[Federal Register Volume 83, Number 218 (Friday, November 9, 2018)]
[Proposed Rules]
[Pages 56015-56031]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-24504]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 155 and 156

[CMS-9922-P]
RIN 0938-AT53


Patient Protection and Affordable Care Act; Exchange Program 
Integrity

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise standards relating to 
oversight of Exchanges established by states, periodic data matching 
frequency and authority, and the length of a consumer's authorization 
for the Exchange to obtain updated tax information. This proposed rule 
would also propose new requirements for certain issuers related to the 
collection of a separate payment for the premium portion attributable 
to coverage for certain abortion services. Many of these proposed 
changes would help strengthen Exchange program integrity.

DATES: Comments: To be assured consideration, comments must be received 
at one of the addresses provided below, no later than 5 p.m. on January 
8, 2019.

ADDRESSES: In commenting, please refer to file code CMS-9922-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation

[[Page 56016]]

to http://www.regulations.gov. Follow the ``Submit a comment'' 
instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-9922-P, P.O. Box 8016, 
Baltimore, MD 21244-8010.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-9922-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Emily Ames, (301) 492-4246, or 
Christine Hammer, (202) 260-6089, for general information.

SUPPLEMENTARY INFORMATION:
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following 
website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to 
view public comments.

I. Executive Summary

    American Health Benefit Exchanges, or ``Exchanges'' (also called 
``Marketplaces'') are entities established under the Patient Protection 
and Affordable Care Act (Pub. L. 111-148), as amended by the Heath Care 
and Education Reconciliation Act of 2010 (Pub. L. 111-152) 
(collectively referred to as PPACA) through which qualified individuals 
and qualified employers can purchase health insurance coverage. 
Exchanges that were established by states (State Exchanges) include 
State-based Exchanges (SBEs) which perform eligibility and enrollment 
functions, as well as State-based Exchanges on the Federal platform 
(SBE-FPs) that utilize the Federally-facilitated Exchange's 
infrastructure to perform eligibility and enrollment functions. Many 
individuals who enroll in qualified health plans (QHPs) through 
individual market Exchanges are eligible to receive a premium tax 
credit (PTC) to reduce their costs for health insurance premiums, and 
receive reductions in required cost-sharing payments to reduce out-of-
pocket expenses for health care services. Eligible individuals can 
receive the estimated amount of the PTC on an advance basis, known as 
advance payments of the premium tax credit (APTC), in accordance with 
section 1412 of the PPACA.
    Strengthening program integrity with respect to subsidy payments in 
the individual market is a top priority of this Administration. Key 
areas of focus include--(1) ensuring that eligible enrollees receive 
the correct amount of APTC and cost-sharing reduction (CSR) (as 
applicable), and do not receive APTC or CSRs for abortion coverage and/
or services for which such payments are not available under section 
1303 of the PPACA; (2) conducting effective and efficient monitoring 
and oversight of State Exchanges to ensure that consumers are receiving 
the correct amount of APTC and CSRs in SBEs, and that State Exchanges 
are meeting the standards of federal law in a transparent manner; and 
(3) protecting the interests of taxpayers, and consumers, and the 
financial integrity of Federally-facilitated Exchanges (FFEs) through 
oversight of health insurance issuers, including ensuring compliance 
with Exchange requirements, such as maintenance of records and 
participation in investigations and compliance reviews, and with the 
requirements of section 1303 of the PPACA.
    The Department of Health and Human Services (HHS) has recently made 
significant strides in these areas. For example, we have implemented 
policy-based payments in the FFEs and almost all of the SBEs, a 
critical system change across Exchanges and issuers that ensures the 
data used to generate APTC and CSR payments to issuers are verified and 
associated with particular enrollees.
    We also recently implemented pre-enrollment verification of 
eligibility for applicable individual market special enrollment periods 
for all Exchanges served by the federal eligibility and enrollment 
platform (the HealthCare.gov platform), ensuring that only those who 
qualify for special enrollment periods receive them. In the HHS Notice 
of Benefit and Payment Parameters for 2019 Final Rule (83 FR 16930) 
(April 17, 2018), we established a policy to require documentary 
evidence for certain consumers who attest to income that is 
significantly higher than the amount found in the Exchange's income 
data. This new check will be conducted for applicants for whom trusted 
data sources (such as the Internal Revenue Service, the Social Security 
Administration, the Department of Homeland Security, Veterans Health 
Administration, Peace Corps, the Department of Defense, Experian, and 
Carahsoft).\1\ This new check will not be performed with respect to 
non-citizen applicants who are ineligible for Medicaid based on their 
immigration status, as these applicants may be statutorily eligible for 
APTC with annual household income below 100 percent of the FPL. An 
accurate eligibility determination is critical for consumers near this 
threshold to ensure APTC is not paid on behalf of consumers who are 
statutorily ineligible for APTC.
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    \1\ One criterion for eligibility for APTC is an income equal to 
or greater than 100 percent but not greater than 400 percent of an 
amount equal to the poverty line based on family size.
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    In late 2017, we developed an innovative approach to provide 
additional notification to tax filers who, based on Internal Revenue 
Service (IRS) data, had received APTC for a prior benefit year but 
failed to reconcile these payments on their tax returns. The notices 
explained that the tax filer was required to take action to reconcile 
these prior APTC payments, or APTC associated with all enrollees for 
whom the individual is the tax filer would be terminated. While HHS was 
already contacting these affected households through its standard 
annual notification processes, this supplemental notice provided 
further clarification and instruction for the tax filer, while adhering 
to IRS' protocols regarding the safe disclosure of protected federal 
tax information.
    We continue to explore opportunities to improve program integrity. 
We work on an ongoing basis on improving program oversight and 
procedures to conduct comprehensive audits of FFE processes to verify 
their integrity. These efforts further our goal of protecting consumers 
enrolled in FFEs and safeguarding taxpayer dollars. We review consumer 
complaints and allegations of fraud and abuse received by the FFE call 
center from insurers, as well as law enforcement and states. 
Additionally, we analyze data to identify issues and vulnerabilities, 
share relevant information with issuers, and identify administrative 
actions to stop bad actors and protect consumers.
    We are proposing several changes targeting these priorities. First, 
we are planning changes to the current periodic data matching (PDM) 
processes, which are the processes through which Exchanges periodically 
examine

[[Page 56017]]

available data sources to identify changes that would affect enrollees' 
eligibility for subsidies. Second, we are planning to add an optional 
authorization to the Exchange application that would allow an 
individual to authorize the FFE to receive Medicare eligibility and 
enrollment information about the enrollee. If an applicant provides 
this authorization and elects to have the Exchange automatically 
terminate QHP coverage if the applicant is found to be dually enrolled, 
then the FFE will end enrollees' QHP coverage on their behalf in such a 
circumstance, even if the enrollee is not receiving APTC or CSRs. 
Third, we propose to specify that Exchanges must conduct PDM for 
Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and 
the Basic Health Program (BHP), if applicable, at least twice a year, 
beginning with the 2020 calendar year, to ensure that Exchanges make 
adequate efforts to discontinue APTC and CSR for those who are eligible 
for or enrolled in other minimum essential coverage (MEC) and, 
therefore, are ineligible for APTC or CSRs.
    We are also proposing changes to improve program integrity related 
to State Exchanges. To strengthen the mechanisms and tools HHS uses in 
its oversight of compliance by State Exchanges with federal 
requirements, including eligibility and enrollment requirements under 
45 CFR part 155, subparts D and E, we are proposing changes that 
provide further specificity to their program reporting requirements. In 
addition, to ensure proper eligibility determinations and enrollments 
in SBEs, we are proposing to clarify the scope of the annual 
programmatic audits that SBEs are required to conduct and submit 
results of annually to HHS, and include testing of SBE eligibility and 
enrollment transactions in the annual programmatic audits.
    Lastly, we are proposing changes related to the separate payment 
requirement in section 1303 of the PPACA. To align the regulatory 
requirements for issuer billing of the portion of the enrollee's 
premium attributable to certain abortion services with the separate 
payment requirement applicable to issuers offering coverage of these 
services, we are proposing changes to the billing and payment 
collection requirements for QHP issuers in connection with their plans 
offered through an individual market Exchange that include coverage for 
abortion services for which federal funding is prohibited.

II. Background

A. Legislative and Regulatory Overview

    Sections 1311(b) and 1321(b) of the PPACA provide that each state 
has the opportunity to establish an Exchange. Section 1311(b)(1) of the 
PPACA gives each state the opportunity to establish an Exchange that 
both facilitates the purchase of QHPs by individuals and families, and 
provides for the establishment of a Small Business Health Options 
Program (SHOP) that is designed to assist qualified employers in the 
state who are small employers in facilitating the enrollment of their 
employees in QHPs offered in the small group market in the state.
    Section 1313 of the PPACA describes the steps the Secretary of 
Health and Human Services (the Secretary) may take to oversee 
Exchanges' compliance with HHS standards related to Title I of the 
PPACA and ensure their financial integrity, including conducting 
investigations and annual audits.
    Section 1321(a) of the PPACA provides broad authority for the 
Secretary to establish standards and regulations to implement the 
statutory standards related to Exchanges, QHPs, and other standards of 
title I of the PPACA.
    Section 1321(c)(2) of the PPACA authorizes the Secretary to enforce 
the Exchange standards using civil money penalties (CMPs) on the same 
basis as detailed in section 2723(b) of the Public Health Service Act 
(PHS Act). Section 2723(b) of the PHS Act authorizes the Secretary to 
impose CMPs as a means of enforcing the individual and group market 
reforms contained in Part A of title XXVII of the PHS Act when a state 
fails to substantially enforce these provisions.
    Section 1411(c) of the PPACA requires the Secretary to submit 
certain information provided by applicants under section 1411(b) of the 
PPACA to other federal officials for verification, including income and 
family size information to the Secretary of the Treasury.
    Section 1411(d) of the PPACA provides that the Secretary must 
verify the accuracy of information provided by applicants under section 
1411(b) of the PPACA for which section 1411(c) does not prescribe a 
specific verification procedure, in such manner as the Secretary 
determines appropriate.
    Section 1411(f)(1)(B) of the PPACA requires the Secretary to 
establish procedures to redetermine eligibility on a periodic basis, in 
appropriate circumstances, including for eligibility to purchase a QHP 
through the Exchange and for APTC and CSRs.
    Section 1411(g) of the PPACA allows the exchange of applicant 
information only for the limited purposes of, and to the extent 
necessary to, ensure the efficient operation of the Exchange, including 
by verifying eligibility to enroll through the Exchange and for APTC 
and CSRs.
    On October 30, 2013, we published a final rule entitled, ``Patient 
Protection and Affordable Care Act; Program Integrity: Exchange, 
Premium Stabilization Programs, and Market Standards; Amendments to the 
HHS Notice of Benefit and Payment Parameters for 2014,'' (78 FR 65046), 
to implement certain program integrity standards and oversight 
requirements for State Exchanges.
    Section 1303 of the PPACA, as implemented in 45 CFR 156.280, 
specifies standards for issuers of QHPs through the Exchanges that 
cover abortion services for which public funding is prohibited (also 
referred to as non-Hyde abortion services). The statute and regulations 
establish that, unless otherwise prohibited by state law, a QHP issuer 
may elect to cover such non-Hyde abortion services. If an issuer elects 
to cover such services under a QHP sold through an individual market 
Exchange, the issuer must take certain steps to ensure that no PTC or 
CSR funds are used to pay for abortion services for which public 
funding is prohibited. One such step is that individual market Exchange 
issuers must determine the amount of, and collect, from each enrollee, 
a ``separate payment'' for an amount equal to the actuarial value of 
the coverage for abortions for which public funding is prohibited,\2\ 
which must be no less than $1 per enrollee per month. QHP issuers must 
also segregate funds for non-Hyde abortion services collected through 
this payment into a separate allocation account used exclusively to pay 
for non-Hyde abortion services.
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    \2\ Section 1303 also specifies how such actuarial value is to 
be calculated.
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    In the 2012 Exchange Establishment Rule, we codified the statutory 
provisions of section 1303 of the PPACA in regulation at 45 CFR 
156.280. On February 27, 2015, we published the Patient Protection and 
Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 
2016, (80 FR 10750) (herein after referred to as the 2016 Payment 
Notice) providing guidance regarding acceptable billing and premium 
collection methods for the portion of the consumer's total premium 
attributable to non-Hyde abortion coverage for purposes of satisfying 
the statutory separate payment requirement.

[[Page 56018]]

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 State 
Exchanges through the Exchange Blueprint process and ongoing oversight 
and technical assistance engagements, 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

A. Exchange Establishment Standards and Other Related Standards Under 
the Affordable Care Act

1. Functions of an Exchange (Sec.  155.200)
    Section 155.200 of the PPACA establishes the functions that an 
Exchange must perform. Section 155.200(c) of the PPACA specifies that 
the Exchange must perform oversight and financial integrity functions, 
specifically that the Exchange must perform required functions related 
to oversight and financial integrity requirements in accordance with 
section 1313 of the PPACA. HHS interprets this requirement broadly to 
include program integrity functions related to protecting against 
fraud, waste, and abuse, including functions not explicitly identified 
in section 1313 of the PPACA. We believe SBEs have generally 
interpreted this requirement broadly as well, as evidenced by their 
engagement in activities designed to combat fraud and abuse related to 
the Exchange.
    However, questions about the breadth of this function have arisen 
when Exchanges have sought to understand what uses and disclosures of 
personally identifiable information (PII) are permitted under Sec.  
155.260.\3\ Specifically, we have received questions about whether 
Exchanges are permitted under Sec.  155.260 to disclose applicant PII 
to certain entities, such as the state departments of insurance, when 
investigating fraudulent behavior related to Exchange enrollments on 
the part of agents and brokers. We believe that use and disclosure 
related to Exchange program integrity efforts, like combatting fraud, 
currently fall under Sec.  155.200(c), but believe the regulation is 
not as clear as it could be. Therefore, we propose to revise Sec.  
155.200(c) to clarify that the Exchanges must perform oversight 
functions generally, and cooperate with oversight activities, in 
accordance with section 1313 of the PPACA and as required under 45 CFR 
part 155, including overseeing its Exchange programs, Navigators, 
agents, brokers, and other non-Exchange entities as defined in Sec.  
155.260(b). Because this change is a clarification and not a new 
function, we do not believe it would impose additional burdens on State 
Exchanges, but instead would help resolve questions about whether 
states have the necessary tools and authority to enable them to 
effectively oversee and combat potentially fraudulent behavior. We seek 
comment on this proposal, including with respect to our understanding 
of the potential imposition of additional burden on State Exchanges.
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    \3\ Section 155.260 limits an Exchange's use and disclosure of 
PII when an Exchange creates or collects personally identifiable 
information for the purposes of determining eligibility for 
enrollment in a qualified health plan; determining eligibility for 
other insurance affordability programs, as defined in Sec.  155.300; 
or determining eligibility for exemptions from the individual shared 
responsibility provisions in section 5000A of the Code. One of the 
permitted uses and disclosures is for the Exchange to carry out the 
functions described in Sec.  155.200.
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2. Verification Process Related to Eligibility for Insurance 
Affordability Programs (Sec.  155.320)
    Currently, under Sec.  155.330, Exchanges are required to 
periodically examine available data sources to identify, with respect 
to enrollees on whose behalf APTC or CSRs are being paid, eligibility 
or enrollment determinations for Medicare, Medicaid, CHIP, or the BHP, 
if a BHP is operating in the service area of the Exchange. Individuals 
identified as enrolled both in Exchange coverage with or without APTC 
or CSRs and one of these other forms of coverage are referred to as 
dually enrolled consumers.
    If a consumer is eligible for premium-free Medicare Part A or 
enrolled in Medicare Part A or Part C (also known as Medicare 
Advantage), all of which qualify as MEC, he or she is not eligible to 
receive APTC or CSRs to help pay for an Exchange plan or covered 
services.
    The Secretary has broad authority under section 1321(a) of the 
PPACA to establish regulations setting standards to implement the 
statutory requirements under title I of the PPACA, including with 
respect to the establishment and operation of Exchanges, the offering 
of QHPs through the Exchanges, the establishment of statutory 
reinsurance and risk adjustment programs, and such other requirements 
as the Secretary determines appropriate. Additionally, section 1411(g) 
of the PPACA allows the exchange of certain applicant information as 
necessary to ensure the efficient operation of the Exchange, including 
verifying eligibility to enroll in coverage through the Exchange and to 
receive APTC or CSRs.
    Section 155.320(b)(2) specifies that the disclosure to HHS of 
information regarding eligibility for and enrollment in a health plan 
that is a government program, which may be considered protected health 
information (PHI), is expressly authorized for the purposes of 
verification of applicant eligibility for MEC as part of the 
eligibility determination process for APTC or CSRs. Section 
155.430(b)(1)(ii) requires an Exchange to provide an opportunity at the 
time of plan selection for an enrollee to choose to remain enrolled in 
a QHP if he or she becomes eligible for other MEC, or to terminate QHP 
coverage if the enrollee does not choose to remain enrolled in the QHP 
upon completion of the redetermination process. As such, we added 
language to the existing single, streamlined application used by 
Exchanges using the federal eligibility and enrollment platform to 
allow consumers to authorize the Exchange to obtain eligibility and 
enrollment data and, if desired, to end their QHP coverage if the 
Exchange finds that the consumer has become eligible for or enrolled in 
other qualifying coverage, such as Medicare, Medicaid/CHIP, or BHP, 
during periodic checks.
    In addition, for plan years beginning with the 2020 plan year, we 
also plan to add a new authorization to the single, streamlined 
application used by Exchanges using the federal eligibility and 
enrollment platform, which will meet Health Insurance Portability and 
Accountability Act of 1996 (HIPAA) (Pub. L. 104-191) standards 
regarding how one's PHI is collected and used. This new authorization 
will expand the current scope of Medicare PDM to individuals in the 
Exchange population not receiving financial assistance who authorize 
the FFE to conduct certain PDM for them. Specifically, this new 
authorization will allow applicants or QHP enrollees, whether or not 
they have applied for or are receiving APTC or CSRs, to authorize the 
Exchange, when conducting Medicare PDM, to request PHI from HHS such as 
their name,

[[Page 56019]]

Social Security Number, Medicare eligibility or enrollment status, and 
other data elements the Exchange may determine necessary, to allow the 
Exchange to determine whether the consumer is simultaneously enrolled 
in Medicare and, if requested, to act on the enrollee's behalf to 
terminate QHP coverage in cases of dual enrollment. We note that, 
because entitlement to premium-free Medicare Part A is based on age and 
information held by the Social Security Administration (that is, the 
number of quarters of coverage toward a Social Security benefit under 
Title II of the Act), the Exchange will not be able to identify through 
this process any consumer who is eligible for premium-free Part A; we 
encourage all consumers who are age 65 and older to apply with the 
Social Security Administration to receive an eligibility determination 
with respect to Medicare. Our adoption of this new optional 
authorization to access Medicare enrollment information does not extend 
to access to Medicaid, CHIP, or BHP information for applicants who are 
not receiving APTC or CSRs, because these programs are targeted to 
relatively lower income consumers and we would not expect to identify a 
significant number of enrollees dually enrolled in one of these 
programs and an unsubsidized QHP through the Exchange.
    For consumers who request voluntary termination upon a finding of 
dual enrollment, the Exchange would terminate coverage after following 
the current PDM process outlined in Sec.  155.330(e)(2)(i), which 
requires the Exchange to provide notice of the updated information the 
Exchange has found and a 30-day period for the enrollee to respond. For 
example, upon receiving the required notice, the enrollee could (1) 
return to the Exchange and terminate his or her QHP coverage, (2) 
revoke the prior authorization for the Exchange to terminate his or her 
QHP coverage in the event dual enrollment is found, so that he or she 
would remain enrolled both in the QHP and in Medicare, or (3) notify 
the Exchange that he or she is not eligible for, or enrolled in, 
Medicare. For consumers who revoke their prior authorization for the 
Exchange to terminate their QHP enrollment where the Exchange finds the 
enrollee is eligible for or enrolled in Medicare, or who disagree that 
they are eligible for or enrolled in Medicare, the Exchange would only 
proceed to terminate the enrollee's APTC and CSRs, and not his or her 
enrollment in QHP coverage through the Exchange, using the process 
specified in Sec.  155.330(e)(2)(i). Again, as the Exchange cannot 
identify through this process those consumers who are eligible for but 
not enrolled in premium-free Part A, we encourage all consumers who are 
65 and older to apply with the Social Security Administration to 
receive an eligibility determination with respect to Medicare.
    Based on our experience performing Medicare PDM, we believe that 
many consumers are inadvertently enrolled in Medicare and QHP coverage 
at the same time, and that their dual enrollment does not represent an 
informed decision. For example, we have found that, once consumers are 
informed of the consequences of their dual enrollment, such as paying 
full price for a QHP and risk for financial penalties for delaying 
Medicare Part B enrollment, the majority of consumers end their QHP 
coverage shortly thereafter. Furthermore, our own internal analyses 
show that the majority of QHP enrollees who become dually enrolled do 
so by aging into Medicare and failing to terminate the APTC or CSRs 
they are receiving through the Exchange (and, if desired, their 
Exchange coverage itself) during their Medicare initial enrollment 
period. We believe that Exchanges should play an important role in 
helping to ensure that consumers, regardless of whether the consumer 
has applied for, or is receiving, APTC or CSRs through the Exchange, 
are aware of their dual enrollment, the fact that their QHP coverage 
may duplicate coverage available to them through Medicare at 
potentially lower expense, and their potential risk for tax liability 
for APTC received during months of overlapping coverage (for consumers 
receiving APTC) or financial penalties (such as the Medicare Part B 
late enrollment penalty if they delay enrolling in Medicare during 
their initial eligibility period).
    We believe these changes will support HHS's program integrity 
efforts regarding the Exchanges by helping promote a balanced risk pool 
for the individual market as Medicare and Medicaid/CHIP beneficiaries 
tend to be higher utilizers of medical services, ensuring that 
consumers are accurately determined eligible for APTC and income-based 
CSRs, and safeguarding consumers against enrollment in unnecessary or 
duplicative coverage. Such unnecessary or duplicative coverage, coupled 
with typically higher utilization, generally results in higher premiums 
across the individual market, leading to unnecessarily inflated 
expenditures of federal funds on PTC for taxpayers eligible for PTC in 
the individual market. We also encourage SBEs and enhanced direct 
enrollment partners to adopt these changes if they are not already 
using the single, streamlined application. We seek comment on these 
plans.
3. Eligibility Redetermination During a Benefit Year (Sec.  155.330)
    In accordance with Sec.  155.330(d), Exchanges must periodically 
examine available data sources to determine whether enrollees in a QHP 
through an Exchange with APTC or CSRs have been determined eligible for 
or enrolled in other qualifying coverage through Medicare, Medicaid, 
CHIP, or the BHP, if applicable. HHS has not previously defined 
``periodically.'' Currently, FFEs conduct Medicare PDM and Medicaid/
CHIP PDM twice a year. To ensure that all Exchanges are taking adequate 
steps to check for enrollees who have become eligible for or enrolled 
in these other forms of MEC, and to terminate APTC and CSRs if so, we 
propose to add a clearer requirement to conduct Medicare, Medicaid/
CHIP, and BHP, if applicable, periodic data matching with regular 
frequency. Specifically, we propose to add paragraph (d)(3) to specify 
that Exchanges conduct Medicare, Medicaid/CHIP, and BHP, if applicable, 
PDM at least twice a year, beginning with the 2020 calendar year. We 
believe this timeframe will give Exchanges that are not already 
performing these PDM checks twice a year sufficient time to implement 
any business, operational, and information technology changes needed to 
comply with the proposed new requirement. Based on HHS's experience, 
Exchanges should consider spacing Medicare, Medicaid/CHIP, and BHP, if 
applicable, PDM checks evenly throughout the year, which we believe 
would help ensure the greatest number of potentially affected enrollees 
are identified and notified. Further, we do not anticipate that the 
proposal--to apply Medicare PDM to those enrollees who are not 
receiving APTC/CSRs but authorize the Exchange to receive Medicare 
enrollment information--would add significant costs to performing 
Medicare PDM. Based on HHS's experience, the dually enrolled 
unsubsidized population is significantly smaller than the population 
receiving APTC/CSRs. We believe this policy would likely reduce QHP 
premiums and improve program integrity for all Exchanges, since 
Medicare and Medicaid/CHIP beneficiaries tend to have a higher risk 
profile than a typical Exchange enrollee and, therefore, may have 
negative impacts on the risk pool because of the typically increased 
utilization of services expected for these populations,

[[Page 56020]]

which include significant numbers of older and disabled beneficiaries 
or poorer health outcomes associated with lower income statuses.\4\ As 
noted above, this negative effect on the risk pool likely results in 
higher premiums across the individual market, leading to increased 
expenditures of federal funds on PTC for taxpayers eligible for PTC 
resulting from unnecessary or duplicative coverage. So that the FFEs 
and SBEs may prioritize the implementation of the proposed requirement 
to conduct PDM for Medicare, Medicaid, CHIP, and BHP (if applicable) 
eligibility or enrollment at least twice yearly, we are not proposing 
to require Exchanges to perform PDM for death at least twice in a 
calendar year. We will consider whether to require this check to be 
performed at a particular frequency through future rulemaking.
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    \4\ For example, see Urban Institute and Center on Society and 
Health, How Are Income and Wealth Linked to Health and Longevity? 
(April 2015), available at https://www.urban.org/sites/default/files/publication/49116/2000178-How-are-Income-and-Wealth-Linked-to-Health-and-Longevity.pdf.
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    Since most SBEs have shared, integrated eligibility systems with 
their respective Medicaid programs, Medicaid/CHIP and BHP, if 
applicable, PDM requirements may be met differently for SBEs than for 
the FFEs. While there is some variation among SBEs in their Medicaid/
CHIP and BHP, if applicable, PDM processes, most SBEs have implemented 
fully integrated eligibility systems where the design of the system 
mitigates risk of dual enrollment in, or inconsistent eligibility 
results regarding, APTC/CSRs and Medicaid/CHIP and BHP, if applicable, 
coverage by having one eligibility rules engine for eligibility 
determinations for all these programs. In these SBEs, an individual 
cannot be enrolled in both a QHP through the Exchange with APTC/CSRs, 
and Medicaid/CHIP or BHP, if applicable, coverage, at any given time. 
At paragraph (d)(3), we propose to specify that we will deem these SBEs 
to be in compliance with the requirement to perform Medicaid/CHIP PDM 
or BHP PDM, if applicable. SBEs that do not have fully integrated 
eligibility systems for APTC/CSRs and Medicaid/CHIP would be required 
to perform Medicaid/CHIP PDM at least twice a year. Similarly, SBEs in 
states that have implemented the BHP, but where the BHP is not 
integrated into the state's shared eligibility system, would be 
required to perform BHP PDM at least twice a year. We anticipate most 
SBEs will meet or exceed the proposed requirements for Medicaid/CHIP 
PDM and BHP PDM, if applicable, based on current or planned operations 
for calendar year 2018, as reported to us through the State-based 
Marketplace Annual Reporting Tool and through technical assistance 
engagements. Therefore, we anticipate that the proposed requirement to 
conduct Medicaid/CHIP PDM and BHP PDM, if applicable, at least twice a 
year would not result in a significant administrative burden for SBEs 
that are not deemed to be in compliance (and no administrative burden 
for those that are so deemed).
    Although we believe that compliance by SBEs with these proposed 
requirements is critically important for program integrity, we are not 
proposing specific penalties if SBEs do not comply. However, we note 
that under current authority HHS requires a SBE to take corrective 
action if it is not complying with federal guidance and regulations. We 
utilize specific oversight tools (SMART, programmatic audits, etc. as 
described in the preamble to Sec.  155.1200) to identify issues with, 
and place corrective actions on Exchanges, and provide technical 
assistance and ongoing monitoring to track those actions until the 
Exchange comes into compliance.
    Additionally, under section 1313(a)(4) PPACA, if HHS determines 
that an Exchange has engaged in serious misconduct with respect to 
compliance with Exchange requirements, it has the option to rescind up 
to 1 percent of payments due a state under any program administered by 
HHS until it is resolved. These existing authorities would apply to the 
proposed periodic data matching requirements in Sec.  155.330(d). If 
HHS determines it is necessary to apply this authority due to non-
compliance by an Exchange with Sec.  155.330(d), HHS would also 
determine the HHS-administered program from which it will rescind 
payments that are due to that state.
    Lastly, we propose to make a technical correction in Sec.  
155.330(d)(1) by adding an additional reference to the process and 
authority in Sec.  155.320(b). This reference was omitted previously, 
but the requirements in Sec.  155.320(b), specifying that Exchanges 
must verify whether an applicant is eligible for MEC other than through 
an eligible employer-sponsored plan using information obtained by 
transmitting identifying information specified by HHS to HHS for 
verification purposes, apply to the PDM process in Sec.  155.330.
4. General Program Integrity and Oversight Requirements (Sec.  
155.1200)
    As section 1311 of the PPACA Exchange Establishment grant program 
has come to a conclusion and State Exchanges are financially self-
sustaining, HHS has a need for strengthening the mechanisms and tools 
for overseeing SBE and SBE-FP ongoing compliance with federal 
requirements for Exchanges, including eligibility and enrollment 
requirements under 45 CFR part 155.
    HHS approves or conditionally approves a state to establish a State 
Exchange (either an SBE or SBE-FP) based on an assessment of a state's 
attested compliance with statutory and regulatory rules. Once approved 
or conditionally approved, State Exchanges must meet specific program 
integrity and oversight requirements specified at section 1313(a) of 
the PPACA, Sec. Sec.  155.1200 and 155.1210. These requirements provide 
HHS with the authority to oversee the Exchanges after their 
establishment. Currently, annual reporting requirements for State 
Exchanges at Sec.  155.1200(b) include the annual submission of: (1) A 
financial statement in accordance with generally accepted accounting 
principles (GAAP); (2) eligibility and enrollment reports; and (3) 
performance monitoring data.
    Additionally, under Sec.  155.1200(c), each State Exchange is 
required to contract with an independent external auditing entity that 
follows generally accepted governmental auditing standards (GAGAS) to 
perform annual independent external financial and programmatic audits. 
State Exchanges are required to provide HHS with the results of the 
annual external audits, including corrective action plans to address 
any material weaknesses or significant deficiencies identified by the 
auditor. All corrective action plans are monitored by HHS until closed. 
Currently, the audits must address compliance with all Exchange 
requirements under 45 CFR part 155.
    HHS designed and developed the State-based Marketplace Annual 
Reporting Tool (SMART) in 2014 to assist Exchanges in conducting a 
defined set of oversight activities. The SMART was designed to 
facilitate State Exchanges' reporting to HHS on how they are meeting 
federal program requirements and operational requirements set forth in 
statute, regulations, and applicable guidance that implements the 
statutory and regulatory requirements, including reporting compliance 
with Federal eligibility and enrollment program requirements under 45 
CFR 155 subparts D and E. The SMART, thus, enables HHS to evaluate and 
monitor State Exchange progress in coming into compliance with federal 
requirements where needed. Since then, HHS has come to utilize the 
SMART, along with

[[Page 56021]]

the annual programmatic and financial audit reports, as primary 
oversight tools for identifying and addressing State Exchange non-
compliance issues. HHS requires State Exchanges to take corrective 
actions to address issues that are identified through the SMART and 
annual programmatic and financial audits, and HHS monitors the 
implementation of the corrective actions. We propose to modify Sec.  
155.1200(b)(2) to reflect that HHS requires State Exchanges to submit 
annual compliance reports (such as the SMART), that encompass 
eligibility and enrollment reporting, but also include reporting on 
compliance across other Exchange program requirements under 45 CFR part 
155. We also propose to modify Sec.  155.1200(b)(1) to eliminate the 
April 1st date in which states must provide a financial statement to 
HHS, to provide HHS the flexibility to align the financial statement 
deadline with the SMART deadline, which is set annually by HHS. Because 
we are proposing to remove the April 1st date, but intend to maintain 
the requirement that State Exchanges submit the required reports by a 
deadline, we also propose to modify the introductory text to Sec.  
155.1200(b) to specify that State Exchanges must provide the required 
annual reporting by deadlines to be set by HHS.
    We propose to retain the requirement at Sec.  155.1200(c) that an 
annual programmatic audit be conducted by SBEs and SBE-FPs, but make a 
minor change from ``state'' to ``State Exchanges'' to be consistent and 
clear on the entities to which this rule applies. We also propose to 
add specificity to the annual programmatic audit requirement by 
proposing a clarification of Sec.  155.1200(d)(2) to make clear that 
HHS may specify or target the scope of a programmatic audit to address 
compliance with particular Exchange program areas or requirements. This 
would provide HHS with the ability to specify those Exchange functions 
that are most pertinent to a particular State Exchange model (SBE or 
SBE-FP) and need to be regularly included in the audit; target those 
Exchange functions most likely to impact program integrity, such as 
eligibility verifications; and reduce burden on State Exchanges where 
possible. In addition, we propose to modify Sec.  155.1200(d) by 
replacing existing paragraph (d)(4) with new paragraphs (d)(4) and (5). 
These requirements specify that SBEs must ensure that the independent 
audits implement testing procedures or other auditing procedures that 
assess whether an SBE is conducting accurate eligibility determinations 
and enrollment transactions under 45 CFR 155 subparts D and E. Such 
auditing procedures include the use of statistically valid sampling 
methods in the testing or auditing procedures.
    We believe these proposed changes will strengthen our programmatic 
oversight and the program integrity of State Exchanges, while providing 
flexibility for HHS in the collection of information. Through the 
Paperwork Reduction Act (PRA) process, we are able to make updates and 
refinements to the SMART reporting tool to align with our oversight and 
program integrity priorities for Exchanges as they evolve. In addition, 
allowing HHS to specify the scope of the programmatic audit at Sec.  
155.1200(d)(2) would provide us the ability to target our oversight to 
specific Exchange program requirements based on the particular State 
Exchange model, our program integrity priorities, and the goal of 
reducing burden on State Exchanges where possible. For instance, this 
would allow the audits to focus on SBE compliance with Exchange 
eligibility and enrollment requirements in 45 CFR 155 subparts D and E, 
and SBE-FP compliance with Exchange requirements in 45 CFR 155 subpart 
C. We believe this approach will provide HHS and states with greater 
insight into SBE and SBE-FP compliance with federal standards in a more 
cost-effective manner. We believe these two tools, state reporting and 
independent testing, coupled with our ongoing oversight activities 
would strengthen program integrity in State Exchanges.
    We believe this approach would allow HHS to identify State Exchange 
non-compliance issues with more precision and efficacy. It would also 
allow HHS to provide more effective, targeted technical assistance to 
State Exchanges in developing corrective action plans to address issues 
that are identified, thus mitigating the need for more drastic or 
severe enforcement actions against a State Exchange. We believe this 
approach can reduce administrative burden on State Exchanges while 
maintaining the traditional role of State Exchanges in managing and 
operating their Exchanges, with HHS maintaining its role of overseeing 
State Exchange compliance with federal requirements through structured 
reporting processes. We seek comment on these proposals.

B. Health Insurance Issuer Standards Under the Affordable Care Act, 
Including Standards Related to Exchanges

Segregation of Funds for Abortion Services (Sec.  156.280)
    Since 1976, the Congress has included language, commonly known as 
the Hyde Amendment, in the Labor, Health and Human Services, Education 
and Related Agencies appropriations legislation.\5\ The Hyde Amendment 
as currently in effect permits federal funds to be used for abortion 
services only in the limited cases of rape, incest, or if a woman 
suffers from a life-threatening physical disorder, physical injury, or 
physical illness, including a life-endangering physical condition 
caused by or arising from the pregnancy itself, that would, as 
certified by a physician, place the woman in danger of death unless an 
abortion is performed (Hyde abortion coverage). The Hyde Amendment 
prohibits the use of federal funds for abortion coverage in instances 
beyond those limited circumstances (non-Hyde abortion coverage). 
Consistent with the Hyde Amendment, section 1303(b)(2) of the PPACA 
prohibits the issuer of a QHP that includes non-Hyde abortion coverage 
from using any amount attributable to PTC (including APTC) or CSRs 
(including advance payments of those funds to the issuer, if any) for 
abortions for which federal funds appropriated for HHS are prohibited, 
``based on the law as in effect as of the date that is 6 months before 
the beginning of the plan year involved.'' \6\
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    \5\ Accordingly, the Hyde Amendment is not permanent Federal 
law, but applies only to the extent reenacted by Congress from time 
to time in appropriations legislation.
    \6\ Section 1303(b)(1)(B)(I) of the PPACA.
---------------------------------------------------------------------------

    Section 1303 of the PPACA outlines specific accounting and notice 
requirements that QHPs covering non-Hyde abortion services on the 
Exchanges must follow to ensure that no federal funding is used to pay 
for those services. Under section 1303(b)(2)(B) of the PPACA, as 
implemented in Sec.  156.280(e)(2)(i), QHP issuers must collect a 
``separate payment,'' from each enrollee in a plan ``without regard to 
the enrollee's age, sex, or family status,'' for an amount equal to the 
greater of the actuarial value of the coverage for abortions for which 
public funding is prohibited or $1 per enrollee per month. Section 
1303(b)(2)(D) of the PPACA, implemented in Sec.  156.280(e)(4), 
provides that the estimation is to be determined on an average 
actuarial basis and that QHP issuers may take into account the impact 
on overall costs of the inclusion of such coverage, but may

[[Page 56022]]

not take into account any cost reduction estimated to result from such 
services, including prenatal care, delivery, or postnatal care. Section 
1303(b)(2)(D) of the PPACA as implemented in Sec.  156.280(e)(4) 
further states that QHP issuers are to estimate these costs as if the 
coverage were included for the entire population covered. With respect 
to the ``separate payment'' requirement, if an enrollee's premium for 
coverage under the plan is paid through employee payroll deposit (or 
deduction) under section 1303(b)(2)(B), the separate payments ``shall 
each be paid by a separate deposit.''
    As mentioned above, QHP issuers that offer coverage for non-Hyde 
abortion may not use APTC to pay for such coverage, or use CSR funds to 
pay for such services. Pursuant to section 1303(b)(2)(D)(ii)(III) of 
the PPACA, these QHP issuers may not estimate the premium attributable 
to the benefit to be less than $1 per enrollee per month, regardless of 
the actual cost of the benefit. Currently, in certain rare scenarios, 
the FFE system allocates an amount of APTC to a policy such that the 
share of the aggregate premium for which the consumer is responsible is 
too low to meet this minimum standard. We intend to make system changes 
for open enrollment for plan year 2019 to ensure that the minimum 
premium amount of $1 per enrollee per month is assigned to all 
enrollments into plans offering coverage of non-Hyde abortion, so that 
issuers may separately collect this amount directly from consumers for 
the portion of the total premium attributable to coverage of non-Hyde 
abortion services.
    Under section 1303(b)(3)(A) of the PPACA as implemented in Sec.  
156.280(f), QHP issuers must provide notice to enrollees as part of the 
Summary of Benefits and Coverage (SBC) at the time of enrollment if 
non-Hyde abortion services are covered by the QHP. As required under 
Sec.  155.205(b)(1)(ii), each Exchange must maintain an up-to-date 
website that provides the SBCs. Section 147.200(a)(4) requires that 
individual market QHP issuers that provide the SBC electronically must 
place it in a prominent and readily accessible location on the QHP 
issuer's internet website. Additionally, pursuant to section 
1303(b)(2)(C) of the PPACA, as implemented at Sec.  156.280(e)(3), QHP 
issuers must segregate funds for non-Hyde abortion services collected 
from consumers into a separate allocation account that is to be used 
exclusively to pay for non-Hyde abortion services. Thus, if a QHP 
issuer disburses funds for a non-Hyde abortion on behalf of a consumer, 
it must draw those funds from the segregated allocation account. The 
account cannot be used for any other purpose.
    Section 1303 of the PPACA and regulations at Sec.  156.280 do not 
specify the method a QHP issuer must use to comply with the separate 
payment requirement under section 1303(b)(2)(B)(i) of the PPACA and 
Sec.  156.280(e)(2)(i). In the 2016 Payment Notice, we provided 
guidance with respect to acceptable methods that a QHP issuer offering 
non-Hyde abortion coverage on the individual market Exchange may use to 
comply with the separate payment requirement. We stated that the QHP 
issuer could satisfy the separate payment requirement in one of several 
ways, including by sending the enrollee a single monthly invoice or 
bill that separately itemizes the premium amount for non-Hyde abortion 
services; sending the enrollee a separate monthly bill for these 
services; or sending the enrollee a notice at or soon after the time of 
enrollment that the monthly invoice or bill will include a separate 
charge for such services and specify the charge. In the 2016 Payment 
Notice, we also stated that a consumer may make the payment for non-
Hyde abortion services and the separate payment for all other services 
in a single transaction. On October 6, 2017, we released a bulletin 
that discussed the statutory requirements for separate payment, as well 
as this previous guidance with respect to the separate payment 
requirement.\7\
---------------------------------------------------------------------------

    \7\ CMS Bulletin Addressing Enforcement of Section 1303 of the 
Patient Protection and Affordable Care Act (October 6, 2017), 
available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Section-1303-Bulletin-10-6-2017-FINAL-508.pdf.
---------------------------------------------------------------------------

    HHS now believes that some of the methods for billing and 
collection of the separate payment for non-Hyde abortion services noted 
as permissible in the preamble to the 2016 Payment Notice do not 
adequately reflect what we see as Congressional intent that the QHP 
issuer bill separately for two distinct (that is, ``separate'') 
payments, one for the non-Hyde abortion services, and one for all other 
services covered under the policy, rather than simply itemizing these 
two components of a single total billed amount or notifying the 
enrollee, at or soon after the time of enrollment, that the monthly 
invoice or bill will include a separate charge for these services. 
Although we recognize that itemizing or providing advance notice about 
the amounts arguably identifies two ``separate'' amounts for two 
separate purposes, we believe that the statute contemplates issuers 
billing for two separate ``payments'' of these two amounts (for 
example, two different checks or two distinct transactions), consistent 
with the requirement on issuers in section 1303(b)(2)(B)(i) of the 
PPACA to collect two separate payments. HHS, thus, believes that 
requiring QHP issuers to separately bill the portion of the consumer's 
premium attributable to non-Hyde abortion services and instruct 
consumers to make a separate payment for this amount is a better 
implementation of the statutory requirement for issuers to collect a 
separate payment for these services.
    As such, we are proposing an amendment at Sec.  156.280(e)(2) 
relating to billing and payment of the consumer's portion of the 
premium attributable to non-Hyde abortion services to reflect this 
interpretation of the statute. Specifically, we are proposing that, if 
these policies are finalized, as of the effective date of the final 
rule, QHP issuers (1) send an entirely separate monthly bill to the 
policy subscriber for only the portion of premium attributable to non-
Hyde abortion coverage, and (2) instruct the policy subscriber to pay 
the portion of their premium attributable to non-Hyde abortion coverage 
in a separate transaction from any payment the policy subscriber makes 
for the portion of their premium not attributable to non-Hyde abortion 
coverage. We believe that these proposals would better align the 
regulatory requirements for QHP issuer billing of enrollee premiums 
with the separate payment requirement in section 1303 of the PPACA. If 
these proposals are finalized, QHP issuers would no longer be permitted 
to send the enrollee a single monthly invoice or bill that separately 
itemizes the premium amount for non-Hyde abortion services, or send the 
enrollee a notice at or soon after the time of enrollment that the 
monthly invoice or bill will include a separate charge for such 
services and specify the charge in order to meet the separate payment 
requirement. Instead, QHP issuers would have to send a separate bill 
and instruct enrollees to send a separate payment in the manner 
specified by the final rule.\8\ We invite comment on these proposals.
---------------------------------------------------------------------------

    \8\ We noted above the situation where, as a result of APTCs, 
the out-of-pocket premium payable by the consumer is less than $1 
per enrollee per month. Under this proposed rule, and to ensure 
compliance with section 1303, if the QHP includes non-Hyde abortion 
coverage, the QHP issuer would be required to bill the consumer at 
least $1 per enrollee per month.
---------------------------------------------------------------------------

    To better align the regulatory requirements for issuer billing of 
enrollee premiums with the separate payment requirement in section 1303 
of the PPACA, our proposal would require

[[Page 56023]]

the QHP issuer to send this separate bill in a separate mailing with 
separate postage. If a QHP issuer sends bills electronically, we 
propose that it provide consumers with the two bills in separate emails 
or other electronic communications. We believe this approach will help 
reduce consumer confusion about receiving two separate bills in a 
single envelope. For example, consumers may inadvertently miss or 
discard a second paper bill included in a single envelope, increasing 
terminations of coverage for failure to pay premiums. The QHP issuer 
would also be required to produce an invoice or bill that is distinctly 
separate from the invoice or bill for the other portion of the 
consumer's premium that is not attributable to non-Hyde abortion 
coverage, whether in paper or electronic format. We solicit comment on 
any operational issues that may arise from this aspect of the proposed 
rule.
    We also seek comment on ways to mitigate any possible confusion, 
for example through an annual notice or standard explanatory language 
on each of the two monthly bills. To meet the requirements of this new 
proposal, QHP issuers would be required to instruct policy subscribers 
to pay the separately billed or invoiced portion of the premium for 
non-Hyde abortion coverage in a transaction separate from the 
transaction for payment of the other portion of the premium that is not 
attributable to non-Hyde abortion coverage and make reasonable efforts 
to collect the payment separately, such as by including a separate 
payment stub on each of the separately mailed bills or invoices (if 
sent on paper) or providing a separate payment link in the separate 
email or electronic communication with a separate payment field on the 
payment web page for each separate payment to be collected (if sending 
an electronic bill, or accepting electronic payments regardless of how 
the bills were transmitted). Under this proposal, consumer non-payment 
of any premium due (including non-payment of the portion of the 
consumer's premium attributable to non-Hyde abortion coverage) would 
continue to be subject to state and federal rules regarding grace 
periods. In the event that a policy subscriber does not follow the 
separate payment instructions, however, and pays the entire premium in 
a single transaction (both the portion attributable to non-Hyde 
abortion coverage, as well as the portion attributable to coverage for 
other services), the QHP issuer would not be permitted to refuse to 
accept such a combined payment on the basis that the policy subscriber 
did not send two checks as requested by the QHP issuer, and to then 
terminate the policy, subject to any applicable grace period, for non-
payment of premiums. We believe that potential loss of coverage would 
be an unreasonable result of a consumer paying in full but failing to 
adhere to the QHP issuer's requested payment procedure. Under our new 
interpretation, a QHP issuer would thus be required to accept a 
combined payment, to the extent necessary to avoid this result.
    QHP issuers that do receive combined consumer premiums covering the 
portion attributable to non-Hyde abortion coverage as well as the 
portion attributable to coverage for other services in one single 
payment would treat the portion of the premium attributable to non-Hyde 
abortion services as a separate payment for which the QHP issuer would 
be expected to disaggregate into the separate allocation account used 
solely for these services. We would expect the QHP issuer in this 
scenario to again explain to the consumer the separate payment 
requirement in the law, and take steps to inform the consumer not 
complying with this policy that he or she should do so in future 
months, including documentation of such outreach and educational 
efforts. Again, if the consumer still declines to do so, however, the 
combined payment must be accepted to avoid a loss of coverage. 
Likewise, QHP issuers would not be permitted to refuse to accept 
separate premium payments paid to the issuer in a single return 
envelope (for example, two separate checks returned to the issuer in a 
single return envelope) on the basis that the consumer did not 
separately return each premium payment in a separate mailing. We seek 
comment on these proposals.
    We are also proposing a technical change, to Section 
156.280(e)(2)(iii) as redesignated, to insert appropriate cross 
reference to the explanation of the separate payments.
    Consistent with Sec.  156.715, HHS has broad authority to perform 
compliance reviews to monitor FFE issuer compliance. HHS conducts 
compliance reviews throughout the year, and issuer notification of 
selection for a review may occur at any time during the year. Detailed 
examples of regulatory and operational areas that will be reviewed are 
included in the Key Priorities for FFM Compliance Review, which is 
updated each year with new key oversight priorities.\9\ Consistent with 
this authority, we propose updating our compliance reviews governing 
QHP certification to include new reviews of FFE issuer compliance with 
Sec.  156.280, including the segregation of funds requirement and the 
new proposals for separate billing of the portion of the consumer's 
premium attributable to coverage of non-Hyde abortion services as 
specified in this rule. FFE issuers subject to these compliance reviews 
should maintain all documents and records of compliance with section 
1303 of the PPACA and these requirements in accordance with Sec.  
156.705, and should anticipate making available to HHS the types of 
records specified at Sec.  156.715(b) that would be necessary to 
establish their compliance with these requirements. For example, FFE 
issuers subject to compliance reviews for Sec.  156.280 should 
anticipate supplying HHS with documentation of their estimate of the 
basic per enrollee per month cost, determined on an average actuarial 
basis, for coverage of non-Hyde abortion services; detailed invoice and 
billing records demonstrating they are separately billing in a separate 
mailing or separate electronic communication and collecting the portion 
of the premium attributable to coverage of non-Hyde abortion services 
as specified in this rule; and appropriately segregating the funds 
collected from consumers into a separate allocation account that is 
used exclusively to pay for non-Hyde abortion services. We believe the 
addition of these compliance reviews will help to address remaining 
issuer compliance issues, if any, previously identified by the 2014 
U.S. Government Accountability Office report.\10\ We seek comment on 
this proposal.
---------------------------------------------------------------------------

    \9\ CCIIO Examinations, Audits and Reviews of Issuers: Issuer 
Resources, available at https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Exams_Audits_Reviews_Issuer_Resources-.html.
    \10\ U.S. Government Accountability Office, ``Health Insurance 
Exchanges: Coverage of Non-excepted Abortion Services by Qualified 
Health Plans,'' (Sept. 15, 2014), available at http://www.gao.gov/products/GAO-14-742R.
---------------------------------------------------------------------------

    As is the case with many provisions in the PPACA, states are the 
entities primarily responsible for implementing and enforcing the 
provisions in section 1303 of the PPACA related to individual market 
QHP coverage of non-Hyde abortion services. Section 1303(b)(2)(E)(i) of 
the PPACA, as implemented at Sec.  156.280(e)(5), designates the state 
insurance commissioners as the entities responsible for monitoring, 
overseeing, and enforcing the provisions in section 1303 of the PPACA 
related to QHP segregation of funds for non-Hyde abortion services. 
However, as stated in

[[Page 56024]]

2017 guidance,\11\ where we are charged with directly enforcing these 
statutory requirements in the FFEs, we intend to do so fully in 
instances of issuer non-compliance. We call upon states that operate 
their own Exchanges to fully enforce these requirements as codified in 
the federal regulations governing the Exchanges. To the extent such a 
state operating its own Exchange fails to substantially enforce these 
requirements, HHS would expect to enforce them in the state's place. 
However, as states remain the primary enforcers of these requirements, 
we propose that HHS involvement in enforcement would be limited to 
ensuring that federal funds are appropriately managed. For example, HHS 
enforcement would be limited to instances where it becomes clear that 
the state department of insurance is not overseeing the requirement for 
the QHP issuer to determine the actuarial value of the coverage of non-
Hyde abortions, to separately bill (and collect) premium of at least $1 
per enrollee per month for such coverage, or to segregate funds 
effectively; a state department of insurance or other entity notifies 
HHS of suspected misuse of federal funding for coverage of non-Hyde 
abortion services; or the state's enforcement actions are inadequate 
and fail to result in compliance from the QHP issuer. The Office of 
Personnel Management may issue guidance related to these provisions for 
multi-state plan issuers.\12\
---------------------------------------------------------------------------

    \11\ CMS Bulletin Addressing Enforcement of Section 1303 of the 
Patient Protection and Affordable Care Act (October 6, 2017), 
available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Section-1303-Bulletin-10-6-2017-FINAL-508.pdf.
    \12\ Section 1334(a)(6) of the PPACA requires that at least one 
multi-state plan in each Exchange excludes coverage of non-Hyde 
abortion services. Currently, no multi-state plan options cover non-
Hyde abortion services. See OPM's Frequently Asked Questions: 
Insurance, available at https://www.opm.gov/faqs/QA.aspx?fid=fd635746-de0a-4dd7-997d-b5706a0fd8d2&pid=8313a65b-c5b8-4d58-a58f-9d81f26856a2.
---------------------------------------------------------------------------

    We remind issuers that pursuant to Sec.  156.280(e)(5)(ii), any 
issuer offering coverage of non-Hyde abortions services on the Exchange 
must submit a plan to its state department of insurance that details 
the issuer's process and methodology for meeting the requirements of 
section 1303(b)(2)(C), (D), and (E) of the PPACA (hereinafter, 
``separation plan'') to the state health insurance commissioner. The 
separation plan should describe the QHP issuer's financial accounting 
systems, including appropriate accounting documentation and internal 
controls, that would ensure the segregation of funds required by 
section 1303(b)(2)(C), (D), and (E) of the PPACA. Issuers should refer 
to Sec.  156.280(e)(5)(ii) for more information on precisely what 
issuers should include in their separation plans to demonstrate 
compliance with these requirements.
    As mentioned previously, consistent with HHS's authority under 
Sec.  156.715, we propose monitoring FFE issuer compliance with the 
requirements under Sec.  156.280 by requiring QHP issuers in FFEs to 
show documentation of compliance with the requirement to estimate the 
basic per enrollee per month cost, determined on an average actuarial 
basis, for coverage of non-Hyde abortion services and charge at least 
$1 per enrollee per month for such coverage, as well as with the 
segregation of funds requirements when undergoing compliance reviews, 
including detailed records and documentation demonstrating compliance 
with the separate billing (including mailing, as applicable) and 
collection requirements proposed in this rule, as well as the 
segregation of funds requirements. We also remind issuers offering 
medical QHPs in the FFEs that they must already attest to adhering to 
all applicable requirements of 45 CFR part 156 as part of the QHP 
certification application, including those requirements related to the 
segregation of funds for abortion services implemented in Sec.  
156.280.\13\ If the separate billing and premium collection proposals 
at Sec.  156.280(e)(2) are finalized as proposed, issuers in the FFE 
completing this attestation would also attest to adhering to these new 
separate billing and collection requirements. As part of the QHP 
certification process, issuers in states with FFEs where the States 
perform plan management functions must also complete similar program 
attestations attesting to adherence with Sec.  156.280.\14\ Issuers in 
states with SBEs that offer QHPs including non-Hyde abortion coverage 
should contact their state for attestation requirements as part of the 
QHP certification process.
---------------------------------------------------------------------------

    \13\ 2019 Qualified Health Plan Issuer Application Instructions, 
available at: https://www.qhpcertification.cms.gov/s/2019QHPInstructionsVersion1.pdf?v=1.
    \14\ State Partnership Exchange Issuer Program Attestation 
Response Form, available at: https://www.qhpcertification.cms.gov/s/SuppDoc_SPE_Attestationsed._revised_508.pdf?v=1.
---------------------------------------------------------------------------

    We seek comment on these proposals.

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), we are required to 
provide 60-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 
proposed rule contains information collection requirements (ICRs) that 
are subject to review by OMB. A description of these provisions is 
given in the following paragraphs.
    In order to fairly evaluate whether an information collection 
should be approved by OMB, section 3506(c)(2)(A) of the PRA requires 
that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of these issues for the 
following sections of this document that contain ICRs:

A. ICRs Regarding General Program Integrity and Oversight Requirements 
(Sec.  155.1200)

    The burden associated with State Exchanges meeting the proposed 
program integrity reporting requirements in Sec.  155.1200 have already 
been assessed and encompassed through SMART currently approved under 
OMB control number: 0938-1244 (CMS-10507). This proposed rule does not 
impose any new burden or add any additional requirements to the 
existing collection.

B. ICRs Regarding Segregation of Funds for Abortion Services (Sec.  
156.280)

    In the preamble to Sec.  156.280, we explain that the proposals to 
require separate issuer billing for, and collection of, the portion of 
the premium attributable to non-Hyde abortion coverage would be subject 
to future HHS compliance reviews of FFE issuers, requiring issuers in 
the FFE to maintain and submit records showing compliance with these 
requirements to HHS. We have determined that the requirements 
associated with compliance reviews have already been assessed and 
encompassed by the Program Integrity: Exchange, Premium Stabilization 
Programs, and Market Standards; Amendments to the HHS Notice of Benefit 
and Payment Parameters for 2014; Final Rule II ICR currently approved 
under OMB control number: 0938-1277 (CMS-10516).
    To show compliance with FFE standards and program requirements, all

[[Page 56025]]

issuers seeking QHP certification in FFE states are required to submit 
responses to program attestations as part of their QHP application. 
This response already includes an attestation that the issuer agrees to 
adhere to the requirements related to the segregation of funds for 
abortion services implemented in Sec.  156.280. We have determined that 
the requirements associated with QHP certification have already been 
assessed and encompassed by the Establishment of Exchanges and 
Qualified Health Plans; Exchange Standard for Employers approved under 
OMB control number 0938-1187 (CMS-10433). Therefore, proposed Sec.  
156.280(e)(2) adds no new ICRs as it relates to program attestations.
    In Sec.  156.280(e)(2), we propose that QHP issuers must send an 
entirely separate monthly bill in a separate mailing or separate 
electronic communication to the policy subscriber for only the portion 
of premium attributable to non-Hyde abortion coverage, and instruct the 
policy subscriber to pay the portion of their premium attributable to 
non-Hyde abortion coverage in a separate transaction from any payment 
the policy subscriber makes for the portion of their premium not 
attributable to non-Hyde abortion coverage. Based on 2018 QHP 
certification data in the FFEs and SBE-FPs, we estimate that 15 QHP 
issuers offered a total of 111 plans with coverage of non-Hyde abortion 
services in 7 States. In SBEs, we estimate that 60 QHP issuers offered 
a total of approximately 1,000 plans offering this coverage across 10 
SBEs. In total, this leads to an estimated 75 QHP issuers offering a 
total of 1,111 plans covering non-Hyde abortion services across 17 
states. As such, the ICRs associated with these proposals would create 
a new burden on QHP issuers and plans and are subject to the Paperwork 
Reduction Act. Salaries for the positions cited below were taken from 
the May 2017 National Occupational Employment and Wage Estimates United 
States Department of Labor's Bureau of Labor Statistics (BLS) (http://www.bls.gov/oes/current/oes_nat.htm) based on the listed national 
median hourly wage. All wages on the following pages are inflated by 
100 percent to account for the cost of fringe benefits and overhead 
costs.
    We anticipate that populating the enrollee information on the 
separate electronic or paper bill, transmitting the separate electronic 
or paper bill in a separate mailing or separate electronic 
communication, and processing the enrollee's separate electronic or 
mailed payment, will be an automated process that occurs monthly after 
a computer programmer adds this functionality to the QHP issuer's 
billing and payment operating system. We estimate that, on a one-time 
basis, a computer programmer will require 10 hours to add this 
functionality to an affected QHP issuer's systems (at a rate of $84.16 
per hour) for a total burden of 10 hours. We estimate that this will 
result in a one-time cost of $841.60 per QHP issuer that offers plans 
that cover non-Hyde abortion services to meet this reporting 
requirement. This would be a one-time cost, such that the overall 
burden for all 75 QHP issuers would be 750 hours, with an associated 
total cost of $63,120.
    Because an estimated 75 QHP issuers offered a total of 1,111 plans 
with coverage of non-Hyde abortion services across 17 states, we 
estimate that the total number of QHP issuers that offer plans with 
coverage of non-Hyde abortion, for which they would be required to send 
separate bills in a separate mailing or separate electronic 
communication and collect separate payments as proposed at Sec.  
156.280(e)(2), would be 75 per year, for a total one-time burden of 750 
hours. Below is the estimate of the burden imposed on a single QHP 
issuer subject to the reporting requirements of this rule. The 
aggregate burden for 3 years will be same as for 1 year: $841.60 per 
respondent and $63,120 for all respondents.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Wage rate (p/   Total annual                   Total one-time
                                                                            Burden per     hr) including    burden per     Labor cost of   cost for all
             Labor category                 Respondents      Responses       response       100% fringe      response        one-time       respondents
                                                                              (hours)        benefits         (hours)      reporting ($)        ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Computer programmer to add automated                  75              75              10          $42.08              10         $841.60         $63,120
 billing & payment processing
 functionality..........................
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................              75              75              10           42.08              10          841.60          63,120
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Although we anticipate that populating the enrollee information on 
the separate electronic or paper bill and transmitting that bill in a 
separate mailing or separate electronic communication would be an 
automated process, we estimate that a general office clerk working for 
an affected QHP issuer would require 2 hours monthly (at a rate of 
$30.28 per hour) per plan to determine which enrollees are enrolled in 
plans that cover non-Hyde abortion and to oversee the process of 
sending a separately packaged complete and accurate bill in a separate 
mailing or separate electronic communication to these enrollees for the 
portion of their premium attributable to that coverage, for an annual 
burden of 24 hours. This estimate includes the amount of time the 
office clerk would spend determining which enrollees prefer paper 
billing versus electronic billing, and ensuring that the bills are 
complete and accurate and are being sent in a separate mailing or 
separate electronic communication. We estimate that it would cost 
$726.72 annually per plan that covers non-Hyde abortion services to 
meet the reporting requirement, with a total annual burden for all 
1,111 plans of 26,664 hours and an associated total annual cost of 
$807,385.92.
    We similarly anticipate that processing the payment made by 
enrollees for this portion of their premium would be an automated 
process. However, we estimate that a general office clerk working for 
an affected QHP issuer would require 2 hours monthly (at a rate of 
$30.28 per hour) per plan to review for accuracy the separate payment 
an enrollee in a plan covering non-Hyde abortion services sends for the 
portion of their premium attributable to that coverage and to process 
any payments or paper checks made by enrollees through the mail, for an 
annual burden of 24 hours. This estimate includes the amount of 
additional time the office clerk would need to spend reviewing for 
accuracy the separate payments returned in separate mailings from the 
payments received for the portion of the policy subscriber's premium 
not attributable to non-Hyde abortion. We estimate that it would cost 
$726.72 annually per plan that covers non-Hyde abortion services to 
meet the reporting requirement, with a total annual burden for all 
1,111 plans

[[Page 56026]]

of 26,664 hours and an associated total cost of $807,385.92.
    As such, we estimate that the total number of plans for which QHP 
issuers would need to send separate bills in a separate mailing or 
separate electronic communication and collect separate payments as 
proposed at Sec.  156.280(e)(2) would be 1,111 per year, for a total 
burden of 53,328 hours to meet these reporting requirements per year. 
Below is the estimate of the burden imposed on a single plan subject to 
the reporting requirements of this rule. The aggregate burden for 3 
years will be $4,360.32 per respondent and $4,844,315.52 for all 
respondents.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Total annual    Wage rate (p/                   Total annual
                                                                            Burden per      burden per     hr) including   Labor cost of   cost for all
             Labor category                 Respondents      Responses       response        response       100% fringe      reporting      respondents
                                                                              (hours)         (hours)        benefits      annually ($)         ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
General office clerk for preparing and             1,111           1,111               2              24          $30.28         $726.72     $807,385.92
 sending the bill.......................
General office clerk for receiving and             1,111           1,111               2              24           30.28          726.72      807,385.92
 processing the separate payment........
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................           2,222           2,222               4              48           60.56        1,453.44    1,614,771.84
--------------------------------------------------------------------------------------------------------------------------------------------------------

C. Submission of PRA-Related Comments

    We have submitted a copy of this proposed rule to OMB for its 
review of the rule's information collection and recordkeeping 
requirements. The requirements are not effective until they have been 
approved by OMB.
    We invite public comments on these information collection 
requirements. If you wish to comment, please identify the rule (CMS-
9922-P) and, where applicable, the ICR's CFR citation, CMS ID number, 
and OMB control number.
    To obtain copies of a supporting statement and any related forms 
for the proposed collection(s) summarized in this notice, you may make 
your request using one of following:
    1. Access CMS's website address at https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html.
    2. Email your request, including your address, phone number, OMB 
number, and CMS document identifier, to [email protected].
    3. Call the Reports Clearance Office at (410) 786-1326.
    See this rule's DATES and ADDRESSES sections for the comment due 
date and for additional instructions.

V. Response to Comments

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

VI. Regulatory Impact Statement

    We have examined the impact 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. 96-354), section 1102(b) of the Social Security Act, 
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).
    Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a 
regulation: (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 must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year), 
and an ``economically significant'' regulatory action is subject to 
review by the Office of Management and Budget (OMB). As discussed below 
regarding their anticipated effects, these proposals are not likely to 
have economic impacts of $100 million or more in any 1 year, and 
therefore do not meet the definition of ``economically significant'' 
under Executive Order 12866. However, OMB has determined that the 
actions are significant within the meaning of section 3(f)(4) of the 
Executive Order. Therefore, OMB has reviewed these final rules and the 
Departments have provided the following assessment of their impact.

A. Need for Regulatory Action

    HHS is committed to promoting program integrity throughout its 
programs to ensure that federal statutory requirements are met and 
federal monies are not being inappropriately spent. Ensuring that 
consumers receive the correct amount of APTC and CSRs at the time of 
enrollment or re-enrollment is a top priority for us, and necessitates 
regulatory action. Accurate and up-to-date eligibility determinations 
help reduce the possibility that an individual or family is paying a 
premium amount that is either higher or lower than they should have to, 
the latter of which could result in the individual or family needing to 
pay a large amount back to the federal

[[Page 56027]]

Treasury on their federal income tax returns. We propose a number of 
changes in this rule to help mitigate the risk of federal dollars 
incorrectly leaving the federal Treasury in the form of APTC during the 
year. To further improve program integrity and ensure that individuals 
receiving APTC/CSRs are appropriately enrolled in insurance 
affordability programs, we are also proposing to specify that Exchanges 
must conduct Medicare PDM, Medicaid/CHIP PDM, and BHP PDM, if 
applicable, pursuant to Sec.  155.330(d)(1)(ii), at least twice a year 
beginning with the 2020 calendar year. We also believe this policy 
would likely reduce QHP premiums and improve program integrity for all 
Exchanges, since Medicare and Medicaid/CHIP beneficiaries tend to have 
a higher risk profile than a typical Exchange enrollee and, therefore, 
may have negative impacts on the risk pool because of the typically 
increased utilization of services expected for these populations, which 
include significant numbers of older and disabled beneficiaries or 
poorer health outcomes associated with lower income statuses.\15\ As 
noted above, this negative effect on the risk pool results in higher 
premiums across the individual market, leading to increased 
expenditures of federal funds on PTC for taxpayers eligible for PTC 
resulting from duplicative coverage.
---------------------------------------------------------------------------

    \15\ For example, see Urban Institute and Center on Society and 
Health, How Are Income and Wealth Linked to Health and Longevity? 
(April 2015), available at https://www.urban.org/sites/default/files/publication/49116/2000178-How-are-Income-and-Wealth-Linked-to-Health-and-Longevity.pdf.
---------------------------------------------------------------------------

    As part of our efforts to strengthen program integrity with respect 
to subsidy payments in the individual market, we also believe 
improvements should be made to our ability to conduct effective and 
efficient oversight of State Exchanges to ensure consumers receive the 
correct amount of APTC and CSRs (as applicable). As section 1311 of the 
PPACA Exchange Establishment grant program has come to a conclusion and 
State Exchanges are financially self-sustaining, HHS has a need to 
strengthen the mechanisms and tools for overseeing ongoing compliance 
by State Exchanges with federal program requirements, including 
eligibility and enrollment requirements under 45 CFR part 155. For 
these reasons, we are proposing to add specificity to the reporting 
requirements for State Exchanges at Sec.  155.1200 to focus on 
activities that speak to compliance with Exchange program requirements, 
including eligibility and enrollment requirements. We are also 
proposing changes at Sec.  155.1200 to clarify the scope of annual 
programmatic audits that State Exchanges are required to conduct, and 
include new requirements that focus on ensuring proper eligibility 
determinations and enrollments in SBEs. It is our intent that these 
changes would enable us to better identify and address State Exchange 
non-compliance issues.
    HHS believes that some of the methods for billing and collection of 
the separate payment for non-Hyde abortion services noted as 
permissible in the preamble to the 2016 Payment Notice do not 
adequately reflect what we see as Congressional intent that the QHP 
issuer bill separately for two distinct (that is, ``separate'') 
payments as required by section 1303 of the PPACA. To remedy this, we 
are proposing at Sec.  156.280(e)(2) that: (1) QHP issuers send an 
entirely separate monthly bill to the policy subscriber for only the 
portion of premium attributable to non-Hyde abortion coverage, and (2) 
instruct the policy subscriber to pay the portion of their premium 
attributable to non-Hyde abortion coverage in a separate transaction 
from any payment the policy subscriber makes for the portion of their 
premium not attributable to non-Hyde abortion coverage. We believe that 
these proposals are necessary to better align the regulatory 
requirements for QHP issuer billing of enrollee premiums with the 
separate payment requirement in section 1303 of the PPACA. HHS believes 
that requiring QHP issuers to separately bill the portion of the policy 
subscriber's premium attributable to non-Hyde abortion services and 
instruct policy subscribers to make a separate payment for this amount 
is a better interpretation of, and would result in greater compliance 
with this interpretation of, the statutory requirement for QHP issuers 
to collect a separate payment for these services.

B. Anticipated Effects

    Revising Sec.  155.200(c) to clarify that the Exchanges must 
perform oversight functions or cooperate with activities related to 
oversight and financial integrity requirements is a clarification and 
not a new function. Therefore, it would not impose additional burdens 
on State Exchanges.
    Our proposal that Exchanges conduct Medicare PDM, Medicaid/CHIP 
PDM, and BHP PDM, if applicable, at least twice a year beginning with 
the 2020 calendar year, merely adds specificity to the existing 
requirement that Exchanges must periodically examine available data 
sources to determine whether Exchange enrollees have been determined 
eligible for or enrolled in other qualifying coverage such as Medicare, 
Medicaid, CHIP, or the BHP, if applicable. Therefore, we expect the 
costs associated with this proposal to be minimal. However, SBEs that 
are not already conducting PDM with the frequency proposed, or deemed 
in compliance with the Medicaid, CHIP, and BHP (where applicable) PDM 
requirements, would likely be required to engage in IT system 
development activity in order to communicate with these programs and 
act on enrollment data either in a new way, or in the same way more 
frequently. Thus, there may be additional associated administrative 
cost for these SBEs to implement the proposed PDM requirements. We 
anticipate a majority (about eight) of the twelve SBEs would be exempt 
from the requirement to perform Medicaid, CHIP, and BHP (where 
applicable) PDM because they have shared, integrated eligibility 
systems, as they would be deemed in compliance with this requirement. 
However, at this point we are not able to confirm the exact number 
because we have not yet set specific criteria and process to assess and 
confirm which SBEs would be exempt, and would need additional 
operational information from SBEs to confirm our assessment. We would 
establish and engage in that process after finalization of the rule. 
For an SBE not already conducting Medicare, Medicaid/CHIP, and BHP PDM 
at least twice a year, and that does not already have a shared, 
integrated eligibility system with its respective Medicaid/CHIP, and 
BHP (where applicable) programs, we estimate that it would cost 
approximately $1,740,000 per SBE to build such capabilities in their 
system. These costs would be incurred by the SBE as they are required 
to be financially self-sustaining and do not receive federal funding 
for their establishment or operational activities.
    We believe these changes will support HHS's program integrity 
efforts regarding the Exchanges by helping promote a balanced risk pool 
for the individual market as Medicare and Medicaid/CHIP beneficiaries 
tend to be higher utilizers of medical services, ensuring that 
consumers are accurately determined eligible for APTC and income-based 
CSRs, and safeguarding consumers against enrollment in unnecessary or 
duplicative coverage. Such unnecessary or duplicative coverage, coupled 
with typically higher utilization, generally results in higher premiums 
across the individual market, leading to unnecessarily inflated 
expenditures of federal funds on PTC for taxpayers eligible for PTC in 
the individual market.

[[Page 56028]]

    We expect our plan to permit HHS to verify applicant eligibility 
for or enrollment in MEC in order for HHS to perform the periodic 
checks required under Sec.  155.330(d) for those consumers who provide 
consent to the Exchange to obtain their eligibility and enrollment 
data, and, if desired, to end their QHP coverage if found dually 
enrolled in other qualifying coverage, to have minimal economic impact. 
Based on HHS's experience, the dually enrolled unsubsidized population 
is significantly smaller than those receiving APTC or CSRs. This plan 
would help expand the scope of the population that is part of Medicare 
PDM, rather than adding new Exchange requirements.
    We do not anticipate the proposed changes to Sec.  155.1200 will 
result in any additional cost for the State Exchanges because the 
changes leverage an existing reporting mechanism, the annual State 
Based Marketplace Reporting Tool, for meeting eligibility and 
enrollment reporting requirements in Sec.  155.1200(b). Additionally, 
State Exchanges are already required to annually contract with, and 
budget accordingly for, an external independent audit entity to perform 
an annual financial and programmatic audit as required under Sec.  
155.1200(c). We believe the proposed requirement that HHS be able to 
specify the scope of annual programmatic audits to focus on the program 
areas that are most pertinent to a State Exchange model (SBE or SBE-
FP), or have the greatest program integrity implications, would allow 
State Exchanges to utilize the funds that they already allocate to 
contracting with an external independent audit entity in the most cost-
effective manner.
    In Sec.  156.280, we propose to amend billing and premium 
collection requirements related to the separate payment requirement for 
abortions for which public funding is prohibited pursuant to section 
1303 of the PPACA, as implemented at Sec.  156.280. Specifically, the 
proposals described at Sec.  156.280(e)(2) would require QHP issuers 
offering non-Hyde abortion coverage through an Exchange to send an 
entirely separate monthly bill in a separate mailing or separate 
electronic communication to the policy subscriber for only the portion 
of premium attributable to non-Hyde abortion coverage, and instruct the 
policy subscriber to pay the portion of their premium attributable to 
non-Hyde abortion coverage in a separate transaction from any payment 
the policy subscriber makes for the portions of the premium not 
attributable to coverage for non-Hyde abortion services. These 
proposals aim to better align the regulatory requirements for QHP 
issuer billing of premiums with the separate payment requirement in 
section 1303 of the PPACA.
    As reflected in the associated ICRs for the proposals at Sec.  
156.280(e)(2), we recognize that QHP issuers that cover non-Hyde 
abortion services may experience an increase in burden if these 
proposals are finalized. We anticipate that QHP issuers would need to 
invest additional time and resources to develop a separate invoice for 
non-Hyde abortion services, separately mail with separate postage the 
bill for the portion of the premium attributable to non-Hyde abortion 
coverage or separately email or electronically send the separate bill, 
as well as additional time and resources for receipt and processing of 
the separate payment through a separate transaction as proposed at 
Sec.  156.280(e)(2). Specifically, we anticipate QHP issuers would need 
to invest time and resources to oversee the process of sending in a 
separate mailing or separate electronic communication a complete and 
accurate bill to these enrollees for the portion of their premium 
attributable to that coverage, to review for accuracy the separate 
payment a policy subscriber in a QHP covering non-Hyde abortion sends 
for the portion of their premium attributable to that coverage, and to 
process separate payments, whether made electronically or by mail. We 
also anticipate that QHP issuers would need to add functionality to 
their operating systems to develop an automated process to populate the 
enrollee information on the separate bill, transmit the separate bill 
in a separate mailing or separate electronic communication, and process 
the separate payment.
    Based on 2018 QHP certification data in FFEs and SBE-FPs, 15 QHP 
issuers offered a total of 111 plans with coverage of non-Hyde abortion 
services in 7 states. In SBEs, we estimate that 60 issuers offered a 
total of 1,000 QHPs offering non-Hyde abortion coverage across 10 SBEs. 
In total, this leads to an estimated 75 QHP issuers offering a total of 
1,111 QHPs covering non-Hyde abortion services across 17 states. This 
rule could significantly increase the administrative burden for QHP 
issuers covering non-Hyde abortion services in developing, sending, and 
processing the separate invoices required under this proposal.
    Based on 2018 QHP Certification data in FFEs and SBE-FPs, there 
were approximately 300,000 enrollees across the 111 QHPs covering non-
Hyde abortion coverage. In SBEs, we estimate that there were 
approximately 1,000,000 enrollees across the approximate 1,000 QHPs 
offering non-Hyde abortion coverage. If finalized, these requirements 
would also increase burden on those 1,300,000 consumers, related to 
paying the portion of the premium attributable to non-Hyde abortion 
services through a separate paper check or electronic transaction; that 
burden, however, is contemplated by the specific language of section 
1303 which requires a QHP issuer ``to collect from each enrollee in the 
plan . . . a separate payment'' for the coverage of non-Hyde abortion 
services. In order to develop a preliminary estimate of the consumer 
cost of this proposed provision, we assume that a policy subscriber 
reading their separately received paper or electronic bill and writing 
out an additional paper check or filling in the necessary information 
for completion of a separate electronic payment adds approximately ten 
minutes per month to a policy subscriber's' monthly payment process for 
payment of their QHP premiums, for a total of 2 hours per year. Based 
on the May 2017 National Occupational Employment and Wage Estimates 
United States Department of Labor's Bureau of Labor Statistics (BLS) 
(http://www.bls.gov/oes/current/oes_nat.htm), using the listed national 
mean hourly wage for the 25th percentile,\16\ it would cost a policy 
subscriber $11.91 for an additional hour of burden, or approximately 
$1.98 for an additional 10 minutes of burden. As such, the 10 minute 
monthly estimated burden for filling out a separate check or online 
payment for a policy subscriber would be $1.98, and the yearly added 
burden for each policy subscriber would be $23.76. We note that many 
consumers are enrolled on the Exchange for an average of 10 months. For 
those enrollees, the annual consumer burden would be $19.80 for a total 
annual burden of $25,740,000. However, in total for all affected 
enrollees in QHPs covering non-Hyde abortion enrolled in plans for 12 
months, we estimate that it would annually cost $30,888,000 for policy 
subscribers to comply with these proposals. This estimate excludes the 
cost of consumer learning (which may have significant upfront costs and 
could also continue to be resource intensive on an ongoing basis given 
the potential confusion of consumers in receiving multiple bills. In 
some cases, these may entail costs not just to consumers but

[[Page 56029]]

also to QHP issuers, such as in increased volume of requests for 
customer service assistance and follow up needed to consumers to pay 
their full bill). However, HHS believes that, if finalized as proposed, 
the proposed changes would better align the regulatory requirements for 
QHP issuer billing of premiums with the separate payment requirement in 
section 1303 of the PPACA. As such, HHS believes that this outweighs 
the estimated consumer burden. We solicit comments on the impact of the 
proposed policy at Sec.  156.280(e)(2) and on whether other impacts 
should be considered or quantified.
---------------------------------------------------------------------------

    \16\ The 25th percentile mean hourly wage most closely resembles 
the group of consumers likely to be affected by this proposal as 
most enrollees enrolled in QHPs on the Exchange are between 100% and 
400% of the federal poverty level.
---------------------------------------------------------------------------

    We request comment on both our assessment of the need for the 
regulatory action and an explanation of how the regulatory action will 
meet that need, as well as our assessment of the potential costs and 
benefits of the regulatory action. To be sure our analysis is as 
accurate as possible with respect to any additional costs to states, 
issuers, or other entities, we encourage robust comment in this area.
    The RFA requires agencies to analyze options for regulatory relief 
of small entities. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Individuals and states are not included in the 
definition of a small entity. We are not preparing an analysis for the 
RFA because we have determined, and the Secretary certifies, that this 
proposed rule would not have a significant economic impact on a 
substantial number of small entities.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2018, that 
threshold is approximately $150 million. This rule will have no 
consequential effect on state, local, or tribal governments or on the 
private sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on state 
and local governments, preempts state law, or otherwise has Federalism 
implications. This proposed rule does not impose substantial direct 
costs on state and local governments or preempt state law. However, we 
believe the rule has Federalism implications.
    In HHS's view, this regulation has Federalism implications due to 
our proposal that Exchanges conduct Medicare, Medicaid/CHIP, and, if 
applicable, BHP PDM at least twice a year, beginning with the 2020 
calendar year. However, HHS believes that the Federalism implications 
are substantially mitigated because the proposed requirement sets only 
a minimum frequency with which Exchanges must conduct Medicare, 
Medicaid/CHIP, and, if applicable, BHP PDM, which is already required 
to be conducted periodically; SBEs would continue to have the 
flexibility to conduct PDM with greater frequency.
    Additionally, the proposed changes to State Exchange oversight and 
reporting requirements in Sec.  155.1200 have Federalism implications 
since those rules would require State Exchanges to submit certain 
reports to HHS and require them to enter into contracts with an 
external independent audit entity to perform audits, and incur the 
associated costs. However, HHS believes that the Federalism 
implications are substantially mitigated because the proposed changes 
do not impose new requirements on State Exchanges, but rather add 
specificity to the existing requirements.
    This proposed rule is subject to the Congressional Review Act (5 
U.S.C. 801, et seq.), which specifies that before a rule can take 
effect, the federal agency promulgating the rule shall submit to each 
House of the Congress and to the Comptroller General a report 
containing a copy of the rule along with other specified information, 
and has been transmitted to the Congress and the Comptroller General 
for review.
    Executive Order 13771, titled 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. OMB Guidance Implementing Executive Order 
13771 (April 5, 2017) defines a regulatory action as (1) a significant 
regulatory action as defined in section 3(f) of Executive Order 12866, 
or (2) a significant guidance document (for example, significant 
interpretive guidance) that has been reviewed by OMB under the 
procedures of Executive Order 12866 and that, when finalized, is 
expected to impose total costs greater than zero. This proposed rule, 
if finalized as proposed, is expected to be an E.O. 13771 regulatory 
action. Details on the estimated costs appear in the preceding 
analysis.

C. Regulatory Review Costs

    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this proposed rule, we 
estimate the cost associated with regulatory review. Due to the 
uncertainty involved with accurately quantifying the number of entities 
that will review the rule, we assume that the total number of unique 
commenters on similar Exchange-related CMS rules will be the number of 
reviewers of this proposed rule. We acknowledge this assumption may 
understate or overstate the costs of reviewing this rule. It is 
possible that not all commenters will review the rule in detail, and it 
is also possible that some reviewers will chose not to comment on the 
proposed rule. For these reasons, we consider the number of past 
commenters on similar CMS rules will be a fair estimate of the number 
of reviewers of this rule. We welcome any comments on the approach in 
estimating the number of entities which will review this proposed rule.
    We recognize that different types of entities may be affected by 
only certain provisions of this proposed rule, and therefore, for the 
purposes of our estimate, we assume that each reviewer reads 
approximately 50 percent of the rule.
    Using the wage information from the Bureau of Labor and Statistics 
(BLS) for medical and health service managers (Code 11-9111), we 
estimate that the cost of reviewing this rule is $107.38 per hour, 
including overhead and fringe benefits.\17\ We estimate that it would 
take approximately 1 hour for the staff to review the relevant portions 
of this proposed rule. Based on previous and similar CMS rules, we 
assume that 321 entities will review this proposed rule. Therefore, we 
estimate that the total cost of reviewing this regulation is 
approximately $34,469 ($107.38 x 321 reviewers).
---------------------------------------------------------------------------

    \17\ https://www.bls.gov/oes/current/oes_nat.htm.
---------------------------------------------------------------------------

    This may underestimate the review costs, since not all reviewers 
may have submitted comments. In addition, stakeholders may need to do a 
detailed analysis in order to implement the unanticipated provisions of 
this rule will need additional time and personnel, which will vary 
depending

[[Page 56030]]

on the extent to which they are affected. To estimate an upper bound, 
we assume that on average 530 issuers and 50 states will spend 10 hours 
each, 100 other organizations will spend 5 hours each and 100 
individuals will spend 1 hour each to review the rule. Under these 
assumptions, total time spent reviewing the rule would be 6,400 hours 
with an estimated cost of approximately $673,024.
    In accordance with the provisions of Executive Order 12866, this 
proposed rule was reviewed by the Office of Management and Budget.

List of Subjects

45 CFR Part 155

    Administrative practice and procedure, Advertising, Brokers, 
Conflict of interests, Consumer protection, Grants 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, Advisory 
committees, Brokers, Conflict of interests, Consumer protection, Grant 
programs--health, Grants administration, Health care, Health insurance, 
Health maintenance organization (HMO), Health records, Hospitals, 
Indians, 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 proposes to amend 45 CFR parts 155 and 156 as set 
forth below:

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

0
1. The authority citation for part 155 is revised to read as follows:

    Authority:  42 U.S.C. 18021-18024, 18031-18033, 18041-18042, 
18051, 18054, 18071, and 18081-18083.

0
2. Section 155.200 is amended by revising paragraph (c) to read as 
follows:


Sec.  155.200  Functions of an Exchange.

* * * * *
    (c) Oversight and financial integrity. The Exchange must perform 
required functions and cooperate with activities related to oversight 
and financial integrity requirements in accordance with section 1313 of 
the Affordable Care Act and as required under this part, including 
overseeing its Exchange programs, assisters, and other non-Exchange 
entities as defined in Sec.  155.260(b)(1).
* * * * *
0
3. Section 155.330 is amended by revising paragraph (d)(1) introductory 
text and adding paragraph (d)(3) to read as follows:


Sec.  155.330  Eligibility redetermination during a benefit year

* * * * *
    (d) * * *
    (1) General requirement. Subject to paragraph (d)(3) of this 
section, the Exchange must periodically examine available data sources 
described in Sec. Sec.  155.315(b)(1) and 155.320(b) to identify the 
following changes:
* * * * *
    (3) Definition of periodically. Beginning with the 2020 calendar 
year, the Exchange must perform the periodic examination of data 
sources described in paragraph (d)(1)(ii) of this section at least 
twice in a calendar year. SBEs that have implemented a fully integrated 
eligibility system that determines eligibility for advance payments of 
the premium tax credit, cost-sharing reductions, Medicaid, CHIP, and 
the BHP, if a BHP is operating in the service area of the Exchange, 
will be deemed in compliance with paragraphs (d)(1)(ii) and (d)(3) of 
this section.
* * * * *
0
4. Section 155.1200 is amended by--
0
a. Revising paragraphs (b) introductory text, (b)(1) and (2), (c) 
introductory text, and (d)(2) and (3);
0
b. Redesignating (d)(4) as paragraph (d)(5);
0
c. Adding a new paragraph (d)(4); and
0
d. Revising newly redesignated paragraph (d)(5).
    The revisions and addition read as follows:


Sec.  155.1200  General program integrity and oversight requirements.

* * * * *
    (b) Reporting. The State Exchange must, at least annually, provide 
to HHS, in a manner specified by HHS and by applicable deadlines 
specified by HHS, the following data and information:
    (1) A financial statement presented in accordance with GAAP,
    (2) Information showing compliance with Exchange requirements under 
this part 155 through submission of annual reports,
* * * * *
    (c) External audits. The State Exchange must engage an independent 
qualified auditing entity which follows generally accepted governmental 
auditing standards (GAGAS) to perform an annual independent external 
financial and programmatic audit and must make such information 
available to HHS for review. The State Exchange must:
* * * * *
    (d)* * *
    (2) Compliance with subparts D and E of this part 155, or other 
requirements under this part 155 as specified by HHS;
    (3) Processes and procedures designed to prevent improper 
eligibility determinations and enrollment transactions, as applicable;
    (4) Compliance with eligibility and enrollment standards through 
sampling, testing, or other equivalent auditing procedures that 
demonstrate the accuracy of eligibility determinations and enrollment 
transactions; and
    (5) Identification of errors that have resulted in incorrect 
eligibility determinations, as applicable.

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

0
5. The authority citation for part 156 is revised to read as follows:

    Authority:  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
6. Section 156.280 is amended by --
0
a. Redesignating paragraph (e)(2)(ii) as (e)(2)(iii);
0
b. Adding a new paragraph (e)(2)(ii); and
0
c. Revising newly redesignated paragraph (e)(2)(iii).
    The revisions and addition read as follows:


Sec.  156.280  Segregation of funds for abortion services.

* * * * *
    (e) * * *
    (2) * * *
    (ii) Send to each policy subscriber (without regard to the policy 
subscriber's age, sex, or family status) in the QHP separate monthly 
bills for each of the amounts specified in paragraphs (e)(2)(i)(A) and 
(B) of this section, and

[[Page 56031]]

instruct the policy subscriber to pay each of these amounts through 
separate transactions. If the policy subscriber fails to pay each of 
these amounts in a separate transaction as instructed by the issuer, 
the issuer may not terminate the policy subscriber's coverage on this 
basis, provided the amount due is otherwise paid.
    (iii) Deposit all such separate payments into separate allocation 
accounts as provided in paragraph (e)(3) of this section. In the case 
of an enrollee whose premium for coverage under the QHP is paid through 
employee payroll deposit, the separate payments required under 
paragraph (e)(2)(i) of this section shall each be paid by a separate 
deposit.
* * * * *

    Dated: October 11, 2018.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: October 18, 2018.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2018-24504 Filed 11-7-18; 4:15 pm]
 BILLING CODE 4120-01-P