[Federal Register Volume 84, Number 86 (Friday, May 3, 2019)]
[Proposed Rules]
[Pages 19000-19003]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-09121]


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DEPARTMENT OF THE TREASURY

31 CFR Part 33

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 155

[CMS-9936-NC2]


Request for Information Regarding State Relief and Empowerment 
Waivers

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS; Department 
of the Treasury.

ACTION: Request for information.

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SUMMARY: This request for information (RFI) solicits public comment on 
ideas for innovative programs and waiver concepts that states could 
consider in developing a 1332 waiver plan. The Department of the 
Treasury and the Centers for Medicare & Medicaid Services in the 
Department of Health and Human Services (collectively, the Departments) 
are seeking feedback and ideas on how states might take advantage of 
new flexibilities provided in recently published October 2018 guidance. 
The overarching goal of section 1332 waivers is to give all Americans 
the opportunity to gain high value and affordable health coverage 
regardless of income, geography, age, gender, or health status while 
empowering states to develop health coverage strategies that best meet 
the needs of their residents. The Departments are committed to 
empowering states to innovate in ways that will strengthen their health 
insurance markets, expand choices of coverage, target public resources 
to those most in need, and meet the unique circumstances of each state.

DATES: Comment Date: To be assured consideration, comments must be 
received at one of the addresses provided below, no later than 5 p.m. 
on July 2, 2019.

ADDRESSES: Written comments may be submitted to the addresses specified 
below. Any comment that is submitted will be shared between the 
Departments. Please do not submit duplicates.
    All comments will be made available to the public. Warning: Do not 
include any personally identifiable information (such as name, address, 
or other contact information) or confidential business information that 
you do not want publicly disclosed. All comments are posted on the 
internet exactly as received and can be retrieved by most internet 
search engines. No deletions, modifications, or redactions will be made 
to the comments received, as they are public records. Comments may be 
submitted anonymously.
    In commenting, refer to file code CMS-9936-NC2. 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 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-9936-NC2, P.O. Box 8013, 
Baltimore, MD 21244-1850.
    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-9936-NC2, 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: Michelle Koltov, Centers for Medicare 
& Medicaid Services, Department of Health and Human Services, at (301) 
492-4225.
    Lina Rashid, Centers for Medicare & Medicaid Services, Department 
of Health and Human Services, at (202) 260-6098.

SUPPLEMENTARY INFORMATION:
    Submission of Comments: All submissions received for this notice 
must include the Agency file code CMS-9936-NC2.
    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. Comments received before the 
close of the comment period are posted 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. Background

    One of the Administration's priorities in health care is to empower 
states by providing tools to address the serious problems that have 
surfaced in state individual health insurance markets with the 
implementation of the Patient Protection and Affordable Care Act 
(PPACA). The Administration is committed to expanding state flexibility 
and empowering states to address problems with their individual health 
insurance markets and increase health insurance coverage options for 
their residents, while at the same time encouraging states to adopt 
innovative strategies to reduce future overall health care spending. 
Section 1332 of the PPACA permits a state to apply for a State 
Innovation Waiver (referred to as a section 1332 waiver or a State 
Relief and Empowerment Waiver) to pursue innovative strategies for 
providing their residents with access to higher value, more affordable 
health coverage. The overarching goal of section 1332 waivers is to 
give all Americans the opportunity to gain high value and affordable 
health coverage regardless of income, geography, age, gender, or health 
status while empowering states to develop health coverage strategies 
that best meet the needs of their residents. Section 1332 waivers 
provide states an opportunity to promote a stable health insurance 
market that offers more choice and affordability to state residents, in 
part through expanded competition.
    On November 29, 2018, CMS released a discussion paper entitled 
``Section 1332 State Relief and Empowerment

[[Page 19001]]

Waiver Concepts.'' \1\ These waiver concepts are intended to foster 
discussion with states by illustrating how states might take advantage 
of new flexibilities provided in guidance related to section 1332 
published on October 24, 2018 (referred to as the 2018 guidance),\2\ 
which replaced the previous guidance published on December 16, 2015.\3\ 
The 2018 guidance aims to lower barriers to innovation for states 
seeking to reform their health insurance markets, increases flexibility 
with respect to the manner in which a section 1332 state plan may meet 
section 1332 approval requirements, clarifies the adjustments that the 
Secretary of the Department of the Treasury and the Secretary of the 
Department of Health and Human Services (collectively, the Secretaries) 
may make to maintain federal deficit neutrality, and clarifies that 
states may use existing state legislative authority to authorize 
section 1332 waivers in certain scenarios. The Departments are 
committed to empowering states to innovate in ways that will strengthen 
their health insurance markets, expand choices of coverage, target 
public resources to those most in need, and meet the unique 
circumstances of their state.
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    \1\ https://www.cms.gov/CCIIO/Programs-and-Initiatives/State-Innovation-Waivers/Downloads/Waiver-Concepts-Guidance.PDF.
    \2\ 83 FR 53575, https://www.federalregister.gov/documents/2018/10/24/2018-23182/state-relief-and-empowerment-waivers.
    \3\ 80 FR 78131, https://www.federalregister.gov/documents/2015/12/16/2015-31563/waivers-for-state-innovation.
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    As noted in the 2018 guidance, the Secretaries will consider 
favorably section 1332 waiver applications that advance some or all of 
the following five principles as elements of a section 1332 waiver 
application. The principles are as follows:
     Provide increased access to affordable private market 
coverage. Making private health insurance coverage more accessible and 
affordable should be a priority for a section 1332 waiver. A section 
1332 state plan should foster health coverage through competitive 
private coverage, including Association Health Plans and short-term 
limited-duration insurance plans, over public programs. Additionally, 
the Departments will look favorably upon section 1332 applications 
under which states increase issuer participation in state insurance 
markets and promote competition.
     Encourage sustainable spending growth. Section 1332 
waivers should promote more cost-effective health coverage and be fair 
to the federal taxpayer by restraining growth in federal spending 
commitments. For example, states should consider eliminating or 
reducing state-level regulation that limits market choice and 
competition in order to reduce prices for consumers and reduce costs to 
the federal government, as part of their section 1332 waiver 
applications.
     Foster state innovation. States are better positioned than 
the federal government to assess and respond to the needs of their 
citizens with innovative solutions. We encourage states to craft 
solutions that meet the needs of their consumers and markets and 
innovate to the maximum extent possible under the law.
     Support and empower those in need. Americans should have 
access to affordable, high value health insurance. Some Americans, 
particularly those with low incomes or high expected health care costs, 
may require financial assistance. Policies in section 1332 waiver 
applications should support state residents in need in the purchase of 
private coverage with financial assistance that meets their specific 
health care situations.
     Promote consumer-driven healthcare. Section 1332 waivers 
should empower Americans to make informed choices about their health 
coverage and health care with incentives that encourage consumers to 
seek value. Instead of only offering a one-size-fits-all plan proposal, 
a section 1332 state plan should focus on providing people with the 
resources and information they need to afford and purchase the private 
insurance coverage that best meets their needs.
    Consistent with the principles laid out above, the Secretaries 
intend to provide states with maximum flexibility within the law to 
innovate, empower consumers, and expand higher value and more 
affordable coverage options.
    Under a section 1332 waiver, states may seek waivers of 
requirements under Part I of Subtitle D of Title I of the PPACA 
(relating to establishing Qualified Health Plans (QHPs)); Part II of 
Subtitle D of Title I of the PPACA (relating to consumer choices and 
insurance competition through health insurance Exchanges); Sections 36B 
of the Internal Revenue Code and 1402 of the PPACA (relating to premium 
tax credits and cost-sharing reductions for QHPs offered within the 
Exchanges); and Section 4980H of the Internal Revenue Code (relating to 
employer shared responsibility). For example, a state may seek to waive 
requirements under parts I and II of Subtitle D of the PPACA, including 
the requirement that an Exchange operate in the state; that the 
Exchange in the state performs certain minimum functions, including QHP 
certification, administration of annual and special enrollment periods; 
as well as requirements related to essential health benefits (EHB) and 
actuarial value (AV) metal levels. The Departments' waiver authority 
does not permit states to waive other PPACA title I requirements such 
as pre-existing condition protections; allowable premium rating 
factors, including age bands; guaranteed availability and renewability 
of health coverage; risk adjustment; and eligibility determinations 
under section 1411 of the PPACA for programs outside of the Exchange 
(this applies to determinations for Medicaid, the Children's Health 
Insurance Program (CHIP), and the Basic Health Program (BHP)). Under 
section 1332 of the PPACA, the Departments have no authority to waive 
any provision of the Employee Retirement Income Security Act (ERISA).
    In order for the Departments to be able to grant a request for a 
section 1332 waiver, the Departments must determine that the waiver 
will provide access to health insurance coverage that is at least as 
comprehensive and affordable as would be provided under the PPACA 
without the waiver, will provide coverage to at least a comparable 
number of residents of the state as would be provided coverage without 
the waiver, and will not increase the federal deficit. These statutory 
criteria are referred to as the ``guardrails.'' Before submitting a 
section 1332 waiver application, a state must have enacted a law 
providing for implementation of the waiver, provided public notice and 
a period for public comment, and held public hearings sufficient to 
ensure a meaningful level of public input.
    Under a section 1332 waiver, a state may receive pass-through 
funding associated with the resulting reductions in federal spending on 
Exchange financial assistance (that is, spending on PTC under section 
36B of the Internal Revenue Code, Small Business Tax Credits (SBTC) 
under section 45R of the Internal Revenue Code, or Cost-Sharing 
Reductions (CSRs) \4\ consistent with the statute and the state's 
waiver plan. Pass-through funding may only be used to implement the 
approved state waiver plan.
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    \4\ So long as there is no available appropriation to support 
federal CSR payments, states may not receive pass-through funds 
based on federal savings in CSR payments.
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    The waiver concepts in the discussion paper released in November 
2018 were offered to spur innovative ideas that

[[Page 19002]]

could be utilized by individual states seeking approval for section 
1332 waivers that could help improve their health care markets. The 
four waiver concepts addressed in that discussion paper are summarized 
below:
     Account-Based Subsidies: Under this waiver concept, a 
state can create its own subsidy structure and direct public subsidies 
into a defined-contribution, consumer-directed account that an 
individual uses to pay for health insurance premiums or other health 
care expenses. The account could be funded with pass-through funding 
made available by waiving federal spending on Exchange financial 
assistance, such as the PTC under section 36B of the Internal Revenue 
Code (IRC) or SBTC under section 45R of the IRC, or by waiving other 
provisions as described above, thereby resulting in reduced federal 
financial assistance spending. The account could also allow individuals 
to aggregate funding from additional sources, including individual and 
employer contributions. An account-based approach could give 
beneficiaries more choices and require beneficiaries to take 
responsibility for managing their health care spending. This approach 
could also provide consumers with a greater ability to select a plan 
based on their needs, or their family's needs, including a higher 
deductible plan with lower premiums.
     State-Specific Premium Assistance: States can use the 
State-Specific Premium Assistance waiver concept to create a new, 
state-administered subsidy program. A state may design a subsidy 
structure that meets the unique needs of its population in order to 
provide more affordable health care options to a wider range of 
individuals, attract more young and healthy consumers into their 
market, or to address structural issues that create perverse 
incentives, such as the subsidy cliff. States may receive federal pass-
through funding by waiving federal spending on Exchange financial 
assistance, such as the PTC under section 36B of the IRC to help fund 
the state subsidy program, or by waiving other provisions as described 
above, thereby resulting in reduced federal financial assistance 
spending.
     Adjusted Plan Options: Under this waiver concept, states 
could provide financial assistance for different types of health 
insurance plans, including non-QHPs, potentially increasing consumer 
choice and making coverage more affordable for individuals. For 
example, states could choose to expand the availability of catastrophic 
plans beyond the current eligibility limitations by waiving section 
1302(e)(2) of the PPACA. Used in conjunction with the account-based 
subsidy waiver concept, states could provide subsidies in the form of 
contributions to consumer-directed accounts, allowing individuals to 
use the funds to purchase coverage that is right for them and use any 
remaining funds in the account to offset out-of-pocket health care 
expenses.
     Risk Stabilization Strategies: To address risk associated 
with individuals with high health care costs, this waiver concept gives 
states more flexibility to implement reinsurance programs or high risk 
pools. For example, a state can implement a state-operated reinsurance 
program or high-risk pool by waiving the single risk pool requirement 
under section 1312(c)(1) of the PPACA. Reinsurance programs established 
through section 1332 waivers have lowered premiums for consumers, 
improved market stability, and increased consumer choice. To date, 
states have chosen to use a variety of models to operate their state-
based reinsurance programs, using flexibility available under section 
1332. These models include a claims cost-based model, a conditions-
based model, and a hybrid conditions and claims cost-based model. For 
approved 1332 waivers, if the Departments determine that the waiver 
will reduce federal spending on Exchange financial assistance, the 
state will receive federal pass-through funding to help fund the 
state's high risk pool/reinsurance program.
    States are not required to use these concepts in their waiver 
applications; states may use these waiver concepts alone or in 
combination with other waiver concepts, state proposals, or policy 
changes. States may also submit applications that do not use any of the 
waiver concepts outlined above. A state's use of any of these waiver 
concepts, in whole or in part, does not guarantee approval. The 
Departments will continue to evaluate all section 1332 waiver 
applications received on an individual basis in a manner consistent 
with the requirements of section 1332 of the PPACA and its implementing 
regulations at 31 CFR part 33 and 45 CFR part 155.

II. Solicitation of Public Comments

    The Departments are committed to empowering states to innovate and 
as such are interested in waiver ideas for states to consider that will 
strengthen their health insurance markets, expand choices of coverage, 
target public resources to those most in need, and meet the unique 
circumstances of each state. This RFI is intended to solicit ideas and 
spur additional thinking and innovation as states consider developing 
section 1332 waiver plans.
    In this RFI, the Departments solicit public comments on ideas for 
other innovative waiver concepts. The Departments seek public comments 
on ideas that states may be able to use to develop innovative waiver 
programs that meet the section 1332 guardrails. The Departments are 
soliciting comments on waiver concepts that states could potentially 
use alone or in combination with other waiver concepts, state 
proposals, or policy changes. In this RFI, the Departments also seek 
public comments on ideas for waiver concepts that could advance some or 
all of the principles outlined in the October 2018 guidance and 
Background section above.
    The Departments are also soliciting public comments on ideas for 
waiver concepts that incorporate the entire range of waivable 
requirements allowed under section 1332. The Departments are also 
interested in how states might align these flexibilities under section 
1332 with other flexibilities under federal law, including regulatory 
flexibility, section 1115 Medicaid waivers, as well as state law.
    The Departments may consider the ideas received in response to this 
RFI to develop additional waiver concepts in the future.

III. Collection of Information Requirements

    Please note, this is a request for information (RFI) only. In 
accordance with the implementing regulations of the Paperwork Reduction 
Act of 1995 (PRA), specifically 5 CFR 1320.3(h)(4), this general 
solicitation is exempt from the PRA. Facts or opinions submitted in 
response to general solicitations of comments from the public, 
published in the Federal Register or other publications, regardless of 
the form or format thereof, provided that no person is required to 
supply specific information pertaining to the commenter, other than 
that necessary for self-identification, as a condition of the agency's 
full consideration, are not generally considered information 
collections and therefore not subject to the PRA.
    Respondents are encouraged to provide complete but concise 
responses. This RFI is issued solely for information and planning 
purposes; it does not constitute a Request for Proposal (RFP), 
applications, proposal abstracts, or quotations. This RFI does not 
commit the U.S. Government to contract for any supplies or services or 
make a grant award. Further, CMS is not seeking proposals through this 
RFI and will not accept unsolicited proposals. Responders are advised 
that the U.S.

[[Page 19003]]

Government will not pay for any information or administrative costs 
incurred in response to this RFI; all costs associated with responding 
to this RFI will be solely at the interested party's expense. Not 
responding to this RFI does not preclude participation in any future 
procurement, if conducted. It is the responsibility of the potential 
responders to monitor this RFI announcement for additional information 
pertaining to this request. Please note that CMS will not respond to 
questions about the policy issues raised in this RFI. CMS may or may 
not choose to contact individual responders. Such communications would 
only serve to further clarify written responses. Contractor support 
personnel may be used to review RFI responses. Responses to this notice 
are not offers and cannot be accepted by the U.S. Government to form a 
binding contract or issue a grant. Information obtained as a result of 
this RFI may be used by the U.S. Government for program planning on a 
non-attribution basis. Respondents should not include any information 
that might be considered proprietary or confidential. This RFI should 
not be construed as a commitment or authorization to incur cost for 
which reimbursement would be required or sought. All submissions become 
U.S. Government property and will not be returned. CMS may publically 
post the comments received, or a summary thereof.

    Signed at Washington DC, this 5th day of April, 2019.
David J. Kautter,
Assistant Secretary (Tax Policy), Department of the Treasury.
    Dated: March 19, 2019.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: April 26, 2019.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2019-09121 Filed 5-1-19; 11:15 am]
BILLING CODE 4120-01-P