[Federal Register Volume 82, Number 73 (Tuesday, April 18, 2017)]
[Rules and Regulations]
[Pages 18346-18382]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-07712]



[[Page 18345]]

Vol. 82

Tuesday,

No. 73

April 18, 2017

Part II





Department of Health and Human Services





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45 CFR Parts 147, 155, and 156





Patient Protection and Affordable Care Act; Market Stabilization; Final 
Rule

  Federal Register / Vol. 82, No. 73 / Tuesday, April 18, 2017 / Rules 
and Regulations  

[[Page 18346]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 147, 155, and 156

[CMS-9929-F]
RIN 0938-AT14


Patient Protection and Affordable Care Act; Market Stabilization

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

ACTION: Final rule.

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SUMMARY: This rule finalizes changes that will help stabilize the 
individual and small group markets and affirm the traditional role of 
State regulators. This final rule amends standards relating to special 
enrollment periods, guaranteed availability, and the timing of the 
annual open enrollment period in the individual market for the 2018 
plan year; standards related to network adequacy and essential 
community providers for qualified health plans; and the rules around 
actuarial value requirements.

DATES: These regulations are effective on June 19, 2017.

FOR FURTHER INFORMATION CONTACT: Jeff Wu, (301) 492-4305, Lindsey 
Murtagh, (301) 492-4106, or Michelle Koltov, (301) 492-4225, for 
general information.
    Rachel Arguello, (301) 492-4263, for matters related to Exchange 
special enrollment periods and annual open enrollment periods.
    Erika Melman, (301) 492-4348, for matters related to network 
adequacy, and essential community providers.
    Allison Yadsko, (410) 786-1740, for matters related to actuarial 
value.
    David Mlawsky, (410) 786-6851, for matters related to guaranteed 
availability.

SUPPLEMENTARY INFORMATION: 

I. Executive Summary

    Affordable Health Benefit Exchanges, or ``Exchanges'' are 
competitive marketplaces through which qualified individuals and 
qualified employers can purchase health insurance coverage. Many 
individuals who enroll in qualified health plans (QHPs) through 
individual market Exchanges are eligible to receive advance payments of 
the premium tax credit to reduce their costs for health insurance 
premiums, and receive reductions in cost-sharing payments to reduce 
out-of-pocket expenses for healthcare services.
    The stability and competitiveness of the Exchanges, as well as that 
of the individual and small group markets in general, have recently 
been threatened by issuer exits and increasing rates in many geographic 
areas. Some issuers have had difficulty attracting and retaining the 
healthy consumers necessary to provide for a stable risk pool that will 
support stable rates. In particular, some issuers have cited special 
enrollment periods and grace periods as potential sources of adverse 
selection that have contributed to this problem. Concerns over the risk 
pool have led some issuers to cease offering coverage on the Exchanges 
in particular States and counties, and other issuers have increased 
their rates.
    A stabilized individual and small group insurance market will 
depend on greater choice to draw consumers to the market and vibrant 
competition to ensure consumers have access to competitively priced, 
affordable, and quality coverage. Higher rates, particularly for 
consumers who are not receiving advance payments of the premium tax 
credit (APTC) or claiming the premium tax credit, resulting from 
minimal choice and competition, can cause healthier individuals to drop 
out of the market, further damaging the risk pool and risking 
additional issuer attrition from the market. This final rule takes 
steps to provide needed flexibility to issuers to help attract healthy 
consumers to enroll in health insurance coverage, improve the risk pool 
and bring stability and certainty to the individual and small group 
markets, while increasing the options for patients and providers.
    To improve the risk pool and promote stability in the individual 
insurance markets, we are taking several steps to increase the 
incentives for individuals to maintain enrollment in health coverage 
and decrease the incentives for individuals to enroll only after they 
discover they require medical services. First, we are changing the 
dates for open enrollment in the individual markets for the benefit 
year starting January 1, 2018, from November 1, 2017 through January 
31, 2018 (the previously established open enrollment period for 2018), 
to extend from November 1 through December 15, 2017. This change 
requires individuals to enroll in coverage prior to the beginning of 
the year, unless eligible for a special enrollment period, and is 
consistent with the open enrollment period previously established for 
the benefit years starting January 1, 2019, and beyond. This change 
will improve individual market risk pools by reducing opportunities for 
adverse selection by those who learn they will need medical services in 
late December and January; and will encourage healthier individuals who 
might have previously enrolled in partial year coverage after December 
15th to instead enroll in coverage for the full year.
    Second, we are responding to concerns from issuers about potential 
misuse and abuse of special enrollment periods in the individual market 
Exchanges that enables individuals who are not entitled to special 
enrollment periods to enroll in coverage after they realize they will 
need medical services. We are increasing pre-enrollment verification of 
all applicable individual market special enrollment periods for all 
States served by the HealthCare.gov platform from 50 to 100 percent of 
new consumers who seek to enroll in Exchange coverage through these 
special enrollment periods. We are also making several additional 
changes to our regulations regarding special enrollment periods that we 
believe could improve the risk pool, improve market stability, promote 
continuous coverage, and increase options for patients.
    Third, we are revising our interpretation of the Federal guaranteed 
availability requirement to allow issuers, subject to applicable State 
law, to apply a premium payment to an individual's past debt owed for 
coverage from the same issuer or a different issuer in the same 
controlled group within the prior 12 months before applying the payment 
toward a new enrollment. We believe this interpretation will have a 
positive impact on the risk pool by removing economic incentives 
individuals may have had to pay premiums only when they were in need of 
healthcare services, particularly toward the end of the benefit year. 
We also believe this policy is an important means of encouraging 
individuals to maintain continuous coverage throughout the year.
    Fourth, we are finalizing an increase in the de minimis variation 
in the actuarial values (AVs) used to determine metal levels of 
coverage for the 2018 plan year and beyond. This change is intended to 
allow issuers greater flexibility in designing new plans and to provide 
additional options for issuers to keep cost sharing the same from year 
to year, while helping stabilize premiums for consumers.
    We believe these changes are critical to improving the risk pool, 
and will together promote more competitive markets with increased 
choice for consumers.
    We are also finalizing policies intended to affirm the traditional 
role of States in overseeing their health insurance markets while 
reducing the regulatory burden of participating in Exchanges for 
issuers. The modified

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approach we are finalizing for network adequacy, which includes 
deferring to States with sufficient network adequacy review (or relying 
on accreditation or an access plan), will not only lessen the 
regulatory burden on issuers, but also will recognize the primary role 
of States in regulating this area. We are also finalizing changes that 
will allow issuers to continue to use a write-in process to identify 
essential community providers (ECPs) who are not on the HHS list of 
available ECPs for the 2018 plan year; and will lower the ECP standard 
to 20 percent (rather than 30 percent) for the 2018 plan year, which we 
believe will make it easier for a QHP issuer to build provider networks 
that comply with the ECP standard.
    Robust issuer participation in the individual and small group 
markets is critical for ensuring consumers have access to affordable, 
quality coverage, and have real choice in coverage. Continued 
uncertainty around the future of the markets and concerns regarding the 
risk pools are two of the primary reasons issuer participation in some 
areas around the country has been limited. The changes in this rule are 
intended to promote issuer participation in these markets and to 
address concerns raised by issuers, States, and consumers. We believe 
these changes will result in broader choices and more affordable 
coverage.

II. Background

A. Legislative and Regulatory Overview

    The Patient Protection and Affordable Care Act (Pub. L. 111-148) 
was enacted on March 23, 2010. The Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and revised 
several provisions of the Patient Protection and Affordable Care Act, 
was enacted on March 30, 2010. In this final rule, we refer to the two 
statutes collectively as the ``Patient Protection and Affordable Care 
Act'' or ``PPACA.''
    The PPACA reorganizes, amends, and adds to the provisions of title 
XXVII of the Public Health Service Act (PHS Act) relating to group 
health plans and health insurance issuers in the group and individual 
markets.
    Section 2702 of the PHS Act, as added by the PPACA, requires health 
insurance issuers that offer non-grandfathered health insurance 
coverage in the group or individual market in a State to offer coverage 
to and accept every employer and individual in the State that applies 
for such coverage, unless an exception applies.
    Section 2703 of the PHS Act, as added by the PPACA, and sections 
2712 and 2742 of the PHS Act, as added by the Health Insurance 
Portability and Accountability Act of 1996 (HIPAA),\1\ require health 
insurance issuers that offer health insurance coverage in the group or 
individual market to renew or continue in force such coverage at the 
option of the plan sponsor or individual, unless an exception applies.
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    \1\ The HIPAA requirement for guaranteed renewability, codified 
in section 2712 of the PHS Act, was renumbered by the PPACA to 
section 2703 of the PHS Act. HIPAA's guaranteed renewability 
requirement continues to apply in certain contexts, such as to 
issuers in the U.S. territories and issuers of expatriate health 
plans.
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    Section 1302(d) of the PPACA describes the various metal levels of 
coverage based on AV. Consistent with section 1302(d)(2)(A) of the 
PPACA, AV is calculated based on the provision of essential health 
benefits (EHB) to a standard population. Section 1302(d)(3) of the 
PPACA directs the Secretary to develop guidelines that allow for de 
minimis variation in AV calculations. Section 2707(a) of the PHS Act 
directs health insurance issuers that offer non-grandfathered health 
insurance coverage in the individual or small group market to ensure 
that such coverage includes the EHB package, which includes the 
requirement to offer coverage at the metal levels of coverage described 
in section 1302(d) of the PPACA.
    Section 1311(c)(1)(B) of the PPACA requires the Secretary to 
establish minimum QHP certification criteria for provider network 
adequacy that a health plan must meet.
    Section 1311(c)(1)(C) of the PPACA requires the Secretary to 
establish minimum QHP certification criteria for the inclusion of 
essential community providers.
    Section 1311(c)(6)(B) of the PPACA states that the Secretary is to 
set annual open enrollment periods for Exchanges for calendar years 
after the initial enrollment period.
    Section 1311(c)(6)(C) of the PPACA states that the Secretary is to 
provide for special enrollment periods specified in section 9801 of the 
Internal Revenue Code of 1986 (the Code) and other special enrollment 
periods under circumstances similar to such periods under part D of 
title XVIII of the Social Security Act (the Act) for the Exchanges.
    Section 1321(a) of the PPACA provides broad authority for the 
Secretary to establish standards and regulations to implement the 
statutory requirements related to Exchanges, QHPs and other components 
of title I of the PPACA.
1. Market Rules
    A proposed rule relating to the 2014 Health Insurance Market Rules 
was published in the November 26, 2012 Federal Register (77 FR 70584). 
A final rule implementing the Health Insurance Market Rules was 
published in the February 27, 2013 Federal Register (78 FR 13406) (2014 
Market Rules).
    A proposed rule relating to Exchanges and Insurance Market 
Standards for 2015 and Beyond was published in the March 21, 2014 
Federal Register (79 FR 15808) (2015 Market Standards Proposed Rule). A 
final rule implementing the Exchange and Insurance Market Standards for 
2015 and Beyond was published in the May 27, 2014 Federal Register (79 
FR 30240) (2015 Market Standards Rule).
2. Exchanges
    We published a request for comment relating to Exchanges in the 
August 3, 2010 Federal Register (75 FR 45584). We issued initial 
guidance to States on Exchanges on November 18, 2010.\2\ We issued a 
proposed rule in the July 15, 2011 Federal Register (76 FR 41865) to 
implement components of the Exchanges, and a proposed rule in the 
August 17, 2011 Federal Register (76 FR 51201) regarding Exchange 
functions in the individual market, eligibility determinations, and 
Exchange standards for employers. A final rule implementing components 
of the Exchanges and setting forth standards for eligibility for 
Exchanges was published in the March 27, 2012 Federal Register (77 FR 
18309) (Exchange Establishment Rule).
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    \2\ Initial Guidance to States on Exchanges (November 10, 2018). 
Available at https://www.cms.gov/CCIIO/Resources/Files/guidance_to_states_on_exchanges.html.
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    In the March 8, 2016 Federal Register (81 FR 12203), we published 
the Patient Protection and Affordable Care Act; HHS Notice of Benefit 
and Payment Parameters for 2017 final rule (2017 Payment Notice), and 
established additional Exchange standards, including requirements for 
network adequacy and essential community providers; and established the 
timing of annual open enrollment periods.
    In the September 6, 2016 Federal Register (81 FR 61456), we 
published the Patient Protection and Affordable Care Act; HHS Notice of 
Benefit and Payment Parameters for 2018 proposed rule (proposed 2018 
Payment Notice). In the December 22, 2016 Federal Register (81 FR 
94058), we published the Patient Protection and Affordable Care Act; 
HHS Notice of Benefit and Payment Parameters for 2018 final rule (2018 
Payment Notice) and established additional Exchange standards, 
including requirements for network

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adequacy and essential community providers.
3. Special Enrollment Periods
    In the July 15, 2011 Federal Register (76 FR 41865), we published a 
proposed rule establishing special enrollment periods for the Exchange. 
We implemented these special enrollment periods in the Exchange 
Establishment Rule (77 FR 18309). In the January 22, 2013 Federal 
Register (78 FR 4594), we published a proposed rule amending certain 
special enrollment periods, including the special enrollment periods 
described in Sec.  155.420(d)(3) and (7). We finalized these rules in 
the July 15, 2013 Federal Register (78 FR 42321).
    In the June 19, 2013 Federal Register (78 FR 37032), we proposed to 
add a special enrollment period when the Exchange determines that a 
consumer has been incorrectly or inappropriately enrolled in coverage 
due to misconduct on the part of a non-Exchange entity. We finalized 
this proposal in the October 30, 2013 Federal Register (78 FR 65095). 
In the March 21, 2014 Federal Register (79 FR 15808), we proposed to 
amend various special enrollment periods. In particular, we proposed to 
clarify that later coverage effective dates for birth, adoption, 
placement for adoption, or placement for foster care would be effective 
the first of the month. The rule also proposed to clarify that earlier 
effective dates would be allowed if all issuers in an Exchange agree to 
effectuate coverage only on the first day of the specified month. 
Finally, this rule proposed adding that consumers may report a move in 
advance of the date of the move and established a special enrollment 
period for individuals losing medically needy coverage under the 
Medicaid program even if the medically needy coverage is not recognized 
as minimum essential coverage (individuals losing medically needy 
coverage that is recognized as minimum essential coverage already were 
eligible for a special enrollment period under the regulation). We 
finalized these provisions in the May 27, 2014 Federal Register (79 FR 
30348). In the October 1, 2014 Federal Register (79 FR 59137), we 
published a correcting amendment related to codifying the coverage 
effective dates for plan selections made during a special enrollment 
period and clarifying a consumer's ability to select a plan 60 days 
before and after a loss of coverage.
    In the November 26, 2014 Federal Register (79 FR 70673), we 
proposed to amend effective dates for special enrollment periods, the 
availability and length of special enrollment periods, the specific 
types of special enrollment periods, and the option for consumers to 
choose a coverage effective date of the first of the month following 
the birth, adoption, placement for adoption, or placement in foster 
care. We finalized these provisions in the February 27, 2015 Federal 
Register (80 FR 10866). In the July 7, 2015 Federal Register (80 FR 
38653), we issued a correcting amendment to include those who become 
newly eligible for a QHP due to a release from incarceration. In the 
December 2, 2015 Federal Register (80 FR 75487) (proposed 2017 Payment 
Notice), we sought comment and data related to existing special 
enrollment periods, including data relating to the potential abuse of 
special enrollment periods. In the 2017 Payment Notice, we stated that 
in order to review the integrity of special enrollment periods, the 
Federally-facilitated Exchange (FFE) will conduct an assessment by 
collecting and reviewing documents from some consumers to confirm their 
eligibility for the special enrollment periods under which they 
enrolled.
    In an interim final rule with comment published in the May 11, 2016 
Federal Register (81 FR 29146), we amended the parameters of certain 
special enrollment periods.
    In the 2018 Payment Notice, we established additional Exchange 
standards, including requirements for certain special enrollments.
4. Actuarial Value
    On February 25, 2013, we established the requirements relating to 
EHBs and AVs in the Standards Related to Essential Health Benefits, 
Actuarial Value, and Accreditation Final Rule, which was published in 
the Federal Register (78 FR 12833) (EHB Rule), implementing section 
1302 of the PPACA and 2707 of the PHS Act. In the 2018 Payment Notice 
published in the December 22, 2016 Federal Register (81 FR 94058), we 
finalized a provision that allows an expanded de minimis range for 
certain bronze plans.

B. Stakeholder Consultation and Input

    HHS has consulted with stakeholders on policies related to the 
operation of Exchanges. We have held a number of listening sessions 
with consumers, providers, employers, health plans, the actuarial 
community, and State representatives to gather public input, with a 
particular focus on risks to the individual and small group markets, 
and how we can alleviate burdens facing patients and issuers. We 
consulted with stakeholders through regular meetings with the National 
Association of Insurance Commissioners, regular contact with States 
through the Exchange Establishment grant and Exchange Blueprint 
approval processes, and meetings with Tribal leaders and 
representatives, health insurance issuers, trade groups, consumer 
advocates, employers, and other interested parties.

III. Provisions of the Proposed Regulations, and Analysis of and 
Responses to Public Comments

    We published the ``Patient Protection and Affordable Care Act; 
Market Stabilization'' proposed rule in the February 17, 2017 Federal 
Register (82 FR 10980) (the proposed rule). We received 4,005 timely 
comments. The comments ranged from general support for or opposition to 
the proposed provisions to specific questions or comments regarding 
proposed changes. We received a number of comments and suggestions that 
were outside the scope of the proposed rule that will not be addressed 
in this final rule.
    In this final rule, we provide a summary of each proposed 
provision, a summary of those public comments received that directly 
related to the proposals, our responses to them, and a description of 
the provisions we are finalizing.
    Comment: We received comments stating that the comment period was 
unreasonably short, making it difficult for stakeholders to provide in-
depth analysis and input. Some commenters stated that the short comment 
period represented a violation of the Administrative Procedure Act, 5 
U.S.C. Ch. 5, Subch. II, sec. 551 et seq. Commenters suggested that HHS 
extend the comment period and provide a comment period of 30 or 60 days 
from the date of publication in the Federal Register.
    Response: We published the proposed rule in order to promote issuer 
participation in the individual and small group markets and to address 
concerns raised by consumers, States, and issuers. While our general 
practice is to allow 30 to 60 days for comment, doing so is not 
specifically required by the Administrative Procedure Act. Because the 
changes directly affect issuers' plan designs and rates for 2018, HHS 
determined that it was necessary to have a 20-day comment period to 
finalize the rule in time for issuers to be able to factor the changes 
into their plans for the 2018 plan year. In addition, we believe that 
the short comment period was necessary to implement these changes in 
time to provide flexibility to issuers to help

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attract healthy consumers to enroll in health insurance coverage, 
improving the risk pool and bringing additional stability and certainty 
to the individual and small group markets for the 2018 plan year. Given 
the limited number of changes to existing rules contemplated by the 
proposed rule, we believe that the 20-day comment period provided 
adequate time for interested stakeholders to participate in the 
rulemaking process by submitting comments. The submission of more than 
4,000 comments, many of which provided thoughtful, complex analyses of 
the proposals, suggests that the timeframe provided interested 
stakeholders with time to carefully consider and provide input on the 
proposals.
    Comment: We received a number of comments in support of the 
proposed rule. Those commenters stated that the rule would stabilize 
and strengthen the risk pool by preventing gaming and encouraging full-
year enrollment. In addition, those commenters stated that the 
proposals in the rule would benefit consumers by increasing coverage 
options, increasing consumer choice, and putting downward pressure on 
premiums, which would make coverage more affordable.
    Response: We agree that the policies are expected to have a 
positive impact on stabilizing the markets, increasing consumer choice, 
and making coverage more affordable.
    Comment: We received a number of comments discouraging HHS from 
finalizing the proposed rule. Some commenters stated that the rule was 
designed to benefit health insurance companies and would have an 
adverse impact on consumers' access to affordable health coverage. 
Commenters noted that they believed the rule would increase premiums 
and out-of-pocket costs, limit provider networks, and reduce covered 
benefits. Commenters also believed that the proposed rule would 
increase the number of uninsured and under-insured individuals. 
Furthermore, some commenters stated that the proposed rule would weaken 
the consumer protections offered under the PPACA, limit consumer 
choices, and limit patients' access to care. Those commenters also 
noted that the proposals would place undue administrative burdens on 
consumers and Exchanges. Many of these commenters suggested that 
additional changes to the Exchanges would cause further uncertainty and 
confusion for consumers and providers and encouraged HHS to wait to 
make any regulatory changes until Congress has passed new healthcare 
reform legislation.
    Response: We appreciate the importance of ensuring that coverage 
purchased through the Exchanges is affordable to consumers, and believe 
affordability is critical to the success of the Exchanges. We 
understand commenters' concerns about loosening consumer protections, 
limiting patients' access to choices of coverage, and increasing 
administrative burdens. We note that this rule does not change the 
majority of standards for certification for QHPs, and agree that it is 
important to promote patients' access to quality coverage. Furthermore, 
we believe that this rule will improve the risk pools and help 
stabilize the individual and small group health insurance markets, 
which will help protect patients and consumers by encouraging issuers 
to maintain a presence in those markets and lower premiums, thereby 
increasing consumers' choices of affordable coverage options. We 
believe prompt regulatory action is necessary to stabilize the markets 
for the upcoming plan year, and recognize the importance of clearly 
communicating these changes in light of confusion and uncertainty for 
consumers and providers.

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

1. Guaranteed Availability of Coverage (Sec.  147.104)
    The guaranteed availability provisions at section 2702 of the PHS 
Act and Sec.  147.104 require health insurance issuers offering non-
grandfathered coverage in the individual or group market to offer 
coverage to and accept every individual and employer in the State that 
applies for such coverage, unless an exception applies.\3\ Individuals 
and employers typically are required to pay the first month's premium 
(sometimes referred to as a binder payment) before coverage is 
effectuated.
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    \3\ Similar provisions in Sec.  146.150 apply to health 
insurance issuers offering grandfathered and non-grandfathered 
coverage in the small group market.
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    We have previously interpreted the guaranteed availability 
requirement to mean that an issuer is prohibited from applying a binder 
payment made for a new enrollment to past-due premiums \4\ owed from 
any previous coverage and then refusing to effectuate the enrollment 
based on failure to pay premiums.\5\ However, should the individual 
seek to renew existing coverage, the issuer could attribute the 
enrollee's forthcoming premium payments to any past-due premiums.
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    \4\ For purposes of this rulemaking, the term ``past-due 
premiums'' refers to premiums that have not been paid by the 
applicable due date as established by the issuer in accordance with 
applicable Federal and State law. It does not include premiums for 
months in which individuals were not enrolled in coverage.
    \5\ Federally-facilitated Marketplace (FFM) and Federally-
facilitated Small Business Health Options Program Enrollment Manual, 
Section 6.3 Terminations for Non-Payment of Premiums, available at 
https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/ENR_FFMSHOP_Manual_080916.pdf.
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    In prior rulemaking related to the 2014 Market Rules, HHS received 
public comments expressing concerns about the potential for individuals 
with a history of non-payment to take unfair advantage of the 
guaranteed availability rules by declining to make premium payments, 
for example, at the end of a benefit year, yet being able to 
immediately sign up for new coverage for the next benefit year during 
the individual market open enrollment period.\6\ In the preamble to the 
2014 Market Rules, HHS encouraged States to consider approaches to 
discourage gaming and adverse selection while upholding consumers' 
guaranteed availability rights, and indicated an intention to address 
this issue in future guidance.
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    \6\ See summary of comments at 78 FR 13416 (Feb. 27, 2013).
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    To address the concern about potential misuse of grace periods, we 
proposed to modify our interpretation of the guaranteed availability 
rules with respect to non-payment of premiums. Under the proposed rule, 
an issuer would not be considered to violate the guaranteed 
availability requirements if the issuer attributes a premium payment 
for coverage under the same or a different product to premiums due to 
the same issuer within the prior 12 months and refuses to effectuate 
new coverage for failure to pay premiums. To the extent permitted by 
applicable State law, this would permit an issuer to require an 
individual or employer to pay all past-due premiums owed to that issuer 
for coverage in the prior 12-month period in order to effectuate new 
coverage from that issuer. Under the proposed rule, an issuer choosing 
to adopt a policy of attributing payments in this way would be required 
to apply its premium payment policy uniformly to all employers or 
individuals in similar circumstances in the applicable market 
regardless of health status, and consistent with applicable non-
discrimination requirements.\7\ The

[[Page 18350]]

proposal would not permit an issuer to condition the effectuation of 
new coverage on payment of premiums owed to a different issuer, or 
permit an issuer to condition the effectuation of new coverage on 
payment of past-due premiums by any individual other than the person 
contractually responsible for the payment of premium, as we do not 
believe it is reasonable to hold persons responsible for payments they 
were not contractually responsible for making. We stated that if the 
proposal were to be finalized, we would encourage States to adopt a 
similar approach, with respect to any State laws that might otherwise 
prohibit this practice.
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    \7\ Issuers may also have obligations under other applicable 
Federal laws prohibiting discrimination, and issuers are responsible 
for ensuring compliance with all applicable laws and regulations. 
There may also be separate, independent non-discrimination 
obligations under State law.
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    Because of rules regarding grace periods and termination of 
coverage, individuals with past-due premiums would generally owe no 
more than 3 months of premiums.\8\ Furthermore, for individuals on 
whose behalf the issuer received APTC, their past-due premiums would be 
net of any APTC that was paid on the individual's behalf to the issuer, 
with respect to any months for which the individual is paying past-due 
premiums.
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    \8\ Section 156.270(d) requires issuers to observe a 3-
consecutive month grace period before terminating coverage for those 
enrollees who upon failing to timely pay their premiums are 
receiving APTC. Section 155.430(d)(4) requires that when coverage is 
terminated following this grace period, the last day of enrollment 
in a QHP through the Exchange is the last day of the first month of 
the grace period. Therefore, individuals whose coverage is 
terminated at the conclusion of a grace period would owe at most 1 
month of premiums, net of any APTC paid on their behalf to the 
issuer. Individuals who attempt to enroll in new coverage while in a 
grace period (and whose coverage has not yet been terminated) could 
owe up to 3 months of premium, net of any APTC paid on their behalf 
to the issuer.
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    We noted that due to operational constraints, the Federally-
facilitated Small Business Health Options Program (FF-SHOP) would be 
unable to offer issuers this flexibility at this time. We solicited 
comments on the proposal, including on whether issuers that choose to 
adopt this type of premium payment policy should be permitted to 
implement it with a premium payment threshold policy, under which the 
issuer can consider an individual to have paid all amounts due, if the 
individual pays an amount, as determined by the issuer, that is less 
than the total past-due premiums. We also solicited comments on whether 
issuers should be required to provide notice to individuals regarding 
whether they have adopted a premium payment policy permitted under this 
proposal.
    We are finalizing this proposal as follows. To the extent permitted 
by applicable State law, an issuer may attribute to any past-due 
premium amounts owed to that issuer the initial premium payment made in 
accordance with the terms of the health insurance policy to effectuate 
coverage. If the issuer is a member of a controlled group, the issuer 
may attribute any past-due premium amounts owed to any other issuer 
that is a member of such controlled group, for coverage in the 12-month 
period preceding the effective date of the new coverage when 
determining whether an individual or employer has made an initial 
premium payment to effectuate new coverage. Consistent with the scope 
of the guaranteed availability provision and subject to applicable 
State law, this policy applies both inside and outside of the Exchanges 
in the individual, small group, and large group markets,\9\ and during 
applicable open enrollment or special enrollment periods. This policy 
does not permit a different issuer (other than one in the same 
controlled group as the issuer to which past-due premiums are owed) to 
condition the effectuation of new coverage on payment of past-due 
premiums or permit any issuer to condition the effectuation of new 
coverage on payment of past-due premiums by any individual other than 
the person contractually responsible for the payment of premiums.\10\ 
As further described later in this preamble, for this purpose, the term 
controlled group means a group of two or more persons that is treated 
as a single employer under sections 52(a), 52(b), 414(m), or 414(o) of 
the Code. We also specify that issuers adopting this premium payment 
policy, as well as any issuers that do not adopt the policy but are 
within an adopting issuer's controlled group, must clearly describe in 
any enrollment application materials, and in any notice that is 
provided regarding non-payment of premiums, in paper or electronic 
form, the consequences of non-payment on future enrollment. We 
encourage States to adopt a similar approach; however, States may 
narrow the circumstances and conditions under which an issuer may apply 
a premium payment policy to past-due premiums before effectuating 
coverage or may prohibit the practice altogether.
---------------------------------------------------------------------------

    \9\ As discussed below, the FF-SHOP is unable to offer issuers 
this flexibility at this time.
    \10\ For example, a subscriber of an individual policy or an 
employer that purchases a group policy is typically responsible for 
payment of the premiums. Thus, an issuer cannot refuse to effectuate 
new coverage purchased by a dependent because the subscriber owes 
past-due premiums or new coverage purchased by a current or former 
employee (or his or her dependent) because the employee's employer 
owes past-due premiums.
---------------------------------------------------------------------------

    The following is a summary of the public comments we received on 
this proposal, and our responses.
    Comment: Many commenters supported the proposal, suggesting that 
this approach is common in other industries such as housing, utilities, 
or telecommunications, where past-due payment for prior services must 
be made prior to restarting the same service. However, many other 
commenters objected to the proposal, stating that there is no statutory 
authority for the policy, that there is insufficient evidence of misuse 
of the grace period, and that individuals fail to make payments for a 
variety of other reasons, including poor or changing financial 
situations, poor health, or issuer or Exchange error. One commenter 
stated that the individual shared responsibility payment that is 
imposed for months in which non-exempt individuals do not have minimum 
essential coverage, as well as the fact that individuals have to pay 
for all of their healthcare expenses during any uninsured period, 
address any concerns about deliberate misuse of the grace period.
    Other commenters who objected to the proposal stated that issuers 
have other ways, including collection actions, for recovering past-due 
premiums. Some of these commenters suggested that the individuals most 
likely to miss their premium payments are younger, healthier 
individuals, who could help balance the individual market risk pool. A 
few commenters stated that forcing individuals to pay retroactively for 
premiums covering months in which they did not seek healthcare will be 
a disincentive to signing up for coverage.
    Response: We believe this interpretation of the guaranteed 
availability requirement will have a positive impact on the risk pool 
by removing economic incentives individuals may have had to pay 
premiums only when they were in need of healthcare services. We also 
believe this policy is an important means of encouraging individuals to 
maintain continuous coverage throughout the year and preventing abuses. 
While the guaranteed availability provision in section 2702 of the PHS 
Act does not explicitly refer to premium payment, it is clear from 
reading this provision together with the guaranteed renewability 
provision in section 2703 of the PHS Act that an issuer's sale and 
continuation in force of an insurance policy is contingent upon payment 
of premiums. We do not believe that the guaranteed availability 
provision is

[[Page 18351]]

intended to require issuers to provide coverage to applicants who have 
not paid for such coverage. To the extent an individual or employer 
makes payment in the amount required to effectuate new coverage, but 
the issuer lawfully credits all or part of that amount toward past-due 
premiums, the consumer has not made sufficient initial payment for the 
new coverage.
    With respect to individuals experiencing poor financial 
circumstances, we note that the PPACA provides for APTC and cost-
sharing reductions (CSRs) for low-income individuals, and that 
increased APTC and CSRs are available as income decreases. We also note 
that consumers who experience a change in household income during a 
policy year are instructed to submit updated financial information to 
an Exchange and may potentially gain new, or additional, APTC or CSRs.
    We disagree that the individual shared responsibility payment and 
paying for healthcare in the absence of coverage are sufficient to 
prevent abuses of the grace period, given that individuals may qualify 
for the short coverage gap exemption from the individual shared 
responsibility payment, and that individuals who misuse the grace 
period are likely to be individuals in good health who do not wish to 
make premium payments for periods of time during which they anticipate 
that they will not incur significant health expenses.
    We acknowledge that issuers have ways of collecting debt other than 
by applying premium payments to past-due premiums. However, the policy 
in this regulation is intended to achieve a broader purpose than simply 
assisting issuers in collecting past-due premiums; rather this policy 
is intended to encourage individuals to maintain continuous coverage 
(and thereby avoid incurring past-due premiums) in order to help 
stabilize the risk pool for all participants, and prevent abuse of 
grace periods.
    We believe the notice requirements discussed below, which will 
inform individuals of the consequences of missing their premium 
payments, will encourage younger, healthier individuals to maintain 
continuous coverage. Further, we disagree that requiring individuals to 
pay premiums owed for the months of prior coverage in which they did 
not seek healthcare will be a disincentive to signing up for coverage. 
We believe that with sufficient notice of having to pay past-due 
premiums before enrolling in new coverage, many individuals will 
instead opt to keep their coverage by making regular monthly premium 
payments.
    Comment: Several commenters supported expanding the proposal. Some 
commenters stated that an issuer other than the specific licensed 
entity to which past-due premiums are owed, such as successors, 
assignees, commonly owned entities, other issuers within an Exchange, 
or any other issuer, should be permitted to refuse to effectuate new 
coverage as a result of unpaid past-due premiums. One commenter stated 
that limiting the proposal only to the specific licensed entity to 
which past-due premiums are owed will merely cause consumers to seek 
coverage from another issuer, thus limiting the policy's intended 
effect. Although several commenters agreed that the policy should not 
affect the ability of any individual other than the person 
contractually responsible for the payment of premiums to purchase 
coverage (such as the dependent of a policyholder, or an employee, when 
their employer has past-due premiums), several others commented that 
the policy should apply to the policyholder and to all covered 
dependents. For example, if a covered dependent of a former 
policyholder applies for new coverage, the issuer could refuse to 
effectuate new coverage for any individual in the enrollment group, 
unless past-due premiums are paid. Several commenters stated that the 
policy should permit issuers to collect all past-due premiums before 
effectuating coverage, even those for coverage beyond the past 12 
months. Other commenters, however, suggested that a 12-month look-back 
is excessively punitive.
    Response: In response to comments received, we believe that it will 
further the goals of this interpretation of guaranteed availability to 
allow the issuer to which past-due premiums are owed, and any other 
issuer that is a member of the same controlled group, to refuse to 
effectuate coverage unless the past-due premiums are paid. For this 
purpose, the term controlled group means a group of two or more persons 
that is treated as a single employer under sections 52(a), 52(b), 
414(m), or 414(o) of the Code, which is the same definition used for 
other purposes related to the guaranteed renewability provision.\11\ We 
believe this approach strikes a balance between comments suggesting a 
broad approach when premiums are owed to any issuer and comments 
favoring a narrow approach specific to premiums owed to the licensed 
entity. For now, we leave open the question of whether a successor or 
assignee issuer may take advantage of this flexibility to State 
interpretation, including in States where HHS is directly enforcing the 
guaranteed availability requirements. We believe that permitting an 
issuer to apply the policy to the dependent of a previous policyholder, 
when that dependent was covered under that previous policyholder's 
policy, or to an employee, when his or her employer was the previous 
policyholder, would be unreasonable, as it would require an individual 
or entity to pay a debt it has no legal obligation to pay. We also 
believe that a look-back period of 12 months (as opposed to a longer or 
shorter period) appropriately balances the objectives of the policy, 
without being unduly burdensome for consumers or carrying forward a 
debt owed for months beyond the previous year of coverage. We note 
that, although the look-back period is for 12 months, individuals with 
past-due premiums would generally owe no more than 1 to 3 months of 
premiums; they would not owe premiums for months in which they were not 
covered.
---------------------------------------------------------------------------

    \11\ See 45 CFR 147.106(d)(4). States adopting the policy may 
use a narrower definition of ``controlled group.''
---------------------------------------------------------------------------

    Comment: One commenter stated that Exchange assisters should inform 
consumers that if they wish to terminate their coverage, they should do 
so proactively, rather than simply fail to pay premiums.
    Response: We encourage all entities and persons providing 
enrollment assistance, such as issuers, agents and brokers, Navigators, 
and other assisters, to educate consumers about how to terminate 
coverage so that it will not affect their ability to sign up for new 
coverage.
    Comment: Many commenters stated that there should be a hardship 
exemption from the policy for individuals who are delinquent in their 
premiums for reasons other than gaming (such as domestic violence, 
falling victim to a crime, or issuer or Exchange error), and an appeals 
process for consumers to demonstrate hardship. A few commenters stated 
that any appeals process should include external review, or HHS review.
    Response: States and issuers have the flexibility to create 
exemptions for extenuating circumstances, and appeals processes by 
which individuals and employers may demonstrate that they qualify for 
any such exemptions, as long as the policy is applied uniformly to 
individuals in similar circumstances in the applicable market within 
the State and not based on health status and consistent with applicable 
non-

[[Page 18352]]

discrimination requirements. To the extent a State mandates an appeal 
or review process, it may also determine the logistics of that process.
    Comment: Several commenters requested clarification that if an 
issuer collects past-due premiums, the issuer should be required to pay 
claims submitted for that individual during the grace period. They also 
stated that issuers should be required to immediately notify providers 
when an enrollee enters the grace period, so the providers could 
determine whether the providers would be penalized for furnishing non-
urgent care, if past-due premiums are not paid. Another commenter 
stated that when past-due premiums are paid in full during a grace 
period, issuers should be required to pay all pended claims without the 
need for the provider to resubmit the claim or claims within 30 days of 
the enrollee's account becoming current. One commenter stated that if 
an issuer authorizes care and a provider provides care in reliance on 
that authorization, the issuer should be responsible for the claim, 
even if the claim would not otherwise be paid pursuant to the policy in 
this regulation.
    Response: We clarify that issuers are required to pay all 
appropriate claims for services rendered to the enrollee during any 
months of coverage for which past-due premiums are collected. In the 
case of enrollees in the 3 consecutive month grace period, a QHP issuer 
must pay all appropriate claims for services rendered to the enrollee 
during the first month of the grace period, regardless of whether past-
due premiums are paid, and must notify providers of the possibility for 
denied claims when an enrollee is in the second and third months of the 
grace period, as specified in Sec.  156.270(d). We are not modifying 
the rules regarding grace periods in this final rule. However, we will 
consider whether to make changes regarding provider notification 
requirements in the future.
    Comment: We received several comments specific to loss of APTC. 
Several commenters stated that when individuals lose APTC for a period 
and then regain it, they have the right to choose whether they would 
like the APTC to be applied prospectively or retroactively. These 
commenters stated that Exchanges should be required to confirm with 
consumers if they would like the APTC to be applied retroactively, to 
reduce the amount of past-due premiums.
    Response: Individuals generally must have their APTCs applied 
prospectively, and do not have a right to choose to have the APTC 
applied retroactively. Only in limited circumstances, such as when an 
eligibility appeal determines that an Exchange erred in its 
determination of eligibility for APTC, are individuals permitted to 
have APTC applied retroactively. Where an individual's coverage through 
the Exchange has been terminated for non-payment of premiums, APTC is 
not available during any resulting coverage gap. While individuals may 
reapply for APTC to be applied prospectively, APTC cannot be applied 
retroactively to periods during which the individual's coverage through 
the Exchange was terminated for non-payment of premiums. We note that 
individuals whose coverage is terminated at the conclusion of a grace 
period would owe premiums for the first month of the grace period, net 
of any APTC paid on their behalf to the issuer, but would not owe for 
the second and third months of the grace period, because the last day 
of enrollment in a QHP through the Exchange is the last day of the 
first month of the 3-month grace period, as outlined in Sec.  
155.430(d)(4). Additionally, the individuals would not owe premiums for 
the months following termination.
    Comment: Many commenters stated that issuers should be required to 
allow individuals to pay past-due premiums in installments, while the 
issuer sells them new coverage. One commenter stated that, during the 
installment period, consumers should be permitted to report any income 
changes, changes in household, or hardships, in order to make 
adjustments to the repayment plan.
    Response: The policy in this final rule permits but does not 
require issuers to collect past-due premiums before effectuating new 
coverage. However, we are not requiring issuers that adopt the policy 
to accept installment payments in this final rule, although State law 
permitting or requiring issuers to accept such installment payments, as 
well as any requirements relating to notice of an adjustment to 
installment periods, would apply, provided the amount of installment 
payments an issuer will accept, and its decision whether or not to 
accept installment payments is applied uniformly to individuals or 
employers in similar circumstances in the applicable market within the 
State and not based on health status, and consistent with applicable 
non-discrimination requirements.
    Comment: All commenters who commented on whether issuers should be 
permitted to accept a threshold amount of past-due premiums as payment 
in full supported this approach. One commenter stated that issuers that 
have a premium threshold for the binder and monthly premiums should not 
be required to do so for past-due premiums, and vice-versa. Another 
commenter stated that HHS should set a threshold that issuers should be 
required to accept. With respect to the disclosure of whether an issuer 
will accept a threshold, and the threshold amount, many commenters 
stated that issuers applying a payment threshold should be required to 
disclose the amount of the threshold either before purchase of the 
insurance policy, or at the time of enrollment. One commenter, however, 
stated that issuers should not be required to provide notice of a 
threshold, as such notice would incentivize partial payments.
    Response: We decline to set a premium payment threshold or mandate 
that issuers set and apply one, or for those that do, require that they 
provide any such notice. Rather, issuers may set and apply a threshold 
to the extent permitted by applicable State law, provided that the 
issuer does so uniformly for individuals or employers in similar 
circumstances in the applicable market within the State and without 
regard to health status, and consistent with applicable non-
discrimination requirements. Also, in accordance with the premium 
payment threshold regulation at Sec.  155.400(g) and guidance, issuers 
on an FFE, and on the State-based Exchanges on the Federal platform 
(SBE-FPs), that choose to apply a payment threshold policy must apply 
the policy in a uniform manner to all enrollees, and are expected to do 
so for the entire plan year.\12\ Additionally under that regulation and 
guidance, if the issuer adopts such a policy, it is expected to apply 
the policy uniformly to the initial premium payment and any subsequent 
premium payments, and to any amount outstanding at the end of a grace 
period for non-payment of premium.
---------------------------------------------------------------------------

    \12\ FFM and FFM-SHOP Enrollment Manual (Section 6.1).
---------------------------------------------------------------------------

    Comment: With respect to the comment solicitation regarding whether 
notice should be provided by issuers that adopt the premium payment 
policy, many commenters stated that such notice should be required. 
However, several commenters stated that no separate notice document is 
necessary. Rather, commenters stated that notice of the policy could be 
included on billing statements, any general payment policy notices, on 
the application, prior to purchase, or on issuers' Web sites. 
Commenters in favor of requiring notice stated that it should include 
the consequences of delinquent payment on

[[Page 18353]]

the ability to purchase new coverage from the issuer, and other 
relevant information. Some commenters recommended this information 
appear in Plan Compare and in the Exchange eligibility determination 
notice.
    Response: We agree that notice is important, but do not believe 
that a separate document is necessary, as issuers already have 
effective ways of communicating with consumers about premium payment. 
Therefore, we specify that issuers adopting a premium payment policy 
permitted under this section, as well as any other issuers that do not 
adopt the policy but are within an adopting issuer's controlled group, 
are required to clearly describe, in any enrollment application 
materials, and in any notice that is provided regarding non-payment of 
premiums, in paper or electronic form, the consequences of non-payment 
on future enrollment. We believe this notice is sufficient to inform 
consumers of their obligations to pay past-due premiums, and are not 
specifying additional notice in Plan Compare or in the Exchange 
eligibility determination at this time.
    Comment: We received a few comments related to operationalizing the 
policy. One commenter stated that it would require information 
technology enhancements for an Exchange to process and store the 
industry standard code received from issuers that is sent when a 
consumer does not pay premiums. This would allow the issuer's system 
and enrollee's account to reflect the enrollment status with the issuer 
that elected to use their premium payment to satisfy past-due premiums. 
Due to the new interface requirements, the changes would be a large 
project and would consume a large amount of resources at considerable 
expense. Another commenter stated that the policy would require 
coordination between the Exchanges and issuers, and might require 
development in Exchanges' billing systems that would require time and 
resources for deployment. One commenter stated that the policy should 
be made optional because it is burdensome for issuers to reconcile 60 
days of claims in order to reenroll individuals. One commenter asked 
for confirmation that the FFEs would operationalize the new policy by 
requiring issuers to send the Exchange a cancellation transaction for 
an enrollment of an individual who did not pay the outstanding balance 
by the applicable due date.
    Response: As regards technical and operational challenges described 
by commenters related to permitting issuers to collect past-due 
premiums before effectuating new coverage, we note that nothing in this 
rule requires an issuer or Exchange to implement this type of premium 
payment policy before effectuating new coverage. We also note that 
these challenges are only applicable to Exchanges that perform premium 
collection on behalf of issuers, such as the FF-SHOP, which due to 
operational limitations, is not able to implement the policy at this 
time. As regards comments about processing enrollment-related 
transactions, we note that QHP issuers are currently required to 
communicate to the FFE and to SBE-FPs whether an enrollment is 
effectuated or cancelled, such as when the individual fails to make 
sufficient payment to effectuate new coverage.\13\
---------------------------------------------------------------------------

    \13\ For example, see Section 6.1 of the FFM and FF-SHOP 
Enrollment Manual (revised July 19, 2016).
---------------------------------------------------------------------------

    Comment: One commenter stated that the policy should apply only to 
individuals who enter the grace period, and to past-due premiums 
accrued, after the effective date of the final rule.
    Response: For issuers that choose to adopt the premium payment 
policy, and for other issuers in such an issuer's controlled group, the 
requirement to provide notice of the policy will become effective 
beginning with notices provided 60 days after publication of the final 
rule. Beginning on or after that date, issuers will not be considered 
to violate Federal guaranteed availability requirements if they 
attribute payments toward past-due premiums consistent with this 
section and then deny enrollment for failure to pay the initial payment 
for a new enrollment to individuals to whom such notice was provided 
prior to their failure to pay premiums that become past-due premiums.
    In addition to the policy on past-due premiums, we proposed to 
amend Sec.  147.104(b)(2)(i) to conform to proposed changes to special 
enrollment periods discussed in greater detail in section III.B.2. of 
the proposed rule (82 FR 10984). Because the proposed changes to Sec.  
155.420(a)(4) and (5) applied to special enrollment periods in the 
individual market, both inside and outside of an Exchange, we proposed 
to amend Sec.  147.104(b)(2)(i) to specify that these paragraphs apply 
to special enrollment periods throughout the individual market. We 
solicited comments on how these changes would be operationalized 
outside of the Exchanges.
    A summary of those comments are found in section III.B.3. of this 
final rule. Instead of the proposed changes at Sec.  147.104(b)(2)(i), 
we are finalizing a new paragraph (b)(2)(iii) of Sec.  147.104 to 
reflect our decision that the changes in Sec.  155.420(a)(4) in this 
final rule apply only within the individual market Exchanges.

B. Part 155--Exchange Establishment Standards and Other Related 
Standards Under the Patient Protection and Affordable Care Act

1. Enrollment of Qualified Individuals Into QHPs (Sec.  155.400)
    We are finalizing an amendment to Sec.  155.400 to address binder 
payment requirements that apply when a consumer whose enrollment was 
delayed due to an eligibility verification opts to delay the coverage 
start date under Sec.  155.420(b)(5). A more detailed discussion of the 
pre-enrollment verification procedures for special enrollment periods 
and the related changes that we are finalizing in Sec.  155.400 are 
provided in section III.B.3 of this final rule.
2. Initial and Annual Open Enrollment Periods (Sec.  155.410)
    We proposed to amend paragraph (e) of Sec.  155.410, which provides 
the dates for the annual Exchange open enrollment period in which 
qualified individuals and enrollees may apply for or change coverage in 
a QHP. The Exchange open enrollment period is extended by cross-
reference to non-grandfathered plans in the individual market, both 
inside and outside of an Exchange, under guaranteed availability 
regulations at Sec.  147.104(b)(1)(ii). In prior rulemaking, we 
established that the open enrollment period for the benefit year 
beginning on January 1, 2018, would begin on November 1, 2017 and 
extend through January 31, 2018; and that the open enrollment period 
for the benefit years beginning on January 1, 2019 and beyond would 
begin on November 1 and extend through December 15 of the calendar year 
preceding the benefit year.\14\ We noted at the time that we believe 
that, as the Exchanges continue, a month-and-a-half open enrollment 
period provides sufficient time for consumers to enroll in or change 
QHPs for the upcoming benefit year. Furthermore, this timeframe would 
achieve our goals of shifting to an earlier open enrollment end date, 
so that all consumers who enroll during this time will receive a full 
year of coverage, which will increase access for patients and simplify 
operational processes for issuers and the Exchanges. In addition, we 
noted that we also believe that this shorter open enrollment period may 
have a positive

[[Page 18354]]

impact on the risk pool because it will reduce opportunities for 
adverse selection by those who learn that they will need healthcare 
services in late December or January. Although we originally thought a 
longer transition period was needed before moving to this shorter open 
enrollment period, in the proposed rule, we stated that we believe that 
the market and issuers are now ready for this adjustment sooner. 
Therefore, we proposed to amend Sec.  155.410(e) to change the open 
enrollment period for benefit year 2018 so that it begins on November 
1, 2017 and runs through December 15, 2017. All consumers who select 
plans on or before December 15, 2017 would receive an enrollment 
effective date of January 1, 2018, as already required by Sec.  
155.410(f)(2)(i). We noted that we believe that this open enrollment 
period would align better with many open enrollment periods for 
employer-based coverage, as well as the open enrollment period for 
Medicare Advantage.
---------------------------------------------------------------------------

    \14\ 81 FR 12203, 12273.
---------------------------------------------------------------------------

    We solicited comments on this proposal, in particular on the 
capacity of State Exchanges (SBEs) to shift to the shorter open 
enrollment period for the 2018 benefit year, on the effect of the 
shorter enrollment period on issuers' ability to enroll healthy 
consumers, and any difficulties agents, brokers, Navigators, and other 
assisters may have in serving consumers seeking to enroll during this 
shorter time period.
    We are finalizing this provision as proposed.
    Comment: Many commenters supported our proposal to shift the open 
enrollment period end date to December 15, 2017 for the 2018 benefit 
year. These commenters noted that this change will improve the risk 
pool by encouraging people to maintain coverage and preventing adverse 
selection from partial-year enrollments, as well as eliminate 
operational complexity for issuers. Several of these commenters stated 
that a uniform January 1 coverage start date is an important element in 
promoting continuous, full-year coverage, and will help prevent gaming 
by healthy individuals who wait until the end of open enrollment to 
enroll in coverage with a later effective date, which would help 
issuers manage risk and develop appropriate rates with consumers 
enrolled for the full year.
    A large number of commenters expressed concerns with our proposal. 
Among these commenters, many worried that a shorter open enrollment 
period would reduce enrollment overall. These commenters disagreed that 
a shorter open enrollment period would reduce premiums or improve the 
health of the risk pool. Instead, they were concerned that it would 
discourage enrollment by young and healthy consumers, who typically 
wait until the end of open enrollment to enroll. Others disagreed with 
the proposal that it was important that the open enrollment timeframe 
mirror employer-sponsored insurance, pointing out that the enrollees in 
employer-sponsored insurance have different characteristics from 
Exchange enrollees and the process for enrolling in health coverage is 
markedly different.
    Response: After consideration of the comments received, we are 
finalizing an open enrollment period for the 2018 benefit year that 
begins on November 1, 2017 and runs through December 15, 2017. We had 
already planned to implement a consistent month-and-a-half open 
enrollment period beginning with open enrollment for the 2019 benefit 
year; therefore, we believe that implementing the same open enrollment 
timeframe 1 year earlier will not increase the burden on consumers or 
make it harder to enroll. As we have previously stated, shifting to an 
earlier open enrollment period closing date ensures that consumers who 
enroll during this time will receive a full year of coverage, which 
will reduce adverse selection risk for issuers.\15\ We agree with 
commenters who noted that ending the open enrollment period on December 
15, 2017, for the 2018 benefit year will decrease operational 
complexity and cost for issuers, since the coverage start date for all 
enrollments (other than those pursuant to a special enrollment period) 
will be on the same day (January 1, 2018), and the Exchange open 
enrollment period will align better with that for employer-based and 
Medicare Advantage plans. We intend to conduct outreach to consumers to 
ensure that they are aware that the deadline for enrolling in coverage 
during the open enrollment period has changed and recognize the 
importance of targeting young and healthy individuals who, as 
commenters noted, often wait until close to the deadline to enroll.
---------------------------------------------------------------------------

    \15\ See 81 FR 12274.
---------------------------------------------------------------------------

    Comment: Commenters both in favor of and opposed to the proposed 
timeframe expressed concern about the burden a shortened open 
enrollment period could create on the Exchanges and on other resources. 
These commenters warned that because a greater number of people will be 
trying to enroll at the same time, Exchanges must increase technology 
infrastructure and capacity to accommodate this shorter open enrollment 
period. Commenters stated that implementing this shorter timeframe a 
year earlier than previously planned does not allow Exchanges 
sufficient time to work out glitches and fix errors. Some commenters 
were concerned that agents, brokers, Navigators, and other assisters 
would be overwhelmed with such a short period of time to assist 
consumers. Among these commenters, some recommended enhanced funding 
for Navigators and other assisters, so that they could produce the same 
quality of assistance in a shorter timeframe. Some commenters worried 
that the overlap of the Exchange open enrollment period with the 
Medicare Advantage open enrollment period may confuse consumers, or 
strain the capacity of agents and brokers. Other commenters expressed 
concern that a compressed open enrollment period would increase the 
administrative and marketing burden on issuers, resulting in an 
increase in administrative costs. Several commenters were concerned 
that State budgets could not accommodate additional outreach or 
technology expenditures for the next open enrollment period.
    Many commenters worried that the proposed timeframe would cause 
confusion and hardship for consumers, particularly during the winter 
holidays and towards the end of school semesters. Some commenters 
worried that consumers would not have sufficient time to respond to 
outreach and advertising, review and compare plans and make informed 
decisions about their coverage, or have their documentation ready and 
their information verified by an Exchange. Many commenters stated that 
younger populations, consumers with limited English proficiency, low-
income communities, rural communities, and first-time enrollees need 
more time to process and understand coverage options. Many commenters 
sought greater specificity on HHS's outreach plans, and encouraged 
additional education and marketing efforts to ensure that consumers are 
aware of the shortened open enrollment period.
    Response: We believe that shifting the open enrollment period end 
date to December 15, 2017, for the 2018 benefit year provides 
sufficient time for all entities involved in the annual open enrollment 
process to conduct outreach, provide assistance, or enroll in coverage. 
We intend to conduct outreach to consumers to ensure that they are 
aware of the newly shortened open enrollment period in advance of the 
November 1, 2017, start date and are prepared to enroll or re-enroll in 
2018 coverage.

[[Page 18355]]

    We agree with commenters that, because of the compressed timeframe, 
consumers may require additional assistance with submitting requested 
documents and choosing the plan that works best for them. We note that 
many Navigators already focus on the populations who may require this 
additional help, such as consumers with limited English proficiency and 
low-income and rural communities.
    Comment: Many commenters recommended providing State flexibility to 
determine open enrollment period timeframes. Other commenters 
recommended alternative open enrollment period timeframes. Among these 
commenters, some recommended maintaining the current open enrollment 
period from November 1 through January 31. Other commenters proposed 
alternative open enrollment periods lasting from November 1 through 
December 31, from October 1 through December 15, from January 1 through 
February 15, or from November 1 to April 15 to align with the tax 
season. Some commenters recommended structuring open enrollment periods 
around consumers' birth month, similar to traditional Medicare 
enrollment, or by consumers' last name. Lastly, other commenters 
recommended that we allow enrollment year-round.
    Response: We believe that a consistent, nationwide, individual 
market open enrollment period will help prevent consumer confusion and 
reduce administrative complexity for issuers, agents, brokers, 
Navigators and other assisters who serve States with FFEs and States 
with SBEs. Shifting the start date of open enrollment prior to November 
1 for the 2018 benefit year would not allow Exchanges, issuers, or 
assisters adequate time to prepare for open enrollment. Instead, we 
believe implementing the same open enrollment timeframe for the 2018 
benefit year as we will implement for the 2019 benefit year and beyond 
will help promote stability in the Exchanges and consistency across 
benefit years. However, we recognize that some SBEs may have 
operational difficulties this year in transitioning to this shorter 
open enrollment period. Under their existing regulatory authority, 
those Exchanges may elect to supplement the open enrollment period with 
a special enrollment period, as a transitional measure, to account for 
those operational difficulties.
    We intend to closely monitor the implementation of this open 
enrollment period and will consider whether we should shift to an 
earlier open enrollment period start date of either October 1 or 
October 15 for future open enrollment periods.
3. Special Enrollment Periods (Sec.  155.420)
    Section 1311(c)(6) of the PPACA establishes enrollment periods, 
including special enrollment periods, for qualified individuals for 
enrollment in QHPs through an Exchange. Section 1311(c)(6)(C) of the 
PPACA states that the Secretary is to provide for special enrollment 
periods specified in section 9801 of the Code and other special 
enrollment periods under circumstances similar to such periods under 
part D of title XVIII of the Act. Section 2702(b)(3) of the PHS Act 
also directs the Secretary to provide for market-wide special 
enrollment periods for qualifying events under section 603 of the 
Employee Retirement Income Security Act of 1974.
    Special enrollment periods are a longstanding feature of employer-
sponsored coverage. They exist to ensure that people who lose health 
coverage during the year (for example, through non-voluntary loss of 
minimum essential coverage provided through an employer), or who 
experience other qualifying events, such as marriage or the birth or 
adoption of a child, have the opportunity to enroll in new coverage or 
make changes to their existing coverage. In the individual market, 
while the annual open enrollment period allows previously uninsured 
individuals to enroll in new coverage, special enrollment periods are 
intended, in part, to promote continuous enrollment in health coverage 
during the benefit year by allowing those who were previously enrolled 
in coverage to obtain new coverage without a lapse or gap in coverage.
    Our past practice, in many cases, was to permit individuals seeking 
coverage through the Exchanges to self-attest to their eligibility for 
most special enrollment periods and to enroll in coverage without 
further verification of their eligibility or without submitting proof 
of prior coverage. This practice had the virtue of minimizing barriers 
to obtaining coverage for consumers, which can, in particular, deter 
enrollment by healthy individuals. However, as the Government 
Accountability Office noted in a November 2016 report, relying on self-
attestation without verifying documents submitted to show a special 
enrollment period triggering event could allow applicants to obtain 
subsidized coverage for which they would otherwise not qualify.\16\ In 
addition, allowing previously uninsured individuals who elected not to 
enroll in coverage during the annual open enrollment period to instead 
enroll in coverage through a special enrollment period for which they 
would not otherwise qualify during the benefit year, undermines the 
incentive for enrolling in a full year of coverage through the annual 
open enrollment period and increases the risk of adverse selection from 
individuals who wait to enroll until they are sick. Such behaviors can 
create a sicker risk pool, leading to higher rates and reduced 
availability of coverage.
---------------------------------------------------------------------------

    \16\ November 2016, Results of Enrollment Testing for the 2016 
Special Enrollment Period, GAO-17-78, US Government Accountability 
Office.
---------------------------------------------------------------------------

a. Pre-Enrollment Verification of Special Enrollment Period Eligibility
    In an effort to curb abuses of special enrollment periods, in 2016 
we added warnings on HealthCare.gov regarding inappropriate use of 
special enrollment periods. We also eliminated several special 
enrollment periods and tightened certain eligibility rules.\17\ Also in 
2016, we announced retrospective audits of a random sampling of 
enrollments through loss of minimum essential coverage and permanent 
move special enrollment periods, 2 commonly used special enrollment 
periods. Additionally, we created a special enrollment confirmation 
process under which consumers enrolling through common special 
enrollment periods were directed to provide documentation to confirm 
their eligibility.\18\ Finally, we proposed to implement (beginning in 
June 2017) a pilot program for conducting pre-enrollment verification 
of eligibility for certain special enrollment periods.\19\
---------------------------------------------------------------------------

    \17\ February 25, 2016, Fact Sheet: Special Enrollment 
Confirmation Process. Available online at https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-02-24.html.
    \18\ Ibid.
    \19\ December 14, 2016, Fact Sheet: Pre-Enrollment Verification 
for Special Enrollment Periods, available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/Pre-Enrollment-SEP-fact-sheet-FINAL.PDF.
---------------------------------------------------------------------------

    As discussed in the 2018 Payment Notice, the impact of special 
enrollment period verification on risk pools may be complex. Some 
commenters suggested that additional steps to determine special 
enrollment period eligibility worsen the problem by creating new 
barriers to enrollment, with healthier, less motivated individuals, the 
most likely to be deterred. The pilot was initially planned to sample 
50 percent of consumers who were attempting to newly enroll in Exchange 
coverage

[[Page 18356]]

through certain special enrollment periods in order to provide a 
statistically sound method to compare the claims experience in the 
second half of 2017 between individuals subject to pre-enrollment 
verification with those who were not.
    However, based on strong issuer feedback and the potential to help 
stabilize the market for 2018 coverage, we proposed to increase the 
scope of pre-enrollment verification of special enrollment periods to 
all applicable special enrollment periods in order to ensure complete 
verification of eligibility. We proposed to begin to implement this 
expanded pre-enrollment verification starting in June 2017. We have 
consistently heard from issuers and other stakeholders that pre-
enrollment verification of special enrollment periods is critical to 
promote continuous coverage, protect the risk pool, and stabilize 
rates. We agree that policies and practices that allow individuals to 
remain uninsured and wait to enroll in coverage through a special 
enrollment period only after becoming sick can contribute to market 
destabilization and reduced issuer participation, which can reduce the 
availability of coverage for individuals.
    Therefore, we proposed that HHS conduct pre-enrollment verification 
of eligibility for Exchange coverage for applicable categories of 
special enrollment periods for all new consumers in all States served 
by the HealthCare.gov platform, which includes FFEs and SBE-FPs.
    Under pre-enrollment verification, HHS would verify eligibility for 
new consumers who seek to enroll in Exchange coverage through 
applicable special enrollment periods. Consumers would be able to 
submit their applications and select a QHP; then, as is the current 
practice for most special enrollment periods, the start date of that 
coverage would be determined by the date of QHP selection. However, the 
consumers' enrollment would be ``pended'' until the Exchange completes 
verification of their special enrollment period eligibility. In this 
context, ``pending'' means the Exchange will hold the information 
regarding QHP selection and coverage start date until special 
enrollment period eligibility is confirmed, and only then release the 
enrollment information to the relevant issuer. Consumers would have 30 
days from the date of QHP selection to provide documentation, and could 
either upload documents into their account on HealthCare.gov or send 
their documents in the mail.
    When possible, we intend to make every effort to verify an 
individual's eligibility for the applicable special enrollment period 
through automated electronic means instead of through consumer-
submitted documentation. For example, we would verify a birth by 
confirming the baby's existence through existing electronic 
verifications or electronically verify that a consumer was denied 
Medicaid or CHIP coverage, where such information is available. 
Otherwise, we intend to seek documentation from the individual applying 
for coverage through the special enrollment period. We noted that, even 
though we do not currently perform verification for all consumers new 
to the Exchange, we already require all consumers to provide 
documentation if they are applying for coverage through a special 
enrollment period based on certain qualifying events. As proposed, we 
anticipate approximately the same amount of documentation under the 
rule that is currently required, and therefore, would not anticipate an 
increased burden on consumers. We solicited comments on the impact on 
consumers. We also solicited comments on our proposed method for pre-
enrollment verification and whether we should retain a small percentage 
of enrollees outside of the pre-enrollment verification process to 
conduct the study discussed above. We noted that if we do not, HHS 
would continue to monitor other indicators of risk where available, in 
lieu of the statistical comparison. Recognizing that pre-enrollment 
verification could have the unintended consequence of deterring 
healthier individuals from purchasing Exchange coverage, we also 
solicited comments on what strategies HHS should take to increase the 
chances that these individuals complete the verification process.
    In addition, we recommended that SBEs that do not currently conduct 
pre-enrollment verification of special enrollment period eligibility 
consider following this approach as well, and requested comment on 
whether SBEs should also be required to conduct pre-enrollment 
verification, with an appropriate amount of time to implement such a 
process, and how long that transition period should be.
    We are moving forward with a pre-enrollment verification of 
eligibility for applicable special enrollment periods as proposed. This 
initiative will include all States served by the HealthCare.gov 
platform, which includes FFEs and SBE-FPs. We note that implementation 
of pre-enrollment verification of special enrollment periods in these 
States will be phased in, focusing first on the categories with the 
highest volume and of most concern--such as loss of minimum essential 
coverage, permanent move, Medicaid/CHIP denial, marriage, and adoption. 
We intend to closely monitor the effectiveness of pre-enrollment 
verification methods for those categories of special enrollment periods 
and will continue to adjust and improve our verification processes in 
order to ensure accurate determinations of eligibility for all special 
enrollment periods.
    SBEs maintain flexibility to determine whether and how to implement 
a pre-enrollment verification of eligibility for special enrollment 
periods. For example, an SBE could consider allowing issuers to conduct 
the verification, if the SBE itself is unable to implement pre-
enrollment verification.
    Comment: Commenters expressed concern about the proposal to conduct 
pre-enrollment verification of eligibility for special enrollment 
periods, which they fear will increase barriers to enrollment and deter 
consumers, especially young and healthy consumers, from enrolling in 
coverage, which will worsen the risk pool. Commenters stated that 
consumers with ongoing medical needs will spend the time and effort 
needed to submit documentation, but those without a current or ongoing 
need for healthcare services or who do not have documents readily 
available or easily accessible, will be more likely to forgo verifying 
their eligibility for a special enrollment period. Citing a study that 
estimated that only 5 percent of eligible consumers enroll through 
special enrollment periods during the year,\20\ commenters expressed 
concern that special enrollment periods are already underutilized and 
expressed fear that instituting a pre-enrollment verification of 
eligibility will further reduce the percentage of eligible consumers 
enrolling through special enrollment periods. Commenters cited early 
results from a 2016 HHS study of post-enrollment verification of 
special enrollment periods, which reported a 20 percent decrease in 
special enrollment period enrollments compared to the same time period 
in 2015, and found that applications with younger household contacts 
were less likely to verify their special enrollment periods.\21\ These 
commenters warned

[[Page 18357]]

that pre-enrollment verification of special enrollment period 
eligibility could have a greater impact across both of these measures.
---------------------------------------------------------------------------

    \20\ Stan Dorn, Enrollment Periods in 2015 and Beyond: Potential 
Effects on Enrollment and Program Administration (Washington, DC: 
Urban Institute, February 2015), available online at http://www.urban.org/sites/default/files/publication/41616/2000104-Enrollment-Periods-in-2015-and-Beyond.pdf.
    \21\ Centers for Medicare and Medicaid Services (CMS), Pre-
Enrollment Verification for Special Enrollment Periods (Dec. 14, 
2016), available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/Pre-Enrollment-SEP-fact-sheet-FINAL.PDF.
---------------------------------------------------------------------------

    In addition to consumers opting not to submit documents, commenters 
noted that other groups of consumers, such as those in rural areas, 
low-income workers, immigrants, and those with limited English 
proficiency, will likely be disproportionately impacted by a pre-
enrollment verification and may experience difficulty submitting their 
documents, even if qualifying for a special enrollment period and being 
motivated to enroll in and start new health coverage. These commenters 
noted that external variables, such as the distance to the nearest 
assister, agent, or broker; difficulty taking time off work; difficulty 
obtaining needed documents; or confusion about which documents to 
submit and how, all affect consumers' ability to submit documents. For 
example, commenters maintained that farm workers often have difficulty 
documenting that they moved and consumers living in rural areas may be 
unable to easily copy or upload documents. For the special enrollment 
periods for loss of minimum essential coverage and permanent move, 
commenters raised concerns that even though consumers may be enrolled 
or recently enrolled in coverage, they may still have difficulty 
submitting documents due to the fact that issuers and health plans are 
no longer required to send enrollees certificates of credible coverage 
(commenters requested that this prior HIPAA requirement be reinstated) 
and due to printing and re-printing delays at State Medicaid agencies. 
Other commenters mentioned that the event that qualifies the consumer 
for a special enrollment period, such as a permanent move, may itself 
impair the consumer's ability to submit required documentation on time. 
Therefore, several commenters requested that the document submission 
deadline be extended from 30 to 60 or 90 days, and that consumers be 
able to request a deadline extension if they are having difficulty 
gathering documents.
    In addition to concerns about consumers' ability to gather and 
submit needed documents, commenters expressed concerns about possible 
delays in enrollment due to system issues, processing backlogs, and 
long wait times, confusion, or lack of information at the Exchange call 
center. Commenters were concerned that these delays could have serious 
negative health consequences for consumers, especially children. 
Several commenters requested that the FFE exclude from pre-enrollment 
verification any special enrollment periods that are often used to 
enroll children, such as the special enrollment periods for birth, 
adoption, foster care placement, court order, and Medicaid or CHIP 
denial.
    Commenters noted that there are still many unknowns about the 
consumers who enroll in coverage through special enrollment periods, 
including a lack of evidence demonstrating misuse and abuse. In 
addition, commenters observed, that to the extent that misuse and abuse 
exist, it is unclear whether requiring pre-enrollment verification will 
serve as an effective deterrent. Some commenters requested that we 
share this data before proceeding with pre-enrollment verification or 
that we continue to collect data about consumer behavior by continuing 
with post-enrollment verification of eligibility for special enrollment 
periods. Other commenters stated that, if the FFE is to proceed with 
pre-enrollment verification of eligibility for special enrollment 
periods, it should proceed with caution by rolling it out slowly, in 
order to permit sufficient education of stakeholders and other entities 
involved, to address any unanticipated technical or other issues that 
may arise, and to collect robust data about impacted consumers. Many of 
these commenters recommended that the FFE start with a randomly 
selected pilot that would subject 50 percent of applicants attempting 
to enroll through a special enrollment period to pre-enrollment 
verification, as originally planned, while other commenters recommended 
proceeding with a 90 percent pilot, assuming the remaining 10 percent 
constitute a statistically significant control group.
    In contrast, other commenters support conducting a pre-enrollment 
verification of eligibility for all applicants attempting to enroll 
through a special enrollment period. These commenters noted that pre-
enrollment verification is the existing standard in the small group 
market, so it makes sense to apply the same standard to the individual 
market. Commenters requested that HHS establish consistent standards 
for verifying eligibility both across special enrollment periods and 
across markets, so that consumers are treated the same. Several issuers 
requested that the FFE agree to share collected documents with issuers 
at their request in order to assist with verifying enrollments outside 
of the Exchange. These commenters stated that performing pre-enrollment 
verification of eligibility for all special enrollment periods is a 
necessary next step to deter bad actors and prevent misuse and abuse of 
special enrollment periods. Doing so, commenters stated, will drive 
down premium costs in the future, which will benefit consumers across 
the individual market.
    Commenters who supported robust pre-enrollment verification of 
eligibility for special enrollment periods stated that it was not 
necessary to exclude any consumers from being subject to pre-enrollment 
verification and urged us to proceed with verifying 100 percent of 
consumers attempting to enroll in coverage through a special enrollment 
period. Some commenters stated that we could use enrollment data from 
the past 2 years as a control group for the purpose of measuring any 
potential consumer impact of a pre-enrollment verification of 
eligibility.
    Response: We appreciate commenters' concerns about the potential 
impact that pre-enrollment verification may have on young and healthy 
consumers, and their decision about whether to complete the steps 
needed to verify their eligibility. We are acutely aware of the 
importance of attracting healthy consumers to the individual market, 
and Exchanges in particular, in order to stabilize and improve the risk 
pool. As we implement pre-enrollment verification, we will seek to 
monitor enrollments by different groups of individuals affected by this 
process to determine its impact. In addition, we appreciate the 
concerns that certain consumers, especially vulnerable populations, may 
face barriers to gathering and timely submitting documents, and that 
delays in enrollment can have a negative impact on consumers', 
especially children's, health. We plan to conduct trainings for both 
internal and external stakeholders, so that they understand what the 
new pre-enrollment verification requirements are, what information will 
be available, and how to successfully prove one's eligibility for each 
special enrollment period where documentation will be required. We are 
also committed to expediting review of these documents to minimize any 
delay, and will be equipping our call center with frequent status 
updates in order to assist in answering questions that may arise.
    We understand that consumers may not currently possess or may 
require time to gather the necessary documents to verify their 
eligibility, and intend to exercise reasonable flexibility with respect 
to the documentation required under this policy. We believe that 
documentation is likely to be most difficult for consumers who qualify 
for

[[Page 18358]]

the loss of minimum essential coverage, permanent move, or Medicaid or 
CHIP denial special enrollment periods. Therefore, we will permit 
consumers to send us the details about their qualifying event with an 
explanation of why they are unable to submit requested documentation, 
and we will take their letters into consideration when deciding whether 
to exercise reasonable flexibility. In addition, in response to the 
comments regarding certificates of credible coverage, we note that 
under sections 1502 and 1514 of the PPACA and section 6055 of the Code, 
enrollees have proof of previous year health coverage via their tax 
statements, which may be helpful in some circumstances. We also note 
that the Exchanges will accept many other types of documentation from 
consumers seeking to verify their prior coverage, including letters 
from insurers, employers, and government health programs.
    Despite the concerns raised, we believe that in order to help 
stabilize the individual market, we must implement a robust pre-
enrollment verification of eligibility for special enrollment periods 
where new consumers will have their eligibility verified. This will 
help ensure that consumers are not misusing special enrollment periods, 
which we anticipate will both improve the risk pool and reduce premiums 
for all Exchange enrollees. Therefore, we are proceeding as proposed to 
implement pre-enrollment verification of eligibility for special 
enrollment periods beginning in June 2017. Stakeholders will receive 
additional updates from us in the coming months.
    Comment: Commenters supported using electronic verification, to the 
extent possible, to verify eligibility for special enrollment periods. 
Commenters stated that using electronic data sources will minimize any 
potential burden on consumers seeking to enroll and any delays in 
starting their coverage. A few commenters requested that the FFE wait 
to begin a pre-enrollment verification of eligibility until methods for 
electronically verifying eligibility for all special enrollment periods 
were in place. Other commenters requested that we continue to explore 
the use of additional electronic data sources, and several issuers 
offered to work with us on this effort. Absent a streamlined method for 
electronic verification of all special enrollment periods, commenters 
expressed concerns about the lack of Federal staff and resources 
available to adjudicate documents in a timely manner, especially when 
the work is layered on top of ongoing post-enrollment documentation 
verification for inconsistencies. Commenters noted the increased costs 
to the Federal government due to increased staffing needs and secure 
storage of submitted documents, and the additional time both consumers 
and assisters will need to spend to adhere to these new requirements. A 
few commenters indicated that a pre-enrollment verification of special 
enrollment period eligibility may also affect other entities, such as 
issuers and medical providers who would incur costs in re-submitting or 
refiling claims, processing retroactive claims, and effectuating 
retroactive enrollments. One commenter suggested that HHS's cost 
analysis include these costs, as well as the consumer cost of spending 
time requesting that claims be re-billed.
    Response: We appreciate commenters' support for using electronic 
data sources, to the extent possible, to verify eligibility for special 
enrollment periods, and agree that the use of electronic data sources 
will minimize the burden on consumers and facilitate faster 
verifications. For these reasons, we intend to make every effort to 
verify an individual's eligibility for the applicable special 
enrollment period through automated electronic means when possible. 
Furthermore, we are exploring ways to enhance and expand our use of 
electronic verification to other special enrollment periods in the near 
future. We hope to minimize any burden on other stakeholders by swiftly 
reviewing any verification documents received and releasing pended 
enrollments as quickly as possible.
    We appreciate the concerns about the increased burden and cost that 
a documentation requirement for pre-enrollment verification of 
eligibility for special enrollment periods will have on all entities 
involved. We are dedicated to reviewing all special enrollment period 
documents received as quickly as possible in order to minimize delays. 
Although we recognize that gathering and submitting these documents can 
be difficult and time consuming, we do not believe that this places a 
new burden on consumers and those providing enrollment assistance since 
consumers are already required to submit documentation to prove their 
eligibility after enrollment for 5 common special enrollment periods. 
Because of our plans for timely document review, we do not believe that 
new costs will be incurred by issuers, medical providers, or consumers 
needing to re-submit, refile, or re-bill for claims for services 
received due to this new requirement.
    Comment: Many commenters requested that States be provided 
flexibility on whether and how to implement a pre-enrollment 
verification of eligibility for special enrollment periods. Several 
States commented that they already have procedures and policies in 
place to verify eligibility for special enrollment periods, and would 
prefer to continue using methods that make sense for their State. 
Commenters also expressed concern about the technical build that would 
be required for SBEs to mirror the proposed process for FFEs and SBE-
FPs, and several States commented that they do not think they could be 
ready for a June 2017 implementation date. Commenters who supported 
requiring SBEs to conduct a pre-enrollment verification of eligibility 
for enrollment through special enrollment periods expressed an interest 
in standardizing requirements and processes across Exchanges, so that 
all consumers are held to the same standards and treated the same.
    Response: While we appreciate the benefits of consistency across 
Exchanges and markets to ensure fair and equal treatment of consumers, 
we believe it is important to provide States with flexibility to adopt 
policies that fit the needs of their State, and will not require a 
State to conduct pre-enrollment verification. However, we encourage 
SBEs to implement pre-enrollment verification as soon as possible, and 
hope that they will utilize creative and innovative methods to do so, 
including allowing issuers to perform the verification on behalf of the 
SBE. In addition, we recognize that several SBEs have already made 
progress in developing methods for verifying eligibility for special 
enrollment periods.
b. Special Enrollment Period Limitations for Existing Enrollees
    As noted above, the pre-enrollment verification of special 
enrollment period eligibility is intended to address concerns about 
potential adverse selection among qualified individuals who are new to 
the Exchanges. However, we have heard concerns that existing Exchange 
enrollees are utilizing special enrollment periods to change plan metal 
levels based on health needs that emerge during the benefit year, and 
that this is having a negative impact on the risk pool. As discussed in 
the proposed rule, we have concerns about pending a new enrollment 
until pre-enrollment verification is conducted for current Exchange 
enrollees, who would still have an active policy. We believe the 
potential overlap of current, active policies and pended new 
enrollments would cause significant confusion for consumers and create 
burdens on issuers with respect to managing the potential operational 
issues. For

[[Page 18359]]

example, if a current enrollee seeks to add a new spouse under the 
marriage special enrollment period, the current coverage would 
generally remain in force until the consumer submits documentation to 
verify the marriage. At that time, the pended new enrollment for both 
individuals would be released, potentially with a retroactive coverage 
effective date based on the date of the plan selection, and the current 
coverage with the single enrollee would be retroactively terminated to 
when the new policy begins. If the new plan selection is with a new 
issuer, any claims incurred during the time period the new enrollment 
is pended would need to be reconciled across the issuers.
    As an alternative to performing pre-enrollment verification of 
special enrollment period eligibility for existing Exchange enrollees, 
we proposed to limit the ability of existing Exchange enrollees to 
change plan metal levels during the benefit year. This proposed change 
was reflected in regulatory text by proposed revisions to the 
introductory text of Sec.  155.420(d), and the proposed additions of 
paragraphs (a)(3) and (4) to Sec.  155.420. We proposed that paragraph 
(a)(4) would also apply in the individual market outside the Exchanges, 
but would not apply in the group market. We proposed changes to 
Sec. Sec.  147.104(b)(2)(i) and 155.725(j)(2)(i) to specify this. We 
solicited comments on all aspects of the proposal, including whether it 
would be preferable to address adverse selection concerns for existing 
enrollees by applying the approach of pending plan selections until 
pre-enrollment verification is completed based on document reviews 
instead of the proposed restrictions based on current plan and metal 
level. We also solicited comments on any alternative strategies for 
addressing potential adverse selection issues for existing enrollees 
who are eligible for a special enrollment period.
    We understand that SBEs may not be able to implement these changes 
starting in 2017, and sought comments on an appropriate transitional 
period for SBEs, or whether these changes should be optional for SBEs.
    Under new paragraph (a)(4)(i) of Sec.  155.420, we proposed to 
require that, if an enrollee qualifies for a special enrollment period 
due to gaining a dependent as described in paragraph (d)(2)(i), the 
Exchange may allow him or her to add the new dependent to his or her 
current QHP (subject to the ability to enroll in silver level coverage 
in certain circumstances as discussed in the next paragraph). 
Alternatively, if the QHP's business rules do not allow the new 
dependent to enroll (for example, because the QHP is only available as 
self-only coverage), the Exchange may allow the enrollee and his or her 
new dependent to enroll in another QHP within the same level of 
coverage (or an ``adjacent'' level of coverage, if no such plans are 
available), as defined in Sec.  156.140(b). Alternatively, new 
dependents may enroll by themselves in a separate QHP at any metal 
level. This proposal sought to ensure that enrollees who qualify for 
the special enrollment period due to gaining a dependent are using this 
special enrollment period for its primary purpose of enrolling the new 
dependent in coverage. We stated in the proposed rule that, if 
finalized, we intended to implement this policy for the FFEs and SBE-
FPs as soon as practicable.
    Section 155.420(a)(4)(ii) proposed to require that if an enrollee 
or his or her dependent is not enrolled in a silver level QHP and 
becomes newly eligible for cost-sharing reductions and qualifies for 
the special enrollment periods in paragraphs (d)(6)(i) and (ii) of 
Sec.  155.420, the Exchange may allow the enrollee and dependent to 
enroll in a QHP at the silver level, as specified in Sec.  
156.140(b)(2), if they choose to change their QHP enrollment. We 
solicited comments on this proposal, including with respect to whether 
individuals newly eligible for APTC who qualify for the special 
enrollment periods at Sec.  155.420(d)(6)(i) and (ii) should also be 
able to enroll in a silver level QHP, or QHPs at other metal levels.
    Paragraph (a)(4)(iii) of Sec.  155.420 proposed that, for an 
enrollee who qualifies for the remaining special enrollment periods 
specified in paragraph (d), the Exchange generally need only allow the 
enrollee and his or her dependents to make changes to their enrollment 
in the same QHP or to change to another QHP within the same level of 
coverage, as defined in Sec.  156.140(b), if other QHPs at that metal 
level are available. This restriction would extend to enrollees who are 
on an application where a new applicant is enrolling in coverage 
through a special enrollment period. As proposed, this rule would 
ensure that enrollees who qualify for a special enrollment period or 
are on an application where an applicant qualifies for a special 
enrollment period to newly enroll in coverage are not using this 
special enrollment period to simply switch levels of coverage during 
the benefit year. This policy would apply to most Exchange enrollees 
who qualify for a special enrollment period during the benefit year, 
further protecting issuers from adverse selection. Affected special 
enrollment periods include special enrollment periods for enrollees who 
lost minimum essential coverage through the Exchange during the benefit 
year in accordance with paragraph (d)(1); demonstrated to the Exchange 
that the QHP into which they have enrolled has violated a material 
provision of its contract in accordance with paragraph (d)(5); gained 
access to a new QHP due to a permanent move in accordance with 
paragraph (d)(7); or were affected by material plan or benefit display 
errors in accordance with paragraph (d)(12). Enrollees who qualify for 
the special enrollment periods in paragraphs (d)(4), (d)(9), and 
(d)(10) would be excluded from this new requirement because the 
qualifying events that enable them to qualify for these special 
enrollment periods may also result in an inability to enroll in their 
desired plan during the annual open enrollment period. In addition, we 
proposed to exclude the special enrollment period in paragraph (d)(8) 
for Indians and their dependents from this requirement. We solicited 
comments on the proposal, and whether other special enrollment periods 
should be excluded. We also solicited comments on the appropriate 
transitional period to enable SBEs to build these capacities, or 
whether the proposals in paragraph (a)(4) should be at the option of 
the Exchanges. Lastly, we solicited comments on how this proposal would 
be operationalized in the individual market outside of the Exchanges.
    For Exchanges, we are finalizing these provisions largely as 
proposed, with slight changes to make it clearer that the new paragraph 
(a)(3) of Sec.  155.420 is applicable, in all circumstances, except for 
the circumstances specified in paragraph (a)(4) (relating to 
restrictions limiting the plans into which current enrollees may enroll 
through certain special enrollment periods). Paragraph (a)(3) applies 
to qualified individuals who are not current enrollees, as well as 
current enrollees other than current enrollees covered by paragraph 
(a)(4), such as Exchange enrollees who are eligible for a special 
enrollment period under paragraph (d)(4), as this special enrollment 
period is excepted from new paragraph (a)(4)(iii). We are also 
modifying proposed paragraph (a)(4)(iii) of Sec.  155.420 to clarify 
that this new requirement applies to current enrollees, whether the 
current enrollee qualifies for a special enrollment period or whether a 
new qualified individual being added to the current enrollee's QHP 
qualifies for a special enrollment period, as discussed earlier in this 
final

[[Page 18360]]

rule, and to allow these individuals to enroll in an ``adjacent'' level 
of coverage, if no other plans are available at their current metal 
level.
    We are also modifying the proposed policy in light of comments 
received, such that new paragraph (a)(4) will not apply to the 
individual market outside of the Exchanges because we recognize that 
requiring issuers outside of the Exchanges to implement this provision 
would significantly increase issuer burden by requiring the creation of 
new enrollment systems that would use information that the issuer may 
not currently possess about the metal level of a consumer's prior 
coverage. We also recognize that outside of the Exchanges, issuers can 
perform pre-enrollment verification of special enrollment period 
eligibility, which mitigates concerns about misuse of special 
enrollment periods by current enrollees outside of the Exchanges. 
Accordingly, we are finalizing a new paragraph (b)(2)(iii) in Sec.  
147.104, rather than the proposed amendments to Sec.  147.104(b)(2)(i). 
Lastly, we are making a technical correction by finalizing new text at 
Sec.  155.725(j)(7), rather than the proposed amendment to Sec.  
155.725(j)(2)(i), to clearly reflect that Sec.  155.420(a)(4) will not 
apply in the group markets outside of the Exchanges or in the SHOP.
    Comment: Many commenters expressed concerns about our proposal to 
limit current Exchange enrollees' ability to change plans or metal 
levels in new proposed Sec.  155.420(a)(4). Commenters primarily noted 
that limiting consumer choice with regard to QHP enrollment is 
prohibited by section 1311(c)(6)(C) of the PPACA and violates the 
guaranteed issue provision at 42 U.S.C. 300gg-1, in addition to being 
inconsistent with current industry practice for employer-sponsored 
coverage, HIPAA, and Medicare Part D. Commenters noted that that the 
events that qualify these Exchange enrollees for special enrollment 
periods midyear may also impact the type of coverage they qualify for, 
the amount of coverage they can afford, and the level of coverage they 
need. Commenters also observed that special enrollment periods are 
natural times for households to re-evaluate their healthcare spending. 
In addition, commenters expressed concerns that this policy would 
disadvantage consumers who enroll in coverage through the Exchanges 
during the annual open enrollment period and subsequently experience a 
qualifying event and want to change their QHP enrollment, as opposed to 
those who are enrolled in off-Exchange coverage at the beginning of the 
benefit year and then, upon experiencing a qualifying event, decide to 
enroll in QHP coverage through the Exchanges. The latter group would be 
able to view and select among all QHPs for which they are qualified, 
while the former group would not. For young and healthy consumers, 
commenters warned that this lack of choice may incentivize them to drop 
coverage midyear, rather than maintain coverage in a QHP or at a metal 
level they no longer want. Some commenters requested clarification on 
the issue that HHS is trying to solve with this proposed policy and 
requested data to justify implementing these restrictions. One 
commenter expressed doubt that this policy, if finalized, would be an 
effective method to protect issuers from gaming and other misuse of 
special enrollment periods.
    In contrast, several commenters supported restricting enrollees' 
ability to change metal levels during the year, which they believe will 
increase the integrity of the Exchange markets and improve the risk 
pool by reducing adverse selection and preventing households from re-
evaluating healthcare needs midyear, as opposed to during open 
enrollment like the rest of the individual market. Several commenters 
expressed general support for this policy, but requested that HHS 
permit consumers who qualify for any of these special enrollment 
periods to be able to change their QHP enrollment to a different QHP at 
the same metal level or a lower metal level. In addition, one commenter 
supports this proposal as a short-term strategy to reduce misuse and 
abuse of special enrollment periods, but would prefer that we move 
toward verification of eligibility for special enrollment periods for 
existing Exchange enrollees in the future, and another commenter 
preferred that the agency require verification of eligibility for 
special enrollment periods right away.
    Response: We understand commenters' concerns about limiting 
enrollees' choice when they qualify for a special enrollment period 
during the benefit year and appreciate the fact that households' health 
coverage needs may change throughout the year. However, we believe 
putting these restrictions in place is necessary in order to stabilize 
the Exchanges, which will benefit all Exchange enrollees moving 
forward. We continue to encourage enrollees to explore all available 
QHPs during open enrollment and to change plans if another QHP better 
meets their or their family's needs.
    We considered the concerns regarding conflicts with the statute, 
but believe that limiting enrollees' ability to change QHPs or metal 
levels is consistent with the requirements in section 1311(c)(6)(C) of 
the PPACA directing the Secretary to require Exchanges to establish 
special enrollment periods as specified in section 9801 of the Code and 
under circumstances similar to such periods under Part D of title XVIII 
of the Act, as well as the Secretary's authority under section 
2702(b)(3) of the PHS Act to promulgate regulations for the individual 
market with respect to special enrollment periods for qualifying events 
under section 603 of the Employee Retirement Income Security Act of 
1974. Given that the PPACA itself called for one annual open enrollment 
period and additional enrollment opportunities only in the case of 
special circumstances, we believe it is reasonable to interpret the 
special enrollment period and guaranteed issue provisions of the PPACA 
in this manner.
    Comment: Commenters expressed concerns about our proposal at Sec.  
155.420(a)(4)(i) to limit the ability of existing enrollees to change 
QHPs when enrolling a new dependent. Commenters stated that this 
restriction may negatively affect the healthcare access and health of 
babies and children, especially if their parents' current coverage is 
not well suited to their needs, for example, if it does not cover their 
needed pediatric doctors or medication or other services for a specific 
health condition. Several commenters supported restricting the ability 
of new parents or any applicable existing enrollees to change their QHP 
enrollment, but many disagreed with placing the same restrictions on 
new minor dependents, especially babies, for whom the family is unable 
to anticipate their healthcare needs in advance. Several commenters 
requested that we establish an exceptions process for babies who have 
increased healthcare needs that would not be covered under their 
parents' existing plan. Commenters also noted that changes in household 
size, which are likely the case for all consumers qualifying for one of 
the gain a dependent special enrollment periods at Sec.  
155.420(d)(2)(i), may impact a household's ability to qualify for new, 
more cost-effective QHPs or to newly qualify for, or qualify for more, 
financial assistance.
    Some commenters requested that in addition to implementing this new 
restriction on enrollees' ability to change their QHP, HHS clarify that 
the special enrollment periods at Sec.  155.420(d)(2)(i) are only 
intended for the new dependent and that other members of the household 
may not enroll in or change coverage through this special enrollment 
period.

[[Page 18361]]

    Response: We appreciate the concerns raised by commenters about 
potential impacts of this policy on new dependents, especially babies 
and children, and would like to clarify that, under this policy, new 
dependents could enroll in a new QHP at any metal level, if they enroll 
in a separate QHP from other existing enrollees. The restrictions on 
changing QHPs only applies when the new dependent is enrolling in the 
same QHP with those who are already QHP enrollees. We also remind 
commenters that the special enrollment period at Sec.  155.420(d)(2)(i) 
as currently written is intended for both those who have gained a 
dependent or become a dependent through marriage, birth, adoption, 
placement for adoption, placement in foster care, or through a child 
support or other court order. Therefore, both the dependent and the 
individual who gained a dependent are entitled to newly enroll in a 
QHP, or, if current enrollees, change to a new QHP at the same metal 
level if the new dependent cannot be added to the existing QHP because 
of applicable business rules. Alternatively, the dependent can enroll 
in a new policy at any metal level.
    Comment: Commenters raised concerns about Sec.  155.420(a)(4)(ii) 
negatively affecting consumers who, despite newly qualifying for cost-
sharing reductions, would prefer to enroll in a QHP at a different 
metal level and forgo those cost-sharing reductions. Commenters were 
divided on the anticipated impact of this proposal, with some 
commenters stating that most enrollees in this situation are likely to 
already be enrolled in a silver plan or that this is likely the level 
of coverage they will want given their change in circumstance, so there 
would be minimal impact of this restriction.
    Response: We understand commenters' concerns about limiting the 
ability of these consumers to change to the QHP metal level that they 
believe will be most beneficial. However, the rationale behind this 
particular special enrollment period is to allow individuals newly 
eligible for cost-sharing reductions to enroll in a plan through which 
they could receive cost-sharing reductions.
    Comment: Commenters supported excluding members of Federally 
recognized tribes or Alaska Native Claims Settlement Act Corporation 
Shareholders from the new requirements at Sec.  155.420(a)(4)(iii). 
Several commenters expressed concern about the metal level restrictions 
in paragraph (a)(4)(iii) if an existing enrollee qualifies for a 
special enrollment period and there are no other QHPs at their current 
metal level into which he or she could enroll. Commenters stated that 
this provision would prevent this consumer from utilizing that special 
enrollment period.
    Response: We agree that members of Federally recognized tribes or 
Alaska Native Claims Settlement Act Corporation Shareholders should not 
be subject to these new requirements and are finalizing their exclusion 
as proposed. We also agree that, in the event that an enrollee 
qualifies for a special enrollment period or is adding an individual to 
his or her existing QHP during the year through a special enrollment 
period and there are no other QHPs at the enrollee's current metal 
level into which he or she can enroll, he or she should be permitted to 
enroll in an adjacent level of coverage. We have amended paragraph 
(a)(4)(iii) to reflect this flexibility.
    Comment: Commenters expressed concern that the complexity of these 
proposals will lead to consumer confusion, as well as confusion by 
assisters and others providing enrollment assistance. The level of 
complexity of these requirements also raised concerns for commenters 
about SBEs' ability to both build for and comply with these 
requirements, and the commenters requested that States be given 
flexibility with respect to implementation. One commenter also 
questioned how these requirements could be implemented outside of the 
Exchange, where issuers do not currently receive information about 
consumers' prior coverage. To that end, commenters noted that these 
provisions would be burdensome to implement, requiring significant 
technical builds by Exchanges and stakeholder trainings.
    Response: We acknowledge the complexity of these provisions and are 
taking time to properly plan for their implementation, including 
developing needed resources for consumers, agents, brokers, Navigators, 
and other assisters so that they will understand available options. 
While we encourage SBEs to implement these provisions as quickly as 
possible, we also appreciate that it will require time for them to make 
sure that the provisions are implemented correctly. We agree that it 
would be difficult to implement these requirements outside of the 
Exchanges, where issuers do not currently receive information about 
consumers' prior coverage, and therefore are not finalizing our 
proposal to apply the requirements in new Sec.  155.420(a)(4) outside 
of the individual market Exchanges, and are finalizing revised language 
in Sec.  147.104 to reflect this.
c. Special Enrollment Period Coverage Effective Dates
    In the 2018 Payment Notice, HHS finalized paragraph (b)(5) to allow 
a consumer to request a later coverage effective date than originally 
assigned if his or her enrollment was delayed due to an eligibility 
verification and the consumer would be required to pay 2 or more months 
of retroactive premium in order to effectuate coverage or avoid 
cancellation. When finalizing this amendment, we did not limit how much 
later the coverage effective date could be. After further consideration 
of concerns raised by stakeholders regarding potential adverse 
selection impacts, we proposed modifying that option and instead 
allowing consumers to start their coverage no more than 1 month later 
than their effective date would ordinarily have been, if the special 
enrollment period verification process delays their enrollment such 
that they would be required to pay 2 or more months of retroactive 
premium to effectuate coverage or avoid cancellation. We interpret 2 or 
more months of retroactive premium to mean that, at the time that the 
enrollment transaction is sent by the FFE to the issuer, no less than 2 
months has elapsed from the date that the consumer's coverage was 
originally scheduled to begin. As proposed, a consumer who was 
originally scheduled to begin coverage on March 1, may elect to have 
coverage start on (and premiums payable for) April 1, if at the end of 
the document verification process, the enrollment transaction was sent 
to the issuer at such a time that would require retroactive payment of 
premiums for March and April. We noted that we do not anticipate that 
many consumers would be eligible to request a later effective date 
under this paragraph, as we do not expect the pre-enrollment 
verification processes to result in such delays. However, we recognized 
that there may be unforeseen challenges as we implement the 
verification process and believe it is important to offer this 
flexibility in the event of such delays. We also noted that we believe 
the option to have a later effective date could help keep healthier 
individuals in the market, who otherwise might be deterred by the 
prospect of paying for 2 or more months of retroactive coverage that 
they did not use. We solicited comments on this proposal, and the 
appropriate coverage effective date for these consumers.
    We are finalizing this policy as proposed, but are making a 
technical correction to clarify that these consumers would be required 
to pay

[[Page 18362]]

retroactive premiums in order to avoid cancellation in accordance with 
Sec.  155.430(e)(2), as opposed to termination. Additionally, in 
response to comments and to ensure that there is no conflict or 
confusion with existing binder payment rules we are revising our 
existing binder payment regulation in new Sec.  155.400(e)(1)(iv) to 
specify that, in the case of a pended enrollment due to special 
enrollment period eligibility verification, the consumer's binder 
payment must consist of the premiums due for all months of retroactive 
coverage through the first prospective month of coverage consistent 
with the consumer's coverage start date, as described in Sec.  
155.420(b)(1), (2) and (3) or, if elected, (b)(5), and that the 
deadline set by the issuer for making this binder payment must be no 
earlier than 30 calendar days from the date that the issuer receives 
the enrollment transaction.
    Comment: Commenters were divided in their response to the proposal 
to modify Sec.  155.420(b)(5) to allow consumers whose enrollment was 
delayed due to verification of their eligibility for special enrollment 
periods and owe 2 or more months of retroactive premium to push their 
coverage start date forward 1 month, at the option of the consumer. 
Some commenters supported this proposal and stated that it balanced the 
needs of different stakeholders. Other commenters supported this 
proposal for providing consumer flexibility. They maintained that 
consumers should not have to pay premiums for several months of 
retroactive coverage caused by processing delays beyond the consumer's 
control. Other commenters opposed the proposal because it would limit 
existing consumer flexibility. They contended that, if verification of 
special enrollment periods was delayed by more than 2 months, then 
consumers should have the flexibility to select an appropriate coverage 
effective date in accordance with the current Sec.  155.420(b)(5), and 
not be limited to a coverage effective date only 1 month later than the 
date originally assigned. Additional commenters raised concerns about 
the fact that consumers might be in this situation due to delays at an 
Exchange and recommended that our policy instead be that if consumers' 
verification is delayed by 5 or more days (other commenters suggested 
by 15 or more days) due to delays at an Exchange, then the Exchange 
should release their pended enrollment, so that they may start using 
their coverage.
    Other commenters opposed the proposal because they stated it could 
promote adverse selection. They contended that healthy consumers would 
be incentivized to delay their coverage effective date by 1 month, 
while sicker consumers would not. They recommended that, if the rule is 
finalized, consumers should be required to select their coverage 
effective date at the time of QHP selection. The appropriate coverage 
effective date should then be sent to the issuer through the consumer's 
enrollment transaction. In addition, a few commenters recommended that 
this paragraph be amended to limit this flexibility to delays caused by 
the Exchanges, as opposed to including consumer delays in submitting 
documentation.
    Several commenters expressed the need for State flexibility in 
adopting and implementing this proposal. Finally, a few commenters 
questioned how the proposal would coordinate with a continuous coverage 
requirement and urged HHS to consider that when crafting future policy 
around continuous coverage. Specifically, commenters were concerned 
that delays in verification could result in coverage lapses for which 
consumers could be penalized if policies requiring continuous coverage 
or the imposition of a waiting period or premium surcharge were 
adopted.
    Response: We appreciate the variety of perspectives received on 
this proposal and agree with commenters that this provision strikes a 
balance of providing consumer flexibility while protecting from adverse 
selection. We clarify that consumers who qualify for a special 
enrollment period due to adoption, placement for adoption, placement in 
foster care, or through a child support or other court order at Sec.  
155.420(d)(2)(i), are still entitled to the alternative coverage 
effective date options as described in paragraphs Sec.  
155.420(b)(2)(i) and (v), at the option of the Exchange. In addition, 
any SBE conducting a pre-enrollment verification of eligibility for 
special enrollment periods must also provide this flexibility for 
consumers. For the FFEs and SBE-FPs, we plan to implement this 
provision initially through a manual process, and will explore ways to 
automate such a date shift in the future. SBEs are encouraged to do the 
same.
d. Tightening Other Special Enrollment Periods
    As part of our enhanced verification efforts for special enrollment 
periods, we proposed to take additional steps to strengthen and 
streamline the parameters of several existing special enrollment 
periods and ensure consumers are adhering to existing and new 
eligibility parameters to further promote continuity of coverage and 
market stability.
    First, in order to ensure that a special enrollment period for loss 
of minimum essential coverage in paragraph (d)(1) is not granted in 
cases where an individual was terminated for non-payment of premium, as 
described in paragraph (e)(1), we proposed that FFE (and SBE-FPs) will 
permit the issuer to reject an enrollment for which the issuer has a 
record of termination due to non-payment of premiums by the individual, 
unless the individual fulfills obligations for premiums due for 
previous coverage, consistent with the guaranteed availability approach 
discussed in the preamble of this final rule for Sec.  147.104. We 
noted that we believe that verifying that consumers are not attempting 
to enroll in coverage through the special enrollment period for loss of 
minimum essential coverage when the reason for their loss of coverage 
is due to non-payment of premiums is an important measure to prevent 
instances of gaming related to individuals only paying premiums and 
maintaining coverage for months in which they seek services.
    Further, HHS intends to explore options for verifying that a 
consumer's coverage was not terminated due to non-payment of premiums 
for coverage within the FFEs as a precursor for being eligible for the 
loss of minimum essential coverage special enrollment period. We 
proposed to allow Exchanges to collect and store information from 
issuers about whether consumers have been terminated from Exchange 
coverage due to nonpayment of premiums, so that the Exchange may 
automatically prevent these consumers from qualifying for the special 
enrollment period due to a loss of minimum essential coverage, if the 
consumer attempts to renew his or her Exchange coverage within 60 days 
of being terminated. We noted that we are focused on the 60 days 
following termination because if the consumer attempts to renew his or 
her Exchange coverage more than 60 days after being terminated due to 
nonpayment of premiums, the Exchange would continue to find the 
consumer ineligible for a special enrollment period because the loss of 
minimum essential coverage would be more than 60 days prior, and 
therefore the individual would not be eligible for the loss of minimum 
essential coverage special enrollment period.
    We are finalizing these provisions as proposed, and we additionally 
clarify that the FFE (and SBE-FPs) will permit the issuers in the same 
controlled group

[[Page 18363]]

as the issuer that has a record of termination due to non-payment of 
premiums to refuse to effectuate new coverage, unless the individual 
pays sufficient premiums to fulfill his or her obligations for past-due 
premiums and to make the required binder payment, consistent with the 
guaranteed availability approach discussed in the preamble for Sec.  
147.104, and the binder payment requirements in Sec.  155.400(e).
    Comment: Commenters had mixed reactions to our proposals to allow 
issuers to reject enrollments from consumers previously terminated from 
coverage due to nonpayment of premiums, and our proposal to allow the 
FFE to store this information from issuers in order to prevent these 
consumers from qualifying for a special enrollment due to loss of 
minimum essential coverage due to termination for nonpayment of 
premiums.
    Commenters in support of these proposals stated that they are 
necessary to prevent misuse of the special enrollment period for loss 
of minimum essential coverage. Some stated that the proposals help 
support continuous coverage by ensuring that consumers do not stop 
paying their premiums in order to be terminated from coverage for a 
portion of the year only to re-enroll in coverage when health needs 
arise. Encouraging both proper use of special enrollment periods and 
continuous coverage, commenters stated, will improve the risk pool 
moving forward.
    Commenters opposing these proposals cautioned that there are 
legitimate reasons why consumers might stop paying their premiums 
midyear that are unrelated to a desire to game the system, such as a 
reduction in household income, other pressing needs that affect 
household finances, or technical issues in making premium payments. In 
addition, some commenters observed that some consumers who want to 
terminate their coverage experience difficulty or confusion over how to 
end it, resulting in termination due to nonpayment of premiums. 
Commenters expressed concern that giving issuers the authority to 
reject enrollments received through the Exchange is a slippery slope 
towards allowing issuers to make eligibility determinations for 
coverage, and asked that HHS ensure that Exchanges continue to make 
eligibility determinations. Finally, commenters expressed concern that 
HHS may be making it too difficult for consumers to enroll in coverage 
with these proposals, leading to consumers getting caught in a cycle of 
being uninsurable.
    Response: We appreciate commenters' concerns about our proposals to 
prevent consumers who were terminated from coverage due to nonpayment 
of premium from enrolling in coverage midyear through a special 
enrollment period due to loss of minimum essential coverage, but 
believe that these provisions are an important step to ensuring that 
consumers are not obtaining Exchange coverage through special 
enrollment periods only when healthcare needs arise. We believe that it 
is important for consumers to maintain continuous coverage both as 
protection against unforeseen health needs and to create stability in 
the individual market, and therefore are finalizing these provisions as 
proposed, with a modification to reflect the revised interpretation of 
guaranteed availability discussed in the preamble for Sec.  147.104.
    Second, in response to concerns that consumers are opting not to 
enroll in QHP coverage during the annual open enrollment period and are 
instead newly enrolling in coverage during the benefit year through the 
special enrollment period for marriage, we proposed to add new 
paragraph (d)(2)(i)(A) to require that, if consumers are newly 
enrolling in QHP coverage through the Exchange through the special 
enrollment period for marriage, at least one spouse must demonstrate 
having had minimum essential coverage as described in 26 CFR 1.5000A-
1(b) for 1 or more days during the 60 days preceding the date of 
marriage. However, we noted that we recognize that individuals who were 
previously living in a foreign country or in a U.S. territory may not 
have had access to coverage that is considered minimum essential 
coverage in accordance with 26 CFR 1.5000A-1(b) prior to moving to the 
U.S. Therefore, we proposed new paragraph (a)(5), to allow that, when 
consumers are newly enrolling in coverage during the benefit year 
through the special enrollment period for marriage, at least one spouse 
must either demonstrate that they had minimum essential coverage or 
that they lived in a foreign country or in a U.S. territory for 1 or 
more days during the 60 days preceding the date of the marriage. We 
proposed this change for the individual market only.
    We are finalizing this provision for the individual market as 
proposed, with minor modifications to Sec.  155.420(a)(5) to: (1) 
Clarify that by those living outside of the U.S, we mean those living 
in a foreign country; and (2) exempt Indians, as defined by section 4 
of the Indian Health Care Improvement Act, from this requirement due to 
the fact that the Indian Health Service has not been designated as 
minimum essential coverage.
    Comment: Some commenters supported the proposal to add a new prior 
coverage requirement for at least one spouse applying for coverage 
through the special enrollment period for marriage at Sec.  
155.420(d)(2)(i)(A) because they believed this new requirement will 
deter abuse and adverse risk selection and is similar to current 
special enrollment period eligibility processes for small group plans. 
Commenters stated that this requirement supports continuous coverage 
and should also be extended to all applicable special enrollment 
periods. One commenter requested that it be extended to both spouses. 
Commenters requested that any prior coverage standards and verification 
methods be standardized across markets.
    However, many commenters opposed this proposal and expressed 
concern that requiring a prior coverage requirement for the special 
enrollment period for marriage is prohibited by section 1311(c)(6)(C) 
of the PPACA and violates guaranteed issue provisions at 42 U.S.C. 
300gg-1, in addition to being inconsistent with current industry 
practice for employer sponsored coverage, HIPAA, and Medicare Part D. 
Commenters stated that the existing individual shared responsibility 
provision is a sufficient deterrent to prevent these consumers from 
avoiding coverage prior to marriage, if otherwise eligible. Of 
particular concern to these commenters was that one or both spouses may 
have been ineligible for affordable coverage prior to marriage due to 
the gap in insurance affordability program eligibility for individuals 
under the poverty line in States that did not expand their Medicaid 
program.
    Some commenters also expressed concern that this requirement and 
any onerous verification process will discourage participation of newly 
married individuals, who are more likely to be part of the young and 
healthy population needed to balance the risk pool. Commenters also 
expressed concern that consumers who qualify for this special 
enrollment period may have had prior coverage but may not have 
documentation to submit due to the elimination of the prior HIPAA 
requirement for issuers and health plans to send enrollees certificates 
of credible coverage, and requested that, in the event that this 
provision is finalized, that this requirement be reinstated.
    In addition, commenters requested that SBEs be given flexibility on 
the effective date of this provision,

[[Page 18364]]

recognizing the resources needed to comply, and to allow for adequate 
time for implementation.
    Response: We agree with comments noting the potential for this 
provision to reduce adverse selection and promote continuous coverage. 
The proposed rule aims to stabilize the individual market, such that 
coverage will be more accessible and affordable for all potential 
enrollees.
    We considered the concerns regarding conflicts with the statute, 
but believe that the additional requirement for marriage special 
enrollment period eligibility is consistent with the requirement in 
section 1311(c)(6)(C) of the PPACA directing the Secretary to require 
Exchanges to establish special enrollment periods as specified in 
section 9801 of the Code and under circumstances similar to such 
periods under Part D of title XVIII of the Act and the Secretary's 
authority under section 2702(b)(3) of the PHS Act to promulgate 
regulations for the individual market with respect to special 
enrollment periods for qualifying events under section 603 of the 
Employee Retirement Income Security Act of 1974. The PPACA itself 
called for one annual open enrollment period and additional 
opportunities for enrollment only in the case of special circumstances. 
Section 155.420(d) provides each of the special enrollment periods 
required by section 1311(c)(6)(C) of the PPACA and section 2702(b)(3) 
of the PHS Act. Section 1321(a) of the PPACA grants the Secretary broad 
discretion to issue regulations setting standards with respect to the 
operation of the Exchange program and other requirements the Secretary 
determines are appropriate to support its viability. Given that there 
is nothing in section 1311(c)(6)(C) of the PPACA that otherwise limits 
the Secretary's broad discretion under section 1321(a) of the PPACA, we 
believe we may place reasonable limits on access to special enrollment 
periods that promote the overall goal of the PPACA to ensure continuous 
health coverage and the viability of Exchanges.
    We are also sensitive to commenter concerns regarding the coverage 
gap that might prevent some consumers from having access to affordable 
coverage prior to marriage. However, if the married couple's combined 
income makes them newly eligible for APTC then that couple would be 
able to qualify for the special enrollment period for consumers in this 
situation at Sec.  155.420(d)(6)(iv), and would not need to enroll 
through the marriage special enrollment period.
    We appreciate commenters' concerns that adding a prior coverage 
requirement to the marriage special enrollment period would discourage 
enrollment by this population, but we believe that this requirement is 
important to ensure that previously uninsured individuals do not 
negatively impact the risk pool. In response to the comments regarding 
certificates of credible coverage, we note that per sections 1502 and 
1514 of the PPACA and section 6055 of the Code, enrollees have proof of 
previous year health coverage via their tax statements that may help in 
certain circumstances. We also note that the FFEs and SBE-FPs will 
accept other types of documentation from consumers to verify their 
prior coverage, including letters from insurers, employers, and 
government health programs. We will also exercise reasonable 
flexibility with respect to the documentation required under this 
policy.
    While we are not adjusting the effective date of the regulation, we 
understand that the prior coverage requirement may require system 
changes that take additional time for some SBEs and expect that 
Exchanges will implement the requirement as soon as technically 
feasible.
    Comment: Commenters requested that members of Federally recognized 
tribes and Alaska Claims Settlement Act Corporation Shareholders be 
excluded from this requirement because the Indian Health Service, a 
major provider of healthcare services for members of Federally 
recognized tribes, is not designated as minimum essential coverage, 
thus individuals moving off of tribal land after a marriage and seeking 
to enroll in Exchange coverage will not be able to prove prior 
coverage.
    Response: We agree with commenters that members of Federally 
recognized tribes and Alaska Claims Settlement Act Corporation 
Shareholders should be excluded from this prior coverage requirement, 
in addition to the prior coverage requirement for permanent move at 
Sec.  155.420(d)(7), and finalize a modification to our proposed 
regulation at Sec.  155.420(a)(5) accordingly.
    To streamline our regulations regarding special enrollment periods 
that require consumers to demonstrate prior coverage, we proposed to 
add new paragraph (a)(5) to clarify that qualified individuals who are 
required to demonstrate prior coverage can either demonstrate that they 
had minimum essential coverage as described in 26 CFR 1.5000A-1(b) for 
1 or more days during the 60 days preceding the date of the qualifying 
event or that they lived in a foreign country or in a U.S. territory 
for 1 or more days during the 60 days preceding the date of the 
qualifying event. Paragraph (a)(5) would apply to paragraph 
(d)(2)(i)(A) for marriage (discussed above) and paragraph (d)(7)(i) for 
permanent move and paragraph (a)(5) would replace current paragraph 
(d)(7)(ii).
    We did not receive comment on this proposal and are finalizing it 
as proposed, with minor modifications: (1) To clarify that by those 
living outside of the U.S. we mean those living in a foreign country; 
and (2) to exempt Indians, as defined by section 4 of the Indian Health 
Care Improvement Act, from this requirement due to the fact that the 
Indian Health Service is not designated as minimum essential coverage. 
Additionally, the finalized amendments to Sec.  155.725(j) include a 
change to the proposed text to reflect that the new prior coverage 
requirement for the marriage special enrollment period under Sec.  
155.420(d)(2) does not apply outside of the individual market. The 
proposed rule had incorrectly cross-referenced Sec.  155.420(a)(5), 
which describes how the prior coverage requirement may be satisfied. We 
had not intended in the proposed rule to prevent individuals applying 
for special enrollment periods under Sec.  155.420(d)(7) in the SHOP 
from satisfying the prior coverage requirement as specified under Sec.  
155.420(a)(5). We note that Sec.  155.420(a)(5) is already incorporated 
through the cross-references to revised Sec.  155.420(d) in Sec.  
155.725(j)(2)(i). Similarly, we note that we are finalizing that Sec.  
155.420(a)(5), specifying how an individual can demonstrate prior 
coverage, applies in the individual market outside of the Exchange, but 
determined that the proposed change to Sec.  147.104(b)(2)(i), which 
would have specified this, is not necessary because Sec.  155.420(a)(5) 
is already incorporated through the cross-reference to revised Sec.  
155.420(d) in Sec.  147.104(b)(2).
    We acknowledge that the proposed rule included changes for special 
enrollment periods in the individual market that differ from the rules 
regarding special enrollment periods in the group market. For example, 
the proposed rule included changes that would require consumers to 
demonstrate prior coverage to qualify for the special enrollment period 
for marriage in proposed paragraph (d)(2)(i)(A) and would generally 
limit plan selection to the same plan or level of coverage when an 
enrollee qualifies for a special enrollment period during the benefit 
year in proposed paragraph (a)(4). However, we noted that we believe 
that the differences in the markets--and the impacts of those 
differences on the risk pool--warrant an

[[Page 18365]]

approach in the individual market that diverges from long-standing 
rules and norms in the group market. Employer-sponsored coverage is 
generally a more stable risk pool and less susceptible to gaming 
because the coverage is tied to employment and often substantially 
subsidized by the employer. Thus, we noted that we believe taking an 
approach in the individual market that imposes tighter restrictions on 
special enrollment periods and the ability to change plans for current 
enrollees better addresses the unique challenges faced in the 
individual market. We also noted that this approach is consistent with 
the requirement in section 1311(c)(6)(C) of the PPACA directing the 
Secretary to require Exchanges to establish special enrollment periods 
as specified in section 9801 of the Code and under circumstances 
similar to such periods under Part D of title XVIII of the Act and the 
Secretary's authority under section 2702(b)(3) of the PHS Act to 
promulgate regulations for the individual market with respect to 
special enrollment periods for qualifying events under section 603 of 
the Employee Retirement Income Security Act of 1974. We interpret 
section 1311 of the PPACA and section 2702 of the PHS Act to require 
the Secretary to implement special enrollment periods with the same 
triggering events as in the group market, but to provide the Secretary 
with flexibility in the specific parameters as to how those special 
enrollment periods are implemented in the individual market, due to the 
unique dynamics of the individual market.
    Third, we proposed to expand the verification requirements related 
to the special enrollment period for a permanent move in paragraph 
(d)(7). This special enrollment period is only available to a qualified 
individual or enrollee who has gained access to new QHPs as a result of 
a permanent move and had coverage for 1 or more days in the 60 days 
preceding the move, unless he or she is moving to the U.S. from a 
foreign country or a U.S. territory. (Following finalization of the 
changes discussed above to paragraph (a)(5), individuals will also be 
exempt from demonstrating prior coverage if they demonstrate they are 
Indians.) Currently, we require documentation to show a move occurred, 
and accept an attestation regarding having had prior coverage or moving 
from a foreign country or a U.S. territory. To ensure that consumers 
meet all the requirements for this special enrollment period, we 
proposed to require that new applicants applying for coverage through 
this special enrollment period submit acceptable documentation to the 
FFEs and SBE-FPs to prove both their move and evidence of prior 
coverage, if applicable, through the pre-enrollment verification 
process.
    We are finalizing this provision as proposed and intend to release 
guidance on what documentation would be acceptable.
    Comment: Comments were mixed regarding our proposal to expand the 
verification requirements for individuals seeking a permanent move 
special enrollment period. Commenters who supported this proposal 
stated that requiring and verifying prior coverage is necessary to 
prevent misuse and abuse of this special enrollment period, which will 
protect the risk pool.
    Commenters who opposed this proposal expressed concerns that some 
individuals may have been ineligible for affordable coverage where they 
were previously living or may experience barriers to providing proof of 
prior coverage. Commenters expressed concerns about consumer capacity 
to procure needed documents, especially if the consumer was formerly 
enrolled in Medicaid. Others expressed specific concerns about the 
ability of vulnerable low-income workers who often move for work to 
produce documentation, since their employers often do not provide 
documentation and insurance companies are no longer required to do so 
via certificates of credible coverage.
    In addition, several commenters supported using electronic methods 
to verify both prior coverage and the permanent move, when able, to 
decrease the burden on consumers.
    Response: We appreciate commenters' input on the merits and 
drawbacks of requiring consumers to submit evidence of prior coverage 
or evidence that they are exempt from the requirement to show prior 
coverage. Although we agree that some consumers may have legitimate 
reasons for not obtaining coverage prior to their move, we established 
in prior rulemaking that prior coverage is generally a requirement to 
qualify for the permanent move special enrollment period, and we did 
not propose to change this requirement in the proposed rule. We agree 
with those commenters who believed that the proposed additional 
verification steps were necessary to prevent abuse and misuse of this 
special enrollment period, and therefore, we will finalize our proposal 
to verify prior coverage for this special enrollment period, when 
applicable. As mentioned earlier in this section, we will also exercise 
reasonable flexibility with respect to the documentation required under 
this policy.
    We agree with comments regarding use of electronic verification 
where available and are investigating our ability to expand our use of 
electronic verification and encourage SBEs to do the same. We also 
clarify that these changes only apply in the individual market.
    Fourth, for the remainder of 2017 and for future plan years, we 
proposed to significantly limit the use of the exceptional 
circumstances special enrollment period described in paragraph (d)(9). 
In previous years, this special enrollment period has been used to 
address eligibility or enrollment issues that affected large cohorts of 
individuals where they had made reasonable efforts to enroll but were 
hindered by outside events. For example, in past years, the FFEs have 
offered exceptional circumstances special enrollment periods to groups 
of consumers who were enrolled in coverage that they believed was 
minimum essential coverage at the time of enrollment, but was not. We 
proposed to apply a more rigorous test for future uses of the 
exceptional circumstances special enrollment period, including 
requiring supporting documentation where practicable, under which we 
would only grant this special enrollment period if provided with 
sufficient evidence to conclude that the consumer's situation was 
highly exceptional and in instances where it is verifiable that 
consumers were directly impacted by the circumstance, as practicable. 
We would provide guidance on examples of situations that we believe 
meet this more rigorous text and what corresponding documentation 
consumers would be required to provide, if requested by the FFE.
    We are finalizing this provision as proposed.
    Comment: We received comments both supporting and opposing our 
proposal to limit the use of the special enrollment period for 
exceptional circumstances. One commenter supported this proposal 
because of a belief that this special enrollment should only be used 
for truly exceptional circumstances and should not be used to provide a 
pathway to coverage for large categories of consumers.
    Commenters opposing the proposal generally expressed concern that 
Exchanges have already imposed sufficient constraints with regard to 
granting eligibility for this special enrollment period and expressed 
concern that this proposal would prevent eligible consumers 
experiencing situations outside of their control from enrolling in 
coverage. Commenters also

[[Page 18366]]

questioned whether HHS would be able to adequately establish guidelines 
for this special enrollment period because it is used for situations 
that are unanticipated and unpredictable. Several commenters requested 
that HHS publish more guidance either in the final rule or guidance as 
to what qualifies as an exceptional circumstance for the purposes of 
this special enrollment period.
    A few commenters noted the importance of allowing SBEs flexibility 
to determine what constitutes an exceptional circumstance.
    Response: The exceptional circumstances special enrollment period 
provides an important avenue to coverage for consumers who experience 
or are affected by unanticipated events, often outside of their 
control. We agree that this special enrollment period should be granted 
as consistently as possible based on established criteria, while still 
allowing enough flexibility to account for the inherent 
unpredictability of exceptional circumstances. Currently, the vast 
majority of exceptional circumstances special enrollment periods 
granted through the FFEs are reviewed in detail by HHS staff and 
evaluated based on standardized protocols. We believe this process 
balances the need for standardization and flexibility while ensuring 
that claims of exceptional circumstances can be verified. HHS expects 
to continue using this process as it applies a more rigorous test for 
future uses of the exceptional circumstances special enrollment period. 
We believe SBEs should retain the flexibility to determine what 
constitutes an exceptional circumstance, but we urge them to establish 
a similar process to grant such special enrollment periods consistently 
and, to help in this effort, as we mentioned in the proposed rule, we 
expect to provide additional guidance on what constitutes an 
exceptional circumstance for the purposes of qualifying for this 
special enrollment period and clarify that this change only applies to 
the individual market.
    Previously, the Exchanges have, at times, offered special 
enrollment periods for a variety of circumstances related to errors 
that occurred more frequently in the early years of operations. As the 
Exchanges continue to mature, HHS has previously evaluated, and will 
continue to evaluate, these existing special enrollment periods to 
determine their continued utility and necessity. For the purposes of 
clarity and in response to confusion by stakeholders about whether 
certain of these special enrollment periods previously made available 
through guidance are still available to consumers, we proposed to 
formalize previous guidance \22\ from HHS that the following special 
enrollment periods are no longer available:
---------------------------------------------------------------------------

    \22\ HHS, Clarifying, Eliminating and Enforcing Special 
Enrollment Periods (January 19, 2016), available at http://wayback.archive-it.org/2744/20170118130449/https://blog.cms.gov/2016/01/19/clarifying-eliminating-and-enforcing-special-enrollment-periods/.
---------------------------------------------------------------------------

     Consumers who enrolled with APTC that is too large because 
of a redundant or duplicate policy;
     Consumers who were affected by a temporary error in the 
treatment of Social Security Income for tax dependents;
     Lawfully present non-citizens that were affected by a 
temporary error in the determination of their eligibility for APTC;
     Lawfully present non-citizens with incomes below 100 
percent of Federal Poverty Level (FPL) who experienced certain 
processing delays; and
     Consumers who were eligible for or enrolled in COBRA and 
not sufficiently informed about their coverage options.
    We are finalizing this provision as proposed.
    Comment: A few commenters expressed concern about our proposal to 
codify the elimination of several special enrollment periods that were 
eliminated through prior guidance due to fear that we are cutting off 
the availability of special enrollment periods to vulnerable 
populations that need a pathway to coverage.
    Response: The special enrollment periods listed for elimination in 
this rule have not been available to consumers since 2016; they were 
originally eliminated in subregulatory guidance because all consumers 
in the situations described had already been provided with a pathway to 
coverage. Codifying the elimination of these special enrollment periods 
will not affect vulnerable consumers' ability to access coverage in the 
future.
4. Continuous Coverage
    Because of the challenges in the individual market related to 
adverse selection, HHS believes it is especially important in this 
market to adopt policies that promote continuous enrollment in health 
coverage and to encourage individuals to enroll and remain in coverage 
for the full year.
    While the provisions in this rule relating to guaranteed 
availability, the annual open enrollment period, and special enrollment 
periods encourage individuals to maintain coverage throughout the year, 
we noted in the proposed rule that we are also actively exploring 
additional policies in the individual market that would promote 
continuous coverage and sought input on which policies would 
effectively do so, consistent with existing legal authorities. For 
example, with respect to special enrollment periods that require 
evidence of prior coverage, we are considering policies for the 
individual market that would require that individuals show evidence of 
prior coverage for a longer ``look back'' period. Individuals could be 
required to provide proof of prior coverage for 6 to 12 months, except 
that an individual with a small gap in coverage (such as up to 60 
days), could be considered to have had prior coverage. Alternatively, 
for individuals who are not able to provide evidence of prior coverage 
during such a look back period, an exception could allow them to enroll 
in coverage if they otherwise qualify for a special enrollment period, 
but impose a waiting period of at least 90 days before effectuating 
enrollment, or assess a late enrollment penalty. These policies could 
encourage individuals to maintain coverage throughout the year, thus 
promoting continuous coverage.
    HHS is also interested in whether policies are needed for the 
individual market similar to those that existed under HIPAA, which in 
the group market required maintenance of continuous, creditable 
coverage without a 63-day break if individuals wished to avoid the pre-
existing condition exclusions, and allowed waiting periods to be 
imposed under certain circumstances. Although the HIPAA rules did not 
require that individuals maintain coverage, the rules were designed to 
provide an important incentive for individuals to enroll in coverage 
for the full year, not just when in need of healthcare services; reduce 
adverse selection; and help prevent premiums from climbing to levels 
that would keep most healthy individuals from purchasing coverage.
    We are interested in policies that not only encourage uninsured 
individuals to enroll in coverage during the open enrollment period, 
but also encourage those with coverage to maintain continuous coverage 
throughout the year.
    We solicited comments on additional policies that would promote 
continuous coverage, but did not propose any of the policies described 
in this section III.B.3. of this final rule. The following is a summary 
of the public comments received on the discussed continuous coverage 
policies and our responses:

[[Page 18367]]

    Comment: A minority of commenters, primarily issuers, supported the 
policies discussed in the proposed rule, or the general concept of 
policies to promote continuous coverage. Many of these commenters 
emphasized the need for policies like continuous coverage requirements, 
waiting periods or late enrollment penalties, if the individual shared 
responsibility provision is eliminated. These commenters recommended 
imposing longer look-back periods of varying lengths for special 
enrollment periods; a few recommended late enrollment surcharges of 
specific amounts (for example, 150 percent, lasting for at least 18 
months); and one commenter expressed a preference for premium penalties 
over making prior coverage an eligibility requirement for special 
enrollment periods. Several of these commenters cautioned HHS against 
re-introducing waiting periods, noting the operational burden, consumer 
harm, or perceived limited effectiveness as compared to other penalties 
for having a coverage lapse. Several commenters noted the importance of 
clearly communicating continuous coverage requirements to consumers.
    Some commenters believed continuous coverage policies should apply 
during open enrollment. One commenter recommended that if a continuous 
coverage policy were adopted that applied only to special enrollment 
periods, an exemption from the look-back period should be provided to 
anyone who enrolled during the most recent open enrollment period. That 
commenter also believed that the longer the look-back period is, the 
stronger the incentive to remain insured and the less opportunity to 
game the system; and commented that the discussed policies could result 
in reduced usage of special enrollment periods and higher out-of-pocket 
costs for consumers. Some commenters opposed applying continuous 
coverage requirements to special enrollment periods. A few commenters 
specifically urged HHS to exempt the monthly special enrollment period 
for Indians and their dependents from any continuous coverage 
requirements. Some commenters observed that some of the changes being 
finalized in this rule, particularly those related to verification of 
eligibility for special enrollment periods, could result in more people 
experiencing coverage lapses.
    The majority of commenters opposed the adoption of the continuous 
coverage policies discussed in this section. Many commenters believed 
the discussed policies would deter individuals from purchasing coverage 
in the individual market, would have a negative impact on the risk 
pool, or increase premiums. Many commenters urged HHS not to adopt 
policies that would penalize people who have coverage lapses for 
legitimate reasons. Commenters questioned the premise that coverage 
lapses were primarily due to gaming behavior. Commenters observed that 
people often experience coverage gaps for reasons unrelated to gaming 
behavior, such as financial difficulties paying their premiums, 
challenges associated with mental or chronic illnesses, job loss, 
changes in family circumstances (for example, death, divorce or moves), 
mix-ups with insurance companies or the Exchanges, lack of awareness 
about the individual shared responsibility provision, and losing APTC. 
Many of these commenters suggested that the continuous coverage 
policies discussed in the proposed rule are unlikely to encourage these 
individuals to maintain coverage, particularly those who are healthy 
and leaving for economic reasons. Some commenters recommended 
exceptions be included in any adopted continuous coverage policies to 
account for individuals who have legitimate reasons not to maintain 
coverage, or who have received an exemption from the individual shared 
responsibility provision. Some commenters observed that the people most 
likely to have gaps in coverage are also the least likely to be able to 
pay higher premiums, and could thus be locked out of the market after a 
coverage lapse. Some commenters predicted such policies would increase 
the uninsured rate. Commenters urged HHS not to adopt policies that 
would make insurance less affordable.
    Many commenters expressed concern that the continuous coverage 
policies discussed in the proposed rule would hurt consumers, 
particularly vulnerable populations, including low- and middle-income 
individuals; seasonal or migratory workers; and individuals with 
chronic diseases, disabilities, or other pre-existing conditions. Many 
commenters believed policies that include longer look-back periods, 
waiting periods, late enrollment penalties, or HIPAA-style rules could 
disrupt patients' care or cause people to delay or go without care, 
resulting in increased costs in the future and worse health outcomes. 
One commenter raised concerns that issuers could game continuous 
coverage requirements to avoid covering sicker individuals. One 
commenter also expressed concern that such policies could result in 
other unintended consequences like increased crime or homelessness. 
Many commenters were concerned that HHS's interest in policies 
promoting continuous coverage presaged an end to the prohibitions 
against pre-existing condition exclusions, medical underwriting, or 
rescissions (except in limited circumstances). Some commenters 
expressed a belief that such policies are immoral. Many commenters 
stated it was unfair to penalize people once they obtain coverage, or 
believed it was unfair to apply both the individual shared 
responsibility provision and penalties associated with continuous 
coverage requirements.
    One commenter noted that it believes HHS has significant authority 
to impose continuous coverage requirements on all special enrollment 
periods, although that commenter also recommended exempting several 
special enrollment periods from continuous coverage requirements. 
Another commenter noted that they believed current law precludes 
imposing continuous coverage requirements during open enrollment 
periods, but not for special enrollment periods. However, many 
commenters stated that the discussed policies, and pre-existing 
condition exclusions, were counter to the PPACA's guaranteed 
availability protections, and that assessing a late enrollment penalty 
or surcharge was also counter to the requirements regarding rating 
variations.
    Commenters raised concerns related to applying continuous coverage 
requirements in the individual market, including a concern about 
applying rules similar to the HIPAA rules outside of the employment 
context, and a concern about adopting continuous coverage requirements 
in the individual market that differ from rules for other markets. One 
commenter strongly opposed requiring SBEs to adopt continuous coverage 
policies.
    Many commenters believed that the individual shared responsibility 
provision promotes continuous coverage better than the policies 
discussed in the proposed rule. Some recommended increasing the amount 
of the individual shared responsibility payment. A few commenters 
encouraged the Administration to communicate that it intended to 
enforce the individual shared responsibility provision as a way to 
stabilize the individual market. Some commenters recommended helping 
people understand their responsibility under the individual shared 
responsibility provision as a means to promote continuous coverage.
    Some commenters provided suggestions for alternative approaches to 
promote continuous coverage, including minimizing barriers to 
enrollment,

[[Page 18368]]

providing more support to people as they enroll, ensuring plans provide 
adequate value to consumers, making plans more affordable, increasing 
subsidies, and creating incentives for multi-year enrollments. One 
commenter recommended enrollees be contractually bound to pay premiums 
for a full year, with insurers having a mechanism to recover unpaid 
premiums. Multiple commenters recommended a form of universal 
healthcare as a way to achieve continuous coverage.
    Response: We thank commenters for their input. We continue to 
explore policies that would promote continuous coverage and that are 
within HHS's legal authority, and will not take action in this final 
rule.
5. Enrollment Periods Under SHOP
    Because the proposed changes to restrict enrollment options though 
special enrollment periods for current enrollees and to require a 
demonstration of prior coverage in order to qualify for the marriage 
special enrollment period were proposed for special enrollment periods 
in the individual market only, we proposed to amend Sec.  
155.725(j)(2)(i) to specify that Sec.  155.420(a)(3) through (5) do not 
apply to special enrollment periods under the Small Business Health 
Options Program (SHOP). We are finalizing the proposal that the change 
to restrict enrollment options though special enrollment periods for 
current enrollees in Sec.  155.420(a)(4) and the change to require a 
demonstration of prior coverage in order to qualify for the marriage 
special enrollment period these paragraphs do not apply to special 
enrollment periods under SHOP. However, instead of finalizing the 
proposed amendment to Sec.  155.725(j)(2)(i), we are finalizing a new 
Sec.  155.725(j)(7). This change more clearly reflects that Sec.  
155.420(a)(4) and the requirement to demonstrate prior coverage to 
qualify for the marriage special enrollment period do not apply to the 
SHOP. We note that under the finalized language, Sec.  155.420(a)(5) 
would be applicable to the SHOP. Although the requirement to show prior 
coverage is not applicable in the SHOP for the marriage special 
enrollment period, it is applicable for the permanent move special 
enrollment period under Sec.  155.420(d)(7). We had not intended the 
proposed rule to prevent individuals applying for special enrollment 
periods under Sec.  155.420(d)(7) in the SHOP from satisfying the prior 
coverage requirement as specified under Sec.  155.420(a)(5). A more 
detailed discussion of the proposed and finalized changes in Sec.  
155.420(a) is provided in section III.B.3. of this final rule.
    The following is a summary of the public comments received on the 
enrollment periods under the SHOP proposed provisions and our 
responses:
    Comment: Commenters expressed concern about applying different 
rules for special enrollment periods in the small group and individual 
markets, noting the potential for confusion among consumers or 
assisters, and operational challenges; or questioning the need for 
different rules. One commenter opposed creating a different set of 
special enrollment period rules between the individual and small group 
markets because the commenter's State has a merged market such that its 
qualified health plans are offered in both the individual and small 
group markets. Some commenters supported not applying the proposed 
changes to special enrollment periods to the SHOP, and one requested 
clarification that the changes also not apply to the small group in the 
off-Exchange market.
    Response: We appreciate the comments. We note that there are other 
rules relating to special enrollment periods where the rules differ for 
the individual Exchanges and the SHOPs. The finalized rules regarding 
special enrollment periods in Sec.  155.420(a)(4) and (d)(2)(i)(A) do 
not apply to the small group market.
6. Exchange Functions: Certification of Qualified Health Plans (Part 
155, Subpart K)
    In light of the need for issuers to make modifications to their 
products and applications to accommodate the changes finalized in this 
rule, we are concurrently issuing separate guidance to update the QHP 
certification calendar and the rate review submission deadlines to give 
additional time for issuers to develop, and States to review, form and 
rate filings for the 2018 plan year that reflect these changes.\23\
---------------------------------------------------------------------------

    \23\ Key Dates for Calendar Year 2017: Qualified Health Plan 
Certification in the Federally-facilitated Exchanges; Rate Review; 
Risk Adjustment and Reinsurance, (April 2017), available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/index.html#.
---------------------------------------------------------------------------

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

1. Levels of Coverage (Actuarial Value) (Sec.  156.140)
    Section 2707(a) of the PHS Act and section 1302 of the PPACA direct 
issuers of non-grandfathered individual and small group health 
insurance plans, including QHPs, to ensure that these plans adhere to 
the levels of coverage specified in section 1302(d)(1) of the PPACA. A 
plan's coverage level, or AV, is determined based on its coverage of 
the EHB for a standard population. Section 1302(d)(1) of the PPACA 
requires a bronze plan to have an AV of 60 percent, a silver plan to 
have an AV of 70 percent, a gold plan to have an AV of 80 percent, and 
a platinum plan to have an AV of 90 percent. Section 1302(d)(2) of the 
PPACA directs the Secretary to issue regulations on the calculation of 
AV and its application to the levels of coverage. Section 1302(d)(3) of 
the PPACA authorizes the Secretary to develop guidelines to provide for 
a de minimis variation in the actuarial valuations used in determining 
the level of coverage of a plan to account for differences in actuarial 
estimates.
    As stated in the proposed rule, we believe that further flexibility 
is needed for the AV de minimis range for metal levels to help issuers 
design new plans for future plan years, thereby promoting competition 
in the market. In addition, we noted that we believe that changing the 
de minimis range will allow more plans to keep their cost sharing the 
same from year to year. More specifically, we noted that as established 
at Sec.  156.135(a), to calculate the AV of a health plan, the issuer 
must use the AV Calculator developed and made available by HHS for the 
given benefit year, and that we made several key updates to the AV 
Calculator for 2018. Due to the scope and number of these updates in 
the 2018 AV Calculator, the impact on current plans' AVs will vary. 
Therefore, we proposed to amend the definition of de minimis included 
in Sec.  156.140(c), to a variation of -4/+2 percentage points, rather 
than +/- 2 percentage points for all non-grandfathered individual and 
small group market plans (other than bronze plans meeting certain 
conditions) that are required to comply with AV. As proposed, for 
example, a silver plan could have an AV between 66 and 72 percent. We 
believe a broader de minimis range will provide additional flexibility 
for issuers to make adjustments to their plans within the same metal 
level.
    While we proposed to modify the de minimis range for the metal 
level plans (bronze, silver, gold, and platinum), we did not propose to 
modify the de minimis range for the silver plan variations (the plans 
with an AV of 73, 87 and 94 percent) under Sec. Sec.  156.400 and 
156.420. The de minimis variation for a silver plan variation of a 
single percentage point would still apply. In the Actuarial Value and 
Cost-Sharing

[[Page 18369]]

Reductions Bulletin (2012 Bulletin) we issued on February 24, 2012,\24\ 
we explained why we did not intend to require issuers to offer a cost-
sharing reduction (CSR) silver plan variation with an AV of 70 percent. 
However, we proposed to consider whether the ability for an issuer to 
offer a standard silver plan at an AV of 66 percent would require a 
silver plan variation to be offered at an AV of 70 percent or would 
require some other mechanism to provide for CSR silver plan variations 
for eligible individuals with household incomes that are more than 250 
percent but not more than 400 percent of the FPL.
---------------------------------------------------------------------------

    \24\ Available at https://www.cms.gov/CCIIO/Resources/Files/Downloads/Av-csr-bulletin.pdf.
---------------------------------------------------------------------------

    We proposed to maintain the bronze plan de minimis range policy 
finalized in the 2018 Payment Notice at Sec.  156.140(c) with one 
modification. We proposed to change the de minimis range for the 
expanded bronze plans from -2/+5 percentage points to -4/+5 percentage 
points to align with the proposed policy. Therefore, for those bronze 
plans that either cover and pay for at least one major service, other 
than preventive services, before the deductible or meet the 
requirements to be a high deductible health plan within the meaning of 
26 U.S.C. 223(c)(2), we proposed the allowable variation in AV would be 
-4 percentage points and +5 percentage points.\25\
---------------------------------------------------------------------------

    \25\ Although we proposed to expand the de minimis range for 
bronze plans to -4 percentage points, we also recognized that 
achieving an AV below 58 percent is difficult with the claims 
distribution underlying the current AV Calculator.
---------------------------------------------------------------------------

    We solicited comments on the proposal, including on the appropriate 
de minimis values for metal level plans and silver plan variations, and 
on whether those values should differ when increasing or decreasing AV. 
We proposed the policy for 2018, but we also considered proposing that 
the change be effective for the 2019 plan year. We noted that, if 
finalized for 2018, we would update the 2018 AV Calculator in 
accordance with this policy.
    We are finalizing the policy as proposed and are adding regulation 
text to reflect that the policy applies to plan years beginning on or 
after January 1, 2018. The following is a summary of the public 
comments received on the levels of coverage (actuarial value) (Sec.  
156.140) proposed provisions and our responses:
    Comment: Some commenters supported the proposed policy as generally 
increasing issuer flexibility by allowing issuers to offer more 
innovative plans, to assist with premium impact and to stabilize the 
market. Others supported the policy for similar reasoning, but 
recommended a different range or combination, such as +/-4 percent, as 
AVs typically go up each year (and not down). Other commenters did not 
support the proposed range, wanting to keep the current range to ensure 
consumers can meaningfully compare plan designs. Some commenters stated 
that the proposed de minimis range was unlawful under section 
1302(d)(3) of the PPACA as the de minimis range is to account for 
differences in actuarial estimates only and not for the reasoning 
provided in the proposed rule. Some commenters were concerned that the 
distinction, transparency, and variation between and within metal 
levels would create consumer confusion and could lead to enrollment 
issues, with some commenters particularly concerned about the proposed 
1 percent difference between bronze and silver levels of coverage and 
the distinction between those metal levels. A commenter also noted that 
the policy would allow plan designs that are simultaneously compliant 
with bronze and silver metal tiers in the Final 2018 AV Calculator (due 
to the induced demand between metal levels). Other commenters wanted to 
ensure State AV-related flexibility. Some commenters wanted HHS to 
engage with stakeholders to consider the impact of the proposal before 
finalizing the policy. Commenters generally supported retaining the 
current de minimis range for the CSR silver plan variations.
    Response: As discussed in the proposed rule, the health and 
competitiveness of the Exchanges, as well as the individual and small 
group markets in general, have recently been threatened by issuer exit 
and increasing rates in many geographic areas. Therefore, while we 
recognize the importance of consumers being able to compare plan 
designs, we are committed to providing issuers increased AV flexibility 
to improve the health and competitiveness of the markets. For these 
reasons, we believe that a de minimis range of -4/+2 percentage points 
provides the flexibility necessary for issuers to design new plans 
while ensuring comparability of plans within each metal level. Through 
our authority under section 1302(d)(3) of the PPACA, which directs the 
Secretary to develop guidelines to provide for a de minimis variance in 
the actuarial valuations used in determining the level of coverage of a 
plan to account for differences in actuarial estimates, and section 
1321(a)(1)(A) and (D) of the PPACA, which requires the Secretary to 
issue regulations setting standards for meeting the requirements for 
the establishment and operation of Exchanges, as well as such other 
requirements as the Secretary determines appropriate, we are finalizing 
the definition of the AV de minimis range included in Sec.  156.140(c) 
to be a variation of -4/+2 percentage points for all non-grandfathered 
individual and small group market insurance plans (other than bronze 
plans meeting certain conditions) that are required to comply with AV, 
starting with plan years beginning in 2018. Because of the urgent need 
to stabilize the market and attract and retain issuers to ensure that 
consumers have options for coverage in the 2018 Exchanges, we do not 
believe that consulting stakeholders in advance of finalizing the rule 
is necessary at this time, but we hope to engage stakeholders on what, 
if any, modifications are needed to publicly available data as a result 
of this change.
    Furthermore, we are also finalizing the de minimis range change for 
bronze plans that either cover and pay for at least one major service, 
other than preventive services, before the deductible or meet the 
requirements to be a high deductible health plan within the meaning of 
26 U.S.C. 223(c)(2) from -2/+5 percentage points to -4/+5 percentage 
points to align with the policy in this rule, starting in plan year 
2018. We recognize that the difference between the bronze and silver 
plans under this de minimis range is only 1 percent and that AVs 
typically increase each year; therefore, we may consider further 
changes to the de minimis ranges in the future as we intend to monitor 
the effects in 2018. We also recognize that States are the enforcers of 
AV policy and nothing under this policy precludes States from applying 
stricter standards, consistent with Federal law. For example, a State 
may apply a +/-2 percent for the AV de minimis range for metal level 
plans, which would be tied to the metal level definitions under section 
1302(d)(1) of the PPACA, would be within the Federal de minimis range, 
and would be considered a stricter standard than the Federal 
requirements. However, a State cannot require issuers to design plans 
that apply an AV range that is not consistent with our implementation 
of section 1302(d)(1) and (d)(3) of the PPACA (which defines the metal 
level definitions). Also, it is the responsibility of the State to 
enforce implementation of a de minimis range using the Federal AV 
Calculator or an

[[Page 18370]]

AV Calculator that utilizes State-specific data under Sec.  
156.135(e).\26\
---------------------------------------------------------------------------

    \26\ As of the 2018 plan year, no State has an AV Calculator 
that utilizes state-specific data under Sec.  156.135(e); therefore, 
an AV Calculator that utilizes State-specific data is intended for 
plan years beyond 2018.
---------------------------------------------------------------------------

    Comment: Many commenters were opposed to the proposed policy or 
were concerned about the potential impact on increasing cost sharing 
for consumers, especially in the form of higher deductibles, an area 
where commenters noted consumers, are already struggling. These 
commenters were also concerned about potential decreases in the amount 
of APTCs \27\ that most Exchange consumers use to purchase coverage, 
particularly for those consumers between 250 and 400 percent of FPL who 
are not eligible for the current CSR silver plan variations. Many 
commenters generally believed that the proposed policy would reduce the 
value of coverage by making it less affordable; for example, a decrease 
in APTC could affect current enrollees' ability to stay in their 
current plan without having to pay more in premiums, or could affect 
consumers' use of services due to higher cost sharing and the 
associated financial implications. Some commenters commented on the 
lack of value of coverage for enrollees who do not receive APTCs given 
the high cost of coverage. Some commenters stated that a silver plan is 
defined in the statute as a plan with a 70 percent AV plan and 
supported requiring that the second lowest cost silver plan (the 
benchmark plan), which is used to calculate APTCs, have an AV of at 
least 70 percent. Some commenters recommended finalizing a de minimis 
range that ensures that a change in de minimis range does not impact AV 
for silver plans that are used to calculate the benchmark plan for 
PTCs, or recommended increasing the de minimis range on only bronze 
plans. Other commenters noted that the proposed policy would not affect 
bronze plans due to the annual limitation on cost sharing, limiting the 
ability of a bronze plan to have a lower AV. Some commenters supported 
a silver plan variation eligible for CSRs at the 70 percent AV level, 
with some commenters believing that a 66 percent AV does not meet the 
statutory requirements at section 1402 of the PPACA, with some 
recommending that HHS establish a 70 percent plan or ensure that plans 
with a 70 percent AV are available, and some commenters wanted further 
details on the proposal to establish a 70 percent AV silver plan 
variation. Other commenters did not support requiring an additional 
silver plan variation eligible for CSRs at the 70 percent AV level due 
to administrative and cost burden to issuers and the absence of 
regulations that support an additional silver variation, and also 
because the reasoning in the 2012 Bulletin still applies, given that 
the reduction in the out-of-pocket limit would cause increases in other 
cost sharing. Some commented on the policy's impact on enrollees in CSR 
plans and on enrollees in zero cost share plans that typically use 
APTCs to enroll in bronze plans.
---------------------------------------------------------------------------

    \27\ For the purposes of this section of the rule, references to 
decreases in APTCs also reflect the possibility of decreases in 
premium tax credits not paid in advance.
---------------------------------------------------------------------------

    Response: In response to comments, we considered limiting this 
policy to the bronze level of coverage or excluding the silver level of 
coverage to ensure that this policy does not affect APTCs. However, we 
believe that limiting the policy in either way would significantly 
blunt the impact of the policy. As discussed in the preamble of the 
proposed 2018 Payment Notice, all plans subject to the annual 
limitation on cost sharing under section 1302(c) of the PPACA have a 
minimum level of generosity that limits the lowest AV that a plan can 
achieve, which means that issuers would not receive much additional 
flexibility if the expanded de minimis range were only applied to 
bronze plans. Because of the annual limitation on cost sharing, issuers 
have limited ability to design a bronze plan with an AV lower than 
58.54 percent.\28\ Therefore, we believe that if this policy was 
limited to bronze plans, the policy would likely not affect the market. 
Also, if the policy did not apply to silver plans, the policy would 
have limited impact because it would only provide issuers with 
significant flexibility for plans with gold and platinum levels of 
coverage. Based on the Exchange plan and enrollment numbers from 2016 
and 2017, there are significantly more plans and more enrollees in the 
silver and bronze tiers than in the gold and platinum tiers. 
Additionally, we do not believe that gold and platinum plans are the 
levels of coverage most likely to attract healthy enrollees to enter 
the risk pool.
---------------------------------------------------------------------------

    \28\ A plan with a deductible of $7,350 that is equal to the 
annual limitation on cost sharing of $7,350 for 2018 with no 
services covered until the deductible and annual limitation on cost 
sharing are met, other than preventive services required to be 
covered without cost sharing under section 2713 of the PHS Act and 
Sec.  147.130, has an AV of 58.54 percent based on the 2018 AV 
Calculator. 81 FR 61455. September 6, 2016.
---------------------------------------------------------------------------

    In finalizing the -4/+2 percent for the de minimis range for all 
metal levels (other than bronze plans meeting certain conditions), we 
recognize that, in the short run, this change would generate a transfer 
of costs from consumers to issuers, but believe the additional 
flexibility for issuers will have positive effects for consumers over 
the longer term. Similar to the -2 percent de minimis range flexibility 
that we have previously provided for AV, the change to allow for -4 
percent de minimis range could reduce the value of coverage for 
consumers compared to a narrower de minimis range, which could lead to 
more consumers facing increases in out-of-pocket expenses, thus 
increasing their exposure to financial risks associated with high 
medical costs. However, providing issuers with additional flexibility 
could help stabilize premiums over time, increase issuer participation, 
and ultimately provide consumers with more coverage options at the 
silver level and above, thereby attracting more young and healthy 
enrollees into plans at these levels.
    In the short term, the benchmark plans used to calculate the amount 
of APTCs available to consumers below 400 percent of FPL could be based 
on a plan at the lower end of the new de minimis range that has lower 
premiums, meaning that a lower APTC amount could be available to all 
consumers eligible for APTC to retain current coverage. The impact of 
the policy is dependent on which plans consumers choose to enroll in 
and the plans that are available in the market. Consumers whose APTC 
decreases could instead choose a plan with lower premiums to mitigate 
an increase in the amount of premium they owe, but that plan may have 
higher cost sharing to offset the decrease in premium. Specifically, 
enrollees who choose to use their APTC amounts to purchase coverage for 
lower priced plans, such as bronze or lowest cost silver, could also be 
negatively impacted. Assuming issuers offer silver metal tier plans at 
the lower end of the new de minimis range, when individuals who are 
eligible for CSRs choose the silver plan variations, there could be an 
increase of CSRs for the lower AV plan to reach the plan variation's 
AV. Individuals with a household income up to 250 percent of FPL, who 
enroll in a CSR silver plan variation, will receive additional CSRs to 
make up the difference between the lower AV of the standard silver plan 
and the CSR silver plan variation. Individuals with a household income 
in the range of 250 to 400 percent of FPL do not currently receive CSRs 
and cannot choose to enroll in a silver plan variation will experience 
greater out of

[[Page 18371]]

pocket expenses. Previously, providing a reduced maximum annual 
limitation on cost sharing for a 70 percent AV plan would have resulted 
in an AV of the standard silver plan being outside of the de minimis 
range unless substantive increases to other cost-sharing parameters are 
made. These individuals in the range of 250 to 400 percent of FPL may 
be affected by the policy finalized in this rule because they will not 
have the choice to enroll in CSR silver plan variations to cover the 
difference from the increased cost sharing from the standard silver 
plan.
    As discussed in the proposed rule, we considered creating a new 70 
percent silver plan variation for enrollees between 250 and 400 percent 
of FPL. In response to comments, we analyzed the effect of reducing the 
maximum annual limitation on cost sharing based on how we calculated 
the 2018 reduced maximum annual limitation on cost sharing. We found 
that it is possible to design plans at 66 percent AV and still be below 
70 percent AV when the maximum annual limitation on cost sharing is 
reduced. However, we are not certain what the AV spread of plan designs 
will be under the finalized policy, whether issuers will in fact reduce 
the AVs of their base silver plans to the lower end of the de minimis 
range, and whether issuers will retain plan designs above the 70 
percent AV range. Therefore, we intend to monitor 2018 standard silver 
plan designs to consider whether to require a 70 percent silver plan 
variation or explore other potential means of mitigating the effect on 
affordability for enrollees. For this reason, we are not changing the 
CSR silver plan variation policy for enrollees with incomes between 250 
to 400 percent of FPL or coordinating with IRS to change the way the 
benchmark plans are determined for 2018, but we may explore whether we 
can do so in the future.
    Comment: Some commenters supported the policy for 2018, and some 
commenters did not support applying the policy in 2018. Some commenters 
noted concerns about 2018 State filing deadlines. Some commenters 
requested a revised AV Calculator as soon as possible, and some 
commenters noted that the policy could help plans affected by the AV 
Calculator changes.
    Response: As discussed in the proposed rule, we believe that 
changing the AV de minimis range will help retain and attract issuers 
to the non-grandfathered individual and small group markets, which will 
increase competition and choice for consumers, and therefore believe it 
is important to finalize the change for 2018. We agree with commenters 
that increased flexibility in the de minimis range could be helpful for 
plans affected by AV Calculator changes. Furthermore, while we 
recognize that AVs typically increase each year, flexibility in the de 
minimis range will give these plans greater flexibility to grow in 
future years. We appreciate the importance of releasing a revised AV 
Calculator, and are releasing the revised AV Calculator concurrently 
with this rule.\29\ Because the AV range is widening and not narrowing, 
we believe that the policy will not create difficulties in meeting the 
State filing deadlines.
---------------------------------------------------------------------------

    \29\ A Revised Final 2018 AV Calculator, User Guide and 
Methodology are posted on CCIIO's Web site under ``Plan Management'' 
at https://www.cms.gov/cciio/resources/regulations-and-guidance/#Plan Management.
---------------------------------------------------------------------------

    Comment: Some commenters commented on the potential impact of the 
proposed policy on plan competition, on whether the proposed policy 
would increase or decrease enrollment or premiums including among 
consumers that may receive a decreased APTC amount, or on whether the 
issuer or the consumer would ultimately benefit under the proposed 
policy with some commenters raising concerns about the purpose and 
impact of the policy discussed in the proposed rule. Some commenters 
questioned the impact of the proposed policy on risk adjustment and on 
current plans being considered the same plan. Other commenters 
commented on applying a de minimis range similar to the proposed policy 
to dental plans, and others submitted comments beyond the scope of the 
proposed rule.
    Response: The risk adjustment model uses metal level specific 
simulated plan liability to predict estimated plan expenditures. The 
model plan designs used to derive plan liability are based on 
representative plans offered by issuers in each metal tier. Given that 
the risk adjustment model estimates relative differences in plan 
liability to calculate risk adjustment transfers and payments based on 
plan risk that may not have been incorporated in rate setting, we 
believe the risk adjustment methodology will continue to function as 
intended to compensate issuers based on relative differences in health 
risk of enrollees. However, in instances where the AV gap between two 
metal tiers is smaller than previously allowed, it is possible that the 
simulated plan liability expenditure differences between metal tiers 
may not be representative of plans offered. Additionally, although 
issuers may offer plans at the lower end of the updated de minimis 
range to obtain competitive advantage, because the risk adjustment 
transfer formula is based on relative plan level differences, and 
incorporates metal level AV, it will continue to preserve the 
calculation of transfers based on relative differences in health risk 
of enrollees across plans. Similarly, the induced utilization factors 
in the current risk adjustment transfer formula represent relative 
differences between the plans and we do not believe the relative 
differences will be affected by the changes in the de minimis range. 
Therefore, we are not making any changes to the risk adjustment 
methodology to accommodate the changes to the de minimis range at this 
time. We intend to monitor the impact of asymmetric changes to the de 
minimis range on plan benefit designs offered, and any impacts on risk 
adjustment methodology and transfer formula calculations. Additionally, 
as we have noted in the 2018 Payment Notice, we anticipate reexamining 
the induced utilization factors in the future as the enrollee-level 
data from the risk adjustment program becomes available.
    Under the exceptions to guaranteed renewability for uniform 
modification of coverage under Sec.  147.106(e), an issuer may, only at 
the time of coverage renewal, modify the health insurance coverage for 
a product offered in the individual market or small group market if the 
modification is consistent with State law and is effective uniformly 
for all individuals or group health plans with that product. To be 
considered a uniform modification of coverage, among other things, each 
plan within the product that has been modified must have the same cost-
sharing structure as before the modification, except any variation in 
cost sharing solely related to changes in cost and utilization of 
medical care, or to maintain the same metal tier level described in 
sections 1302(d) and (e) of the PPACA. States have flexibility to 
broaden what cost-sharing changes are considered within the scope of a 
uniform modification of coverage and may, for example, consider uniform 
cost-sharing changes that result in plans having the same metal level 
based on the expanded de minimis range to be uniform modifications.
    We intend to monitor the impact of this policy on plan design and 
by extension, Exchange enrollment to consider whether further changes 
are needed. We may also consider similar changes for dental plans in 
the future.
2. Network Adequacy (Sec.  156.230)
    In recognition of the traditional role States have in developing 
and enforcing network adequacy standards, we proposed to rely on State 
reviews for

[[Page 18372]]

network adequacy in States in which an FFE is operating, provided the 
State has a sufficient network adequacy review process. For the 2018 
plan year, we proposed to defer to the States' reviews in States with 
the authority that is at least equal to the ``reasonable access 
standard'' identified in Sec.  156.230 and means to assess issuer 
network adequacy.
    We also proposed a change to our approach to reviewing network 
adequacy in States that do not have the authority and means to conduct 
sufficient network adequacy reviews. In those States, we would, for the 
2018 plan year, apply a standard similar to the one used in the 2014 
plan year.\30\ As HHS did in 2014, in States without the authority or 
means to conduct sufficient network adequacy reviews, we proposed for 
2018 to rely on an issuer's accreditation (commercial, Medicaid, or 
Exchange) from an HHS-recognized accrediting entity. HHS has previously 
recognized three accrediting entities for the accreditation of QHPs: 
The National Committee for Quality Assurance, URAC, and Accreditation 
Association for Ambulatory Health Care.\31\ We proposed to utilize 
these same three accrediting entities for network adequacy reviews for 
the 2018 plan year. Unaccredited issuers would be required to submit an 
access plan as part of the QHP Application. To show that the QHP's 
network meets the requirement in Sec.  156.230(a)(2), the access plan 
would need to demonstrate that an issuer has standards and procedures 
in place to maintain an adequate network consistent with the National 
Association of Insurance Commissioners' (NAIC's) Health Benefit Plan 
Network Access and Adequacy Model Act.\32\
---------------------------------------------------------------------------

    \30\ Letter to Issuers on Federally-facilitated and State 
Partnership Exchanges (April 5, 2013). Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2014_letter_to_issuers_04052013.pdf.
    \31\ Recognition of Entities for the Accreditation of Qualified 
Health Plans 77 FR 70163 (November 23, 2012) and Approval of an 
Application by the Accreditation Association for Ambulatory Health 
Care (AAAHC) To Be a Recognized Accrediting Entity for the 
Accreditation of Qualified Health Plans 78 FR 77470 (December 23, 
2013).
    \32\ The National Association of Insurance Commissioners' Health 
Benefit Plan Network Access and Adequacy Model Act is available at 
http://www.naic.org/store/free/MDL-74.pdf.
---------------------------------------------------------------------------

    We proposed that we would further coordinate with States to monitor 
network adequacy, for example, through complaint tracking. We also 
noted that we intended to release an updated timeline for the QHP 
certification process for plan year 2018 that would provide issuers 
with additional time to implement changes that are finalized prior to 
the 2018 coverage year. This new timeline was released on February 17, 
2017,\33\ with a version that includes finalized dates for rate review 
being released concurrently with this rule.
---------------------------------------------------------------------------

    \33\ Key Dates for Calendar Year 2017: QHP Certification in the 
Federally-facilitated Marketplaces; Rate Review; Risk Adjustment and 
Reinsurances, Revised February 2017, available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Revised-Key-Dates-for-Calendar-Year-2017-2-17-17.pdf.
---------------------------------------------------------------------------

    We are finalizing the changes as proposed. The following is a 
summary of the public comments received on the network adequacy 
proposed provisions and our responses:
    Comment: Many commenters supported the proposal to rely on States 
with a sufficient network adequacy review process, to rely on an 
issuer's accreditation in States without a sufficient network adequacy 
review process, and the submission of access plans in States without 
sufficient review for issuers that are unaccredited. Many commenters 
also supported HHS no longer employing the time and distance standard. 
Some commenters recommended that all compliance and complaint tracking 
should be handled solely by States to avoid duplicative oversight and 
stated that States are better positioned to monitor networks.
    Response: We appreciate commenters' support of our proposed policy 
and are finalizing the proposals as proposed. We believe this approach 
affirms the traditional role of States in overseeing network adequacy 
standards.
    Comment: One commenter recommended that HHS rely on State review of 
network adequacy for SADPs in all States, rather than applying an 
accreditation standard to SADPs in States that do not have network 
adequacy review authority, because dental issuers do not get 
accredited.
    Response: In States that are determined to not have sufficient 
network adequacy review, HHS will require SADPs to submit an access 
plan that demonstrates that the issuer has standards and procedures in 
place to maintain an adequate network consistent with NAIC's Health 
Benefit Plan Network Access and Adequacy Model Act (NAIC Model Act).
    Comment: Many other commenters opposed the proposed change to rely 
primarily on State review of network adequacy and raised concerns that 
this could decrease healthcare access and create disparities in access 
to and quality of providers for consumers depending on their State or 
could lead to narrow networks.
    Response: We appreciate the concerns, and recognize the importance 
of patients having access to adequate networks. However, we believe 
that States are best positioned to determine what constitutes an 
adequate network in their geographic area. We do not believe relying on 
State reviews in States that have the authority and means to conduct 
sufficient network adequacy reviews will translate to decreased access 
to providers. We look forward to working closely with States in this 
area as we implement the new network adequacy review approach. We also 
plan to continue to monitor the States' implementation of the NAIC 
Model Act, and we intend to use that information to shape future 
network adequacy policy. We also plan to provide information to issuers 
about which States have been determined not to have sufficient network 
adequacy processes in the near future.
    Comment: Some commenters stated that accreditation is not a 
substitute for a robust provider network and that accreditation 
organizations can only revoke accreditation and do not provide ongoing 
oversight of QHP issuers and advocated for the continuation of time and 
distance criteria. One State commented that it relies on HHS for the 
evaluation of network adequacy and questioned if relying upon the 
issuer's accreditation will be sufficient.
    Response: We appreciate the comments regarding these concerns. 
Accredited issuers are required to develop reasonable standards for 
access and availability of services and measure themselves against 
those standards. Further, we believe that the requirement for 
unaccredited issuers to submit an access plan to demonstrate that an 
issuer has standards and procedures in place to maintain an adequate 
network consistent with the NAIC Model Act will ensure an issuer has a 
sufficient provider network. We are finalizing this proposal as 
proposed.
3. Essential Community Providers (Sec.  156.235)
    Essential community providers (ECPs) include providers that serve 
predominantly low-income and medically underserved individuals, and 
specifically include providers described in section 340B of the PHS Act 
and section 1927(c)(1)(D)(i)(IV) of the Act. Section 156.235 
establishes requirements for inclusion of ECPs in QHP provider networks 
and provides an alternate standard for issuers that provide a majority 
of covered services through employed physicians or a single contracted 
medical group.
    For conducting upcoming reviews of the ECP standard for QHP and 
SADP certification for the 2018 plan year, we

[[Page 18373]]

proposed to follow the approach previously finalized in the 2018 
Payment Notice and outlined in the 2018 Letter to Issuers in the 
Federally-facilitated Marketplaces, with two changes as outlined below. 
States performing plan management functions in the FFEs would be 
permitted to use a similar approach.
    Section 156.235(a)(2)(i) stipulates that a plan has a sufficient 
number and geographic distribution of ECPs if it demonstrates, among 
other criteria, that the network includes as participating 
practitioners at least a minimum percentage, as specified by HHS. For 
the 2014 plan year, we set this minimum percentage at 20 percent, but, 
starting with the 2015 Letter to Issuers in the Federally-facilitated 
Marketplaces, we increased the minimum percentage to 30 percent.\34\ 
For certification for the 2018 plan year, we proposed to return to the 
percentage used in the 2014 plan year, and to again consider the issuer 
to have satisfied the regulatory standard if the issuer contracts with 
at least 20 percent of available ECPs in each plan's service area to 
participate in the plan's provider network. The calculation methodology 
outlined in the 2018 Letter to Issuers in the Federally-facilitated 
Marketplaces and 2018 Payment Notice would remain unchanged.
---------------------------------------------------------------------------

    \34\ 2015 Letter to Issuers in the Federally-facilitated 
Marketplaces. Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2015-final-issuer-letter-3-14-2014.pdf.
---------------------------------------------------------------------------

    We stated that we believe this standard will substantially reduce 
the regulatory burden on issuers while preserving adequate access to 
care provided by ECPs. In particular, as noted in the proposed rule, 
the standard would result in fewer issuers needing to submit a 
justification to prove that they include in their provider networks a 
sufficient number and geographic distribution of ECPs to meet the 
standard in Sec.  156.235. For the 2017 plan year, 6 percent of issuers 
were required to submit such a justification. Although none of their 
networks met the 30 percent ECP threshold, all of these justifications 
were deemed sufficient, and each network would have met the 20 percent 
threshold. We anticipate that issuers will readily be able to contract 
with at least 20 percent of ECPs in a service area, and that enrollees 
will have reasonable and timely access to ECPs.
    For certification for the 2018 plan year, we also proposed to 
modify our previous guidance regarding which providers issuers may 
identify as ECPs within their provider networks. Under our current 
guidance, issuers would only be able to identify providers in their 
network who are included on a list of available ECPs maintained by HHS 
(``the HHS ECP list''). This list is based on data maintained by HHS, 
including provider data that HHS receives directly from providers 
through the ECP petition process for the 2018 plan year.\35\ In 
previous years, we also permitted issuers to identify ECPs through a 
write-in process. Because the ECP petition process is intended to 
ensure qualified ECPs are included in the HHS ECP list, we indicated in 
guidance that we would not allow issuers to submit ECP write-ins for 
plan year 2018. However, we are aware that not all qualified ECPs have 
submitted an ECP petition, and therefore have determined the write-in 
process is still needed to allow issuers to identify all ECPs in their 
network. Therefore, as for plan year 2017, for plan year 2018, we 
proposed that an issuer's ECP write-ins would count toward the 
satisfaction of the ECP standard only for the issuer that wrote in the 
ECP on its ECP template, provided that the issuer arranges that the 
written-in provider has submitted an ECP petition to HHS by no later 
than the deadline for issuer submission of changes to the QHP 
application. For example, issuers may write in any providers that are 
currently eligible to participate in the 340B Drug Program described in 
section 340B of the PHS Act \36\ that are not included on the HHS list, 
or not-for-profit or State-owned providers that would be entities 
described in section 340B of the PHS Act but do not receive Federal 
funding under the relevant section of law referred to in section 340B 
of the PHS Act, as long as the provider has submitted a timely ECP 
petition. Such providers include not-for-profit or governmental family 
planning service sites that do not receive a grant under Title X of the 
PHS Act. We believe the proposal would help build the HHS ECP list so 
that it is more inclusive of qualified ECPs and better recognize 
issuers for the ECPs with whom they contract.
---------------------------------------------------------------------------

    \35\ List available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Marketplaces/Downloads/FINAL-CMS-ECP-LIST-PY-2018_12-16-16.xlsx.
    \36\ For a list of types of providers eligible to participate in 
the 340B Drug Program, see https://www.hrsa.gov/opa/eligibilityandregistration/index.html.
---------------------------------------------------------------------------

    As in previous years, if an issuer's application does not satisfy 
the ECP standard, the issuer would be required to include as part of 
its application for QHP certification a satisfactory narrative 
justification describing how the issuer's provider networks, as 
presently constituted, provide an adequate level of service for low-
income and medically underserved individuals and how the issuer plans 
to increase ECP participation in the issuer's provider networks in 
future years. At a minimum, such narrative justification would include 
the number of contracts offered to ECPs for the 2018 plan year; the 
number of additional contracts an issuer expects to offer and the 
timeframe of those planned negotiations; the names of the specific ECPs 
to which the issuer has offered contracts that are still pending; and 
contingency plans for how the issuer's provider network, as currently 
designed, would provide adequate care to enrollees who might otherwise 
be cared for by relevant ECP types that are missing from the issuer's 
provider network.
    For the 2018 plan year, we are finalizing our proposals to decrease 
the minimum ECP threshold from 30 to 20 percent of the available ECPs 
in a plan's service area, and to continue to allow an issuer's ECP 
write-ins to count toward the satisfaction of the ECP standard for only 
the issuer that wrote in the ECP on its ECP template, provided that the 
issuer arranges that the written-in provider has submitted an ECP 
petition to HHS by no later than the deadline for issuer submission of 
changes to the QHP application.
    Comment: Several commenters supported our proposal to decrease the 
minimum ECP threshold from 30 to 20 percent, stating that the lower 
threshold requirement would reduce the administrative burden on 
issuers, especially for those issuers in rural areas or States with few 
ECPs. Other commenters recommended that HHS further lower the ECP 
threshold to 15 percent for dental issuers, due to fewer ECPs that 
offer dental services.
    Response: We appreciate these comments and agree that the lower 20 
percent threshold requirement would reduce the administrative burden on 
issuers without affecting the ability of low-income and medically-
underserved individuals to receive reasonable and timely access to 
care. At this time, we do not believe lowering the ECP threshold to 15 
percent for dental issuers would adequately promote patient access to 
dental ECPs, given that there are fewer available dental ECPs compared 
to medical ECPs for low-income and medically-underserved consumers to 
access dental care.
    Comment: Many commenters opposed our proposal to decrease the 
minimum ECP threshold that an issuer must achieve from 30 to 20 percent 
of the number of available ECPs located in a plan's service area. These 
commenters

[[Page 18374]]

expressed concerns that the lower threshold requirement would result in 
access barriers to care for low-income consumers; restricted access to 
specialty care; dangerous and costly treatment interruptions; 
continuity of care challenges; increased travel time; poor access to 
culturally appropriate healthcare providers; and diminished access to 
community health centers, safety net and children's hospitals, HIV/AIDS 
clinics, and family planning health centers. Many of these commenters 
stated that lowering the ECP threshold to achieve a reduced 
administrative burden on issuers is unnecessary given that 94 percent 
of issuers satisfied the 30 percent threshold for plan year 2017 and 
the remaining 6 percent were able to submit a satisfactory 
justification to meet the ECP regulatory requirement. Several 
commenters opposed the reduction in the threshold requirement, stating 
that the 30 percent threshold for plan year 2017 was not high enough to 
provide sufficient access to ECPs. One commenter supported the decrease 
of the ECP threshold for States with issuers that experienced 
difficulty satisfying the 30 percent threshold, but suggested that 
States with issuers that did not experience any difficulty be given the 
flexibility to require a higher ECP percent threshold.
    Response: We are finalizing our proposal to decrease the ECP 
threshold requirement from 30 to 20 percent for plan year 2018 in an 
effort to reduce the regulatory burden on issuers and stabilize the 
Exchanges. The final rule provides that this threshold will be 
applicable for the 2018 plan year. Given the recent refinements to the 
HHS ECP list through the ECP petition process (for example, the 
addition of newly qualified ECPs and the removal of former ECPs that no 
longer provide care to low-income, medically-underserved populations), 
a 20 percent ECP threshold requirement is expected to adequately 
protect consumer access to ECPs for plan year 2018, while reducing the 
issuer burden that was associated with heavier reliance on the ECP 
write-in process to achieve the 94 percent issuer compliance with the 
30 percent threshold for plan year 2017. We appreciate the suggestion 
to provide States with issuers that did not experience any difficulty 
achieving the 30 percent threshold the flexibility to require a higher 
ECP percent threshold. However, because the lower threshold reduces 
issuer burden while adequately protecting consumer access to ECPs, we 
believe it is important that this change apply in all States with FFEs.
    Comment: All commenters supported the proposal to continue the ECP 
write-in process for the 2018 plan year using the ECP petition process. 
Some commenters stated that it would reduce administrative burden by 
continuing to allow issuers to count providers they have contracted 
with for the 2018 plan year but who missed the ECP petition window for 
the final 2018 plan year ECP list. Other commenters appreciated the 
additional time for providers to petition to be added to the HHS ECP 
list. Several commenters urged that we sunset the ECP write-in process 
for the 2019 plan year and beyond, allowing the 2018 plan year to 
further refine the ECP petition process.
    Response: We are finalizing our proposal to continue the ECP write-
in process for the 2018 plan year using the ECP petition process. We 
agree with commenters that continuation of the ECP write-in process for 
the 2018 plan year using the ECP petition process will ensure that 
issuers are better recognized for the ECPs with whom they contract by 
offering those providers additional time to petition for inclusion on 
the HHS ECP list. We appreciate commenters' recommendations regarding 
the appropriate time to sunset the ECP write-in process, and will take 
these into consideration in the future.
    Comment: Numerous commenters urged that HHS extend the continuity 
of care protections under Sec.  156.230(d) to ECP discontinuations from 
the issuer's provider network across plan years. These commenters 
stated that extending continuity of care provisions to ECPs would have 
negligible impact on issuers because issuers must already follow these 
requirements for provider discontinuations within a plan year. 
Commenters further explained that this protection would discourage 
discriminatory benefit design and support enrollee continuance within 
the same plan, promoting market stability. Without these protections, 
commenters expressed concern that issuers will attempt to shed high-
cost enrollees by eliminating their ECPs from the provider network.
    Response: In the 2017 Payment Notice (81 FR 12204), we finalized 
two policies related to continuity of care at Sec.  156.230(d), which 
began applying in 2017 and apply to ECP terminations. First, we require 
the issuer, under Sec.  156.230(d)(1), to make a good faith effort to 
provide written notice of discontinuation of a provider 30 days prior 
to the effective date of the change, or otherwise as soon as 
practicable, to enrollees who are patients seen on a regular basis by 
the provider or who receive primary care from the provider whose 
contract is being discontinued, irrespective of whether the contract is 
being discontinued due to a termination for cause or without cause, or 
due to a nonrenewal. Second, in cases where a provider is terminated 
without cause, we require the issuer, under Sec.  156.230(d)(2), to 
allow enrollees in an active course of treatment to continue treatment 
until the treatment is complete or for 90 days, whichever is shorter, 
at in-network cost-sharing rates. These policies apply to provider 
transitions that occur because a QHP issuer in an FFE discontinues its 
contract with an ECP. More explicitly, with respect to Sec.  
156.230(d)(1), this policy applies to ECP contract discontinuations, 
irrespective of whether the contract is being discontinued due to a 
termination for cause or without cause, or due to a non-renewal; and 
with respect to Sec.  156.230(d)(2), this policy applies to ECP 
contract discontinuations where a provider is terminated without cause.

IV. Provisions of the Final Regulations

    For the most part, this final rule incorporates the provisions of 
the proposed rule. However, this final rule makes clarifications to the 
scope of the guaranteed availability policy regarding unpaid premiums; 
makes modifications to the provisions relating to special enrollment 
periods; finalizes amendments to Sec.  155.400 to conform to changes 
made in this rule; and makes clarifications regarding States' roles.

V. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 30-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. This 
final rule contains information collection requirements (ICRs) that are 
subject to review by OMB. A description of these provisions is given in 
the following paragraphs, with an estimate of the annual burden. To 
fairly evaluate whether an information collection should be approved by 
OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 
requires that we solicit comments on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.

[[Page 18375]]

     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We solicited public comment on each of these issues for the 
following sections of the proposed rule that contain ICRs.

A. ICRs Regarding Verification of Eligibility for Special Enrollment 
Periods (Sec.  155.420)

    Starting in June 2017, HHS will begin to implement pre-enrollment 
verification of eligibility for all categories of special enrollment 
periods for all States served by the HealthCare.gov platform. 
Currently, individuals self-attest to their eligibility for many 
special enrollment periods and submit supporting documentation, but 
enroll in coverage through the Exchanges without any pre-enrollment 
verification. As mentioned in the preamble to this rule, beginning in 
June 2017, we previously planned to implement a pilot program to 
conduct pre-enrollment verification for a sample of 50 percent of 
consumers attempting to enroll in coverage through special enrollment 
periods. We will now expand pre-enrollment verification to all new 
consumers for applicable special enrollment periods, so that enrollment 
will be delayed or ``pended'' until verification of eligibility is 
completed. Individuals will have to provide supporting documentation 
within 30 days. Where possible, the FFE will make every effort to 
verify an individual's eligibility for the applicable special 
enrollment period through automated electronic means instead of through 
a consumer's submission of documentation. Since consumers currently 
provide required supporting documentation even though there is no pre-
enrollment verification process, the provisions will not impose any 
additional paperwork burden on consumers.
    Based on enrollment data, we estimate that HHS eligibility support 
staff members will conduct pre-enrollment verification for an 
additional 650,000 individuals. Once individuals have submitted the 
required verification documents, we estimate that it will take 
approximately 12 minutes (at an hourly cost of $40.82) to review and 
verify submitted verification documents. The verification process will 
result in an additional annual burden for the Federal government of 
130,000 hours at a cost of $5,306,600.
    We have revised the information collection currently approved under 
OMB control number 0938-1207 (Medicaid and Children's Health Insurance 
Programs: Essential Health Benefits in Alternative Benefit Plans, 
Eligibility Notices, Fair Hearing and Appeal Processes, and Premiums 
and Cost Sharing; Exchanges: Eligibility and Enrollment) to account for 
this additional burden. The 30-day notice soliciting public comment 
will be published in the Federal Register at a future date.
    SBEs that currently do not conduct pre-enrollment verification for 
special enrollment periods are encouraged to follow the same approach. 
States that choose to do so will change their current approach. Under 5 
CFR 1320.3(c)(4), this ICR is not subject to the PRA as we anticipate 
it would affect fewer than 10 entities in a 12-month period.
    Comment: Commenters expressed concerns about the lack of Federal 
staff and resources available to adjudicate documents in a timely 
manner, especially when the work is layered on top of ongoing post-
enrollment documentation verification for inconsistencies. Commenters 
noted the increased costs to the Federal government due to increased 
staffing needs and secure storage of submitted documents, and the 
additional time both consumers and assisters will need to spend to 
adhere to these new requirements. A few commenters indicated that a 
pre-enrollment verification of special enrollment period eligibility 
may also affect other entities, such as issuers and medical providers 
who would incur costs in re-submitting or refiling claims, processing 
retroactive claims, and effectuating retroactive enrollments. One 
commenter suggested that HHS's cost analysis include these costs, as 
well as the consumer cost of spending time requesting that claims be 
re-billed.
    Response: We appreciate the concerns about the increased burden and 
cost that a documentation requirement for pre-enrollment verification 
of eligibility for special enrollment periods will have on all entities 
involved. We are dedicated to reviewing all special enrollment period 
documents received as quickly as possible in order to minimize delays. 
Although we recognize that gathering and submitting these documents can 
be difficult and time consuming, we do not believe that this places a 
new burden on consumers or those providing enrollment assistance since 
consumers are already required to submit documentation to prove their 
eligibility after enrollment for 5 common special enrollment periods. 
Because of our plans for timely document review, we do not believe that 
new costs will be incurred by issuers, medical providers, or consumers 
needing to re-submit, refile, or re-bill for claims for services 
received due to this new requirement.

B. ICRs Regarding Network Adequacy Reviews and Essential Community 
Providers (Sec.  156.230, Sec.  156.235)

    After further review and consideration, HHS has determined that the 
ICRs associated with QHP certification have already been assessed and 
encompassed by CMS-10592/OMB Control No. 0938-1187 (Establishment of 
Exchanges and Qualified Health Plans; Exchange Standards for 
Employers). As such, the proposed ICRs related to QHP certification in 
the proposed rule have been removed in this final rule.

VI. Regulatory Impact Analysis

A. Statement of Need

    As noted previously in the preamble, the Exchanges have experienced 
a decrease in the number of participating issuers and many States have 
recently seen increases in premiums. This final rule, which is being 
published as issuers develop their proposed plan benefit structures and 
premiums for 2018, aims to improve market stability and issuer 
participation in the Exchanges for the 2018 benefit year and beyond. 
This rule also aims to reduce the fiscal and regulatory burden on 
individuals, families, health insurers, patients, recipients of 
healthcare services, and purchasers of health insurance. This rule 
seeks to lower insurance rates and ensure dynamic and competitive 
markets in part by preventing and curbing potential misuse and abuse 
associated with special enrollment periods and gaming by individuals 
taking advantage of the current regulations on grace periods and 
termination of coverage due to the non-payment of premiums.
    This rule addresses these issues by changing a number of 
requirements that HHS believes will provide needed flexibility to 
issuers and help stabilize the individual insurance markets, allowing 
consumers in many State or local markets to retain or obtain health 
insurance while incentivizing issuers to enter, or remain, in these 
markets while returning greater autonomy to the States for a number of 
issues.

B. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-

[[Page 18376]]

354), section 202 of the Unfunded Mandates Reform Act of 1995 (March 
22, 1995, Pub. L. 104-4), Executive Order 13132 on Federalism (August 
4, 1999), the Congressional Review Act (5 U.S.C. 804(2)), and Executive 
Order 13771 on Reducing Regulation and Controlling Regulatory Costs 
(January 30, 2017).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility.
    Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a rule--
(1) having an annual effect on the economy of $100 million or more in 
any 1 year, or adversely and materially affecting a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local or tribal governments or communities 
(also referred to as ``economically significant''); (2) creating a 
serious inconsistency or otherwise interfering with an action taken or 
planned by another agency; (3) materially altering the budgetary 
impacts of entitlement grants, user fees, or loan programs or the 
rights and obligations of recipients thereof; or (4) raising novel 
legal or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in the Executive Order.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with economically significant effects ($100 million or more in any 1 
year), and a ``significant'' regulatory action is subject to review by 
OMB. HHS has concluded that this rule is likely to have economic 
impacts of $100 million or more in at least 1 year, and therefore, 
meets the definition of ``significant rule'' under Executive Order 
12866. Therefore, HHS has provided an assessment of the potential 
costs, benefits, and transfers associated with this rule.
    The provisions in this final rule aim to improve the health and 
stability of the Exchanges. They provide additional flexibility to 
issuers for plan designs, reduce regulatory burden, reduce 
administrative costs, seek to improve issuer risk pools and lower 
premiums by reducing potential gaming and adverse selection and 
incentivize consumers to maintain continuous coverage. Through the 
reduction in financial uncertainty for issuers and increased 
affordability for consumers, these provisions are expected to increase 
access to affordable health coverage. Although there is some 
uncertainty regarding the net effect on enrollment, premiums, and total 
premium tax credit payments by the government, we anticipate that the 
provisions of this final rule will help further HHS's goal of ensuring 
that all consumers have quality, affordable healthcare; that markets 
are stable; and that Exchanges operate smoothly.
    In accordance with Executive Order 12866, HHS has determined that 
the benefits of this regulatory action justify the costs.

C. Impact Estimates and Accounting Table

    In accordance with OMB Circular A-4, Table 1 depicts an accounting 
statement summarizing HHS's assessment of the benefits, costs, and 
transfers associated with this regulatory action.
    The provisions in this rule will have a number of effects, 
including reducing regulatory burden for issuers, reducing the impact 
of adverse selection, stabilizing premiums in the individual insurance 
markets, and providing consumers with more affordable health insurance 
coverage. The effects in Table 1 reflect qualitative impacts and 
estimated direct monetary costs and transfers resulting from the 
provisions of this final rule.

                                                                Table 1--Accounting Table
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Qualitative:
     Improved health and protection from the risk of catastrophic medical expenditures for the previously uninsured, especially individuals with
     medical conditions (if health insurance enrollment increases).\a\..................................................................................
     Cost savings due to reduction in providing medical services (if health insurance enrollment decreases).\a\ \b\.............................
     Cost savings to issuers from not having to process claims while enrollment is ``pended'' during pre-enrollment verification of eligibility
     for special enrollment periods.\c\.................................................................................................................
     Cost savings to the government and plans associated with the reduced open enrollment period................................................
     Costs savings to consumers and issuers due reduced administrative costs to issuers.........................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Qualitative:
     Harms to health and reduced protection from the risk of catastrophic medical expenditures for the previously uninsured, especially
     individuals with medical conditions (if health insurance enrollment decreases).\a\.................................................................
     Cost due to increases in providing medical services (if health insurance enrollment increases).\a\ \b\.....................................
     Possible decrease in quality of medical services (for example, reductions in continuity of care due to lower ECP threshold)................
     Administrative costs incurred by the Federal government and by States that start conducting verification of special enrollment period
     eligibility........................................................................................................................................
     Costs to issuers of redesigning plans......................................................................................................
     Costs to the Federal government and issuers of outreach activities associated with shortened open enrollment period........................
     Administrative costs to stakeholders to read, comprehend and comply with provisions of the final rule......................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
                           Transfers                              Low estimate      High estimate      Year dollar      Discount rate    Period covered
                                                                       (million)         (million)                           (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Monetized ($millions/year).........................              $200              $400              2016                 7         2018-2022
                                                                             200               400              2016                 3         2018-2022
--------------------------------------------------------------------------------------------------------------------------------------------------------
Transfer from Federal Government to issuers and providers via possible increases in CSRs, as well as a transfer of similar magnitude via possible
 reductions in APTC subsidies from some combination of enrollees and issuers to the Federal Government..................................................

[[Page 18377]]

 
Qualitative:
     Transfers, via premium reductions and claim reductions, from special enrollment period applicants who do not provide sufficient
     documentation and their medical providers to all other enrollees and issuers.......................................................................
     Transfers related to changes in AV from enrollees to issuers...............................................................................
     Transfer from enrollees to issuers in the form of payments made for past due premiums......................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ Enrollment may increase due to decreases in premiums resulting from pass-through of administrative cost savings (as listed) and savings associated
  with reductions in special enrollment period or the shortened open enrollment period. Enrollment may decrease due to lessened consumer appeal of
  insurance with reduced AV and less access to ECPs, increases in premiums resulting from pass-through of administrative costs (as listed), former
  special enrollment period users discontinuing participation, or due to shortened enrollment periods. The net effect on enrollment is ambiguous.
\b\ These cost and cost savings generalizations are somewhat oversimplified because uninsured individuals are relatively likely to obtain healthcare
  through high-cost providers (for example, visiting an emergency room for preventive services).
\c\ These savings will potentially be negated as issuers process any claims that occur while being ``pended'' once an enrollee's SEP eligibility has
  been verified.

1. Guaranteed Availability of Coverage
    This final rule provides that, to the extent permitted by 
applicable State law, issuers may apply a premium payment to past-due 
premiums owed for coverage from the same issuer, or another issuer in 
the same controlled group within the prior 12 month period preceding 
the effective date of coverage before effectuating new coverage. 
Individuals with past due premiums will generally owe no more than 1 to 
3 months of past-due premiums. The issuer will have to apply its 
premium payment policy uniformly to all employers or individuals in 
similar circumstances in the applicable market and State and regardless 
of health status and consistent with applicable non-discrimination 
requirements. Furthermore, issuers adopting a premium payment policy, 
as well as any issuers that do not adopt the policy but are within an 
adopting issuer's controlled group, must clearly describe in any 
enrollment application materials and in any notice that is provided 
regarding non-payment of premiums, whether in paper or electronic form, 
the consequences of non-payment on future enrollment. Plan documents 
and related materials are usually reviewed and updated annually before 
a new plan year begins. Issuers may include this information in their 
plan documents and related materials at negligible cost at that time. 
This will reduce misuse of grace periods and the risk of adverse 
selection by consumers while likely also discouraging some individuals 
from obtaining coverage.
    A recent study \37\ surveying consumers with individual market 
plans concluded that approximately 21 percent of consumers stopped 
premium payments in 2015. Approximately 87 percent of those individuals 
repurchased plans in 2016, and 49 percent of these consumers purchased 
the same plan on which they had previously stopped payment.
---------------------------------------------------------------------------

    \37\ 2016 OEP: Reflection on enrollment, Center for U.S. Health 
System Reform, McKinsey & Company, May 2016, available at http://healthcare.mckinsey.com/2016-oep-consumer-survey-findings.
---------------------------------------------------------------------------

    Based on internal analysis, we estimate that approximately one in 
ten enrollees in the FFE had their coverage terminated due to non-
payment of premiums in 2016. We estimate that approximately 86,000 (or 
16 percent) of those individuals whose coverage was terminated due to 
non-payment of premium in 2016 and who lived in an area where their 
2016 issuer was available in 2017 had an active 2017 plan selection 
with the same issuer at the end of the open enrollment period. 
Additionally, for those individuals living in an area where their 2016 
issuer was the only issuer available in 2017, 23 percent of those 
individuals whose coverage was terminated due to non-payment in 2016 
had an active 2017 plan selection with that issuer at the end of the 
open enrollment period--equating to approximately 21,000 individuals. 
In the absence of data, we are unable to determine the amount of past-
due premiums that consumers will have to pay in order to effectuate new 
coverage with the same issuer or an issuer in the same controlled 
group, though individuals will generally owe no more than 1 to 3 months 
of premiums.
2. Open Enrollment Periods
    This final rule amends Sec.  155.410(e) and changes the individual 
market annual open enrollment period for coverage year 2018 to begin on 
November 1, 2017, and run through December 15, 2017. This is expected 
to have a positive impact on the individual market risk pools by 
reducing the risk of adverse selection. However, the shortened 
enrollment period could lead to a reduction in enrollees, primarily 
younger and healthier enrollees who usually enroll late in the 
enrollment period. The change in the open enrollment period could lead 
to additional reductions in enrollment if Exchanges and enrollment 
assisters do not have adequate support, which can lead to potential 
enrollees facing longer wait times. In addition, this change is 
expected to simplify operational processes for issuers and the 
Exchanges. However, the Federal government, SBEs, and issuers may incur 
costs if additional consumer outreach is needed.
3. Special Enrollment Periods
    Special enrollment periods ensure that people who lose health 
insurance during the year (for example, through non-voluntary loss of 
minimum essential coverage provided through an employer), or who 
experience other qualifying events such as marriage or birth or 
adoption of a child, have the opportunity to enroll in new coverage or 
make changes to their existing coverage. In the individual market, 
while the annual open enrollment period allows previously uninsured 
individuals to enroll in new insurance coverage, special enrollment 
periods are intended to promote continuous enrollment in health 
insurance coverage during the benefit year by allowing those who were 
previously enrolled in coverage to obtain new coverage without a lapse 
or gap in coverage.
    However, allowing previously uninsured individuals to enroll in 
coverage via a special enrollment period that they would not otherwise 
qualify for can increase the risk of adverse selection, negatively 
impact the risk pool, contribute to gaps in coverage, and contribute to 
market instability and reduced issuer participation.
    Currently, in many cases, individuals self-attest to their 
eligibility for most special enrollment periods and submit supporting 
documentation, but enroll in coverage through the Exchanges without 
further pre-enrollment verification. As mentioned earlier in the 
preamble, in 2016 we took several steps to further

[[Page 18378]]

verify eligibility for special enrollment periods and planned to 
implement a pilot program to conduct pre-enrollment verification for a 
sample of 50 percent of consumers attempting to enroll in coverage 
through special enrollment periods. The provisions finalized in this 
rule will increase the scope of pre-enrollment verification, strengthen 
and streamline the parameters of several existing special enrollment 
periods, and limit several other special enrollment periods. Starting 
in June 2017, new consumers in all States served by the HealthCare.gov 
platform attempting to enroll through applicable special enrollment 
periods will have to undergo pre-enrollment verification of 
eligibility, so that their enrollment would be delayed or ``pended'' 
until verification of eligibility is completed by the Exchange. Where 
possible, the FFE will make every effort to verify an individual's 
eligibility for a special enrollment period through automated 
electronic means instead of through documentation. Based on past 
experience, we estimate that the expansion in pre-enrollment 
verification to all individuals seeking to enroll in coverage through 
all applicable special enrollment periods will result in an additional 
650,000 individuals having their enrollment delayed or ``pended'' 
annually until eligibility verification is completed. As discussed 
previously in the Collection of Information Requirements section, there 
will be an increase in costs to the Federal government for conducting 
the additional pre-enrollment verifications. SBEs that begin to conduct 
pre-enrollment verification will incur administrative costs to conduct 
those reviews. We anticipate that there will be a reduction in costs to 
issuers since they will not have to process any claims while the 
enrollments are ``pended'', though these savings may be negated as 
issuers process any claims that occur while an enrollment is ``pended'' 
once an enrollee's special enrollment period eligibility has been 
verified.
    The changes will promote continuous coverage and allow individuals 
who qualify for a special enrollment period to obtain coverage, while 
ensuring that uninsured individuals who do not qualify for a special 
enrollment period obtain coverage during open enrollment instead of 
waiting until they get sick, which is expected to protect the Exchange 
risk pools, enhance market stability, and in doing so, limit rate 
increases. On the other hand, it is possible that the additional steps 
required to verify eligibility may discourage some eligible individuals 
from obtaining coverage, and reduce access to healthcare for those 
individuals, increasing their exposure to financial risk. If it deters 
younger and healthier individuals from obtaining coverage, it can also 
worsen the risk pool.
    If pre-enrollment verification causes premiums to fall and all 
individuals who inappropriately enrolled via special enrollment periods 
continue to be covered, there will be a transfer from such individuals 
to other consumers. Conversely, if some individuals are no longer able 
to enroll via special enrollment periods, they will experience reduced 
access to healthcare. If there is a significant decrease in 
enrollment,\38\ especially for younger and healthier individuals, it is 
possible that premiums will not fall, and potentially might increase.
---------------------------------------------------------------------------

    \38\ As some commenters noted, preliminary data regarding HHS's 
special enrollment confirmation process did indicate a decrease in 
special enrollment period plan selection. See, Frequently Asked 
Questions Regarding Verification of Special Enrollment Periods 
(Sept. 6, 2016) available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/FAQ-Regarding-Verification-of-SEPs.pdf.
---------------------------------------------------------------------------

    Office of the Actuary analysis of the net effect of pre-enrollment 
verification and other special enrollment period changes estimated that 
premiums will be approximately 1.5 percent lower. The premium 
difference was calculated by taking into account the greater claims 
cost per member per month for enrollees through special enrollment 
periods and fewer enrollees through special enrollment periods.
4. Levels of Coverage (Actuarial Value)
    We are amending the de minimis range included in Sec.  156.140(c), 
to a variation of -4/+2 percentage points, rather than +/- 2 percentage 
points for all non-grandfathered individual and small group market 
plans (other than bronze plans meeting certain conditions) that are 
required to comply with AV for plans beginning in 2018. We are also 
amending the expanded de minimis range for certain bronze plans from -
2/+5 percentage points to -4/+5 percentage points to align with the 
policy in this rule for the same timeline. While we are modifying the 
de minimis range for the metal level plans (bronze, silver, gold, and 
platinum), we are not modifying the de minimis range for the silver 
plan variations (the plans with an AV of 73, 87 and 94 percent) under 
Sec. Sec.  156.400 and 156.420. In the short run, the impact of this 
change will be to generate a transfer of costs from consumers to 
issuers. The change in AV may reduce the value of coverage for 
consumers, which can lead to more consumers facing increases in out-of-
pocket expenses, thus increasing their exposure to financial risks 
associated with high medical costs. However, providing issuers with 
additional flexibility can help stabilize premiums over time, increase 
issuer participation and ultimately provide more coverage options at 
the silver level and above, thereby attracting more young and healthy 
enrollees into plans at these levels.
    Taking into account limits on design flexibilities for bronze plans 
and related to State limits on flexibility, the Office of the Actuary 
analysis estimated that the change in AV will lead to a 0.75 percent 
reduction in total premiums. This analysis estimated that the change to 
the de minimis range would reduce premiums for the non-subsidized 
population at the silver, gold, and platinum metal levels.
    The lower AV will decrease plan liability for non-cost-sharing 
variation plans in silver, gold, and platinum and therefore premiums 
for non-subsidized enrollees will have a proportional reduction in 
premiums comparable to the reduction in AV.
    A reduction in premiums will likely also reduce the benchmark 
premium for purposes of the premium tax credit, leading to a transfer 
from APTC (or premium tax credit) recipients to the government. One 
commenter estimated that if the AV for all benchmark silver level plans 
were to decrease from 68 to 66 percent AV, this would result in a 
decrease of the benchmark premium by $131 per year, which would reduce 
APTCs the Federal government provides to consumers by $381 million 
dollars per year (holding enrollment constant). We agree with the 
commenter's assessment that lower financial assistance in the form of 
APTCs is likely. The premium reduction measures total premium 
reductions not the effects of lower APTC on net premiums for subsidized 
enrollees. With a decrease in the benchmark premium and therefore the 
APTC, enrollees, particularly subsidized enrollees who purchase plans 
with premiums less than the second lowest cost silver plan, could have 
higher net premiums than in prior years.
    The decrease in the de minimis range for the silver metal tier will 
also affect the value of cost-sharing reductions provided to 
individuals who qualify for CSRs, with the magnitude of the impact 
based on individual income levels. Currently, individuals with a 
household income in the range of 250 to 400 percent of FPL do not 
receive any CSRs because reductions to the maximum

[[Page 18379]]

annual limitation on cost sharing under the previous de minimis range 
of 68 percent-72 percent AV, without substantive increases to other 
cost sharing parameters would have resulted in an AV that exceeded the 
statutory maximum 70 percent AV. Because enrollees with incomes between 
250 to 400 percent of FPL do not receive CSRs, the lower AV for the 
silver metal tier will result in higher cost sharing for these 
individuals. However, individuals with a household income up to 250 
percent of FPL, who enroll in a CSR silver plan variation, will benefit 
from additional CSRs that the issuer will provide to make up the 
difference between the lower AV of silver metal tier standard plans and 
the CSR silver plan variation AV. As part of CSR reconciliation, HHS 
will continue to calculate CSR amounts provided based on the cost 
sharing that the individual would have otherwise paid in a standard 
plan. That is, if the standard plan the CSR-eligible enrollee chooses 
is now a 66 percent AV plan, with a de minimis variation of 4 percent 
below 70 percent AV (or 2 percentage points below the lowest available 
silver plan at 68 percent AV previously), the CSRs provided will equal 
the difference between the value of CSRs in the applicable CSR silver 
plan variation (either 73 percent, 87 percent, 94 percent AV), and the 
standard plan (66 percent), which will be greater than the CSRs 
provided if the standard silver plan has +/-2 percent allowable 
variation. Based on the most recent data on CSRs provided by CSR plan 
variations, steady-state enrollment in CSR plans, and an increase in 
CSRs provided based on a conservative range of 30 to 50 percent of CSR 
eligible individuals choosing a standard silver plan with lower AV than 
previously available, we estimate the lowered AV under the new de 
minimis range will increase the CSRs provided to enrollees in 2018 by 
approximately $200 million to $400 million or approximately an amount 
equal to the expected reduction in APTCs (or premium tax credits) 
described above in this section.
5. Network Adequacy
    Section 156.230(a)(2) requires a QHP issuer to maintain a network 
that is sufficient in number and types of providers, including 
providers that specialize in mental health and substance abuse 
services, to assure that all services will be accessible without 
unreasonable delay. For the 2018 plan year, HHS will defer to the 
State's reviews in States with authority and means to assess issuer 
network adequacy; while in States without authority and means to 
conduct sufficient network adequacy reviews, HHS will rely on an 
issuer's accreditation (commercial, Medicaid, or Exchange) from an HHS-
recognized accrediting entity. Unaccredited issuers in States without 
network adequacy review will be required to submit an access plan as 
part of the QHP Application. This may reduce administrative costs for 
issuers, which can ultimately lead to reduced premiums for consumers.
    Depending on the level of review by State regulators and 
accrediting entities, this can have an impact on plan design. Issuers 
can potentially use network designs to encourage enrollment into 
certain plans, exacerbating selection pressures. The net effect on 
consumers is uncertain.
6. Essential Community Providers
    Section 156.235(a)(2)(i) stipulates that a plan has a sufficient 
number and geographic distribution of ECPs if it demonstrates, among 
other criteria, that the network includes as participating 
practitioners at least a minimum percentage, as specified by HHS. For 
the 2014 plan year, this minimum percentage was 20 percent, but 
starting with the 2015 Letter to Issuers in the Federally-facilitated 
Marketplaces, we increased the minimum percentage to 30 percent. For 
certification and recertification for the 2018 plan year, we will 
instead consider the issuer to have satisfied the regulatory standard 
if the issuer contracts with at least 20 percent of available ECPs in 
each plan's service area to participate in the plan's provider network. 
In addition, we are reversing our previous guidance that we were 
discontinuing the write-in process for ECPs, and will continue to allow 
this process for the 2018 plan year. If an issuer's application does 
not satisfy the ECP standard, the issuer will be required to include as 
part of its application for QHP certification a satisfactory narrative 
justification describing how the issuer's provider networks, as 
presently constituted, provide an adequate level of service for low-
income and medically underserved individuals and how the issuer plans 
to increase ECP participation in the issuer's provider networks in 
future years. We expect that issuers will be able to meet this 
requirement, with the exception of issuers that do not have any ECPs in 
their service area.
    Less expansive requirements for network size will lead to both 
costs and cost savings. Costs can take the form of increased travel 
time and wait time for appointments or reductions in continuity of care 
for those patients whose providers have been removed from their 
insurance issuers' networks.
    Cost savings for issuers will be associated with reductions in 
administrative costs of arranging contracts, meeting QHP certification 
requirements, and, if issuers focus their networks on relatively low-
cost providers to the extent possible, reductions in the cost of 
healthcare provision.
7. Uncertainty
    The net effect of these provisions on enrollment, premiums and 
total premium tax credit payments are uncertain. That is, premiums will 
tend to fall if more young and healthy individuals obtain coverage, 
adverse selection is reduced and issuers are able to lower costs due to 
reduced regulatory burden, and offer greater flexibility in plan 
design. However, if changes such as a shortened open enrollment period, 
pre-enrollment verification for special enrollment periods, reduced AV 
of plans, or less expansive provider networks result in lower 
enrollment, especially for younger, healthier adults, it will tend to 
increase premiums. Lower premiums in turn will increase enrollment, 
while higher premiums will have the opposite effect. In addition, lower 
premiums will tend to decrease total premium tax credit payments, which 
can be offset by an increase in enrollment. Increased enrollment will 
lead to an overall increase in healthcare spending by issuers, while a 
decrease in enrollment will lower it, although the effect on total 
healthcare spending is uncertain, since uninsured individuals are more 
likely to obtain healthcare through high cost providers such as 
emergency rooms.

D. Regulatory Alternatives Considered

    In developing the final rule, we considered maintaining the status 
quo with respect to our interpretation of guaranteed availability, 
network adequacy requirements, and essential community provider 
requirements. However, we determined that the changes are urgently 
needed to stabilize markets, to incentivize issuers to enter into or 
remain in the market and to ensure premium stability and consumer 
choice.
    With respect to the provision regarding essential community 
providers, we considered proposing a minimum threshold other than 20 
percent, but believed that reverting to the previously used 20 percent 
threshold that issuers were used to would better help stabilize the 
markets, while adequately protecting access to ECPs.

[[Page 18380]]

    We also considered keeping the current individual market open 
enrollment period for 2018 coverage, but determined that an immediate 
change would have a positive impact on the individual market risk pools 
by reducing the risk of adverse selection and that the market is mature 
enough for an immediate transition.
    In addition, we considered increasing the scope of pre-enrollment 
verification for certain special enrollment periods to 90 percent 
instead of 100 percent. This would have allowed us to maximize the 
verification of eligibility while providing some control population for 
claims comparison as envisioned by the scaled pilot. We solicited 
comment on the issue, but noted that we believe that in order to 
minimize the risk of adverse selection, complete pre-enrollment 
verification for special enrollment periods is necessary. We also 
considered maintaining the existing parameters around special 
enrollment periods so that the individual market special enrollment 
periods would continue to align with group market policies. However, 
HHS determined that aspects of the individual market and the unique 
threats of adverse selection in this market justified a departure from 
the group market policies.
    With respect to the provision regarding AV, we considered proposing 
that the change would be effective for the 2019 plan year, but 
determined that an immediate change would have a positive impact on the 
markets for the 2018 plan year.

E. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601, et seq.) requires 
agencies to prepare a 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.'' 
HHS uses a change in revenues of more than 3 to 5 percent as its 
measure of significant economic impact on a substantial number of small 
entities.
    This rule will affect health insurance issuers. We believe that 
health insurance issuers would be classified under the North American 
Industry Classification System code 524114 (Direct Health and Medical 
Insurance Carriers). According to SBA size standards, entities with 
average annual receipts of $38.5 million or less would be considered 
small entities for these North American Industry Classification System 
codes. Issuers could possibly be classified in 621491 (HMO Medical 
Centers) and, if this is the case, the SBA size standard would be $32.5 
million or less.\39\ We believe that few, if any, insurance companies 
underwriting comprehensive health insurance policies (in contrast, for 
example, to travel insurance policies or dental discount policies) fall 
below these size thresholds. Based on data from MLR annual report 
submissions for the 2015 MLR reporting year, approximately 97 out of 
528 issuers of health insurance coverage nationwide had total premium 
revenue of $38.5 million or less. This estimate may overstate the 
actual number of small health insurance companies that would be 
affected, since almost 74 percent of these small companies belong to 
larger holding groups, and many, if not all, of these small companies 
are likely to have non-health lines of business that would result in 
their revenues exceeding $38.5 million for Direct Health and Medical 
Insurance Carriers or $32.5 million for HMO Medical Centers.
---------------------------------------------------------------------------

    \39\ ``Table of Small Business Size Standards Matched to North 
American Industry Classification System Codes'', effective February 
26, 2016, U.S. Small Business Administration, available at https://www.sba.gov/contracting/getting-started-contractor/make-sure-you-meet-sba-size-standards/table-small-business-size-standards.
---------------------------------------------------------------------------

    HHS is not preparing an analysis for the RFA because it has 
determined, and the Secretary certifies, that this rule will not have a 
significant economic impact on a substantial number of small entities.

F. Unfunded Mandates

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires that agencies assess anticipated costs and benefits and take 
certain other actions before issuing a rule that includes any Federal 
mandate that may result in expenditures in any 1 year by State, local, 
or Tribal governments, in the aggregate, or by the private sector, of 
$100 million in 1995 dollars, updated annually for inflation. 
Currently, that threshold is approximately $146 million. Although we 
have not been able to quantify all costs, we expect the combined impact 
on State, local, or Tribal governments and the private sector to be 
below the threshold.

G. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a rule that imposes substantial 
direct costs on State and local governments, preempts State law, or 
otherwise has Federalism implications.
    In HHS's view, while this final rule will not impose substantial 
direct requirement costs on State and local governments, this 
regulation has Federalism implications due to direct effects on the 
distribution of power and responsibilities among the State and Federal 
governments relating to determining standards relating to health 
insurance that is offered in the individual and small group markets. 
However, HHS anticipates that the Federalism implications (if any) are 
substantially mitigated because under the statute and this final rule, 
States have choices regarding the structure, governance, and operations 
of their Exchanges. This rule strives to increase flexibility for SBEs. 
For example, we recommend, but do not require, that SBEs engage in pre-
enrollment verification with respect to special enrollment periods; and 
we will defer to State network adequacy reviews provided the States 
have the authority and the means to conduct network adequacy reviews. 
Additionally, the PPACA does not require States to establish these 
programs; if a State elects not to establish any of these programs or 
is not approved to do so, HHS must establish and operate the programs 
in that State.
    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, HHS 
has engaged in efforts to consult with and work cooperatively with 
affected States, including participating in conference calls with and 
attending conferences of the National Association of Insurance 
Commissioners, and consulting with State insurance officials on an 
individual basis.
    While developing this rule, HHS attempted to balance the States' 
interests in regulating health insurance issuers with the need to 
ensure market stability. By doing so, it is HHS's view that we have 
complied with the requirements of Executive Order 13132.

H. Congressional Review Act

    This rule is subject to the Congressional Review Act provisions of 
the Small Business Regulatory Enforcement Fairness Act of 1996 (5

[[Page 18381]]

U.S.C. 801, et seq.), which specifies that before a rule can take 
effect, the Federal agency promulgating the rule shall submit to each 
House of the Congress and to the Comptroller General a report 
containing a copy of the rule along with other specified information, 
and has been transmitted to Congress and the Comptroller for review.

I. Reducing Regulation and Controlling Regulatory Costs

    Executive Order 13771, entitled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017. Section 2(a) of 
Executive Order 13771 requires an agency, unless prohibited by law, to 
identify at least two existing regulations to be repealed when the 
agency publicly proposes for notice and comment or otherwise 
promulgates a new regulation. In furtherance of this requirement, 
section 2(c) of Executive Order 13771 requires that the new incremental 
costs associated with new regulations shall, to the extent permitted by 
law, be offset by the elimination of existing costs associated with at 
least two prior regulations. It has been determined that this final 
rule does not impose costs that trigger the above requirements of 
Executive Order 13771.

List of Subjects

45 CFR Part 147

    Health care, Health insurance, Reporting and recordkeeping 
requirements.

45 CFR Part 155

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

45 CFR Part 156

    Administrative practice and procedure, Advertising, American 
Indian/Alaska Natives, Conflict of interest, Consumer protection, Cost-
sharing reductions, Grant programs-health, Grants administration, 
Health care, Health insurance, Health maintenance organization (HMO), 
Health records, Hospitals, Individuals with disabilities, Loan 
programs-health, Medicaid, Organization and functions (Government 
agencies), Public assistance programs, Reporting and recordkeeping 
requirements, State and local governments, Sunshine Act, Technical 
assistance, Women, Youth.

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

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

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

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


0
2. Section 147.104 is amended by adding paragraph (b)(2)(iii) to read 
as follows:


Sec.  147.104  Guaranteed availability of coverage.

* * * * *
    (b) * * *
    (2) * * *
    (iii) Notwithstanding anything to the contrary in Sec.  155.420(d) 
of this subchapter, Sec.  155.420(a)(4) of this subchapter does not 
apply to limited open enrollment periods under paragraph (b)(2) of this 
section.
* * * * *

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

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

    Authority:  Title I of the Affordable Care Act, sections 1301, 
1302, 1303, 1304, 1311, 1312, 1313, 1321, 1322, 1331, 1332, 1334, 
1402, 1411, 1412, 1413, Pub. L. 111-148, 124 Stat. 119 (42 U.S.C. 
18021-18024, 18031-18033, 18041-18042, 18051, 18054, 18071, and 
18081-18083).

0
4. Section 155.400 is amended by adding paragraph (e)(1)(iv) to read as 
follows:


Sec.  155.400  Enrollment of qualified individuals into QHPs.

* * * * *
    (e) * * *
    (1) * * *
    (iv) Notwithstanding the requirements in paragraphs (e)(1)(i) 
through (iii) of this section, for coverage to be effectuated after 
pended enrollment due to special enrollment period eligibility 
verification, the binder payment must consist of the premium due for 
all months of retroactive coverage through the first prospective month 
of coverage consistent with the coverage effective dates described in 
Sec.  155.420(b)(1), (2) and (3) or, if elected, Sec.  155.420(b)(5) 
and the deadline for making the binder payment must be no earlier than 
30 calendar days from the date the issuer receives the enrollment 
transaction.
* * * * *

0
5. Section 155.410 is amended by revising paragraphs (e)(2) and (3) to 
read as follows:


Sec.  155. 410  Initial and annual open enrollment periods.

* * * * *
    (e) * * *
    (2) For the benefit years beginning on January 1, 2016 and January 
1, 2017, the annual open enrollment period begins on November 1 of the 
calendar year preceding the benefit year, and extends through January 
31 of the benefit year.
    (3) For the benefit years beginning on or after January 1, 2018, 
the annual open enrollment period begins on November 1 and extends 
through December 15 of the calendar year preceding the benefit year.
* * * * *

0
6. Section 155.420 is amended by:
0
a. Adding paragraph headings for paragraphs (a)(1) and (2);
0
b. Adding paragraphs (a)(3) through (5);
0
c. Revising paragraphs (b)(1) introductory text, (b)(5), and (d) 
introductory text;
0
d. Adding paragraph (d)(2)(i)(A) and reserved paragraph (d)(2)(i)(B); 
and
0
e. Revising paragraph (d)(7).
    The additions and revisions read as follows:


Sec.  155.420  Special enrollment periods.

    (a) * * *
    (1) General parameters. * * *
    (2) Definition of dependent. * * *
    (3) Use of special enrollment periods. Except in the circumstances 
specified in paragraph (a)(4) of this section, the Exchange must allow 
a qualified individual or enrollee, and when specified in paragraph (d) 
of this section, his or her dependent to enroll in a QHP if one of the 
triggering events specified in paragraph (d) of this section occur.
    (4) Use of special enrollment periods by enrollees. (i) If an 
enrollee has gained a dependent in accordance with paragraph (d)(2)(i) 
of this section, the Exchange must allow the enrollee to add the 
dependent to his or her current QHP, or, if the current QHP's business 
rules do not allow the dependent to enroll, the Exchange must allow the 
enrollee and his or her dependents to

[[Page 18382]]

change to another QHP within the same level of coverage (or one metal 
level higher or lower, if no such QHP is available), as outlined in 
Sec.  156.140(b) of this subchapter, or, at the option of the enrollee 
or dependent, enroll the dependent in any separate QHP.
    (ii) If an enrollee and his or her dependents become newly eligible 
for cost-sharing reductions in accordance with paragraph (d)(6)(i) or 
(ii) of this section and are not enrolled in a silver-level QHP, the 
Exchange must allow the enrollee and his or her dependents to change to 
a silver-level QHP if they elect to change their QHP enrollment.
    (iii) If an enrollee qualifies for a special enrollment period or 
is adding a dependent to his or her QHP through a triggering event 
specified in paragraph (d) of this section other than those described 
under paragraph (d)(2)(i), (d)(4), (d)(6)(i), (d)(6)(ii), (d)(8), 
(d)(9), or (d)(10), the Exchange must allow the enrollee and his or her 
dependents to make changes to his or her enrollment in the same QHP or 
to change to another QHP within the same level of coverage (or one 
metal level higher or lower, if no such QHP is available), as outlined 
in Sec.  156.140(b) of this subchapter, or, at the option of the 
enrollee or dependent, enroll in any separate QHP.
    (5) Prior coverage requirement. Qualified individuals who are 
required to demonstrate coverage in the 60 days prior to a qualifying 
event can either demonstrate that they had minimum essential coverage 
as described in 26 CFR 1.5000A-1(b) for 1 or more days during the 60 
days preceding the date of the qualifying event; lived in a foreign 
country or in a United States territory for 1 or more days during the 
60 days preceding the date of the qualifying event; or that they are an 
Indian as defined by section 4 of the Indian Health Care Improvement 
Act.
    (b) * * *
    (1) Regular effective dates. Except as specified in paragraphs 
(b)(2), (3), and (5) of this section, for a QHP selection received by 
the Exchange from a qualified individual--
    * * *
    (5) Option for later coverage effective dates due to prolonged 
eligibility verification. At the option of the consumer, the Exchange 
must provide for a coverage effective date that is no more than 1 month 
later than the effective date specified in this paragraph (b) if a 
consumer's enrollment is delayed until after the verification of the 
consumer's eligibility for a special enrollment period, and the 
assignment of a coverage effective date consistent with this paragraph 
(b) would result in the consumer being required to pay 2 or more months 
of retroactive premium to effectuate coverage or avoid cancellation.
* * * * *
    (d) Triggering events. Subject to paragraphs (a)(3) through (5) of 
this section, as applicable, the Exchange must allow a qualified 
individual or enrollee, and, when specified below, his or her 
dependent, to enroll in or change from one QHP to another if one of the 
triggering events occur:
* * * * *
    (2) * * *
    (i) * * *
    (A) In the case of marriage, at least one spouse must demonstrate 
having minimum essential coverage as described in 26 CFR 1.5000A-1(b) 
for 1 or more days during the 60 days preceding the date of marriage.
    (B) [Reserved]
* * * * *
    (7) The qualified individual or enrollee, or his or her dependent, 
gains access to new QHPs as a result of a permanent move and--
    (i) Had minimum essential coverage as described in 26 CFR 1.5000A-
1(b) for one or more days during the 60 days preceding the date of the 
permanent move.
    (ii) [Reserved]
* * * * *

0
 7. Section 155.725 is amended by adding paragraph (j)(7) to read as 
follows:


Sec.  155.725   Enrollment periods under SHOP.

* * * * *
    (j) * * *
    (7) Notwithstanding anything to the contrary in Sec.  155.420(d), 
Sec.  155.420(a)(4) and (d)(2)(i)(A) do not apply to special enrollment 
periods in the SHOP.
* * * * *

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

0
8. The authority citation for part 156 continues to read as follows:

    Authority:  Title I of the Affordable Care Act, sections 1301-
1304, 1311-1313, 1321-1322, 1324, 1334, 1342-1343, 1401-1402, Pub. 
L. 111-148, 124 Stat. 119 (42 U.S.C. 18021-18024, 18031-18032, 
18041-18042, 18044, 18054, 18061, 18063, 18071, 18082, 26 U.S.C. 
36B, and 31 U.S.C. 9701).


0
9. Section 156.140 is amended by revising paragraph (c) to read as 
follows:


Sec.  156.140  Levels of coverage.

* * * * *
    (c) De minimis variation. For plan years beginning on or after 
January 1, 2018, the allowable variation in the AV of a health plan 
that does not result in a material difference in the true dollar value 
of the health plan is -4 percentage points and +2 percentage points, 
except if a health plan under paragraph (b)(1) of this section (a 
bronze health plan) either covers and pays for at least one major 
service, other than preventive services, before the deductible or meets 
the requirements to be a high deductible health plan within the meaning 
of 26 U.S.C. 223(c)(2), in which case the allowable variation in AV for 
such plan is -4 percentage points and +5 percentage points.

CMS-9929-P

    Dated: April 10, 2017.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.

    Dated: April 11, 2017.
Thomas E. Price,
Secretary, Department of Health and Human Services.
[FR Doc. 2017-07712 Filed 4-13-17; 4:15 pm]
 BILLING CODE 4120-01-P