:
    (1) Is not inconsistent with section 1334 of the Affordable Care 
Act or this part;
    (2) Does not prevent the application of a requirement of part A of 
title XXVII of the PHS Act; and
    (3) Does not prevent the application of a requirement of title I of 
the Affordable Care Act.
    (c) Request for review. The request must be in writing and include 
contact information, including the name, telephone number, email 
address, and mailing address of the person or persons whom OPM may 
contact regarding the request for review. The request must be in such 
form, contain such information, and be submitted in such manner and 
within such timeframe as OPM may prescribe.
    (1) The requester may submit to OPM any relevant information to 
support its request.
    (2) OPM may obtain additional information relevant to the request 
from any source as it may, in its judgment, deem necessary. OPM will 
provide the requester with a copy of any additional information it 
obtains and provide an opportunity for the requester to respond 
(including by submission of additional information or explanation).
    (3) OPM will issue a written decision within 60 calendar days after 
receiving the written request, or after the due date for a response 
under paragraph (c)(2) of this section, whichever is later, unless a 
different timeframe is agreed upon.
    (4) OPM's written decision will constitute final agency action that 
is subject to review under the Administrative Procedure Act in the 
appropriate U.S. district court. Such review is limited to the record 
that was before OPM when OPM made its decision.

Subpart C--Premiums, Rating Factors, Medical Loss Ratios, and Risk 
Adjustment


Sec.  800.201  General requirements.

    (a) Premium negotiation. OPM will negotiate annually with an MSP 
issuer, on a State by State basis, the premiums for each MSP option 
offered by that issuer in that State. Such negotiations may include 
negotiations about the cost-sharing provisions of an MSP option.
    (b) Duration. Premiums will remain in effect for the plan year.
    (c) Guidance on rate development. OPM will issue guidance 
addressing methods for the development of premiums for the MSP Program. 
That guidance will follow State rating standards generally applicable 
in a State, to the greatest extent practicable.
    (d) Calculation of actuarial value. An MSP issuer must calculate 
actuarial value in the same manner as QHP issuers under section 1302(d) 
of the Affordable Care Act, as well as any applicable standards set by 
OPM or HHS.
    (e) OPM rate review process. An MSP issuer must participate in the 
rate review process established by OPM to negotiate rates for MSP 
options. The rate review process established by OPM will be similar to 
the process established by HHS pursuant to section 2794 of the PHS Act 
and disclosure and review standards established under 45 CFR part 154.
    (f) State effective rate review. With respect to its MSP options, 
an MSP issuer is subject to a State's rate review process, including a 
State's Effective Rate Review Program established by HHS pursuant to 
section 2794 of the PHS Act and 45 CFR part 154. In the event HHS is 
reviewing rates for a State pursuant to section 2794 of the PHS Act, 
HHS will defer to OPM's judgment regarding the MSP options' proposed 
rate increase. If a State withholds approval of an MSP option and OPM 
determines, in its discretion, that the State's action would prevent 
OPM from administrating the MSP Program, OPM retains authority to make 
the final decision to approve rates for participation in the MSP 
Program, notwithstanding the absence of State approval.
    (g) Single risk pool. An MSP issuer must consider all enrollees in 
an MSP option to be in the same risk pool as all enrollees in all other 
health plans in the individual market or the small group market, 
respectively, in compliance with section 1312(c) of the Affordable Care 
Act, 45 CFR 156.80, and any applicable Federal or State laws and 
regulations implementing that section.


Sec.  800.202  Rating factors.

    (a) Permissible rating factors. In proposing premiums for each MSP 
option, an MSP issuer must use only the rating factors permitted under 
section 2701 of the PHS Act.
    (b) Application of variations based on age or tobacco use. Rating 
variations permitted under section 2701 of the PHS Act must be applied 
by an MSP issuer based on the portion of the premium attributable to 
each family member covered under the coverage in accordance with any 
applicable Federal or State laws and regulations implementing section 
2701(a) of the PHS Act.
    (c) Age rating. For age rating, an MSP issuer must use the ratio 
established by the State in which the MSP option is offered, if it is 
less than 3:1.
    (1) Age bands. An MSP issuer must use the uniform age bands 
established under HHS regulations implementing section 2701(a) of the 
PHS Act.
    (2) Age curves. An MSP issuer must use the age curves established 
under HHS regulations implementing section 2701(a) of the PHS Act, or 
age curves established by a State pursuant to HHS regulations.
    (d) Rating areas. An MSP issuer must use the rating areas 
appropriate to the State in which the MSP option is offered and 
established under HHS regulations implementing section 2701(a) if the 
PHS Act.
    (e) Tobacco rating. An MSP issuer must apply tobacco use as a 
rating factor in accordance with any applicable Federal or State laws 
and regulations implementing section 2701(a) of the PHS Act.
    (f) Wellness programs. An MSP issuer must comply with any 
applicable Federal or State laws and regulations implementing section 
2705 of the PHS Act.


Sec.  800.203  Medical loss ratio.

    (a) Required medical loss ratio. An MSP issuer must attain:
    (1) The medical loss ratio (MLR) required under section 2718 of the 
PHS Act and regulations promulgated by HHS; and
    (2) Any MSP-specific MLR that OPM may set in the best interests of 
MSP enrollees or that is necessary to be consistent with a State's 
requirements with respect to MLR.
    (b) Consequences of not attaining required medical loss ratio. If 
an MSP issuer fails to attain an MLR set forth in paragraph (a) of this 
section, OPM may take any appropriate action, including but not limited 
to intermediate sanctions, such as suspension of marketing, 
decertifying an MSP option in one or more States, or terminating an MSP 
issuer's contract pursuant to Sec.  800.404.

[[Page 69816]]

Sec.  800.204  Reinsurance, risk corridors, and risk adjustment.

    (a) Transitional reinsurance program. An MSP issuer must comply 
with section 1341 of the Affordable Care Act, 45 CFR part 153, and any 
applicable Federal or State regulations under section 1341 that set 
forth requirements to implement the transitional reinsurance program 
for the individual market.
    (b) Temporary risk corridors program. An MSP issuer must comply 
with section 1342 of the Affordable Care Act, 45 CFR part 153, and any 
applicable Federal regulations under section 1342 that set forth 
requirements to implement the risk corridor program.
    (c) Risk adjustment program. An MSP issuer must comply with section 
1343 of the Affordable Care Act, 45 CFR part 153, and any applicable 
Federal or State regulations under section 1343 that set forth 
requirements to implement the risk adjustment program.

Subpart D--Application and Contracting Procedures


Sec.  800.301  Application process.

    (a) Acceptance of applications. Without regard to 41 U.S.C. 
6101(b)-(d), or any other statute requiring competitive bidding, OPM 
may consider annual applications from health insurance issuers, 
including groups of health insurance issuers as defined in Sec.  
800.20, to participate in the MSP Program. If OPM determines that it is 
not beneficial for the MSP Program to consider new issuer applications 
for an upcoming year, OPM will issue a notice to that effect. Each 
existing MSP issuer may complete a renewal application annually.
    (b) Form and manner of applications. An applicant must submit to 
OPM, in the form and manner and in accordance with the timeline 
specified by OPM, the information requested by OPM for determining 
whether an applicant meets the requirements of this part.


Sec.  800.302  Review of applications.

    (a) Determinations. OPM will determine if an applicant meets the 
requirements of this part. If OPM determines that an applicant meets 
the requirements of this part, OPM may accept the applicant to enter 
into contract negotiations with OPM to participate in the MSP Program.
    (b) Requests for additional information. OPM may request additional 
information from an applicant before making a decision about whether to 
enter into contract negotiations with that applicant to participate in 
the MSP Program.
    (c) Declination of application. If, after reviewing an application 
to participate in the MSP Program, OPM declines to enter into contract 
negotiations with the applicant, OPM will inform the applicant in 
writing of the reasons for that decision.
    (d) Discretion. The decision whether to enter into contract 
negotiations with a health insurance issuer who has applied to 
participate in the MSP Program is committed to OPM's discretion.
    (e) Impact on future applications. OPM's declination of an 
application to participate in the MSP Program will not preclude the 
applicant from submitting an application for a subsequent year to 
participate in the MSP Program.


Sec.  800.303  MSP Program contracting.

    (a) Participation in MSP Program. To become an MSP issuer, the 
applicant and the Director or the Director's designee must sign a 
contract that meets the requirements of this part.
    (b) Standard contract. OPM will establish a standard contract for 
the MSP Program.
    (c) Premiums. OPM and the applicant will negotiate the premiums for 
an MSP option for each plan year in accordance with the provisions of 
subpart C of this part.
    (d) Benefit packages. OPM must approve the applicant's benefit 
packages for an MSP option.
    (e) Additional terms and conditions. OPM may elect to negotiate 
with an applicant such additional terms, conditions, and requirements 
that:
    (1) Are in the interests of MSP enrollees; or
    (2) OPM determines to be appropriate.
    (f) Certification to offer health insurance coverage.
    (1) For each plan year, an MSP Program contract will specify MSP 
options that OPM has certified, the specific package of benefits 
authorized to be offered on each Exchange, and the premiums to be 
charged for each package of benefits on each Exchange.
    (2) An MSP issuer may not offer an MSP option on an Exchange unless 
its MSP Program contract with OPM includes a certification authorizing 
the MSP issuer to offer the MSP option on that Exchange in accordance 
with paragraph (f)(1) of this section.


Sec.  800.304  Term of the contract.

    (a) Term of a contract. The term of the contract will be specified 
in the MSP Program contract and must be for a period of at least the 12 
consecutive months defined as the plan year.
    (b) Plan year. The plan year is a consecutive 12-month period 
during which an MSP option provides coverage for health benefits. A 
plan year may be a calendar year or otherwise.


Sec.  800.305  Contract renewal process.

    (a) Renewal. To continue participating in the MSP Program, an MSP 
issuer must provide to OPM, in the form and manner and in accordance 
with the timeline prescribed by OPM, the information requested by OPM 
for determining whether the MSP issuer continues to meet the 
requirements of this part.
    (b) OPM decision. Subject to paragraph (c) of this section, OPM 
will renew the MSP Program contract of an MSP issuer who timely submits 
the information described in paragraph (a).
    (c) OPM discretion not to renew. OPM may decline to renew the 
contract of an MSP issuer if:
    (1) OPM and the MSP issuer fail to agree on premiums and benefits 
for an MSP option for the subsequent plan year;
    (2) The MSP issuer has engaged in conduct described in Sec.  
800.404(a); or
    (3) OPM determines that the MSP issuer will be unable to comply 
with a material provision of section 1334 of the Affordable Care Act or 
this part.
    (d) Failure to agree on premiums and benefits. Except as otherwise 
provided in this part, if an MSP issuer has complied with paragraph (a) 
of this section and OPM and the MSP issuer fail to agree on premiums 
and benefits for an MSP option on one or more Exchanges for the 
subsequent plan year by the date required by OPM, either party may 
provide notice of nonrenewal pursuant to Sec.  800.306, or OPM may in 
its discretion withdraw the certification of that MSP option on the 
Exchange or Exchanges for that plan year. In addition, if OPM and the 
MSP issuer fail to agree on benefits and premiums for an MSP option on 
one or more Exchanges by the date set by OPM and in the event of no 
action (no notice of nonrenewal or renewal) by either party, the MSP 
Program contract will be renewed and the existing premiums and benefits 
for that MSP option on that Exchange or Exchanges will remain in effect 
for the subsequent plan year.


Sec.  800.306  Nonrenewal.

    (a) Nonrenewal. Nonrenewal may pertain to the MSP issuer or the 
State-level issuer. The circumstances under which nonrenewal may occur 
are:
    (1) Nonrenewal of contract. As used in this subpart and subpart E 
of this part, ``nonrenewal of contract'' means a decision by either OPM 
or an MSP issuer not to renew an MSP Program contract.

[[Page 69817]]

    (2) Nonrenewal of participation. As used in this subpart and 
subpart E of this part, ``nonrenewal of participation'' means a 
decision by OPM, an MSP issuer, or a State-level issuer not to renew a 
State-level issuer's participation in a MSP Program contract.
    (b) Notice required. Either OPM or an MSP issuer may decline to 
renew an MSP Program contract by providing a written notice of 
nonrenewal to the other party.
    (c) MSP issuer responsibilities. The MSP issuer's written notice of 
nonrenewal must be made in accordance with its MSP Program contract 
with OPM. The MSP issuer also must comply with any requirements 
regarding the termination of a plan that are applicable to a QHP 
offered on an Exchange on which the MSP option was offered, including a 
requirement to provide advance written notice of termination to 
enrollees. MSP issuers shall provide written notice to enrollees in 
accordance with Sec.  800.404(d).

Subpart E--Compliance


Sec.  800.401  Contract performance.

    (a) General. An MSP issuer must perform an MSP Program contract 
with OPM in accordance with the requirements of section 1334 of the 
Affordable Care Act and this part. The MSP issuer must continue to meet 
such requirements while under an MSP Program contract with OPM.
    (b) Specific requirements for issuers. In addition to the 
requirements described in paragraph (a) of this section, each MSP 
issuer must:
    (1) Have, in the judgment of OPM, the financial resources to carry 
out its obligations under the MSP Program;
    (2) Keep such reasonable financial and statistical records, and 
furnish to OPM such reasonable financial and statistical reports with 
respect to the MSP option or the MSP issuer, as may be requested by 
OPM;
    (3) Permit representatives of OPM (including the OPM Office of 
Inspector General), the U.S. Government Accountability Office, and any 
other applicable Federal Government auditing entities to audit and 
examine its records and accounts that pertain, directly or indirectly, 
to the MSP option at such reasonable times and places as may be 
designated by OPM or the U.S. Government Accountability Office;
    (4) Timely submit to OPM a properly completed and signed novation 
or change-of-name agreement in accordance with subpart 42.12 of 48 CFR 
part 42;
    (5) Perform the MSP Program contract in accordance with prudent 
business practices, as described in paragraph (c) of this section; and
    (6) Not perform the MSP Program contract in accordance with poor 
business practices, as described in paragraph (d) of this section.
    (c) Prudent business practices. OPM will consider an MSP issuer's 
specific circumstances and facts in using its discretion to determine 
compliance with paragraph (b)(5) of this section. For purposes of 
paragraph (b)(5) of this section, prudent business practices include, 
but are not limited to, the following:
    (1) Timely compliance with OPM instructions and directives;
    (2) Legal and ethical business and health care practices;
    (3) Compliance with the terms of the MSP Program contract, 
regulations, and statutes;
    (4) Timely and accurate adjudication of claims or rendering of 
medical services;
    (5) Operating a system for accounting for costs incurred under the 
MSP Program contract, which includes segregating and pricing MSP option 
medical utilization and allocating indirect and administrative costs in 
a reasonable and equitable manner;
    (6) Maintaining accurate accounting reports of costs incurred in 
the administration of the MSP Program contract;
    (7) Applying performance standards for assuring contract quality as 
outlined at Sec.  800.402; and
    (8) Establishing and maintaining a system of internal controls that 
provides reasonable assurance that:
    (i) The provision and payments of benefits and other expenses 
comply with legal, regulatory, and contractual guidelines;
    (ii) MSP funds, property, and other assets are safeguarded against 
waste, loss, unauthorized use, or misappropriation; and
    (iii) Data is accurately and fairly disclosed in all reports 
required by OPM.
    (d) Poor business practices. OPM will consider an MSP issuer's 
specific circumstances and facts in using its discretion to determine 
compliance with paragraph (b)(6) of this section. For purposes of 
paragraph (b)(6) of this section, poor business practices include, but 
are not limited to, the following:
    (1) Using fraudulent or unethical business or health care practices 
or otherwise displaying a lack of business integrity or honesty;
    (2) Repeatedly or knowingly providing false or misleading 
information in the rate setting process;
    (3) Failing to comply with OPM instructions and directives;
    (4) Having an accounting system that is incapable of separately 
accounting for costs incurred under the contract and/or that lacks the 
internal controls necessary to fulfill the terms of the contract;
    (5) Failing to ensure that the MSP issuer properly pays or denies 
claims, or, if applicable, provides medical services that are 
inconsistent with standards of good medical practice; and
    (6) Entering into contracts or employment agreements with 
providers, provider groups, or health care workers that include 
provisions or financial incentives that directly or indirectly create 
an inducement to limit or restrict communication about medically 
necessary services to any individual covered under the MSP Program. 
Financial incentives are defined as bonuses, withholds, commissions, 
profit sharing or other similar adjustments to basic compensation 
(e.g., service fee, capitation, salary) which have the effect of 
limiting or reducing communication about appropriate medically 
necessary services.
    (e) Performance escrow account. OPM may require MSP issuers to pay 
an assessment into an escrow account to ensure contract compliance and 
benefit MSP enrollees.


Sec.  800.402  Contract quality assurance.

    (a) General. This section prescribes general policies and 
procedures to ensure that services acquired under MSP Program contracts 
conform to the contract's quality requirements.
    (b) Internal controls. OPM may periodically evaluate the 
contractor's system of internal controls under the quality assurance 
program required by the contract and will acknowledge in writing if the 
system is inconsistent with the requirements set forth in the contract. 
OPM's reviews do not diminish the contractor's obligation to implement 
and maintain an effective and efficient system to apply the internal 
controls.
    (c) Performance standards. (1) OPM will issue specific performance 
standards for MSP Program contracts and will inform MSP issuers of the 
applicable performance standards prior to negotiations for the contract 
year. OPM may benchmark its standards against standards generally 
accepted in the insurance industry. OPM may authorize nationally 
recognized standards to be used to fulfill this requirement.
    (2) MSP issuers must comply with the performance standards issued 
pursuant to this section.

[[Page 69818]]

Sec.  800.403  Fraud and abuse.

    (a) Program required. An MSP issuer must conduct a program to 
assess its vulnerability to fraud and abuse as well as to address such 
vulnerabilities.
    (b) Fraud detection system. An MSP issuer must operate a system 
designed to detect and eliminate fraud and abuse by employees and 
subcontractors of the MSP issuer, by providers furnishing goods or 
services to MSP enrollees, and by MSP enrollees.
    (c) Submission of information. An MSP issuer must provide to OPM 
such information or assistance as may be necessary for the agency to 
carry out the duties and responsibilities, including those of the 
Office of Inspector General as specified in sections 4 and 6 of the 
Inspector General Act of 1978 (5 U.S.C. App.). An MSP issuer must 
provide any requested information in the form, manner, and timeline 
prescribed by OPM.


Sec.  800.404  Compliance actions.

    (a) Causes for OPM compliance actions. The following constitute 
cause for OPM to impose a compliance action described in paragraph (b) 
of this section against an MSP issuer:
    (1) Failure by the MSP issuer to meet the requirements set forth in 
Sec.  800.401(a) and (b);
    (2) An MSP issuer's sustained failure to perform the MSP Program 
contract in accordance with prudent business practices, as described in 
Sec.  800.401(c);
    (3) A pattern of poor conduct or evidence of poor business 
practices such as those described in Sec.  800.401(d); or
    (4) Such other violations of law or regulation as OPM may 
determine, including pursuant to its authority under Sec. Sec.  800.102 
and 800.114.
    (b) Compliance actions. (1) OPM may impose a compliance action 
against an MSP issuer at any time during the contract term if it 
determines that the MSP issuer is not in compliance with applicable 
law, this part, or the terms of its contract with OPM.
    (2) Compliance actions may include, but are not limited to:
    (i) Establishment and implementation of a corrective action plan;
    (ii) Imposition of intermediate sanctions, such as suspensions of 
marketing;
    (iii) Performance incentives;
    (iv) Reduction of service area or areas;
    (v) Withdrawal of the certification of the MSP option or options 
offered on one or more Exchanges;
    (vi) Nonrenewal of participation;
    (vii) Nonrenewal of contract; and
    (viii) Withdrawal of approval or termination of the MSP Program 
contract.
    (c) Notice of compliance action. (1) OPM must notify an MSP issuer 
in writing of a compliance action under this section. Such notice must 
indicate the specific compliance action undertaken and the reason for 
the compliance action.
    (2) For compliance actions listed in Sec.  800.404(b)(2)(v) through 
(b)(2)(viii), such notice must include a statement that the MSP issuer 
is entitled to request a reconsideration of OPM's determination to 
impose a compliance action pursuant to Sec.  800.405.
    (3) Upon imposition of a compliance action listed in paragraphs 
(b)(2)(iv) through (b)(2)(vii) of this section, OPM must notify the 
State Insurance Commissioner(s) and Exchange officials in the State or 
States in which the compliance action is effective.
    (d) Notice to enrollees. If the contract is terminated, if OPM 
withdraws certification of an MSP option, or if a State-level issuer's 
participation in the MSP Program contract is not renewed, as described 
in Sec. Sec.  800.306 and 800.404(b)(2) or any situation in which an 
MSP option is no longer available to enrollees, the MSP issuer must 
comply with any State or Exchange requirements regarding discontinuing 
a particular type of coverage that are applicable to a QHP offered on 
the Exchange on which the MSP option was offered including a 
requirement to provide advance written notice before the coverage will 
be discontinued. If a State or Exchange does not have requirements 
about advance notice to enrollees, the MSP issuer must inform current 
MSP enrollees in writing of the discontinuance of the MSP option no 
later than 90 days prior to discontinuing the MSP option, unless OPM 
determines that there is good cause for less than 90 days' notice.
    (e) Definition. As used in this subpart, ``termination'' means a 
decision by OPM to cancel an MSP Program contract prior to the end of 
its contract term. The term includes OPM's withdrawal of approval of an 
MSP Program contract.


Sec.  800.405  Reconsideration of compliance actions.

    (a) Right to request reconsideration. An MSP issuer may request 
that OPM reconsider a determination to impose one of the following 
compliance actions:
    (1) Withdrawal of the certification of the MSP option or options 
offered on one or more Exchanges;
    (2) Nonrenewal of participation;
    (3) Nonrenewal of contract; or
    (4) Termination of the MSP Program contract.
    (b) Request for reconsideration and/or hearing. (1) An MSP issuer 
with a right to request reconsideration specified in paragraph (a) of 
this section may request a hearing in which OPM will reconsider its 
determination to impose a compliance action.
    (2) A request under this section must be in writing and contain 
contact information, including the name, telephone number, email 
address, and mailing address of the person or persons whom OPM may 
contact regarding a request for a hearing with respect to the 
reconsideration. The request must be in such form, contain such 
information, and be submitted in such manner as OPM may prescribe.
    (3) The request must be received by OPM within 15 calendar days 
after the date of the MSP issuer's receipt of the notice of compliance 
action. The MSP issuer may request that OPM's reconsideration allow a 
representative of the MSP issuer to appear personally before OPM.
    (4) A request under this section must include a detailed statement 
of the reasons that the MSP issuer disagrees with OPM's imposition of 
the compliance action, and may include any additional information that 
will assist OPM in rendering a final decision under this section.
    (5) OPM may obtain additional information relevant to the request 
from any source as it may, in its judgment, deem necessary. OPM will 
provide the MSP issuer with a copy of any additional information it 
obtains and provide an opportunity for the MSP issuer to respond 
(including by submitting additional information or explanation).
    (6) OPM's reconsideration and hearing, if requested, may be 
conducted by the Director or a representative designated by the 
Director who did not participate in the initial decision that is the 
subject of the request for review.
    (c) Notice of final decision. OPM will notify the MSP issuer, in 
writing, of OPM's final decision on the MSP issuer's request for 
reconsideration and the specific reasons for that final decision. OPM's 
written decision will constitute final agency action that is subject to 
review under the Administrative Procedure Act in the appropriate U.S. 
district court. Such review is limited to the record that was before 
OPM when it made its decision.

Subpart F--Appeals by Enrollees of Denials of Claims for Payment or 
Service


Sec.  800.501  General requirements.

    (a) Definitions. For purposes of this subpart:

[[Page 69819]]

    (1) Adverse benefit determination has the meaning given that term 
in 45 CFR 147.136(a)(2)(i).
    (2) Claim means a request for:
    (i) Payment of a health-related bill; or
    (ii) Provision of a health-related service or supply.
    (b) Applicability. This subpart applies to enrollees and to other 
individuals or entities who are acting on behalf of an enrollee and who 
have the enrollee's specific written consent to pursue a remedy of an 
adverse benefit determination.


Sec.  800.502  MSP issuer internal claims and appeals.

    (a) Processes. MSP issuers must comply with the internal claims and 
appeals processes applicable to group health plans and health insurance 
issuers under 45 CFR 147.136(b).
    (b) Timeframes and notice of determination. An MSP issuer must 
provide written notice to an enrollee of its determination on a claim 
brought under paragraph (a) of this section according to the timeframes 
and notification rules under 45 CFR 147.136(b) and (e), including the 
timeframes for urgent claims. If the MSP issuer denies a claim (or a 
portion of the claim), the enrollee may appeal the adverse benefit 
determination to the MSP issuer in accordance with 45 CFR 147.136(b).


Sec.  800.503  External review.

    (a) External review by OPM. OPM will conduct external review of 
adverse benefit determinations using a process similar to OPM review of 
disputed claims under 5 CFR 890.105(e), subject to the standards and 
timeframes set forth in 45 CFR 147.136(d).
    (b) Notice. Notices to MSP enrollees regarding external review 
under paragraph (a) of this section must comply with 45 CFR 147.136(e), 
and are subject to review and approval by OPM.
    (c) Issuer obligation. An MSP issuer must pay a claim or provide a 
health-related service or supply pursuant to OPM's final decision or 
the final decision of an independent review organization without delay, 
regardless of whether the plan or issuer intends to seek judicial 
review of the external review decision and unless or until there is a 
judicial decision otherwise.


Sec.  800.504  Judicial review.

    (a) OPM's written decision under the external review process 
established under Sec.  800.503(a) will constitute final agency action 
that is subject to review under the Administrative Procedure Act in the 
appropriate U.S. district court. A decision made by an independent 
review organization under the process established under Sec.  
800.503(a) is not within OPM's discretion and therefore is not final 
agency action.
    (b) Judicial review under paragraph (a) of this section is limited 
to the record that was before OPM when OPM made its decision.

Subpart G--Miscellaneous


Sec.  800.601  Reservation of authority.

    OPM reserves the right to implement and supplement these 
regulations with written operational guidelines.


Sec.  800.602  Consumer choice with respect to certain services.

    (a) Assured availability of varied coverage. Consistent with Sec.  
800.104, OPM will ensure that at least one of the MSP issuers on each 
Exchange in each State offers at least one MSP option that does not 
provide coverage of services described in section 1303(b)(1)(B)(i) of 
the Affordable Care Act.
    (b) State opt-out. An MSP issuer may not offer abortion coverage in 
any State where such coverage of abortion services is prohibited by 
State law.
    (c) Notice to enrollees--(1) Notice of exclusion. The MSP issuer 
must provide notice to consumers prior to enrollment when non-excepted 
abortion services are not a covered benefit in a State where such 
coverage of such abortion services is permitted by State law, in the 
form, manner, and timeline prescribed by OPM.
    (2) Notice of coverage. If an MSP issuer chooses to offer an MSP 
option that covers non-excepted abortion services, in addition to an 
MSP option that does not provide coverage for these services, the MSP 
issuer must provide notice to consumers prior to enrollment that non-
excepted abortion services are a covered benefit, in a manner 
consistent with 45 CFR 147.200(a)(3), to meet the requirements of 45 
CFR 156.280(f). OPM may provide guidance on the form, manner, and 
timeline for this notice.
    (3) OPM review and approval of notices. OPM may require an MSP 
issuer to submit to OPM such notices. OPM reserves the right to review 
and approve these consumer notices to ensure that an MSP issuer 
complies with Federal and State laws, and the standards prescribed by 
OPM with respect to Sec.  800.602.


Sec.  800.603  Disclosure of information.

    (a) Disclosure to certain entities. OPM may provide information 
relating to the activities of MSP issuers or State-level issuers to a 
State Insurance Commissioner or Director of a State-based Exchange.
    (b) Conditions of when to disclose. OPM shall only make a 
disclosure described in this section to the extent that such disclosure 
is:
    (1) Necessary or appropriate to permit OPM's Director, a State 
Insurance Commissioner, or Director of a State-based Exchange to 
administer and enforce laws applicable to an MSP issuer or State-level 
issuer over which it has jurisdiction, or
    (2) Otherwise in the best interests of enrollees or potential 
enrollees in MSP options.
    (c) Confidentiality of information. OPM will take appropriate steps 
to cause the recipient of this information to preserve the information 
as confidential.
[FR Doc. 2014-27793 Filed 11-21-14; 8:45 am]
BILLING CODE 6325-63-P