[Federal Register Volume 86, Number 184 (Monday, September 27, 2021)]
[Rules and Regulations]
[Pages 53412-53506]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-20509]



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Vol. 86

Monday,

No. 184

September 27, 2021

Part II





Department of the Treasury





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31 CFR Part 33





Department of Health and Human Services





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45 CFR Parts 147, 155, and 156





Patient Protection and Affordable Care Act; Updating Payment 
Parameters, Section 1332 Waiver Implementing Regulations, and Improving 
Health Insurance Markets for 2022 and Beyond; Final Rule

  Federal Register / Vol. 86, No. 184 / Monday, September 27, 2021 / 
Rules and Regulations  

[[Page 53412]]


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DEPARTMENT OF THE TREASURY

31 CFR Part 33

RIN 1505-AC78

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 147, 155, and 156

[CMS-9906-F]
RIN 0938-AU60


Patient Protection and Affordable Care Act; Updating Payment 
Parameters, Section 1332 Waiver Implementing Regulations, and Improving 
Health Insurance Markets for 2022 and Beyond

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

ACTION: Final rule.

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SUMMARY: This final rule sets forth revised 2022 user fee rates for 
issuers offering qualified health plans (QHPs) through federally-
facilitated Exchanges and State-based Exchanges on the Federal 
platform; repeals separate billing requirements related to the 
collection of separate payments for the portion of QHP premiums 
attributable to coverage for certain abortion services; expands the 
annual open enrollment period and Navigator duties; implements a new 
monthly special enrollment period for qualified individuals or 
enrollees, or the dependents of a qualified individual or enrollee, who 
are eligible for advance payments of the premium tax credit (APTC) and 
whose household income does not exceed 150 percent of the Federal 
poverty level, available during periods of time during which APTC 
benefits are available such that certain applicable taxpayers' 
applicable percentage is set at zero, such as during tax years 2021 and 
2022 under the section 9661 of the American Rescue Plan Act of 2021; 
repeals the recent establishment of a Direct Enrollment option for 
Exchanges; and modifies regulations and policies related to section 
1332 waivers.

DATES: This final rule is effective on November 26, 2021.

FOR FURTHER INFORMATION CONTACT: Adrianne Patterson, (410) 786-0686, 
Jacquelyn Rudich, (301) 492-5211, or Nora Simmons, (410) 786-1981, for 
general information.
    Gian Johnson, (301) 492-4323, or Meredyth Woody, (301) 492-4404, 
for matters related to Navigator program standards.
    Robert Yates, (301) 492-5151, for matters related to the Exchange 
Direct Enrollment option for federally-facilitated Exchanges, State-
based Exchanges on the Federal platform, and State Exchanges.
    Carly Rhyne, (301) 492-4188, or Aziz Sandhu, (301) 492-4437, for 
matters related to the annual open enrollment period.
    Carolyn Kraemer, (301) 492-4197, for matters related to special 
enrollment periods for Exchange enrollment under parts 147 and 155.
    Nikolas Berkobien, (301) 492-4400, for matters related to 
standardized options.
    Aaron Franz, (410) 786-8027, for matters related to user fees.
    Rebecca Bucchieri, (301) 492-4341, for matters related to provision 
of essential health benefits and separate billing and segregation of 
funds for abortion services.
    Erika Melman, (301) 492-4348, Deborah Hunter, (410) 786-0625, or 
Emily Martin, (301) 492-4400, for matters related to network adequacy.
    Lina Rashid, (202) 260-6098, Michelle Koltov, (301) 492-4225, or 
Kimberly Koch, (202) 622-0854, for matters related to section 1332 
waivers.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Executive Summary
II. Background
    A. Legislative and Regulatory Overview
    B. Stakeholder Consultation and Input
    C. Structure of the Final Rule
III. Provisions of the Updating Payment Parameters and Improving 
Health Insurance Markets for 2022 and Beyond Final Rule and 
Responses to Public Comments
    A. Part 147--Health Insurance Reform Requirements for the Group 
and Individual Health Insurance Markets
    B. Part 155--Exchange Establishment Standards and Other Related 
Standards Under the Affordable Care Act
    C. Part 156--Health Insurance Issuer Standards Under the 
Affordable Care Act, Including Standards Related to Exchanges
IV. Provisions of the Final Rule for Section 1332 Waivers and 
Responses to Public Comments
    A. 31 CFR part 33 and 45 CFR part 155--Section 1332 Waivers
V. Collection of Information Requirements
    A. ICRs Regarding Navigator Program Standards (Sec.  155.210)
    B. ICRs Regarding Segregation of Funds for Abortion Services 
(Sec.  156.280)
    C. ICRs Regarding Section 1332 Waivers (31 CFR part 33 and 45 
CFR part 155)
VI. Regulatory Impact Analysis
    A. Statement of Need
    B. Overall Impact
    C. Impact Estimates of the Payment Notice Provisions and 
Accounting Table
    D. Regulatory Alternatives Considered
    E. Regulatory Flexibility Act
    F. Unfunded Mandates
    G. Federalism
    H. Congressional Review Act

I. Executive Summary

    American Health Benefit Exchanges, or ``Exchanges,'' are entities 
established under the Patient Protection and Affordable Care Act (ACA) 
\1\ through which qualified individuals and qualified employers can 
purchase comprehensive health insurance coverage through QHPs. Many 
individuals who enroll in QHPs through individual market Exchanges are 
eligible to receive a premium tax credit (PTC) to reduce their costs 
for health insurance premiums and to receive reductions in required 
cost-sharing payments to reduce out-of-pocket expenses for health care 
services. This rule finalizes policies designed to promote greater 
access to comprehensive health insurance coverage through the 
Exchanges, consistent with applicable law and with the administration's 
policy priorities detailed in recent Presidential executive orders.
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    \1\ The Patient Protection and Affordable Care Act (Pub. L. 111-
148) was enacted on March 23, 2010. The Healthcare and Education 
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and 
revised several provisions of the Patient Protection and Affordable 
Care Act, was enacted on March 30, 2010. In this proposed rule, HHS 
refers to the two statutes collectively as the ``Affordable Care 
Act'' or ``ACA.''
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    On January 28, 2021, President Biden issued Executive Order 14009, 
``Executive Order on Strengthening Medicaid and the Affordable Care 
Act'' (E.O. 14009), which stated the Administration's policy to protect 
and strengthen the ACA and to make high-quality health care accessible 
and affordable for every American.\2\ This Executive Order instructed 
the Secretary of Health and Human Services (hereinafter referred to as 
``the Secretary'' or the ``Secretary of HHS''), along with the 
Secretaries of the Departments of Labor and the Treasury, to review all 
existing regulations, guidance documents, and other agency actions to 
determine whether they are consistent with the aforementioned policy, 
and to consider whether to suspend, revise, or rescind any agency 
actions that are inconsistent with it.
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    \2\ 86 FR 7793 (Feb. 2, 2021).
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    On January 20, 2021, President Biden issued Executive Order 13985, 
``On Advancing Racial Equity and Support for Underserved Communities 
Through the Federal Government'' (E.O. 13985),\3\ directing that as a 
policy matter, the

[[Page 53413]]

Federal Government should pursue a comprehensive approach to advancing 
equity for all, including people of color and others who have been 
historically underserved, marginalized, and adversely affected by 
persistent poverty and inequality. E.O. 13985 also directs HHS to 
assess whether, and to what extent, its programs and policies 
perpetuate systemic barriers to opportunities and benefits for people 
of color and other underserved groups.
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    \3\ 86 FR 7009 (Jan. 25, 2021).
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    Those who have insurance frequently face barriers to using it 
because of affordability concerns related to premiums, deductibles, 
copayments, and coinsurance, as well as challenges related to health 
literacy and the ability for the insured to find and access in-network 
providers. These barriers to using insurance are particularly 
problematic for those with chronic conditions and individuals with 
social risk factors (such as poverty, minority race and/or ethnicity, 
social isolation, and limited community resources),\4\ which also 
includes members of underserved communities, people of color, and 
others who have been historically underserved, marginalized, and 
adversely affected by persistent poverty and inequality. Today, of the 
30 million uninsured, half are people of color.\5\ The COVID-19 public 
health emergency (PHE) has highlighted the negative effects of these 
circumstances as COVID-19 has unequally affected many racial and ethnic 
minority groups, putting them more at risk of getting sick and dying 
from COVID-19.\6\
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    \4\ See ``Social Risk Factors and Medicare's Value-Based 
Purchasing Programs,'' HHS Office of the Secretary of Planning and 
Evaluation, available at https://aspe.hhs.gov/social-risk-factors-and-medicares-value-based-purchasing-programs.
    \5\ ``Health Insurance Coverage: Early Release of Estimates From 
the National Health Interview Survey, January-June 2020,'' National 
Center for Health Statistics, February 2021, available at https://www.cdc.gov/nchs/data/nhis/earlyrelease/insur202102-508.pdf.
    \6\ See Centers for Disease Control and Prevention, ``Health 
Equity Considerations and Racial and Ethnic Minority Groups,'' 
updated April 19, 2021, available at https://www.cdc.gov/coronavirus/2019-ncov/community/health-equity/race-ethnicity.html#print, https://www.cdc.gov/coronavirus/2019-ncov/community/health-equity/race-ethnicity.html#print.
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    As part of its review of regulations and policies under the 
Executive Orders described in the preceding paragraphs, HHS analyzed 
whether certain policies and requirements addressed in this final rule 
are consistent with policy goals outlined in the Executive Orders, 
including whether they might create or perpetuate systemic barriers to 
obtaining health insurance coverage. The results of HHS's analyses led 
to the policies and rules finalized in this rule.
    In previous rulemakings, HHS established provisions and parameters 
to implement many ACA requirements and programs. In this final rule, 
HHS amends and repeals some of these provisions and parameters, with a 
focus on making high-quality health care accessible and affordable for 
consumers. These changes provide consumers greater access to coverage 
through, for example, greater education and outreach, improved 
affordability for consumers, reduced administrative burden for issuers 
and consumers, and improved program integrity. As discussed more fully 
later in the preamble, each of these measures strengthen the ACA or 
otherwise promote the policy goals outlined in the Executive Orders 
described earlier in this preamble.\7\
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    \7\ Although many of the policies in this rule support the goals 
outlined in recent Executive Orders, as described later in the 
preamble discussions related to individual provisions, each of the 
provisions is supported by statutory authority independent of the 
Executive Orders.
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    HHS amends Sec.  147.104(b)(2) to specify that issuers are not 
required to provide a special enrollment period in the individual 
market with respect to coverage offered outside of an Exchange to 
qualifying individuals who would be eligible for the proposed special 
enrollment period triggering event at Sec.  155.420(d)(16) described 
below.
    HHS also amends Sec.  155.210(e)(9) to reinstitute previous 
requirements that Navigators in federally-facilitated Exchanges (FFEs) 
be required to provide consumers with information and assistance on 
certain post-enrollment topics, such as the Exchange eligibility 
appeals process, the Exchange-related components of the PTC 
reconciliation process, and the basic concepts and rights of health 
coverage and how to use it.
    HHS also finalizes the removal of Sec.  155.221(j) and repeal of 
the Exchange Direct Enrollment option which established a process for 
State Exchanges, State-based Exchanges on the Federal platform (SBE-
FPs), and FFEs to work directly with private sector entities (including 
QHP issuers, web-brokers, and agents and brokers) to operate enrollment 
websites through which consumers can apply for coverage, receive an 
eligibility determination from the Exchange, and purchase an individual 
market QHP offered through the Exchange with APTC and cost-sharing 
reductions (CSRs), if otherwise eligible.
    For the 2022 coverage year and beyond, HHS amends Sec.  155.410(e) 
to lengthen the annual open enrollment period for coverage through all 
individual market Exchanges to November 1 through January 15, as 
compared to the current annual open enrollment period of November 1 
through December 15, and HHS codifies flexibility for State Exchanges 
that operate their own eligibility and enrollment platform to set 
annual open enrollment period end dates no earlier than December 15.
    HHS adds a new paragraph at Sec.  155.420(d)(16) to establish a 
monthly special enrollment period for qualified individuals or 
enrollees, or the dependents of a qualified individual or enrollee, who 
are eligible for APTC and whose household income does not exceed 150 
percent of the Federal poverty line (FPL), in order to provide low-
income individuals who generally will have access to a premium-free 
silver plan with a 94 percent actuarial value (AV) with more 
opportunities to enroll in coverage. This monthly special enrollment 
period will be available during periods of time when APTC benefits are 
available such that the applicable taxpayers' applicable percentage is 
set at zero, such as during tax years 2021 and 2022, as provided by 
section 9661 of the American Rescue Plan Act of 2021 (Pub. L. 117-2) 
(ARP). HHS also clarifies, for purposes of the special enrollment 
periods provided at Sec.  155.420(d), that a qualified individual who 
meets the criteria at Sec.  155.305(f), but who qualifies for a maximum 
APTC amount of zero dollars, is not considered APTC eligible. This 
approach will ensure that Sec.  155.420 reflects appropriate special 
enrollment period eligibility for qualifying individuals who qualify 
for a maximum APTC amount of zero dollars and for those who become 
eligible for APTC amounts greater than zero.
    In addition, to reflect updated analysis of enrollment and the cost 
of expanded services offered through the Federal platform, HHS is 
finalizing the 2022 user fee rate at 2.75 percent of total monthly 
premiums charged by the issuer for each policy under plans offered 
through an FFE, and 2.25 percent of the total monthly premiums charged 
by the issuer for each policy under plans offered through an SBE-FP 
(rather than 2.25 and 1.75 percent of the total monthly premiums 
charged by the issuer for each policy under plans offered through an 
FFE or SBE-FP, respectively, as finalized in the HHS Notice of Benefit 
and Payment Parameters for 2022 (hereinafter referred to as ``part 1 of 
the 2022 Payment Notice final rule'').\8\ These finalized 2022 user

[[Page 53414]]

fee rates are still less than the 2021 user fees currently being 
collected--3.0 and 2.5 percent of the total monthly premiums charged by 
the issuer for each policy under plans offered through an FFE or SBE-
FP, respectively.
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    \8\ 86 FR 6138.
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    HHS is also finalizing a technical amendment to requirements at 
Sec.  156.115(a)(3) pertaining to the provision of the essential health 
benefits (EHB), to include a cross-reference to the Public Health 
Service (PHS) Act to make clear that health plans subject to EHB 
requirements must comply with all of the requirements under Mental 
Health Parity and Addiction Equity Act of 2008 (MHPAEA), including any 
amendments to MHPAEA.
    HHS is repealing the separate billing regulation at Sec.  
156.280(e)(2), which requires individual market QHP issuers that offer 
coverage of abortion services for which Federal funds are prohibited 
\9\ to separately bill for this portion of the policy holder's premium 
and to instruct the policy holder to pay for the separate bill in a 
separate transaction. Specifically, HHS will revert to, finalize, and 
codify the policy finalized in the 2016 Payment Notice \10\ such that 
QHP issuers offering coverage of abortion services for which Federal 
funds are prohibited again have flexibility in selecting a method to 
comply with the separate payment requirement in section 1303 of the 
ACA. As finalized, individual market QHP issuers covering abortion 
services for which Federal funds are prohibited would still be expected 
to comply with all statutory requirements in section 1303 of the ACA 
and all applicable regulatory requirements codified at Sec.  156.280.
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    \9\ These abortion services refer to abortion coverage that is 
subject to the Hyde Amendment's funding limitations which prohibit 
the use of Federal funds for such coverage.
    \10\ 80 FR 10750 (Feb. 27, 2015).
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    This rulemaking also finalizes modifications to the section 1332 
Waivers for State Innovation (referred to throughout this rule as 
section 1332 waivers) implementing regulations, including changes to 
many of the policies and interpretations of the statutory guardrails 
recently codified in regulation. The policies and interpretations 
finalized in this rule supersede and rescind those outlined in the 
October 2018 ``State Relief and Empowerment Waivers'' guidance \11\ 
(hereinafter referred to as the ``2018 Guidance'') and repeal the 
previous codification of the interpretations of the statutory 
guardrails in part 1 of the 2022 Payment Notice final rule.\12\ HHS and 
the Department of the Treasury (collectively, the Departments) are also 
finalizing flexibilities in the public notice requirements and post 
award public participation requirements for section 1332 waivers under 
certain future emergent situations. The Departments are also finalizing 
the processes and procedures for amendments and extensions for approved 
waiver plans.
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    \11\ 83 FR 53575.
    \12\ 86 FR 6138.
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II. Background

A. Legislative and Regulatory Overview

    Title I of the Health Insurance Portability and Accountability Act 
of 1996 (HIPAA) added a new title XXVII to the PHS Act to establish 
various reforms to the group and individual health insurance markets. 
These provisions of the PHS Act were later augmented by other laws, 
including the ACA. Subtitles A and C of title I of the ACA reorganized, 
amended, and added to the provisions of part A of title XXVII of the 
PHS Act relating to group health plans \13\ and health insurance 
issuers in the group and individual markets. The term ``group health 
plan'' includes both insured and self-insured group health plans.
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    \13\ The term ``group health plan'' is used in title XXVII of 
the PHS Act and is distinct from the term ``health plan'' as used in 
other provisions of title I of the ACA. The term ``health plan'' 
does not include self-insured group health plans.
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    Section 2702 of the PHS Act, as added by the ACA, establishes 
requirements for guaranteed availability of coverage in the group and 
individual markets.\14\
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    \14\ Before enactment of the ACA, HIPAA amended the PHS Act 
(formerly section 2711) to generally require guaranteed availability 
of coverage for employers in the small group market.
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    Section 1301(a)(1)(B) of the ACA directs all issuers of QHPs to 
cover the EHB package described in section 1302(a) of the ACA, 
including coverage of the services described in section 1302(b) of the 
ACA, adherence to the cost-sharing limits described in section 1302(c) 
of the ACA, and meeting the AV levels established in section 1302(d) of 
the ACA. Section 2707(a) of the PHS Act, which is effective for plan or 
policy years beginning on or after January 1, 2014, extends the 
requirement to cover the EHB package to non-grandfathered individual 
and small group health insurance coverage, irrespective of whether such 
coverage is offered through an Exchange. In addition, section 2707(b) 
of the PHS Act directs non-grandfathered group health plans to ensure 
that cost sharing under the plan does not exceed the limitations 
described in sections 1302(c)(1) of the ACA.
    Section 1302 of the ACA provides for the establishment of an EHB 
package that includes coverage of EHBs (as defined by the Secretary), 
cost-sharing limits, and AV requirements. Section 1302(b) of the ACA 
directs that EHBs be equal in scope to the benefits provided under a 
typical employer plan, and that they cover at least the following 10 
general categories: Ambulatory patient services; emergency services; 
hospitalization; maternity and newborn care; mental health and 
substance use disorder services, including behavioral health treatment; 
prescription drugs; rehabilitative and habilitative services and 
devices; laboratory services; preventive and wellness services and 
chronic disease management; and pediatric services, including oral and 
vision care.
    Section 1302(d) of the ACA describes the various levels of coverage 
based on their AV. Consistent with section 1302(d)(2)(A) of the ACA, AV 
is calculated based on the provision of EHB to a standard population. 
Section 1302(d)(3) of the ACA directs the Secretary to develop 
guidelines that allow for de minimis variation in AV calculations.
    Section 1303 of the ACA, as implemented in 45 CFR 156.280, 
specifies standards for issuers of QHPs through the Exchanges that 
cover abortion services for which Federal funding is prohibited. The 
statute and regulation establish that, unless otherwise prohibited by 
state law, a QHP issuer may elect to cover such 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.
    As specified in section 1303(b)(2) of the ACA, 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 AV of the coverage for abortions for which public funding is 
prohibited, which must be no less than $1 per enrollee, per month. QHP 
issuers must also segregate funds collected through this payment for 
abortion services for which Federal funds are prohibited into a 
separate allocation account used to pay for such abortion services.
    Sections 1311(b) and 1321(b) of the ACA provide that each state has 
the opportunity to establish an individual market Exchange that 
facilitates the purchase of insurance coverage by qualified individuals 
through QHPs and meets other standards specified in the ACA. Section 
1321(c)(1) of the ACA directs the Secretary to establish and

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operate such Exchange within states that do not elect to establish an 
Exchange or, as determined by the Secretary on or before January 1, 
2013, will not have an Exchange operable by January 1, 2014.
    Section 1311(c)(1) of the ACA provides the Secretary the authority 
to issue regulations to establish criteria for the certification of 
QHPs, including network adequacy standards at section 1311(c)(1)(B) of 
the ACA. Section 1311(d) of the ACA describes the minimum functions of 
an Exchange. Section 1311(e)(1) of the ACA grants the Exchange the 
authority to certify a health plan as a QHP if the health plan meets 
the Secretary's requirements for certification issued under section 
1311(c)(1) of the ACA, and the Exchange determines that making the plan 
available through the Exchange is in the interests of qualified 
individuals and qualified employers in the state. Section 1311(c)(6) of 
the ACA establishes authority for the Secretary to require Exchanges to 
provide enrollment periods, including special enrollment periods, 
including the monthly enrollment period for Indians, as defined by 
section 4 of the Indian Health Care Improvement Act, per section 
1311(c)(6)(D) of the ACA.
    Sections 1311(d)(4)(K) and 1311(i) of the ACA require each Exchange 
to establish a Navigator program under which it awards grants to 
entities to carry out certain Navigator duties.
    Section 1312(c) of the ACA generally requires a health insurance 
issuer to consider all enrollees in all health plans (except 
grandfathered health plans) offered by such issuer to be members of a 
single risk pool for each of its individual and small group markets. 
States have the option to merge the individual and small group market 
risk pools under section 1312(c)(3) of the ACA.
    Section 1312(e) of the ACA directs the Secretary to establish 
procedures under which a state may permit agents and brokers to enroll 
qualified individuals and qualified employers in QHPs through an 
Exchange and to assist individuals in applying for financial assistance 
for QHPs sold through an Exchange.
    Sections 1313 and 1321 of the ACA provide the Secretary with the 
authority to oversee the financial integrity of State Exchanges, their 
compliance with HHS standards, and the efficient and non-discriminatory 
administration of State Exchange activities. Section 1321 of the ACA 
provides for state flexibility in the operation and enforcement of 
Exchanges and related requirements.
    Section 1321(a)(1) of the ACA directs the Secretary to issue 
regulations that set standards for meeting the requirements of title I 
of the ACA for, among other things, the establishment and operation of 
Exchanges. When operating an FFE under section 1321(c)(1) of the ACA, 
HHS has the authority under sections 1321(c)(1) and 1311(d)(5)(A) of 
the ACA to collect and spend user fees. Office of Management and Budget 
(OMB) Circular A-25 establishes Federal policy regarding user fees and 
specifies that a user charge will be assessed against each identifiable 
recipient for special benefits derived from Federal activities beyond 
those received by the general public.
    Section 1321(d) of the ACA provides that nothing in title I of the 
ACA must be construed to preempt any state law that does not prevent 
the application of title I of the ACA. Section 1311(k) of the ACA 
specifies that Exchanges may not establish rules that conflict with or 
prevent the application of regulations issued by the Secretary.
    Section 1332 of the ACA provides the Secretary of HHS and the 
Secretary of the Treasury (collectively, the Secretaries) with the 
discretion to approve a state's proposal to waive specific provisions 
of the ACA, provided the state's section 1332 waiver plan meets certain 
requirements. Section 1332(a)(4)(B) of the ACA requires the Secretaries 
to issue regulations regarding procedures for section 1332 waivers.
    Section 1402 of the ACA provides for, among other things, 
reductions in cost sharing for EHB for qualified low- and moderate-
income enrollees in silver level QHPs offered through the individual 
market Exchanges. This section also provides for reductions in cost 
sharing for Indians enrolled in QHPs at any metal level.
    Section 1411(c) of the ACA requires the Secretary to submit certain 
information provided by applicants under section 1411(b) of the ACA to 
other Federal officials for verification, including income and family 
size information to the Secretary of the Treasury.
    Section 1411(d) of the ACA provides that the Secretary must verify 
the accuracy of information provided by applicants under section 
1411(b) of the ACA for which section 1411(c) of the ACA does not 
prescribe a specific verification procedure, in such manner as the 
Secretary determines appropriate.
    Section 1411(f) of the ACA requires the Secretary, in consultation 
with the Secretary of the Treasury, the Secretary of Homeland Security, 
and the Commissioner of Social Security, to establish procedures for 
hearing and making decisions governing appeals of Exchange eligibility 
determinations.
    Section 1411(f)(1)(B) of the ACA requires the Secretary to 
establish procedures to redetermine eligibility on a periodic basis, in 
appropriate circumstances, including eligibility to purchase a QHP 
through the Exchange and for APTC and CSRs.
    Section 1411(g) of the ACA allows the use or disclosure 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.
    Section 5000A of the Internal Revenue Code (``the Code''), as added 
by section 1501(b) of the ACA, requires individuals to have minimum 
essential coverage (MEC) for each month, qualify for an exemption, or 
make an individual shared responsibility payment. Under the Tax Cuts 
and Jobs Act (Pub. L. 115-97, December 22, 2017) the individual shared 
responsibility payment has been reduced to $0, effective for months 
beginning after December 31, 2018. Notwithstanding that reduction, 
certain exemptions are still relevant to determine whether individuals 
age 30 and above qualify to enroll in catastrophic coverage under 45 
CFR 155.305(h) or 156.155.
1. Program Integrity
    In the June 19, 2013 Federal Register (78 FR 37031), HHS published 
a proposed rule that proposed certain program integrity standards 
related to Exchanges and the premium stabilization programs (proposed 
Program Integrity Rule). The provisions of that proposed rule were 
finalized in two rules, the ``first Program Integrity Rule'' published 
in the August 30, 2013 Federal Register (78 FR 54069) and the ``second 
Program Integrity Rule'' published in the October 30, 2013 Federal 
Register (78 FR 65045). In the December 27, 2019 Federal Register (84 
FR 71674), HHS published a final rule that revised standards relating 
to oversight of Exchanges established by states and periodic data 
matching frequency. It also added new requirements for certain issuers 
related to the separate billing and collection of the separate payment 
for the premium portion attributable to coverage for certain abortion 
services. In the May 8, 2020 Federal Register (85 FR 27550), HHS 
published the Medicare and Medicaid Programs, Basic Health Programs and 
Exchanges interim final rule with public comment (``May 2020 IFC'') and 
postponed the

[[Page 53416]]

implementation deadline for those separate billing and collection 
requirements by 60 days. In light of court rulings in the ongoing 
litigation in Federal courts in Maryland, Washington, and California 
challenging the separate billing regulation,\15\ the separate billing 
policy is not currently in effect.
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    \15\ Washington v. Azar, 461 F. Supp. 3d 1016 (E.D. Wash. 2020); 
Planned Parenthood of Maryland, Inc. v. Azar, No. CV CCB-20-00361 
(D. Md. July 10, 2020); California v. U.S. Dep't of Health & Hum. 
Servs., 473 F. Supp. 3d 992 (N.D. Cal. July 20, 2020).
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2. Market Rules
    An interim final rule relating to the HIPAA health insurance 
reforms was published in the April 8, 1997 Federal Register (62 FR 
16894). A proposed rule relating to ACA health insurance market reforms 
that became effective in 2014 was published in the November 26, 2012 
Federal Register (77 FR 70584). A final rule implementing those 
provisions was published in the February 27, 2013 Federal Register (78 
FR 13406) (2014 Market Rules).
    A proposed rule relating to Exchanges and Insurance Market 
Standards for 2015 and beyond was published in the March 21, 2014 
Federal Register (79 FR 15808) (2015 Market Standards Proposed Rule). A 
final rule implementing the Exchange and Insurance Market Standards for 
2015 and Beyond was published in the May 27, 2014 Federal Register (79 
FR 30240) (2015 Market Standards Rule). The 2018 Payment Notice final 
rule in the December 22, 2016 Federal Register (81 FR 94058) provided 
additional guidance on guaranteed availability and guaranteed 
renewability. In the Market Stabilization final rule that was published 
in the April 18, 2017 Federal Register (82 FR 18346), HHS released 
further guidance related to guaranteed availability. In the 2019 
Payment Notice final rule in the April 17, 2018 Federal Register (83 FR 
17058), HHS clarified that certain exceptions to the special enrollment 
periods only apply with respect to coverage offered outside of the 
Exchange in the individual market.
    In the 2022 Payment Notice final rule in the May 5, 2021 Federal 
Register (86 FR 24140) (hereinafter referred to as the ``part 2 of the 
2022 Payment Notice final rule''), HHS made additional amendments to 
the guaranteed availability regulation regarding special enrollment 
periods and finalized new special enrollment periods related to 
untimely notice of triggering events, cessation of employer 
contributions or government subsidies to COBRA continuation coverage, 
and loss of APTC eligibility.
3. Exchanges
    HHS published a request for comment relating to Exchanges in the 
August 3, 2010 Federal Register (75 FR 45584). HHS issued initial 
guidance to states on Exchanges on November 18, 2010. In the July 15, 
2011 Federal Register (76 FR 41865), HHS published a proposed rule with 
proposals to implement components of the Exchanges, and a rule in the 
August 17, 2011 Federal Register (76 FR 51201) regarding Exchange 
functions in the individual market and Small Business Health Options 
Program (SHOP), eligibility determinations, and Exchange standards for 
employers. A final rule implementing components of the Exchanges and 
setting forth standards for eligibility for Exchanges, including 
minimum network adequacy requirements, was published in the March 27, 
2012 Federal Register (77 FR 18309) (Exchange Establishment Rule).
    In the 2014 Payment Notice and in the Amendments to the HHS Notice 
of Benefit and Payment Parameters for 2014 interim final rule, 
published in the March 11, 2013 Federal Register (78 FR 15541), HHS set 
forth standards related to Exchange user fees. HHS established an 
adjustment to the FFE user fee in the Coverage of Certain Preventive 
Services under the Affordable Care Act final rule, published in the 
July 2, 2013 Federal Register (78 FR 39869) (Preventive Services Rule). 
In the 2016 Payment Notice in the February 27, 2015 Federal Register 
(80 FR 10750), HHS finalized changes related to network adequacy and 
provider directories.
    In the 2017 Payment Notice in the March 8, 2016 Federal Register 
(81 FR 12203), HHS finalized six standardized plan options to simplify 
the plan selection process for consumers on the Exchanges and codified 
SBE-FPs along with relevant requirements, including the associated user 
fee. In the 2017 Payment Notice, HHS also finalized policies relating 
to network adequacy for QHPs on the FFEs. In the May 11, 2016 Federal 
Register (81 FR 29146), HHS published an interim final rule with 
amendments to the parameters of certain special enrollment periods 
(2016 Interim Final Rule). HHS finalized these amendments in the 2018 
Payment Notice final rule, published in the December 22, 2016 Federal 
Register (81 FR 94058). The 2018 Payment Notice also modified the 
standardized options finalized in the 2017 Payment Notice and included 
three new sets of standardized options.
    In the April 18, 2017 Market Stabilization final rule Federal 
Register (82 FR 18346), HHS amended standards relating to special 
enrollment periods and QHP certification. In the 2019 Payment Notice 
final rule, published in the April 17, 2018 Federal Register (83 FR 
16930), HHS modified parameters around certain special enrollment 
periods and discontinued the designation of standardized options. In 
the April 25, 2019 Federal Register (84 FR 17454), the final 2020 
Payment Notice established a new special enrollment period. In the May 
14, 2020 Federal Register (85 FR 29204), the 2021 Payment Notice final 
rule made certain changes to plan category limitations and special 
enrollment period coverage effective date rules, allowed individuals 
provided a non-calendar year qualified small employer health 
reimbursement arrangement (QSEHRA) to qualify for an existing special 
enrollment period, and discussed plans for future rulemaking for 
employer-sponsored coverage (ESC) verification and non-enforcement 
discretion for Exchanges that do not conduct random sampling to verify 
whether an employer offers ESC until plan year 2021.
    In part 1 of the 2022 Payment Notice final rule, published in the 
January 19, 2021 Federal Register (86 FR 6138), HHS finalized a new 
Exchange Direct Enrollment (DE) option. In part 2 of the 2022 Payment 
Notice final rule in the May 5, 2021 Federal Register (86 FR 24140) HHS 
finalized new special enrollment periods related to untimely notice of 
triggering events, cessation of employer contributions or government 
subsidies to COBRA continuation coverage, loss of APTC eligibility, and 
clarified the regulation imposing network adequacy standards with 
regard to QHPs that do not use provider networks.
4. Essential Health Benefits
    On December 16, 2011, HHS released a bulletin \16\ that outlined an 
intended regulatory approach for defining EHB, including a benchmark-
based framework. A proposed rule relating to EHBs was published in the 
November 26, 2012 Federal Register (77 FR 70643). HHS established 
requirements relating to EHBs in the Standards Related to Essential 
Health Benefits, Actuarial Value, and Accreditation Final Rule, which 
was published in the February 25, 2013 Federal Register (78

[[Page 53417]]

FR 12833) (EHB Rule). In the 2019 Payment Notice, published in the 
April 17, 2018 Federal Register (83 FR 16930), HHS added Sec.  156.111 
to provide states with additional options from which to select an EHB-
benchmark plan for plan years 2020 and beyond.
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    \16\ ``Essential Health Benefits Bulletin,'' December 16, 2011. 
Available at https://www.cms.gov/CCIIO/Resources/Files/Downloads/essential_health_benefits_bulletin.pdf.
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5. Section 1332 Waivers
    In the March 14, 2011 Federal Register (76 FR 13553), the 
Departments published the ``Application, Review, and Reporting Process 
for Waivers for State Innovation'' proposed rule to implement section 
1332(a)(4)(B) of the ACA. In the February 27, 2012 Federal Register (77 
FR 11700), the Departments published the ``Application, Review, and 
Reporting Process for Waivers for State Innovation'' final rule 
(hereinafter referred to as the ``2012 Final Rule''). In the October 
24, 2018 Federal Register (83 FR 53575), the Departments issued the 
2018 Guidance, which superseded the previous guidance \17\ published in 
the December 16, 2015 Federal Register (80 FR 78131) (hereinafter 
referred to as the ``2015 Guidance''), and provided additional 
information about the requirements that states must meet for waiver 
proposals, the Secretaries' application review procedures, pass-through 
funding determinations, certain analytical requirements, and 
operational considerations. In the November 6, 2020 Federal Register 
(85 FR 71142), the Departments issued an interim final rule 
(hereinafter referred to as the ``November 2020 IFC''), which revises 
regulations to set forth flexibilities in the public notice 
requirements and post award public participation requirements for 
waivers under section 1332 during the COVID-19 PHE. In the December 4, 
2020 Federal Register (85 FR 78572), the Departments published the 
``Patient Protection and Affordable Care Act; HHS Notice of Benefit and 
Payment Parameters for 2022 and Pharmacy Benefit Manager Standards; 
Updates to State Innovation Waiver (Section 1332 Waiver) Implementing 
Regulations'' proposed rule (hereinafter referred to as the ``2022 
Payment Notice proposed rule'') to codify certain policies and 
interpretations of the 2018 Guidance. In the January 19, 2021 Federal 
Register (86 FR 6138), the Departments published part 1 of the 2022 
Payment Notice final rule which codified many of the policies and 
interpretations outlined in the 2018 Guidance into section 1332 
regulations.
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    \17\ https://www.govinfo.gov/content/pkg/FR-2015-12-16/pdf/2015-31563.pdf.
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B. Stakeholder Consultation and Input

    HHS consulted with stakeholders on policies related to the 
operation of Exchanges relevant to the policies in this final rule. HHS 
held a number of listening sessions with consumers, providers, 
employers, health plans, advocacy groups and the actuarial community to 
gather public input. HHS has solicited input from state representatives 
on numerous topics, particularly the direct enrollment option for FFEs, 
SBE-FPs and State Exchanges.
    HHS consulted with stakeholders through monthly meetings with the 
National Association of Insurance Commissioners (NAIC), regular contact 
with states, and health insurance issuers, trade groups, consumer 
advocates, employers, and other interested parties. HHS considered all 
public input it received as HHS developed the policies in this rule.

C. Structure of Final Rule

    The regulations outlined in this final rule were proposed in the 
``Patient Protection and Affordable Care Act; Updating Payment 
Parameters, Section 1332 Waiver Implementing Regulations, and Improving 
Health Insurance Markets for 2022 and Beyond Proposed Rule'' published 
in the July 1, 2021 Federal Register (86 FR 35156 through 35216) and 
will be codified in 45 CFR parts 147, 155, and 156. In addition, the 
regulations outlined in this final rule governing waivers under section 
1332 of the ACA at 45 CFR part 155 subpart N will also be codified in 
31 CFR part 33.
    The changes to part 147 specify that issuers are not required to 
provide a special enrollment period in the individual market with 
respect to coverage offered outside of an Exchange to consumers who 
would be eligible for the special enrollment period at Sec.  
155.420(d)(16).
    The changes to part 155 repeal the establishment of the Exchange DE 
option, which established a process for State Exchanges, SBE-FPs, and 
FFEs to elect to transition to use direct enrollment technology and 
non-Exchange websites developed by approved web brokers, issuers and 
other direct enrollment partners to enroll qualified individuals in 
QHPs offered through the Exchange. HHS is finalizing an extension of 
the annual individual market open enrollment period to end on January 
15 of the applicable year, rather than December 15 of the previous year 
beginning with the open enrollment period for the 2022 coverage year, 
and HHS is codifying flexibility for State Exchanges that operate their 
own eligibility and enrollment platform to set individual market annual 
open enrollment period end dates no earlier than December 15 and to 
adopt accelerated effective dates. HHS is also finalizing the 
reinstitution of previous requirements that Navigators in FFEs provide 
consumers with information and assistance on certain post-enrollment 
topics, such as the Exchange eligibility appeals process, the Exchange-
related components of the PTC reconciliation process, and the basic 
concepts and rights of health coverage and how to use it. HHS is 
further finalizing the provision of a monthly special enrollment period 
for qualified individuals or enrollees, or the dependents of a 
qualified individual or enrollee, who are eligible for APTC and whose 
household income does not exceed 150 percent of the FPL for periods of 
time during which enhanced APTC benefits are also available, such that 
certain applicable taxpayers' applicable percentage is set at zero, as 
provided by the section 9661 of the ARP or any subsequent statute or 
rule. HHS is finalizing a clarification that, for purposes of the 
special enrollment periods provided at Sec.  155.420(d), a qualified 
individual, enrollee, or his or her dependent who is eligible for APTC 
because they meet the criteria at Sec.  155.305(f), but who qualifies 
for a maximum APTC amount of zero dollars, is not considered APTC 
eligible for purposes of these special enrollment periods.
    The changes to part 156 update the user fee rates for the 2022 
benefit year for all issuers participating on the Exchanges using the 
Federal platform. HHS is also finalizing the repeal of the separate 
billing requirement, which required individual market QHP issuers that 
offer coverage for abortion services for which Federal funding is 
prohibited to separately bill policy holders for the portion of the 
premium attributable to coverage of such abortion services and instruct 
the policy holder to pay for this portion of their premium in a 
separate transaction. Finally, HHS is finalizing an update to cross 
reference to mental health parity standards in the provision of EHB 
regulations.
    The changes in 31 CFR part 33 and 45 CFR part 155 related to 
section 1332 waivers rescind the previous incorporation into regulation 
of certain policies and interpretations announced in the 2018 Guidance 
and are adopting new policies and interpretations for the statutory 
guardrails. The Departments are finalizing modifications to the section 
1332 implementing regulations, and the proposals related to section 
1332 waivers, which include adoption of processes and procedures for

[[Page 53418]]

amendments and extensions for approved waiver plans. Additionally, the 
Departments are finalizing the extension of certain flexibilities in 
the public notice requirements and post award public participation 
requirements for section 1332 waivers during future emergent 
situations.

III. Provisions of the Updating Payment Parameters and Improving Health 
Insurance Markets for 2022 and Beyond the Final Rule and Analysis and 
Responses to Public Comments

    In the July 1, 2021 Federal Register (86 FR 35156) HHS published 
the ``Updating Payment Parameters, Section 1332 Waiver Implementing 
Regulations, and Improving Health Insurance Markets for 2022 and 
Beyond'' proposed rule.\18\ HHS received a total of 390 comments, 
including 168 comments that were substantially similar to one form 
letter. Comments were received from state entities, such as departments 
of insurance and State Exchanges, health insurance issuers, providers 
and provider groups, consumer groups, industry groups, national 
interest groups, and other stakeholders. The comments ranged from 
general support for the proposed rule, to specific support of or 
opposition to the proposed provisions, to specific questions regarding 
proposed changes. HHS also received a number of comments and 
suggestions that were outside the scope of the proposed rule. These 
out-of-scope comments are not addressed in this final rule.
---------------------------------------------------------------------------

    \18\ 86 FR 35156.
---------------------------------------------------------------------------

    In this final rule, HHS provides a summary of proposed provisions, 
a summary of the public comments received that directly related to 
those proposals, its responses to these comments and a description of 
the provisions HHS is finalizing.
    HHS first addresses comments regarding the publication of the 
proposed rule and the comment period.
    Comment: Some commenters were concerned about the length of the 
comment period, stating that a longer comment period is necessary to 
allow stakeholders to review the proposed rule and provide thoughtful 
comments. Some commenters expressed concern that HHS should not 
calculate the comment period from the posting of the public inspection 
version, and that HHS would not have time to adequately review and 
consider all the comments before issuing a final rule.
    Response: HHS disagrees that the comment period was not long enough 
to allow stakeholders to provide meaningful comments. HHS found 
commenters' submissions to be thoughtful and reflective of a detailed 
review and analysis of the proposed rule. HHS notes that in the 
interest of providing valuable information for issuers to set their 
rates for the 2022 plan year as soon as possible, HHS started the 30-
day comment period with the posting of the rule for public inspection.
    HHS further recognizes the importance of Federal agencies reviewing 
and considering all the relevant comments before issuing a final rule. 
The comment period for the proposed rule closed on July 28, 2021. HHS 
has had ample time to review and fully consider comments relevant to 
the rules and policies addressed in this final rule.
    Comment: HHS received several comments of general support for the 
rule and for the proposed provisions which expand access to affordable 
health coverage. Some commenters expressed support for EOs 13985 and 
14009. Other commenters expressed concern regarding the timing of the 
rule and the repeal of policies finalized in part 1 of the 2022 Payment 
Notice final rule.\19\ A few commenters stated that this rule is being 
published too late in the 2021 plan year for policy implementation and 
rate-setting for the 2022 plan year.
---------------------------------------------------------------------------

    \19\ 86 FR 24140.
---------------------------------------------------------------------------

    Response: HHS recognizes that this rulemaking has occurred later 
than usual in the plan year. However, HHS believes that the policies 
finalized in this rule align with the goals included in EOs 13985 and 
14009.\20\
---------------------------------------------------------------------------

    \20\ See 86 FR 7009 (Jan. 25, 2021) and 86 FR 7793 (Feb. 2, 
2021).
---------------------------------------------------------------------------

    While several of the policies in this final rule do not directly 
impact rate-setting, this final rule is being released prior to the 
September 21, 2021 deadline for signing final QHP agreements to 
participate in FFEs and SBE-FPs during the 2022 plan year. The purpose 
of the policies in this final rule is to strengthen the health 
insurance markets comprising plans that are subject to the ACA market 
reforms, and HHS encourages issuers to continue their participation in 
the Exchanges for 2022. HHS also believes that there is sufficient time 
to implement the applicable policies in advance of the start of the 
2022 plan year.
    Comment: One commenter requested that HHS assess and address 
systemic barriers to access for American Indian and Alaskan Native 
populations and establish guidance to address the social determinants 
of health that affect these communities and other communities of color.
    Response: While this comment is outside of the scope of this rule, 
HHS appreciates this feedback. HHS notes that it is actively seeking 
ways to engage with stakeholders in an effort to advance health equity 
and address the social determinants of health that disparately impact 
communities of color in line with E.O. 13985 as described previously.

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

1. Guaranteed Availability of Coverage (Sec.  147.104)
a. Special Enrollment Periods (Sec.  147.104(b)(2))
    As further discussed in the preamble section regarding the monthly 
special enrollment period for APTC-eligible qualified individuals with 
an expected household income no greater than 150 percent of the FPL 
(Sec.  155.420(d)(16)), HHS is finalizing the proposed special 
enrollment period with amendments, so that it is available only during 
periods of time during which APTC benefits are available such that the 
applicable taxpayers' applicable tax percentage is set at zero, such as 
during tax years 2021 and 2022, as provided by section 9661 of the ARP. 
HHS is otherwise finalizing this new special enrollment period as 
proposed, including adding a new paragraph at Sec.  147.104(b)(2)(i)(G) 
to specify that issuers are not required to provide this special 
enrollment period in the individual market with respect to coverage 
offered outside of an Exchange. HHS proposed to add this paragraph 
because eligibility for the special enrollment period is based on 
eligibility for APTC, as discussed in the Sec.  155.420(d)(16) preamble 
section, and APTC cannot be applied to coverage that is not a QHP 
offered through an Exchange.\21\ HHS requested comment on this 
proposal. HHS did not receive many comments on this aspect of the 
proposed special enrollment period. However, comments that HHS did 
receive supported the proposal to not require issuers to provide the 
proposed special enrollment period for consumers to enroll in coverage 
off-Exchange. HHS appreciates this support and is finalizing the 
proposed special enrollment period to specify that issuers are not 
required to provide it in the individual market with respect to 
coverage offered outside of an Exchange.
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    \21\ See IRC 36B(b)(2)(A), (c)(2)(A)(i).

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[[Page 53419]]

B. Part 155--Exchange Establishment Standards and Other Related 
Standards under the Affordable Care Act

1. Standardized Options (Sec.  155.20)
    On March 4, 2021, the United States District Court for the District 
of Maryland decided City of Columbus v. Cochran, No. 18-2364, 2021 WL 
825973 (D. Md. Mar. 4, 2021). The court reviewed nine separate policies 
HHS had promulgated in the 2019 Payment Notice final rule. The court 
vacated four of these policies. One of the policies vacated was the 
2019 Payment Notice's cessation of the practice of designating some 
plans in the FFEs as ``standardized options.'' \22\ Additionally, in 
July 2021, President Biden's Executive Order 14036 on Promoting 
Competition in the American Economy directed HHS to standardize plan 
options in order to facilitate the plan selection process for consumers 
on the Exchanges.\23\
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    \22\ See 83 FR 16974-16975.
    \23\ See 86 FR 36987 (Jul. 9, 2021).
---------------------------------------------------------------------------

    HHS intends to implement the court's decision as soon as possible, 
as explained in part 2 of the 2022 Payment Notice final rule.\24\ HHS 
will not be able to fully implement those aspects of the court's 
decision regarding standardized options in time for issuers to design 
plans and for CMS to be prepared to certify such plans as QHPs for the 
2022 plan year. With the rule removing standardized options vacated, 
HHS will also need to design and propose new standardized options that 
otherwise meet current market reform requirements.\25\ HHS will need to 
design, propose, and finalize such plans in time for issuers to design 
their own standardized options in accord with HHS's parameters and to 
submit those plans for approval by applicable regulatory authorities 
and for certification as QHPs. This is not feasible for the upcoming 
QHP certification cycle for the 2022 plan year. The plan certification 
process for that year has already begun as of April 22, 2021. CMS's 
planning for the QHP certification cycle for the 2022 plan year has 
taken into account the existing policies that the court vacated, and it 
is too late now to revisit those factors if the process is to go 
forward in time for plans to be certified in time for the annual open 
enrollment period later this year.
---------------------------------------------------------------------------

    \24\ See 86 FR 24140, 24264-24265.
    \25\ See 45 CFR 155.220(c)(3)(i)(H).
---------------------------------------------------------------------------

    Specifically, in the last iteration of standardized options HHS 
finalized in the 2018 Payment Notice, HHS created three sets of 
standardized options based on FFE and SBE-FP enrollment data and state 
cost-sharing laws. The basis on which HHS created these three sets of 
options, as well as a number of other factors in the individual market 
(for example, states with FFEs or SBE-FPs transitioning to State 
Exchanges), have changed considerably since the last iteration of 
standardized options in 2018. Further, HHS does not have sufficient 
time to conduct a full analysis of the changes that have occurred in 
the last several years necessary to timely design and propose 
standardized options suitable for the current environment. 
Additionally, in prior years, HHS proposed and finalized standardized 
option plan designs prior to the start of the QHP certification cycle 
for the following plan year such that issuers had sufficient time to 
assess these standardized options and could thus determine if they 
wanted to offer them and take the steps necessary to do so. Issuers 
will not have a sufficient amount of time to meaningfully assess any 
standardized options HHS would propose and decide whether or not to 
offer them if such proposals were made effective before the 2023 plan 
year.
    For these reasons, HHS intends to resume the designation of 
standardized options and to propose specific plan designs in more 
complete detail in the 2023 Payment Notice. HHS sought the views of 
stakeholders regarding issues related to the proposal of new 
standardized options, including the views of states with FFEs or SBE-
FPs regarding how unique state cost-sharing laws could affect 
standardized option plan designs.
    The following is a summary of the comments received and HHS's 
responses related to standardized options.
    Comment: Some commenters recommended not requiring issuers to offer 
standardized options. Some commenters also recommended permitting 
issuers to voluntarily offer standardized options in states with State 
Exchanges, including SBE-FPs, even if issuers in the FFEs were required 
to offer them. Some commenters also noted opposition to limiting the 
number of non-standardized plans issuers could offer. Some commenters 
also recommended not preferentially or differentially displaying 
standardized options on HealthCare.gov.
    These commenters explained that issuers are already required to 
cover the EHB at specified metal tiers of coverage, which provides 
consumers a sufficient degree of standardization. These commenters also 
explained that requiring issuers to offer standardized options could 
result in an influx of options that fail to provide additional value to 
consumers and make it more difficult to compare plan options. These 
commenters also explained that limiting the number of non-standardized 
plans issuers could offer would inhibit innovative plan designs that 
meet diverse coverage needs. These commenters also explained that the 
preferential or differential display of standardized options would 
appear to favor some plans over others, inadvertently steer consumers 
towards standardized plans, and discourage consumers from exploring all 
available options. These commenters recommended that CMS identify 
issuers with a disproportionately high volume of plan options in a 
given geographic region and work with these issuers to ensure there are 
actual meaningful differences among the plans.
    Response: HHS will take these considerations into account when 
designing the standardized options that will be proposed in the 2023 
Payment Notice.
    Comment: Some commenters recommended that CMS should employ a 
minimally disruptive approach in designing standardized options and not 
design plans to be radically different from those currently offered. 
These commenters explained that such plans would be more complicated 
for issuers to develop and could be challenging for consumers to 
interpret. These commenters recommended that CMS offer standardized 
options that are based on the most popular plans currently offered on 
the Exchanges, a similar approach to that taken in past iterations. 
Several of these commenters also recommended that CMS not be overly 
prescriptive in standardizing every aspect of cost sharing, but instead 
focus on setting annual deductible and out-of-pocket limits.
    Response: HHS will take these considerations into account when 
designing the standardized options that will be proposed in the 2023 
Payment Notice.
    Comment: Some commenters explained that plan standardization could 
stifle competition. These commenters explained that if cost sharing is 
standardized, the only difference between plans will be networks. These 
commenters also explained that if standardization strengthens the 
importance of networks while deemphasizing other aspects of coverage, 
issuers may not stay in markets where network costs exceed their 
competitors'. These commenters further explained that with every 
additional aspect of coverage that is standardized, issuers will have 
to consider their ability to compete as

[[Page 53420]]

potential areas to innovate and differentiate are limited.
    Response: HHS will take these considerations into account when 
designing the standardized options that will be proposed in the 2023 
Payment Notice.
    Comment: Commenters also expressed support for requiring issuers to 
offer standardized options, limiting the number of non-standardized 
plans that issuers could offer, and preferentially or differentially 
displaying standardized options.
    Commenters explained the importance of simplifying the complex 
process of purchasing insurance and the important role that 
standardized options could play in that simplification. Commenters 
explained that there is significant variation in the cost sharing 
structures of non-standardized plans, much of which cannot be 
identified without a detailed analysis of benefit designs. Commenters 
explained that many individuals do not have the time, resources, or 
health literacy necessary for this level of analysis. Commenters 
explained that enrollees typically choose plans based on more readily 
available comparison points, like premiums, rather than factors that 
would be illuminated by a more detailed examination of plan designs, 
like expected out-of-pocket costs. Commenters explained that selecting 
a plan solely based on its premium without taking into consideration 
other attributes of its design, such as its cost sharing structure, 
deductible, or expected out-of-pocket costs, can result in unexpected 
costs and financial harm for consumers.
    Commenters explained that barriers to conducting a detailed 
analysis of plan designs are particularly pronounced for those whose 
resources are already severely constrained, including those with 
limited English proficiency, those with inadequate internet access, and 
those with complex health needs. Commenters explained that facilitating 
consumer understanding and streamlining decision-making would benefit 
these populations as well as populations with disproportionately high 
rates of chronic diseases.
    Commenters also explained that standardized plans could help 
individuals more easily identify plans that have potentially 
discriminatory benefit designs, such as plans that have coinsurance 
subject to the deductible as the cost sharing type for specialty tier 
prescription drugs. These commenters explained that discriminatory 
benefit designs target individuals with particular disabilities or 
health conditions by leaving them with substantial out-of-pocket costs. 
Commenters explained that conditions that are typically targeted, 
including HIV, diabetes, cancer, and mental health conditions, 
disproportionately affect individuals of color. Commenters explained 
that discriminatory benefit designs continue to violate the ACA's 
protections for people with preexisting conditions and its prohibition 
on discrimination based on race, sex, and disability.
    Response: HHS will take these considerations into account when 
designing the standardized options that will be proposed in the 2023 
Payment Notice.
    Comment: Commenters also recommended taking a more prescriptive 
approach beyond requiring issuers to offer standardized plans, limiting 
the number of non-standardized plans, and preferentially or 
differentially displaying standardized plans. These commenters 
recommended requiring issuers to offer standardized options 
exclusively, pointing to Covered California's approach, which has 
required issuers to offer standardized plans exclusively since 2014. 
These commenters explained that in Covered California's approach, to 
the extent issuers want to offer non-standardized products, they need 
to demonstrate that such designs are also patient-centered. These 
commenters explained that issuers in California have not seen the value 
in offering non-standardized options to date, suggesting that 
California's approach to standardized options has satisfied the needs 
of issuers and enrollees alike.
    Response: HHS will take these considerations into account when 
designing the standardized options that will be proposed in the 2023 
Payment Notice.
    Comment: Commenters also made recommendations regarding specific 
aspects of standardized plan designs. Some commenters expressed concern 
about the cost-sharing structure in the first set of standardized plans 
in the 2018 Payment Notice in particular, which had coinsurance subject 
to the deductible as the form of cost sharing for occupational, 
physical, and speech therapies. Many commenters also noted a strong 
preference for copayments over coinsurance as the form of cost sharing 
for as many benefit categories as possible. These commenters explained 
that consumers prefer copayments to coinsurance because copayments are 
more transparent and make it easier to predict out-of-pocket costs. 
Commenters also explained that in the context of prescription drugs, 
the use of coinsurance results in patients paying cost sharing amounts 
based on a medicine's list price, rather than a medicine's net price, 
which accounts for manufacturer discounts and rebates paid to pharmacy 
benefit managers (PBMs) and issuers. Some commenters recommended that 
standardized plans include a nominal cost-sharing cap in the form of 
copayments for all tiers of prescription drug coverage to limit the 
amount that consumers spend on prescriptions every month, as several 
states have already done.
    Commenters also recommended having low deductibles, explaining that 
deductibles act as a barrier to access. One commenter pointed to 
Washington's standardized plans, which have a deductible that is on 
average $1,000 less than non-standard offerings and provide more pre-
deductible services. Commenters also recommended exempting a range of 
benefits from the deductible, including primary care visits, specialist 
visits, outpatient visits, mental health services, habilitative and 
rehabilitative services, pediatric preventative services, preventative 
care, chronic condition management, and prescription drug coverage. One 
commenter explained that any standardized plan that is also a high 
deductible health plan (HDHP) should provide pre-deductible coverage 
for preventive care the Internal Revenue Service (IRS) has determined 
is permitted to be provided without a deductible pursuant to section 
223(c)(2)(C) of the Code.
    Response: HHS will take these considerations into account when 
designing the standardized options that will be proposed in the 2023 
Payment Notice.
    Comment: One commenter recommended delaying the implementation of 
standardized options requirements until plan year 2024 to allow issuers 
sufficient time to prepare for this change.
    Response: HHS will take these considerations into account when 
designing the standardized options that will be proposed in the 2023 
Payment Notice.
2. Navigator Program Standards (Sec.  155.210)
    HHS proposed to amend Sec.  155.210(e)(9) to reinstitute the 
requirement that Navigators in the FFEs provide information and 
assistance with regard to certain post-enrollment topics.
    Sections 1311(d)(4)(K) and 1311(i) of the ACA require each Exchange 
to establish a Navigator program under which it awards grants to 
entities to conduct public education activities to raise awareness of 
the availability of

[[Page 53421]]

QHPs; distribute fair and impartial information concerning enrollment 
in QHPs, and the availability of PTCs and CSRs; facilitate enrollment 
in QHPs; provide referrals to any applicable office of health insurance 
consumer assistance or health insurance ombudsman established under 
section 2793 of the PHS Act, or any other appropriate state agency or 
agencies for any enrollee with a grievance, complaint, or question 
regarding their health plan, coverage, or a determination under such 
plan or coverage; and provide information in a manner that is 
culturally and linguistically appropriate to the needs of the 
population being served by the Exchange. The statute also requires the 
Secretary, in collaboration with states, to develop standards to ensure 
that information made available by Navigators is fair, accurate, and 
impartial. HHS has implemented the statutorily required Navigator 
duties through regulations at Sec. Sec.  155.210 (for all Exchanges) 
and 155.215 (for Navigators in FFEs).
    Further, section 1311(i)(4) of the ACA requires the Secretary to 
establish standards for Navigators to ensure that Navigators are 
qualified, and licensed, if appropriate, to engage in the Navigator 
activities described in the statute and to avoid conflicts of interest. 
This provision has been implemented at Sec. Sec.  155.210(b) (generally 
for all Exchanges) and 155.215(b) (for Navigators in FFEs).
    HHS has also established under Sec.  155.205(d) and (e) that each 
Exchange must have a consumer assistance function, including the 
Navigator program, and must conduct outreach and education activities 
to educate consumers about the Exchange and insurance affordability 
programs to encourage participation.
    HHS proposed to amend Sec.  155.210(e)(9) to reinstitute the 
requirement that Navigators in the FFEs provide information and 
assistance with regard to certain post-enrollment topics rather than 
merely being authorized to do so.
    Following a reduction in overall funding available to the FFE 
Navigator program in 2020, HHS provided more flexibility to FFE 
Navigators by making the provision of certain types of assistance, 
including post-enrollment assistance, permissible, but not required, 
for FFE Navigators under Navigator grants awarded in 2019 or any later 
year.\26\ On August 27, 2021, HHS awarded $80 million in grant funding 
to 60 Navigator grantees in 30 states with an FFE for the 2022 plan 
year.\27\ With this substantially increased funding for the FFE 
Navigator program for the 2022 plan year, HHS noted that HHS believes 
there will be sufficient Navigator grant funding available to support 
the post-enrollment duties HHS proposed to once again require of FFE 
Navigators. HHS also noted that HHS believes this proposal aligns with 
E.O. 14009 on Strengthening Medicaid and the ACA because it will 
improve consumers' access to health coverage information, not only when 
selecting a plan, but also throughout the year as they use their 
coverage.\28\ In addition, the proposal was designed to ensure that 
consumers would have access to skilled assistance beyond applying for 
and enrolling in health insurance coverage through the Exchange, 
including, for example, assistance with the process of filing Exchange 
eligibility appeals, understanding basic information about PTC 
reconciliation, and understanding basic concepts and rights related to 
health coverage and how to use it, such as locating providers and 
accessing care.
---------------------------------------------------------------------------

    \26\ 84 FR 17511-17514 (April 25, 2019). These post-enrollment 
topics included: Understanding the process of filing Exchange 
eligibility appeals; understanding and applying for exemptions from 
the individual shared responsibility payment that are granted 
through the Exchange; understanding the availability of exemptions 
from the requirement to maintain MEC and from the individual shared 
responsibility payment that are claimed through the tax filing 
process and how to claim them; the Exchange-related components of 
the PTC reconciliation process; understanding basic concepts and 
rights related to health coverage and how to use it; and referrals 
to licensed tax advisers, tax preparers, or other resources for 
assistance with tax preparation and tax advice on certain Exchange-
related topics.
    \27\ https://www.cms.gov/newsroom/press-releases/biden-harris-administration-quadruples-number-health-care-navigators-ahead-healthcaregov-open.
    \28\ 86 FR 7793 (Feb. 2, 2021).
---------------------------------------------------------------------------

    Section 1311(i)(3)(D) of the ACA and 45 CFR 155.210(e)(4) already 
expressly require Navigators to provide post-enrollment assistance by 
referring consumers with complaints, questions, or grievances about 
their coverage to appropriate state agencies. This suggests that 
Congress anticipated that consumers would need assistance beyond the 
application and enrollment process, and that Navigators would maintain 
relationships with consumers and be a source of such post-enrollment 
assistance.
    Consistent with the requirements under section 1311(i)(3)(B) and 
(C) of the ACA that Navigators distribute fair and impartial 
information concerning enrollment in QHPs and facilitate enrollment in 
QHPs, and pursuant to the Secretary's authority under section 
1321(a)(1)(A) of the ACA, HHS proposed to reinstitute as a requirement 
at Sec.  155.210(e)(9)(i) that Navigators in the FFEs must help 
consumers with understanding the process of filing appeals of Exchange 
eligibility determinations. HHS noted that HHS was once again not 
proposing to establish a duty for Navigators to represent a consumer in 
an appeal, sign an appeal request, or file an appeal on the consumer's 
behalf. HHS noted that HHS believes that helping consumers understand 
Exchange appeal rights when they have received an adverse eligibility 
determination when applying for health insurance coverage, and 
assisting them with the process of completing and submitting appeal 
forms, would help to facilitate enrollment through the FFEs and would 
help consumers obtain fair and impartial information about enrollment 
through the FFEs. HHS discussed that HHS would interpret the proposal 
to include helping consumers file appeals of eligibility determinations 
made by an Exchange related to enrollment in a QHP, special enrollment 
periods, and any insurance affordability program, including eligibility 
determinations for Exchange financial assistance, Medicaid, the 
Children's Health Insurance Program (CHIP), and the Basic Health 
Program.
    Currently, pursuant to Sec.  155.210(e)(9)(ii), Navigators in the 
FFEs are permitted to provide information and assistance to consumers 
with regard to understanding and applying for exemptions from the 
individual shared responsibility payment that are granted through the 
Exchange, understanding the availability of exemptions from the 
requirement to maintain minimum essential coverage and from the 
individual shared responsibility payment that are claimed through the 
Federal income tax filing process and how to claim them, and 
understanding the availability of the IRS resources on this topic. HHS 
proposed to amend Sec.  155.210(e)(9)(ii) slightly to reinstitute as a 
requirement that Navigators in the FFEs must help consumers understand 
and apply for exemptions from the requirement to maintain minimum 
essential coverage granted by the Exchange. Although consumers who do 
not maintain minimum essential coverage no longer need to receive an 
exemption from the individual shared responsibility payment to avoid 
having to make such a payment, Navigators can still assist consumers 
age 30 or above with filing an exemption to qualify to enroll in 
catastrophic coverage under Sec.  155.305(h). HHS noted that HHS 
believes that the proposal was consistent with Navigators' duty under

[[Page 53422]]

section 1311(i)(3)(B) and (C) of the ACA to distribute fair and 
impartial information concerning enrollment in QHPs, since impartial 
information concerning the availability of exemptions for consumers age 
30 or above to enroll in catastrophic coverage would help consumers 
make informed decisions about whether or not to enroll in such 
coverage. This assistance with Exchange-granted exemptions from the 
requirement to maintain minimum essential coverage would include 
informing consumers about the availability of the exemption; helping 
consumers fill out and submit Exchange-granted exemption applications 
and obtain any necessary forms prior to or after applying for the 
exemption; explaining what the exemption certificate number is and how 
to use it; and helping consumers understand and use the Exchange tool 
to find catastrophic plans in their area.
    In addition, HHS proposed to reinstitute as a requirement at Sec.  
155.210(e)(9)(iii) that Navigators must help consumers with the 
Exchange-related components of the PTC reconciliation process and with 
understanding the availability of IRS resources on this process. As 
explained in the proposed rule, this would include ensuring consumers 
have access to their Forms 1095-A and receive general, high-level 
information about the purpose of this form that is consistent with 
published IRS guidance on the topic. The proposal stemmed from the 
requirement under section 1311(i)(3)(B) of the ACA that Navigators 
distribute fair and impartial information concerning the availability 
of the PTC under section 36B of the Code.
    Consumers who receive premium assistance through APTC may need help 
with a variety of issues related to the requirement to reconcile the 
APTC with the PTC allowed for the year of coverage. As explained in the 
proposed rule, FFE Navigators would be required to help consumers 
obtain IRS Form 1095-A, Health Insurance Marketplace Statement, and 
Form 8962, Premium Tax Credit (PTC), and the instructions for Form 
8962, and to provide general information, consistent with applicable 
IRS guidance, about the significance of the forms. HHS noted that, as 
proposed, Navigators would also be required to help consumers 
understand (1) how to report errors on the Form 1095-A; (2) how to find 
silver plan premiums using the Exchange tool; and (3) the difference 
between APTC and PTC and the potential implications for enrollment and 
reenrollment of not filing a tax return and reconciling the APTC paid 
on consumers' behalf with their PTC for the year.
    HHS noted that, as proposed, Navigators would still not be 
permitted to provide tax assistance or advice, or interpret tax rules 
and forms within their capacity as FFE Navigators. However, their 
expertise related to the consumer-facing aspects of the Exchange, 
including eligibility and enrollment rules and procedures, would 
uniquely qualify them to help consumers understand and obtain 
information from the Exchange that is necessary to understand the PTC 
reconciliation process. Because the proposal included a requirement 
that Navigators provide consumers with information and assistance 
understanding the availability of IRS resources, HHS noted that 
Navigators would be expected to familiarize themselves with the 
availability of materials on irs.gov, including the Form 8962 
instructions, IRS Publication 974, Premium Tax Credit, and relevant 
FAQs, and to refer consumers with questions about tax law to those 
resources or to other resources, such as free tax return preparation 
assistance from the Volunteer Income Tax Assistance or Tax Counseling 
for the Elderly programs.
    To help ensure consumers have seamless access to Exchange-related 
tax information beyond the basic information that Navigators can 
provide, HHS proposed to reinstitute as a requirement at Sec.  
155.210(e)(9)(v) that FFE Navigators must refer consumers to licensed 
tax advisers, tax preparers, or other resources for assistance with tax 
preparation and tax advice related to consumer questions about the 
Exchange application and enrollment process, and PTC 
reconciliations.\29\
---------------------------------------------------------------------------

    \29\ HHS notes that HHS did not propose to reinstitute at Sec.  
155.210(e)(9)(v) the requirement that Navigators must provide 
referrals to licensed tax advisers, tax preparers, or other 
resources for assistance with tax preparation and tax advice related 
to consumer questions about exemptions from the requirement to 
maintain MEC and from the individual shared responsibility payment 
in light of the fact that the individual shared responsibility 
payment was reduced to zero for months beginning after December 31, 
2018 under the Tax Cuts and Jobs Act (Pub. L. 115-97, December 22, 
2017).
---------------------------------------------------------------------------

    In the proposed rule, HHS discussed that it interprets the 
Navigator duties to facilitate enrollment in QHPs in section 
1311(i)(3)(C) of the ACA, to distribute fair and impartial information 
concerning enrollment in QHPs under section 1311(i)(3)(B) of the ACA, 
and to conduct public education activities to raise awareness about the 
availability of QHPs in section 1311(i)(3)(A) of the ACA to include 
helping consumers understand the kinds of decisions they will need to 
make in selecting coverage, and how to use their coverage after they 
are enrolled. HHS has previously stated that one of the overall 
purposes of consumer assistance programs is to help consumers become 
fully informed and health literate.\30\
---------------------------------------------------------------------------

    \30\ See 79 FR 30276.
---------------------------------------------------------------------------

    To improve consumers' health literacy related to coverage 
generally, and to ensure that individual consumers are able to use 
their coverage meaningfully, HHS proposed to reinstitute at Sec.  
155.210(e)(9)(iv) the requirement that Navigators in the FFEs must help 
consumers understand basic concepts and rights related to health 
coverage and how to use it. HHS also proposed to expand its 
interpretation of this requirement and the activities that fall within 
the requirement's scope. As explained in the proposed rule, these 
activities could be supported through the use of existing resources 
such as the CMS ``From Coverage to Care'' initiative, which HHS 
encourages Navigators to review, and which are now available in 
multiple languages.\31\ HHS noted that, as proposed, the provision 
would improve consumers' access to health coverage information, not 
just when selecting a plan, but also when using their coverage.
---------------------------------------------------------------------------

    \31\ See https://marketplace.cms.gov/c2c.
---------------------------------------------------------------------------

    HHS noted that HHS believes expanding its interpretation of the 
requirement that Navigators help consumers understand basic concepts 
and rights related to health coverage and how to use it and the 
activities that fall within the scope of this requirement is vital to 
improving health equity and helping to address social determinants of 
health, particularly among underserved and vulnerable populations.\32\ 
Navigators are already required under Sec.  155.210(e)(8) to provide 
targeted assistance to underserved or vulnerable populations. 
Underserved and vulnerable populations often experience lower levels of 
health literacy, which can be a barrier to enrolling in and accessing 
care.\33\ Social determinants of health can also create significant 
disparities in whether and how an individual is able to afford and 
access health coverage and health care services, including primary and 
preventive care. As trusted partners and members of local communities, 
HHS noted that Navigators are uniquely positioned to establish and 
build trust

[[Page 53423]]

with individuals and families as they transition from enrolling in 
health coverage to using and maintaining their coverage throughout the 
year.
---------------------------------------------------------------------------

    \32\ 86 FR 7009 (Jan. 25, 2021).
    \33\ Access to Health Services: Healthy People 2020. Office of 
Disease Prevention and Health Promotion, Department of Health & 
Human Services. https://www.healthypeople.gov/2020/topics-objectives/topic/social-determinants-health/interventions-resources/access-to-health.
---------------------------------------------------------------------------

    Additionally, HHS noted that Navigators in FFEs are already 
required under Sec.  155.215(c)(1) to develop and maintain general 
knowledge about the racial, ethnic, and cultural groups in their 
service area, including each group's health literacy and other needs, 
and under Sec.  155.215(c)(2) to collect and maintain updated 
information to help understand the composition of the communities in 
the service area. Because the health literacy needs of consumers will 
vary depending on their circumstances, HHS noted that HHS is not 
requiring Navigators to help consumers with specific health literacy 
topics. Instead, HHS proposed to expand its interpretation of the 
Navigator duties to be reinstituted as requirements at Sec.  
155.210(e)(9)(iv) to include, for example, helping consumers understand 
(1) key terms used in health coverage materials, such as ``deductible'' 
and ``coinsurance,'' and how they relate to the consumer's health plan; 
(2) the cost and care differences between a visit to the emergency 
department and a visit to a primary care provider under the coverage 
options available to the consumer; (3) how to evaluate their health 
care options and make cost-conscious decisions, including through the 
use of information required to be disclosed by their health plan as a 
result of the Transparency in Coverage Final Rules; \34\ (4) how to 
identify in-network providers to make and prepare for an appointment 
with a provider--including utilizing tools and resources available 
through the No Surprises Act \35\ to make informed decisions about 
their care; (5) how the consumer's coverage addresses steps that often 
are taken after an appointment with a provider, such as making a 
follow-up appointment and filling a prescription; and (6) the right to 
coverage of certain preventive health services without cost sharing 
under QHPs--including information and resources related to accessing 
viral testing and vaccination options supported by Exchange coverage. 
HHS noted that, if this proposal were finalized, CMS intends to make 
training materials and other educational resources available to 
Navigators regarding the proposed expanded interpretation of this 
requirement.
---------------------------------------------------------------------------

    \34\ 85 FR 72158.
    \35\ Title I of Division BB of the Consolidated Appropriations 
Act, 2021, Pub. L. 116-260 (Dec. 27, 2020).
---------------------------------------------------------------------------

    HHS noted that, as proposed, FFE Navigators would continue to be 
permitted to perform the Navigator duties specified in Sec.  
155.210(e)(9) until this provision, if finalized, became effective. HHS 
explained that if the proposal was finalized, FFE Navigators would be 
required to perform the Navigator duties specified in Sec.  
155.210(e)(9) beginning with Navigator grants awarded after the 
effective date of this rule, including non-competing continuation 
awards. For example, if the proposal was finalized prior to Navigator 
grant funding being awarded in fiscal year (FY) 2022, FY 2021 Navigator 
grantees would be required to perform these duties beginning with the 
Navigator grant funding awarded in FY 2022 for the second 12-month 
budget period of the 36-month period of performance. To the extent FFE 
Navigators awarded grant funding in FY 2021 are not already performing 
these duties under their year one project plans when the provision, if 
finalized, becomes effective, HHS noted that they can revise their 
project plans to incorporate performance of the duties specified in 
Sec.  155.210(e)(9) as part of their non-competing continuation 
application for their FY 2022 funding. HHS also noted that if the 
provision was finalized as proposed, HHS would codify in Sec.  
155.210(e)(9) the applicability date to make clear when the Navigator 
duties specified in Sec.  155.210(e)(9) would once again be required.
    HHS discussed in the proposed rule that HHS interprets the 
requirement to facilitate enrollment in a QHP under section 
1311(i)(3)(C) of the ACA, and the requirement at Sec.  155.210(e)(2) to 
provide information that assists consumers with submitting the 
eligibility application, to include assistance with updating an 
application for coverage through an Exchange, including reporting 
changes in circumstances and assisting with submitting information for 
eligibility redeterminations. Additionally, HHS noted that Navigators 
are already permitted, but not required, to help with a variety of 
other post-enrollment issues. For example, HHS noted that HHS 
interpreted the requirements in Sec.  155.210(e)(1) and (2) that 
Navigators conduct public education activities to raise awareness about 
the Exchange and provide fair and impartial information about the 
application and plan selection process to mean that Navigators may 
educate consumers about their rights with respect to coverage available 
through an Exchange, such as nondiscrimination protections, 
prohibitions on preexisting condition exclusions, and preventive 
services available without cost-sharing. HHS also noted that HHS 
interpreted these requirements, together with the requirement in 
section 1311(i)(3)(B) of the ACA that Navigators distribute fair and 
impartial information concerning enrollment in QHPs, and the 
availability of Exchange financial assistance, to mean that Navigators 
may assist consumers with questions about paying premiums for coverage 
or insurance affordability programs enrolled in through an Exchange. 
Finally, HHS noted that HHS interpreted the requirement in section 
1311(i)(3)(D) of the ACA and Sec.  155.210(e)(4) to provide referrals 
for certain post-enrollment issues to mean that Navigators may help 
consumers obtain assistance with coverage claims denials.
    Certified application counselors (CACs) do not receive grants from 
the FFEs, and thus may have more limited resources than Navigators. As 
a result, while HHS did not propose to require CACs to further expand 
their required duties, HHS noted that HHS encouraged CACs to help with 
activities consistent with their existing regulatory duties and 
recognized that many of these CACs may already be participating in 
these post-enrollment activities.
    The following is a summary of the comments received and HHS's 
responses related to Navigator program standards at Sec.  155.210.
    Comment: The vast majority of comments HHS received in relation to 
this proposal expressed enthusiastic support. Many commenters stated 
that they believe it is important that high-quality consumer assistance 
to help people find, keep, and use health coverage be free and widely 
available. Several commenters emphasized that this was particularly 
important for individuals with limited English proficiency (LEP) or 
those who lack basic health insurance literacy to reduce health 
disparities in rural and underserved communities, including the Black, 
Indigenous, and other People of Color (BIPOC) community. Additionally, 
several commenters supported and noted the importance of increased 
funding for the Navigator program.
    Response: HHS appreciates the comments in support of this proposal 
and is finalizing the proposal to amend Sec.  155.210(e)(9) to 
reinstitute the requirement that Navigators in the FFEs provide 
information and assistance with regard to certain post-enrollment 
topics as proposed. HHS also appreciates commenters' support of 
increased

[[Page 53424]]

funding for the Navigator program, which has funded 60 Navigator 
grantees in 30 FFE states for plan year 2022.
    Comment: A few commenters said they believe the proposed Navigator 
duties duplicate services provided by issuers or agents and brokers. A 
few commenters suggested that Navigators be required to be licensed, 
carry errors and omissions insurance, and be under the oversight of 
state regulators.
    Response: HHS believes it is important for consumers to have access 
to a variety of assistance options. HHS especially believes it is 
important that consumers have access to Navigators who, unlike agents 
and brokers, are required under Sec.  155.210(e)(2) to provide 
information and services in a fair, accurate, and impartial manner, and 
to abide by the conflict of interest provision at Sec.  155.210(d)(4) 
prohibiting Navigators from receiving any consideration directly or 
indirectly from any health insurance issuer or issuer of stop loss 
insurance in connection with the enrollment of any individuals or 
employees in a QHP or a non-QHP. Although they are not required by CMS 
to carry errors and omissions insurance, Navigators are required to 
complete HHS-approved training, achieve a passing score on all approved 
certification examinations, and be certified or recertified on at least 
an annual basis before carrying out any consumer assistance functions 
under Sec.  155.210. Additionally, Navigators in all states are 
required under Sec.  155.210(c)(1)(iii) to meet any licensing, 
certification, or other standards prescribed by the state or Exchange, 
if applicable, so long as the standards do not prevent the application 
of the provisions of title I of the ACA.
    Comment: A few commenters expressed concern that CMS did not 
propose to restore the requirements to have at least two in-person 
Navigator organizations in each state and to ensure that at least one 
of those organizations was a community and consumer-focused nonprofit 
group.
    Response: HHS recognizes that trusted community non-profits and in-
person presence are desirable qualities for Navigator organizations, 
and that these can be particularly valuable in serving vulnerable 
populations such as minorities, individuals with LEP, and individuals 
with disabilities. However, the existing Navigator grant process 
already gives considerable weight to the capacity of the Navigator 
organization to serve vulnerable populations, including those who may 
need communications assistance, lack broadband access, or have 
specialized needs. Therefore, HHS believes that reinstating these 
requirements would not be beneficial to Exchanges, as they currently 
have the flexibility to award funding to the number and type of 
entities that will be most effective for the specific Exchange, thus 
optimizing use of the funding amounts available to direct investments 
to effective and efficient Navigators, which may include selecting a 
single, high performing grantee in an Exchange.
    Additionally, reinstating the requirement that one Navigator 
grantee in each Exchange must be a community and consumer-focused 
nonprofit group may unnecessarily limit an Exchange's ability to award 
grants to the strongest applicants, particularly in an Exchange that 
opts to have only one Navigator grantee, and where the strongest 
applicant is not a community and consumer-focused nonprofit group. 
Reinstating this requirement would effectively exclude any other type 
of statutorily eligible entities from becoming Navigators in an 
Exchange that opts to have only one Navigator grantee and would limit 
an Exchange's ability to target to the highest scoring and performing 
entities, regardless of organization type.
    Comment: A few commenters suggested HHS reinstate the requirement 
that Navigators receiving grants maintain a physical presence in the 
Exchange service area.
    Response: HHS agrees with commenters who emphasized the importance 
of providing more flexibility to each Exchange to structure its 
Navigator program to best serve the Exchange's service area. HHS 
believes that entities with a physical presence and strong 
relationships in their FFE service areas tend to deliver the most 
effective outreach and enrollment results. Navigator grant applicants 
that demonstrate the ability to maintain these relationships and 
establish new relationships through a physical presence in their 
proposed service area(s) may receive a higher score on their 
application than those who do not. The majority of HHS's 2021 Navigator 
grantees will be maintaining a physical presence in the state they are 
serving, and there will be at least one physically present Navigator 
organization in every FFE state. Additionally, nothing in this final 
rule prevents an Exchange from selecting grantees that are physically 
present and available to provide a spectrum of in-person, local 
outreach, education, and assistance, including directing these services 
towards vulnerable and underserved populations, if the Exchange elects 
to weight its selection process in that way and its selection process 
is consistent with section 1311(i)(2)(A) of the ACA and Sec.  
155.210(c)(1)(ii).
    After consideration of the comments received, HHS is finalizing the 
proposals as proposed. FFE Navigators will continue to be permitted to 
perform the Navigator duties specified in Sec.  155.210(e)(9) until 
Navigator grants are awarded in 2022. FFE Navigators will be required 
to perform the Navigator duties specified in Sec.  155.210(e)(9) 
beginning with Navigator grants awarded in 2022, including non-
competing continuation awards. Thus, prior to Navigator grant funding 
being awarded in FY 2022, FY 2021 Navigator grantees will be required 
to perform these duties beginning with the Navigator grant funding 
awarded in FY 2022 for the second 12-month budget period of the 36-
month period of performance.
3. Exchange Direct Enrollment Option (Sec.  155.221(j))
    In part 1 of the 2022 Payment Notice final rule, HHS codified Sec.  
155.221(j), which established a process for states to elect a new 
Exchange Direct Enrollment option (Exchange DE option). Under the 
Exchange DE option, State Exchanges, SBE-FPs, and FFE states may work 
directly with private sector entities (including QHP issuers, web-
brokers, and agents and brokers) to transition to private-sector 
enrollment pathways through which consumers can apply for coverage, 
receive an eligibility determination from the Exchange, and purchase an 
individual market QHP offered through the Exchange with APTC and CSRs, 
if otherwise eligible. These private-sector pathways could be offered 
in addition to or instead of a centralized eligibility and enrollment 
website operated by an Exchange. Subject to meeting HHS approval 
requirements under Sec.  155.221(j)(1) and (2), the Exchange DE option 
may be implemented in states with a State Exchange beginning in plan 
year 2022 and in SBE-FP or FFE states beginning in plan year 2023. HHS 
also finalized a 2023 user fee rate of 1.5 percent of the total monthly 
premiums charged by issuers for each policy in FFE and SBE-FP states 
that elect the Exchange DE option. Since the publication of part 1 of 
the 2022 Payment Notice final rule, there have been significant changes 
to policy and operational priorities, as well as the enactment of new 
Federal laws. Given these changes, as well as a general lack of 
interest expressed by states in the option, and potential for the 
Exchange DE option to be misaligned with administration priorities, HHS 
proposed to remove Sec.  155.221(j) and repeal the Exchange DE option.

[[Page 53425]]

    On January 20, 2021, President Biden issued the E.O. 13985,\36\ 
directing that as a policy matter the Federal Government should pursue 
a comprehensive approach to advancing equity for all, including people 
of color and others who have been historically underserved, 
marginalized, and adversely affected by persistent poverty and 
inequality. On January 28, 2021, President Biden issued E.O. 14009.\37\ 
Section 3 of E.O. 14009 directs HHS, and the heads of all other 
executive departments and agencies with authorities and 
responsibilities related to Medicaid and the ACA, to review all 
existing regulations, orders, guidance documents, policies, and any 
other similar agency actions to determine whether they are inconsistent 
with policy priorities described in Section 1 of E.O. 14009, to include 
protecting and strengthening the ACA by assisting people who are 
potentially eligible for coverage, and eliminating unnecessary 
difficulties to obtaining health insurance. Specifically, this agency 
review must evaluate whether existing policies or regulations, ``. . . 
undermine the Health Insurance Marketplace[supreg] \38\ or the 
individual, small group, or large group markets for health insurance . 
. .'' or ``. . . present unnecessary barriers to individuals and 
families attempting to access Medicaid or ACA coverage . . .'' \39\
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    \36\ 86 FR 7009 (Jan. 25, 2021).
    \37\ 86 FR 7793 (Feb. 2, 2021).
    \38\ Health Insurance Marketplace[supreg] is a registered 
service mark of the U.S. Department of Health & Human Services.
    \39\ 86 FR 7793 (Feb. 2, 2021).
---------------------------------------------------------------------------

    Section 2 of E.O. 14009 also requires that the Secretary of HHS 
consider whether to implement an Exchange special enrollment period for 
exceptional circumstances pursuant to Sec.  155.420(d)(9) and other 
existing authorities, for uninsured and underinsured individuals to 
obtain coverage in light of the special circumstances caused by the 
COVID-19 pandemic. After E.O. 14009 was issued, HHS used its discretion 
to make such a special enrollment period available to uninsured and 
underinsured consumers through HealthCare.gov from February 15, 2021, 
through May 15, 2021. To support outreach, education and enrollment 
efforts for this special enrollment period, HHS has provided $2.3 
million in additional funding to current Navigator grantees in the 
FFEs.\40\
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    \40\ https://www.cms.gov/newsroom/press-releases/cms-announces-additional-navigator-funding-support-marketplace-special-enrollment-period.
_____________________________________-

    All State Exchanges followed suit and implemented corresponding 
special enrollment periods on similar timelines. HHS later made a 
decision to extend the ability of consumers to access the special 
enrollment period through HealthCare.gov through August 15, 2021, and 
many State Exchanges extended their special enrollment periods, as 
well. As of August 10, 2021, 2.5 million consumers have enrolled in 
coverage through HealthCare.gov and the State Exchanges, which 
represents a substantial increase from previous years when special 
enrollment periods were available primarily for normal qualifying life 
events.\41\
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    \41\ https://www.cms.gov/newsroom/press-releases/more-25-million-americans-gain-health-coverage-during-special-enrollment-period.
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    In addition, Congress recently passed the ARP,\42\ which was signed 
into law on March 11, 2021. The ARP establishes new ACA programs, 
including a new grant program for Exchange modernization, which 
appropriates $20,000,000 in Federal funding, which is available until 
September 30, 2022, to State Exchanges to implement Exchange system, 
program, or technology updates to ensure compliance with applicable 
Federal requirements. It also modifies eligibility criteria for 
existing ACA programs. For example, the provisions in the ARP include a 
temporary change (for taxable years 2021 and 2022) that allows 
consumers with household income above 400 percent of the FPL to be 
applicable taxpayers potentially eligible for PTC, an update to 
applicable percentage tables to increase the amount of PTC for 
qualified individuals in all income brackets, and a modification of 
eligibility for PTC for consumers receiving, or approved to receive, 
unemployment compensation in 2021. Beginning on April 1, HHS 
operationalized these new requirements through HealthCare.gov, and is 
providing technical assistance to State Exchanges that are 
operationalizing these requirements at the state level. The 
approximately 2.5 million consumers that have enrolled in coverage 
through HealthCare.gov and the State Exchanges during the COVID-19 
special enrollment period have reduced their monthly premiums by $40 
per person per month due to the ARP's premium credits, with more than 
one-third of consumers finding coverage for $10 or less per month. In 
addition, out-of-pockets costs have fallen for new consumers that have 
enrolled since April, with the median plan deductible falling by nearly 
90 percent from $450 to $50.\43\
---------------------------------------------------------------------------

    \42\ Public Law 117-2.
    \43\ https://www.cms.gov/newsroom/press-releases/more-25-million-americans-gain-health-coverage-during-special-enrollment-period.
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    There are also new obligations established via other health care-
related legislation for which HHS is responsible to implement in 
coordination with states and other Federal Departments. This includes 
the No Surprises Act,\44\ which was enacted on December 27, 2020, and 
establishes an extensive array of Federal and state requirements and 
programs to protect consumers against surprise medical bills.
---------------------------------------------------------------------------

    \44\ Title I of Division BB of the Consolidated Appropriations 
Act, 2021, Public Law 116-260 (Dec. 27, 2020).
---------------------------------------------------------------------------

    Given its obligation to review all existing policies and 
regulations in line with E.O. 14009, E.O. 13985, and recent actions by 
Congress, including the health care-related provisions of the ARP and 
other new Federal legislation, for which HHS is now responsible or 
centrally involved in implementing, HHS determined that all available 
resources should be directed to ensuring HHS is able to efficiently and 
effectively meet those obligations. Permitting the establishment of the 
Exchange DE option would detract from those efforts. Furthermore, 
meeting the new requirements of the health care provisions of the ARP 
would add complexity to Exchange operations that could reduce the 
prospects for successful implementation of the Exchange DE option, even 
if temporarily. For instance, states and DE entities would need to 
coordinate and implement new procedures to ensure that consumers 
receive eligibility determinations and are enrolled in coverage in line 
with the modified PTC eligibility criteria under the ARP, and then take 
steps and expend resources to end these new procedures since this 
temporary modification no longer applies after taxable year 2022. As 
part of this process, HHS would need to ensure the adoption of 
appropriate procedures, proper approvals, and ongoing oversight. To 
foreclose the possibility that Federal funding and resources will be 
diverted from efforts to provide direct benefits to consumers made 
available under recent legislation to optional programs, HHS proposed 
to repeal the Exchange DE option. As explained in the proposed rule, 
this would help ensure that available resources are allocated 
consistent with administration health care priorities and dedicated to 
implementation of newly-enacted Federal laws that provide greater 
financial assistance and protections to consumers.
    HHS further explained that repealing the Exchange DE option should 
generally have a minimal impact on states and other interested parties.

[[Page 53426]]

States with State Exchanges already could engage with DE entities 
preceding the addition of Sec.  155.221(j). In addition, the FFEs have 
already implemented the DE program (including classic direct enrollment 
and enhanced direct enrollment, or EDE), which provides broad 
availability of non-Exchange websites to assist consumers applying for, 
or enrolling in QHPs through an FFE or SBE-FP with APTC and CSRs, when 
otherwise eligible.\45\ Additionally, HHS noted that nothing in the 
previous regulatory framework prohibited State Exchanges from engaging 
DE entities similar to the FFEs in order to supplement Exchange 
operations in their states should they so choose. HHS also noted that 
although HHS understands that several State Exchanges have engaged with 
DE entities to discuss possibilities for collaboration, State Exchanges 
and other stakeholders nearly universally cautioned against the 
Exchange DE option in public comments submitted in response to the 
initial proposal to establish the Exchange DE option. HHS further noted 
that, to date, no state had expressed interest in implementing the 
Exchange DE option.
---------------------------------------------------------------------------

    \45\ The FFE DE pathways are also available in SBE-FP states. 
See 45 CFR 155.220(l) and 155.221(i).
---------------------------------------------------------------------------

    Finally, in reviewing Sec.  155.221(j) in line with E.O. 13985 and 
E.O. 14009, and after further consideration of public comments received 
when the Exchange DE option was proposed, HHS explained in the proposed 
rule that HHS determined that the Exchange DE option is inconsistent 
with policies described in E.O. 13985 and sections 1 and 3 of E.O. 
14009. Consistent with many public comments received when the Exchange 
DE option was proposed, HHS noted that HHS believed that shifting away 
from HealthCare.gov or State Exchange websites as the primary pathway 
to enroll in and receive information about coverage would harm 
consumers by unnecessarily fracturing enrollment processes among the 
Exchange and possibly multiple DE entities operating in a state. HHS 
noted that such a shift would be particularly harmful now when over 2.5 
million consumers have relied upon and successfully navigated 
HealthCare.gov and State Exchange websites during the COVID-19 special 
enrollment period to enroll in Exchange coverage. HHS also agreed with 
many commenters who noted that a fractured process could foster 
consumer confusion about how to get covered and what coverage options 
are available, since consumers could be directed to DE entities that 
only offer assistance with a limited selection of products and some of 
those products may not provide, for example, MEC for consumers.\46\ 
Many commenters raised concerns that this consumer confusion or limited 
product selection through DE entities could also potentially disrupt 
coordination of coverage with other insurance affordability programs, 
including Medicaid and CHIP, which is inconsistent with HHS's ``no 
wrong door'' policy.\47\ In addition, these consequences could act as 
an unnecessary barrier to consumers seeking Medicaid or ACA coverage 
rather than facilitating enrollment in comprehensive coverage, and 
could have additional downstream impacts including an increased 
uninsured or underinsured population, or more consumers enrolling in 
less comprehensive coverage options. These downstream impacts could 
lead to health inequities by disparately impacting certain vulnerable 
groups that tend to have a greater need for comprehensive coverage or 
rely more heavily on Medicaid and CHIP. These concerns and the 
accompanying risks to the health and well-being of underserved groups 
and consumers in general are heightened as the COVID-19 PHE continues.
---------------------------------------------------------------------------

    \46\ Multiple commenters cited the following report as support 
for their comments related to DE entities offering limited plan 
selection and potential disruptions to coordination of coverage with 
other insurance affordability programs: https://www.cbpp.org/research/health/direct-enrollment-in-marketplace-coverage-lacks-protections-for-consumers-exposes.
    \47\ This policy is intended to ensure that consumers can 
complete a single eligibility application to receive determinations 
of eligibility across multiple health insurance affordability 
programs, including for QHPs, APTC, CSRs, as well as Medicaid and 
CHIP. See, for example, sections 1311(d)(4)(F) and 1413 of the ACA.
---------------------------------------------------------------------------

    After finding the Exchange DE option inconsistent with recent 
Executive Orders, to ensure that resources are not diverted from 
fulfilling requirements under the new health care legislation and other 
initiatives like the COVID-19 special enrollment period, and because no 
state had yet expressed interest in implementing the Exchange DE 
option, HHS proposed to remove Sec.  155.221(j) and repeal the Exchange 
DE option. As explained in the preamble section regarding user fee 
rates for the 2022 benefit year (Sec.  156.50), HHS also proposed to 
repeal the accompanying user fee rate for FFE-DE and SBE-FP-DE states 
for 2023.
    The following is a summary of the comments received and HHS's 
responses to the proposed repeal of the Exchange DE option (Sec.  
155.221(j)).
    Comment: The overwhelming majority of commenters supported the 
proposal to repeal the Exchange DE option. These commenters both 
endorsed the rationale behind this proposal, and reiterated concerns 
about the potential negative ramifications of the Exchange DE option 
that were expressed in comments when the Exchange DE option was 
originally proposed in the 2022 Payment Notice. These include a lack of 
empirical research to quantify potential impacts or demonstrate the 
value that would be added by implementation of this option; the 
potential for consumer confusion due to fragmentation among multiple DE 
entities; the potential for DE entities with misaligned incentives to 
steer consumers toward less comprehensive coverage options or fail to 
inform consumers that they are eligible for Medicaid or CHIP; an 
increase in funding and resources that would be needed to provide 
effective oversight; and other downstream impacts, including the 
potential for an increase in uninsured and underinsured populations, 
particularly within the QHP, Medicaid, and CHIP populations.
    Several commenters also raised health equity concerns, asserting 
that the Exchange DE option could have a disproportionate impact on 
certain underserved or historically-marginalized groups, and others 
that face barriers navigating the health care system to get coverage. 
Supporting commenters commented on behalf of those with pre-existing 
conditions, the LGBTQ+ population, women and children, those with 
substance use disorders, young adults, and others. One commenter noted 
that the Exchange DE option would disproportionately impact 
historically-marginalized populations by making Medicaid less 
accessible, asserting that DE entities do not necessarily provide 
Medicaid eligibility information to consumers. Another commenter noted 
that making Medicaid less accessible would be particularly harmful to 
women of color and those in the LGBTQ+ community who, due to 
discrimination and depressed wages, are disproportionately eligible for 
Medicaid and CHIP. Several commenters expressed concern that the 
Exchange DE option would disproportionately impact people with 
substance use disorders and mental health conditions given the 
increased prevalence of those conditions during the PHE. Commenters 
expressed concern that those with limited health literacy also could be 
particularly harmed by the Exchange DE option, citing consumers in 
underserved communities, young people, people who do not speak English 
as a first language, and others. These commenters

[[Page 53427]]

stated that such consumers are particularly susceptible to being harmed 
by insufficient information, coverage, and hidden costs. One commenter 
also noted that women generally have more health care needs and are 
more vulnerable to high health costs, which means enrolling in 
substandard coverage could result in care being delayed or denied, 
medical debt, and overall worse health outcomes. Commenters also noted 
that the potential increase in the number of consumers enrolled in 
substandard coverage as a result of the Exchange DE option would be 
particularly harmful for consumers with pre-existing conditions, since 
through such substandard coverage they could experience a denial of 
coverage due to their pre-existing conditions. Most of these commenters 
underscored that health equity concerns are heightened by the ongoing 
PHE.
    Supporting commenters strongly encouraged the repeal to be 
finalized as proposed to remedy these concerns and protect consumers, 
particularly underserved and historically-marginalized consumers.
    Response: HHS appreciates the support of this proposal and 
generally agrees with commenters' concerns, particularly those 
regarding the potential negative impacts to underserved and 
historically-marginalized consumers during the PHE. The new enrollment 
and coverage opportunities available to consumers, including the 
special enrollment period to enroll in Exchange coverage through 
HealthCare.gov or their State Exchange website during the COVID-19 PHE, 
and the increased financial assistance under the ARP, have proven to be 
successful at increasing enrollment in comprehensive coverage options, 
such as ACA coverage offered through Exchanges.\48\ HHS believes it is 
critical to build on this success by maximizing opportunities for 
consumers to get comprehensive ACA coverage through the Exchanges and 
to enroll in insurance affordability programs (for example, Medicaid 
and CHIP), when eligible. Moreover, HHS believes that this will best 
serve underserved and historically-marginalized groups, as well as 
support health equity. For example, as raised in comments that are 
summarized earlier in this preamble, consumers in these groups tend to 
have a greater need for more comprehensive coverage (for example, those 
with pre-existing conditions) or to require robust consumer support and 
ample opportunity to successfully navigate the health care system (for 
example, those with limited health literacy). HHS believes that 
focusing resources on the Exchanges and the new health care programs 
they are leading is the best approach to support these, and other 
consumer needs, for underserved and historically-marginalized groups, 
and for consumers in general.
---------------------------------------------------------------------------

    \48\ https://www.cms.gov/newsroom/press-releases/more-25-million-americans-gain-health-coverage-during-special-enrollment-period.
---------------------------------------------------------------------------

    HHS also notes that repealing the Exchange DE option will not 
foreclose states' option to leverage the existing FFE DE pathways,\49\ 
nor the ability of State Exchanges to implement DE pathways similar to 
the FFEs, should they find that it is appropriate given their specific 
market dynamics, priorities, and needs. However, on balance, HHS 
believes there is much greater risk that the Exchange DE option could 
serve as a barrier to consumers getting comprehensive coverage rather 
than facilitate such enrollment. The repeal of the Exchange DE option 
also permits HHS to direct available resources to implementation of the 
new Federal requirements (for example, the No Surprises Act consumers 
protections and the ARP increased subsidies), rather than diverting 
resources to implement an optional program. Finally, as detailed 
earlier in this preamble, it aligns with the policy goals and 
directives in the recent Executive Orders to advance health equity for 
all, protect and strengthen the ACA, and eliminate unnecessary 
difficulties to obtaining health insurance. After consideration of 
comments, HHS is finalizing the repeal of the Exchange DE option and 
accompanying user fees, as proposed.
---------------------------------------------------------------------------

    \49\ The FFE DE pathways are also available in SBE-FP states. 
See 45 CFR 155.220(l) and 155.221(i).
---------------------------------------------------------------------------

    Comment: Commenters requested clarification regarding the scope of 
the proposed repeal and whether HHS's intent is to eliminate the 
existing FFE DE pathways or just to eliminate the Exchange DE option.
    Response: HHS clarifies that the existing FFE DE pathways, 
including both classic DE and EDE, will not be impacted by the repeal 
of the Exchange DE option. Those pathways will continue to be available 
to consumers shopping for Exchange coverage in FFE and SBE-FP states. 
In addition, states with State Exchanges also still have the option to 
leverage DE should they choose to do so based on their specific market 
dynamics, priorities, and needs. The proposed repeal, which HHS is 
finalizing in this rule, is specific to removing the Exchange DE option 
codified at Sec.  155.221(j) and the accompanying FFE-DE and SBE-FP-DE 
user fees. The other Federal requirements applicable to the FFE DE 
pathways, as outlined in Sec. Sec.  155.220, 155.221, and 156.1230, 
remain intact.
    Comment: Several opposing commenters asserted it is premature to 
repeal the Exchange DE option on the grounds of lacking state interest, 
given the limited time since the proposal was finalized. They stated 
that reliance on this ground was questionable in light of the many 
other health care priorities that have occupied states such as 
implementing and operationalizing the health care provisions of recent 
legislation, including the ARP. Some opposing commenters recommended 
that the rollout of the Exchange DE option merely be delayed, rather 
than repealed, to give states additional time to explore its 
feasibility. Several commenters also expressed general support for the 
Exchange DE option, noting that it meets all applicable ACA statutory 
and regulatory requirements. One commenter suggested that the lowered 
user fee for the Exchange DE option for FFE and SBE-FP states could be 
attractive to states and weigh favorably in the balance for those 
states who may be interested in pursuing the Exchange DE option, if 
given more time to consider it. This commenter noted that another 
attractive feature to states is the potential cost savings on consumer 
support functions resulting from potentially having more enrollment 
channels available to consumers. Other commenters in opposition of the 
proposed repeal stated that there would be no cost to the Federal 
Government beyond oversight costs in states that elected to implement 
the Exchange DE option.
    Response: HHS acknowledges that the Exchange DE option was only 
recently finalized and it is plausible that but for competing health 
care priorities perhaps some states would express interest in the 
Exchange DE option. However, HHS clarifies that the lack of interest 
from states was just one factor that lead to the proposed repeal of the 
Exchange DE option. As detailed earlier in this preamble and in the 
proposed rule, HHS was also concerned that permitting the establishment 
of the Exchange DE option would detract from efforts to implement new 
Federal requirements, including consumer protections against surprise 
medical billing, for which HHS is now responsible and centrally 
involved in implementing. HHS was also concerned about the additional 
complexity to Exchange operations resulting from newly passed 
legislation that could impact the successful implementation of the 
Exchange DE

[[Page 53428]]

option, which could negatively impact consumers ability to enroll in 
comprehensive coverage. Finally, the proposal was made following HHS's 
evaluation of the Exchange DE option as directed by EOs 13985 and 
14009, which determined the option was inconsistent with the policies 
outlined in those Executive Orders to advance health equity for all, 
protect and strengthen the ACA, and eliminate unnecessary difficulties 
to obtaining health insurance.
    HHS appreciates that there are potentially attractive features of 
the Exchange DE option both for states and the Federal Government, 
particularly from a financial perspective. This was one of the 
considerations that led to the proposed establishment of the Exchange 
DE option. However, HHS does not believe that a reduced user fee or 
potential savings on consumer support costs outweighs the potential 
harm to consumers, or other considerations, outlined earlier in this 
preamble and in the proposed rule, that HHS considered as part of its 
recent evaluation of the Exchange DE option. Delaying the rollout of 
the Exchange DE option and giving states more time to evaluate its 
feasibility would not assuage the multitude of concerns expressed by 
the public or those outlined earlier in this preamble and in the 
proposed rule, including the need to focus health care resources on the 
emergent needs of struggling vulnerable and historically-marginalized 
consumers and the need to focus available Department resources on 
implementing new Federal requirements, including the new consumer 
protections against surprise medical billing. In part 1 of the 2022 
Payment Notice final rule, HHS outlined many potential direct and 
indirect costs of startup, approval, and oversight.\50\ HHS therefore 
disagrees that the Federal Government would incur only oversight costs 
in states that elect to implement the Exchange DE option.
---------------------------------------------------------------------------

    \50\ See 86 FR 6169-6170.
---------------------------------------------------------------------------

    Comment: All opposing commenters argued that state flexibility, 
particularly the flexibility to tailor enrollment portals, should not 
be curtailed, especially during a PHE. Relatedly, these commenters 
asserted that consumers universally benefit from an increase in choice. 
One of these commenters stated that DE entities would serve to 
supplement and extend the reach of Exchanges rather than replacing 
them.
    Response: HHS agrees that proposals that encourage and promote 
state flexibility are important, as states are best suited to tailor 
programs to address local health care priorities and the needs of their 
residents. HHS also reiterates that the existing FFE DE pathways are 
not impacted by the repeal of the Exchange DE option. States using the 
HealthCare.gov platform and State Exchanges will still have the option 
to leverage DE as a supplement to the Exchange should they find that it 
would provide value for their consumers given their specific market 
dynamics, priorities, and needs. States that currently use 
HealthCare.gov also have flexibility to transition to a State Exchange 
model and adapt Exchange functions to their local markets and unique 
needs of their residents. HHS also believes that in this situation, on 
balance, the potential for expanded choice does not outweigh the 
potential consumer harms when there is a danger of fragmenting 
consumers' path to getting comprehensive coverage and directing 
consumers to less comprehensive coverage options that, in many cases, 
will not cover their health care costs. This places an outsized burden 
on consumers that, after further evaluation, HHS determined is 
unnecessary given their existing choice of multiple enrollment pathways 
offered by Exchanges, QHP issuers, web-brokers, agents and brokers, 
generally harmful for consumers, and unacceptable during a PHE.
    HHS also highlights the recent enrollment increases driven by 
HealthCare.gov and State Exchange websites, which are outlined earlier 
in this preamble. In particular, HHS reiterates that as of August 10, 
2021, approximately 2.5 million consumers have enrolled in coverage 
through HealthCare.gov and State Exchange websites during the COVID-19 
special enrollment period, and have reduced their monthly premiums by 
$40 per person per month due to the ARP's premium credits, with more 
than one-third of consumers finding coverage for $10 or less per 
month.\51\ In addition, out-of-pockets costs have fallen for new 
consumers that have enrolled since April, with the median plan 
deductible falling by nearly 90 percent from $450 to $50. This 
increased enrollment and cost savings to consumers, which has been 
driven by the current Exchange programs, further demonstrates their 
importance and effectiveness.
---------------------------------------------------------------------------

    \51\ https://www.cms.gov/newsroom/press-releases/more-25-million-americans-gain-health-coverage-during-special-enrollment-period.
---------------------------------------------------------------------------

    Comment: All opposing commenters asserted that DE entities and 
their platforms are better suited than Navigators and centralized, 
government-run Exchanges to innovate to meet consumer needs. Relatedly, 
they argue that the FFE DE pathways have in many ways surpassed the 
consumer support functionality of HealthCare.gov, and that this is 
largely driven by competition among DE entities to attract consumers. 
They also claim that the success of the FFE DE pathways is evidenced by 
the enrollment statistics from the successful plan year 2021 open 
enrollment period.\52\ One commenter argued that EOs 13985 and 14009 
would actually be better served by maintaining the Exchange DE option 
since it would provide more consumer-centric access to coverage, 
including for vulnerable populations.
---------------------------------------------------------------------------

    \52\ Several commenters cited in particular that CMS data show 
that the FFE DE pathways more than doubled enrollments during the 
plan year 2021 open enrollment period, increasing from 521,000 to 
1,130,000. They also noted that the FFE DE pathways have attracted a 
higher proportion of new consumers and increased the number of 
consumers who made active plan selections.
---------------------------------------------------------------------------

    Response: While HHS does not agree with many of these 
characterizations, HHS reiterates again that the FFE DE pathways will 
not be impacted by the repeal of Sec.  155.221(j). Those pathways and 
their success may continue unimpeded since HHS is only repealing the 
Exchange DE option. DE may indeed be the right choice for some states 
and certain consumers, and HHS does not intend to diminish its success 
or inhibit innovation in this area. However, HHS maintains that the 
policy goals outlined in EOs 13985 and 14009 are best served by 
repealing the Exchange DE option. More specifically, the dangers that 
this optional program that would remove the centralized Exchange 
website could fragment consumers' path to getting comprehensive 
coverage, direct consumers to less comprehensive coverage options that, 
in many cases, will not cover their health care costs, and 
disproportionately impact certain underserved and historically 
marginalized groups are inconsistent with advancing health equity, 
protecting and strengthening the ACA, and eliminating unnecessary 
barriers to obtaining health insurance. These dangers are heightened 
during a PHE. HHS believes that access to comprehensive coverage 
options, including Exchange plans, and advancing health equity among 
consumers will be best served by enhancing access to coverage through 
proven enrollment channels like the Exchanges or the FFEs' DE pathways, 
and eliminating optional programs that have the potential to cause 
significant consumer confusion and harm at a time when consumer 
protection and enrollment in comprehensive coverage

[[Page 53429]]

is of paramount importance. Notwithstanding the claim that centralized, 
government-run Exchanges are not as well equipped to innovate to meet 
consumer needs as DE entities and platforms, HHS highlights that 
Exchanges do innovate, and are central participants in innovative 
programs. For instance, the State Exchanges and HealthCare.gov have 
administered innovative new health care programs in 2021 detailed 
previously \53\ that have resulted in 2.5 million consumers 
successfully enrolling through the Exchanges with significant premium 
assistance. In addition, the FFEs have been central participants in 
innovating through the Federal DE pathways.\54\ These pathways are 
designed to foster innovation of new consumer-based tools and 
functionality by approved DE partners.\55\ HHS believes that these and 
other examples of Exchange innovation and collaboration with the 
private sector help dispel concerns about the ability of centralized, 
government-run Exchanges to meet consumer needs.
---------------------------------------------------------------------------

    \53\ These include the efforts to administer the health care 
provisions of the ARP and the related COVID-19 special enrollment 
period.
    \54\ One of the critical consumer-centric innovations of the 
Federal EDE pathway is to enable consumers to access eligibility and 
enrollment information directly through a DE entity's website by 
means of various application program interfaces rather than having 
to re-direct to HealthCare.gov.
    \55\ For instance, DE entities may offer plan comparison tools 
with functionality targeted specifically to serve the needs of their 
consumer base.
---------------------------------------------------------------------------

    Comment: Opposing commenters argued that concerns about consumers 
being steered toward non-comprehensive coverage options like short-term 
limited duration insurance or association health plans are exaggerated 
since there are existing FFE DE requirements and limitations that would 
mitigate such concerns. They also highlighted that Sec.  155.221(j) 
requires that a State Exchange electing to implement the Exchange DE 
option must have at least one DE entity that meets all requirements of 
the FFE DE program, including displaying all available QHPs. These 
commenters also suggested that concerns about potential disruptions to 
coordination of coverage with insurance affordability programs like 
Medicaid and CHIP are exaggerated because the DE entities participating 
in the FFE DE pathways use the same single, streamlined application and 
eligibility notices as HealthCare.gov to assist the Exchange with 
rendering an eligibility determination for all insurance affordability 
programs in compliance with the ``no wrong door'' policy.
    Response: HHS appreciates that there are Federal DE requirements 
and operational practices in place designed to protect consumers, 
including certain requirements to protect against steering QHP 
consumers to less comprehensive coverage options.\56\ The Exchange DE 
option also included certain safeguards, including the requirement that 
at least one DE entity must meet all of the requirements to participate 
in the FFE DE program. However, HHS maintains that the previously 
identified dangers that this optional program could harm consumers by 
fragmenting the path to comprehensive coverage, directing consumers to 
less comprehensive coverage options, and disproportionately impacting 
certain underserved and historically marginalized groups are 
inconsistent with advancing health equity, protecting and strengthening 
the ACA, and eliminating unnecessary barriers to obtaining health 
insurance. These dangers are real,\57\ they are heightened during a 
PHE, and after further evaluation, HHS determined they place an 
unnecessary and unacceptable outsized burden on consumers. HHS believes 
that access to comprehensive coverage options, including Exchange 
plans, and advancing health equity among consumers will be best served 
by enhancing access to coverage through proven enrollment channels, 
which includes maintaining a centralized Exchange website for consumers 
to apply for an enroll in QHPs and insurance affordability programs. 
The increased enrollment through Exchange websites during the COVID-19 
special enrollment period underscores the importance of maintaining 
these known enrollment pathways for consumers. Finalizing the repeal of 
the Exchange DE option also ensures HHS can focus resources and efforts 
on implementing new Federal requirements, including consumer 
protections against surprise medical billing, for which HHS is now 
responsible and centrally involved in implementing, rather than on 
implementing and overseeing an optional program, which has the 
potential to cause significant confusion and harm at a time when 
consumer protection is paramount. Finally, HHS reiterates that the 
repeal of the Exchange DE option does not impact or change the other 
Federal requirements applicable to the FFE DE pathways, which will 
continue to be available in FFE and SBE-FP states. States with State 
Exchanges can also still leverage DE as a supplement to the Exchange 
website should they find it would provide value for their consumers 
given their specific market dynamics, priorities, and needs.
---------------------------------------------------------------------------

    \56\ See, for example, 45 CFR 155.220(c)(3)(i)(A)--(L), 
155.220(j), 155.221(b)(1)-(3) and 156.1230(a) and (b).
    \57\ See, e.g., https://www.cbpp.org/research/health/direct-enrollment-in-marketplace-coverage-lacks-protections-for-consumers-exposes.
---------------------------------------------------------------------------

    After consideration of these comments, HHS is finalizing the repeal 
of the Exchange DE option and the FFE-DE and SBE-FP-DE user fees, as 
proposed.
4. Annual Open Enrollment Period Extension (Sec.  155.410(e))
    HHS proposed to amend paragraph (e) of Sec.  155.410, which 
provides the dates for the annual individual market Exchange open 
enrollment period in which qualified individuals and enrollees may 
apply for or change coverage in a QHP. The annual individual market 
Exchange open enrollment period is extended by cross-reference to non-
grandfathered plans in the individual market, both inside and outside 
of an Exchange, under guaranteed availability regulations at Sec.  
147.104(b)(1)(ii). HHS specifically proposed to alter the annual open 
enrollment period for the 2022 coverage year and beyond so that it 
begins on November 1 and runs through January 15 of the applicable 
benefit year.
    In previous rulemaking, HHS established that the annual open 
enrollment period for benefit years beginning on or after January 1, 
2018 would begin on November 1 and extend through December 15. In doing 
so, HHS indicated a preference for a shorter 6-week annual open 
enrollment period, noting HHS's belief that it provides sufficient time 
for consumers to enroll in or change QHPs and that an end date of 
December 15 carries the benefit of ensuring consumers receive a full 
year of coverage and simplifies operational processes for issuers and 
the Exchanges.\58\ Accordingly, the annual open enrollment period dates 
have been set to November 1 through December 15 for the 2018, 2019, 
2020, and 2021 plan years. As discussed in the proposed rule, HHS has 
observed several benefits using the present annual open enrollment 
period dates. Prior enrollment data suggests that the majority of new 
consumers to the Exchange select plans prior to December 15 so as to 
have coverage beginning January 1.
---------------------------------------------------------------------------

    \58\ See 82 FR 18346 at 18381.
---------------------------------------------------------------------------

    HHS also observed that consumer casework volumes related to 
coverage start dates and inadvertent dual enrollment decreased in the 
years after the December 15 end date was adopted,

[[Page 53430]]

suggesting that the consumer experience was improved by having a 
singular deadline of December 15 to enroll in coverage for the upcoming 
plan year. HHS noted that an extension to January 15 may cause some 
previously observed consumer confusion to resurface surrounding the 
need to enroll by December 15 for a full year of coverage versus the 
final deadline of January 15 to enroll for a plan that would begin on 
February 1. This confusion could cause some consumers to miss out on 
coverage for the month of January altogether. A January 15 end date may 
also require enrollment assisters allocate budget resources over a 
longer period of time.
    However, after observing the effects of a 6-week annual open 
enrollment period over these years, HHS has also observed negative 
impacts to consumers that may justify an extension of the annual open 
enrollment period end date to January 15. In particular, HHS has 
observed that consumers who receive financial assistance, who do not 
actively update their applications during the annual open enrollment 
period, and who are automatically re-enrolled into a plan are subject 
to unexpected plan cost increases if they live in areas where the 
second lowest-cost silver plan has dropped in price. These consumers 
will experience a reduction in their allocation of APTC based on the 
second lowest-cost silver plan price, but are often unaware of their 
increased plan liabilities until they receive a bill from the issuer in 
early January after the annual open enrollment period has concluded. 
Extending the annual open enrollment period end date to January 15 
would allow these consumers the opportunity to change plans after 
receiving updated plan cost information from their issuer and to select 
a new plan that is more affordable to them. HHS also noted in the 
proposed rule that HHS has also observed concerns from Navigators, 
CACs, and agents and brokers that the current annual open enrollment 
period does not leave enough time for them to fully assist all 
interested Exchange applicants with their plan choices. Extending the 
annual open enrollment period end date to January 15 would allow more 
time for consumers to seek assistance from one of these entities. 
Together, the impacts of providing consumers with more time to react to 
updated plan cost information and more time to seek enrollment 
assistance may improve access to health coverage. The additional time 
for enrollment assistance provided by this proposal may be particularly 
beneficial to consumers in underserved communities who may face time or 
language barriers in accessing health coverage by extending the period 
in which these consumers can seek in-person assistance to enroll.
    HHS sought comment on whether a January 15 end date would provide a 
balanced approach to providing consumers with additional time to make 
informed plan choices and increasing access to health coverage, while 
mitigating risks of adverse selection, consumer confusion, and issuer 
and Exchange operational burden. HHS invited comments from stakeholders 
that would experience specific benefits or adverse effects from a 
January 15 end date, and encourage comments on potential impacts to 
resources, consumer assistance budgets, overall enrollment numbers, 
premiums, and market stability. HHS sought comment on whether this 
extension would incentivize consumers who need coverage to begin on 
January 1 to still make a choice and enroll by December 15, while also 
preserving sufficient time in the remainder of the plan year for 
issuers and Exchanges to perform other obligations such as QHP 
certification.
    HHS further invited comments on alternative approaches to extending 
the annual open enrollment period to address coverage gaps or 
enrollment challenges facing consumers and stakeholders. HHS also 
invited comments to address whether HHS should explore the possibility 
of a new special enrollment period, such as for current enrollees who 
are automatically re-enrolled and experienced a significant cost 
increase, to address concerns for specific consumer challenges as an 
alternative to extending the annual open enrollment period. HHS also 
noted that HHS is considering whether approaches such as enhanced 
noticing or special, targeted outreach would address the needs of 
consumers who are automatically re-enrolled in areas where the second 
lowest-cost silver plan drops in value, thereby reducing APTC amounts. 
HHS sought comment on how HHS may improve communications and consumer 
engagement around potential cost changes for consumers who do not 
actively re-enroll in coverage. HHS also noted that HHS is considering 
if improved education and outreach during the coverage year to raise 
awareness of existing special enrollment period opportunities, such as 
those for loss of coverage or becoming newly eligible or ineligible for 
financial assistance, may serve consumers who do not enroll or change 
plans during the annual open enrollment period. HHS sought comment on 
whether adoption of these or other outreach approaches would be a 
viable alternate approach to finalizing its proposal to extend the 
annual open enrollment period end date to January 15.
    HHS noted that HHS anticipated that if an annual open enrollment 
period end date of January 15 were finalized, this change would apply 
to all Exchanges, including State Exchanges for the 2022 coverage year 
and beyond. HHS noted that in preceding plan years, a majority of State 
Exchanges operating their own eligibility and enrollment platform have 
used special enrollment period authority to offer additional enrollment 
time beyond the end date of December 15 in the Exchanges on the Federal 
platform. HHS invited additional comments on State Exchange 
flexibility, as well as operational challenges relating to State 
Exchange implementation of the proposed change for 2022 and beyond.
    HHS is finalizing this policy for the FFEs and SBE-FPs, and HHS 
codifies flexibility for State Exchanges that operate their own 
eligibility and enrollment platform to set individual market annual 
open enrollment period end dates no earlier than December 15 and to 
offer accelerated effective date rules. HHS is clarifying that the 
annual open enrollment period end dates chosen by State Exchanges 
operating their own eligibility and enrollment platform will apply to 
all non-grandfathered plans in the individual market, both inside and 
outside of an Exchange, under guaranteed availability regulations at 
Sec.  147.104(b)(1)(ii). The following is a summary of the comments 
received and HHS's responses to its proposals related to the annual 
open enrollment period extension (Sec.  155.410(e)).
    Comment: The majority of commenters supported HHS's proposal. 
Commenters agreed that lengthening the annual open enrollment period 
would provide valuable time to consumers to seek in-person assistance 
and make informed plan choices. Many commenters agreed that this time 
would be particularly helpful to those who are auto-reenrolled into 
coverage, but receive a lower subsidy than the prior year because the 
cost of their benchmark plan has dropped. Commenters also noted 
additional groups that would benefit from this extension: Consumers 
whose coverage is terminated towards the end of the calendar year and 
who do not become aware of its termination until after January 1, 
consumers whose Medicaid eligibility is ending as the result of the 
potential expiration of the continuous enrollment provisions in section 
6008(b)(3) of the Families First

[[Page 53431]]

Coronavirus Response Act (Pub. L. 116-127), and consumers whose share 
of premiums may increase in plan year 2022 due to the expiration of 
extra subsidies provided for under the ARP. A January 15 end date would 
provide these consumers extra time and a streamlined process to 
understand their eligibility and plan cost changes and enroll in new 
coverage.
    Several commenters highlighted the complex medical needs of 
consumers with chronic and serious medical conditions, noting that a 
longer annual open enrollment period would give these consumers more 
time to review and compare plan options, provider networks, and 
prescription drug offerings. Organizations and individuals providing 
application and enrollment assistance commented that there is often not 
enough time to provide individual or in-person help to all consumers 
who request it at the end of the current 6-week annual open enrollment 
period. Other commenters agreed with HHS's proposal that a longer 
annual open enrollment period would allow underserved populations more 
time to seek in person assistance and reduce barriers to enrollment, 
and that the proposal would allow agents and brokers, Navigators, and 
other consumer assisters more time to help and serve consumers shopping 
for plans. Finally, many commenters noted that the months of November 
and December are some of the busiest for consumers, and that holidays 
and end of the year activities cause significant time and financial 
constraints that are barriers to enrollment. Commenters argued that 
many consumers would benefit from additional time in January to 
complete plan shopping and enrollment activities.
    Response: HHS agrees with these comments and is finalizing the 
policy to extend the annual open enrollment period to January 15 of the 
applicable benefit year, as proposed, and HHS codifies flexibility for 
State Exchanges that operate their own eligibility and enrollment 
platform to set individual market annual open enrollment period end 
dates no earlier than December 15 and to use accelerated effective date 
rules.
    Comment: Many commenters noted that the majority of State Exchanges 
have already extended their annual open enrollment periods beyond the 
current December 15 deadline used by Exchanges on the Federal platform, 
and that State Exchanges have achieved enrollment gains in the month of 
January without introducing adverse selection into the market. Some 
State Exchange commenters noted that a longer annual open enrollment 
period allowed new consumers to enroll and resulted in a healthier risk 
pool mix. Another commenter noted that while most consumers continued 
to choose plans in December in order to have coverage effectuate 
January 1, the additional time in January offered flexibility for 
consumers who needed more time to weigh coverage options and enroll.
    Many state commenters noted that State Exchanges that offered 
extended periods for the annual open enrollment period beyond the end 
date used by the Exchanges on the Federal platform in some cases 
offered more accelerated effective date rules during the annual open 
enrollment period such that plan selections made by the last day of the 
month are effective the first day of the following month. These 
commenters asked that this flexibility be maintained and that January 
15 be the minimum end date for the annual open enrollment period in the 
State Exchanges. Other commenters noted that not all State Exchanges 
have chosen to extend their annual open enrollment periods into January 
and requested that State Exchanges maintain an ability to end the 
annual open enrollment period earlier than January 15. These commenters 
noted that State Exchanges may face operational burdens in adjusting 
their systems to accommodate the January 15 end date and that State 
Exchanges should maintain autonomy to set annual open enrollment period 
dates that best serve their populations.
    Response: HHS appreciates the comments highlighting evidence from 
State Exchange experiences with longer effective annual open enrollment 
periods, and are finalizing the policy to extend the annual open 
enrollment period to January 15. HHS agrees with commenters that State 
Exchanges are best suited to address the needs of their markets and are 
therefore codifying flexibilities for State Exchanges that operate 
their own eligibility and enrollment platform to set annual open 
enrollment period end dates no earlier than December 15. HHS also is 
codifying that these State Exchanges may extend their annual open 
enrollment periods beyond the end date of January 15 that will be used 
by the Exchanges on the Federal platform and may adopt more flexible 
accelerated effective date rules.
    Comment: Many commenters encouraged HHS to extend the annual open 
enrollment period even further, specifically to January 31. Commenters 
also asked that HHS use accelerated effective dates to make coverage 
available February 1 for plan selections received by January 31. Other 
commenters asked us to consider beginning the annual open enrollment 
period earlier in the year, for example on October 15, while still 
maintaining an end date of December 15 or December 31, as an 
alternative way to extend the total length of the annual open 
enrollment period. Still other commenters asked HHS to explore an 
October 15 start date in addition to the proposed extension, noting 
that the date would align with the beginning of Medicare's annual open 
enrollment period and that this alignment would facilitate additional 
consumer outreach and enrollments. Another commenter suggested 
providing an annual open enrollment period of January 1 through March 
31 to avoid the holiday season and end of the calendar year altogether.
    Response: HHS recognizes that a January 31 end date would provide 
additional time for consumers to enroll, and that some State Exchanges 
have adopted this date. However, HHS believes the proposed date of 
January 15 sufficiently balances its priorities of allowing consumers 
additional time to enroll after the end of the calendar year, while 
still promoting full coverage year enrollment and minimizing 
administrative burdens on Exchanges and issuers associated with longer 
annual open enrollment periods. Given the high volume of transactions 
processed by the Federal platform, HHS's operational experience 
suggests that adopting accelerated effective dates for the annual open 
enrollment period could cause delays in enrollments and claims 
processing and would require further study. Accordingly, HHS is not 
considering requiring changes to effective date rules at this time, but 
as noted earlier, is codifying flexibility for State Exchanges 
operating their own eligibility and enrollment platforms to adopt 
accelerated effective dates.
    While beginning the annual open enrollment period in October 
instead of November 1 would effectively lengthen the total annual open 
enrollment period timeframe, it would not address the needs of 
consumers who receive updated plan cost information or who experience 
program eligibility changes after January 1 and would also create 
administrative burdens on Exchanges and issuers to complete QHP plan 
certification and other pre-enrollment readiness activities. Similarly, 
HHS believes a change to begin the annual open enrollment period on 
January 1 and end in March would require a shift of the plan year 
calendar and create significant administrative burden on Exchanges, 
issuers, and state regulators, and HHS is not considering such a change 
at this time.

[[Page 53432]]

    Comment: Other commenters opposed the proposal to extend the annual 
open enrollment period to January 15. Commenters stated that this 
change would introduce adverse selection into the market, as more 
consumers would delay enrollment and may enroll in January only after 
needing care. Others noted that the change would increase 
administrative burdens and marketing and operational costs on issuers. 
Commenters noted that consumers have become accustomed to a 6-week 
annual open enrollment period and some commenters assisting consumers 
with enrollment activities noted that in their experience consumers did 
not need more time. Other commenters argued that the change would 
actually decrease total enrollment figures, as measured by total 
coverage months, as more consumers delay enrollment and neglect 
coverage for the month of January.
    Response: HHS acknowledges commenters' concerns regarding consumer 
confusion and coverage gaps, and recognizes that HHS will need to 
engage in consumer outreach activities to ensure consumers are aware of 
the new deadlines and the implications of signing up by December 15 for 
a January 1 effective date. However, HHS notes that the experience from 
State Exchanges operating their own eligibility and enrollment 
platforms suggests that extending the annual open enrollment period 
into January does result in increased consumer enrollments and does not 
introduce adverse selection into market. State Exchange commenters 
noted that the majority of consumers still enrolled in time to 
effectuate coverage for January 1, but that the Exchanges were able to 
achieve additional enrollments in January from consumers who simply 
missed the deadline or needed more time and help enrolling. The 
experience from these State Exchange commenters is also consistent with 
other comments received in support of this proposal which noted that 
underserved consumers, consumers with complex health needs, and 
consumers with unexpected plan cost or eligibility changes at the end 
of the year do not have enough time to shop and get in-person 
assistance under the current annual open enrollment period timeframe.
    Comment: HHS received comments in support of its suggestion to 
offer a special enrollment period for current enrollees who are 
automatically re-enrolled and experienced a significant cost increase 
as an alternative to extending the annual open enrollment period, and a 
request that HHS delay offering this special enrollment period until 
2023. Other commenters opposed the idea of a targeted special 
enrollment period and noted that special enrollment periods create 
complexity and costs for issuers and are difficult and burdensome for 
consumers to navigate. Commenters stated that an extended annual open 
enrollment period offers a much more streamlined approach to achieving 
the policy goal of allowing consumers to change plans in response to 
updated cost information as compared to a special enrollment period. 
Commenters also supported HHS's suggestions to improve consumer 
outreach and education activities to address enrollment barriers, but 
did not agree this outreach is an adequate substitute for extending the 
annual open enrollment period.
    Response: While HHS is not aware of increased issuer costs or 
consumer burden in the State Exchanges that have used special 
enrollment periods to effectively lengthen the annual open enrollment 
period, HHS acknowledges that the targeted special enrollment period as 
discussed in this rule would be limited to certain consumers meeting 
specified criteria and, as such, could require additional 
administrative steps for issuers, consumers, and Exchanges. HHS agrees 
that an extended annual open enrollment period offers a more 
streamlined approach for consumers, and also serves the added benefit 
of allowing other consumers, such as those with complex health needs, 
those in underserved communities, and those who receive a lower subsidy 
than the prior year that they are not aware of until receiving their 
January bill more time to determine their best coverage option.
    Comment: Other commenters suggested HHS could do more to improve 
renewal notices to address the challenges faced by consumers who were 
automatically re-enrolled but then experienced a significant cost 
increase as an alternative to extending the annual open enrollment 
period. Commenters suggested HHS consider aligning operational 
timelines and allowing issuers to provide more timely and accurate 
premium tax credit and plan cost information to consumers. Commenters 
suggested HHS could improve its communications around the automatic re-
enrollment process to better avoid consumers receiving surprising plan 
cost information after the benefit year has begun. Another commenter 
asked HHS to consider a policy for providing retroactive terminations 
to consumers who were automatically re-enrolled into coverage that they 
no longer want, and that such a policy could reduce spending on APTC 
paid for these months of inadvertent coverage.
    Response: HHS agrees that more improvements can be made in this 
area, and welcomes the suggestions by commenters to improve renewal 
notice processes to provide more accurate plan cost information to 
consumers earlier in the annual open enrollment period. However, after 
review of the range of public comments received, HHS does not believe 
improvements to the renewal noticing and automatic re-enrollment 
process alone is a sufficient alternative to providing additional 
enrollment time. HHS notes that current HHS policy does allow for 
consumers to request retroactive terminations under certain 
circumstance after their coverage has been automatically renewed, and 
that an extended annual open enrollment period deadline of January 15 
will also allow consumers more time to become aware of their enrollment 
options after automatic reenrollment has occurred.
5. Monthly Special Enrollment Period for APTC-Eligible Qualified 
Individuals With a Household Income No Greater Than 150 Percent of the 
Federal Poverty Level Whose Applicable Taxpayer Has an Applicable 
Percentage of Zero (Sec.  155.420(d)(16))
    In order to make affordable coverage available to more consumers, 
HHS proposed to codify a monthly special enrollment period for 
qualified individuals or enrollees, or the dependents of a qualified 
individual or enrollee, who are eligible for APTC, and whose household 
income is expected to be no greater than 150 percent of the FPL.\59\ As 
discussed in the proposed rule, HHS proposed making this special 
enrollment period available to individuals based on household income 
level because enhanced financial

[[Page 53433]]

assistance provided by the ARP for tax years 2021 and 2022 is such that 
many individuals with a household income no greater than 150 percent of 
the FPL have access to a silver plan with a zero dollar monthly premium 
after the application of APTC.\60\ Specifically, section 9661 of the 
ARP amended section 36B(b)(3)(A) of the Code to decrease the applicable 
percentages used to calculate the amount of household income a taxpayer 
is required to contribute to their second lowest cost silver plan for 
tax years 2021 and 2022.\61\ The applicable percentages are used in 
combination with factors including annual household income and the cost 
of the benchmark plan to determine the PTC amount for which a taxpayer 
can qualify to help pay for a QHP on an Exchange for themselves and 
their dependents.\62\ These decreased percentages generally result in 
increased PTC for PTC-eligible taxpayers, and for those with household 
incomes no greater than 150 percent of the FPL, the new applicable 
percentage is zero. As a result of these changes, many low-income 
consumers with a household income no greater than 150 percent of the 
FPL whose QHP coverage can be fully paid for with APTC have one or more 
options to enroll in a silver-level plan without needing to pay a 
premium after the application of APTC. All of these consumers, if 
eligible to enroll through an Exchange and to receive APTC, will 
qualify for CSRs to enroll in a silver plan with an AV of 94 
percent.\63\
---------------------------------------------------------------------------

    \59\ As noted in the proposed rule, a qualifying individual is 
generally not eligible for a PTC if their household income is below 
100 percent of the FPL, but there are a small number of consumers 
with a household income below 100 percent of the FPL who may qualify 
for APTC. Specifically, section 36B(c)(1)(B) of the Code provides 
that a taxpayer with a household income which is not greater than 
100 percent of the FPL, and who is a lawfully present immigrant and 
ineligible for Medicaid due to their immigration status, may qualify 
for a PTC. Consumers for whom this is the case would be able to 
qualify for the proposed special enrollment period, as well. 
Additionally, HHS notes that because individuals would qualify for 
this special enrollment period based on their household income 
level, household members who apply for coverage with financial 
assistance together generally will all qualify for the special 
enrollment period. However, it is also possible that one household 
member could trigger the special enrollment period based on a change 
in their eligibility for APTC--for example, a household member who 
loses access to an offer of coverage through an employer that is 
considered affordable based on 26 CFR 1.36B-2(c)(3)(v).
    \60\ 86 FR 35169.
    \61\ Public Law 117-2.
    \62\ See 26 CFR 1.36B-3(g) for more information on the 
applicable percentage and its relationship to the PTC.
    \63\ See Sec. Sec.  155.305(g)(2) and 156.420(a).
---------------------------------------------------------------------------

    HHS proposed that this special enrollment period be available at 
the option of the Exchange, in order to allow State Exchanges to decide 
whether to implement it based on their specific market dynamics, needs, 
and priorities. Additionally, HHS proposed that Exchanges on the 
Federal platform will implement this special enrollment period by 
providing qualified individuals who are eligible with a pathway to 
access it through the HealthCare.gov application. HHS proposed that 
implementation in Exchanges on the Federal platform be consistent with 
current special enrollment period policy and operations, in particular 
such that there is no limitation on how often individuals who are 
eligible for this special enrollment period can obtain or utilize 
it.\64\ Consistency in this area will mitigate consumer and other 
stakeholder confusion and simplify Exchange operations. To provide 
Exchanges with flexibility to prioritize ensuring that qualifying 
individuals are able to obtain coverage through this special enrollment 
period quickly following plan selection, or to implement this special 
enrollment period in keeping with their current operations, HHS 
proposed to add a new paragraph at Sec.  155.420(b)(2)(vii) to provide 
that the Exchange must ensure that coverage is effective in accordance 
with paragraph (b)(1) of this section or on the first day of the month 
following plan selection, at the option of the Exchange.
---------------------------------------------------------------------------

    \64\ For example, those who qualify for the special enrollment 
period per Sec.  155.420(d)(8) for qualifying individuals who gain 
or maintain status as an Indian, as defined by section 4 of the 
Indian Health Care Improvement Act, may change their plan selection 
multiple times each month, noting that only the last plan selection 
before the applicable cutoff date for coverage each month will take 
effect for the month in question.
---------------------------------------------------------------------------

    HHS also proposed to add a new paragraph at Sec.  
155.420(a)(4)(ii)(D) to provide that an Exchange must permit eligible 
enrollees and their dependents to change to a silver-level plan, and to 
amend paragraph Sec.  155.420(a)(4)(iii), which provides other plan 
category limitations for other special enrollment periods, to provide 
that these other plan category limitations do not apply to enrollees or 
dependents who qualify for the proposed special enrollment period.\65\ 
Finally, HHS proposed to add a new paragraph at Sec.  
147.104(b)(2)(i)(G) to specify that issuers are not required to provide 
this special enrollment period in the individual market with respect to 
coverage offered outside of an Exchange, because eligibility for the 
special enrollment period is based on eligibility for APTC, and APTC 
cannot be applied to coverage that is not a QHP offered through an 
Exchange.\66\
---------------------------------------------------------------------------

    \65\ This provision would not prevent enrollees who qualify for 
the new special enrollment period from changing to a plan of any 
category through a special enrollment period that provides this 
flexibility, including the special enrollment periods at Sec.  
155.420(d)(4), (8), (9), (10), (12), and (14).
    \66\ See IRC 36B(b)(2)(A), (c)(2)(A)(i).
---------------------------------------------------------------------------

    In consideration of public comments that HHS received, HHS is 
finalizing this monthly special enrollment period for APTC eligible 
consumers with a projected annual household income no greater than 150 
percent of the FPL with coverage effective dates and other eligibility 
parameters as proposed, but is finalizing it so that the special 
enrollment period is only available during periods of time during which 
PTC benefits are available such that the applicable taxpayers' 
applicable percentage is set at zero. HHS is also finalizing a revision 
to the language of proposed paragraph Sec.  155.420(a)(4)(ii)(D) to 
reflect that an enrollee who is adding a qualified individual or 
dependent through this special enrollment period may add the newly-
enrolling household member to their current QHP; or, change to a 
silver-level QHP and add the newly-enrolling household member to this 
silver-level QHP; or, change to a silver-level QHP and enroll the 
newly-enrolling qualified individual or dependent in a separate QHP. In 
consideration of concerns raised by commenters as further discussed 
below, HHS believes that this modification is appropriate to provide 
clarity on options and limitations for enrollees whose household 
members newly enroll through this special enrollment period. In 
particular, this change makes clear that while newly-enrolling 
qualified individuals and dependents are not subject to plan category 
limitations, enrollees with a newly-enrolling dependent or other 
household member may not use the new monthly special enrollment period 
to change to a plan of a different metal level other than a silver-
level QHP to enroll together with their newly-enrolling household 
member, but can stay in the same plan or change to a silver plan to 
enroll together with the newly-enrolling household member. This 
limitation will help to mitigate adverse selection. Also, the revision 
HHS is finalizing makes clear that the limitation that applies to this 
new special enrollment period functions similarly to other plan 
category limitations, such as those at Sec.  155.420(a)(4)(iii)(B) and 
(C) for enrollees who are adding one or more newly-enrolling dependents 
or household members to their Exchange coverage.
    In addition to finalizing the previously stated modifications, HHS 
is also finalizing conforming updates to regulatory text at Sec.  
155.420(a)(4)(ii)(C). HHS proposed to add new paragraph (a)(4)(ii)(D) 
which provided that where an enrollee ``or'' his or her dependents 
qualify for a special enrollment period underSec.  155.420(d)(16) and 
is not enrolled in a silver-level QHP, the Exchange must allow the 
enrollee and their dependents to change to a silver-level QHP if they 
elect to change their QHP enrollment. HHS also proposed to align 
existing regulatory text at Sec.  155.420(a)(4)(ii)(C) with this new 
paragraph, and with the related special enrollment period triggering 
event at Sec.  155.420(d)(6)(i) and (ii), by updating a sentence 
reading ``if an enrollee and his or her dependents'' to ``if an 
enrollee or his or her dependents.'' These edits align with 
corresponding special

[[Page 53434]]

enrollment period triggering events at Sec.  155.420(d) to which plan 
category limitations at (a)(4) refer.
    As discussed in previous rulemaking, certain provisions under Sec.  
155.420(d) defining special enrollment period triggering events refer 
both to a qualified individual and the qualified individual's 
dependents, and use ``or'' (rather than ``and'') to be clear that when 
a qualified individual or enrollee, or his or her dependent, 
experiences the special enrollment period triggering event, all members 
of a household generally may enroll in or change plans together in 
response to the event experienced by one member of the household, 
subject to the limitations in Sec.  155.420(a)(4).\67\ Therefore, HHS 
is finalizing as proposed this change to Sec.  155.420(a)(4)(ii)(C).
---------------------------------------------------------------------------

    \67\ See 78 FR 42262. Also, the 2017 Market Stabilization Rule 
used the phrase ``if an enrollee or his or her dependent'' when 
describing the rule that would be finalized at what is now paragraph 
Sec.  155.420(a)(4)(ii)(A), See 82 FR 18359.
---------------------------------------------------------------------------

    Although HHS proposed revisions to Sec.  155.420(a)(4)(ii)(C) to 
align with the text of triggering event provisions underSec.  
155.420(d), HHS neglected to propose similar but necessary changes to 
the text of Sec.  155.420(a)(4)(ii)(A) and (B). HHS intends to propose 
these changes in future rulemaking. Because this is a technical change, 
HHS does not anticipate that it will impact Exchanges' operations or 
messaging. However, if the change does affect an Exchange's operations, 
CMS will not consider the Exchange to be out of compliance with the 
rule due to interpreting the plan category limitations rules as 
aligning with the related special enrollment period qualifying events 
at Sec.  155.420(d).
    This new monthly special enrollment period will be available at the 
option of the Exchange, as proposed, in order to allow State Exchanges 
to decide whether to implement it based on their specific market 
dynamics, needs, and priorities. HHS is also finalizing that Exchanges 
on the Federal platform will implement this special enrollment period 
by providing qualified individuals who are eligible with a pathway to 
access it through the HealthCare.gov application.
    The APTC benefit changes under the ARP make affordable coverage 
available to more uninsured people. However, as discussed in the 
proposed rule, if past trends continue, HHS believes that some 
consumers who qualify for these benefits under the ARP may continue to 
forgo enrollment in premium-free coverage due to a lack of awareness of 
the opportunity to enroll or a misconception about what the coverage 
would cost, and that low-income consumers who have lacked coverage for 
more than a year may be especially difficult to reach.\68\ Therefore, 
while HHS will undertake extensive outreach and engagement efforts to 
promote enrollment during the open enrollment period for 2022 coverage 
and to help ensure consumer awareness of existing special enrollment 
periods for which they may qualify, given the established challenges 
with promoting awareness of access to coverage among low-income 
consumers, HHS believes additional enrollment opportunities for low-
income consumers are appropriate and in the best interest of low-income 
consumers. Additionally, as noted in the proposed rule, the monthly 
special enrollment period policy would align with E.O. 14009, which 
requires Federal agencies to identify and appropriately address 
policies that create barriers to accessing ACA coverage, including 
access through mid-year enrollment.
---------------------------------------------------------------------------

    \68\ Key Facts about the Uninsured Population: Kaiser Family 
Foundation; Nov. 6, 2020, https://www.kff.org/uninsured/issue-brief/key-facts-about-the-uninsured-population/.
---------------------------------------------------------------------------

    In addition to providing certain low-income individuals with 
additional opportunities to newly enroll in free or low-cost coverage 
that is available to them, HHS believes this special enrollment period 
may help consumers who lose Medicaid coverage to regain health care 
coverage. While, as discussed in the proposed rule, these consumers can 
already qualify for a special enrollment period due to their loss of 
Medicaid coverage per Sec.  155.420(d)(1), and may also have access to 
other flexibilities, whether members of this group of consumers are 
able to benefit from existing enrollment periods and flexibilities may 
vary, and may require Exchanges to assess eligibility on a case-by-case 
basis. This may also require consumers who generally have low household 
income and who therefore may face other barriers to accessing health 
care coverage, such as low health insurance literacy levels and lack of 
internet access, to be aware of the potential for an extended 
enrollment timeframe and to request it from their Exchange. As also 
discussed in the proposed rule, after the COVID-19 PHE comes to an end, 
HHS expects to see a higher than usual volume of low-income individuals 
transitioning from Medicaid coverage to the Exchanges for at least 
several months as states begin to catch up on a backlog of 
redeterminations and terminations for Medicaid beneficiaries after 
having generally suspended Medicaid disenrollments since March 2020 to 
comply with the continuous enrollment provisions in section 6008(b)(3) 
of the Families First Coronavirus Response Act.\69\ Therefore, while 
this special enrollment period would not be limited to qualified 
individuals who have lost Medicaid coverage, HHS noted that providing 
access to a monthly enrollment opportunity could help some consumers 
who lose Medicaid coverage to regain health insurance coverage, 
especially those who do not initially realize that loss of Medicaid is 
a special enrollment period triggering event. This special enrollment 
period could help mitigate the risk of long-term coverage disruptions 
due to the potentially high volume of Medicaid terminations following 
the end of the COVID-19 PHE, by giving qualifying individuals who lose 
Medicaid and who may miss or misunderstand notifications about their 
coverage loss more time to enroll in Exchange coverage.\70\
---------------------------------------------------------------------------

    \69\ Public Law 116-127. These provisions enabled states to 
receive the temporary Federal Medical Assistance Percentage increase 
under that section.
    \70\ See 86 FR 35170 for discussion of this issue in the 
proposed rule.
---------------------------------------------------------------------------

    As proposed, Exchanges that elect to provide this special 
enrollment period would have the option to require consumers to submit 
documentation to confirm their eligibility in accordance with their 
pre- or post-enrollment verification programs. However as discussed in 
the proposed rule, CMS will determine eligibility for this special 
enrollment period in Exchanges on the Federal platform based on 
consumers' attested household income. Once an Exchange on the Federal 
platform grants this special enrollment period to a consumer based on 
their attested household income, the Exchange will then verify 
applicants' projected annual household income consistent with 45 CFR 
155.320(c).\71\ Specifically, CMS will continue to require consumers 
whose projected annual household income cannot be verified using a 
trusted electronic data source to submit documentation to confirm their 
annual income (currently approved under OMB control number 0938-1207/
Expiration date February 29, 2024). CMS will not require submission of 
household income documentation prior to enrollment, and will not pend 
the enrollment as part of a pre-enrollment verification process, in 
part because CMS's experience administering the verification processes 
for Exchanges on the Federal platform in accordance with Sec.  
155.320(c) shows that submitting documentation quickly to verify income 
can be especially onerous for those at

[[Page 53435]]

the lowest income levels who may not have ready access to a computer or 
smartphone, the internet, a copier or scanner, or funds for postage.
---------------------------------------------------------------------------

    \71\ Section 1411(c)(3) of the ACA.
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    In addition to outreach and education efforts, HHS noted that HHS 
believed that applying plan category limitations to this special 
enrollment period would help to mitigate adverse selection because it 
would limit the ability of enrollees to change to a higher metal level 
plan based on a new health care need and then change back to a silver 
plan once the health issue is resolved. However, HHS acknowledged that 
enrollees may still choose to enroll in a silver-level plan that is 
more expensive than their zero dollar option, and, while HHS believes 
that enrollees will likely be deterred from changing plans mid-year 
because such a change will generally mean they lose progress they have 
made toward meeting their deductible and other accumulators, HHS 
acknowledged that through a monthly special enrollment period, 
enrollees could change plans mid-year based on differences in provider 
networks or prescription drug formularies. HHS sought comment on this 
proposal and on whether, alternatively, plan category limitations 
should not be applied. For example, HHS sought comment on whether to 
instead exempt the proposed special enrollment period at Sec.  
155.420(d)(16) from plan category limitations in order to alleviate the 
implementation burden on Exchanges, or due to a lack of concern that 
eligible enrollees would use the proposed special enrollment period to 
change to a plan category other than silver.
    HHS also sought comment on the degree to which the risk of adverse 
selection increases due to the fact that not all qualifying individuals 
who have a household income no greater than 150 percent of the FPL and 
whose applicable percentage is therefore set at zero will have access 
to a silver plan with a zero-dollar premium, and therefore might be 
more inclined to enroll in coverage due to a health care need and end 
coverage once this need has been met rather than pay even a relatively 
small premium.
    HHS estimated that this adverse selection risk may result in 
issuers increasing premiums by approximately 0.5 to 2 percent, and a 
corresponding increase in APTC outlays and decrease in income tax 
revenues of approximately $250 million to $1 billion, when the enhanced 
APTC provisions of the ARP are in effect (currently, plan year 2022). 
HHS described this impact in more detail in the regulatory impact 
analysis (RIA) section in the proposed rule.\72\ HHS also discussed 
some of the reasons adverse selection can be mitigated, but not 
altogether eliminated.
---------------------------------------------------------------------------

    \72\ See the proposed rule at 86 FR 35206 through 35207 for more 
detail on this discussion.
---------------------------------------------------------------------------

    HHS sought comment from health insurance issuers and other 
stakeholders on its position that adverse selection related to this 
special enrollment period will be mitigated by the availability of free 
or very low-cost coverage with a 94 percent AV and the application of 
plan category limitations to this new special enrollment period, or 
whether the adverse selection risk created by this new special 
enrollment period cannot be sufficiently mitigated such that its 
creation may result in significant rate increases. HHS also solicited 
comment regarding whether health insurance issuers and other 
stakeholders have concerns that the policy could cause any adverse 
selection among higher-income individuals with variable hours and 
income. HHS sought comment on whether the requirement that Exchanges 
verify applicants' projected annual household income post-enrollment, 
consistent with 45 CFR 155.320(c), is sufficient, or if there are other 
measures HHS should put in place to further protect program integrity. 
HHS also solicited comment on estimated implementation burdens for 
Exchanges that elect to provide this additional enrollment opportunity, 
including whether implementation of this special enrollment period will 
be possible in time for consumers to benefit from it during the 2022 
plan year. HHS requested comment on whether issuers will have 
sufficient time to adjust rate filings to account for any increased 
risk and whether state regulators will have sufficient time to review 
those filings after a final rule is issued.
    HHS further requested comment on whether this proposed special 
enrollment period should be available indefinitely (as proposed), or 
whether it should be time-limited. For example, HHS sought comment on 
whether HHS should finalize the proposed special enrollment period to 
be available only for coverage during years when enhanced APTC benefits 
are also available, as provided by the section 9661 of the ARP or any 
subsequent statute. Finally, HHS requested comment on strategies for 
providing outreach and education for consumers who may be eligible for 
this special enrollment period, in particular to help qualifying 
individuals understand and take advantage of the free or very low-cost 
coverage that is available to them. Within this group, HHS requested 
comments on strategies for educating consumers who qualify to enroll in 
a 94 percent AV silver plan about the benefits of enrolling in such a 
plan even if they are required to pay a small premium, as opposed to 
electing a premium-free bronze plan with a lower AV.
    The following is a summary of the comments received and HHS's 
responses regarding the proposals related to the monthly special 
enrollment period for APTC-eligible qualified individuals with a 
household income no greater than 150 percent of the FPL and whose 
applicable percentage therefore is zero (Sec.  155.420(d)(16)).
    Comment: Many commenters supported the proposal to provide a 
monthly special enrollment period to APTC-eligible individuals with 
projected annual household income no higher than 150 percent of the 
FPL, and a number of them agreed with and expanded upon HHS's position 
that it would positively impact health equity. For example, several 
commenters agreed that lower-income individuals often face greater 
barriers to enrollment, such as a lack of an internet connection or 
other computer equipment, limited available time due to working 
multiple jobs, and LEP. Commenters also noted that this group of 
consumers is disproportionately made up of people of color. Several 
commenters noted that they expected this special enrollment period to 
be especially helpful to individuals in their area whose income is 
under 100 percent of the FPL, but who do not qualify for Medicaid 
because of their immigration status, and who therefore may qualify for 
APTC. They noted that this group can be difficult to reach through 
outreach and education, and therefore may benefit significantly from 
additional opportunities to enroll throughout the year. Several 
commenters voiced support for outreach and education to promote 
awareness of this special enrollment period as well as other special 
enrollment period qualifying events. Some added that currently-
available enrollment opportunities are underutilized due to their 
complexity and due to the challenges associated with learning about and 
enrolling in coverage. Some commenters encouraged CMS to focus outreach 
and education efforts on vulnerable communities, individuals with LEP, 
immigrants, and the LGBTQ+ community. A few commenters specified 
potential outreach strategies, such as engaging schools and community 
health workers.
    Response: As discussed in the proposed rule, HHS agrees that

[[Page 53436]]

providing a monthly enrollment opportunity for certain low-income 
consumers will increase the likelihood that more of these consumers are 
able to access coverage in spite of barriers that this group, which 
disproportionately includes people of color, often face. A May 2021 
report by the Kaiser Family Foundation estimates that there are 
approximately 10.9 million uninsured people who are both eligible for 
coverage through the Exchange and eligible for subsidies under the ACA 
and ARP.\73\ The report found that compared to the general non-elderly 
population in the U.S., this population is more likely to be Hispanic, 
people with a high school diploma or less, and young adults ages 19 to 
34. Additionally, it found that uninsured people eligible for subsidies 
are more likely to live in rural areas and lack internet access than 
the general non-elderly population in the U.S. The report also noted 
that the estimated 6 million uninsured people who may be eligible for a 
zero-dollar premium plan through the Exchange after application of APTC 
are more likely to be non-English speakers at home. Providing a monthly 
enrollment opportunity will give this population of uninsured people 
more opportunities to access coverage and provide more time for 
targeted outreach to consumers who may be harder to reach and enroll, 
such as those who are non-English speakers at home. HHS agrees with 
commenters' support for robust outreach and education efforts targeted 
in particular to ensuring awareness and understanding of this special 
enrollment period and other enrollment opportunities, and will continue 
to work with stakeholders to develop and optimize targeted messaging.
---------------------------------------------------------------------------

    \73\ Kaiser Family Foundation. A closer look at the uninsured 
marketplace eligible population following the American Rescue Plan 
Act. May 2021. https://www.kff.org/private-insurance/issue-brief/a-closer-look-at-the-uninsured-marketplace-eligible-population-following-the-american-rescue-plan-act/.
---------------------------------------------------------------------------

    Comment: Some commenters who supported the proposed special 
enrollment period were skeptical that it would pose a significant 
adverse selection risk, citing as mitigating factors the high rate of 
subsidization for qualifying individuals and the likelihood that 
younger, healthier individuals would enroll. Many of these commenters 
also cited comparable state experiences as evidence of the low 
likelihood of adverse selection and high likelihood of a positive 
impact on reducing uninsured rates should CMS finalize the proposed 
special enrollment period. Some commenters said that State Exchange 
data on risk factors associated with enrollees who accessed coverage 
through a special enrollment period, including the special enrollment 
period that State Exchanges provided during the 2020 or 2021 plan years 
due to the COVID-19 pandemic, indicated that these enrollees did not 
pose significant additional risk. One of these commenters asked that 
CMS analyze data on special enrollment period enrollees in states that 
use the HealthCare.gov platform, and suggested that such analysis would 
yield a similar result.
    For example, multiple commenters cited the Massachusetts State 
Exchange's enrollment opportunity for individuals with a household 
income no higher than 300 percent of the FPL, and the ability of 
consumers up to 200 percent of the FPL to enroll in the Basic Health 
Program year-round in Minnesota and New York. Specifically, one 
commenter noted that in Massachusetts, consumers with household incomes 
up to 300 percent of the FPL may qualify for coverage with low or no 
monthly premiums, low copays, and no deductibles through the state's 
Health Connector's ConnectorCare program, and that these individuals, 
once determined eligible for ConnectorCare, qualify for a 60-day 
special enrollment period to enroll in coverage at any point during the 
plan year. The commenter added that in spite of this flexible 
enrollment opportunity, the state has not experienced individual market 
adverse selection within the program, and enrollment in the program has 
remained stable over time. In fact, the commenter noted that the 
average risk score for insurers participating in ConnectorCare is lower 
than the risk score for insurers in their individual market outside of 
ConnectorCare. Finally, the commenter noted a low rate of changes in 
plans among current enrollees during the mid-2021 enrollment period 
that the state established due to the COVID-19 pandemic, adding that 
this experience suggests less risk of adverse selection due to current 
enrollees changing plans in response to an emerging medical need.\74\
---------------------------------------------------------------------------

    \74\ Specifically, the commenter stated that 0.23 percent of 
Health Connector members changed plans from June to July 2021.
---------------------------------------------------------------------------

    Another commenter cited reports that indicated issuers had not 
found evidence of adverse selection due to the ability of individuals 
with a household income up to 200 percent of the FPL to enroll year-
round in a Basic Health Program in New York or Minnesota.\75\ This 
commenter also cited a report that suggested, based on data from states 
that offered a mid-year special enrollment period in 2020 due to the 
COVID-19 pandemic, that these enrollment periods resulted in 
individuals enrolling who were younger and healthier than those who 
enrolled during the annual open enrollment period.\76\ Another 
commenter provided data from DC Health Link, the Washington, DC State 
Exchange, that indicated that a higher percentage of younger enrollees 
accessed coverage through the mid-2020 special enrollment period than 
through the annual open enrollment period.
---------------------------------------------------------------------------

    \75\ See Improving the Affordability of Coverage through the 
Basic Health Program in Minnesota and New York, Kaiser Family 
Foundation, Dec. 8, 2016, available at https://www.kff.org/report-section/improving-the-affordability-of-coverage-through-the-basic-health-program-in-minnesota-and-new-york-issue-brief/ .
    \76\ See Many States with COVID-19 Special Enrollment Periods 
See Increase in Younger Enrollees, The Commonwealth Fund, Jan. 28, 
2021, available at https://www.commonwealthfund.org/blog/2021/many-states-covid-19-special-enrollment-periods-see-increase-younger-enrollees.
---------------------------------------------------------------------------

    However, some commenters did not support finalizing this special 
enrollment period, primarily due to concerns that it posed significant 
adverse selection risks. Several of these commenters said that in the 
proposed rule, CMS significantly underestimated the increase in rates 
due to adverse selection that would result from the proposed special 
enrollment period. Commenters also raised the concern that qualifying 
individuals would learn about their enrollment opportunity due to 
experiencing a health event, and a few also worried that consumers 
would decline to renew coverage once a medical need had ended, or lose 
coverage because of the need to pay even a relatively small premium. 
Commenters also voiced concerns specifically about adverse selection 
the proposed special enrollment period could create for plans with 
broad provider networks due to the potential for qualifying enrollees 
to change plans mid-year to access a specific provider or prescription 
drug. Some of these commenters were concerned that health care 
providers would encourage current enrollees to change plans based on an 
emerging health care need, in order to access coverage for items or 
services furnished by a provider that does not participate in the 
consumer's current plan's network. Several commenters added that due to 
these adverse selection risks, the proposed special enrollment period 
would result in narrower networks and fewer choices for consumers.

[[Page 53437]]

    Other concerns included the likelihood that adverse selection would 
drive up rates and that these rate increases would disproportionately 
impact unsubsidized consumers. Additionally, several commenters agreed 
that, as noted in the proposed rule, adverse selection and related 
increases in individual health insurance premiums would vary 
significantly by state based on specific market conditions such as 
Medicaid expansion status. Several commenters, including some that 
supported the proposal, asked that CMS monitor the individual market 
for impacts of adverse selection, and one commenter asked us to engage 
in additional rulemaking if evidence of significant adverse selection 
is found. A few commenters were also concerned that the applicable risk 
adjustment methodology would not adequately compensate issuers for 
individuals who enroll through the special enrollment period and, as a 
result, have partial-year or short enrollment terms.
    Response: HHS agrees that, in many cases, special enrollment 
periods may encourage consumers who are younger and healthier than 
average to enroll. Additionally, HHS acknowledges that some Exchanges 
that have expanded enrollment opportunities for consumers with a 
projected annual household income below a certain threshold have not 
experienced significant negative impacts from adverse selection. 
However, HHS appreciates concerns that the risk of adverse selection 
may vary significantly based on market conditions specific to different 
Exchanges, and HHS's goal is also to achieve a balanced approach that 
takes into account these varying conditions as much as possible. 
Therefore, HHS is finalizing this special enrollment period as proposed 
but limiting it to be available only during periods of time during 
which APTC benefits are available such that the applicable taxpayers' 
applicable percentage is set at zero.
    HHS believes that the time-limited nature of this special 
enrollment period, and providing Exchanges with flexibility in terms of 
whether to implement it, will help to mitigate concerns about adverse 
selection, especially when combined with robust outreach and education 
efforts to maximize the number of qualifying individuals who gain 
coverage through the special enrollment period based on an 
understanding of its availability as opposed to due to an emerging 
health care need.
    HHS also appreciates concerns about the impact of rate increases on 
unsubsidized enrollees and will work with stakeholders to monitor the 
markets to track potential adverse selection impacts of the special 
enrollment period. Currently, however, HHS is of the view that the 
enhanced benefits available under the ARP mitigate adverse selection 
risk such that premiums for subsidized and unsubsidized consumers will 
rise no more than 0.5 to 2 percent as a result of this special 
enrollment period. In assessing the impact on unsubsidized consumers, 
HHS also considered that under section 9661 of the ARP, consumers may 
qualify for premium tax credits at any point at which they would be 
required to contribute more than 8.5 percent of their annual household 
income to their benchmark health insurance plan. However, HHS will work 
with stakeholders to monitor and evaluate the impacts of this policy on 
individuals who do not qualify for PTC (or who qualify for a maximum 
amount of zero dollars of PTC), including consideration of possible 
approaches to address them as may be necessary.
    Finally, HHS notes that the HHS-operated risk adjustment 
methodology added enrollment duration factors to the adult risk 
adjustment models starting with the 2017 benefit year.\77\ These 
enrollment duration factors are used in the calculation of adult 
enrollee risk scores under the state payment transfer formula to 
account for additional risk associated with enrollees with partial-year 
enrollment.\78\ They do so through a set of 11 enrollment duration 
binary indicatory variables that signify that an enrollee had exactly 
one to 11 months of enrollment in a given plan.\79\ The value of these 
indicators decreases monotonically from one to 11 months, reflecting 
the increased annualized costs associated with fewer months of 
enrollment. Adult enrollees who enrolled during this special enrollment 
period will receive the applicable risk adjustment enrollment duration 
factor in the risk score calculation. While HHS continues to evaluate 
the current enrollment duration factors, HHS generally disagrees with 
comments asserting the risk adjustment methodology does not adequately 
address partial year enrollees.\80\
---------------------------------------------------------------------------

    \77\ See 81 FR at 94071-94074. Since the 2017 benefit year, HHS 
has operated the risk adjustment program in all 50 states and the 
District of Columbia. Massachusetts ran its own risk adjustment 
program for benefit years 2014-2016. See, e.g., page 5 of the March 
2016 Risk Adjustment Methodology White Paper (March 24,2016), 
available at https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/RA-March-31-White-Paper-032416.pdf.
    \78\ For more information on the enrollment duration factors, 
see 85 FR at 7103, 7104.
    \79\ See, e.g., Enrollment Duration Factors in Table 2: Final 
Adult Risk Adjustment Factors for 2017 Benefit Year, 81 FR at 94088; 
and Enrollment Duration Factors in Table 1: Final Adult Risk 
Adjustment Factors for 2022 Benefit Year, available at https://www.cms.gov/files/document/updated-2022-benefit-year-final-hhs-risk-adjustment-model-coefficients-clean-version-508.pdf.
    \80\ HHS proposed but did not finalize updates to the enrollment 
duration factors in the 2022 Payment Notice. See 86 FR at 24151-
24162. Also see 85 FR at 78581-78586.
---------------------------------------------------------------------------

    Comment: Some commenters voiced the concern that providing this 
open-ended enrollment opportunity would undermine the goal of 
continuous coverage, decreasing issuers' ability to connect with 
beneficiaries and making it less likely that certain qualifying 
consumers would take advantage of preventive care. A few added the 
concern that consumers changing plans mid-year might not realize their 
deductibles and other accumulators would reset, and unexpectedly would 
end up paying more out-of-pocket than if they had remained enrolled in 
the same plan. Some commenters were concerned about individuals 
attesting to a lower-than-accurate annual household income in order to 
gain coverage, and one commenter added the concern that these consumers 
would unexpectedly have to pay back APTC at tax time for which they 
were not eligible based on actual annual household income. Some 
commenters suggested that qualifying enrollees might decide to change 
plans in spite of the knowledge that their accumulators would reset, 
with one commenter noting that the relatively low deductible and other 
cost-sharing requirements for a plan with a 94 percent AV were not a 
sufficient incentive for enrollees to preserve progress they had made 
towards meeting maximum cost-sharing requirements. Finally, a few 
commenters said that HHS does not have statutory authority to establish 
the proposed special enrollment period, because section 1311(c)(6) of 
the ACA refers to specific qualifying events and HHS has limited 
authority to establish special enrollment periods that are not included 
in this list.
    Response: HHS disagrees that this special enrollment period 
opportunity will discourage eligible consumers from maintaining 
continuous coverage once they have learned about and been able to 
access the free or low-cost coverage available to them. In HHS's view 
and based on State Exchanges' experiences, it is more likely that 
consumers who newly gain access to free or low-cost coverage through 
this special enrollment period will maintain such coverage because of 
its affordability and comprehensiveness. HHS appreciates

[[Page 53438]]

concerns that consumers who are enrolled in Exchange coverage may not 
be aware that changing plans mid-year will cause their deductible and 
other accumulators to reset, and HHS will continue working to develop 
and enhance messaging to make consumers and other stakeholders, such as 
enrollment assisters, understand that this is the case. HHS disagrees 
that qualifying enrollees with a 94 percent AV silver plan will not 
have an incentive to preserve progress they make during the year toward 
meeting their deductible and other cost-sharing requirements, because 
for enrollees who qualify for income-based CSRs, the deductible and 
cost-sharing requirements under the plan variation is based on 
household income, and such amounts therefore likely do not represent 
insignificant amounts relative to that household income.
    HHS notes that consumers who apply for Exchange coverage on 
HealthCare.gov are required to attest multiple times, at the beginning 
and end of the application process, that the information they have 
provided is correct.\81\ As part of the implementation of this special 
enrollment period, HHS will also continue to emphasize to applicants 
and current enrollees the importance of attesting to an accurate and 
up-to-date estimate of their annual household income. Additionally, 
when applicants attest to a household income amount that CMS cannot 
verify using a trusted data source, HHS generates an income 
``inconsistency'' explaining that this is the case and requiring the 
consumer to submit additional information. This process involves 
extensive outreach and education, which helps ensure that consumers 
understand the importance of attesting to an accurate household income 
amount, including how their attested household income informs the APTC 
that they receive. Further, once the special enrollment period has been 
implemented, HHS will monitor uptake and the occurrence of income 
inconsistencies among qualifying individuals, and work with 
stakeholders as appropriate to address instances of potential abuse. 
Finally, as discussed in prior rulemaking, section 1311(c) of the ACA 
requires the Secretary to establish the minimum uniform enrollment 
periods across all Exchanges; and section 1321(a) of the ACA provides 
broad authority for the Secretary to issue regulations setting 
standards to implement the statutory requirements related to Exchanges, 
QHPs, and other standards under title I of the ACA.\82\
---------------------------------------------------------------------------

    \81\ For example, before signing and submitting their 
application, all consumers see the statement, ``I'm signing this 
application under penalty of perjury, which means I've provided true 
answers to all of the questions to the best of my knowledge. I know 
I may be subject to penalties under Federal law if I intentionally 
provide false information.''
    \82\ See, for example, 77 FR 18310, 18312 (Mar. 27, 2012), and 
78 FR 42160, 42162 (July 15, 2013).
---------------------------------------------------------------------------

    Comment: Several commenters raised the concern that HHS 
underestimated rate increases due to the proposed special enrollment 
period, and that issuers had not incorporated this risk into their 
rates for the 2022 plan year. However, no commenters recommended giving 
issuers an additional opportunity to adjust rates--one did not believe 
such an opportunity was needed, and the others did not believe that 
there was enough time for issuers to submit and regulators to review 
updated rates before the 2022 plan year. One commenter requested that 
HHS delay making the proposed special enrollment period available until 
the 2023 plan year in order to provide issuers with adequate time to 
incorporate related risk into their rates. Some commenters who did not 
support the special enrollment period suggested that, if it were to be 
finalized, it should be limited to the first few months of the year. 
These commenters noted that the tax season could be leveraged to 
promote the special enrollment period, and that this limitation was 
reasonable because consumers should be able to accurately predict their 
annual income once they have completed the Federal income tax filing 
process.
    Response: Because of the benefit to consumers who are eligible for 
free or very low-cost coverage provided by enhanced APTC through the 
ARP from having additional opportunities to enroll in Exchange coverage 
while this enhanced assistance is in place, HHS is finalizing the 
special enrollment period to be available for the 2022 plan year. 
However, HHS is limiting it to be available only during periods of time 
during which APTC benefits are available such that the applicable 
taxpayers' applicable percentage is set at zero. Further, HHS 
appreciates concerns that issuers and other stakeholders benefit from 
having as much time as possible to adjust rates and other planning 
processes based on upcoming developments. However, in some instances, 
particularly in the context of a PHE such as the COVID-19 pandemic, HHS 
believes that rapid responses are warranted and necessary to help 
ensure as many individuals as possible can access basic necessities 
such as health insurance coverage and care. Further, HHS believes it is 
appropriate to provide this special enrollment period for the full 
duration of time that enhanced APTC benefits are available in order to 
maximize opportunities for qualifying individuals to enroll. Finally, 
while the Federal income tax filing process may be helpful for some 
consumers as a way to estimate their annual household income, HHS notes 
that this is not necessarily the case, because the Federal income tax 
filing process is based on prior year household income, and applicants 
for future or current year Exchange coverage with financial assistance 
must estimate their household income for the upcoming or current 
coverage year, and annual household income can fluctuate significantly 
from one year to another.
    Comment: Several commenters that opposed the special enrollment 
period due to concerns about adverse selection and resulting rate 
increases said that, if finalized, they strongly supported applying 
plan category limitations as proposed. Some of these commenters also 
recommended that qualifying individuals be limited even further; for 
example, to a specific plan or plans such as the second lowest-cost or 
lowest-cost silver plan available to them, or to a plan with an AV of 
94 percent. Some commenters expressed stronger concerns about adverse 
selection due to enrollees changing plans based on provider network 
rather than based on metal level. Some commenters asked that only 
currently uninsured consumers be permitted to use the special 
enrollment period, or that consumers only be permitted to access the 
special enrollment period once per year, or if they had not yet 
received any APTC for the year, in order to help mitigate adverse 
selection.
    Response: As discussed in the proposed rule, HHS believes that 
applying plan category limitations to this special enrollment period 
will help to mitigate adverse selection, because it will limit the 
ability of enrollees to change to a higher metal level plan based on a 
new health care need and then change back to a silver plan once the 
health issue is resolved. Further, HHS notes that all consumers who 
qualify for this special enrollment period and choose to enroll in a 
silver-level plan will gain coverage with a 94 percent AV based on 
their projected annual household income level. HHS does not believe 
that it is necessary to limit enrollees to one or several specific 
silver-level plan(s), because HHS believes that enrollees who are 
interested in changing plans during the year will generally be deterred 
as such a change will often mean they lose progress they have made 
toward meeting their deductible and other

[[Page 53439]]

accumulators. Additionally, requiring this type of restriction, 
limiting use of the special enrollment period to once per year per 
consumer, or limiting the special enrollment period to consumers who 
had not yet received APTC during the applicable plan year, would impose 
additional complexity on Exchanges to the point that implementation 
would not be possible in time for the 2022 plan year. However, in 
consideration of these concerns, HHS is clarifying at Sec.  
155.420(a)(4)(ii)(D) that an enrollee who is adding a qualified 
individual or dependent may add the newly-enrolling household member to 
their current QHP; or, change to a silver-level QHP and add their 
newly-enrolling household member to this silver-level QHP; or, change 
to a silver-level QHP and enroll the newly-enrolling qualified 
individual or dependent in a separate QHP. HHS believes that this 
language is appropriate to provide clarity on options and limitations 
for enrollees whose household members newly enroll through this special 
enrollment period. In particular, this language clarifies that, while 
newly-enrolling qualified individuals and dependents are not subject to 
plan category limitations, current enrollees with a newly-enrolling 
dependent or other household member may not use this new special 
enrollment period to change to a plan of any metal level along with 
their newly-enrolling household member.
    Comment: One commenter misunderstood the proposal to newly permit 
enrollees to change from one metal level to another, and raised 
concerns about how such changes could affect enrollment in standalone 
dental plans. Another commenter asked for clarification that 
individuals will still qualify for the other special enrollment periods 
only when they experience a special enrollment period qualifying event 
that makes them eligible.
    Response: HHS clarifies that this proposal, and the resulting final 
rule, do not newly permit Exchange enrollees to change to a plan of a 
different metal level or make policy changes to plan category 
limitations for existing special enrollment periods. Rather, the new 
rule establishes a plan category limitation to address a newly-created 
special enrollment period triggering event and makes a small technical 
clarification to the preceding paragraph, as further discussed earlier 
in this preamble. Further, HHS has discussed and extensively 
investigated concerns about accidental standalone dental plan 
disenrollment due to a change in medical QHP and has not found this to 
be a problem in practice for HealthCare.gov enrollees, who are always 
offered the opportunity to select or re-select their standalone dental 
plan after completing medical QHP selection. Finally, HHS clarifies 
that the new monthly special enrollment period does not change or 
expand eligibility requirements for other special enrollment period 
qualifying events at Sec.  155.420(d).
    Comment: A few commenters asked that HHS require pre-enrollment 
verification of income for consumers to qualify for this special 
enrollment period. However, several commenters supported the proposal 
not to require such verification, and one commenter encouraged HHS to 
monitor even post-enrollment income verification to ensure that it did 
not present a significant barrier to low-income consumers seeking to 
enroll in coverage.
    Response: As discussed in the proposed rule, HHS believes that the 
post-enrollment income verification process already in place consistent 
with Sec.  155.320(c) is sufficient to ensure program integrity, 
because consumers who do not verify their attested household income 
through the post-enrollment verification process will have their APTC 
adjusted accordingly. Further, HHS agrees with commenters' concerns 
that imposing a pre-enrollment income verification process would 
prevent eligible consumers from accessing coverage through the special 
enrollment period, especially those who represent marginalized 
communities that face barriers to accessing documentation quickly and 
those who are younger and healthier, and therefore, have less incentive 
to devote time to a complex enrollment process.
    Comment: Some commenters that did not have adverse selection 
concerns asked HHS not to finalize the proposed special enrollment 
period to be limited to the period of time during which enhanced APTC 
is available per ARP or other statutory authority. These commenters' 
position was that even without the ARP's enhanced APTC, consumers with 
household income below a certain FPL are heavily subsidized enough to 
mitigate adverse selection. However, commenters with concerns about 
adverse selection, including some who otherwise supported offering the 
special enrollment period as proposed, requested that, if finalized, 
CMS limit its availability to periods when APTC is available at the 
level provided for under the ARP.
    Response: To an extent, HHS agrees with certain commenters that 
some markets could see limited effects of adverse selection if the 
proposed special enrollment period were available permanently, 
depending on individual market conditions. However, as discussed in the 
proposed rule, HHS believes that that access to 94 percent AV coverage 
premium-free or at very low-cost after application of APTC will help to 
mitigate risk of adverse selection, because qualifying individuals will 
not have an incentive not to enroll or to end coverage when health care 
services are no longer needed. HHS also agrees with commenters' 
concerns that even a relatively small premium could introduce 
additional risk of adverse selection. Therefore, HHS is finalizing this 
special enrollment period to be available only during periods of time 
during which APTC benefits are available such that the applicable 
taxpayers' applicable percentage is set at zero, such as during tax 
years 2021 and 2022, as provided by section 9661 of the ARP.
    Comment: Several issuers provided recommendations for alternatives 
to the proposed special enrollment period that would assist consumers 
with transitioning between Medicaid and Exchange coverage--for example, 
a few commenters suggested providing an extended loss of coverage 
special enrollment period window to those who lose Medicaid coverage 
due to the end of the COVID-19 PHE. Other suggestions included 
establishing policy similar to a Medicaid waiver in New York under 
section 1115 of the Social Security Act that allows issuers who are 
Medicaid Managed Care Organizations (MCOs) to assist consumers with re-
enrollment, and suggested that HHS permit MCOs to auto-enroll consumers 
eligible to transition into a corresponding QHP, or generally 
facilitate enhanced communication between issuers and enrollees to 
allow issuers to provide more support for transitions. One commenter 
suggested that instead of providing this special enrollment period, HHS 
automatically enroll all qualifying individuals into coverage with the 
option to opt out. One commenter supported the proposed special 
enrollment period but also offered suggestions for improving consumers' 
transition from Medicaid to Exchange coverage. Another commenter who 
supported the proposed special enrollment period requested that, in 
addition, HHS also provide guidance in rulemaking on an ``Automatic 
Retention'' program that would automatically enroll individuals who 
miss premium payments into a plan available without premiums after 
application of the APTC until they lose eligibility or cancel their 
plan.

[[Page 53440]]

    Response: As discussed in the proposed rule, HHS believes that 
providing a special enrollment period for all APTC-eligible individuals 
with a household income up to 150 percent of the FPL, and whose 
applicable percentage is therefore set at zero, will be an important 
tool to help these consumers access coverage. However, HHS also 
appreciates the interest in developing additional strategies for 
improving the transition from Medicaid to Exchange coverage and 
encouraging newly enrolling individuals and current enrollees to 
maintain continuous coverage, and HHS will continue to work with 
stakeholders in the future to do so.
    Further, HHS notes that there are other existing special enrollment 
periods that may support Medicaid beneficiaries' transition to Exchange 
coverage at the end of the COVID-19 PHE. For example, if state Medicaid 
programs or Medicaid MCOs experience delays in delivering notices 
informing beneficiaries that their Medicaid eligibility is terminating, 
Exchanges currently have flexibility and authority to provide 
additional relief for consumers who lose Medicaid coverage. As 
discussed in the proposed rule,\83\ Exchanges could provide consumers 
who do not timely learn of their opportunity to enroll in Exchange 
coverage with additional time to enroll in health coverage based on the 
regulation at Sec.  155.420(c)(5), recently finalized in part 2 of the 
2022 Payment Notice final rule. Additionally, Sec.  155.420(d)(9) 
provides a special enrollment period to consumers who demonstrate to 
the Exchange, in accordance with guidelines issued by HHS, the 
individual meets exceptional circumstances as the Exchange may provide. 
In the FFE and FF-SHOP Enrollment Manual, which provides operational 
policy and guidance on key topics related to eligibility and enrollment 
for FFEs and SBE-FPs, HHS explains that an individual may qualify for a 
special enrollment period through authority at Sec.  155.420(d)(9) if 
their enrollment or non-enrollment in a QHP (or that of their 
dependent) is the result of an exceptional circumstance, as determined 
by the Secretary.\84\ In 2018, HHS issued guidance to provide that an 
individual or their dependents who are affected by an emergency or 
major disaster that is recognized with a formal declaration from the 
Federal Emergency Management Agency (FEMA) and that prevents the 
qualified individual or their dependents from enrolling during the 
annual open enrollment period or during the enrollment window for a 
special enrollment period for which they qualified will be eligible for 
an Exceptional Circumstances special enrollment period under Sec.  
155.420(d)(9). If needed, HHS will similarly provide a special 
enrollment period to former Medicaid beneficiaries who are prevented 
from enrolling in Exchange coverage by challenges they experience as a 
result of the end of the PHE, and HHS notes that State Exchanges can 
also take similar action. Further, HHS will continue to engage with all 
Exchanges and other stakeholders to provide additional support for 
consumer transitions between Medicaid and Exchange coverage following 
the end of the PHE.\85\ HHS believes the special enrollment period 
finalized in this rule, along with existing special enrollment 
authorities granted to Exchanges discussed here, are sufficient to 
ensure that consumers who lose Medicaid coverage due to the end of the 
PHE are able to transition to Exchange coverage.
---------------------------------------------------------------------------

    \83\ See 86 FR 35170.
    \84\ See FFEs and FF-SHOP Enrollment Manual: Section 6, Exhibit 
14, https://www.regtap.info/uploads/library/ENR_FFEFFSHOPEnrollmentManual2020_5CR_090220.pdf.
    \85\ For example, in 2018, HHS issued guidance to provide that 
an individual or their dependents who are affected by an emergency 
or major disaster that is recognized with a formal declaration from 
FEMA and that emergency or major disaster prevents the qualified 
individual or their dependents from enrolling during the annual open 
enrollment period or during the enrollment window for a special 
enrollment period for which they qualified will be eligible for an 
exceptional circumstances special enrollment period under Sec.  
155.420(d)(9). See https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/8-9-natural-disaster-SEP.pdf.
---------------------------------------------------------------------------

    Comment: Multiple commenters that supported the proposal were 
optimistic about Exchanges' ability to implement it in time for the 
2022 plan year based on availability of comparable special enrollment 
periods in some Exchanges, such as Massachusetts'. Other commenters 
were generally supportive of the special enrollment period, but 
strongly supported that it be finalized, as proposed, at the option of 
the Exchange, and varied in their assessments of level of effort to 
implement it. One estimated that the special enrollment period could be 
implemented for the 2022 plan year, but that state regulators would 
first need to be consulted about potential impact on individual market 
rates to determine whether they should. One commenter did not think 
that Exchanges could implement the special enrollment period in time 
for the 2022 plan year, and another was unsure about whether they could 
do so.
    Finally, several commenters said that the special enrollment period 
could be implemented in time for the 2022 plan year, but without plan 
category limitations, and suggested that these limitations be optional 
for Exchanges due to significant additional level of effort for 
implementation, and because of the likely very small affected 
population. One state regulator requested that plan category 
limitations not be applied because some qualifying individuals would be 
better served by enrolling in a very low-cost bronze plan, and that 
they should be permitted to determine with an agent or broker which 
metal level was best for them.
    Response: HHS agrees with commenters that State Exchanges should 
have the option of whether to implement this special enrollment period, 
and therefore have finalized, as proposed, that it be at the option of 
the Exchange. While HHS understands concerns about complexity of 
implementation, in consideration of strong support from other 
commenters for guardrails to help mitigate adverse selection, HHS 
agrees that the proposed plan category limitations, as clarified in 
this final rule, will be helpful in mitigating potential adverse 
selection, even in Exchanges in which the population of consumers 
potentially eligible for this special enrollment period is small.
    Comment: Based on a belief that adverse selection would be limited 
and that the uninsured rates would decrease due to the proposed special 
enrollment period, several commenters asked that HHS increase the 
household income threshold for qualifying individuals to 200 or 250 
percent of the FPL. These commenters' rationale was that individuals 
with household income below this threshold are also highly subsidized 
to an extent that would mitigate adverse selection risk. Several 
commenters also noted that this income range would include more 
consumers who make minimum wage, and who regularly transition between 
Medicaid and Exchange coverage.
    Response: HHS shares the goal of reducing barriers to coverage for 
as many individuals as possible. However, as discussed in the proposed 
rule, HHS believes that access to premium-free or very low-cost 
coverage with a 94 percent AV after application of APTC and CSRs will 
be an important factor to help mitigate risk of adverse selection, 
because qualifying individuals will not have an incentive not to enroll 
or to end coverage when health care services are no longer needed. 
While many individuals with projected annual household income greater 
than 150

[[Page 53441]]

percent of the FPL also benefit from APTC that covers a significant 
portion of their monthly premium, given a number of commenters' 
concerns about adverse selection risk, HHS believes it is appropriate 
to make the special enrollment period available only to individuals 
whose applicable taxpayer has an applicable premium percentage set at 
zero. Limiting the special enrollment period in this way also ensures 
that eligible individuals will have access to a silver plan with a 94 
percent AV, which may reinforce qualifying individuals' interest in 
maintaining coverage when health care services are no longer needed, 
even for those who must pay a small premium, because of the ability to 
access care without significant cost sharing.
    Further, as also addressed in the proposed rule, adverse selection 
risk presented by the proposal stems, in part, from qualifying 
individuals who live in states where premiums for Exchange coverage 
cannot be fully paid for with APTC, such that these individuals will 
not have access to a silver plan with a zero-dollar premium, because 
these individuals may have more incentive to end their coverage when 
they no longer believe that they need it, or to inadvertently allow 
their coverage to lapse due to missing multiple premium payments. 
Therefore, HHS is finalizing the special enrollment period for APTC-
eligible individuals with a household income up to 150 percent of the 
FPL, but limiting it to be available only during periods of time during 
which APTC benefits are available, such that the applicable taxpayers' 
applicable percentage is set at zero.
6. Clarification of Special Enrollment Periods for Enrollees Who Are 
Newly Eligible or Newly Ineligible for Advance Payments of the Premium 
Tax Credit (Sec.  155.420(f))
    HHS proposed new language to clarify that, for purposes of the 
special enrollment period rules at Sec.  155.420(d), references to 
ineligibility for APTC refer to being ineligible for such payments or 
being technically eligible for such payments but qualifying for a 
maximum of zero dollars per month of such payments. That is, a 
qualified individual, enrollee, or his or her dependent who is 
technically eligible for APTC because they meet the criteria at Sec.  
155.305(f), but who qualifies for a maximum APTC amount of zero 
dollars, is also considered ineligible for APTC for purposes of these 
special enrollment periods, even if they experience a change in 
circumstance from an APTC ineligible status in accordance with Sec.  
155.305(f), such as having other MEC. As discussed in the proposed 
rule, currently, the special enrollment periods to which this 
clarification is applicable are the triggering events at Sec.  
155.420(d)(6), but HHS proposed that the clarification apply to all of 
Sec.  155.420 to ensure consistency, for example, between special 
enrollment period triggering events at Sec.  155.420(d) and related 
coverage effective date and enrollment window rules at Sec.  155.420(b) 
and (c), respectively. After consideration of public comments, as 
further discussed below, HHS is finalizing Sec.  155.420(f) as 
proposed.
    As discussed in the proposed rule, IRS rules at 26 CFR 1.36B-3 
govern the APTC amount an individual may receive once they are found 
eligible for APTC under Sec.  155.420(d)(6). Pursuant to these IRS 
rules, an Exchange enrollee's monthly APTC amount is the excess of the 
adjusted monthly premium for the applicable benchmark plan \86\ over 
\1/12\ of the product of the taxpayer's household income and the 
applicable percentage for the taxable year. Under this formula, if the 
applicable percentage of \1/12\ of a taxpayer's estimated annual 
household income is higher than the adjusted monthly premium of the 
relevant benchmark plan, a taxpayer will be eligible generally for APTC 
under Sec.  155.305(f)(1), but will qualify for a maximum APTC amount 
of zero dollars under 26 CFR 1.36B-3. Currently, neither Sec.  
155.305(f)(1) or 26 CFR 1.36B-3 recognize or explain that an individual 
generally could be APTC-eligible, but not qualify to receive any amount 
in APTC greater than zero. The current text of Sec.  155.420 similarly 
does not address this issue, such that there could exist some ambiguity 
about what it means to be APTC-eligible or ineligible for purposes of 
the special enrollment periods under Sec.  155.420.
---------------------------------------------------------------------------

    \86\ Per IRS rules at 26 CFR 1.36B-3(f), the term ``benchmark 
plan'' is generally used to refer to the second lowest-cost silver 
plan, as described in section 1302(d)(1)(B) of the ACA (42 U.S.C. 
18022(d)(1)(B)), offered to the taxpayer's coverage family through 
the Exchange for the rating area where the taxpayer resides.
---------------------------------------------------------------------------

    HHS proposed to add text to Sec.  155.420 to clarify that an 
individual who qualifies for a maximum APTC amount of zero dollars is 
considered ineligible for APTC for purposes of the Sec.  155.420 
special enrollment periods. Specifically, any determination that an 
individual cannot receive an APTC amount greater than zero dollars is 
equivalent to being found APTC-ineligible for purposes of special 
enrollment period eligibility under Sec.  155.420(d). HHS noted that 
HHS believed this interpretation comports with the perspective of an 
applicant for Exchange coverage who will take their available financial 
assistance amount into account when selecting a QHP for the upcoming 
coverage year and who may wish to change their QHP partway through a 
coverage year because of a change in their financial assistance. 
Because HHS believes that the current regulation permits this 
interpretation, but could instead be interpreted to require strict 
adherence to the listed requirements for APTC eligibility at Sec.  
155.305(f) (which does not address situations where a consumer meets 
these requirements but qualifies for a zero-dollar APTC amount), HHS 
proposed regulation text to ensure consistent and correct 
interpretation of what it means to be determined ineligible for APTC. 
This reading of APTC ineligibility is also consistent with HHS's 
discussion of the policy in previous rulemaking. For example, in the 
2020 Payment Notice final rule,\87\ HHS added a new paragraph at Sec.  
155.420(d)(6)(v) allowing Exchanges to provide a special enrollment 
period for qualified individuals who experience a decrease in household 
income and receive a new determination of eligibility for APTC by an 
Exchange, and who had MEC for one or more days during the 60 days 
preceding the financial change.
---------------------------------------------------------------------------

    \87\ 84 FR 17526.
---------------------------------------------------------------------------

    HHS stated that HHS believes that this clarification will be 
especially helpful in light of the removal of the upper APTC 
eligibility limit on household income at 400 percent of the FPL for 
taxable years 2021 and 2022 under the ARP.\88\ This is because, with 
this change, any applicants with household incomes over 400 percent of 
the FPL may be eligible for APTC, so more consumers likely will qualify 
for APTC technically, but for an APTC amount of zero dollars. This 
clarification ensures that special enrollment period regulations 
clearly reflect that enrollees for whom this is the case may qualify 
for a special enrollment period based on a decrease in their household 
income, or any other change that makes them newly eligible for an APTC 
amount of greater than zero dollars.
---------------------------------------------------------------------------

    \88\ Public Law 117-2.
---------------------------------------------------------------------------

    HHS explained that HHS believes that this clarification should also 
apply to the special enrollment periods provided in Sec.  
155.420(d)(6)(iii) through (v), which include special enrollment 
periods for individuals who become newly eligible for APTC. However, 
HHS sought comment on whether the clarification that a qualified 
individual, enrollee, or his or her dependent is considered

[[Page 53442]]

APTC-ineligible if they meet the requirements at Sec.  155.305(f), but 
qualify for a maximum APTC amount of zero dollars, should be applied as 
proposed to all of the special enrollment period qualifying events at 
Sec.  155.420(d)(6), or whether it should be limited to only apply to 
some of them. For example, HHS sought comment on whether HHS should 
only apply this clarification to the special enrollment periods at 
Sec.  155.420(d)(6)(i) and (ii) and (iv) and (v), to permit individuals 
whose ESC is no longer considered affordable or no longer meets the 
minimum value standard to qualify for a special enrollment period to 
enroll in Exchange coverage through Sec.  155.420(d)(6)(iii) regardless 
of whether they qualify for an APTC amount of greater than zero 
dollars.
    HHS also sought comment on the proposal, including from State 
Exchanges, regarding whether this definition of APTC eligibility 
reflects their current implementation of the special enrollment period 
qualifying events per Sec.  155.420(d)(6), and if not, whether there 
are policy concerns about this clarification, or the burden of making 
related changes to Exchange operations. HHS also sought comment on 
whether HHS should provide Exchanges with flexibility in terms of when 
they are required to ensure that their operations reflect this 
definition, and whether Exchanges should be permitted to adopt a more 
inclusive definition, for example, to consider an individual to be 
newly eligible or ineligible for APTC for purposes of the special 
enrollment periods at Sec.  155.420(d)(6) based on a change from a 
zero-dollar maximum APTC amount to APTC ineligibility for another 
reason per regulations at Sec.  155.305(f).
    The following is a summary of the comments received and HHS's 
responses regarding these proposals related to the clarification of the 
special enrollment period for enrollees who are newly eligible or newly 
ineligible for advance payments of the premium tax credit (Sec.  
155.420(f)).
    Comment: Multiple commenters supported this clarification, and one 
commenter confirmed that it reflected their State Exchange's 
implementation of the applicable special enrollment periods. Several 
commenters, including another State Exchange, agreed that this 
clarification is helpful for mitigating issuer and consumer confusion. 
However, one commenter raised the concern that the clarification would 
result in fewer consumers qualifying for a special enrollment period 
due to confusion about how to report life changes related to special 
enrollment period access and eligibility. The commenter added that some 
consumers who are not receiving PTCs may wish to change plans based on 
having reported a change to their household income. This commenter also 
raised the concern that it would require their State Exchange to make 
significant system and messaging adjustments to change how they 
implement applicable special enrollment periods.
    Response: HHS appreciates comments that this clarification is 
helpful, and HHS is finalizing it as proposed. In response to the 
concern that it will cause fewer consumers to qualify for special 
enrollment periods, HHS notes that in addition to providing general 
clarity, HHS's primary purpose for this update is be clear that 
enrollees may qualify for a special enrollment period at Sec.  
155.420(d)(6)(i) or (ii) based on a change from being eligible for a 
maximum APTC of zero dollars per month to an amount greater than zero 
dollars per month, or who become newly eligible for a maximum of zero 
dollars per month after previously having qualified for an amount of 
more than zero dollars. While this may require some Exchanges to make 
system changes, HHS is finalizing the clarification as proposed to 
ensure that enrollees in this situation may qualify for a special 
enrollment period based on a meaningful change in eligibility for APTC 
as opposed to a change that is not meaningful.
    Additionally, HHS appreciates the comment that some consumers who 
experience a change in household income mid-year may wish to change to 
a different QHP based on this clarification. However, current rules do 
not include special enrollment periods based only on a change in 
household income, and qualifying events at Sec.  155.420(d)(6) are not 
based on changes in household income, but rather on changes in 
eligibility for APTC, to account for whether, based on their household 
income, a qualifying individual can receive assistance with their 
monthly QHP premium payments. HHS disagrees that this clarification 
will result in fewer special enrollment periods for consumers who 
qualify based on experiencing an established special enrollment period 
triggering event, because special enrollment period rules at Sec.  
155.420(d) do not currently include an enrollment opportunity based 
solely on a change in household income. However, HHS commits to 
continue working with State Exchanges on an ongoing basis to mitigate 
confusion related to eligibility rules to promote greater access to 
coverage. HHS also commits to collaborating to promote continuity of 
coverage for all Exchange enrollees, including by helping enrollees to 
understand the importance of reporting changes to their household 
income so that they receive an up-to-date APTC amount even if their 
change does not make them eligible for a special enrollment period.
    Comment: One commenter generally supported the proposal, but 
requested that HHS finalize it to exempt the special enrollment period 
at Sec.  155.20(d)(6)(iii) so that employees or dependents who are 
enrolled in an employer-sponsored plan and determined newly APTC-
eligible based in part on a finding that they are no longer eligible 
for qualifying coverage in an eligible employer-sponsored plan in 
accordance with 26 CFR 1.36B-2(c)(3) may qualify for a special 
enrollment period even if they qualify for a maximum payment of zero 
dollars per month. This commenter explained that individuals in this 
situation could benefit from an opportunity to change to coverage that 
meets the minimum value standards that apply to Exchange coverage, even 
if they are required to pay full price for Exchange coverage.
    Response: HHS appreciates this comment and agrees that an 
individual whose ESC is no longer considered affordable or no longer 
provides minimum value may wish to access individual market coverage 
through an Exchange, even if they will not qualify for APTC to help 
reduce their premiums.
    HHS does not agree that additional special enrollment period 
authority is necessary at this time, because there are existing 
pathways to enrollment in individual market coverage through an 
Exchange for many individuals who meet the conditions of the triggering 
event at Sec.  155.420(d)(6)(iii), except that they do not qualify for 
APTC. Further, based on HHS's experience, changes to ESC that would 
have these effects are rarely made mid-plan year. Therefore, employees 
and dependents who experience this type of change and whose ESC renews 
on a calendar year basis can enroll in individual market coverage 
through an Exchange during the annual open enrollment period, and those 
whose ESC renews on a non-calendar year basis can qualify for a special 
enrollment period per Sec.  155.420(d)(1)(ii), based on the last day of 
the plan year of their ESC. In what HHS expects will be rare instances 
that an individual's ESC ceases to meet the minimum value or 
affordability standards in the middle of a plan year under 
circumstances that would not qualify the individual for a special

[[Page 53443]]

enrollment period under Sec.  155.420(d)(1)(ii), an Exchange could 
exercise its authority to find that this change is an exceptional 
circumstance that qualifies the individual for a special enrollment 
period under Sec.  155.420(d)(9).
    Due to the existing special enrollment period authorities available 
to Exchanges, HHS is of the view that additional special enrollment 
period authority is not necessary at this time. HHS will monitor these 
circumstances and, if necessary, consider proposing such authority in 
future rulemaking.

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

1. User Fee Rates for the 2022 Benefit Year (Sec.  156.50)
    In the December 4, 2020 Federal Register (85 FR 78572), HHS 
published the proposed 2022 Payment Notice that proposed to reduce 
fiscal and regulatory burdens across different program areas and to 
provide stakeholders with greater flexibility that included a proposed 
2022 user fee rate. In the January 19, 2021 Federal Register (86 FR 
6138), HHS published part 1 of the 2022 Payment Notice final rule that 
addressed a subset of the policies proposed in the proposed rule. That 
final rule, among other things, finalized the 2022 user fee rates for 
issuers offering QHPs through the FFEs at 2.25 percent of total monthly 
premiums, and the user fee rate for issuers offering QHPs through SBE-
FPs at 1.75 percent of total monthly premiums.
    On January 28, 2021, President Biden issued E.O. 14009,\89\ 
directing HHS, and the heads of all other executive departments and 
agencies with authorities and responsibilities related to the ACA, to 
review all existing regulations, orders, guidance documents, policies, 
and any other similar agency actions to determine whether such agency 
actions are inconsistent with this Administration's policy to protect 
and strengthen the ACA and to make high-quality health care accessible 
and affordable for every American. As part of this review, HHS examined 
policies and requirements under the proposed 2022 Payment Notice and 
part 1 of the 2022 Payment Notice final rule to analyze whether the 
policies under these rulemakings might undermine the Health Benefits 
Exchanges or the health insurance markets, and whether they may present 
unnecessary barriers to individuals and families attempting to access 
health coverage. HHS also considered whether to suspend, revise, or 
rescind any such actions through appropriate administrative action.
---------------------------------------------------------------------------

    \89\ 86 FR 7793 (Feb. 2, 2021).
---------------------------------------------------------------------------

    In compliance with E.O. 14009 and as a result of HHS's review of 
the proposed 2022 Payment Notice and part 1 of the 2022 Payment Notice 
final rule, HHS discussed in the proposed rule that HHS has reanalyzed 
the additional costs of expanded services, such as consumer outreach 
and education in the FFEs and SBE-FPs, and Navigators in the FFEs in 
2022. As explained in part 2 of the 2022 Payment Notice final rule,\90\ 
HHS indicated the intention to propose to increase the user fee rates 
for the 2022 benefit year in future rulemaking. Therefore, in the 
proposed rule, HHS proposed new QHP issuer user fee rates for the 2022 
plan year: a new FFE user fee rate of 2.75 percent of total monthly 
premiums, and a new SBE-FP user fee rate of 2.25 percent of monthly 
premiums. The proposed rates are based on internal projections of 
Federal costs for providing special benefits to FFE and SBE-FP issuers 
during the 2022 benefit year, taking into account estimated changes in 
parameters, specifically the increased funding to the FFE Navigator 
program and consumer outreach and education. As discussed in the 
proposed rule, HHS is of the view that pursuit of the proposal was 
necessary for consistency with E.O. 14009 and this Administration's 
goal of protecting and strengthening the ACA and making high-quality 
health care accessible and affordable for every American. HHS noted 
that HHS believed that expanded outreach and education will lead to 
broader risk pools, lower premiums, fewer uninsured consumers, and 
expanded use of Exchange services.
---------------------------------------------------------------------------

    \90\ 86 FR 24140, 24288.
---------------------------------------------------------------------------

    Section 1311(d)(5)(A) of the ACA permits an Exchange to charge 
assessments or user fees on participating health insurance issuers as a 
means of generating funding to support its operations. If a state does 
not elect to operate an Exchange or does not have an approved Exchange, 
section 1321(c)(1) of the ACA directs HHS to operate an Exchange within 
the state. Accordingly, in Sec.  156.50(c), HHS specifies that a 
participating issuer offering a plan through an FFE or SBE-FP must 
remit a user fee to HHS each month that is equal to the product of the 
annual user fee rate specified in the annual HHS notice of benefit and 
payment parameters for FFEs and SBE-FPs for the applicable benefit year 
and the monthly premium charged by the issuer for each policy where 
enrollment is through an FFE or SBE-FP. In addition, OMB Circular No. 
A-25 establishes Federal policy regarding the assessment of user fee 
charges under other statutes, and applies to the extent permitted by 
law. Furthermore, OMB Circular No. A-25 specifically provides that a 
user fee charge will be assessed against each identifiable recipient of 
special benefits derived from Federal activities beyond those received 
by the general public.
    Activities performed by the Federal Government that do not provide 
issuers participating in an FFE with a special benefit, or that are 
performed by the Federal Government for all QHPs, including those 
offered through State Exchanges, are not covered by this user fee. As 
in benefit years 2014 through 2021, issuers seeking to participate in 
an FFE in the 2022 benefit year will receive two special benefits not 
available to the general public: (1) The certification of their plans 
as QHPs; and (2) the ability to sell health insurance coverage through 
an FFE to individuals determined eligible for enrollment in a QHP.
a. FFE User Fee Rate
    For the 2022 benefit year, issuers participating in an FFE will 
receive the benefits of the following Federal activities:
    Under Consumer Information and Outreach:
     Provision of consumer assistance tools;
     Consumer outreach and education; and
     Management of a Navigator program.
    Under Health Plan Bid Review, Management, and Oversight:
     Certification processes for QHPs (including ongoing 
compliance verification, recertification, and decertification); and
     Regulation of agents and brokers.
    Under Eligibility and Enrollment:
     Eligibility determinations; and
     Enrollment processes.
    Activities through which FFE issuers receive a special benefit also 
include use of the Health Insurance and Oversight System (HIOS), which 
is partially funded by FFE and SBE-FP user fees, and the 
Multidimensional Insurance Data Analytics System (MIDAS) platform, 
which is fully funded by FFE and SBE-FP user fees. In light of E.O. 
14009,\91\ published on January 28, 2021, the administration has a 
priority to increase accessibility and affordability of health care for 
every American. Consistent with increasing

[[Page 53444]]

accessibility for every American an expanded budget for consumer 
support activities and Navigators was developed, and HHS conducted 
additional analytic review which revealed that the user fee rates 
established in part 1 of the 2022 Payment Notice final rule \92\ need 
to be increased to sustain essential Exchange-related activities. Based 
on this new analysis of the increased contract costs and projected 
premiums and enrollment (including changes in FFE enrollment resulting 
from anticipated establishment of State Exchanges or SBE-FPs in certain 
states in which FFEs currently are operating) for the 2022 plan year, 
HHS proposed to establish the FFE user fee for all participating FFE 
issuers at 2.75 percent of total monthly premiums.
---------------------------------------------------------------------------

    \91\ 86 FR 7793 (Feb. 2, 2021).
    \92\ 86 FR 6138 at 6152.
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b. SBE-FP User Fee Rate
    As previously discussed, OMB Circular No. A-25 establishes Federal 
policy regarding user fees, and specifies that a user charge will be 
assessed against each identifiable recipient for special benefits 
derived from Federal activities beyond those received by the general 
public.
    SBE-FPs enter into a Federal platform agreement with HHS to 
leverage the systems established for the FFEs to perform certain 
Exchange functions, and to enhance efficiency and coordination between 
state and Federal programs. Accordingly, in Sec.  156.50(c)(2), HHS 
specifies that an issuer offering a plan through an SBE-FP must remit a 
user fee to HHS, in the timeframe and manner established by HHS, equal 
to the product of the monthly user fee rate specified in the annual HHS 
notice of benefit and payment parameters for the applicable benefit 
year and the monthly premium charged by the issuer for each policy 
where enrollment is through an SBE-FP, unless the SBE-FP and HHS agree 
on an alternative mechanism to collect the funds from the SBE-FP or 
state.
    The benefits provided to issuers in SBE-FPs by the Federal 
Government include use of the Federal Exchange information technology 
and call center infrastructure used in connection with eligibility 
determinations for enrollment in QHPs and other applicable state health 
subsidy programs, as defined at section 1413(e) of the ACA, and QHP 
enrollment functions under Sec.  155.400. The user fee rate for SBE-FPs 
is calculated based on the proportion of FFE costs that are associated 
with the FFE information technology infrastructure, the consumer call 
center infrastructure, and eligibility and enrollment services, and 
allocating a share of those costs to issuers in the relevant SBE-FPs, 
as issuers in SBE-FPs receive those special benefits and will be able 
to access the increased consumer support and education.
    Similar to the FFEs, activities through which SBE-FP issuers 
receive a special benefit also include use of HIOS, which is partially 
funded by FFE and SBE-FP user fees, and the MIDAS platform, which is 
fully funded by FFE and SBE-FP user fees. In light of E.O. 14009,\93\ 
the administration has a priority to increase accessibility and 
affordability of health care for every American. Consistent with 
increasing accessibility for every American, an expanded budget for 
consumer support activities and Navigators was developed, and HHS 
conducted additional analytic review which revealed that the user fee 
rates established in part 1 of the 2022 Payment Notice final rule \94\ 
need to be increased to sustain essential Exchange-related activities. 
Based on this new analysis of the increased contract costs and 
projected premiums and enrollment (including changes in FFE enrollment 
resulting from anticipated establishment of State Exchanges or SBE-FPs 
in certain states in which FFEs currently are operating) for the 2022 
plan year, HHS proposed to establish the SBE-FP user fee for all 
participating SBE-FP issuers at 2.25 percent of the monthly premium 
charged by the issuer for each policy under plans offered through an 
SBE-FP for benefit year 2022.
---------------------------------------------------------------------------

    \93\ 86 FR 7793 (Feb. 2, 2021).
    \94\ 86 FR 6138 at 6152.
---------------------------------------------------------------------------

    HHS sought comment on the FFE and SBE-FP user fee rates for 2022. 
The following is a summary of the comments received and the responses 
to HHS' proposals related to the FFE and SBE-FP user fee rates for 
2022.
    Comment: Most commenters supported the proposal to increase the 
2022 user fee rates for the FFEs and SBE-FPs. These commenters 
supported funding increases for consumer outreach and education and 
Navigators, and for building up the Exchange infrastructure. Other 
commenters were concerned about changes to user fees happening this 
late into the 2022 rate -setting process. One commenter suggested that 
the increased user fee collections be aimed at only consumer outreach 
and education and not toward funding Navigators.
    Response: HHS is finalizing the higher 2022 user fee rates for the 
FFEs and SBE-FPs as proposed. These higher user fee rates will allow 
for an expanded budget for consumer support activities and Navigators 
and will ensure that HHS can sustain essential Exchange-related 
activities.
    HHS is finalizing the proposal to increase the user fee rates to 
fund both consumer outreach and education and Navigators. Pursuant to 
E.O. 14009, HHS is aiming to increase accessibility and affordability 
of health care for every American. On August 27, 2021, CMS awarded $80 
million in grant funding to 60 Navigator grantees in 30 states with an 
FFE for the 2022 plan year.\95\ Extending funding for Navigators 
through 2022 is consistent with increasing accessibility for every 
American.
---------------------------------------------------------------------------

    \95\ https://www.cms.gov/newsroom/press-releases/biden-harris-administration-quadruples-number-health-care-navigators-ahead-healthcaregov-open.
---------------------------------------------------------------------------

    HHS also appreciates commenters' concerns about rate-setting. To 
help stakeholders anticipate a possible increase to the FFE and SBE-FP 
user fee rates for 2022, HHS announced in part two of the 2022 Payment 
Notice final rule \96\ that HHS intended to propose increased new user 
fee rates for 2022 and provided the projected user fee rates that HHS 
was considering. Therefore, HHS believes that stakeholders may have 
been anticipating the proposed changes to the 2022 user fee rates and 
reasonably could have taken steps to accommodate the possible change.
---------------------------------------------------------------------------

    \96\ 86 FR 24141.
---------------------------------------------------------------------------

    Comment: Some commenters recommended that HHS further increase the 
user fee rates to 3.5 percent or 3.0 percent of total monthly premiums. 
Other commenters were concerned about the proposed higher user fee 
rates. Some of these commenters were concerned that increasing user fee 
rates is unnecessary as increased enrollment should provide adequate 
revenue to fund Exchange activities. Other commenters expressed concern 
that the costs of increased user fee rates would be passed on to 
consumers in the form of higher premiums. One commenter was concerned 
that increasing user fee rates could result in reduced commission paid 
to agents and brokers and limit enrollment growth through those 
channels. Another commenter suggested that, rather than increasing user 
fee rates, HHS should use excess collections from prior years to cover 
the costs of the expanded Navigator and consumer information and 
outreach activities. One commenter observed that the higher user fee 
rates will be covered by higher APTC payments, which results in 
transferring funds from one program to another program.
    Response: HHS believes that these newly finalized 2022 user fee 
rates will

[[Page 53445]]

provide adequate funding for the full functioning of the Federal 
platform, and HHS does not need to further increase these rates at this 
time. HHS acknowledges that the user fee rates in this final rule are 
higher than those previously finalized for 2022 in part 1 of the 2022 
Payment Notice final rule, which could increase premiums for consumers, 
but in accordance with E.O. 12866, HHS believes that the benefits of 
this regulatory action justify the costs. The FFE and SBE-FP user fee 
rates for the 2022 benefit year are based on expected total costs to 
offer the special benefits to issuers offering plans on FFEs or SBE-FPs 
and were developed based on an evaluation of expected enrollment and 
premiums for the 2022 benefit year. HHS also notes that the 2022 user 
fee rates are still lower than the 2021 user fee rates.
    Regardless, HHS will continue to examine cost estimates for the 
special benefits provided to issuers offering QHPs on the FFEs and SBE-
FPs for future benefit years. This will include annually evaluating 
outreach and education efforts to consider what the appropriate level 
of funding should be.
    HHS also notes that it is consistent with the ACA and implementing 
regulations for user fees to be included in premiums (as determined by 
the issuer) and for these premiums to be partially covered by APTC 
payments for eligible enrollees.
    Comment: Some commenters requested that HHS provide greater budget 
transparency and more data reporting on how and where user fees are 
spent.
    Response: HHS believes that the information provided in the 
proposed rule in support of the proposed user fee rate was sufficient 
to allow commenters to meaningfully assess and comment on the 
appropriateness of the user fee rate proposals. The FFE and SBE-FP user 
fee rates for the 2022 benefit year are based on expected total costs 
to offer the special benefits to issuers offering plans on FFEs or SBE-
FPs, and are based on an evaluation of expected enrollment and premiums 
for the 2022 benefit year. Annually, HHS and CMS also publish detailed 
information on Federal Exchange Activities and budget request 
estimates, including expected Exchange user fee-eligible costs.\97\ To 
calculate these expected costs, HHS makes reasonable assumptions about 
the expected market for the upcoming benefit year, and reconsiders 
these assumptions and re-estimate these costs on an annual basis with 
the most recent data available. For example, for the 2022 benefit year, 
HHS considered whether they needed to make changes to the cost, 
premium, and enrollment assumptions based on data from the 2020 benefit 
year and made updates to their projections as appropriate. User fee-
eligible costs are generally estimated in advance of the benefit year 
and are based upon cost targets for specific contracting activities 
that are not yet finalized, and therefore contain proprietary 
information related to contracting activities that should not be 
disclosed. HHS will continue to outline user fee-eligible functional 
areas in the annual HHS notice of benefit and payment parameters, and 
will evaluate contract activities related to operation of Federal 
platform user fee-eligible functions.
---------------------------------------------------------------------------

    \97\ The FY 2022 CMS Budget Request is available at https://www.cms.gov/files/document/fy2022-cms-congressional-justification-estimates-appropriations-committees.pdf and the FY 2022 HHS Budget 
Request is available at https://www.hhs.gov/sites/default/files/fy-2022-budget-in-brief.pdf.
---------------------------------------------------------------------------

    Comment: HHS received comments that HHS should switch to a per 
member per month (PMPM) capitated user fee, rather than a premium based 
user fee, and a comment requesting that HHS conduct and publish a study 
on a PMPM user fee.
    Response: HHS did not propose to switch to a PMPM capitated user 
fee and therefore is not finalizing a PMPM capitated user fee. The FFE 
and SBE-FP user fee rates will continue to be assessed as a percent of 
the monthly premium charged by participating issuers. Setting the user 
fee as a percent of premium avoids disproportionately increasing 
premiums in lower-cost areas and for lower-premium plans, since, 
holding all other factors constant, issuers of plans with lower 
premiums will experience lower user fees, and issuers of plans with 
higher premiums will experience a proportional increase in user fees. 
Although a PMPM user fee rate would yield lower user fees for higher-
premium plans, it would likely cause issuers of lower-premium plans to 
increase premiums, thus decreasing the affordability of the most 
affordable plans.
    Comment: One commenter suggested that more user fee money be aimed 
at enrolling immigrants by, for example, offering the option to receive 
educational material in different languages.
    Response: A portion of user fee funds is used for the management of 
the FFE Navigator program, as well as consumer outreach and education 
for the FFEs and SBE-FPs. In previous Payment Notices, commenters have 
acknowledged the important role that Navigators play in assisting 
individuals with LEP. On August 27, 2021, CMS awarded $80 million in 
grant funding to 60 Navigator grantees in 30 states with an FFE for the 
2022 plan year.\98\ This is the largest funding allocation HHS has made 
available for Navigator grants to date. As part of this grant funding, 
HHS has encouraged current and past Navigators to apply, especially 
those that focus on education, outreach, and enrollment efforts to 
underserved and diverse communities, including those with LEP. HHS also 
notes that under Sec.  155.205(c)(2)(i)(A), HHS currently provides 
accessibility services in at least 150 languages at no cost to 
applicants and enrollees. These translation services are provided 
telephonically and for written communications at no cost to the 
consumer.
---------------------------------------------------------------------------

    \98\ https://www.cms.gov/newsroom/press-releases/cms-announces-80-million-funding-opportunity-available-navigators-states-federally-facilitated-0 https://www.cms.gov/newsroom/press-releases/biden-harris-administration-quadruples-number-health-care-navigators-ahead-healthcaregov-open.
---------------------------------------------------------------------------

    After considering the public comments, HHS is are finalizing the 
proposed rates of 2.75 percent for the FFE user fee rate and 2.25 
percent for the SBE-FP user fee rate for the 2022 benefit year.
c. 2023 Exchange DE Option User Fee Rate
    In the January 19, 2021 Federal Register (86 FR 6138), HHS 
published part 1 of the 2022 Payment Notice final rule that codified 
Sec.  155.221(j), which established a process for states to elect a new 
Exchange DE option. When finalizing this new Exchange option, HHS also 
finalized a 2023 user fee rate of 1.5 percent of the total monthly 
premiums charged by issuers for each policy in FFE and SBE-FP states 
that elect the Exchange DE option. As explained earlier in this 
preamble, HHS proposed to repeal the Exchange DE option; accordingly, 
HHS also proposed to repeal the user fee rate associated with Sec.  
155.221(j) for the FFE-DE and SBE-FP-DEs for 2023. HHS sought comment 
on this proposal.
    HHS did not receive public comments specific to the proposal to 
repeal the user fee rates for FFE-DEs and SBE-FP-DEs for 2023. HHS 
summarizes the comments received on the accompanying proposal to repeal 
the Exchange DE option under part 155 earlier in this preamble. After 
consideration of those comments, HHS is finalizing the proposal to 
repeal the Exchange DE option and the accompanying 2023 user fee rates 
for FFE-DEs and SBE-FP-DEs, as proposed.

[[Page 53446]]

2. Provision of EHB (Sec.  156.115)
    HHS proposed a technical amendment to Sec.  156.115. Section 
156.115(a)(3) provides that, to satisfy the requirement to provide EHB, 
a health plan must provide mental health and substance use disorder 
services, including behavioral health treatment services required under 
Sec.  156.110(a)(5), in a manner that complies with the parity 
standards set forth in Sec.  146.136, implementing the requirements 
under MHPAEA. Instead of referencing the regulation implementing 
MHPAEA, HHS proposed to reference section 2726 of the PHS Act and its 
implementing regulations. HHS proposed this change to make clear that 
health plans must comply with all the requirements under MHPAEA, 
including any amendments to MHPAEA, such as those made by the 
Consolidated Appropriations Act, 2021,\99\ in order to satisfy the EHB 
requirements.
---------------------------------------------------------------------------

    \99\ See section 203 of Title II of Division BB of the 
Consolidated Appropriations Act, 2021, Public Law 116-260 (Dec. 27, 
2020).
---------------------------------------------------------------------------

    The following is a summary of the comments received and responses 
to the HHS proposals related to EHB provision (Sec.  156.115).
    Comment: HHS received several comments in support of the proposed 
amendment. The commenters expressed that the amendment would affirm 
HHS' commitment to the goal of ensuring access to mental health and 
substance use disorder coverage for individuals, and also will 
strengthen national and local efforts to enforce MHPAEA requirements.
    Response: HHS appreciates the support of the commenters and are 
finalizing this policy as proposed.
3. Network Adequacy (Sec.  156.230)
    As discussed in more detail in the preamble to Sec.  155.20, on 
March 4, 2021, the United States District Court for the District of 
Maryland decided City of Columbus v. Cochran, 2021 WL 825973 (D. Md. 
Mar. 4, 2021). One of the policies the court vacated was the 2019 
Payment Notice's elimination of the Federal Government's reviews of the 
network adequacy of QHPs offered through the FFEs in certain 
circumstances by incorporating the results of the states' reviews.\100\
---------------------------------------------------------------------------

    \100\ This policy was first announced in the 2018 Letter to 
Issuers in the federally-facilitated Marketplaces, December 16, 
2016, available at https://wayback.archive-it.org/2744/20200125161008/https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-2018-Letter-to-Issuers-in-the-federally-facilitated-Marketplaces-and-February-17-Addendum.pdf. See also 83 
FR 17024-17026.
---------------------------------------------------------------------------

    As explained in part 2 of the 2022 Payment Notice final rule,\101\ 
HHS intends to implement the court's decision through rulemaking as 
soon as possible. However, HHS also will not be able to fully implement 
the aspects of the court's decision regarding network adequacy in time 
for issuers to design plans and for CMS to be prepared to certify such 
plans as QHPs for the 2022 plan year. HHS noted in the proposed rule 
that HHS instead intends to address these issues in time for plan 
design and certification for plan year 2023. Specifically, with the 
rule vacated, HHS would need to set up a new network adequacy review 
process, and issuers would need sufficient time before the applicable 
plan year to assess that their networks meet the new regulatory 
standard, submit network information, and have the information reviewed 
by applicable regulatory authorities to have their plans certified as 
QHPs. Issuers might also have to contract with other providers in order 
to meet the standard. This was not feasible for the QHP certification 
cycle for the 2022 plan year, which began on April 22, 2021. HHS plans 
to propose specific steps to address Federal network adequacy reviews 
in future rulemaking. HHS requested comments and input regarding how 
the Federal Government should approach network adequacy reviews.
---------------------------------------------------------------------------

    \101\ 86 FR 24140.
---------------------------------------------------------------------------

    The following is a summary of the comments received and the 
responses to HHS' solicitation for comments related to network adequacy 
(Sec.  156.230).
    Comment: Many commenters highlighted the importance of ensuring 
adequate network access for all consumers seeking coverage through QHPs 
offered through the FFEs. Commenters encouraged HHS to specifically 
review networks for: full accessibility to consumers with disabilities, 
language access, cultural competency, capacity to deliver anti-bias 
care, specialist and sub-specialist access, end-of-life care services, 
diverse providers reflecting backgrounds of enrollees, and extended 
hours of operation. Commenters also suggested networks' capacity to 
deliver LGBTQ+-affirming care should be assessed as part of network 
adequacy review processes. Other commenters specified that broad and 
equitable access to sexual and reproductive health services, 
contraceptive services, and HIV care should be evaluated.
    Response: HHS agrees that adequacy metrics supporting equitable 
access for all consumers should be a high priority. For future 
rulemaking, HHS is carefully considering standards that promote health 
equity (for example, provider directory requirements to include 
information about the race/ethnicity, language(s) spoken, 
accessibility, and office hours of in-network providers).
    Comment: Many commenters offered network adequacy enforcement 
strategies for HHS to consider, stating HHS should implement direct 
testing of provider availability as an enforcement method, per the 2014 
HHS Office of Inspector General Report.\102\ Others encouraged HHS to 
examine out-of-network claims submission rates and claims denials rates 
(adjusted for enrollment numbers) to monitor and enforce network 
adequacy. Additional enforcement and monitoring strategies cited by 
commenters included: submission and review of access plans for new 
networks, submission and review of parity compliance reports on network 
standards, use of consumer surveys and complaint data, and use of 
geographic mapping tools and secret shopper surveys to identify 
adequacy gaps.
---------------------------------------------------------------------------

    \102\ https://oig.hhs.gov/oei/reports/oei-02-13-00670.pdf.
---------------------------------------------------------------------------

    Response: HHS will take these comments under advisement when 
detailing the specific criteria and processes for meeting network 
adequacy standards.
    Comment: Some comments cautioned against creating a quantitative 
Federal standard that is overly prescriptive for issuers, citing 
differences across states. A Federal standard may not allow for the 
needed tailored flexibilities and innovations in adequacy assessment 
that respond to the unique workforces, geographies, populations, and 
markets of each state. Additionally, several comments called for 
maximum consistency of approach across states. One commenter encouraged 
HHS to utilize the network adequacy standards developed by the National 
Committee for Quality Assurance (NCQA) for medical and behavioral 
health services. Conversely, one commenter noted accreditation 
organizations are not the appropriate arbiter of network adequacy.
    Response: HHS aims to establish Federal oversight standards that 
complement state standards while meeting Federal obligations, including 
for QHPs on FFEs. HHS will continue to coordinate closely with state 
authorities to address compliance issues, eliminate duplicative 
requirements or reviews, and reduce stakeholder burden.
    Comment: Several comments supported the application of telehealth 
for fulfilling network adequacy

[[Page 53447]]

standards. Some commenters cautioned against the use of telehealth or 
virtual-only providers to fulfill quantitative standards for adequacy 
in lieu of in-person care.
    Response: Telehealth is of special interest to HHS given its recent 
expansion during the COVID-19 pandemic. HHS intends to detail the 
specific criteria and processes for meeting network adequacy standards. 
Standards that account for the availability of telehealth services are 
under consideration.
    Comment: Some commenters asserted that Federal network adequacy 
reviews should prevent discrimination against and examine the 
availability of a diverse set of provider types, including nurse 
practitioners, certified registered nurse anesthetists, and other mid-
level practitioners. Commenters called for including all applicable 
provider types such as skilled nursing facilities, durable medical 
equipment suppliers, and prosthetists and orthotists. Specifically, 
some commenters noted the importance of ensuring access, via 
quantitative standards, to behavioral health and substance use disorder 
providers and services at all care levels, including intermediate care.
    Response: HHS intends to evaluate QHP issuer networks for access to 
providers enrollees most generally use and/or that have historically 
been the subject of network adequacy concerns raised by patients and 
other stakeholders (for example, behavioral health providers).
    Comment: Commenters suggested use of a range of general and 
specific network adequacy metrics and standards, including time and 
distance, provider-to-enrollee ratio minimums, availability of 
providers accepting new patients, timely notification of provider 
terminations, provision of out-of-network services, provider directory 
data elements, and appointment wait times. Commenters also suggested 
that when assessing network adequacy, HHS should consider enrollees' 
health care needs (for example, by using the Community Need Index) and 
transportation and topographical complexities that influence geographic 
accessibility.
    Response: HHS intends to ensure that network adequacy standards 
ensure enrollee access to care, are applicable and meaningful across 
diverse state settings, are achievable, and do not place an undue 
burden on issuers to collect and validate the necessary data.
    HHS will take the comments into consideration while formulating 
forthcoming rulemaking. HHS will also consider these comments in 
specifying QHP certification requirements related to network adequacy. 
Pursuant to 45 CFR 156.230(a)(2), an issuer of a QHP that has a 
provider network must maintain a network that is sufficient in number 
and types of providers, including providers that specialize in mental 
health and substance use disorder services, to assure that all services 
will be accessible to enrollees without unreasonable delay.
    For the certification cycle for plan years beginning in 2023, HHS 
is considering the adoption of time and distance standards to assess 
whether QHP issuer networks fulfill this regulatory requirement. HHS is 
considering evaluating QHP issuer networks for compliance with this 
standard based on the numbers and types of providers that enrollees 
most generally use and/or that have historically been the subject of 
network adequacy concerns raised by patients and other stakeholders 
(for example, behavioral health providers); providers' geographic 
location; and other factors to be determined by HHS. HHS would 
calculate time and distance standards at the county level. Issuers that 
are unable to meet the specified standards would be able to submit a 
justification to account for variances, and the FFEs would review the 
justification to determine whether the variance(s) is/are reasonable 
based on a specific set of circumstances, such as the local 
availability of providers and variables reflected in local patterns of 
care. HHS would also include a requirement for issuers to make the 
information necessary to evaluate their QHP issuer networks under these 
standards available in a machine-readable file and format specified by 
HHS.
    HHS anticipates:
     Using standards that are informed by those used in 
Medicare Advantage;
     Implementing methodologies that account for local 
geographical and topographical features that influence real-world 
access to providers such as the physical environment (for example, 
bodies of water, unpassable mountainous areas) and varied travel modes 
(for example, car, public transportation); and
     Expanding the use of the Java Script Object Notation 
(JSON) files QHP issuers currently make available as part of meeting 
provider directory requirements.
    In light of the expanded use of, and reimbursement for, telehealth 
services during the COVID-19 PHE, time and distance standard 
methodologies that account for the availability of telehealth services 
are also under consideration.
    For future rulemaking, HHS is carefully considering other network 
adequacy standards, including appointment wait times and standards that 
promote health equity (for example, provider directory requirements to 
include information about the race/ethnicity, language(s) spoken, 
accessibility, and office hours of in-network providers).
4. Segregation of Funds for Abortion Services (Sec.  156.280)
    HHS proposed to repeal the separate billing regulation at Sec.  
156.280(e)(2)(ii) that required individual market QHP issuers to send a 
separate bill for that portion of a policy holder's premium that is 
attributable to coverage for abortion services for which Federal funds 
are prohibited and to instruct such policy holders to pay for the 
separate bill in a separate transaction. Specifically, HHS proposed to 
revert to and codify in amended regulatory text at Sec.  
156.280(e)(2)(ii) the prior policy announced in the preamble of the 
2016 Payment Notice under which QHP issuers offering coverage of 
abortion services for which Federal funds are prohibited have 
flexibility in selecting a method to comply with the separate payment 
requirement in section 1303 of the ACA. As proposed, HHS noted that 
individual market QHP issuers covering such abortion services would 
still be expected to comply with all statutory requirements in section 
1303 of the ACA and all applicable regulatory requirements codified at 
Sec.  156.280. HHS is finalizing removal of the separate billing 
regulation and codification of the prior policy at Sec.  
156.280(e)(2)(ii) as proposed.
    Section 1303 of the ACA outlines requirements that issuers of 
individual market QHPs covering abortion services for which Federal 
funds are prohibited must follow to ensure compliance with these 
funding limitations, which are based on the law in effect as of the 
date that is 6 months before the beginning of the plan year involved. 
Since 1976, Congress has included language, commonly known as the Hyde 
Amendment, in the Labor, Health and Human Services, Education and 
Related Agencies appropriations legislation that sets out funding 
restrictions for abortions.\103\ The Hyde Amendment, as currently in 
effect, permits Federal funds subject to its funding limitations to be 
used for abortion services only in the limited cases of rape, incest, 
or if a

[[Page 53448]]

woman suffers from a 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. Abortion coverage beyond those limited circumstances is 
subject to the Hyde Amendment's funding limitations which prohibit the 
use of Federal funds for such coverage.
---------------------------------------------------------------------------

    \103\ The Hyde Amendment is not permanent Federal law, but 
applies only to the extent reenacted by Congress from time to time 
in appropriations legislation.
---------------------------------------------------------------------------

    Section 1303(b)(2) prohibits QHPs from using any amount 
attributable to PTC (including APTC) or CSRs (including advance 
payments of those funds to an issuer, if any) for coverage of abortion 
services for which Federal funds are prohibited. Under sections 
1303(b)(2)(B) and (b)(2)(D) of the ACA, as implemented in Sec.  
156.280(e)(2)(i) and (e)(4), QHP issuers must collect a separate 
payment from each enrollee without regard to the enrollee's age, sex, 
or family status, for an amount equal to the greater of the AV of 
coverage of abortion services for which public funding is prohibited, 
or $1 per enrollee per month. Section 1303(b)(2)(D) of the ACA 
establishes certain requirements with respect to a QHP issuer's 
estimation of the AV of abortion services for which Federal funds are 
prohibited including that a QHP issuer may not estimate such cost at 
less than $1 per enrollee, per month. Section 1303(b)(2)(C) of the ACA, 
as implemented at Sec.  156.280(e)(3), requires that QHP issuers 
segregate funds for coverage of such abortion services collected from 
enrollees into a separate allocation account used to pay for such 
abortion services. Thus, if a QHP issuer disburses funds for an 
abortion for which Federal funds are prohibited on behalf of an 
enrollee, it must draw those funds from the segregated allocation 
account.
    Notably, section 1303 of the ACA does 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 ACA. In the 2016 Payment Notice, HHS 
provided guidance with respect to acceptable methods that an issuer of 
individual market QHPs could use to comply with the separate payment 
requirement.\104\ HHS stated that QHP issuers could satisfy the 
separate payment requirement in one of several ways, including by 
sending the enrollee a single monthly invoice or bill that separately 
itemized the premium amount for coverage of abortion services for which 
Federal funds are prohibited; 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. HHS 
also stated that an enrollee could make the payment for coverage of 
such abortion services and the separate payment for coverage of all 
other services in a single transaction.\105\ On October 6, 2017, HHS 
released a bulletin that discussed the statutory requirements for 
separate payment, as well as this previous guidance on the separate 
payment requirement.\106\
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    \104\ 80 FR 10750 (February 27, 2015).
    \105\ 80 FR 10750, 10840 (February 27, 2015).
    \106\ 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.
---------------------------------------------------------------------------

    The 2019 Program Integrity Rule \107\ prohibited the compliance 
options that the 2016 Payment Notice previously provided to QHP issuers 
with regard to the separate payment requirement. Specifically, the 2019 
Program Integrity Rule finalized a policy requiring issuers of 
individual market QHPs offering coverage of abortion services for which 
Federal funds are prohibited to send an entirely separate monthly bill 
to policy holders just for the portion of the premium attributable to 
coverage of such abortion services. QHP issuers were required to either 
send separate paper bills (which could be sent in the same envelope or 
mailing), or send separate bills electronically (which were required to 
be in separate emails or electronic communications). The separate 
billing regulation also required QHP issuers to instruct the policy 
holder to pay for the portion of their premium attributable to coverage 
of abortion services for which Federal funds are prohibited through a 
separate transaction from any payment made for the portion of their 
premium not attributable to this coverage. It also required QHP issuers 
to make reasonable efforts to collect the payments separately. QHP 
issuers were to begin complying with these billing requirements on or 
before the QHP issuer's first billing cycle following June 27, 2020. 
Although HHS recognized that the previous methods of itemizing or 
providing advance notice about the amounts noted as permissible in the 
preamble of the 2016 Payment Notice arguably identified two `separate' 
amounts for two separate purposes, HHS also reasoned that the separate 
billing policy would better align the regulatory requirements for QHP 
issuer billing of enrollee premiums with the intent of the separate 
payment requirement in section 1303 of the ACA.\108\
---------------------------------------------------------------------------

    \107\ 84 FR 71674 (December 27, 2019).
    \108\ 84 FR 71674, 71693.
---------------------------------------------------------------------------

    HHS announced in the 2019 Program Integrity Rule that it would 
exercise enforcement discretion to mitigate risk of inadvertent 
coverage terminations that might result from enrollee confusion in 
connection with receiving two separate bills for one insurance 
contract. HHS explained that it would not take enforcement action 
against a QHP issuer that implemented a policy under which the issuer 
would not place an enrollee into a grace period and would not terminate 
QHP coverage based solely on the policy holder's failure to pay the 
separate bill. The 2019 Program Integrity Rule provided that HHS was 
adopting this enforcement posture effective June 27, 2020.
    In response to the proposal to adopt the separate billing 
requirement finalized in the 2019 Program Integrity Rule, HHS also 
received comments expressing concern that lack of transparency into 
whether QHPs provided coverage of abortion services for which Federal 
funds are prohibited presented the risk that consumers could 
unknowingly purchase such coverage. To address this risk, HHS announced 
that as of the effective date of the final rule, February 25, 2020, it 
would not take enforcement action against QHP issuers that allowed 
enrollees to opt out of coverage of such abortion services by not 
paying the separate bill for such services (the opt-out non-enforcement 
policy). The opt-out non-enforcement policy effectively gave issuers 
the flexibility to modify the benefits of a plan during a plan year 
based on an enrollee's desire to opt out of a plan's coverage of such 
abortion services.
    In light of the immediate need for QHP issuers to divert resources 
to respond to the COVID-19 PHE, HHS published an interim final rule 
with comment in May 2020 for Medicare and Medicaid Programs, Basic 
Health Programs and Exchanges (``May 2020 IFC'').\109\ Finalized at 
Sec.  156.280(e)(2)(ii), the rule delayed by 60 days the date when 
individual market QHP issuers would be required to begin separately 
billing policy holders such that QHP issuers were expected to comply 
with the separate billing regulation beginning on or before the QHP 
issuer's first billing cycle following August 26, 2020. The May 2020 
IFC noted that a 60-day delay was justified in light of the ongoing 
litigation in Federal courts in Maryland, Washington, and California 
challenging the separate billing

[[Page 53449]]

regulation. The May 2020 IFC also noted that the extended compliance 
deadline would only apply to the non-enforcement policy under which 
issuers would have flexibility to refrain from triggering grace periods 
or coverage terminations where a policy holder failed to pay the 
separate monthly bill, delaying when this enforcement posture would 
become available by 60 days (to August 26, 2020).
---------------------------------------------------------------------------

    \109\ 85 FR 27550.
---------------------------------------------------------------------------

    A district court in Washington \110\ invalidated the 2019 Program 
Integrity Rule's separate billing regulation in the state of Washington 
in April 2020, and district courts in Maryland \111\ and California 
\112\ vacated the 2019 Program Integrity Rule's separate billing 
regulation in July 2020, in advance of the postponed compliance 
deadline of August 26, 2020. On April 9, 2020, the United States 
District Court for the Eastern District of Washington issued an opinion 
declaring the separate billing regulation invalid in the State of 
Washington.\113\ The district court specifically found that the 
separate billing regulation was in conflict with Washington's ``Single-
Invoice Statute,'' \114\ which requires health insurance issuers in the 
state to bill enrollees using a single invoice. The district court held 
that the separate billing regulation did not preempt Washington's 
Single-Invoice Statute.
---------------------------------------------------------------------------

    \110\ Washington v. Azar, 461 F. Supp. 3d 1016 (E.D. Wash. 
2020).
    \111\ Planned Parenthood of Maryland, Inc. v. Azar, No. CV CCB-
20-00361 (D. Md. July 10, 2020); 5 U.S.C. 706.
    \112\ California v. U.S. Dep't of Health & Hum. Servs., 473 F. 
Supp. 3d 992 (N.D. Cal. July 20, 2020).
    \113\ Washington v. Azar, 461 F. Supp. 3d 1016 (E.D. Wash. 
2020).
    \114\ Wash. Rev. Code Sec.  48.43.074.
---------------------------------------------------------------------------

    On July 10, 2020, the United States District Court for the District 
of Maryland found the separate billing regulation to be contrary to 
section 1554 of the ACA and arbitrary and capricious under the 
Administrative Procedure Act, thus declaring it invalid and 
unenforceable nationwide.\115\ The district court found the separate 
billing regulation to be in conflict with section 1554 of the ACA, 
which, among other key provisions, prohibits the Secretary from 
promulgating regulations that create any unreasonable barriers to 
obtaining appropriate medical care or impede timely access to health 
care services. The district court concluded that the policy imposed an 
unreasonable barrier because it would make it harder for enrollees to 
pay for insurance because they must keep track of two separate bills, 
which is likely to cause confusion and might lead to some enrollees 
losing health insurance. The district court also held the separate 
billing regulation to be arbitrary and capricious, finding that HHS 
failed to provide a reasoned explanation for abandoning the policy that 
existed prior to the adoption of the current separate billing 
regulation in the 2019 Program Integrity Rule. The district court also 
held that the implementation deadline was arbitrary and capricious 
because HHS failed to consider and adequately address specific, 
contrary evidence from regulated stakeholders that the implementation 
deadline for compliance with the separate billing regulation was 
unreasonable and would not provide QHP issuers with sufficient time to 
comply.
---------------------------------------------------------------------------

    \115\ Planned Parenthood of Maryland, Inc. v. Azar, No. CV CCB-
20-00361 (D. Md. July 10, 2020); 5 U.S.C. 706.
---------------------------------------------------------------------------

    On July 20, 2020, the United States District Court for the Northern 
District of California issued an opinion \116\ holding that the 
separate billing regulation was arbitrary and capricious, setting it 
aside nationwide. The district court held that the required mid-year 
implementation date for issuers to comply with the separate billing 
regulation would cause substantial transactional costs to states, 
issuers, and enrollees without any corresponding benefit. The court 
further found that the 2019 Program Integrity Rule lacked a reasoned 
explanation for deviating from the prior acceptable methods available 
to QHP issuers for compliance with the separate payment requirement and 
for departing from industry billing practice.
---------------------------------------------------------------------------

    \116\ California v. U.S. Dep't of Health & Hum. Servs., 473 F. 
Supp. 3d 992 (N.D. Cal. July 20, 2020).
---------------------------------------------------------------------------

    HHS initially appealed all three decisions, but those appeals have 
been placed on hold following the recent change in administration. As 
explained in the proposed rule, in light of these developments, and 
upon further consideration of the court decisions invalidating the 
policy, HHS reassessed the value of the separate billing regulation and 
no longer believe it is justified in light of the high burden it would 
impose on issuers, states, Exchanges, and consumers, as well as the 
high likelihood of consumer confusion and unintended losses of 
coverage. Nor does HHS believe section 1303 of the ACA restricts 
issuers offering coverage of abortion services for which Federal funds 
are prohibited to collect the required separate payment through a 
separate bill and instruct consumers to pay for such a bill in a 
separate transaction. Rather, section 1303 of the ACA outlines 
requirements that issuers of individual market QHPs covering abortion 
services for which Federal funds are prohibited must follow to ensure 
that no public funding is utilized for coverage of such abortion 
services, including requiring issuers to collect separate payments for 
this portion of the premium, to segregate the funds, and to deposit 
such funds into separate allocation accounts. As the 2019 Program 
Integrity Rule acknowledged, section 1303 of the ACA does not specify 
the method a QHP issuer must use to comply with the separate payment 
requirement.\117\
---------------------------------------------------------------------------

    \117\ 84 FR 71674, 71683.
---------------------------------------------------------------------------

    After considering comments received on this proposal, HHS is 
finalizing amendments to Sec.  156.280(e)(2)(ii) to revert to and 
codify the policy previously adopted in the 2016 Payment Notice such 
that QHP issuers offering coverage of abortion services for which 
Federal funds are prohibited have flexibility in selecting a reasonable 
method to comply with the section 1303 separate payment requirement. As 
finalized, acceptable methods for satisfying the separate payment 
requirement are outlined at Sec.  156.280(e)(2)(ii) and include sending 
the policy holder a single monthly invoice or bill that separately 
itemizes the premium amount for coverage of such abortion services; 
sending the policy holder a separate monthly bill for these services; 
or sending the policy holder 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. Since HHS is 
finalizing these policies, the non-enforcement policies adopted in the 
2019 Program Integrity rule and the May 2020 IFC are discontinued.
    HHS is also finalizing as proposed the technical change to the 
section heading of Sec.  156.280 to more accurately reflect its 
contents. As finalized, it will instead read, ``Segregation of funds 
for abortion services.''
    Comment: The majority of commenters supported the proposed changes 
to repeal the separate billing regulation and codify the prior policy 
at Sec.  156.280(e)(2)(ii). A minority of commenters objected to the 
proposal.
    Commenters supporting repeal of the separate billing regulation 
asserted that eliminating the separate billing requirements would 
streamline issuer billing practices, alleviate consumer and issuer 
burden, lessen the confusion for consumers pertaining to billing for 
their health needs, and prevent termination of coverage that would have 
otherwise resulted from substantial consumer confusion over a second 
bill for such a miniscule amount. These commenters

[[Page 53450]]

highlighted how the separate billing regulation would have caused 
considerable and unnecessary confusion and frustration for consumers 
that may have jeopardized their health insurance coverage if not for 
court intervention invalidating the policy prior to implementation. 
Commenters supporting repeal also noted that the separate billing 
framework contradicted well established industry practices for sending 
one bill for the entire premium for a set period. These commenters 
highlighted that HHS never offered examples of where the new approach 
of separate billing is used for other types of insurance billing 
successfully and without harm to consumers, and that HHS broadly failed 
to support the change to separate billing with evidence that the 
approach was reasonable. Commenters stated that such an unreasonable 
requirement is arbitrary and capricious and therefore unlawful, and 
noted that the separate billing regulation was so egregious of an 
interpretation of section 1303 of the ACA that multiple Federal courts 
invalidated the policy in 2020.
    Commenters supported repeal from both a policy and legal 
perspective, noting that repeal of the separate regulation aligns with 
the vacatur of the policy by multiple Federal district courts in 2020. 
Commenters specifically raised that the Maryland District Court vacated 
the separate billing regulation in part because it would have created 
unreasonable barriers to obtaining appropriate medical care and impeded 
timely access to health care services, as it would have made it harder 
for enrollees to pay for insurance by making consumers keep track of 
two separate bills--in conflict with section 1554 of the ACA. 
Commenters also noted that court decisions invalidating the separate 
billing regulation focused on the harm that the requirements would have 
caused to enrollees if it went into effect. For example, commenters 
emphasized that the United States District Court for the Northern 
District of California issued an opinion holding that the separate 
billing regulation was arbitrary and capricious and focused on the 
substantial costs of the policy to states, issuers, and enrollees 
without any corresponding benefit.
    Commenters also raised that the separate billing regulation was 
incompatible with some state laws, including Washington law. Commenters 
asserted that the United States District Court for the Eastern District 
of Washington found that the separate billing regulation was invalid in 
Washington State because of Washington's ``single invoice statute,'' 
which the court found was not preempted by the separate billing 
regulation.
    Commenters also expressed support for codifying the policy put in 
place under the 2016 Payment Notice for issuer compliance with section 
1303's separate payment requirement, asserting that separately billing 
was unnecessary to achieve the congressional objective to section 1303 
of segregating funds into separate allocation accounts and ensuring no 
Federal funds are used for coverage of abortion services for which 
Federal funding is prohibited. Specifically, commenters noted that for 
the five years preceding the separate billing regulation, individual 
market QHP issuers covering abortion services for which Federal funding 
is prohibited had executed HHS-approved methods for complying with 
section 1303 as permitted under the 2016 Payment Notice and, in doing 
so, achieved the congressional intent of segregating funds as the 
statute requires, without the variety of negative consequences from the 
separate billing regulation. Supporting commenters explained that 
reverting to the pre-2019 policy properly prioritizes a more efficient 
policy that will alleviate any burden the separate billing regulation 
would have imposed on consumers and issuers. Commenters commended HHS 
for proposing to allow issuers and states to choose the best compliance 
option for the separate payment requirement in section 1303 that will 
minimize carrier and consumer burden in the context of the local, 
state-specific landscape.
    Some commenters expressing strong support for repeal of the 
separate billing policy and codification of the prior policy also 
asserted that, because the separate billing regulation has been vacated 
and because issuers never implemented the requirements, HHS does not 
technically need to finalize the proposed rule in order to grant 
issuers, consumers, and other stakeholders the requisite relief. These 
commenters emphasized that, by virtue of the Federal district courts' 
vacaturs, the policy finalized in the preamble of the 2016 payment 
notice is already currently in effect, which was itself a policy 
adopted after notice-and-comment rulemaking.
    Other commenters supported the repeal of the separate billing 
regulation and codification of the pre-2019 policy, but requested that 
HHS prohibit issuers from sending separate bills entirely. These 
commenters asserted that compliance with section 1303 falls on the 
issuers, not the consumers, and that the negative consequences of the 
issuer billing and the consumer paying for coverage through separate 
transactions--increasing consumer confusion without any real benefit 
and the risk of coverage termination--are significant. Commenters noted 
that section 1303 requires that any notice regarding payments ``shall 
provide information only with respect to the total amount of the 
combined payments for services'' covered by the plan and that this 
restriction suggests that bills regarding abortion should only bill 
``the total amount of the combined payments.'' These commenters 
therefore urged HHS to eliminate the option for QHP issuers to send a 
separate monthly bill for abortion services for which Federal funding 
is prohibited because it is prohibited by the statute, consistent with 
the purpose of section 1303, and supported by the record and common 
industry practice. Other commenters urged HHS to emphasize the third 
option for compliance, sending the consumer a notice at or shortly 
after time of enrollment, over the others as it is the least burdensome 
to consumers and would reduce potential confusion. If the option to 
send separate bills is maintained, some commenters encouraged HHS to 
consider adopting consumer protections to guard against the potential 
for policy holders to lose their health insurance coverage because they 
fail to pay the de minimis amount of the separate premium bill for 
abortion services for which Federal funds are prohibited, if issuers 
still choose to send separate bills.
    Commenters opposing the proposal objected to abortion coverage 
altogether and asked that HHS retain the separate billing regulation 
and continue to require separate checks, separate envelopes, and 
separate transactions for all QHPs that provide coverage for abortion 
services for which Federal funding is prohibited. Many commenters 
objecting to the proposal also asked that HHS allow issuers to permit 
consumers to opt out of such coverage by refusing to pay the portion of 
their premium attributable to coverage for abortions for which Federal 
funding is prohibited. Objecting commenters also challenged the 
assertion that the separate billing regulation would cause undue 
consumer confusion, pointing to how some policy holders receive 
multiple bills anyway from their insurance issuers or providers, such 
as consumers who have Medicare as well as a supplemental Medigap 
policy.
    Objecting commenters generally argued that section 1303 of the ACA 
expressly requires separate billing as the only appropriate method for 
collection of the separate payment required under

[[Page 53451]]

section 1303, that the burden estimated for implementation of the 
separate billing regulation is necessary to achieve compliance with the 
statute, and that repeal of the separate billing regulation will 
deprive consumers of needed transparency into coverage for which they 
may object on conscience or other grounds. Commenters asserted that all 
of the revised options for compliance with section 1303 proposed at 
Sec.  156.280(e)(2)(ii) other than separate billing are inadequate to 
satisfy the section 1303 requirement as they would conceal the portion 
of the premium attributable to certain abortion services and would 
permit issuers to collect monthly premiums in a single, rather than 
separate, payment. Commenters also questioned HHS's reasoning for 
continuing to allow issuers to bill separately as one of the available 
compliance options when such a billing method leads to so many 
unjustified burdens, consumer confusion, barriers to care, and 
inequities.
    Most commenters supported the proposal to change the section 
heading of Sec.  156.280 to ``Segregation of funds for abortion 
services.'' Commenters asserted that this technical change would better 
align with the intention of section 1303 of the ACA which expressly 
requires issuers to segregate funds and accounts for certain abortion 
coverage but does not pass on that burden to consumers. Commenters that 
objected to the proposal to repeal the separate billing regulation also 
objected to renaming the section heading, arguing that the technical 
change is inappropriate and a further attempt to establish regulations 
that deviate from the law, for the same reasons that such commenters 
object to the proposal overall.
    Response: HHS agrees with commenters that repealing the separate 
billing regulation is consistent with the Federal district court 
decisions invalidating the separate billing regulation and the 
requirements of section 1303 of the ACA. HHS also agrees that codifying 
the pre-2019 policy reinstates a policy that supports meaningful issuer 
compliance with section 1303 by ensuring appropriate segregation of 
funds as required by statute, without imposing the operational and 
administrative burdens of the separate billing regulation and without 
causing additional consumer confusion and unintended losses of 
coverage.
    Although HHS acknowledges that some commenters continue to support 
the separate billing regulation, HHS emphasizes that multiple Federal 
district courts have already invalidated the separate billing 
regulation, preventing HHS from requiring its implementation.
    HHS agrees with commenters' assertions that the invalidation of the 
separate billing regulation by the Federal district courts is binding 
on HHS and currently prohibits implementation of the separate billing 
policy.\118\ HHS also believes the potential harms to consumers, costs 
to issuers and states, consumer confusion, and potential loss of 
consumer coverage that would have occurred under the separate billing 
regulation warrant a formal repeal of the policy through notice and 
comment rulemaking not only to reflect these legal developments but 
also to rectify the interpretation and implementation of section 1303 
of the ACA as a matter of Federal policy. HHS also believes it is 
important to codify the pre-2019 options for issuer compliance with 
section 1303 of the ACA, as such compliance options were noted only in 
the preamble to the 2016 Payment Notice. Taken together, HHS believes 
the Federal district court cases invalidating the separate billing 
regulation in combination with finalizing repeal of the regulation and 
codifying the pre-2019 options in this rule will provide additional 
clarity regarding compliance with section 1303 for stakeholders and 
remove contradictory policy interpretations at the Federal level.
---------------------------------------------------------------------------

    \118\ Planned Parenthood of Maryland, Inc. v. Azar, No. CV CCB-
20-00361 (D. Md. July 10, 2020); 5 U.S.C. 706; California v. U.S. 
Dep't of Health & Hum. Servs., 473 F. Supp. 3d 992 (N.D. Cal. July 
20, 2020); Washington v. Azar, 461 F. Supp. 3d 1016 (E.D. Wash. 
2020).
---------------------------------------------------------------------------

    Therefore, HHS is repealing the separate billing regulation and 
codifying the policy previously adopted in the 2016 Payment Notice such 
that QHP issuers offering coverage of abortion services for which 
Federal funds are prohibited again have flexibility in selecting a 
reasonable method to comply with the section 1303 separate payment 
requirement. As finalized at Sec.  156.280(e)(2)(ii), acceptable 
methods for satisfying the separate payment requirement include sending 
the policy holder a single monthly invoice or bill that separately 
itemizes the premium amount for coverage of such abortion services; 
sending the policy holder a separate monthly bill for these services; 
or sending the policy holder 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. As finalized, issuers 
will no longer be required to send separate paper bills or separate 
electronic communications for the portion of the policy holder's 
premium attributable to coverage of abortions services for which 
Federal funding is prohibited. Nor will an issuer electing to send 
separate bills, or utilizing any of the acceptable methods for 
collecting the separate payment, be required to instruct consumers to 
pay for the portion of their premium attributable to coverage of 
abortion services for which Federal funds are prohibited in a separate 
transaction, or to make efforts to collect these payments separately.
    HHS again emphasizes that under this finalized revision to Sec.  
156.280(e)(2)(ii), individual market QHP issuers covering abortion 
services for which Federal funds are prohibited are still required to 
comply with section 1303 of the ACA and all applicable requirements 
codified at Sec.  156.280. As discussed in the proposed rule, this 
includes collecting a separate payment from each policy holder per 
month for an amount equal to the greater of $1 or the AV of coverage of 
abortion services for which Federal funds are prohibited, continuing to 
ensure that no Federal funding is used to pay for coverage of such 
abortion services, submitting a plan to the relevant state insurance 
regulator outlining how it will comply with the segregation of funds 
requirements, and continuing to segregate funds for coverage of such 
abortion services collected from policy holders into a separate 
allocation account that is to be used to pay for such abortion 
services.
    HHS understands commenter concerns regarding issuers that might 
choose to continue sending separate bills for the portion of the policy 
holder's premium attributable to abortion services for which Federal 
funding is prohibited. However, HHS continues to anticipate most 
issuers will decline to send two separate monthly bills and will 
instead choose to collect separate payments by one of the other 
proposed acceptable methods, as those alternatives minimize 
administrative complexity for issuers, align with industry billing 
practice, are less costly and administratively burdensome, and promote 
a more seamless consumer billing and payment experience. Although 
sending two bills would continue to be an option under the revisions 
HHS is finalizing, HHS emphasizes that any issuer electing to send two 
separate monthly bills should do so in a manner that minimizes consumer 
confusion, promotes continuity of coverage, and complies with section 
1303 of the ACA. For example, if an issuer still chooses to send two 
separate monthly bills, issuers should include both bills in the same 
mailing, include the total premium due on both bills, explain on both 
bills that

[[Page 53452]]

the total premium due is inclusive of the amount attributable to 
coverage of such abortion services for which Federal funding is 
prohibited, and explain that the consumer may pay for both bills in a 
single transaction. Issuers that do choose to send separate bills 
should also explain to the consumer that non-payment of any premium 
due, including for the portion of premium attributable to such abortion 
services, would continue to be subject to state and Federal rules 
regarding grace periods to mitigate risk of inadvertent loss of 
coverage from failure to pay a portion of the premium due. Although HHS 
encourages issuers to utilize the other available options for 
compliance, HHS also believes separately billing in the manner 
described (without direction to pay in two separate transactions and 
with adequate consumer protections in place) would comply with section 
1303, which does not specify a single method for compliance with the 
separate payment requirement, and would continue to alleviate the 
burden from the rigid requirements of the separate billing regulation.
    Comment: Commenters who objected to repealing the separate billing 
regulation argued that the revised options for compliance with section 
1303's separate payment requirement would not adequately address the 
concerns of consumers who object to coverage of abortions for which 
Federal funding is prohibited based on their conscience or religion. 
Such commenters maintain that abortion is immoral, has no place in 
health care, and that the separate billing regulation is the best way 
to affirm consumer conscience rights. These commenters asserted that 
the proposed revisions to Sec.  156.280(e)(2)(ii) weaken statutory 
prohibitions on Federal funding for certain abortions that protect the 
conscience rights of taxpayers consistent with the Hyde Amendment. Such 
commenters asked that HHS allow consumers to opt out of coverage for 
abortions for which Federal funding is prohibited by not paying the 
portion of their premium attributable to such coverage, thereby 
avoiding the separate charge entirely.
    Objecting commenters also stated that repealing the separate 
billing regulation removes transparency for consumers into which QHPs 
cover abortion services for which Federal funding prohibited and that 
the proposal to codify prior policy options for compliance with section 
1303 would leave it up to QHP issuer discretion to determine how to 
comply with the statutory requirements of the ACA, when in fact the 
only method that complies with the statute existed under the separate 
billing regulation. Such commenters also asserted that the prior 
methods for compliance with section 1303 under the 2016 Payment Notice 
deprive consumers of needed transparency and allow many unwittingly to 
purchase plans that include abortion coverage that might be contrary to 
their religious and moral convictions. These commenters urged HHS to 
pursue greater transparency by being open to consumers about their 
coverage options and what they are paying for in their insurance.
    Commenters supporting the proposal to repeal the separate billing 
regulation and codify the prior options for compliance noted that 
transparency on HealthCare.gov could be further improved for consumers 
who value coverage of abortion services by including language during 
plan selection that indicates when a plan does not cover abortion 
services for which Federal funding is prohibited so that consumers are 
aware of this lack of coverage and can seek out a different plan with 
such coverage.
    Commenters supporting repeal also supported discontinuing the opt-
out non-enforcement policy. These commenters noted that HHS never 
sought public comment on that policy, which was especially harmful to 
consumers as the opt-out would have applied not only to the policy 
holder but also to anyone else on the policy, such as a spouse or an 
adult child, potentially causing consumers to lose coverage of abortion 
services. Commenters supporting discontinuation of the opt-out non-
enforcement policy also asserted that allowing opt-outs in this manner 
runs afoul of the plain language of section 1303, which distinguishes 
between plans that offer abortion coverage for which Federal funding is 
prohibited to all enrollees on one hand, and plans that do not offer 
such coverage, on the other. Commenters asserted that section 1303 
therefore leaves no room for the issuer of a single plan to offer such 
abortion coverage to some enrollees but not others, or to permit 
enrollees to opt-out of such coverage and effectively turn a single 
plan otherwise approved by the Exchange and offered to consumers into 
two separate plans. Commenters also noted that, in announcing the opt-
out non-enforcement policy, HHS did not quantify the financial impact 
that was certain to result from it, as the issuers and plan 
participants who maintained abortion coverage would be left to shoulder 
the cost of that coverage without those who had opted out.
    Response: Repealing the separate billing regulation and codifying 
the prior policy will allow issuers to bill using one of the prior 
acceptable methods that would eliminate all risk of inadvertent 
coverage terminations that could result from consumer confusion due to 
receiving two monthly bills (one for a miniscule amount, not less than 
$1) in connection with one insurance policy.
    As such, HHS affirms that repealing the separate billing regulation 
will also discontinue the non-enforcement policies adopted in the 2019 
Program Integrity Rule and the May 2020 IFC, including the opt-out non-
enforcement policy, which were in large part intended to mitigate 
potential coverage losses resulting from enrollee confusion that leads 
to enrollees' failures to pay the separate, small monthly bill covering 
abortion services for which Federal funds are prohibited.
    HHS acknowledges that the 2019 Program Integrity Rule noted that 
the opt-out non-enforcement policy was also intended to address 
commenter concerns regarding insufficient transparency into whether 
QHPs include coverage of abortion services for which Federal funds are 
prohibited and the risk that consumers could unknowingly purchase QHPs 
that include such coverage, and potentially conflict with their 
conscience. In response to comments again raising these concerns, HHS 
reiterates that it has already taken steps to improve transparency 
regarding QHP offerings of abortion coverage by making it easier for 
consumers to select QHPs that they believe are best suited to their 
needs and preferences. For instance, information is available during 
plan selection on HealthCare.gov that can assist consumers in more 
readily identifying QHPs that offer coverage of such abortion services 
and provide consumers with the requisite information to make an 
informed choice about their plan selections regarding coverage of such 
services.\119\ Further, although section 1303 requires collection of a 
separate payment and segregation of funds for coverage of certain 
abortion services, it does not require issuers to alert consumers to 
this coverage for purposes of transparency of benefits. Like with 
coverage of other benefits, consumers seeking a QHP that

[[Page 53453]]

covers abortion services should review plan details and plan documents 
for information during plan selection that affirms the plan's coverage 
of such services. Consumers are able to make plan selections based on 
their unique health needs and benefit coverage preferences prior to 
enrollment, and updates made to plan selection on HealthCare.gov to 
list coverage of abortion services for which Federal funding is 
prohibited facilitates this selection process for individuals with 
conscience objections or other preferences regarding their coverage.
---------------------------------------------------------------------------

    \119\ Frequently Asked Questions for Agents, Brokers, and 
Assisters Providing Consumers with Details on Plan Coverage of 
Certain Abortion Services (November 21, 2018), available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/FAQ-on-Providing-Consumers-with-Details-on-Plan-Coverage-of-Certain-Abortion-Services.pdf.
---------------------------------------------------------------------------

    Although HHS acknowledges that there are some states where there 
may be no QHP available on the Exchange that omits coverage for such 
abortion services, HHS again emphasizes that such plan availability is 
subject to state law and issuer choice in plan design as permitted 
under section 1303 of the ACA. Specifically, section 1303(b)(1)(A)(ii) 
specifies that an issuer shall determine whether or not the plan 
provides coverage for abortion services for which Federal funds are 
prohibited for the applicable plan year, expressly providing that 
issuers are able to determine whether to offer coverage for such 
abortion services, subject to state law. Therefore, it is state law 
that dictates to what extent issuers may cover abortion services for 
which Federal funding is prohibited, the issuer's option whether to 
offer such services pursuant to state law, and the enrollee's option 
whether to enroll in such a plan.
    HHS therefore continues to believe that allowing an opt-out policy 
would conflict with the flexibility in issuer plan design expressly 
provided under section 1303. HHS also believes the opt-out non-
enforcement policy conflicts with Sec.  147.106(e)(1), which generally 
provides that only at the time of coverage renewal may issuers modify 
the health insurance coverage for a product offered to a group health 
plan or an individual, as applicable.
    It also specifies that any such modification in the individual 
market must be consistent with state law and be effective uniformly for 
all individuals with that product. Finally, the United States District 
Court for the Northern District of California cited the opt-out non-
enforcement policy in finding that the 2019 Program Integrity Rule 
lacked a reasoned explanation for deviating from the prior acceptable 
methods available to QHP issuers for compliance with the separate 
payment requirement.\120\ The court explained that inclusion of the 
opt-out non-enforcement policy, which was not subject to public 
comment, supported the court's conclusion that HHS changed its prior 
policy without affording any reasoned explanation for the change.
---------------------------------------------------------------------------

    \120\ California v. U.S. Dep't of Health & Hum. Servs., 473 F. 
Supp. 3d 992, 1003 (N.D. Cal. July 20, 2020) (citing Encino 
Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2125 (2016)).
---------------------------------------------------------------------------

    For these reasons, and given that the separate billing requirements 
finalized in the 2019 Program Integrity Rule have been invalidated, 
these non-enforcement policies are no longer necessary or feasible 
long-term and are therefore discontinued. Section 1303 of the ACA 
requires certain billing, accounting, and notice requirements of 
issuers in the individual market to ensure that issuers that do offer 
abortion services for which Federal funding is prohibited do so in a 
manner that ensures separation of funds consistent with statute. HHS 
believes the permissible methods finalized at Sec.  156.280(e)(2)(ii) 
for issuer compliance with section 1303 of the ACA offer issuers 
several ways to comply with section 1303 of the ACA in a manner that 
works best for them and minimizes burden on consumers.
    Comment: Commenters supporting the proposal to repeal the separate 
billing regulation and codify the prior policy explained that the 
separate billing regulation would have imposed new overly burdensome 
costs on issuers, states, State Exchanges, and FFEs, which would have 
been passed on to consumers in the form of higher premiums.
    Supporting commenters stated that issuers subject to the separate 
billing requirements would have had to redesign their billing systems 
and imposed expensive IT changes on issuers and states, requiring 
creation of an operating billing system only for individual Exchanges 
and not for products sold in any other market. Commenters also agreed 
that the separate billing regulation would have required costly changes 
to other issuer operations such as invoice processing, collections, 
customer service support, and electronic data interchange (EDI) 
transactions with Exchanges. Commenters also agreed there would be 
added administrative costs of mailing separate bills in separate 
envelopes and collecting separate payments. Commenters also expressed 
concern that the highest costs from the separate billing regulation 
would have been concentrated in states that require abortion coverage. 
Some commenters noted that issuers have already incurred ongoing costs 
for printing and mailing, additional staffing, and reprograming billing 
systems and that the separate billing regulation already resulted in 
increased burden for issuers and consumers, widespread confusion by 
consumers and other stakeholders, and an increase in frustration and 
confusion around grace periods and terminations.
    Supporting commenters also stated that the separate billing 
regulation would have been so burdensome on issuers and consumers that 
it would have impeded access to abortion coverage, which is a common 
and safe medical intervention, and a legally and constitutionally 
protected form of medical care in the United States. These commenters 
noted that some issuers would find the separate billing regulation so 
burdensome that they would either leave the Exchange or drop coverage 
for abortion care entirely. These commenters asserted that coverage for 
abortion care often means the difference between getting the health 
care that a consumer needs and being denied that care, and that 
individuals denied abortions are more likely to experience eclampsia, 
other serious medical complications, and death, remain in relationships 
where interpersonal violence is present, and suffer anxiety after being 
denied an abortion.
    Commenters agreed that it would have had a disproportionate effect 
on consumer groups who already face barriers in navigating health 
insurance, particularly people of color, immigrants, individuals with 
LEP or low literacy and educational levels, and those living with 
visual disabilities and/or impairments. Commenters explained that 
restrictions to abortion coverage such as the separate billing 
regulation particularly harm BIPOC as well as LGBTQ+ individuals who 
disproportionately struggle with poverty and who are over-represented 
in the population of individuals receiving abortions. Commenters noted 
that 28 percent of individuals who receive abortions are Black and 25 
percent are Latinx, while they represent only 13 percent and 18 percent 
of the U.S. population, respectively. These commenters also noted that 
the separate billing regulation would have exposed many of these 
individuals and families to untenable economic circumstances because, 
if issuers were to drop such abortion coverage, the costs would be 
transferred to consumers and such costs would likely disproportionately 
impact low-income women who already face barriers to accessing health 
care services. Commenters also asserted that termination of coverage 
due to confusion over payment of the second

[[Page 53454]]

bill would be especially problematic for consumers with critical 
medical needs such as cancer patients and survivors, as gaps in 
coverage may interrupt treatment schedules which could jeopardize 
outcomes in care.
    Commenters also noted that repealing the separate billing 
regulation and interpreting section 1303 of the ACA in the least 
burdensome manner is consistent with both the Department's mission to 
``enhance the health and well-being of all Americans'' and E.O. 14009, 
which directed HHS to review all existing regulations to determine 
whether they are inconsistent with the Administration's policy priority 
of ``eliminating unnecessary difficulties to obtaining health 
insurance.'' Commenters also expressed support that the proposal is 
consistent with E.O. 13985, which directed HHS to assess whether, and 
to what extent, its programs and policies ``perpetuate systemic 
barriers to opportunities and benefits for people of color and other 
underserved groups.'' \121\
---------------------------------------------------------------------------

    \121\ 86 FR 7009 (Jan. 25, 2021).
---------------------------------------------------------------------------

    Commenters objecting to repeal of the separate billing regulation 
and codification of the pre-2019 policy asserted that justifying repeal 
of the policy based partially on a reassessment of burden ignores the 
issuers, states, Exchanges, and consumers for which separate billing 
regulation had no impact. For example, such commenters explained that 
the separate billing regulation had no effect on issuers, states, 
Exchanges, and consumers in states that prohibit insurance coverage of 
abortion services for which Federal funding is prohibited or on issuers 
that do not include such coverage in their plans for other reasons.
    Objecting commenters broadly criticized HHS's cost estimates for 
the burden associated with the separate billing regulation, arguing 
that HHS failed to consider important factors, explore sufficient data, 
and make necessary estimates. These commenters asserted that HHS based 
its cost estimates on the projections from the 2019 Program Integrity 
Rule which commenters claim lack sufficient justification. For example, 
commenters asserted that HHS did not provide sufficient evidence that 
certain groups of people are more likely to be impacted by the separate 
billing regulation than others or that the burden will fall more 
heavily on marginalized communities. Such commenters added that, in any 
event, such arguments cannot justify violating the separate billing 
requirement that commenters argue is expressly required under section 
1303.
    Commenters also argued that HHS has not shown how repeal of the 
separate billing regulation and codification of the prior policy will 
add a financial benefit for either consumers or issuers that outweighs 
the harm caused to consumer transparency, conscience protections, and 
statutory compliance with section 1303. Such commenters asserted that 
the separate billing regulation would have rightly shifted the burden 
of complying with section 1303 away from individual consumers and onto 
issuers. Commenters also asserted that, without exploring further 
information, HHS cannot claim a full and complete savings of the 
estimated costs had the separate billing regulation been implemented.
    Objecting commenters also alleged that, regardless of the extent of 
burden associated with the separate billing regulations on issuers, 
states, Exchanges, and consumers, any such burden is not unreasonable, 
but rather is necessary to ensure compliance with section 1303. 
Commenters objecting to repeal of the separate billing regulation also 
posited that HHS provided insufficient evidence to support the 
assertion that marginalized communities would be disproportionality 
burdened by the separate billing regulation had it been implemented.
    Commenters also asserted that the cost estimates fail to address or 
take into account recent changes in the law made by the ARP. Commenters 
stated that millions of Americans are newly eligible for zero-dollar 
coverage under ARP but that, in states where all or most individual 
market plans cover abortion for which Federal funding is prohibited, 
consumers will not be able to purchase a zero-dollar premium plan 
because of section 1303's funding restrictions. Commenters therefore 
argued that individuals in such situations are already paying, in 
effect, a ``separate bill'' for that coverage and would not face 
additional burdens established by the separate billing regulation. 
Commenters raising this objection asked HHS to explain how the 
Department will enforce section 1303's funding restrictions for 
otherwise zero-premium Exchange plans and to provide a state-by-state 
analysis of the effects of the proposed rule.
    Response: HHS agrees with commenters that the burden on 
stakeholders and consumers to comply with the separate billing 
regulation would have been overly burdensome if the policy had 
ultimately been implemented. HHS also agrees that the increased burden 
associated with issuers complying with the separate billing regulation 
could have influenced whether a QHP issuer continues to offer coverage 
of abortion services for which Federal funding is prohibited in states 
that do not require it, an outcome which was also acknowledged in the 
2019 Program Integrity Rule. HHS also agrees with commenters that, had 
the separate billing regulation been implemented, consumer confusion 
over receiving a separate bill for a relatively small amount of premium 
could have caused inadvertent loss of coverage and would have imposed 
significant burden on states and issuers to implement the new billing 
framework.
    HHS generally disagrees with commenters contesting the estimated 
cost savings of repealing the separate billing regulation, particularly 
those claiming that the estimated cost savings are too high because 
they believe that the estimated burden in the 2019 Program Integrity 
rule was inflated. Some commenters noted that issuers have already 
incurred ongoing costs for printing and mailing, additional staffing, 
and reprograming billing systems and that the separate billing 
regulation already resulted in increased burden for issuers and 
consumers, widespread confusion by consumers and other stakeholders, 
and an increase in frustration and confusion around grace periods and 
terminations. HHS acknowledges that some costs may have already been 
incurred by issuers and that the actual cost savings, especially for 
one-time IT related costs, may be lower than HHS estimates. 
Unfortunately, HHS does not have an estimate of costs already incurred 
by issuers and can only estimate savings going forward. HHS nonetheless 
continues to believe the timing of the courts' actions likely dissuaded 
issuers from assuming further costly administrative and operational 
burdens required to build the separate billing policy into their 
billing and IT systems. As the courts' nationwide invalidation of the 
policy prevented HHS from requiring initial implementation of the 
separate billing regulation, the potential consumer confusion over 
payment obligations, which could have inadvertently led to non-payment 
of enrollee premium and subsequent termination of consumer coverage, 
was also avoided. Furthermore, HHS continues to believe that requiring 
separate billing is unnecessary and overly burdensome to achieve 
compliance with section 1303 of the ACA. Section 1303 does not specify 
a method for compliance with the separate payment requirement, and HHS 
believes the new issuer compliance

[[Page 53455]]

options codified at Sec.  156.280(e)(2)(ii) minimize stakeholder burden 
and protect against consumer confusion and potential loss of coverage.
    HHS acknowledges that consumers who live in states where premiums 
for Exchange coverage cannot be fully paid for with APTC, such as 
states that require coverage of abortion services for which Federal 
funding is prohibited, will not have access to a silver plan with a 
zero-dollar premium, as further explained in the preamble to Sec.  
155.420(d)(16) of the proposed rule.\122\ However, HHS also notes that 
individual market QHP issuers covering abortion services for which 
Federal funds are prohibited offering coverage to consumers who qualify 
for zero-dollar premium plans are still required to comply with section 
1303 of the ACA and all applicable requirements codified at Sec.  
156.280. HHS also notes that the ARP was enacted in 2021 and, 
therefore, the consumer cost and burden estimates in each respective 
rule regarding the separate billing regulation were based on the 
estimated number of all consumers enrolled in QHPs offering coverage 
for abortion and are reflective of the anticipated burden at that time.
---------------------------------------------------------------------------

    \122\ 86 FR 35156.
---------------------------------------------------------------------------

    HHS similarly disagrees with commenters questioning the validity of 
the cost estimates and cost-benefit analysis for repealing the separate 
billing regulation and codifying the prior acceptable methods for 
compliance with section 1303. In response to comments that objected to 
the omission of issuers that do not cover abortion services for which 
Federal funding is prohibited and states that ban such coverage, HHS 
notes that such an omission is appropriate as such issuers and states 
would not be impacted by the requirements or the high costs and burden 
from the separate billing regulation. The 2019 Program Integrity Rule 
included a detailed account of the anticipated financial and 
operational burdens from the separate billing regulation, estimates 
which were based upon plan and premium data, actuarial estimates, 
public comments from issuers and states directly regulated by the 
separate billing policy, and consumer enrollment figures. Those burdens 
are discussed in further detail in sections III., ``Collection of 
Information Requirements,'' and IV., ``Regulatory Impact Analysis,'' of 
that rule and explain from where such estimates are derived. Those 
burdens included one-time cost estimates for issuers and State 
Exchanges performing premium billing and payment processing for 
operational changes such as implementation of the technical build to 
implement the necessary system changes to support separate billing and 
receipt of separate payments, which would require significant changes 
to current billing practice and pose increased challenges given the 
mid-plan year implementation timeline. The anticipated burden also 
included ongoing annual costs for sending a separate bill to impacted 
enrollees, associated record keeping, customer service, and compliance, 
as well as annual materials costs related to printing of and sending 
the separate bill. HHS also acknowledged that the separate billing 
regulation would impose burdens on State Exchange operations due to 
one-time technical changes such as updating online payment portals to 
accept separate payments and updating enrollment materials, as well as 
ongoing annual costs associated with increased customer service, 
outreach, and compliance.
    The Program Integrity Rule also projected that FFEs would incur 
additional costs due to one-time technical changes and increased call 
volumes and additional customer services efforts. HHS also stated that 
QHP issuers were likely to consider these new costs when setting 
actuarially sound rates and that this would likely lead to higher 
premiums for enrollees. HHS also anticipated increased costs to 
consumers for the time required to read and understand the separate 
bills and to seek help from customer service if necessary, and 
additional time to read and send separate payments in subsequent 
months. In total, the projected burden to all issuers, states, State 
Exchanges performing premium billing and payment processing, the FFEs, 
and consumers totaled $546.1 million in 2020, $232.1 million in 2021, 
$230.7 million in 2022, and $229.3 million annually in 2023 and 
onwards.
    As stated in the proposed rule, HHS has since reassessed these 
burdens and agree with commenters that the consumer confusion and new 
logistical obstacles from the separate billing regulation would 
disproportionately burden communities that already face barriers to 
accessing care, such as individuals with LEP, individuals with 
disabilities, rural residents, those with inconsistent or no access to 
the internet, those with low levels of health care system literacy, and 
individuals within other marginalized communities. The impact of these 
barriers to access for the aforementioned segments of consumers are 
routinely borne out in multiple studies and supported by readily 
available data and evidence.\123\ For example, the National Council on 
Disability concludes that, ``[p]eople with disabilities experience more 
problems accessing health care than other groups, and these 
difficulties increase for those with the most significant disabilities 
and who are in the poorest health.'' \124\ Existing inequalities in 
access to health care resulting from those barriers would be 
exacerbated by the addition of further and unnecessary requirements 
that result in consumers receiving a second separate bill for a 
relatively miniscule amount with an arbitrary requirement to pay both 
bills in separate transactions. As many commenters noted, failure to 
pay the separate bill entirely due to consumer confusion could also 
lead to a complete loss of coverage, further exacerbating existing 
health disparities and jeopardizing health outcomes.\125\ The 2019 
Program Integrity Rule also acknowledged that the high burden 
associated with the separate billing regulation might result in issuers 
withdrawing coverage of abortion services for which Federal funds are 
prohibited altogether to avoid the associated burden, requiring some 
enrollees to pay for these services out-of-pocket. Based on a 2014 
study, the average costs to patients for first-trimester abortion care 
was $461, and anywhere from $860 to $1,874 for second-trimester 
abortion care.\126\ Transferring these costs to enrollees could 
disproportionately impact low-income women for whom these out-of-pocket 
costs could represent a significant financial burden. In addition,

[[Page 53456]]

low-income women may already face barriers to accessing quality health 
care due to their socioeconomic status, gender, sexual orientation, 
nationality, or race.\127\ HHS believes proposing repeal of the 
separate billing regulation would remove these burdensome requirements 
and obstacles, promoting health equity.
---------------------------------------------------------------------------

    \123\ See Rural Health, Centers for Disease Control and 
Prevention, available at https://www.cdc.gov/chronicdisease/resources/publications/factsheets/rural-health.htm; Accenture, The 
Hidden Cost of Healthcare System Complexity (2018), available at 
https://www.accenture.com/_acnmedia/pdf-104/accenture-health-hidden-cost-of-healthcare-system-complexity.pdf; The Current State of 
Health Care for People with Disabilities, The National Council on 
Disability, available at https://www.ncd.gov/publications/2009/Sept302009#Overview. See Victor G. Villagra et al., Health Insurance 
Literacy: Disparities by Race, Ethnicity, and Language Preference, 
American Journal of Managed Care (Mar. 2019), available at https://www.ajmc.com/view/health-insurance-literacy-disparities-by-race-ethnicity-and-language-preference.
    \124\ See The Current State of Health Care for People with 
Disabilities, The National Council on Disability, available at 
https://www.ncd.gov/publications/2009/Sept302009#Overview.
    \125\ See Health Coverage by Race and Ethnicity, 2010-2019, 
Kaiser Family Foundation, available at https://www.kff.org/racial-equity-and-health-policy/issue-brief/health-coverage-by-race-and-ethnicity/.
    \126\ See Roberts, Sarah C. M., Heather Gould, Katrina Kimport, 
Tracy A. Weitz, and Diana Greene Foster. ``Out-of-Pocket Costs and 
Insurance Coverage for Abortion in the United States.'' Women's 
Health Issues, vol. 24, no. 2 (2014): e211-e218.
    \127\ See Disparities, Healthy People 2020, available at https://www.healthypeople.gov/2020/about/foundation-health-measures/Disparities.
---------------------------------------------------------------------------

    Comment: Commenters supporting the proposal to repeal the separate 
billing regulation and codify the prior policy from the 2016 Payment 
Notice expressed support for reverting to an interpretation of section 
1303 that is consistent with Congressional intent. Such commenters 
emphasized that, although Congress decided to treat abortion 
differently when passing section 1303, it did so specifically to ensure 
that private insurance plans could continue to decide whether or not to 
cover abortion in a state that did not ban such coverage. These 
commenters also noted that during the ACA debates and negotiations, 
Congress rejected amendments aimed at more stringent restrictions or 
prohibitions of abortion coverage. Commenters also supported repeal of 
the separate billing regulation, noting it would have interfered with 
flexibility provided to states under section 1303 of the ACA by 
interfering with states' requirements to offer or allow abortion 
coverage in their plans, which section 1303 expressly permits.
    Commenters also noted that section 1303(b)(2)(E)(i) of the ACA 
designates state insurance commissioners as the entities responsible 
for monitoring, overseeing, and enforcing the provisions in section 
1303 related to the segregation of funds for QHPs that cover abortion 
services for which Federal funding is prohibited.
    Commenters supporting repeal of the separate billing regulation 
agreed that section 1303 does not expressly require a specific method 
for collecting the separate payment for abortion services for which 
Federal funding is prohibited. Commenters also highlighted that section 
1303(b)(3)(B) of the ACA specifies that issuer notifications shall 
provide information only with respect to the total amount of the 
combined payments for abortion services for which Federal funding is 
prohibited and other services covered by the plan. Commenters therefore 
stated that requiring separate billing for these services directly 
contradicts section 1303(b)(3)(B) as it would have required issuers to 
separately notify the consumer on a monthly basis of the portion of 
their premium attributable to coverage of abortion services for which 
Federal funds are prohibited.
    Commenters also stated that codifying the pre-2019 options for 
compliance with the separate payment requirement comply with the 
section 1303(b)(2)(E) of the ACA, which states that health plans shall 
``comply with the segregation requirements in this subsection through 
the segregation of plan funds in accordance with applicable provisions 
of generally accepted accounting requirements, circulars on funds 
management of the Office of Management and Budget, and guidance on 
accounting of the Government Accountability Office.'' Specifically, 
commenters noted that generally accepted accounting requirements would 
permit one single bill outlining the separate charges for any covered 
abortion services for which Federal funding is prohibited. Commenters 
noted that requiring separate bills for each charge, as established in 
the 2019 Program Integrity Rule, goes too far, is against industry 
practice, and is not what section 1303 requires.
    Commenters objecting to the proposal to repeal the separate billing 
regulation asserted that section 1303 is unambiguous in requiring a 
separate bill for coverage of abortion for which Federal funding is 
prohibited, and that any ambiguity is clarified by the legislative 
history of section 1303 of the ACA. Objecting commenters also stated 
that, prior to the separate billing regulation, HHS failed to enforce 
section 1303's separate payment requirements sufficiently, citing a 
2014 Government Accountability Office (GAO) report that found issuer 
inconsistencies in compliance with section 1303 requirements \128\ and 
a 2018 letter from Congress which cited the same GAO report.\129\ Such 
commenters objected to repeal of the separate billing regulation, 
stating that requiring two separate bills would have addressed what 
commenters believed was insufficient enforcement of section 1303. 
Commenters argued that money that originates as a single payment and is 
later separated into separate allocation accounts is not separate 
within the meaning of section 1303 and that only with separation from 
intake to expenditure can health care providers meaningfully ensure 
that abortion services are not being funded from the same pool of 
resources as other health care services. These commenters asserted that 
the separate billing regulations align best with the text of the ACA 
and the intent of Congress in including section 1303 by providing the 
most common-sense route to encourage consumers to make separate 
payments as required by statute and to maintain the segregation of 
funds from intake to expenditure. Commenters also stated that, 
according to Merriam-Webster Dictionary, the word ``separate'' means 
``to set or keep apart'' and that this warrants an interpretation of 
section 1303 as requiring only separate bills. Objecting commenters 
also argued that section 1303(b)(2)(B)(i) of the ACA demonstrates that 
section 1303 requires separate billing by elaborating that in the case 
of a payroll deposit, a separate deposit is required. Commenters 
therefore assert that the fact that section 1303 expressly requires 
separate deposits for certain abortion coverage in the case of premiums 
paid through employee payroll deposits further supports the 
interpretation that issuers must collect all separate payments from 
individuals through separate transactions.
---------------------------------------------------------------------------

    \128\ U.S. Government Accountability Office, ``Health Insurance 
Exchanges: Coverage of Nonexcepted Abortion Services by Qualified 
Health Plans,'' (Sept. 15, 2014), available at http://www.gao.gov/products/GAO-14-742R.
    \129\ Letter from Chris Smith, Member of Congress, to Alex Azar, 
Secretary, U.S. Department of Health and Human Services (Aug. 6, 
2018), available at https://chrissmith.house.gov/uploadedfiles/2018-08-06_-_smith_letter_on_section_1303_-_abortion_funding_transparency.pdf.
---------------------------------------------------------------------------

    Response: HHS again emphasizes that multiple Federal district 
courts have already invalidated the separate billing regulation, 
preventing HHS from requiring its implementation.\130\ HHS also 
continues to believe the changes to Sec.  156.280(e)(2)(ii) offer 
issuers options for meaningful compliance with section 1303 and ensure 
appropriate segregation of funds required by statute, without imposing 
the operational and administrative burdens of the separate billing 
regulation and without causing additional consumer confusion and 
unintended losses of coverage, a position that is supported by the 
Federal district courts invalidating the separate billing regulation. 
HHS therefore disagrees with commenters' assertions that the other 
methods for complying with the separate payment requirement HHS is 
finalizing at Sec.  156.280(e)(2)(ii) are in conflict with the 
requirements in section 1303.
---------------------------------------------------------------------------

    \130\ Planned Parenthood of Maryland, Inc. v. Azar, No. CV CCB-
20-00361 (D. Md. July 10, 2020); California v. U.S. Dep't of Health 
& Hum. Servs., 473 F. Supp. 3d 992 (N.D. Cal. July 20, 2020); 
Washington v. Azar, 461 F. Supp. 3d 1016 (E.D. Wash. 2020).
---------------------------------------------------------------------------

    Indeed, the preamble to the 2019 Program Integrity Rule 
acknowledged that receipt by a QHP issuer of a single premium payment 
for the entirety of the policy holder's coverage including

[[Page 53457]]

abortion services for which Federal funds are prohibited did not 
preclude QHP issuer compliance with the section 1303 separate payment 
requirement. Although the separate billing regulation required QHP 
issuers to bill separately and make reasonable efforts to collect the 
payment separately, it also specified that QHP issuers would not be 
permitted to refuse a combined payment or terminate the policy on the 
basis of combined payment. The separate billing regulation is therefore 
ultimately nonessential to QHP issuer compliance with the separate 
payment requirement in section 1303 of the ACA, which does not 
expressly require that a separate bill be sent for coverage of 
abortions for which Federal funding is prohibited. Upon receiving a 
single premium payment inclusive of the portion of premium attributable 
to coverage of such services, the QHP issuer may treat that portion as 
a separate payment and disaggregate the amounts into the separate 
allocation accounts, consistent with Sec.  156.280(e)(2)(iii). HHS 
believes this provides the requisite segregation of funds required by 
statute. HHS therefore believes that requiring QHP issuers to acquire 
the separate payment through sending separate bills and instructing 
consumers to pay in separate transactions is more restrictive than 
necessary, especially in light of the issuer and stakeholder burden and 
adverse consumer impacts the separate billing regulation could impose.
    Although sending a separate bill to enrollees for these services is 
one way in which an issuer may satisfy the separate payment requirement 
as finalized at Sec.  156.280(e)(2)(ii), it is not the only method 
contemplated by the plain reading of section 1303. HHS therefore agrees 
with commenters that it is unnecessary to restrict the acceptable 
methods for collecting these payments, especially in light of the 
substantial anticipated burden from the separate billing regulation, 
the risk of inadvertent coverage terminations that could result from 
consumer confusion due to receiving two monthly bills, the stakeholder 
reliance on the prior acceptable methods, and Federal district court 
concerns with barriers to appropriate and timely medical care as well 
as a lack of corresponding benefits.
    The section 1303 provision that is colloquially referred to as the 
separate payment requirement is titled ``Establishment of allocation 
accounts,'' and is a subsection of a section titled ``Prohibition on 
the use of Federal funds.'' \131\ These sections detail issuer 
requirements for calculating the AV for the portion of the premium 
attributable to coverage of abortion services for which Federal funds 
are prohibited, and require issuers to collect separate payments for 
this portion of the premium, segregate the funds, and deposit such 
funds into separate allocation accounts. Notably, these sections do not 
require that issuers satisfy these requirements by separately billing 
policy holders or instructing them to pay in separate transactions.
---------------------------------------------------------------------------

    \131\ Section 1303(b)(2) and (b)(2)(B) of the ACA.
---------------------------------------------------------------------------

    Lastly, HHS notes that not only is the 2014 U.S. GAO report that 
objecting commenters state is evidence of HHS non-enforcement of 
section 1303 of the ACA outdated, but also there is no evidence of 
ongoing issuer compliance issues with section 1303 of the ACA. In fact, 
the 2014 U.S. GAO report predates the 2016 Payment Notice, which is 
where HHS first clarified for issuers the acceptable methods for 
complying with the separate payment requirement which HHS is 
reinstating and codifying today. Further, the research to inform that 
report was conducted between February 2014 and September 2014, prior to 
the 2016 Payment Notice and during the first full year that the 
Exchanges began operating. As such, issuers were less likely to have 
fully implemented the compliance standards required under the ACA and 
were not yet aware of how HHS would further clarify and implement the 
separate payment requirement in the 2016 Payment Notice.
    Section 1303 does not specify the method a QHP issuer must use to 
collect the separate payment.\132\ Consistent with the Federal district 
court decisions invalidating the separate billing regulation, HHS is 
therefore finalizing a revised policy at Sec.  156.280(e)(2)(ii) that 
repeals the separate billing regulation and instead allows issuers to 
satisfy the separate payment requirement through methods consistent 
with section 1303 of the ACA. As finalized, Sec.  156.280(e)(2)(ii) 
imposes no more burden on issuers, states, Exchanges, and consumers 
than is necessary, and removes unreasonable barriers to obtaining 
appropriate medical care.
---------------------------------------------------------------------------

    \132\ 84 FR 71674, 71683.
---------------------------------------------------------------------------

IV. Provisions of the Proposed Rule for Section 1332 Waivers--
Department of Health and Human Services and Department of the Treasury

A. 31 CFR Part 33 and 45 CFR Part 155--Section 1332 Waivers

    Section 1332 of the ACA permits states to apply for a section 1332 
waiver to pursue innovative strategies for providing their residents 
with access to higher value, more affordable health coverage.
    Under section 1332 of the ACA, the Secretary of HHS and the 
Secretary of the Treasury (collectively, the Secretaries) may exercise 
their discretion to approve a request for a section 1332 waiver only if 
the Secretaries determine that the proposal for the section 1332 waiver 
meets the following four requirements, referred to as the statutory 
guardrails: (1) The proposal will provide coverage that is at least as 
comprehensive as coverage defined in section 1302(b) of the ACA and 
offered through Exchanges established under title I of the ACA, as 
certified by the Office of the Actuary of CMS, based on sufficient data 
from the state and from comparable states about their experience with 
programs created by the ACA and the provisions of the ACA that would be 
waived; (2) the proposal will provide coverage and cost-sharing 
protections against excessive out-of-pocket spending that are at least 
as affordable for the state's residents as would be provided under 
title I of the ACA; (3) the proposal will provide coverage to at least 
a comparable number of the state's residents as would be provided under 
title I of the ACA; and (4) the proposal will not increase the Federal 
deficit. The Secretaries retain their discretionary authority under 
section 1332 to deny waivers when appropriate given consideration of 
the application as a whole, even if an application meets the four 
statutory guardrails.
    The Departments are also responsible under section 1332 for 
monitoring an approved section 1332 waiver's compliance with the 
statutory guardrails and for conducting evaluations to determine the 
impact of the section 1332 waiver. Specifically, section 1332 of the 
ACA requires that the Secretaries provide for and conduct periodic 
evaluations of approved section 1332 waivers.\133\ The Secretaries must 
also provide for a process under which states with approved section 
1332 waivers must submit periodic reports concerning the implementation 
of the state's waiver program.\134\
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    \133\ See section 1332(a)(4)(B)(v) of the ACA.
    \134\ See section 1332(a)(4)(B)(iv) of the ACA.
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    In October 2018, the Departments issued the 2018 Guidance,\135\ 
which provided additional guidance for states wishing to submit section 
1332 waiver proposals regarding the Secretaries' application review 
procedures, pass-through funding determinations, certain analytical 
requirements, and operational

[[Page 53458]]

considerations.\136\ The 2018 Guidance also included information 
regarding how the Departments will apply and interpret the section 1332 
statutory guardrails when evaluating waiver applications. Furthermore, 
in part 1 of the 2022 Payment Notice final rule,\137\ the Departments 
codified many of the major policies and interpretations outlined in the 
2018 Guidance into the text of relevant section 1332 implementing 
regulations.
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    \135\ 83 FR 53575 (Oct. 24, 2018).
    \136\ The 2018 Guidance superseded guidance issued by the 
Departments in December 2015, which similarly provided information 
regarding the Secretaries' application review procedures, pass-
through funding determinations, certain analytical requirements, 
operational considerations, and interpretations of the statutory 
guardrails. See 80 FR 78131, available at https://www.govinfo.gov/content/pkg/FR-2015-12-16/pdf/2015-31563.pdf.
    \137\ See 86 FR 6138.
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    On January 28, 2021, President Biden issued E.O. 14009,\138\ 
directing the Secretaries and the heads of all other executive 
departments and agencies with authorities and responsibilities related 
to Medicaid and the ACA to review all existing regulations, orders, 
guidance documents, policies, and any other similar agency actions to 
determine whether such agency actions are inconsistent with the policy 
set forth in section 1 of E.O. 14009. As part of this review, E.O. 
14009 directed agencies to look at demonstrations and waivers, as well 
as demonstration and waiver policies that may reduce coverage under or 
otherwise undermine Medicaid or the ACA. As such, the Departments 
reviewed the 2012 Final Rule, the 2015 Guidance, the 2018 Guidance, and 
the policies implemented in part 1 of the 2022 Payment Notice final 
rule on section 1332 waivers to determine whether they are inconsistent 
with the policy intention of E.O. 14009 to protect and strengthen 
Medicaid and the ACA and to make high-quality health care accessible 
and affordable for every American.
---------------------------------------------------------------------------

    \138\ 86 FR 7793 (Feb. 2, 2021).
---------------------------------------------------------------------------

    In addition, on January 20, 2021, President Biden issued E.O. 
13985,\139\ directing that, as a policy matter, the Federal Government 
should pursue a comprehensive approach to advancing equity for all, 
including people of color and others who have been historically 
underserved, marginalized, and adversely affected by persistent poverty 
and inequality. As such, the Departments also reviewed the 2012 Final 
Rule, the 2015 Guidance, the 2018 Guidance, and the policies 
implemented in part 1 of the 2022 Payment Notice final rule on section 
1332 waivers to assess whether, and to what extent, these policies may 
perpetuate systemic barriers to opportunities and benefits for people 
of color and other underserved groups.
---------------------------------------------------------------------------

    \139\ 86 FR 7009 (Jan. 25, 2021).
---------------------------------------------------------------------------

    Upon review, the Departments determined that the 2012 Final Rule 
was generally consistent with the policy intentions of E.O. 14009 and 
E.O. 13985. However, the Departments determined that the 2018 Guidance 
and the policies implemented in part 1 of the 2022 Payment Notice final 
rule on section 1332 waivers were generally inconsistent with the 
policy intentions of E.O. 14009 and E.O. 13985. As explained in part 1 
of the 2022 Payment Notice final rule and the proposed rule, the 
majority of commenters on both the 2018 Guidance and the 2022 Payment 
Notice Proposed Rule noted that both the 2018 Guidance and the 
incorporation of its guardrail interpretations into regulations could 
result in the Departments approving section 1332 waivers that would 
result in fewer residents in those states enrolling in comprehensive 
and affordable coverage, and that those interpretations do not 
represent the best fulfillment of Congressional intent behind the 
statutory guardrails. After further consideration of these comments as 
part of the Departments' reviews under E.O. 14009 and E.O. 13985, the 
Departments proposed to modify 31 CFR 33.108(f)(3)(iv)(A)-(C) and 45 
CFR 155.1308(f)(3)(iv)(A)-(C) to generally remove the language 
incorporating the interpretation of the statutory guardrails first set 
forth in the 2018 Guidance from the text of the section 1332 
regulations, including those that were finalized in part 1 of the 2022 
Payment Notice final rule. In addition, the Departments proposed new 
interpretations and proposed amendments to regulations to provide 
supplementary information about the requirements that must be met for 
the approval of a section 1332 waiver, the Secretaries' application 
review procedures, certain analytical requirements, operational 
considerations, the calculation of pass-through funding, and amendments 
and extensions of approved waiver plans. The Departments discussed that 
the new proposed policies and interpretations, if adopted, would 
supersede those outlined in the 2018 Guidance and, where applicable, 
the preamble to part 1 of the 2022 Payment Notice final rule. The 
Departments also proposed amendments to the regulations that align with 
the revised interpretations of the guardrails.
    In this final rule, the Departments are finalizing policies, 
interpretations, and regulatory amendments to provide clarity to states 
regarding the requirements and expectations of the section 1332 waiver 
program for the approval, as well as for ongoing oversight, of approved 
waivers. The Departments received 262 comments on the section 1332 
waiver proposals from a mix of stakeholders, including general advocacy 
organizations, disease advocacy organizations, states, issuers, 
providers, individuals, and other entities. The overwhelming majority 
of stakeholders supported the section 1332 waiver proposals and 
encouraged the Departments to finalize the policies as proposed. The 
Departments are generally finalizing the policies, interpretations, and 
regulatory amendments as proposed in order to encourage states to 
develop innovative waivers. Specifically, the Departments are 
finalizing modifications to 31 CFR 33.109(f)(3)(iv)(A)-(C) and 45 CFR 
155.1308(f)(3)(iv)(A)-(C) to codify in regulation the manner in which 
the Departments will apply the comprehensiveness, affordability, and 
coverage guardrails. Relatedly, the Departments are adopting the 
proposed policy clarifications relating to the deficit neutrality 
guardrail. In addition, the Departments are adopting policy 
clarifications as outlined in the preamble to the proposed rule 
relating to coordinated waivers, application timing, requirements for 
the actuarial and economic analyses, implementation timeline and 
operational concerns, and public input on waiver proposals. The 
Departments are also finalizing modifications to 31 CFR 33.118, 31 CFR 
33.120, 45 CFR 155.1318, and 45 CFR 155.1320 to extend flexibilities in 
the public notice requirements and post-award public participation 
requirements for waivers under section 1332 beyond the COVID-19 PHE to 
allow similar flexibilities in the event of future emergent situations. 
The Departments also are finalizing the modifications to 31 CFR 
33.120(a)(1) and (2) and 45 CFR 155.1320(a)(1) and (2) relating to 
waiver monitoring and compliance, to remove the reference, as codified 
under part 1 of the 2022 Payment Notice final rule, to interpretive 
guidance published by the Departments. Similarly, the Departments are 
finalizing the modifications to 31 CFR 33.128(a) and 45 CFR 155.1328(a) 
relating to periodic evaluation requirements, to remove the reference, 
as codified under part 1 of the 2022 Payment Notice final rule, to 
interpretive guidance published by the Departments. This rule also 
finalizes new regulation text at 31 CFR 33.122 and 45 CFR 155.1322 to 
codify in regulation details regarding the Departments' determination 
of pass-through funding for approved section

[[Page 53459]]

1332 waivers. Through this rule, the Departments also finalize the 
addition of new regulation text at 31 CFR 33.130 and 45 CFR 155.1330 
governing waiver amendment requests for approved section 1332 waivers 
and at 31 CFR 33.132 and 45 CFR 155.1332 governing waiver extension 
requests for approved section 1332 waivers.
    As discussed in the proposed rule, the Departments are of the view 
that rescinding the 2018 Guidance, repealing the previous codification 
of its guardrail interpretations in part 1 of the 2022 Payment Notice 
final rule, and finalizing new policies and interpretations will align 
with the Administration's goals to strengthen the ACA and increase 
enrollment in comprehensive, affordable health coverage among the 
remaining underinsured and uninsured. These policies will further 
advance this Administration's goal of increasing access to coverage by 
empowering states to develop innovative health coverage options for 
their residents through section 1332 waivers that best fit the states' 
individual needs. The policies are also intended to provide more 
information and clarity regarding the interpretations, processes, and 
procedures the Departments would apply when reviewing new waiver 
applications and waiver amendment and extension requests, as well as 
making pass-through funding determinations for approved waivers. The 
Departments noted that all of the policies were designed to align with 
the Administration's commitment to protect and expand Americans' access 
to high-quality, comprehensive, and affordable health care coverage, 
and to ensure that systemic barriers to opportunities and benefits for 
people of color and other underserved groups are not perpetuated. In 
addition, the policies will further support the Administration's 
efforts to build on the ACA by meeting the health care needs created by 
the COVID-19 PHE, reducing individuals' health care costs, and making 
our health care system less complex to navigate. The Departments noted 
that, through section 1332 waivers, they aim to assist states with 
developing health insurance markets that expand coverage, lower costs, 
and make high-quality health care accessible for every American.\140\ 
In light of E.O. 13985, the Departments also encourage states to 
develop waiver proposals that diminish barriers to opportunities and 
benefits, such as health insurance coverage, for people of color and 
other underserved groups. For example, states may propose waiver 
programs that increase plan options for comprehensive coverage, reduce 
premiums, improve affordability, and address social determinants of 
health.
---------------------------------------------------------------------------

    \140\ https://www.whitehouse.gov/briefing-room/statements-releases/2021/02/15/statement-by-president-joe-biden-on-the-2021-special-health-insurance-enrollment-period-through-healthcare-gov/.
---------------------------------------------------------------------------

    As under similar waiver authorities,\141\ the Departments note that 
the Secretaries reserve the right to further evaluate an approved 
waiver and suspend or terminate an approved waiver, in whole or in 
part, any time before the date of expiration, if the Secretaries 
determine that the state materially has failed to comply with the terms 
and conditions of the waiver, the section 1332 guardrails,\142\ or 
applicable laws and regulations, unless specifically waived.\143\ In 
addition, states with approved waivers must come into compliance with 
any changes in Federal law, regulation, or policy affecting section 
1332 waivers, unless the provision being changed is expressly 
waived.\144\
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    \141\ Section 1115 Waiver Demonstrations have similar authority.
    \142\ See 31 CFR 33.120(d) and 45 CFR 155.1320(d) and STC 16 at 
https://www.cms.gov/CCIIO/Programs-and-Initiatives/State-Innovation-Waivers/Downloads/1332-NH-Approval-STCs.pdf.
    \143\ See 31 CFR 33.120(a)(1) and 45 CFR 155.1320(a)(1).
    \144\ Ibid.
---------------------------------------------------------------------------

1. Coordinated Waiver Process (31 CFR 33.102 and 45 CFR 155.1302)
    Regulations at 31 CFR 33.102 and 45 CFR 155.1302 permit, but do not 
require, states to submit a single application for a section 1332 
waiver and a waiver under one or more of the existing waiver processes 
applicable under titles XVIII, XIX, and XXI of the Social Security Act 
(the Act), or under any other Federal law relating to the provision of 
health care items or services, provided that the application is 
consistent with the procedures outlined in the 2012 Final Rule,\145\ 
the procedures for demonstrations under section 1115 of the Act 
(section 1115 demonstrations), if applicable, and the procedures under 
any other applicable Federal law or regulations under which the state 
seeks a waiver.
---------------------------------------------------------------------------

    \145\ See 77 FR 11700.
---------------------------------------------------------------------------

    Similar to the policies outlined in the 2018 Guidance, as well as 
in guidance previously published in December 2015 (2015 Guidance), the 
Departments' determination of whether a section 1332 waiver proposal 
satisfies the statutory guardrails set forth in section 1332 takes into 
consideration the projected impact of waivers of certain ACA provisions 
made pursuant to the section 1332 waiver. The Departments also consider 
related changes to the state's health care system that, under state 
law, are contingent only on the approval of the section 1332 waiver. 
For example, the Departments, in making their determination, would take 
into account the impact of a new, related state-run health benefits 
program that, under legislation enacted by the state, would be 
implemented only if the section 1332 waiver were approved.
    The Departments did not propose any regulatory changes to 31 CFR 
33.102 and 45 CFR 155.1302, but reiterated in the proposed rule the 
policy relating to the coordinated waiver process so states understand 
the process for submission and review of a coordinated waiver. As 
explained in the preamble to the proposed rule, the Departments are of 
the view that the policies outlined, which are in line with both the 
2018 and 2015 Guidance, further advance E.O. 14009 because these 
policies aim to protect and strengthen Medicaid and the ACA and to make 
high-quality health care accessible and affordable for every American 
by specifying how a state may submit a coordinated waiver. 
Specifically, the Departments will not consider the potential impact of 
policy changes that are contingent on further state action, such as 
state legislation that is proposed but not yet enacted that would be in 
effect during the timeframe for the section 1332 waiver. For example, 
the Departments will not consider the potential impact of state 
legislation to expand Medicaid that is not yet enacted. The Departments 
also will not consider the impact of changes contingent on other 
Federal determinations, including approval of Federal waivers (such as 
waivers under section 1115 or titles XVIII, XIX, or XXI of the Act) 
pursuant to statutory provisions other than section 1332 of the ACA. 
Therefore, as proposed, the Departments will not take into account 
proposed changes to Medicaid or CHIP state plans, waivers, or 
demonstration projects that require separate Federal approval, such as 
changes in coverage or Federal Medicaid or CHIP spending that would 
result from a proposed section 1115 demonstration, regardless of 
whether the section 1115 demonstration proposal is submitted as part of 
a coordinated waiver application with a section 1332 waiver. Savings 
accrued under either proposed or current Medicaid or CHIP section 1115 
demonstrations will not be factored into the assessment of whether a 
proposed section 1332 waiver meets the deficit neutrality requirement. 
The Departments' determination also will

[[Page 53460]]

not take into account any proposed changes to the Medicaid or CHIP 
state plan that are subject to Federal approval.
    As proposed, the Departments will take into account changes in 
Medicaid or CHIP coverage or in Federal spending on Medicaid or CHIP 
that would result directly from the proposed waiver of ACA provisions 
pursuant to section 1332, holding state Medicaid and CHIP policies 
constant. For example, if a state section 1332 waiver would result in 
more or less Medicaid spending, this impact will be considered in the 
Departments' assessment of the section 1332 waiver for the deficit 
neutrality guardrail.
    Nothing in the proposed rule proposed to alter a state's authority 
to make changes to its Medicaid and CHIP policies consistent with 
applicable law. In addition, the proposed rule did not propose to alter 
the Secretary of HHS's authority or CMS's policy regarding review and 
approval of section 1115 demonstrations, and states should continue to 
work with the Center for Medicaid and CHIP Services (CMCS) on issues 
relating to section 1115 demonstrations or other Medicaid or CHIP 
authorities. A state may submit a coordinated waiver application as 
provided in 31 CFR 33.102 and 45 CFR 155.1302. The waiver applications 
included in a coordinated waiver application would each be reviewed by 
the applicable agency component independently according to the Federal 
laws and regulations that apply to each waiver application.
    As the Departments receive and review waiver proposals, the 
Departments will continue to examine the types of changes, contingent 
on Federal approval, that will be considered in reviewing section 1332 
waiver applications.
    The following is a summary of the comments received and the 
Departments' responses related to the coordinated waiver process (31 
CFR 33.102 and 45 CFR 155.1302).
    Comment: The Departments received a few comments on coordinated 
waivers expressing general support of the policy clarifications 
regarding coordinated waivers. Some of the commenters also encouraged 
the Departments to consider additional flexibilities to further support 
coordinated waivers and reduce the burden on states. Commenters 
recommended allowing states to coordinate section 1115 demonstration 
projects and section 1332 waivers so that deficit neutrality is 
considered in light of both programs to result in greater savings. 
Commenters also recommended that the Departments provide additional 
flexibility to states to demonstrate overall savings across both 
programs and for consumers/enrollees. The commenters contended that the 
proposal would otherwise have a negative impact on any new state-led 
innovation efforts through the section 1332 waiver process. 
Furthermore, another commenter encouraged the Departments to explore 
options for combined section 1115 demonstrations/1332 waivers to 
address affordability concerns for states, and to coordinate between 
Medicaid and Exchange programs to avoid gaps in coverage and ensure a 
seamless enrollment process.
    Response: The Departments appreciate the comments and welcome the 
opportunity to work with states interested in pursuing coordinated 
waivers. States with specific proposals for coordinated waivers are 
encouraged to discuss proposals with the Departments early in the 
coordinated waiver development process. In regard to the commenter's 
suggestion that the Departments consider additional flexibilities 
concerning deficit neutrality (for the purposes of section 1332 
waivers) and budget neutrality (for the purposes of section 1115 
demonstrations) to further support coordinated waivers, the Departments 
note that there are differences between the section 1115 demonstration 
budget neutrality requirement and the section 1332 waiver deficit 
neutrality requirement. Section 1115 demonstrations are required to be 
budget neutral, meaning that Federal spending under the section 1115 
demonstration cannot exceed the aggregate budget neutrality limit of 
what Federal spending would have been in absence of the section 1115 
demonstration, and states are liable for additional demonstration 
spending over the budget neutrality limit. Section 1332 waivers are 
required by statute to not increase the Federal deficit. With regard to 
commenters' concerns that state innovation would be hindered without 
flexibility for states to demonstrate overall savings across Medicaid 
and Exchange programs, the Departments remind states that the 
Departments are committed to providing technical assistance to states 
and encourage innovative waiver proposals. Proposals may range from 
addressing affordability concerns, to closing gaps in coverage and 
ensuring a seamless enrollment process, and the particular approach 
taken will depend on each state's unique needs and circumstances.
    As previously noted, the Departments did not propose any regulatory 
changes to 31 CFR 33.102 and 45 CFR 155.1302 in the proposed rule. 
After consideration of the comments received, the Departments are 
adopting the proposed policies and interpretations related to the 
coordinated waiver process.
2. Section 1332 Application Procedures--Application Timing (31 CFR 
33.108(b) and 45 CFR 155.1308(b))
    Consistent with regulations at 31 CFR 33.108(b) and 45 CFR 
155.1308(b), states are required to submit initial section 1332 waiver 
applications sufficiently in advance of the requested waiver effective 
date to allow for an appropriate implementation timeline. As explained 
in the proposed rule, the Departments did not propose any regulatory 
changes to 31 CFR 33.108(b) and 45 CFR 155.1308(b), but did propose 
through preamble policies related to the timing of initial section 1332 
waiver application submissions that are consistent with policies 
outlined in the 2018 Guidance. As the Departments noted in the proposed 
rule, the proposed policies were intended to help states understand the 
requirements for submitting a section 1332 waiver application 
sufficiently in advance of the requested waiver effective date to allow 
for enough time for Federal review and to maintain smooth operations of 
the Exchange in the state. In addition, the proposed policies were 
intended to help states allow for enough time for implementation of 
their section 1332 waiver plan, and for affected stakeholders, 
including issuers of health insurance plans that may be affected by the 
waiver plan, to take necessary actions based on the approval of the 
waiver plan, particularly when the waiver impacts premium rates, if 
approved. As discussed in the proposed rule, some section 1332 waiver 
plans may require operational changes or accommodations to the Federal 
information technology platform or its operations, and the proposed 
policies would help ensure the state and the Departments are able to 
sufficiently plan in advance of the effective waiver date. The 
Departments proposed the following policies:
    The Departments strongly encourage states interested in applying 
for section 1332 waivers, including coordinated waivers with section 
1115 demonstrations, to engage with the Departments promptly for 
assistance in formulating an approach to a section 1332 waiver that 
meets the requirements of section 1332.
    In order to help ensure timely decision-making regarding approval, 
the Departments advise that states should plan to submit their initial 
section 1332 waiver applications with enough time to

[[Page 53461]]

allow for public comment (as required by 31 CFR 33.112, 31 CFR 
33.116(b), 45 CFR 155.1312, and 45 CFR 155.1316(b)), review by the 
Departments, and implementation of the section 1332 state plan as 
outlined in the waiver application. For example, for section 1332 
waivers that impact the individual market, submission before or during 
the first quarter of the year prior to the year health plans affected 
by the section 1332 waiver would take effect would generally permit 
sufficient time for review and implementation of both the waiver 
application and affected plans, depending on the complexity of the 
proposal. The Departments note that they cannot guarantee approval of a 
section 1332 waiver submission or a state's request for expedited 
review and will continue to review applications consistent with the 
timeline requirements outlined in the regulations and statute.\146\ The 
Departments encourage states to work with the Departments on 
formulating timeframes that take into account the states' legislative 
sessions and timing of health plan rate filings if the section 1332 
waiver is projected to have any impact on premiums. If a state's 
section 1332 waiver application includes potential operational changes 
or accommodations to the Federal information technology platform or its 
operations, the Departments note that additional time for review and 
implementation of the waiver application may be needed. The Departments 
also encourage states to engage with the Departments early in the 
process to determine whether Federal infrastructure can accommodate 
technical changes that support their requested flexibilities, as 
discussed elsewhere in this preamble.
---------------------------------------------------------------------------

    \146\ 31 CFR 33.108 and 45 CFR 155.1308; Section 1332(d)(1) of 
the ACA.
---------------------------------------------------------------------------

    The following is a summary of the comments received regarding the 
Departments' proposed policies and the Departments' responses.
    Comment: The Departments received one comment, which was in support 
of the proposal. The commenter applauded the Departments for 
encouraging states to engage with the Departments early in the waiver 
process and consider the implementation timeline as part of the waiver 
development and application process.
    Response: The Departments appreciate the commenter's support. After 
consideration of the comments received, the Departments are adopting 
the proposed policies relating to section 1332 application procedures 
and timing.
3. Section 1332 Application Procedures--Statutory Guardrails (31 CFR 
33.108(f)(3)(iv) and 45 CFR 155.1308(f)(3)(iv))
    The Departments proposed to modify 31 CFR 33.108(f)(3)(iv)(A)-(C) 
and 45 CFR 155.1308(f)(3)(iv)(A)-(C) to set forth revised 
interpretations of the comprehensiveness, affordability, and coverage 
guardrails. In addition, the Departments proposed to adopt new policies 
and interpretations with regard to the statutory guardrails that, if 
finalized, would supersede and rescind those outlined in the 2018 
Guidance. The proposed guardrail interpretations were largely in line 
with those in the 2015 Guidance. The Departments also proposed to 
modify 31 CFR 33.108(f)(3)(iv) and 45 CFR 155.1308(f)(3)(iv) to remove 
the reference, as codified under part 1 of the 2022 Payment Notice 
final rule, to interpretive guidance published by the Departments.
    As discussed in the proposed rule, the 2018 Guidance aimed to allow 
states to pursue section 1332 waivers with the goals of increasing 
consumer choice and promoting private market competition. In 
particular, in the 2018 Guidance, the Secretaries explained that their 
interpretations of the statutory guardrails were meant to remove 
restrictions that could limit consumer choice by allowing states to 
provide access to health insurance coverage at different price points 
and benefits levels, including less comprehensive plans that states 
considered to be better suited to consumer needs. Specifically, the 
2018 Guidance interpreted the comprehensiveness and affordability 
guardrails to be satisfied if comprehensive and affordable coverage 
were available to consumers, without regard to who would actually 
enroll in such coverage. In addition, the 2018 Guidance instructed that 
these two guardrails must be evaluated together. The 2018 Guidance 
explained that it is not enough to make available some coverage that is 
comprehensive but not affordable, while making available other coverage 
that is affordable but not comprehensive. Thus, the Departments stated 
that a state plan would comply with the comprehensiveness and 
affordability guardrails, consistent with the statute, if it makes 
coverage that is both comprehensive and affordable available to a 
comparable number of otherwise qualified residents as would have had 
such coverage available absent the waiver.
    In the 2018 Guidance, the Departments also stated that section 
1332(b)(1)(C) of the ACA requires that a state's plan under a section 
1332 waiver will provide coverage ``to at least a comparable number of 
its residents'' as would occur without the waiver.\147\ The 2018 
Guidance further noted that the text of the coverage guardrail 
provision of the statute is silent as to the type of coverage that is 
required. Accordingly, in the 2018 Guidance, the Departments explained 
they would consider section 1332 waivers to satisfy the coverage 
guardrail requirement if at least as many state residents were 
projected to be enrolled in comprehensive and less comprehensive health 
plans combined under the waiver as would be enrolled without the 
waiver. Under that interpretation, the Departments could approve a 
state's section 1332 waiver designed to promote residents' enrollment 
in less comprehensive or less affordable coverage to promote choice. As 
long as a comparable number of residents were projected to be covered 
as would have been covered absent the waiver, the coverage guardrail 
would be met.\148\
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    \147\ 83 FR at 53577.
    \148\ The Departments note that the policies and interpretations 
in the 2018 Guidance were in line with the Administration's 
priorities at the time. In particular, the 2018 Guidance noted that 
the Secretaries would consider favorably section 1332 waiver 
applications that advanced specific principles and noted that the 
Secretaries aimed to provide states maximum flexibility. See 83 FR 
at 53576.
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    In part 1 of the 2022 Payment Notice final rule, the Departments 
codified the 2018 Guidance interpretation of the guardrails into the 
text of the section 1332 implementing regulations. Specifically, the 
Departments added regulatory language in 31 CFR 33.108(f)(3)(iv)(A) and 
45 CFR 155.1308(f)(3)(iv)(A), explaining that the Departments would 
consider the comprehensive coverage guardrail to be met by a state 
section 1332 waiver plan if the plan would provide consumers access to 
coverage options that are at least as comprehensive as the coverage 
options provided without the waiver, to at least a comparable number of 
people as would have had access to such coverage absent the waiver. The 
final rule also added language to 31 CFR 33.108(f)(3)(iv)(B) and 45 CFR 
155.1308(f)(3)(iv)(B) providing that the Departments would consider the 
affordability requirement to be met by a state section 1332 waiver plan 
that would provide consumers access to coverage options that are at 
least as affordable as the coverage options provided without the 
waiver, to at least a comparable number of people as would have had 
access to such coverage absent the waiver. These modifications

[[Page 53462]]

also provided, consistent with the 2018 Guidance and the 
Administration's priorities at the time, that the Departments would 
consider the comprehensiveness and affordability guardrails met if a 
section 1332 waiver plan provides access to coverage that is as 
comprehensive and affordable as coverage forecasted to have been 
available in the absence of the waiver, and is projected to be 
available to a comparable number of people under the waiver, as opposed 
to the actual number of people enrolled in comprehensive and affordable 
coverage as under the 2015 Guidance. The final rule also added 
regulatory language to 31 CFR 33.108(f)(3)(iv)(C) and 45 CFR 
155.1308(f)(3)(iv)(C) providing that, for purposes of the coverage 
guardrail, ``coverage'' refers to minimum essential coverage as defined 
in 26 U.S.C. 5000A(f) and 26 CFR 1.5000A-2, and health insurance 
coverage as defined in 45 CFR 144.103.
    As noted in the proposed rule, a majority of commenters on both the 
2018 Guidance and the 2022 Payment Notice proposed rule were concerned 
that the 2018 Guidance and its proposed codification would undermine 
the congressional intent underlying the section 1332 guardrails and 
effectively codify policy they believe is based on a misapplication of 
the statutory guardrails. The commenters were concerned that the 
interpretation of the availability of comprehensive and affordable 
coverage in the 2018 Guidance would result in fewer residents enrolled 
in comprehensive and affordable coverage. Other commenters asserted 
that the interpretation of the availability of comprehensive and 
affordable coverage for the coverage guardrail allows for a disjointed 
application of the guardrails whereby a state can meet the coverage 
guardrail, while its waiver plan reduces the overall comprehensiveness 
and affordability of coverage in a state. A few commenters recommended 
rescinding and abandoning the 2018 Guidance completely in favor of 
returning to the prior interpretation of the guardrails in the 2015 
Guidance. In addition, some commenters also expressed concern that 
alternative coverage options, which would qualify for the purposes of 
meeting the coverage guardrail under the 2018 Guidance, are not subject 
to the same limitations as comprehensive coverage in terms of consumer 
protections. For instance, alternative plan options generally lack 
financial limitations like out-of-pocket maximums and annual/lifetime 
limits, and, if consumers covered by alternative plan options 
experience unexpected, potentially-catastrophic health events, they are 
likely to pay substantially more out-of-pocket to cover incurred costs. 
Further, commenters also raised concerns that alternative plans can 
terminate or deny coverage based on health status, which would tend to 
affect high-risk individuals. Coupled with the diminished affordability 
of comprehensive coverage, this possibility puts high-risk individuals 
at great risk of going without effective coverage.
    In the proposed rule, the Departments proposed changes to 31 CFR 
33.108 and 45 CFR 155.1308 to incorporate revised interpretations of 
the statutory guardrails. The decision to rescind those interpretations 
was based on further consideration of commenters' concerns that the 
proposals are a better interpretation of section 1332(b)(1)(A)-(C), and 
the Departments' reviews under E.O. 14009, which was intended to 
strengthen the ACA and expand access to high-quality health care, and 
E.O. 13985, which was intended to pursue a comprehensive approach to 
advancing equity for all. The Departments concluded that the 
interpretations of section 1332's comprehensiveness, affordability, and 
coverage guardrails codified in part 1 of the 2022 Payment Notice final 
rule could permit section 1332 waivers that do not result in a 
comparable number of residents overall being enrolled in coverage that 
is at least as affordable and as comprehensive as they would have 
enrolled in without the waiver. As discussed in more detail later in 
this preamble, the Departments' changes are intended to align with the 
President's instruction in E.O. 14009 to adopt policies to strengthen 
the implementation of the ACA and remove any barriers that those 
policies may create for expanding coverage, lowering costs, and making 
high-quality health care accessible for every American.
    The Departments determined that the guardrail interpretations 
codified in part 1 of the 2022 Payment Notice final rule were 
inconsistent with the Departments' goal of ensuring that the guardrails 
should be focused on the types of coverage residents actually purchase 
such that individuals are enrolled in affordable, comprehensive 
coverage and not just that there is generalized access to such 
coverage. The Departments note that plans that could be offered to 
individuals under section 1332 waivers applying the interpretations 
codified in the part 1 of the 2022 Payment Notice final rule could 
allow state section 1332 waivers that would result in more individuals 
enrolling in medically underwritten plans \149\ that offer only limited 
benefits, charge higher out-of-pocket costs, or both, which is 
inconsistent with the goal of the E.O. 14009 to reduce barriers for 
expanding comprehensive affordable coverage. Allowing more individuals 
to be in medically underwritten plans could also have a disparate 
impact on vulnerable populations, especially people of color and those 
who are in poverty, those who are underserved, and those with pre-
existing conditions, which is inconsistent with the goal of E.O. 13985.
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    \149\ Health insurance issuers medically underwrite policies to 
try to ascertain prospective enrollees' health statuses when they 
are applying for health insurance coverage in order to determine 
whether to offer these individuals coverage, or at what price, and 
with what exclusions or limits, to offer coverage. (https://www.healthcare.gov/glossary/medical-underwriting/). Since 2014, 
however, medical underwriting is no longer permitted in the 
individual or small group markets with respect to non-grandfathered 
health insurance coverage, due to ACA rules. Instead, all such 
individual and small group plans are guaranteed issue. Guaranteed 
issue is a requirement that health insurance issuers must permit any 
individual to enroll regardless of health status, age, gender, or 
other factors that might predict the use of health services, subject 
to certain specified exceptions. Guaranteed issue does not limit how 
much individuals can be charged if they enroll in coverage. https://www.healthcare.gov/glossary/guaranteed-issue/. However, the ACA's 
community rating protections prevent health insurance issuers from 
varying premiums within a geographic area based on gender, health 
status or other factors not specified in the statute with respect to 
non-grandfathered individual and small group plans. https://www.healthcare.gov/glossary/community-rating/.
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    Additionally, the Departments are of the view that the section 1332 
waiver proposals that could be available under the guardrail 
interpretations in the 2018 Guidance and codified in part 1 of the 2022 
Payment Notice final rule may also conflict with E.O. 14009. For 
example, the Section 1332 State Relief and Empowerment Waiver Concepts 
Discussion Paper (November 2018 Discussion Paper) \150\ included waiver 
concepts that were intended to foster discussion with states by 
illustrating how states might take advantage of new flexibilities 
provided in the 2018 Guidance. The Departments also are of the view 
that some of these waiver concepts, which rely upon the 2018 Guidance 
interpretation of the guardrails, are not in line with E.O. 14009 goals 
to protect and strengthen Medicaid and the ACA and to make high-quality 
health care accessible and affordable for every American. For example, 
the Adjusted Plan Options section 1332 waiver concept included in the 
2018 Discussion Paper would permit states to have the flexibility to 
provide state financial assistance for non-QHPs.

[[Page 53463]]

A section 1332 waiver proposal that includes this concept could 
potentially increase coverage in non-QHPs and potentially decrease 
enrollment in comprehensive coverage plans by allowing consumers to use 
a state subsidy towards catastrophic plans, individual market plans 
that are not QHPs, or plans that do not fully meet ACA requirements. 
This waiver concept is inconsistent with E.O. 14009, as it would likely 
result in consumers enrolling in non-QHPs and plans that do not fully 
meet ACA requirements, thereby increasing barriers for expanding 
comprehensive affordable coverage and potentially decreasing enrollment 
in comprehensive coverage. Further, commenters to the 2018 Guidance 
expressed generalized concern that the 2018 Guidance permitted 
alternative coverage options that can be underwritten and do not meet 
EHB standards. In addition, commenters were concerned that measures 
taken to facilitate coverage in alternative plan options (for example, 
allowing the use of subsidies for such coverage) would result in fewer 
comprehensive plans on the market, and that those comprehensive plans 
would become less affordable. In light of E.O.s 13985 and 14009 and 
concerns raised by commenters, the Departments proposed new policies 
that would allow states flexibility to develop waiver plans to meet 
their needs and expand coverage, lower costs, and increase access to 
high-quality health care with comprehensive benefits.
---------------------------------------------------------------------------

    \150\ https://www.cms.gov/CCIIO/Programs-and-Initiatives/State-Innovation-Waivers/Downloads/Waiver-Concepts-Guidance.PDF.
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    Given current policy goals, as well as the Departments' further 
consideration of comments received on the 2022 Payment Notice, the 
Departments proposed to revise policies for how the Departments would 
evaluate whether a state's section 1332 waiver plan satisfies each of 
the guardrails, as outlined in more detail later in this section. 
Overall, the Departments proposed that the ``coverage'' to be provided 
and evaluated in each guardrail should be interpreted the same way in 
each subparagraph of section 1332(b)(1)(A)-(C) of the ACA for 
consistency. Thus, the Departments proposed in 31 CFR 
33.108(f)(3)(iv)(A) through (C) and 45 CFR 155.1308(f)(3)(iv)(A) 
through (C) that, to be approved, a waiver must be projected to provide 
coverage that is as comprehensive and affordable as would have been 
provided absent the waiver and to the same number of residents.
    Similarly, given the current COVID-19 PHE, this Administration is 
focused on the response to the PHE and on helping increase enrollment 
in comprehensive, affordable health insurance coverage. The ARP made 
numerous changes to the ACA to expand access to comprehensive health 
insurance coverage and lower costs. Specifically, the ARP temporarily 
expanded eligibility for and increased the value of APTC/PTC, enabling 
previously ineligible consumers to qualify for help paying for Exchange 
coverage and increasing assistance to eligible individuals already 
enrolled in Exchange plans. As discussed in the proposed rule, these 
changes have already increased enrollment through the Exchanges,\151\ 
and the Departments are of the view that this law will continue to 
increase enrollment through the Exchanges as the ARP's enhanced 
subsidies lower the costs of coverage for millions of Americans and 
change the incentives to seek and maintain comprehensive health 
insurance coverage. In addition, increased affordability and expansion 
of access to comprehensive health insurance coverage will better 
support enrollment of historically uninsured communities--especially 
those who have faced significant health disparities--in such coverage, 
thereby improving access to health care during and beyond the COVID-19 
PHE. This Administration has also sought to strengthen the ACA and 
increase enrollment by directing the establishment of a special 
enrollment period, which was open from February 15, 2021 through August 
15, 2021, for Exchanges using the HealthCare.gov platform (COVID-19 
special enrollment period). Over 1.5 million Americans had already 
signed up for coverage on HealthCare.gov during the COVID-19 special 
enrollment period at the time of the proposed rule and that number has 
increased to 2.5 million.\152\ To promote the special enrollment 
period, CMS spent approximately $100 million on outreach and education, 
including broadcast, radio, and digital advertising to reach the 
uninsured, and also launched parallel outreach efforts through 
stakeholders and partners to increase education and awareness across 
communities on the COVID-19 special enrollment period.\153\ Earlier 
this year, CMS made approximately $2.3 million in additional funding 
available to current Navigator grantees in FFEs to support the 
outreach, education, and enrollment efforts around the COVID-19 special 
enrollment period.\154\ Additionally, on August 27, 2021, CMS awarded 
$80 million in grant funding to 60 Navigator grantees in 30 states with 
an FFE for the 2022 plan year.\155\ This represents an eight-fold 
increase in funding from the previous year. Taken together, these 
policies, including the increased subsidies available under the ARP, 
the COVID-19 special enrollment period, and the increased Federal 
investment in the FFE Navigator program, have already led to, and are 
expected to continue to lead to, increased enrollment through the 
Exchanges.
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    \151\ 2021 Marketplace Special Enrollment Period Report, June 
14, 2021 https://www.cms.gov/newsroom/fact-sheets/2021-marketplace-special-enrollment-period-report-2.
    \152\ See https://www.cms.gov/newsroom/fact-sheets/2021-marketplace-special-enrollment-period-report-3 and https://www.cms.gov/newsroom/fact-sheets/2021-marketplace-special-enrollment-period-report-4.
    \153\ On January 28, 2021, CMS announced $50 million for 
outreach and marketing for the COVID-19 special enrollment period: 
https://www.cms.gov/newsroom/fact-sheets/2021-special-enrollment-period-response-covid-19-emergency. On April 1, 2021 HHS announced 
an additional $50 million to further bolster the COVID-19 special 
enrollment period campaign and promote the lower premiums under the 
ARP: https://www.cms.gov/newsroom/press-releases/hhs-secretary-becerra-announces-reduced-costs-and-expanded-access-available-marketplace-health.
    \154\ https://www.cms.gov/newsroom/press-releases/cms-announces-additional-navigator-funding-support-marketplace-special-enrollment-period.
    \155\ https://www.cms.gov/newsroom/press-releases/cms-announces-80-million-funding-opportunity-available-navigators-states-federally-facilitated-0.
     https://www.cms.gov/newsroom/press-releases/biden-harris-administration-quadruples-number-health-care-navigators-ahead-healthcaregov-open.
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    As noted in the proposed rule, the Departments are of the view that 
rescinding the 2018 Guidance, repealing the previous codification of 
its guardrail interpretations in part 1 of the 2022 Payment Notice 
final rule, and proposing new policies and restoring prior 
interpretations aligns with the Administration's goals to strengthen 
the ACA and increase enrollment in comprehensive, affordable health 
coverage among the remaining underinsured and uninsured. The 
Departments also noted that they are of the view that during a 
pandemic, as Americans continue to battle COVID-19 and millions of 
Americans are facing uncertainty and experiencing new health problems, 
it is even more critical that Americans have meaningful access to high-
quality, comprehensive and affordable health coverage options.
    The Departments also proposed to modify 31 CFR 33.108(f)(3)(iv) and 
45 CFR 155.1308(f)(3)(iv) to remove the reference, as codified under 
part 1 of the 2022 Payment Notice final rule, to interpretive guidance 
published by the Departments. The Departments noted that they are of 
the view that the proposal aligns with the Departments' efforts to 
provide supplementary information about the requirements that must be 
met for the approval of a

[[Page 53464]]

section 1332 waiver and the Secretaries' application review procedures. 
Because the Departments are of the view that the 2018 Guidance and its 
incorporation into regulations could result in the Departments 
approving section 1332 waivers that would result in fewer residents in 
those states enrolling in comprehensive and affordable coverage, that 
those interpretations do not represent the best fulfillment of 
congressional intent behind the statutory guardrails, that they are 
inconsistent with the policy intentions of E.O. 14009 and E.O. 13985, 
and that it is appropriate to address concerns raised by commenters on 
the 2018 Guidance, the Departments proposed to remove references to the 
2018 Guidance.
    As proposed, the Departments would rely upon the statute and 
regulations, as well as the Departments' interpretive policy statements 
as outlined in the applicable notice and comment rulemaking, in 
reviewing section 1332 waiver applications.
    The Departments sought comment on the proposals. The Departments 
also solicited comment on whether there are policies that meet the 
statutory guardrails of section 1332 waivers that the Departments could 
consider that would encourage states to find innovative ways to use 
section 1332 waivers to focus on equity and expand access to 
comprehensive coverage for their residents. In addition, the 
Departments considered whether any affected parties could be impacted 
by the proposed changes in policy interpretations outlined in this 
rule. This rule does not alter any of the requirements related to state 
innovation waiver applications, compliance and monitoring, or 
evaluation in a way that would create any additional costs or burdens 
for states submitting proposed waiver applications or those states with 
approved waiver plans that has not already been captured in prior 
burden estimates. As such, the Departments are of the view that both 
states with approved section 1332 waivers and states that are 
considering section 1332 waivers would continue to comply with the 
requirements noted earlier without creating any additional costs or 
burdens that have not already been accounted for in prior impact 
estimates of benefits and costs.
    The following is a summary of the general comments received and the 
Departments' responses related to the section 1332 application 
procedures--statutory guardrails (31 CFR 33.108(f)(3)(iv) and 45 CFR 
155.1308(f)(3)(iv)).
    Comment: The overwhelming majority of commenters were supportive of 
the proposed changes to the policies and interpretations related to the 
statutory guardrails. Commenters encouraged the Departments to finalize 
the statutory guardrail proposals in order to establish strong 
protections for consumers so that states are not able to use section 
1332 waivers to take away coverage or force people into high-cost 
health plans. Furthermore, commenters supported the policies and 
interpretations relating to the Departments' commitment to ensuring 
that waivers must not adversely affect vulnerable and underserved 
populations. A few commenters noted that the change in policies and 
interpretations would not affect approved waivers and supported the 
Departments finalizing the statutory guardrail policies and 
interpretations as proposed.
    Response: The Departments appreciate commenters' support and agree 
that it is important to adopt policies that strengthen the ACA and 
increase enrollment in comprehensive, affordable health coverage. After 
consideration of the comments received, the Departments are finalizing 
as proposed regulation text at 31 CFR 33.108(f)(3)(iv)(A)-(C) and 45 
CFR 155.1308(f)(3)(iv)(A)-(C), as well as adopting the new underlying 
statutory guardrail policies and interpretations described in this 
preamble.
    Comment: A few commenters were concerned that the proposed changes 
to the policies and interpretations related to the statutory guardrails 
would be overly restrictive. These commenters were concerned that these 
proposed changes would limit state innovation and would be too 
restrictive for states to meet. Instead, these commenters expressed 
support for the 2018 Guidance guardrail interpretations, in particular 
the access standard. One commenter recommended that the 2018 Guidance 
guardrail interpretation for the access standard be expanded to the 
coverage guardrail as well.
    Some of these commenters also took the position that the proposed 
changes to the policies and interpretations related to the statutory 
guardrails would undermine Congress' intent to give states a meaningful 
level of flexibility to develop and implement new health programs. They 
contended that the proposals only allow a waiver from the requirements 
of the ACA if the waiver meets the requirements of the ACA, thereby 
significantly diminishing state flexibility. Additionally, one 
commenter expressed concern that, by limiting consumer choice, the 
proposal would have a detrimental impact on vulnerable populations and 
``ignores how waiver flexibility may allow states to better tailor 
plans for people with greater health needs.'' \156\
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    \156\ Center of the American Experiment comment letter on 
proposed rule.
---------------------------------------------------------------------------

    Response: The Departments appreciate these comments, but disagree 
that the proposed guardrail policies and interpretations are overly 
restrictive and will limit state flexibility to provide access to 
comprehensive, affordable coverage. These policies and interpretations 
only limit states' flexibility to adopt section 1332 waiver plans that 
promote coverage that is not comprehensive (such as medically 
underwritten plans) at the expense of comprehensive coverage options. 
The Departments are of the view that the policies and interpretations 
finalized in this rule will allow states to develop proposals to 
promote comprehensive affordable coverage and restrict waiver proposals 
that would result in enrollment in less comprehensive coverage that may 
leave consumers exposed to high out-of-pocket costs. The Departments 
are committed to working with states to develop innovative waiver plans 
to address health care needs in a particular state. As discussed in the 
preambles to the proposed rule and this final rule, the Departments 
have determined that the guardrail interpretations codified in part 1 
of the 2022 Payment Notice final rule are inconsistent with the 
Departments' goal of ensuring individuals are enrolled in affordable, 
comprehensive coverage and not just that there is generalized access to 
such coverage. The decision to rescind these interpretations is based 
on the Departments' goal to ensure enrollment in comprehensive coverage 
and further consideration of previous comments and whether the 
replacement proposals are a better interpretation of section 
1332(b)(1)(A)-(C), as well as the Departments' reviews under E.O. 
14009, which is intended to strengthen the ACA and expand high-quality 
health care, and E.O. 13985, which is intended to pursue a 
comprehensive approach to advancing equity for all. The Departments' 
proposed statutory guardrail policies and interpretations, which are 
being finalized as proposed, are intended to align with the President's 
instruction in E.O. 14009 to adopt policies to strengthen the 
implementation of the ACA and remove any barriers that those policies 
may create for expanding coverage, lowering costs, and making high-
quality health care accessible for every American. Furthermore, in line 
with E.O. 14009, this Administration is focused on ensuring high-
quality health care is

[[Page 53465]]

accessible and affordable for every American. Therefore, as explained 
in the preambles to the proposed rule and this final rule, the 
Departments are of the view that the comprehensiveness and 
affordability guardrails should focus on the types of coverage 
residents actually purchase, rather than the types of coverage to which 
residents have access.
    The Departments are also of the view that the policies and 
interpretations adopted in this preamble do not limit consumer choice 
and instead further the goal of ensuring individuals are enrolled in 
affordable, comprehensive coverage and not just that there is 
generalized access to such coverage. As discussed in the preambles to 
the proposed rule and this final rule, the plans that could be offered 
to individuals under section 1332 waivers when applying the 
interpretations codified in the part 1 of the 2022 Payment Notice final 
rule could allow state section 1332 waivers that would result in more 
individuals enrolling in medically underwritten plans that offer only 
limited benefits, charge higher out-of-pocket costs, or both, which is 
inconsistent with the goal of the E.O. 14009 to reduce barriers for 
expanding comprehensive affordable coverage. Allowing more individuals 
to enroll in medically underwritten plans could also have a disparate 
impact on vulnerable populations, especially people of color and those 
who are in poverty, those who are underserved, and those with pre-
existing conditions, which is inconsistent with the goal of E.O. 13985. 
Further, waivers that result in more individuals enrolling in medically 
underwritten plans could also be detrimental to those who have chronic 
conditions or greater health needs. The policies and interpretations 
adopted in this preamble and regulations finalized in this rule will 
help decrease barriers for expanding comprehensive affordable coverage 
and potentially increase access to and enrollment in high-quality 
health care with comprehensive benefits. However, at the same time, the 
Departments note that the changes in policies and interpretations 
adopted in this preamble do not limit or otherwise establish new 
requirements or restrictions on other currently available coverage 
options. Therefore, the Departments generally disagree with commenters' 
assertions that the new statutory guardrail policies and 
interpretations will limit consumer choice, as consumers will continue 
to have access to the same coverage options, both on and off Exchange, 
as they do today.
    After consideration of the comments received, the Departments are 
adopting the new policies and interpretations described in this 
preamble with regard to the statutory guardrails and are finalizing the 
regulatory changes relating to the statutory guardrails (31 CFR 
33.108(f)(3)(iv) and 45 CFR 155.1308(f)(3)(iv)) as proposed. Each of 
the statutory guardrails is addressed further later in this section of 
this preamble, along with summaries of and responses to comments on 
each of the individual guardrails.
a. Comprehensive Coverage (31 CFR 33.108(f)(3)(iv)(A) and 45 CFR 
155.1308(f)(3)(iv)(A))
    The Departments proposed to modify the regulations at 31 CFR 
33.108(f)(3)(iv)(A) and 45 CFR 155.1308(f)(3)(iv)(A) to set forth a 
revised interpretation of the comprehensiveness guardrail. In addition, 
the Departments proposed, through preamble, policies and 
interpretations relating to the requirements for the comprehensive 
coverage guardrail that are similar to the policies and interpretations 
outlined in the 2015 Guidance. Specifically, the Departments proposed 
to modify the regulations at 31 CFR 33.108(f)(3)(iv)(A) and 45 CFR 
155.1308(f)(3)(iv)(A) such that to satisfy the comprehensive coverage 
requirement, the Departments, as applicable, must determine that the 
section 1332 waiver will provide coverage that is at least as 
comprehensive overall for residents of the state as coverage absent the 
waiver.
    The Departments proposed to modify the regulations at 31 CFR 
33.108(f)(3)(iv)(A) and 45 CFR 155.1308(f)(3)(iv)(A) for the 
comprehensiveness guardrail as follows:
    To meet the comprehensiveness guardrail, health care coverage under 
a section 1332 waiver is required to be forecast to be at least as 
comprehensive overall for residents of the state as coverage absent the 
waiver.
    As proposed, the Departments' policies and interpretations related 
to the comprehensiveness guardrail are as follows: Comprehensiveness 
refers to the scope of benefits provided by the coverage and would be 
measured by the extent to which coverage meets the requirements for 
EHBs as defined in section 1302(b) of the ACA and offered through 
Exchanges established by Title I of the ACA, or, as appropriate, 
Medicaid or CHIP standards. The impact on all state residents would be 
considered, regardless of the type of coverage they would have had 
absent the section 1332 waiver.
    Comprehensiveness will be evaluated by comparing coverage under the 
section 1332 waiver to the state's EHB-benchmark plan applicable for 
the plan year pursuant to 45 CFR 156.111, as well as to, in certain 
cases, the coverage provided under the state's Medicaid or CHIP 
programs.\157\ A section 1332 waiver will not satisfy the 
comprehensiveness requirement if the waiver decreases: (1) The number 
of residents with coverage that is at least as comprehensive as the 
EHB-benchmark plan in all ten EHB categories; (2) for any of the ten 
EHB categories, the number of residents with coverage that is at least 
as comprehensive as the benchmark in that category; or (3) the number 
of residents whose coverage includes the full set of services that 
would be covered under the state's Medicaid or CHIP programs, holding 
the state's Medicaid and CHIP policies constant. That is, the section 
1332 waiver cannot decrease the number of individuals with coverage 
that satisfies EHB requirements, the number of individuals with 
coverage of any particular category of EHB, or the number of 
individuals with coverage that includes the services covered under the 
state's Medicaid or CHIP programs.
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    \157\ In the 2019 Payment Notice, HHS provided states with 
substantially more options in the selection of an EHB-benchmark 
plan. Instead of being limited to 10 options, states are now be able 
to choose from the 50 EHB-benchmark plans used for the 2017 plan 
year in other states or select specific EHB categories, such as drug 
coverage or hospitalization, from among the categories in the EHB-
benchmark plan used for the 2017 plan year in other states. 
Additionally, states are able to build their own set of benefits 
that could potentially become their EHB-benchmark plan, subject to 
certain scope of benefits requirements.
---------------------------------------------------------------------------

    Assessment of whether a section 1332 waiver proposal meets the 
comprehensiveness requirement will also take into account the effects 
across different groups of state residents, and, in particular, effects 
on vulnerable and underserved residents, including low-income 
individuals, older adults, those with serious health issues or who have 
a greater risk of developing serious health issues, and people of color 
and others who have been historically underserved, marginalized, and 
adversely affected by persistent poverty and inequality.\158\ A section 
1332 waiver will be highly unlikely to be approved by the Secretaries 
under the

[[Page 53466]]

interpretation outlined in the preambles to the proposed rule and this 
final rule if the waiver would reduce the comprehensiveness of coverage 
provided to these types of vulnerable or underserved groups, even if 
the waiver maintained comprehensiveness in the aggregate. This 
condition generally must be forecast to be met in each year that the 
section 1332 waiver would be in effect.
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    \158\ These groups include individuals who belong to underserved 
communities that have been denied such treatment, such as Black, 
Latino, and Indigenous and Native American persons, Asian Americans 
and Pacific Islanders and other persons of color; members of 
religious minorities; lesbian, gay, bisexual, transgender, and queer 
(LGBTQ+) persons; persons with disabilities; persons who live in 
rural areas; and persons otherwise adversely affected by persistent 
poverty or inequality. https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-Federal-government/.
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    Consistent with 31 CFR 33.108(f) and 45 CFR 155.1308(f), the 
section 1332 waiver application must include analysis and supporting 
data that establishes that the section 1332 waiver satisfies this 
requirement. This includes an explanation of how the benefits offered 
under the section 1332 waiver differ from the benefits provided absent 
the waiver (if the benefits differ at all) and how the state determined 
the benefits to be as ``comprehensive.''
    As discussed previously in the preamble to the proposed rule, the 
policies and interpretations of the comprehensiveness guardrail 
outlined in the 2018 Guidance and codified in part 1 of the 2022 
Payment Notice final rule were in line with the Administration's 
priorities at the time to promote private market competition and 
increase consumer choice. Under those policies, analysis of 
comprehensiveness and affordability of coverage under a section 1332 
waiver focused on the nature of coverage that is made available to 
state residents (access to coverage), rather than on the coverage that 
residents actually purchase. The plans that could be offered to 
individuals under section 1332 waivers as codified in part 1 of the 
2022 Payment Notice final rule could therefore allow for more 
individuals to enroll in medically underwritten plans that only offer 
limited benefits, which is inconsistent with the goal of E.O. 14009 to 
reduce barriers for expanding comprehensive affordable coverage.
    In response to the proposal in the 2022 Payment Notice proposed 
rule, commenters raised concerns that alternative plan options (which 
could include medically underwritten plans) can terminate or deny 
coverage based on health status, which would tend to affect high-risk 
individuals. Commenters asserted that this possibility puts individuals 
with greater medical needs at risk of going without effective coverage 
for their health care needs. Some commenters expressed concern that the 
potential market effects would have a disparate impact on vulnerable 
populations, especially low-income consumers and those with pre-
existing conditions. Additionally, these commenters expressed concern 
that a disparate impact on any particular group would not necessarily 
cause the Departments to deny a section 1332 waiver application, even 
though the impact on vulnerable population groups would be taken into 
account.
    The Departments noted that they are of the view that the current 
interpretation of the comprehensiveness guardrail is inconsistent with 
the goal of E.O. 14009 to reduce barriers for expanding comprehensive 
affordable coverage. The Departments also noted that they are of the 
view that the current interpretation of the comprehensiveness guardrail 
is inconsistent with the goal of E.O. 13985 to pursue a comprehensive 
approach to advancing equity and could create barriers to health 
coverage for people of color and underserved groups.
    As noted in the proposed rule, the proposed changes are intended to 
align with the President's instructions in E.O. 14009 and E.O. 13985 to 
adopt policies to strengthen the implementation of the ACA and ensure 
high-quality health care coverage is accessible and affordable for 
every American. The Departments note that they are of the view that the 
provisions outlined in the proposed rule would further support states 
providing consumers with comprehensive, high-quality health care 
coverage that will better protect consumers with pre-existing 
conditions and will help protect consumers from unexpected and expected 
medical needs. Further, the Departments note that the provisions 
outlined in the proposed rule would further the goal that consumers 
with pre-existing conditions, particularly racial and ethnic minorities 
who are 1.5 to 2.0 times more likely than whites to have major chronic 
diseases \159\ and as such pre-existing conditions, maintain 
comprehensive coverage.
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    \159\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3794652/
#:~:text=more%20chronic%20diseases.-
,Racial%2Fethnic%20minorities%20are%201.5%20to%202.0%20times%20more%2
0likely,seem%20to%20be%20getting%20worse.
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    The Departments sought comment on the proposed policies and 
interpretations related to the comprehensiveness guardrail. The 
Departments noted that they are of the view that the proposed 
provisions would have minimal impact on both states with section 1332 
waivers under development and states with approved waivers. The 
Departments solicited comment on the impact to stakeholders.
    The following is a summary of the comments received and the 
Departments' responses related to 31 CFR 33.108(f)(3)(iv)(A) and 45 CFR 
155.1308(f)(3)(iv)(A), the comprehensiveness guardrail.
    Comment: The Departments received a few comments specifically 
focused on the comprehensiveness guardrail. Several commenters 
supported the proposal to use EHB and Medicaid coverage as a standard 
of comparison for the comprehensiveness guardrail. Furthermore, these 
commenters supported the modifications to the rule text to evaluate 
this guardrail based on coverage that is provided under the waiver, not 
just coverage that is available. One commenter recommended adding rule 
text to capture that the waiver cannot decrease the number of people 
with coverage that satisfies EHB requirements, the number of people 
with coverage of any particular category of EHB, or the number of 
individuals with coverage that includes the services covered under the 
state's Medicaid or CHIP programs. Furthermore, this commenter 
recommended that the rule text should reaffirm that these criteria must 
be met in each year of the waiver.
    Response: After consideration of the comments received, the 
Departments are adopting the proposed policies and interpretations 
related to the comprehensiveness guardrail, as well as the proposed 
amendments to 31 CFR 33.108(f)(3)(iv)(A) and 45 CFR 
155.1308(f)(3)(iv)(A). As finalized, to meet the comprehensiveness 
guardrail, coverage under a section 1332 waiver must be forecast to be 
at least as comprehensive overall for residents of the state as 
coverage absent the waiver. For this purpose, comprehensiveness refers 
to the scope of benefits provided and will be measured by the extent to 
which coverage meets EHB or, as appropriate, Medicaid or CHIP 
standards. The impact on all state residents will be considered as part 
of this analysis, regardless of the type of coverage they would have 
had absent the section 1332 waiver. As explained in this preamble, the 
Departments will evaluate this guardrail in each year that the section 
1332 waiver would be in effect to ensure that a waiver will not 
decrease the number of people with coverage that satisfies EHB 
requirements, the number of individuals with coverage of any particular 
category of EHB, or the number of individuals with coverage that 
includes the services covered under the state's Medicaid or CHIP 
programs. The Departments remain committed to approving waivers that 
promote health insurance coverage and health equity.
    Regarding the comprehensiveness guardrail regulatory provisions, 
the Departments are not finalizing additional changes to the rule text 
at this time. The Departments are of the

[[Page 53467]]

view that codifying more specific requirements and guidelines in 
regulation is unnecessary, given the policies and interpretations 
already discussed in this preamble and the amendments to the 
comprehensiveness guardrail regulations finalized in this rule, which 
provide states and the Federal Government the information to reasonably 
evaluate whether a section 1332 waiver meets the coverage guardrail and 
relevant policy goals.
    Comment: One commenter opposed the proposal due to concerns it 
would stifle a state's ability to innovate through plan design. This 
commenter raised concerns that as proposed, the proposal ``leaves no 
room for plan and benefit design'' and encouraged the Departments to 
use an ``overall'' standard for comprehensiveness as they do for the 
affordability guardrail.\160\
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    \160\ Oregon Department of Consumer and Business Services, the 
State of Oregon's insurance regulator, and the Oregon Health 
Authority comment letter on proposed rule.
---------------------------------------------------------------------------

    Response: The proposed policies and interpretations related to the 
statutory guardrails require that coverage be available for a 
comparable number of people that is as affordable and comprehensive as 
coverage would have been available in the absence of the waiver. The 
Departments disagree that the proposed policies and interpretations of 
the comprehensiveness guardrail will stifle a state's ability to 
innovate through plan design. Under the 2019 Payment Notice final rule, 
states have increased flexibility to change their EHB-benchmark 
plan.\161\ States interested in changing their EHB-benchmark plan can 
do so without pursuing a section 1332 waiver, following the approach 
finalized in the 2019 Payment Notice final rule, or they can elect to 
make those changes while also pursuing a section 1332 waiver to make 
other changes. For example, a state could select another state's EHB-
benchmark plan that was applicable for the 2017 plan year, replace one 
or more of categories in its EHB-benchmark plan with the same 
categories from another state's EHB -benchmark plan that was applicable 
for the 2017 plan year, or select a set of benefits that would become 
the state's new EHB -benchmark plan.
---------------------------------------------------------------------------

    \161\ 45 CFR 156.111.
---------------------------------------------------------------------------

    States could also consider increasing the generosity of an EHB-
benchmark plan's benefits to address health equity. Further, the 
Departments are of the view that the ``overall'' standard incorporated 
in the comprehensiveness guardrail analysis, which looks at the number 
of residents with coverage that is at least as comprehensive as the 
benchmark in all ten EHB categories, any of the ten EHB categories, and 
full set of services under the state's Medicaid or CHIP programs, is 
critical to ensure that consumers continue to have comprehensive 
affordable coverage under a waiver. As such, the Departments are of the 
view that states could consider current policy flexibilities and 
utilizing section 1332 waivers to innovate through plan design and 
benefit design.
    After consideration of the comments received, the Departments are 
adopting the proposed policies and interpretations relating to the 
comprehensiveness guardrail and finalizing the proposed modifications 
to 31 CFR 33.108(f)(3)(iv)(A) and 45 CFR 155.1308(f)(3)(iv)(A).
b. Affordability (31 CFR 33.108(f)(3)(iv)(B) and 45 CFR 
155.1308(f)(3)(iv)(B))
    The Departments proposed to modify the regulations at 31 CFR 
33.108(f)(3)(iv)(B) and 45 CFR 155.1308(f)(3)(iv)(B) to set forth a 
revised interpretation of the affordability guardrail. In addition, the 
Departments proposed, through preamble, policies and interpretations 
relating to the requirements for the affordability coverage guardrail 
that are similar to the policies and interpretations outlined in the 
2015 Guidance. Specifically, the Departments proposed to modify the 
regulations at 31 CFR 33.108(f)(3)(iv)(B) and 45 CFR 
155.1308(f)(3)(iv)(B) such that to satisfy the affordability 
requirement, the Departments, as applicable, must determine that the 
section 1332 waiver would provide coverage that is at least as 
affordable overall for residents of the state as coverage absent the 
waiver.
    The Departments proposed to modify the regulations at 31 CFR 
33.108(f)(3)(iv)(B) and 45 CFR 155.1308(f)(3)(iv)(B) for the 
affordability guardrail as follows: To meet the affordability 
guardrail, health care coverage under the section 1332 waiver will be 
required to be forecast to be as affordable overall for state residents 
as coverage absent the waiver.
    As proposed, the Departments' policies and interpretations related 
to the affordability guardrail are as follows:
    Affordability refers to state residents' ability to pay for health 
care expenses relative to their incomes and will generally be measured 
by comparing each individual's expected out-of-pocket spending for 
health coverage and services to their incomes. Out-of-pocket spending 
for health care includes premiums (or equivalent costs for enrolling in 
coverage), and spending such as deductibles, co-pays, and co-insurance, 
associated with the coverage or direct payments for health care. 
Spending on health care services that are not covered by a health plan 
or health coverage could also be taken into account if they are 
affected by the section 1332 waiver proposal. The impact on all state 
residents will be required to be considered, regardless of the type of 
coverage they would have had absent the section 1332 waiver. Under the 
proposed provisions and interpretation, this condition generally must 
be forecast to be met in each year that the section 1332 waiver would 
be in effect.
    Section 1332 waivers will be evaluated not only based on how they 
affect affordability on average, but also on how they affect the number 
of individuals with large health care spending burdens relative to 
their incomes. Increasing the number of state residents with large 
health care spending burdens will cause a section 1332 waiver proposal 
to fail the affordability requirement, even if the waiver would 
increase affordability for many other state residents. Given that 
eligibility for comprehensive coverage among the uninsured varies 
across racial and ethnic groups, the Departments' assessment of whether 
the proposal meets the affordability requirement will also take into 
account the effects across different groups of state residents, and, in 
particular, effects on vulnerable or underserved residents, including 
low-income individuals, older adults, those with serious health issues 
or who have a greater risk of developing serious health issues, and 
people of color and others who have been historically underserved, 
marginalized, and adversely affected by persistent poverty and 
inequality.\162\ A section 1332 waiver will be highly unlikely to be 
approved by the Secretaries under the policies and interpretations set 
forth in the preambles to the proposed rule and this final rule if it 
reduces affordability for these vulnerable or underserved groups, even 
if the waiver would maintain affordability in the

[[Page 53468]]

aggregate. In addition, a section 1332 waiver will fail to meet the 
affordability guardrail if it would reduce the number of individuals 
with coverage that provides a minimal level of protection against 
excessive cost sharing. In particular, section 1332 waivers that reduce 
the number of people with insurance coverage that provides both an AV 
equal to or greater than 60 percent and an out-of-pocket maximum that 
complies with section 1302(c)(1) of the ACA, will fail to meet this 
guardrail under the policies and interpretations set forth in this 
rule. Section 1332 waivers that reduce the number of people with 
coverage that meets the affordability requirements set forth in 
sections 1916 and 1916A of the Act, as codified in 42 CFR part 447, 
subpart A, while holding the state's Medicaid policies constant will 
also fail under the affordability guardrail.
---------------------------------------------------------------------------

    \162\ These groups include individuals who belong to underserved 
communities that have been denied such treatment, such as Black, 
Latino, and Indigenous and Native American persons, Asian Americans 
and Pacific Islanders and other persons of color; members of 
religious minorities; lesbian, gay, bisexual, transgender, and queer 
(LGBTQ+) persons; persons with disabilities; persons who live in 
rural areas; and persons otherwise adversely affected by persistent 
poverty or inequality. See https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-Federal-government/.
---------------------------------------------------------------------------

    Consistent with 31 CFR 33.108(f) and 45 CFR 155.1308(f), the 
section 1332 waiver application must include analysis and supporting 
data that establishes that the waiver satisfies this requirement. This 
includes information on estimated individual out-of-pocket costs 
(premium and out-of-pocket expenses for deductibles, co-payments, co-
insurance, co-payments and plan differences) by income, health 
expenses, health insurance status, and age groups, absent the section 
1332 waiver and with the waiver. The expected changes in premium 
contributions and other out-of-pocket costs and the combined impact of 
changes in these components should be identified separately. The 
application should also describe any changes in employer contributions 
to health coverage or in wages expected under the section 1332 waiver. 
The application should identify any types of individuals for whom 
affordability of coverage would be reduced by the section 1332 waiver.
    As discussed previously in the preamble of the proposed rule, the 
affordability guardrail interpretation outlined in the 2018 Guidance 
and codified in part 1 of the 2022 Payment Notice final rule aimed to 
increase consumer choice to allow states to provide access to health 
insurance coverage at different prices points and benefits levels. The 
Departments noted that they are of the view that this interpretation of 
the affordability guardrail is inconsistent with the goal of E.O. 14009 
to reduce barriers for expanding comprehensive affordable coverage. The 
current interpretation could allow for more individuals, including 
potentially those with pre-existing conditions, to enroll in medically 
underwritten plans that charge higher out-of-pocket costs, which is 
inconsistent with the goal of the E.O. to reduce barriers for expanding 
comprehensive affordable coverage. As proposed, the changes were 
intended to align with the President's instruction in E.O. 14009 to 
adopt policies to strengthen the implementation of the ACA and ensure 
high-quality health care is accessible and affordable for every 
American. The Departments noted that they are of the view that the 
provisions outlined in the proposed rule would further support states 
providing consumers with comprehensive, high-quality affordable health 
care coverage that will better protect consumers with pre-existing 
conditions, and will help protect consumers from unexpected and 
expected medical needs.
    The Departments sought comment on these proposed policies and 
interpretations related to the affordability guardrail. The Departments 
noted that they are of the view the proposal would have minimal impact 
on both states with section 1332 waivers under development and states 
with approved waivers. The Departments solicited comment on the impact 
to stakeholders.
    The following is a summary of the comments received and the 
Departments' responses related to 31 CFR 33.108(f)(3)(iv)(B) and 45 CFR 
155.1308(f)(3)(iv)(B), the affordability guardrail.
    Comment: Commenters were generally supportive of the proposals 
related to the affordability guardrail. These commenters supported the 
modifications to require coverage and cost sharing protections against 
excessive out-of-pocket spending that are at least as affordable as the 
provisions of title I of the ACA. Commenters were supportive of the 
policies outlined in the preamble to the proposed rule, including the 
Departments' policy under which they would evaluate whether consumers 
would have large health care spending burdens relative to their incomes 
and will examine the effects on various vulnerable groups. 
Additionally, one commenter recommended that the rule text should 
similarly require examination of the effect of a proposed waiver on 
vulnerable groups and the groups now eligible for the largest premium 
credits and cost sharing reductions.
    Response: The Departments appreciate commenters' support and are 
finalizing the amendments to 31 CFR 33.108(f)(3)(iv)(B) and 45 CFR 
155.1308(f)(3)(iv)(B) and the affordability guardrail policies and 
interpretations as proposed. As finalized, to meet the affordability 
guardrail, a section 1332 waiver must be forecast to be as affordable 
overall for state residents as coverage absent the waiver. The impact 
on all state residents will be considered as part of this analysis, 
regardless of the type of coverage they would have had absent the 
section 1332 waiver. Section 1332 waivers will be evaluated not only 
based on how they affect affordability on average, but also on how they 
affect the number of individuals with large health care spending 
burdens relative to their incomes. As previously explained, in applying 
this guardrail, the Departments will examine the impact the waiver has 
on state residents' ability to pay for health care expenses relative to 
their incomes and will generally measure compliance by comparing each 
individual's expected out-of-pocket spending for health coverage and 
services to their incomes. This approach allows the Departments to 
evaluate the affordability guardrail across various FPL levels, 
including for those newly eligible or eligible for expanded PTC as a 
result of the ARP, which impacts various FPLs differently, an issue 
that was raised by a commenter. Regarding the waiver's impact on the 
affordability of coverage for vulnerable populations, the Departments' 
analysis of compliance with the affordability guardrail will also take 
into account the effects on low-income individuals, older adults, those 
with serious health issues or who have a greater risk of developing 
serious health issues, and people of color and others who have been 
historically underserved, marginalized, and adversely affected by 
persistent poverty and inequality. The Departments also note that, 
under the proposals finalized in this rule related to the Actuarial and 
Economic Analysis section of the regulation,\163\ states should compare 
comprehensiveness, affordability, coverage, and deficit neutrality with 
and without the section 1332 waiver. States should also include in 
their analysis of the aforementioned guardrails whether the proposed 
section 1332 waiver would increase health equity in keeping with goals 
of with E.O. 13985, which will provide the Departments with information 
to evaluate the impact on vulnerable populations.
---------------------------------------------------------------------------

    \163\ See 31 CFR 33.108(f)(4)(i)-(iii) and 45 CFR 
155.1308(f)(4)(i)-(iii).
---------------------------------------------------------------------------

    The Departments decline to finalize additional changes to the rule 
text at this time. The Departments are of the view that codifying more 
specific requirements and guidelines in regulation is unnecessary, 
given the policies and interpretations already

[[Page 53469]]

discussed in this preamble and the amendments to the affordability 
guardrail regulations finalized in this rule, which provide states and 
the Federal Government the information needed to reasonably evaluate 
the ability of a section 1332 waiver to meet the affordability 
guardrail and relevant policy goals.
    The Departments remain committed to approving waivers that promote 
health insurance coverage and health equity and are adopting the 
proposed policies and interpretations relating to the affordability 
guardrail, as well as finalizing as proposed the modifications to 31 
CFR 33.108(f)(3)(iv)(B) and 45 CFR 155.1308(f)(3)(iv)(B).
c. Coverage (31 CFR 33.108(f)(3)(iv)(C) and 45 CFR 
155.1308(f)(3)(iv)(C))
    The Departments proposed to modify the regulations at 31 CFR 
33.108(f)(3)(iv)(C) and 45 CFR 155.1308(f)(3)(iv)(C) to remove the 
coverage guardrail interpretations codified in part 1 of the 2022 
Payment Notice final rule. In addition, the Departments proposed, 
through preamble, policies and interpretations relating to the 
requirements for the coverage guardrail that are similar to the 
policies and interpretations outlined in the 2015 Guidance. 
Specifically, the Departments proposed to modify the regulations at 31 
CFR 33.108(f)(3)(iv)(C) and 45 CFR 155.1308(f)(3)(iv)(C) such that to 
satisfy the scope of coverage requirement, the Departments, as 
applicable, must determine that the section 1332 waiver would provide 
coverage to a comparable number of state residents under the waiver as 
would have coverage absent the waiver.
    The Departments proposed to modify the regulations at 31 CFR 
33.108(f)(3)(iv)(C) and 45 CFR 155.1308(f)(3)(iv)(C) for the coverage 
guardrail as follows: To meet the coverage guardrail, a comparable 
number of state residents must be forecast to have coverage under the 
section 1332 waiver as would have had coverage absent the waiver.
    As proposed, the Departments' policies and interpretations related 
to the coverage guardrail are as follows:
    Coverage refers to MEC as defined in 26 U.S.C. 5000A(f). For this 
purpose, ``comparable'' means that the forecast of the number of 
covered individuals is no less than the forecast of the number of 
covered individuals absent the section 1332 waiver. This condition 
generally will be required to be forecast to be met in each year that 
the section 1332 waiver would be in effect.
    The impact on all state residents will be considered, regardless of 
the type of coverage they would have had absent the section 1332 
waiver. For example, while a section 1332 waiver may not change the 
terms of a state's Medicaid coverage or change existing Medicaid 
demonstration authority, changes in Medicaid enrollment--whether 
increases or decreases--that result from a section 1332 waiver, holding 
the state's Medicaid policies constant, will be considered in 
evaluating the number of residents with coverage under a waiver.
    Assessment of whether the section 1332 waiver application covers a 
comparable number of individuals will also take into account the 
effects across different groups of state residents, and, in particular, 
effects on vulnerable or underserved residents, including low-income 
individuals, older adults, those with serious health issues or who have 
a greater risk of developing serious health issues, and people of color 
and others who have been historically underserved, marginalized, and 
adversely affected by persistent poverty and inequality.\164\ A section 
1332 waiver will be highly unlikely to be approved by the Secretaries 
if it would reduce coverage for these populations, even if the waiver 
would provide coverage to a comparable number of residents in the 
aggregate. Finally, analysis under the coverage requirement will take 
into account whether the section 1332 waiver sufficiently prevents gaps 
in or discontinuations of coverage.
---------------------------------------------------------------------------

    \164\ These groups include individuals who belong to underserved 
communities that have been denied such treatment, such as Black, 
Latino, and Indigenous and Native American persons, Asian Americans 
and Pacific Islanders and other persons of color; members of 
religious minorities; lesbian, gay, bisexual, transgender, and queer 
(LGBTQ+) persons; persons with disabilities; persons who live in 
rural areas; and persons otherwise adversely affected by persistent 
poverty or inequality. See https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-Federal-government/.
---------------------------------------------------------------------------

    Consistent with 31 CFR 33.108(f) and 45 CFR 155.1308(f), the 
section 1332 waiver application must include analysis and supporting 
data that establishes that the waiver satisfies this requirement, 
including information on the number of individuals covered by income, 
health expenses, health insurance status, and age groups, under current 
law and under the waiver, including year-by-year estimates. The 
application should identify any types of individuals, including 
vulnerable and underserved individuals, who are more or less likely to 
be covered under the waiver than under current law.
    As discussed previously in the preamble to the proposed rule, under 
the interpretation outlined in the 2018 Guidance and codified in part 1 
of the 2022 Payment Notice final rule, the coverage guardrail would be 
met if at least as many residents are enrolled in health coverage, 
including both comprehensive and less comprehensive health plans, as 
would be enrolled absent the waiver. That interpretation was intended 
to promote choice among a wide range of plans to ensure that consumers 
can enroll in coverage that is right for them. As such, the Departments 
noted that the interpretations set forth in the 2018 Guidance and 
codified in part 1 of the 2022 Payment Notice final rule permit states 
to provide access to less comprehensive or less affordable coverage as 
an additional option for their residents to choose. Under the current 
policy, as long as a comparable number of residents are projected to be 
covered as would have been covered absent the section 1332 waiver, the 
coverage guardrail would be met. The Departments noted that this 
interpretation of the coverage guardrail is inconsistent with the goal 
of E.O. 14009 to reduce barriers for expanding comprehensive affordable 
coverage. The interpretation could allow for more individuals to enroll 
in medically underwritten plans that offer limited benefits, charge 
higher out-of-pocket costs, or both, which is inconsistent with the 
goal of E.O. 14009 to reduce barriers for expanding comprehensive, 
high-quality, affordable coverage. As discussed in the preamble to the 
proposed rule, the proposed provisions are intended to align with the 
President's instruction in E.O. 14009 to adopt policies to strengthen 
the implementation of the ACA and ensure high-quality health care is 
accessible and affordable for every American. The Departments are of 
the view that the proposals outlined in the proposed rule will further 
support states providing consumers with comprehensive, high-quality 
affordable health care that will better protect consumers with pre-
existing conditions and will help protect consumers from unexpected and 
expected medical costs.
    The Departments sought comment on the proposed policies and 
interpretations related to the coverage guardrail. The Departments are 
of the view that the proposed provisions would have minimal impact on 
both states with section 1332 waivers under development and states with 
approved waivers. The Departments solicited comment on the impact to 
stakeholders.
    The following is a summary of the comments received and the

[[Page 53470]]

Departments' responses related to 31 CFR 33.108(f)(3)(iv)(C) and 45 CFR 
155.1308(f)(3)(iv)(C), the coverage guardrail.
    Comment: Commenters were generally supportive of the proposals 
related to the coverage guardrail. One commenter recommended that the 
regulatory language be clarified to indicate that the coverage it 
references is comprehensive coverage, meeting the standards set forth 
in 31 CFR 33.108(f)(3)(iv)(A) and 45 CFR 155.1308(f)(3)(iv)(A).
    Response: The Departments appreciate commenters' support and are 
adopting the policies and interpretations related to the coverage 
guardrail policy and finalizing the amendments to 31 CFR 
33.108(f)(3)(iv)(C) and 45 CFR 155.1308(f)(3)(iv)(C) as proposed. The 
Departments confirm that for purposes of the coverage guardrail, the 
term ``coverage'' refers to minimum essential coverage as defined in 26 
U.S.C. 5000A(f), which aligns with the policies and interpretations 
described in this preamble for the comprehensiveness guardrail analysis 
under 31 CFR 33.108(f)(3)(iv)(A) and 45 CFR 155.1308(f)(3)(iv)(A). As 
explained in this preamble, the Departments will evaluate waiver 
proposals against this guardrail to ensure that, under the waiver, a 
comparable number of state residents are forecast to have coverage 
under the section 1332 waiver as would have had coverage absent the 
waiver. The impact on all state residents will be considered, 
regardless of the type of coverage they would have had absent the 
section 1332 waiver. The Departments remain committed to approving 
waivers that promote health insurance coverage and health equity.
    Regarding the coverage guardrail regulations, the Departments are 
not finalizing additional changes to the rule text at this time. The 
Departments are of the view that codifying more specific requirements 
and guidelines in regulation is unnecessary, given the polices and 
interpretations already discussed in this preamble and the amendments 
to the coverage guardrail regulations finalized in this rule, which 
provide states and the Federal Government the information necessary to 
reasonably evaluate the ability of a section 1332 waiver to meet the 
coverage guardrail and relevant policy goals.
    After consideration of the comments received, the Departments are 
adopting the policies and interpretations related to the coverage 
guardrail and finalizing the modifications to 31 CFR 
33.108(f)(3)(iv)(C) and 45 CFR 155.1308(f)(3)(iv)(C) as proposed.
d. Deficit Neutrality (31 CFR 33.108(f)(3)(iv)(D) and 45 CFR 
155.1308(f)(3)(iv)(D))
    The Departments did not propose to modify the regulations at 31 CFR 
33.108(f)(3)(iv)(D) and 45 CFR 155.1308(f)(3)(iv)(D) for the deficit 
neutrality guardrail, but proposed, through preamble, policies and 
interpretations relating to the requirements for the deficit neutrality 
guardrail consistent with the policies outlined in the 2015 and 2018 
Guidance. As proposed, the Departments' policies and interpretations 
related to the deficit neutrality guardrail are as follows:
    Under the deficit neutrality guardrail, the projected Federal 
spending net of Federal revenues under the section 1332 waiver is 
required to be equal to or lower than projected Federal spending net of 
Federal revenues in the absence of the waiver.
    The estimated effect on Federal revenue is required to include all 
changes in income, payroll, or excise tax revenue, as well as any other 
forms of revenue (including user fees), that would result from the 
proposed section 1332 waiver. Estimated effects include, for example, 
changes in the amounts the Federal Government pays in PTC, small 
business tax credits, or other health coverage tax credits; changes in 
the amount of employer shared responsibility payments and-excise taxes 
on high-cost employer-sponsored plans collected by the Federal 
Government; and changes in income and payroll taxes resulting from 
changes in tax exclusions for employer-sponsored insurance and in 
deductions for medical expenses.
    The effect on Federal spending includes all changes in Federal 
financial assistance (PTC, small business tax credits, and CSRs) and 
other direct spending, such as changes in Medicaid spending (while 
holding the state's Medicaid policies constant) that would result from 
the changes made through the proposed section 1332 waiver. Projected 
Federal spending under the section 1332 waiver proposal also includes 
all administrative costs to the Federal Government, including any 
changes in IRS administrative costs, Federal Exchange administrative 
costs, and other administrative costs associated with the waiver or 
alleviated by the waiver.
    Under the policies and interpretations outlined in the proposed 
rule, section 1332 waivers must not increase the Federal deficit over 
the period of the waiver (which may not exceed 5 years unless renewed) 
or in total over the 10-year budget plan submitted by the state as part 
of the section 1332 waiver application. Consistent with the policies in 
the 2015 Guidance and in the 2018 Guidance, the 10-year budget plan 
would be required to describe, for both the period of the waiver and 
for the 10-year budget window, the projected Federal spending and 
changes in Federal revenues under the section 1332 waiver and the 
projected Federal spending and changes in Federal revenues in the 
absence of the waiver for each year of the 10 years.
    The 10-year budget plan should assume the section 1332 waiver would 
continue permanently, but should not include Federal spending or 
savings attributable to any period outside of the 10-year budget 
window. A variety of factors, including the likelihood and accuracy of 
projected spending and revenue effects and the timing of these effects, 
will be considered when evaluating the effect of the section 1332 
waiver on the Federal deficit. A section 1332 waiver that increases the 
deficit in any given year is less likely to meet the deficit neutrality 
requirement than one that does not.
    The Departments note that the approach outlined in part 1 of the 
2022 Payment Notice final rule for the deficit neutrality guardrail is 
consistent with E.O. 14009 as it would not reduce coverage or otherwise 
undermine the ACA and Medicaid.
    The Departments sought comment on the proposed policies and 
interpretations related to the deficit neutrality guardrail. The 
Departments noted that the proposal would have minimal impact on both 
states with section 1332 waivers under development and states with 
approved waivers. The Departments solicited comment on the impact to 
stakeholders.
    The following is a summary of the comments received and the 
Departments' responses related to 31 CFR 33.108(f)(3)(iv)(D) and 45 CFR 
155.1308(f)(3)(iv)(D), the deficit neutrality guardrail. The summary of 
comments and the Departments' responses that follow also address 
comments regarding pass-through funding that were made in connection 
with the Departments' proposals related to the deficit neutrality 
guardrail.
    Comment: The Departments received two specific comments that were 
generally supportive of the proposals related to the deficit neutrality 
guardrail. One commenter noted that the ``Departments' longstanding 
approach . . . appropriately carries out this statutory requirement by 
specifying

[[Page 53471]]

that the Federal Government's projected spending net of revenues under 
a section 1332 waiver would need to be equal to or lower than would 
occur in the absence of a waiver.'' \165\ Another commenter noted that 
while it supports the policies and interpretation of the deficit 
neutrality guardrail, ``the Departments should calculate pass-through 
funding differently and in a way that would allow states to share more 
of the Federal savings that a section 1332 waiver could generate.''
---------------------------------------------------------------------------

    \165\ Center on Budget and Policy Priorities comment letter on 
proposed rule.
---------------------------------------------------------------------------

    Response: The Departments appreciate commenters' support and are 
finalizing the policies and interpretations related to the deficit 
neutrality guardrail policy as proposed. Regarding pass-through 
funding, states with approved section 1332 waivers may only receive 
pass-through funding associated with resulting reductions in Federal 
spending on certain types of Federal financial assistance specified in 
the statute and reduced, as necessary, to ensure deficit neutrality, as 
required by the statute.\166\
---------------------------------------------------------------------------

    \166\ See section 1332(a)(3) of the ACA, which refers to premium 
tax credits, cost-sharing reductions, and small business credits 
under section 36B of the Code or under Part I of subtitle E of the 
ACA.
---------------------------------------------------------------------------

    Comment: The Departments received several comments requesting that 
the Departments revisit their proposed policies and interpretations of 
the deficit neutrality guardrail. These commenters expressed concern 
that as proposed, the policies and interpretations are overly strict 
and narrow, which may prevent states from pursuing innovative new 
models that would expand coverage, and are inconsistent with the 
original intent of the waiver program and the Administration's goal of 
increasing enrollment in comprehensive coverage. Furthermore, these 
commenters contended that the Departments' overall proposed 
interpretation of deficit neutrality is inconsistent with the other 
statutory guardrails and the ACA more broadly. Other commenters were of 
the view that these policies and interpretations were also contrary to 
E.O. 14009 and E.O. 13985 and should be updated to explicitly allow 
state efforts to experiment with improving on the ACA while reducing 
racial disparities due to a lack of coverage or barriers to 
affordability.
    These commenters expressed concern that the proposed policies and 
interpretations of the deficit neutrality guardrail could result in a 
scenario where a state that pursues a section 1332 waiver that 
successfully results in an increase in ACA-eligible enrollment would 
fail to meet the deficit neutrality requirement because the increase in 
enrollment would increase Federal spending on PTC, thereby increasing 
the Federal deficit. The commenters stated that this creates a 
disincentive for states to pursue innovative health care reform under a 
section 1332 waiver, since, if a state were to pursue an innovative 
health care proposal outside the section 1332 process which resulted in 
increased enrollment, the Federal Government would bear the cost of any 
increased enrollment. Further, commenters noted that the Departments' 
overall interpretation of the deficit neutrality guardrail is contrary 
to the goals of the ACA and E.O.s 14009 and 13985 as people who are 
eligible but not enrolled are disproportionately from communities of 
color. As such, commenters contended that the policies and 
interpretations as proposed would penalize states seeking to innovate 
through a section 1332 waiver and contradict the Departments' stated 
goal to expand coverage.
    The commenters recommended that the Departments instead consider 
three alternative ways to evaluate the deficit neutrality guardrail. 
One recommendation is that the Departments take into account those who 
are currently eligible for coverage, but unenrolled, in the baseline 
coverage for evaluating the deficit neutrality guardrail and costs used 
to compute pass-through funding. Commenters noted that this alternate 
interpretation of ``deficit neutrality'' aligns with the aims of the 
ACA to expand coverage and would grant states the flexibility to create 
new waiver designs, including a state-level public option, to meet 
those goals. Commenters noted utilizing this approach for section 1332 
waivers would align with the statutory interpretation for section 1115 
demonstrations and Medicaid waivers that a law should be interpreted to 
promote rather than undermine the accomplishment of its core 
objectives. Further, the commenters noted that CMS has permitted states 
to juxtapose waiver spending against baselines reflecting state 
implementation of alternative policies permitted without any waiver in 
the context of section 1115 demonstrations to promote statutory 
objectives and increased enrollment of eligible people.
    Another commenter recommended that instead of looking at deficit 
neutrality on an annual basis for each and every year of the waiver, 
the Departments should instead consider the deficit neutrality 
guardrail over a 10-year period to allow states greater opportunity for 
innovation, such as creating a public option. The commenter noted that 
this approach would be consistent with existing requirements for 
section 1332 waivers to include a 10-year budget projection in 1332 
waiver applications. In other rulemaking, commenters have also noted 
that this approach would be consistent with how the Congressional 
Budget Office (CBO) scores are generally analyzed for deficit 
neutrality over a 10-year period.
    Another recommendation from commenters was that the Departments 
evaluate deficit neutrality and compute pass-through funding on a per 
capita basis. These commenters explained that a per capita basis would 
provide a sustainable funding source in the event future enrollment 
exceeds current levels. These commenters further noted that under 
section 1115 demonstration projects, the calculation of the without 
waiver budget neutrality expenditure limit(s) is based on spending per 
eligible individual, per month (PMPM). Using this PMPM approach, the 
commenters explained that the state is not at risk for increased costs 
associated with increases in enrollment, and does not accrue savings 
from decreases in enrollment. Unexpected increases in enrollment could 
be a consequence of factors outside the demonstration and beyond the 
state's complete control--such as changing economic conditions and 
natural disasters. The state is at risk only for increases to the PMPM 
cost growth--not for the increases in enrollment.\167\
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    \167\ SMD # 18-009 RE: Budget Neutrality Policies for Section 
1115(a) Medicaid Demonstration Projects available online at https://www.medicaid.gov/Federal-policy-guidance/downloads/smd18009.pdf.
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    Response: The Departments appreciate these commenters' 
recommendations and acknowledge stakeholders' interest in pursuing 
innovative strategies to increase enrollment. After consideration of 
the comments received, the Departments are finalizing as proposed their 
interpretation of the requirement that waivers must not increase the 
Federal deficit.\168\ Thus, the projected Federal spending net of 
Federal revenues under the section 1332 waiver is required to be equal 
to or lower than projected Federal spending net of Federal revenues in 
the absence of the waiver to meet the deficit neutrality guardrail 
requirement. The Departments also clarify that the evaluation of 
whether a section 1332 waiver increases the Federal deficit will 
include consideration of the projected impact of the waiver over the 
period of

[[Page 53472]]

the waiver (which may not exceed 5 years unless renewed) and over the 
10-year budget plan. However, the Departments reiterate that under the 
policies and interpretations finalized in this rule, a section 1332 
waiver that increases the Federal deficit in any given year is less 
likely to meet this guardrail than one that does not.
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    \168\ See section 1332(b)(1)(D) of the ACA.
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    The Departments appreciate commenters' suggestions on the deficit 
neutrality guardrail, as well as suggestions related to the 
affordability, comprehensiveness, and coverage guardrails and pass-
through funding. The Departments reaffirm their aim to promote health 
equity and increase health insurance coverage through section 1332 
waivers and are of the view that the proposed policies and 
interpretations related to the deficit neutrality guardrail are 
consistent with the goals of the ACA, and align with E.O. 14009 and 
E.O. 13985, as states are still encouraged to consider ways to 
experiment with improving coverage and affordability for vulnerable 
populations. Thus, after consideration of the comments received, the 
Departments are adopting the proposed policies and interpretations 
related to the deficit neutrality guardrail. The Departments are also 
finalizing the accompanying pass-through funding policies and 
interpretations, as well as the codification of 31 CFR 33.122 and 45 
CFR 155.1322, as proposed.
4. Section 1332 Application Procedures (31 CFR 33.108(f)(4) and 45 CFR 
155.1308(f)(4))
a. Actuarial and Economic Analysis (31 CFR 33.108(f)(4)(i)-(iii) and 45 
CFR 155.1308(f)(4)(i)-(iii))
    As required under 31 CFR 33.108(f)(4)(i)-(iii) and 45 CFR 
155.1308(f)(4)(i)-(iii), states must include actuarial analyses and 
actuarial certifications, economic analyses, and the data and 
assumptions used to demonstrate and support the state's estimates that 
the proposed section 1332 waiver will comply with the statutory 
guardrails. The Departments did not propose any regulatory changes to 
31 CFR 33.108(f)(4)(i)-(iii) and 45 CFR 155.1308(f)(4)(i)-(iii), but 
did propose, through preamble, policies relating to the requirements 
for the actuarial and economic analyses that are similar to the 
policies outlined in the 2015 and 2018 Guidance. The Departments 
proposed these policies to help ensure that the Departments have the 
appropriate and necessary information to measure the impact of waivers 
on the guardrails, particularly related to coverage. This information 
is especially important in light of the goal of E.O. 14009 to provide 
more comprehensive affordable coverage to consumers. In addition, the 
Departments encouraged states to include in their analysis whether the 
proposed section 1332 waiver would increase health equity in line with 
E.O. 13985. As proposed, the policies are as follows:
    Consistent with the 2015 and 2018 Guidance, the determination of 
whether a proposed section 1332 waiver meets the requirements under 
section 1332 and the calculation of the pass-through funding amount 
will be made using generally accepted actuarial and economic analytic 
methods, such as micro-simulation. The analysis will rely on 
assumptions and methodologies that are similar to those used to produce 
the baseline and policy projections included in the most recent 
President's Budget (or Mid-Session Review), but adapted as appropriate 
to reflect state-specific conditions. As provided in 31 CFR 
33.108(f)(4)(i) and 45 CFR 155.1308(f)(4)(i), the state must include 
actuarial analyses and actuarial certifications to support the state's 
estimates that the proposed section 1332 waiver will comply with the 
comprehensive coverage requirement, the affordability requirement, and 
the scope of coverage requirement. Consistent with the 2018 Guidance, 
these actuarial analyses and certifications should be conducted by a 
member of the American Academy of Actuaries.
    The Departments' analysis of whether a proposed section 1332 waiver 
meets the requirements under section 1332 will be based on state-
specific estimates of the current level and distribution of population 
by the relevant economic and demographic characteristics, consistent 
with the 2015 and 2018 Guidance, including income and source of health 
coverage. It will generally use Federal estimates of population growth, 
and economic growth as published in the Analytical Perspectives volume 
released as part of the President's Budget \169\ and health care cost 
growth \170\ to project the initial state variables through the 10-year 
budget plan window. However, in limited circumstances where it is 
expected that a state will experience substantially different trends 
than the nation as a whole in the absence of a section 1332 waiver, the 
Secretaries may determine that state-specific assumptions will be used.
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    \169\ https://www.whitehouse.gov/omb/budget/Analytical_Perspectives.
    \170\ https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/index.html?redirect=/NationalHealthExpendData/.
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    Consistent with the 2018 Guidance and largely similar to the 2015 
Guidance, estimates of the effect of the section 1332 waiver will 
assume, in accordance with standard estimating conventions, that 
macroeconomic variables like population, output, and labor supply are 
not affected by the waiver. However, estimates will take into account, 
as appropriate, other changes in the behavior of individuals, 
employers, and other relevant entities induced by the section 1332 
waiver where applicable, including employer decisions regarding what 
coverage (and other compensation) they offer and individual decisions 
regarding whether to take up coverage. The same state-specific and 
Federal data, assumptions, and model are used to calculate 
comprehensiveness, affordability, and coverage, and relevant state 
components of Federal taxes and spending under the section 1332 waiver 
and under current law.
    The analysis and information submitted by the state as part of the 
section 1332 waiver application must conform to these standards. 
Consistent with the 2015 and 2018 Guidance, the application would 
describe all modeling assumptions used, sources of state-specific data, 
and the rationale for any deviation from Federal forecasts. A state may 
be required under 31 CFR 33.108(f)(4)(vii) and 45 CFR 
155.1308(f)(4)(vii) to provide to the Secretaries copies of any data 
used for their section 1332 waiver analyses that are not publicly 
available so that the Secretaries can independently verify the analysis 
produced by the state.
    Consistent with the 2018 Guidance, for each of the guardrails, the 
state must clearly explain its estimates with and without the section 
1332 waiver. The actuarial and economic analyses would be required to 
compare comprehensiveness, affordability, coverage, and deficit 
neutrality with and without the section 1332 waiver. The deficit 
neutrality analysis will specifically examine net Federal spending and 
revenues under the section 1332 waiver to those measures absent the 
waiver (the baseline) for each year of the waiver. If the state is 
submitting a section 1332 waiver application for less than a 5-year 
period, the actuarial analysis could be submitted for the period of the 
waiver. The Departments, in accordance with their regulations,\171\ 
could request

[[Page 53473]]

additional information or data in order to conduct their assessments.
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    \171\ See 31 CFR 33.108(g) and 45 CFR 155.1308(g).
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    The state should also provide a description of the models used to 
produce these estimates, including data sources and quality of the 
data, key assumptions, and parameters for the section 1332 waiver. 
Consistent with the 2018 Guidance, the Departments will not prescribe 
any particular method of actuarial analysis to estimate the potential 
impact of a section 1332 waiver. However, the state should explain its 
modeling in sufficient detail to allow the Secretaries to evaluate the 
accuracy of the state's modeling and the comprehensiveness and 
affordability of the coverage available under the state's section 1332 
waiver proposal. As permitted under 31 CFR 33.108(g) and 45 CFR 
155.1308(g) the state may be required to provide, upon request by the 
Secretaries, data or other information that it used to make its 
estimates, including an explanation of the assumptions used in the 
actuarial analysis.
    The Departments sought comment on the proposals, and did not 
receive any comments in response to these proposals regarding 31 CFR 
33.108(f)(4)(i)-(iii) and 45 CFR 155.1308(f)(4)(i)-(iii). The 
Departments are finalizing these policies as proposed.
b. Implementation Timeline and Operational Considerations (31 CFR 
33.108(f)(4)(iv) and 45 CFR 155.1308(f)(4)(iv))
    As required under 31 CFR 33.108(f)(4)(iv) and 45 CFR 
155.1308(f)(4)(iv), states must include in their applications for 
initial approval of a section 1332 waiver a detailed draft timeline for 
the state's implementation of the proposed waiver. The Departments did 
not propose any regulatory changes to 31 CFR 33.108(f)(4)(iv) and 45 
CFR 155.1308(f)(4)(iv). Rather, the Departments proposed the 
operational considerations in preamble that states should take into 
account when developing a waiver application, waiver plan, and 
implementation timeline. Specifically, the Departments proposed these 
operational considerations to provide additional information regarding 
how HHS and the IRS may be able to support a state in implementing a 
section 1332 waiver plan so states can take this information into 
consideration as it relates to their implementation timelines. The 
Departments noted that the proposals would help to ensure that the 
Departments have the appropriate and necessary information to measure 
the impact of proposed waivers on the statutory guardrails, 
particularly related to coverage. This information is especially 
important in light of the goal of E.O. 14009 to provide more 
comprehensive affordable coverage to consumers. In addition, the 
Departments encouraged states to include in their analysis whether the 
proposed section 1332 waiver would increase health equity in line with 
E.O. 13985. Upon consideration, the approach proposed with regard to 
operational considerations was revised from the 2018 Guidance with 
regard to the use of the Exchange information technology platform (the 
Federal platform) and IRS operational considerations to maintain smooth 
operations of the Exchanges consistent with E.O. 14009 and this 
Administration's goals to protect and strengthen Medicaid and the ACA 
and to make high-quality health care accessible and affordable for 
every American. A discussion of operational considerations for waivers 
that use the Federal platform for FFE states and IRS functionality 
follows, as well as comments on the proposals.
i. Use of Federal Platform Technology
    HHS operates the Federal platform utilized by FFEs and by some 
State Exchanges for eligibility and enrollment functions. For 
technical, operational, and fiscal efficiency, the Federal platform is 
generally designed to support uniform administration across the states 
that utilize it. With that noted, HHS would be open to inquiries and 
further discussion with states that are developing section 1332 waiver 
proposals and are interested in potential technical collaboration. For 
example, over the past few years HHS has offered assistance to states 
implementing state-based reinsurance programs.\172\ Currently, states 
can request that the Federal Government assist with the calculation of 
issuers' eligible state reinsurance payments based on the state 
reinsurance parameters as part of the state's approved section 1332 
waiver plan. Under this arrangement, states are still responsible for 
making reinsurance payments to issuers and otherwise administering and 
overseeing their programs.
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    \172\ For plan year 2021, HHS is providing this support for six 
states: Colorado, Delaware, Maryland, New Hampshire, North Dakota, 
and Pennsylvania.
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    The Departments noted that states that are interested in this 
assistance should notify HHS early in the process about the state's 
interest and the state's parameters (that is, claims cost-based, 
conditions-based, or other) for HHS to assess the feasibility of 
providing this support. Should a final proposal involve any customized 
or specialized Federal technical or operational capabilities, the 
Departments noted that states would be responsible for funding the 
development and operation of these capabilities under the 
Intergovernmental Cooperation Act (ICA).\173\ Under the ICA, a Federal 
agency generally may provide certain technical and specialized services 
to state governments, so long as the state covers the full costs of 
those services. Accordingly, where a state intends to rely on HHS for 
technical services related to its section 1332 waiver proposal, the 
state would be required to cover HHS's costs. For example, states 
implementing state-based reinsurance programs that request technical or 
specialized services from HHS with respect to calculating state 
reinsurance payments are responsible for the Federal costs associated 
with providing this service, including development, implementation, 
maintenance, operations, and customer support. For this reason, the 
Departments noted that should HHS and a state agree to such technical 
or specialized services to support an approved section 1332 waiver 
plan, the Departments would not consider costs for HHS services covered 
under the ICA as an increase in Federal spending resulting from the 
state's waiver plan for purposes of the deficit neutrality analysis.
---------------------------------------------------------------------------

    \173\ Public Law 90-577.
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    As outlined in the preamble of the proposed rule for the deficit 
neutrality guardrail, costs associated with changes to Federal 
administrative processes that are not covered under the ICA would be 
taken into account in determining whether a waiver application 
satisfies the deficit neutrality requirement. Regulations at 31 CFR 
33.108(f)(4) and 45 CFR 155.1308(f)(4) require that such costs be 
included in the 10-year budget plan submitted by the state. As specific 
section 1332 waiver proposals are submitted, the Departments noted that 
HHS would work closely with states to determine which Federal costs are 
covered under the ICA (and thus are not subject to deficit neutrality 
guardrail), and which are not covered under the ICA (and thus are 
subject to the deficit neutrality guardrail).
ii. IRS Functionality
    Certain changes that affect IRS administrative processes may make a 
section 1332 waiver proposal infeasible for the Departments to 
accommodate. The IRS generally is not able to administer different sets 
of Federal tax rules for different states. As a result, the

[[Page 53474]]

Departments noted that while a state may propose to entirely waive the 
application of one or more of the Federal tax provisions listed in 
section 1332 for taxpayers in the state, it would generally not be 
feasible to design a section 1332 waiver that would require the IRS to 
administer a program that alters these provisions for taxpayers in the 
state.
    The Departments noted that in some limited circumstances, the IRS 
may be able to accommodate small adjustments to the existing systems 
for administering Federal tax provisions. However, the Departments 
noted that it is generally not feasible to have the IRS administer a 
different set of PTC eligibility or PTC computation rules for 
individuals in a particular state. Thus, states contemplating a waiver 
proposal that includes a modified version of a Federal tax provision 
could consider waiving the provision entirely and creating a subsidy 
program administered by the state as part of a section 1332 waiver 
proposal.
    In addition, a section 1332 waiver proposal that partly or 
completely waives one or more Federal tax provisions in a state may 
create administrative costs for the IRS. As noted in the preamble for 
the deficit neutrality guardrail of the proposed rule, costs associated 
with changes to Federal administrative processes would be taken into 
account in determining whether a waiver application satisfies the 
deficit neutrality requirement. Regulations at 31 CFR 33.108(f)(4) and 
45 CFR 155.1308(f)(4) require that such costs be included in the 10-
year budget plan submitted by the state. States contemplating to waive 
any part of a Federal tax provision should engage with the Departments 
early in the section 1332 waiver application process to assess whether 
the waiver proposal is feasible for the IRS to implement, and, if 
applicable, to assess the administrative costs to the IRS of 
implementing the waiver proposal.
    The Departments did not receive any public comments in response to 
these proposals regarding 31 CFR 33.108(f)(4)(iv) and 45 CFR 
155.1308(f)(4)(iv), Implementation Timeline and Operational 
Considerations, and are finalizing these policy clarifications and 
operational considerations as proposed.
5. Public Input on Waiver Proposals (31 CFR 33.112 and 45 CFR 155.1312)
    Section 1332(a)(4)(B)(i) of the ACA, and regulations at 31 CFR 
33.112 and 45 CFR 155.1312, require states to provide a public notice 
and comment period for a section 1332 waiver application sufficient to 
ensure a meaningful level of public input prior to submitting an 
application. Under the current requirements, as part of the state's 
public notice and comment period, a state with one or more federally-
recognized tribes must conduct a separate process for meaningful 
consultation with such tribes.\174\ In addition, a state must make 
available, at the beginning of its public notice and comment period, 
through its website or other effective means of communication, a public 
notice that includes all of the information outlined in 31 CFR 
33.112(b) and 45 CFR 155.1312(b). The state must also update this 
information, as appropriate. After issuance of this notice and prior to 
submission of a new section 1332 waiver application, the state must 
conduct public hearings and provide interested parties an opportunity 
to learn about and comment on the contents of the state's section 1332 
waiver application.\175\ Because section 1332 waiver applications may 
vary significantly in their complexity and breadth, the regulations 
provide states with flexibility in determining the length of the 
comment period required to allow for meaningful and robust public 
engagement. Consistent with Federal civil rights law, including section 
1557 of the ACA, section 504 of the Rehabilitation Act of 1973, and 
title II of the Americans with Disabilities Act, section 1332 waiver 
applications must be posted online in a manner that is accessible to 
individuals with disabilities. To assist with ensuring website 
accessibility, states may look to national standards issued by the 
Architectural and Transportation Barriers Compliance Board (often 
referred to as ``section 508 standards''),\176\ or alternatively, the 
World Wide Web Consortium's Web Content Accessibility Guidelines (WCAG) 
\177\ 2.0 Level AA standards.
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    \174\ See 31 CFR 33.112(a)(2) and 45 CFR 155.1312(a)(2).
    \175\ See 31 CFR 33.112(c) and 45 CFR 155.1312(c).
    \176\ For more information on section 508 standards, see: 
https://section508.gov/manage/program-roadmap. See also: https://www.hhs.gov/sites/default/files/ocr-guidance-electronic-information-technology.pdf.
    \177\ For more information, see the WCAG website at http://www.w3.org/TR/WCAG20/.
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    While the Departments did not propose any regulatory changes to 31 
CFR 33.112 and 45 CFR 155.1312, through the preamble, the Departments 
proposed policies and interpretations for the state public notice 
requirements. More specifically, the Departments proposed to maintain 
the current standard that the state comment period for a section 1332 
waiver application should generally be no less than 30 days.\178\ The 
Departments explained that a general standard requiring a minimum 30-
day comment period would be sufficient to allow for meaningful and 
robust public engagement on a state's waiver application and reiterated 
that a longer period may be appropriate for complex proposed waiver 
plans.
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    \178\ Notwithstanding this policy, the Departments clarified 
that states with approved waivers and states seeking approval for 
proposed waivers continue to have flexibility to submit requests to 
the Departments to modify certain public participation requirements 
during the COVID-19 PHE. See 31 CFR 33.118 and 45 CFR 155.1318. Also 
see the November 2020 IFC, 85 FR 71142. As detailed below, in this 
rulemaking, the Departments are finalizing the proposal to extend 
similar flexibilities during future emergent situations. As such, 
states with approved waivers and state seeking approval for proposed 
waivers will have similar flexibilities to submit requests to the 
Departments to modify certain public participation requirements 
during future emergent situations.
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    Section 1332(a)(4)(B)(iii) of the ACA and its implementing 
regulations \179\ also require the Federal Government to provide a 
public notice and comment period once the Secretaries receive an 
application. The period must be sufficient to ensure a meaningful level 
of public input and must not impose requirements that are in addition 
to, or duplicative of, requirements imposed under the Administrative 
Procedure Act, or requirements that are unreasonable or unnecessarily 
burdensome with respect to state compliance.\180\ Under existing 
regulations, 31 CFR 33.108(f) and 45 CFR 155.1308(f), a submitted 
section 1332 waiver application will not be deemed received until the 
Secretaries have made the preliminary determination that the 
application is complete. As with the state comment period described 
earlier, the Departments did not propose regulatory amendments and 
instead proposed adoption of policies and interpretations related to 
the Federal comment period. More specifically, the Departments 
explained that the length of the Federal comment period should also 
reflect the complexity of the section 1332 waiver proposal and 
similarly proposed that the Federal comment period should also 
generally not be less than 30 days.\181\
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    \179\ See 31 CFR 33.116 and 45 CFR 155.1316.
    \180\ See section 1332(a)(4)(B)(iii) of the ACA, 31 CFR 
33.116(b) and 45 CFR 155.1316(b).
    \181\ Notwithstanding this policy, the Departments clarified 
that states with approved waivers and states seeking approval for 
proposed waivers continue to have flexibility to submit requests to 
the Departments to modify certain public participation requirements 
during the COVID-19 PHE. See 31 CFR 33.118 and 45 CFR 155.1318. Also 
see the November 2020 IFC, 85 FR 71142. As detailed below, in this 
rulemaking, the Departments are finalizing the proposal to extend 
similar flexibilities during future emergent situations. As such, 
states with approved waivers and state seeking approval for proposed 
waivers will have similar flexibilities to submit requests to the 
Departments to modify certain public participation requirements 
during future emergent situations.

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[[Page 53475]]

    The Departments did not receive any public comments on the 
proposals related to 31 CFR 33.112 and 45 CFR 155.1312, Public Input on 
Waiver Proposals, and are finalizing these policy clarifications and 
interpretations as proposed.
6. Modification From the Normal Public Notice Requirements (31 CFR 
33.118, 31 CFR 33.120, 45 CFR 155.1318, and 45 CFR 155.1320)
    In the November 2020 IFC,\182\ the Departments revised regulations 
to set forth flexibilities in the public notice requirements and post 
award public participation requirements for waivers under section 1332 
during the COVID-19 PHE. The Departments proposed to extend these 
changes beyond the COVID-19 PHE to allow similar flexibilities in the 
event of future natural disasters; PHEs; or other emergent situations 
that threaten consumers' access to health insurance coverage, 
consumers' access to health care, or human life. The Departments 
proposed to consider a situation to be ``emergent'' if it is both 
unforeseen and urgent. The Departments did not propose any changes with 
respect to the flexibility made available in the November 2020 IFC 
during the COVID-19 PHE. The Departments further clarified that states 
with approved section 1332 waivers and states seeking approval for 
proposed waivers will continue to have flexibility to submit requests 
to the Departments to modify certain public participation requirements 
during the COVID-19 PHE.\183\
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    \182\ 85 FR 71142. See https://www.federalregister.gov/documents/2020/11/06/2020-24332/additional-policy-and-regulatory-revisions-in-response-to-the-covid-19-public-health-emergency.
    \183\ See 85 FR 71142.
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    The Departments also explained in the 2022 Payment Notice proposed 
rule \184\ that CMS similarly proposed an extension of COVID-19 policy 
flexibilities, specifically the calculation of plan average premium and 
state average premium requirements for extending future premium credits 
(``temporary premium credits''), which was originally published in the 
November 2020 IFC.\185\ In part 2 of the 2022 Payment Notice final 
rule, HHS finalized these policies to extend beyond the COVID-19 PHE, 
to be available, if permitted by HHS, during a future declared 
PHE.\186\ In developing the policies in the proposed rule, the 
Departments considered extending the section 1332 flexibilities adopted 
in the November 2020 IFC only to future declared PHEs, but are of the 
view that these flexibilities, as proposed to be available on a broader 
basis in different times of emergent situations, would allow states to 
use or modify their waivers to respond to state or local emergent 
situations that may not rise to the level of a national declared PHE. 
The Departments further explained they are of the view that this best 
aligns with the overall statutory purpose and goals for section 1332 
waivers, which are meant to allow states to craft their own unique 
solutions to respond to the specific health care needs in their 
respective markets. If the Departments were to limit these 
flexibilities only to future declared national PHEs, states may not be 
able to utilize or modify their section 1332 waivers as a tool to 
address state or local emergent situations or state designated 
emergencies which may similarly threaten consumers' access to health 
insurance coverage, consumers' access to health care, or human life.
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    \184\ See 85 FR at 78597-78598 and 78608-78609.
    \185\ 85 FR 54820.
    \186\ 86 FR at 24182-24183 and 24202-24203.
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    In addition, the flexibilities outlined in the proposed rule are 
similar to those available under section 1115 demonstrations. Existing 
regulations at 42 CFR 431.416(g), relating to demonstration projects 
under section 1115 of the Act, provide that CMS may waive, in whole or 
in part, the state and Federal public notice requirements to expedite a 
decision on a proposed section 1115 demonstration application or 
section 1115 demonstration extension request that addresses a natural 
disaster, PHE, or other sudden emergency threat to human life, under 
certain circumstances described in the regulation. The Departments 
explained they are of the view that using a similar standard for 
section 1332 waivers would provide states the necessary flexibility to 
enable them to quickly respond to various emergent situations. For 
example, some states have used flexibilities for section 1115 
demonstrations in emergent situations to address threats to human life 
such as mudslides and wildfires that were state-designated emergencies.
    The Secretaries value the importance of the public input process, 
but also intend to propose to provide reprieve from certain 
requirements, where appropriate, in emergent situations. Allowing the 
Secretaries to modify the public notice and post award requirements 
would allow states to seek emergency relief in support of the 
development of quick and innovative ways to ensure consumers across the 
country have access to health care coverage in the face of unforeseen 
threats to that coverage. As was noted in the November 2020 IFC and the 
proposed rule, HHS and the Department of the Treasury are concerned 
that past trends that threaten the stability of the individual market 
risk pool may return, leading some issuers to cease offering coverage 
on the Exchanges in some states and counties and leading other issuers 
to increase their rates, leaving some geographic areas with limited or 
no affordable Exchange coverage options. Permitting the Secretaries to 
modify the public notice procedures, in part, will help states seeking 
section 1332 waivers to address such circumstances more quickly and 
develop innovative ways to ensure consumers have access to affordable 
health care coverage. Specifically, the Departments proposed to modify 
31 CFR 33.118 and 45 CFR 155.1318 to broaden the Secretaries' authority 
to modify, in part, the otherwise applicable public notice procedures 
to expedite a decision on a proposed section 1332 waiver request that 
is submitted or would otherwise become due during emergent situations, 
when a delay would undermine or compromise the purpose of the proposed 
waiver request and be contrary to the interests of consumers. The 
proposed amendments to these regulations further clarify that these 
proposed flexibilities would be available in future natural disasters; 
PHEs; and other emergent situations that threaten consumers' access to 
health insurance coverage, consumers' access to health care, or human 
life, rather than being limited to only the duration of the COVID-19 
PHE.
    The Departments also proposed to modify 31 CFR 33.120(c)(2) and 45 
CFR 155.1320(c)(2) to provide the Secretaries with similar authority to 
modify, in part, otherwise applicable post award public notice 
requirements for an approved waiver outlined in 31 CFR 33.120(c) and 45 
CFR 155.1320(c) when the application of the post-award public notice 
procedures would be contrary to the interests of consumers during a 
natural disaster; PHE; or other emergent situations that threaten 
consumers' access to health insurance coverage, consumers' access to 
health care, or human life, rather than limiting this flexibility only 
to the duration of the COVID-19 PHE. These proposals would expand on 
policies published in

[[Page 53476]]

the November 2020 IFC that are limited to the COVID-19 PHE.
a. Public Notice Procedures and Approval (31 CFR 33.118 and 45 CFR 
155.1318)
    Section 1332(a)(4)(B) of the ACA provides that the Secretaries 
shall issue regulations providing a process for public notice and 
comment at the state level, including public hearings, and a process 
for providing public notice and comment at the Federal level after the 
section 1332 waiver application is received by the Secretaries, that 
are both sufficient to ensure a meaningful level of public input. 
Current regulations at 31 CFR 33.112 and 45 CFR 155.1312 specify state 
public notice and participation requirements for proposed section 1332 
waiver requests, and 31 CFR 33.116(b) and 45 CFR 155.1316(b) specify 
the public notice and comment period requirements under the 
accompanying Federal process.
    As explained in the November 2020 IFC, the Departments recognize 
that the current section 1332 waiver regulations regarding state and 
Federal public notice procedures and comment period requirements may 
impose barriers for states pursuing a proposed waiver request during an 
emergent situation, such as the COVID-19 PHE or a future natural 
disaster; PHE; or other emergent situation that threatens consumers' 
access to health insurance coverage, consumers' access to health care, 
or human life. It is the mission of the Departments to enhance and 
protect the health and well-being of all Americans. As such, the 
Departments proposed to extend the existing flexibilities codified in 
regulations to protect public health and access to health insurance 
coverage and care during the COVID-19 PHE to also apply in the event of 
a future emergent situation, such as a natural disaster; a PHE; or 
other emergent situations that threaten consumers' access to health 
insurance coverage, consumers' access to health care, or human life. 
These flexibilities have been important during the COVID-19 PHE and 
support efforts to prevent the spread of COVID-19 by limiting the need 
for in-person gatherings related to section 1332 waivers during the 
PHE. Extending these flexibilities beyond the COVID-19 PHE to future 
emergent situations is important to similarly help states as they may 
face uncertainty as to whether their waiver request will be approved in 
time, given the otherwise applicable state and Federal public notice 
procedures or public participation requirements, to expeditiously 
reform their health insurance markets and to protect consumers during a 
future emergent situation. Some states may not consider more robust 
changes because they are concerned that the current section 1332 waiver 
application requirements are too time-consuming or burdensome to pursue 
during a future emergency or other emergent situation. Therefore, the 
Departments explained they are of the view that providing similar 
flexibility to modify certain public notice procedures and 
participation requirements during a future emergent situation will 
protect public health and health insurance markets, and will increase 
flexibility and reduce burdens for states seeking to use section 1332 
waivers as a means of innovation for providing coverage, lowering 
premiums, and improving their health care markets.
    Permitting the Secretaries to modify the public notice procedures, 
in part, when a delay would undermine or compromise the purpose of the 
proposed section 1332 waiver request and be contrary to the interests 
of consumers will help states seeking section 1332 waivers to address 
such circumstances more quickly to ensure consumers have access to 
affordable health care coverage throughout the emergent situation. As 
such, the Departments explained they are of the view that, if certain 
safeguards are met, it is in the best interest of the public to provide 
states applying for section 1332 waivers with the option to request to 
modify otherwise applicable public notice procedures during an emergent 
situation. Based on the experience with the current COVID-19 PHE, the 
Departments noted they are of the view that it is appropriate and 
reasonable to propose to make similar flexibilities available in future 
emergent situations.
    The Departments proposed to modify 31 CFR 33.118(a) and 45 CFR 
155.1318(a) to provide that the Secretaries may modify, in part, the 
state public notice requirements specified in 31 CFR 33.112(a)(1), (b), 
(c), and (d) and 45 CFR 155.1312(a)(1), (b), (c), and (d) and the 
Federal public notice requirements specified at 31 CFR 33.116(b) and 45 
CFR 155.1316(b) to expedite a decision on a proposed section 1332 
waiver request during an emergent situation, when a delay would 
undermine or compromise the purpose of the proposed waiver request and 
would be contrary to the interests of consumers. As proposed, the 
amendments to 31 CFR 33.118(a) and 45 CFR 155.1318(a) further specified 
that these flexibilities would be limited to emergent situations, 
including natural disasters; PHEs; or other emergent situations that 
threaten consumers' access to health insurance coverage, consumers' 
access to health care, or human life.
    As noted earlier in this section of the preamble, under the 
proposal, the existing flexibility made available in the November 2020 
IFC \187\ for the COVID-19 PHE would continue to apply. The Departments 
also clarified that, similar to the November 2020 IFC, they were not 
proposing to allow states to waive 31 CFR 33.112(a)(2) and 45 CFR 
155.1312(a)(2), which require states to conduct a separate process for 
meaningful consultation with federally-recognized tribes. The 
Departments noted that tribal consultation is subject to separate 
requirements in accordance with E.O. 13175,\188\ which mandates the 
establishment of regular and meaningful consultation and collaboration 
with tribal officials in the development of Federal policies that have 
tribal implications.
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    \187\ See 85 FR 71142, https://www.federalregister.gov/documents/2020/11/06/2020-24332/additional-policy-and-regulatory-revisions-in-response-to-the-covid-19-public-health-emergency.
    \188\ See 85 FR 71142, 71178.
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    In addition, the Departments clarified that a state cannot use this 
flexibility to request to eliminate public notice and participation 
procedures. Instead, this is a targeted proposal intended to extend the 
existing COVID-19 PHE flexibilities to future emergent situations to 
remove potential barriers and allow both the Federal Government and 
states flexibility to respond to emergent situations as they unfold. It 
is limited to permitting states to request to modify, in part, certain 
otherwise applicable public notice and participation requirements, not 
to eliminate the requirements all together.
    Examples of the public notice and participation procedures that 
currently apply that, under this proposal, a state may seek to have 
waived or modified during a future emergent situation include the 
requirement that the state notifies the public and holds hearings prior 
to submitting an application, that the state hold more than one public 
hearing in more than one location, and that the Departments provide for 
public notice and comment after an application is determined to be 
complete. States may also seek to modify the state and/or Federal 
comment periods to be less than 30 days and to host public hearings 
virtually rather than in person.
    In addition, the Departments explained they are of the view that 
these flexibilities are necessary to allow states flexibility to 
respond to rapid changes in the event of a future emergent situation 
and noted that these proposals align with existing flexibilities 
available

[[Page 53477]]

for public health programs that do not apply to section 1332 waivers. 
For example, when the President declares a disaster or emergency under 
the Stafford Act or the National Emergencies Act and the Secretary of 
HHS declares a PHE under section 319 of the PHS Act, section 1135 of 
the Act allows the Secretary of HHS to temporarily waive or modify 
certain Medicare, Medicaid, and CHIP requirements to ensure: (1) 
Sufficient health care items and services are available to meet the 
needs of individuals enrolled in these programs in the emergency 
area(s) and time periods; and (2) providers who give such services in 
good faith can be reimbursed and exempted from sanctions (absent any 
determination of fraud and abuse). However, section 1135 of the Act 
does not apply to or otherwise provide the Departments with authority 
to waive or modify requirements regarding section 1332 waivers when 
similar events cause similar impacts in the private health insurance 
markets. As proposed, the modifications to the Departments' section 
1332 waiver regulations outlined in the proposed rule were designed to 
generally align with the section 1135 flexibilities, but would be 
available in broader circumstances than emergencies or disasters 
declared under the Stafford Act or the National Emergencies Act and 
PHEs declared under section 319 of the PHS Act. The Departments 
proposed to apply this flexibility to include other emergencies at the 
state or local level to allow states to better address all of the 
various emergent situations that may impact their state health 
insurance markets and residents access to coverage and care.
    Consistent with the existing framework for state modification 
requests related to the COVID-19 PHE, for a state request to modify the 
state or Federal public notice requirements to expedite a decision on a 
proposed section 1332 waiver request during an emergent situation to be 
approved, the state must meet the requirements outlined in 31 CFR 
33.118(b) and 45 CFR 155.1318(b). As proposed, the Secretaries could 
approve a state's request to modify the Federal and/or state public 
notice procedures, in part, in future emergent situations if the state 
meets all of the following requirements:
     The state requests a modification in the form and manner 
specified by the Secretaries.
     The state acted in good faith, and in a diligent, timely, 
and prudent manner in the preparation of the request for the 
modification for the section 1332 waiver, and the waiver application 
request, as applicable.
     The state details in its request for a modification, as 
applicable, the justification for the requested modification from the 
state public notice procedures, and the alternative public notice 
procedures it proposes to implement at the state level, including 
public hearings, that are designed to provide the greatest opportunity 
and level of meaningful public input from impacted stakeholders that is 
practicable given the emergency circumstances underlying the state's 
request for a modification.
     The state details in its request for a modification, as 
applicable, the justification for the request and the alternative 
public notice procedures it requests to be implemented at the Federal 
level.
    The Departments also proposed that the state, as applicable, must 
implement the alternative public notice procedures at the state level 
if the state's modification request is approved and, if required, amend 
the section 1332 waiver application to specify that it is the state's 
intent to comply with those alternative public notice procedures in the 
state's modification request. These are the same requirements that 
apply under the existing framework for state modification requests 
related to the COVID-19 PHE and are currently captured in 31 CFR 
33.118(b)(1) through (4) and (f) and 45 CFR 155.1318(b)(1) through (4) 
and (f).\189\
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    \189\ To effectuate the extension of these flexibilities to 
future emergent situations, the Departments proposed to amend 31 CFR 
33.118(b)(3) and 45 CFR 155.1318(b)(3) to replace the current 
reference to ``public health emergency'' with ``the emergent 
situation.'' This criterion otherwise remains the same.
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    Any state submitting a proposed section 1332 waiver application 
during a future emergent situation could submit a separate request to 
the Secretaries to modify, in part, certain otherwise applicable state 
and/or Federal public notice and public participation requirements or 
could include such a request in its section 1332 waiver application 
request.
    Consistent with the framework for COVID-19 PHE state modification 
requests, the Secretaries' review and consideration of a modification 
request for future emergent situations would vary based on the state's 
circumstances, its modification request, and the complexity and breadth 
of the state's proposed section 1332 waiver request. For example, 
during the COVID-19 PHE, many states prohibited in-person public 
gatherings or established stay-at-home orders due to the public health 
threat.\190\ States seeking new section 1332 waiver(s) that had such 
prohibitions in effect at the time they would have otherwise had to 
conduct public notice were unable to hold two in-person public hearings 
prior to submission of their section 1332 waiver applications. In 
similar future emergent situations, this approach would allow the 
Secretaries to grant the state's request to hold the two public 
hearings virtually, rather than in person, or to hold one public 
hearing at the state level, rather than two public hearings at the 
state level, if the state's request meets other applicable 
requirements. As another example, the Secretaries may agree with a 
state's determination that, due to emergent circumstances that have 
arisen related to a natural disaster, there is insufficient time for 
the state to provide public notice and hold any public hearings at the 
state level prior to submitting its section 1332 waiver application as 
would otherwise be required by 31 CFR 33.112(a) and 45 CFR 155.1312(a), 
and grant the state's request to provide public notice and hold public 
hearings at the state level after the state's submission of its 
application if the state's request meets other applicable requirements.
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    \190\ https://khn.org/morning-breakout/states-declare-emergencies-ban-large-gatherings-as-coronavirus-sweeps-the-nation/; 
https://www.axios.com/states-shelter-in-place-coronavirus-66e9987a-a674-42bc-8d3f-070a1c0ee1a9.html.
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    In situations where the Departments approve a state's modification 
request to provide public notice and host the state-level hearings on a 
different timeframe or setting, such as after the submission of a 
state's waiver application request, the state would be required to 
amend the application request as necessary to reflect public comments 
or other relevant feedback received during the alternative state-level 
public notice procedures. The Departments would evaluate a state's 
request for a modification of the public participation requirements and 
issue their modification determination within approximately 15 calendar 
days after the request is received. In assessing whether a state acted 
in good faith, and in a diligent, timely, and prudent manner in the 
preparation of the modification request for the waiver, and for the 
section 1332 waiver application, the Departments would evaluate whether 
the relevant circumstances are sufficiently emergent. The Departments 
proposed in new proposed 31 CFR 33.118(g) and 45 CFR 155.1318(g) that 
the Departments will consider circumstances to be emergent when they 
could not have been reasonably

[[Page 53478]]

foreseen. In addition, the Departments proposed to assess ``reasonable 
foreseeability'' based on the specific issues that a section 1332 
waiver proposes to address and other relevant factors, and would not 
make this assessment based solely on the number of days a state may 
have been aware of such issues. Other relevant factors that the 
Departments would consider include the specific circumstances involved, 
the nature and extent of the future emergent situation, and whether the 
state could have predicted the situation. To assist the Departments 
with making this assessment, the Departments also proposed to capture a 
new requirement at 31 CFR 33.118(b)(5) and 45 CFR 155.1318(b)(5) to 
require a state submitting a modification request must also explain in 
its request how the circumstances underlying its request result from a 
natural disaster; PHE; or other emergent situation that threatens 
consumers' access to health insurance coverage, consumers' access to 
health care, or human life that could not be reasonably have been 
foreseen and how a delay would undermine or compromise the purpose of 
the waiver and be contrary to the interests of consumers.
    The Departments reminded states that any public participation 
processes must continue to comply with applicable Federal civil rights 
laws,\191\ including taking reasonable steps to provide meaningful 
access for individuals with LEP and taking appropriate steps to ensure 
effective communication with individuals with disabilities, including 
accessibility of information and communication technology. It is also 
important for states to remember that virtual meetings may present 
additional accessibility challenges for people with communication and 
mobility disabilities, as well as those who lack broadband access. The 
Departments noted that they expect states to take these considerations 
into account when seeking flexibility to modify the public 
participation requirements, as the overall statutory and regulatory 
obligation to ensure a meaningful level of public input during the 
public notice and comment period would continue to apply. By way of 
example, ensuring effective communication during a future emergent 
situation when the otherwise applicable public notice and participation 
requirements are modified may include providing American Sign Language 
interpretation and real-time captioning as part of a virtual hearing, 
and ensuring that the platform used to host the hearing is 
interoperable with assistive technology for those with mobility 
difficulties. The Departments especially encouraged states to strive to 
obtain meaningful input from potentially affected populations, 
including low-income residents, residents with high expected health 
care costs, persons less likely to have access to care, and members of 
federally-recognized tribes, if applicable, as part of any alternative 
public participation process.
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    \191\ See Title VI of the Civil Rights Act of 1964 (42 U.S.C. 
2000d, 45 CFR part 80), Section 1557 of the ACA (42 U.S.C. 18116), 
Section 504 of the Rehabilitation Act of 1973 (29 U.S.C 794, 45 CFR 
part 84), and Title II of the Americans with Disabilities Act (42 
U.S.C. 1213 et seq., 28 CFR part 35). The HHS Office for Civil 
Rights enforces applicable Federal civil rights laws that prohibit 
discrimination on the basis of race, color, national origin, sex, 
age, or disability, as well as laws protecting the exercise of 
conscience and religious freedom, including the Religious Freedom 
Restoration Act (42 U.S.C. 2000bb through 2000bb-4).
---------------------------------------------------------------------------

    Consistent with the framework for COVID-19 PHE state modification 
requests, the Secretary of HHS would publish on the CMS website any 
modification determinations within 15 calendar days of the Secretaries 
making such a determination, as well as the approved revised timeline 
for public comment at the state and Federal level, as applicable.\192\ 
In addition, the state would be required to publish on its website any 
modification requests and determinations within 15 calendar days of 
receipt of the determination, as well as the approved revised timeline 
for public comment at the state and Federal level, as applicable.\193\
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    \192\ See 31 CFR 33.118(d) and 45 CFR 155.1318(d).
    \193\ See 31 CFR 33.118(e) and 45 CFR 155.1318(e).
---------------------------------------------------------------------------

    The Departments sought comment on these proposals. The Departments 
summarize and respond to comments on the proposals related to Public 
Notice Procedures and Approval requirements captured in 31 CFR 33.118 
and 45 CFR 155.1318 below alongside comments on the accompanying 
proposals to the Monitoring and Compliance requirements captured in 31 
CFR 33.120 and 45 CFR 155.1320. As detailed further later in this 
section of the preamble, the Departments are finalizing the amendments 
to 31 CFR 33.118(a), (b)(3), (b)(5) and (g) and 45 CFR 155.1318(a), 
(b)(3), (b)(5) and (g) with one modification. In response to comments 
and to align the regulations with the intended policy, we are replacing 
the reference to ``health insurance coverage'' with ``comprehensive 
coverage'' in the description of emergent situations in 31 CFR 
33.118(a) and (b)(5) and 45 CFR 155.1318(a) and (b)(5).\194\
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    \194\ As finalized, the new regulatory text provides these 
flexibilities are limited to emergent situations, including natural 
disasters; public health emergencies; or other emergent situations 
that threaten consumers' access to comprehensive coverage, 
consumers' access to health care, or human life. Similarly, state 
requests to modify otherwise applicable public notice and 
participation requirements must explain how the emergent 
circumstances underlying the request result from a natural disaster; 
public health emergency; or other emergent situation that threatens 
consumers' access to comprehensive coverage, consumers' access to 
health care, or human life and could not reasonably have been 
foreseen.
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b. Monitoring and Compliance (31 CFR 33.120 and 45 CFR 155.1320)
    As section 1332 waivers are likely to a have a significant impact 
on individuals, states, and the Federal Government, the 2012 Final Rule 
established processes and methodologies to ensure that the Secretaries 
receive adequate and appropriate information regarding section 1332 
waivers (consistent with section 1332(a)(4)(B)(iv) of the ACA). As part 
of the Departments' monitoring and oversight of approved section 1332 
waivers, the Secretaries monitor the state's compliance with the 
specific terms and conditions of the waiver, including, but not limited 
to, compliance with the guardrails, reporting requirements, and the 
post award forum requirements.\195\ Under 31 CFR 33.120(c) and 45 CFR 
155.1320(c), to ensure continued public input within at least 6 months 
after the implementation date, and annually thereafter, states are 
required to hold a public forum at which members of the public have an 
opportunity to provide comments on the progress of the program 
authorized by the section 1332 waiver and to provide a summary of this 
forum to the Secretary of HHS for the Departments' review as part of 
the quarterly and annual reports required under 31 CFR 33.124 and 45 
CFR 155.1324. Under 31 CFR 33.120(c)(1) and 45 CFR 155.1320(c)(1), 
states are required to publish the date, time, and location of the 
public forum in a prominent location on the state's public website at 
least 30 days prior to the date of the planned public forum. In the 
November 2020 IFC, the Departments added 31 CFR 33.120(c)(2) and 45 CFR 
155.1320(c)(2) to provide that the Secretaries may waive, in part, post 
award public notice requirements during the COVID-19 PHE when certain 
criteria were met.
---------------------------------------------------------------------------

    \195\ See section 1332(a)(4)(iv) and (v). Also see 31 CFR 33.120 
and 45 CFR 155.1320.

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[[Page 53479]]

    The Departments proposed to modify 31 CFR 33.120(c)(2) and 45 CFR 
155.1320(c)(2), to extend the flexibilities currently provided during 
the COVID-19 PHE to permit the Secretaries to modify in part, certain 
post award public notice requirements in 31 CFR 33.120(c) and 45 CFR 
155.1320(c) for approved waivers during a future emergent situation 
when the application of the post award public notice procedures would 
be contrary to the interests of consumers. Extending these 
flexibilities beyond the COVID-19 PHE to future emergent situations is 
important to help states as they may face similar uncertainty as to 
whether they are able to comply with the otherwise applicable post 
award requirements in such situations. For example, the state post 
award procedures generally require an in-person gathering. Based on the 
experience with the current COVID-19 PHE, the Departments explained 
they are of the view that it is appropriate and reasonable to propose 
to make similar flexibilities available in future emergent situations 
as those circumstances may also limit the ability for the state to host 
in-person gatherings. The Departments did not propose any changes with 
respect to the flexibility made available in the November 2020 IFC in 
response to the COVID-19 PHE and clarified that states with approved 
section 1332 waivers continue to have flexibility to submit requests to 
the Departments to modify certain post award public notice requirements 
during the COVID-19 PHE.\196\
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    \196\ See 85 FR 71142.
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    Consistent with the framework for state modification requests 
related to the COVID-19 PHE, as proposed, the Secretaries could 
similarly approve a state request to modify the post award public 
notice procedures, in part, when the application of the post award 
public notice requirements would be contrary to the interest of 
consumers during the future emergent situation. The Departments 
proposed to amend the title in 31 CFR 33.120(c)(2) and 45 CFR 
155.1320(c)(2) and to amend the text at 31 CFR 33.120(c)(2)(i) and 45 
CFR 155.1320(c)(2)(i) to replace the references to ``the public health 
emergency'' with ``an emergent situation.'' The Departments also 
proposed amendments to the last sentence of 31 CFR 33.120(c)(2)(i) and 
45 CFR 155.1320(c)(2)(i) to replace the language that limits these 
flexibilities to the COVID-19 PHE to reflect the broader proposed 
applicability to emergent situations, including natural disasters; 
PHEs; or other emergent situations that threaten consumers' access to 
health insurance coverage, consumers' access to health care, or human 
life. In addition, the Departments proposed that the Secretaries could 
approve a state's post award modification request if the state meets 
all of the following requirements:
     The state requests a modification in the form and manner 
specified by the Secretaries.
     The state acts in good faith, and in a diligent, timely, 
and prudent manner to comply with the monitoring and compliance 
requirements under the regulations and specific terms and conditions of 
the section 1332 waiver and to submit and prepare the request for a 
modification.
     The state details in its request for a modification the 
reason(s) for the alternative post award public notice procedures it 
proposes to implement at the state level, including public hearings, 
that are designed to provide the greatest opportunity and level of 
meaningful public input from impacted stakeholders that is practicable 
given the emergent circumstances underlying the state's request for a 
modification.
    These are the same requirements that apply under the existing 
framework for state post award modification requests related to the 
COVID-19 PHE currently captured in 31 CFR 33.120(c)(2)(ii)(A) through 
(C) and 45 CFR 155.1320(c)(2)(ii)(A) through (C).
    As proposed, a state may request to modify the otherwise applicable 
public participation requirements to host the public forum for an 
approved section 1332 waiver that would take place or become due during 
an emergent situation virtually rather than as an in-person gathering. 
When reviewing state modification requests, the Departments would 
remain focused on ensuring the public is informed about the 
implementation of programs authorized by section 1332 waivers and has a 
meaningful opportunity to comment on its implementation.
    Consistent with the framework for COVID-19 state modification 
requests, the Secretaries would evaluate a state's request for a 
modification of certain post award public participation requirements 
during a future emergent situation and issue their modification 
determination within approximately 15 calendar days after the request 
is received.\197\ The state would be required to publish on its website 
any modification requests and determinations by the Departments within 
15 calendar days of receipt of the determination, as well as 
information on the approved revised timeline for the state's post award 
public notice procedures, as applicable.\198\ Since the state is 
already required to post materials as part of post award annual 
reporting requirements, such as the notice for the public forum and 
annual report, states would be responsible for ensuring that the public 
is aware of the determination to modify the public notice procedures 
and would be required to include this information along with the other 
information required under 31 CFR 33.120(c)(1) and 45 CFR 
155.1320(c)(1) for the alternative procedures in a prominent location 
on the state's public website.
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    \197\ See 31 CFR 33.120(c)(2)(ii)(D) and 45 CFR 
155.1320(c)(2)(ii)(D).
    \198\ See 31 CFR 33.120(c)(2)(ii)(E) and 45 CFR 
155.1320(c)(2)(ii)(E).
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    The Departments explained they are of the view that post award 
public forums are critical to ensure that the public has a regular 
opportunity to learn about and comment on the progress of section 1332 
waivers. Based on the experience during COVID-19 PHE, the Departments 
explained they are of the view that it is appropriate and reasonable to 
propose to provide similar flexibilities and permit states to request 
to modify certain post award public participation requirements in 
future emergent situations. States that receive approval to modify, in 
part, these post award public notice procedures would still need to 
meet all other applicable requirements specified in 31 CFR 33.120(c) 
and 45 CFR 155.1320(c). For example, if the state receives a 
modification approval that permits it to hold the post award public 
forum virtually instead of in person, the state must still publish the 
notice of its post award public forum on the state's public website and 
use other effective means to communicate the required information to 
the public. The public notice must include the website, date, and time 
of the public forum that will be convened by the state, information 
related to the timeframe for comments, and how comments from the public 
on the section 1332 waiver must be submitted. The Departments reminded 
states that they still must also comply with applicable Federal civil 
rights requirements, including laws pertaining to accessibility, if the 
Secretaries approve a modification from post award public notice 
procedures. For example, a state that receives approval to host the 
required public hearing(s) virtually would need to ensure the hearings 
are accessible to individuals with disabilities and individuals with 
LEP so members of the public can participate and submit comments. The 
state should

[[Page 53480]]

also track how many people are attending these forums, if possible.
    In assessing whether a state acted in good faith, and in a 
diligent, timely, and prudent manner when reviewing a state's post 
award modification request, the Departments would evaluate whether the 
relevant circumstances are sufficiently emergent. The Departments 
proposed in 31 CFR 33.120(c)(2)(iii) and 45 CFR 155.1320(c)(2)(iii) 
that the Departments will consider circumstances to be emergent when 
they could not have been reasonably foreseen. In addition, the 
Departments proposed to assess ``reasonable foreseeability'' based on 
the specific issues that a section 1332 waiver proposes to address and 
other relevant factors, and would not make this assessment based solely 
on the number of days a state may have been aware of such issues. Other 
relevant factors that the Departments would consider include the 
specific circumstances involved, the nature and extent of the emergent 
situation, and whether the state could have predicted the situation. To 
assist the Departments with making this assessment the Departments also 
proposed to capture a new requirement at 31 CFR 33.120(c)(2)(ii)(F) and 
45 CFR 155.1320(c)(2)(ii)(F) to require a state submitting a post award 
modification request to also explain in its request how the 
circumstances underlying its request result from a natural disaster; 
PHE; or other emergent situation that threatens consumers' access to 
health insurance coverage, consumers' access to health care, or human 
life and could not be reasonably have been foreseen and how application 
of the post award public notice requirements would be contrary to the 
interests of consumers.
    The Departments sought comment on this proposal.
    The following is a summary of the comments received and the 
Departments' responses to our proposals to amend 31 CFR 33.118, 31 CFR 
33.120, 45 CFR 155.1318, and 45 CFR 155.1320 to permit the Secretaries 
to modify, in part, the normal public notice requirements for section 
1332 waivers in future emergent situations.
    Comment: The Departments received comments in support of the 
proposals to modify 31 CFR 33.118, 31 CFR 33.120, 45 CFR 155.1318, and 
45 CFR 155.1320. In addition, one commenter recommended that the 
Departments codify as part of the regulatory text the ``reasonably 
foreseeable'' definition for emergent situations. Another commenter 
recommended that the section 1332 waiver process should more closely 
mirror the section 1115 demonstration program emergency process. This 
commenter had concerns about the vagueness of both the definition of 
``emergency'' and the definition of ``health insurance coverage''--
specifically, the latter not being defined as comprehensive--and that 
the proposed flexibilities could be ``subject to misuse'' as a result. 
Another commenter requested that the Departments provide further 
guidance or examples of situations the Departments will consider 
unforeseeable and urgent threats to consumers' access to health 
insurance coverage, consumers' access to health care, or human life so 
states can better understand when these flexibilities may be available. 
One commenter recommended that the Departments extend the flexibilities 
demonstrated during the COVID-19 PHE, not just for other emergent 
situations, but regardless of whether the circumstances are emergent or 
not. This commenter explained that extending these policies beyond 
emergencies would foster the goals of the statute by providing the 
public an opportunity for meaningful access and participation in the 
public notice process. This commenter noted that extending this policy 
more generally would help individuals with LEP and individuals with 
disabilities since online tools make participation possible and may 
exceed what is available at a time- and space-restricted in-person 
forum.
    Response: The Departments appreciate commenters' support for the 
proposals to extend the COVID-19 flexibilities to modify, in part, the 
otherwise applicable public participation requirements and are 
finalizing these policies and clarifications as proposed. The 
Departments are not finalizing additional changes to the rule text at 
this time.
    The Departments considered but did not propose extending these 
flexibilities regardless of whether the circumstances are emergent or 
not. The Departments proposed and are finalizing the extension of these 
flexibilities to address when current requirements are barriers for 
states during emergent situations. This policy is targeted at providing 
a reprieve from certain requirements to allow the Federal Government 
and states to respond to emergent situations as they unfold. States 
will be required to meet the otherwise applicable public participation 
requirements in all other circumstances. Furthermore, there is also no 
requirement that precludes states from utilizing online tools for their 
public participation requirements forums in addition to in-person 
forums to better meet the needs of populations such as those with 
disabilities or LEP.
    The Departments decline to adopt a specific definition for 
``reasonable foreseeability'' or further define the exact number of 
days that the state must not have been aware of such issues. The 
Departments are of the view that such a determination would depend 
heavily on the specific facts and circumstances involved, including the 
nature and extent of the emergent situation. The Departments are 
finalizing the proposal to assess ``reasonable foreseeability'' based 
on the specific issues that a section 1332 waiver proposes to address 
and other relevant factors, and would not make this assessment based 
solely on the number of days a state may have been aware of such 
issues. Other relevant factors that the Departments will consider 
include the specific circumstances involved, the nature and extent of 
the future emergent situation, and whether the state could have 
predicted the situation. The justification and other information 
submitted by the state as part of its modification request will also be 
considered. The Departments are of the view that this general framework 
allows the Departments to strike a balance in accounting for states 
experiencing different kind of emergencies, while also providing states 
with information on the factors the Departments will use when making 
this determination. For example, a state that experiences a hurricane, 
which often happens quickly and may impact the state's ability to hold 
an in-person hearing, would likely have little lead time to request and 
plan for a change. Furthermore, a state could experience a new emergent 
situation that could lead to limited or no Exchange plan options in a 
geographic area--perhaps from a very recent and sudden economic 
downturn, issuer insolvency, or other reasons--that could threaten 
consumers' access to health insurance coverage or care. In this 
scenario, the state would likely have more lead time compared to a 
natural disaster, such as a hurricane or flooding, but the issue could 
become emergent at various points during the rate submission or QHP 
certification process. For example, the Departments would not consider 
an ongoing recession, by itself, to be an emergent situation. The 
Departments further note that existing threats to consumers' access to 
health coverage or care--such as in geographic areas in which issuer 
participation has been historically low--would not be considered 
emergent situations for purposes of applying the flexibilities 
finalized in this rule. After

[[Page 53481]]

receipt of a state's modification request, the Departments will also 
examine what is in the best interest of the public and whether allowing 
the state to modify the full public participation requirements would do 
undue harm to the public. This evaluation will also take into account 
other relevant factors and information, including information provided 
by the state regarding how the emergent situation could not reasonably 
have been foreseen and how a delay would undermine or compromise the 
purpose of the waiver and be contrary to the interest of consumers.
    The Departments are not providing additional examples of situations 
they may consider ``reasonably unforeseen'' at this time but will 
consider doing so in the future. States that may be interested in using 
these flexibilities during an emergent situation should reach out to 
the Departments as soon as practicable to help determine if the 
situation would meet the requirements outlined in this rule.
    While section 1115 demonstration projects do not have emergency 
processes for situations that threaten access to health insurance 
coverage, it is the Departments' view that these flexibilities for an 
emergent situation are important for section 1332 waivers for the 
private health insurance market. In addition, the Departments clarify 
that for the purposes of this flexibility to address emergent 
situations that threaten consumers' access to health insurance 
coverage, the reference to ``health insurance coverage'' was intended 
to capture comprehensive coverage as defined under 31 CFR 
33.108(f)(3)(iv)(A) and 45 CFR 155.1308(f)(3)(iv)(A) such that 
situations that threaten consumers' access to comprehensive coverage 
that meets the requirements for EHBs as defined in section 1302(b) of 
the ACA and offered through Exchanges established by title I of the 
ACA, or, as appropriate, Medicaid or CHIP, may be considered emergent 
under this rule. Similarly, the reference was intended to align with 
the policies and interpretations finalized in this rule regarding the 
coverage guardrail and to capture the different forms of MEC as defined 
in 26 U.S.C. 5000A(f). In response to comments and to align the 
regulations with the intended policies and interpretations, we are 
updating 31 CFR 33.118(a) and (b)(5), 31 CFR 33.120(c)(2)(i) and 
(c)(2)(ii)(F), 45 CFR 155.1318(a) and (b)(5), and 45 CFR 
155.1320(c)(2)(i) and (c)(2)(ii)(F) to replace the references to 
``health insurance coverage'' with ``comprehensive coverage'' in the 
description of emergent situations.\199\
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    \199\ As finalized, the new regulatory text provides these 
flexibilities are limited to emergent situations, including natural 
disasters; public health emergencies; or other emergent situations 
that threaten consumers' access to comprehensive coverage, 
consumers' access to health care or human life. Similarly, state 
requests to modify otherwise applicable public notice and 
participation requirements must explain how the emergent 
circumstances underlying the request result from a natural disaster; 
public health emergency; or other emergent situation that threatens 
consumers' access to comprehensive coverage, consumers' access to 
health care or human life and could not reasonably have been 
foreseen.
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    Comment: The Departments received several comments encouraging the 
Departments to withdraw the proposals to modify 31 CFR 33.118, 31 CFR 
33.120, 45 CFR 155.1318, and 45 CFR 155.1320 related to extending the 
COVID-19 PHE flexibilities to future emergent situations. These 
commenters voiced concerns that the proposals would allow states to 
avoid providing the public a meaningful opportunity to provide input on 
waiver plans, as required by the statute. Some of these commenters were 
concerned that the revised public notice requirements risk unintended 
negative consequences for consumers. They noted that various 
stakeholders, including state advocates, rely on these public comment 
periods to provide feedback on how waiver proposals will impact 
consumers and other key stakeholders. The commenters expressed the view 
that the proposed flexibilities would allow states to cut short the 
notice and comment periods, thereby not allowing for a meaningful level 
of public input. Furthermore, these commenters were of the view that 
the proposed flexibilities would delay the public notice procedures 
until after the Departments make a decision on a waiver application 
request. These commenters also noted that section 1332 waivers are 
designed to implement health system innovations, not to respond to 
disasters and other emergencies. They also cited that Congress has 
provided other authorities to respond to natural disasters and other 
emergencies.
    Response: The Departments appreciate and understand the concerns 
raised by these commenters; however, as explained earlier and in the 
proposed rule, the flexibilities provided under this rule do not allow 
states to avoid providing notice and an opportunity to comment on 
proposed waiver applications. Consistent with section 1332(a)(4)(B)(i) 
of the ACA and regulations at 31 CFR 33.112 and 45 CFR 155.1312, states 
will continue to be required to provide a public notice and comment 
period for section 1332 waiver applications sufficient to ensure a 
meaningful level of public input prior to approval or denial of an 
application. States with approved section 1332 waivers will similarly 
be required to provide a meaningful opportunity to comment during post 
award public forums. Stakeholders and the general public will continue 
to be able to provide feedback on the impact of waiver proposals. As 
explained in this preamble, the Departments value the importance of the 
public input process, but are finalizing the flexibility to permit the 
adjustment of certain requirements, where appropriate, in emergent 
situations.
    In finalizing these policies, the Departments intend to permit 
states to request to modify the public notice procedures for proposed 
waiver applications, in part, when a delay would undermine or 
compromise the purpose of the proposed section 1332 waiver request and 
be contrary to the interests of consumers. States will also be 
permitted to request to modify the post award requirements, in part, 
when the application of those requirements would be contrary to the 
interests of consumers. The Departments again reiterate that a state 
cannot use this flexibility to eliminate public notice and 
participation procedures.\200\ In addition, states cannot waive the 
requirement to conduct a separate process for meaningful consultation 
with federally-recognized tribes. States must also continue to comply 
with applicable civil rights laws, including requirements related to 
providing meaningful access for individuals with LEP and effective 
communication with individuals with disabilities. This rule is a 
targeted policy to extend the existing COVID-19 PHE flexibilities to 
future emergent situations to remove potential barriers and allow both 
the Federal Government and states flexibility to respond to emergent 
situations as they unfold. States can seek to use these flexibilities 
to modify the requirement to hold more than one public hearing in more 
than one location, to hold public hearings before submission of the 
waiver application to the Departments, or to hold the hearings 
virtually rather than in-person. The Departments expect states will 
take into account relevant considerations when seeking flexibility

[[Page 53482]]

to modify the public participation requirements and that states will 
address these considerations in modification requests. For example, 
when evaluating a state's request to conduct a virtual hearing during a 
future emergent situation, the Departments may evaluate, among other 
relevant factors, what steps the state outlines in its modification 
request in response to the additional accessibility challenges that 
such hearings entail.
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    \200\ The state's request must detail the justification for and 
the alternative public notice procedures it seeks to implement that 
are designed to provide the greatest opportunity and level of public 
input from impacted stakeholders practicable given the emergent 
circumstances underlying the state's request. See 31 CFR 
33.118(b)(3) and 45 CFR 155.1318(b)(3).
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    The Departments also reiterate that in situations where the 
Departments approve a state's modification request to provide public 
notice and host the state-level hearings on a different timeframe or in 
a different setting, such as after the submission of a state's waiver 
application request, the state would be required to amend the 
application request as necessary to reflect public comments or other 
relevant feedback received during the alternative state-level public 
notice procedures. The state would also be required to publish on its 
website any modification requests and determinations, as well as 
publish information on the approved revised timeline to inform the 
public about the alternative timeline or procedures. The Departments 
further clarify and affirm that they do not intend to approve or deny a 
waiver application request until after completion of the modified 
public notice procedures at the state or Federal level, as applicable, 
and consideration of timely submitted public comments.
    Finally, these flexibilities have been important during the COVID-
19 PHE and have furthered efforts to prevent the spread of COVID-19 by 
limiting the need for in-person gatherings related to section 1332 
waivers. During the COVID-19 PHE, 14 states with approved section 1332 
waivers have utilized the flexibilities outlined in the November 2020 
IFC to meet the section 1332 public notice requirements while ensuring 
the safety of state residents by holding virtual forums.\201\ 
Furthermore, states have found virtual forums more beneficial in terms 
of reaching more rural or hard-to-reach populations, when compared to 
in-person gatherings. Finally, the Departments acknowledge there are 
similar flexibilities available under section 1115 demonstrations for 
Medicaid and CHIP, as well as under section 1135 waivers for Medicare, 
Medicaid, and CHIP. These amendments to 31 CFR 33.118, 31 CFR 33.120, 
45 CFR 155.1318, and 45 CFR 155.1320 provide for similar treatment of 
section 1332 waivers.
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    \201\ States with approved waivers that have held public notice 
requirements virtually during the COVID-19 PHE include Alaska, 
Colorado, Delaware, Hawaii, Maine, Maryland, Minnesota, Montana, New 
Hampshire, North Dakota, Oregon, Pennsylvania, Rhode Island, and 
Wisconsin.
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    The Departments appreciate commenters' concern that section 1332 
waivers are not intended to respond to disasters and other emergencies, 
but are of the view that these situations could lead to an acute need 
for health insurance coverage and that section 1332 waivers can be used 
to help address these challenges and promote market stability.
    After consideration of these comments, the Departments are 
finalizing the modifications to 31 CFR 33.118(a), (b)(3), (b)(5) and 
(g); 31 CFR 33.120(c)(2); 45 CFR 155.1318(a), (b)(3), (b)(5) and (g); 
and 45 CFR 155.1320(c)(2) and the adoption of the accompanying 
policies, interpretations, and clarifications as explained in this 
section of this preamble.
7. Monitoring and Compliance (31 CFR 33.120 and 45 CFR 155.1320)
    The Departments proposed to modify 31 CFR 33.120(a)(1) and (2) and 
45 CFR 155.1320(a)(1) and (2) to remove the reference, as codified 
under part 1 of the 2022 Payment Notice final rule, to interpretive 
guidance published by the Departments. The proposal aligns the 
Departments' efforts to provide supplementary information about the 
requirements that must be met for the continued oversight and 
monitoring of an approved section 1332 waiver. Because the Departments 
are of the view that the 2018 Guidance and the incorporation of its 
guardrail interpretations into regulations could result in the 
Departments approving section 1332 waivers that would result in fewer 
residents in those states enrolling in comprehensive and affordable 
coverage, that those interpretations do not represent the best 
fulfillment of congressional intent behind the statutory guardrails, 
that they are inconsistent with the policy intentions of E.O. 14009 and 
E.O. 13985, and that it is appropriate to address concerns raised by 
commenters on the 2018 Guidance, the Departments proposed to remove the 
reference to the 2018 Guidance. As proposed, the Departments would rely 
upon the statute and regulations, as well as the Departments' 
interpretive policy statements as outlined in the applicable notice and 
comment rulemaking, in monitoring approved section 1332 waivers.
    The following is a summary of the comments received and the 
Departments' responses to our proposals to amend 31 CFR 33.120(a)(1) 
and (2) and 45 CFR 155.1320(a)(1) and (2).
    Comment: The Departments received some comments expressing general 
support for removing the reference to guidance from the rule text. In 
addition, one commenter specifically supported the proposal to monitor 
approved section 1332 waivers according to the statute, regulations, 
and interpretative policy described in notice and comment rulemaking, 
and removing the reference to the 2018 guidance.
    Response: The Departments appreciate commenters' support. After 
consideration of these comments, the Departments are finalizing these 
proposed modifications to 31 CFR 33.120(a)(1) and (2) and 45 CFR 
155.1320(a)(1) and (2).
8. Pass-Through Funding (31 CFR 33.122 and 45 CFR 155.1322)
    Section 1332(a)(3) of the ACA directs the Secretaries to pay pass-
through funding to the state for the purpose of implementing the state 
section 1332 waiver plan and outlines accompanying requirements for 
making the pass-through funding determination. The Departments proposed 
new regulation text at 31 CFR 33.122 and 45 CFR 155.1322 to codify in 
regulation details regarding the Departments' determination of pass-
through funding for approved section 1332 waivers. More specifically, 
the Departments proposed to codify in regulation that, with respect to 
a state's approved section 1332 waiver, the amount of Federal pass-
through funding would equal the amount, determined annually by the 
Secretaries, of the PTC under section 36B of the Code, the small 
business tax credit (SBTC) under section 45R of the Code, or CSRs under 
ACA part I of subtitle E (collectively referred to as Federal financial 
assistance), that individuals and small employers in the state would 
otherwise be eligible for had the state not received approval for its 
section 1332 waiver. This calculation would include any amount not paid 
due to an individual not qualifying for Federal financial assistance or 
qualifying for a reduced level of such financial assistance. The pass-
through amount would not be increased to account for any savings other 
than the reduction in Federal financial assistance. The pass-through 
amount would be reduced by any net increase in Federal spending or net 
decrease in Federal revenue if necessary to ensure deficit neutrality. 
The pass-through estimates take into account experience in the relevant 
state and the experience of other states with respect to participation 
in an Exchange and credits and reductions provided under such 
provisions to residents of the other

[[Page 53483]]

states. This amount would be calculated annually by the Departments and 
could be updated by the Departments as necessary to reflect applicable 
changes in Federal or state law. The proposed regulations further 
state, consistent with the statute,\202\ that any pass-through funding 
can only be used for purposes of implementing the state's approved 
section 1332 waiver plan.
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    \202\ See section 1332(a)(3) of the ACA.
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    Consistent with the Departments' existing regulations at 31 CFR 
33.108(f)(4) and 45 CFR 155.1308(f)(4), section 1332 waiver 
applications are required to provide analysis and supporting data to 
inform the Department's estimate of the pass-through funding amount and 
the waivers' predicted impact on the deficit neutrality guardrail. For 
states that do not utilize an FFE, this includes information about 
enrollment, premiums, and Federal financial assistance in the state's 
Exchange by age, income, and type of policy, and other information as 
may be required by the Secretaries. Consistent with the Departments' 
existing regulations at 31 CFR 33.124 and 45 CFR 155.1324, states with 
approved section 1332 waivers must comply with state reporting 
requirements in accordance with the terms and conditions of the state's 
section 1332 waiver. If pass-through funding is being sought as part of 
the state's section 1332 waiver plan, states may also be required to 
submit data as outlined in the specific terms and conditions for the 
state's approved waiver in order for the Departments to calculate pass-
through funding. The Departments did not propose any changes to these 
waiver requirements.
    In addition, the proposals do not change the existing requirements 
codified in 31 CFR 33.108(f)(3)(iii) and 45 CFR 155.1308(f)(3)(iii) for 
the state's section 1332 waiver application to include a description of 
the provisions for which the state seeks a section 1332 waiver and how 
the waiver is necessary to facilitate the state's waiver plan. The 
Departments proposed that, if the state is seeking pass-through 
funding, the state waiver application should include an explanation of 
how, due to the structure of the section 1332 state plan and the 
statutory provisions waived, the state anticipates that individuals 
would no longer qualify for Federal financial assistance or would 
qualify for reduced Federal financial assistance, as a result of the 
section 1332 waiver.\203\ In addition, the Departments proposed the 
state would also need to explain in its application how the state 
intends to use that funding for the purposes of implementing its 
section 1332 state plan.
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    \203\ While this rule generally finalizes the proposal to 
supersede and rescind the 2018 Guidance, the Departments are 
finalizing these standards which align with the approach outlined in 
the 2018 Guidance.
---------------------------------------------------------------------------

    The Departments sought comment on the proposals, including the 
proposed adoption of the new regulatory text on pass-through funding 
for approved section 1332 waivers. The Departments received some 
comments regarding pass-through funding in connection with the 
Departments' proposals related to the deficit neutrality guardrail and 
those comments are summarized and responded to in this preamble at 
section IV(3)(d) of this final rule.
    Comment: The Departments received a comment expressing general 
support for codifying the proposed interpretation related to pass-
through funding.
    Response: The Departments appreciate this commenter's support. 
After consideration of the comments on pass-through funding, the 
Departments are finalizing the adoption of these proposed policies and 
the codification of these new regulations.
9. Periodic Evaluation Requirements (31 CFR 33.128 and 45 CFR 155.1328)
    The Departments proposed to modify 31 CFR 33.128(a) and 45 CFR 
155.1328(a) to remove the reference, as codified under part 1 of the 
2022 Payment Notice final rule, to interpretive guidance published by 
the Departments. The proposal aligns the Departments' efforts to 
provide supplementary information about the requirements that must be 
met for the periodic evaluation requirements of an approved section 
1332 waiver. Because the Departments are of the view that the 2018 
Guidance and the incorporation of its guardrail interpretations into 
regulations could result in the Departments approving section 1332 
waivers that would result in fewer residents in those states enrolling 
in comprehensive and affordable coverage, that those interpretations do 
not represent the best fulfillment of Congressional intent behind the 
statutory guardrails, that they are inconsistent with the policy 
intentions of E.O. 14009 and E.O. 13985, and that it is appropriate to 
address concerns raised by commenters on the 2018 Guidance, the 
Departments proposed to remove the reference to the 2018 Guidance. As 
proposed, the Departments would rely upon the statute and regulations, 
as well as the Departments' interpretive policy statements as outlined 
in the applicable notice and comment rulemaking, in conducting periodic 
evaluations of approved section 1332 waivers.
    The following is a summary of the comments received and the 
Departments' responses to the proposals to amend 31 CFR 33.128(a) and 
45 CFR 155.1328(a).
    Comment: The Departments received some comments expressing general 
support for removing the reference to guidance from the rule text.
    Response: The Departments appreciate commenters' support. After 
consideration of these comments, the Departments are finalizing the 
proposed modifications to 31 CFR 33.128(a) and 45 CFR 155.1328(a).
10. Waiver Amendment (31 CFR 33.130 and 45 CFR 155.1330)
    The Departments proposed new regulations at 31 CFR 33.130 and 45 
CFR 155.1330 to delineate the process by which a state is permitted to 
submit an amendment to an approved section 1332 waiver. The proposed 
new regulations also capture a proposed definition of a section 1332 
waiver amendment. While the statute does not specifically mention 
amendment requests, some states with approved section 1332 waivers have 
indicated interest in amending their current approved waiver plans. 
Further, in response to previously received comments on the 2012 Final 
Rule, the Departments acknowledged that information regarding section 
1332 waiver amendments and renewals would be needed in the future,\204\ 
and the Departments have received several inquiries from states on 
these topics. In addition, there may be situations where states 
pursuing proposed section 1332 waiver plans are interested in amending 
an application that has been submitted to the Departments for review. 
The Departments proposed that the framework would only apply to 
amendments to approved section 1332 waiver plans and would not apply to 
changes to an initial section 1332 waiver application submitted to the 
Departments but unapproved.\205\ Under this proposal, a state would not 
be authorized to implement any aspect of the proposed amendment without 
prior approval by the Departments.
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    \204\ See 77 FR 11700.
    \205\ In circumstances where a state wants to amend its waiver 
application before the Departments have approved the waiver plan, 
the Departments intend to work with the state to ensure there is an 
adequate, meaningful opportunity for public notice and comment 
taking into account the particular circumstances of the situation 
and the state's waiver application (such as the changes to the 
proposed waiver, timing, etc.).
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    In the proposed rule, the Departments set forth a proposed 
procedural

[[Page 53484]]

framework for submission and review of amendment requests for an 
approved section 1332 waiver. The Departments explained they are of the 
view that this additional information will help states with approved 
section 1332 waiver plans better plan for and prepare for potential 
amendments to their state waiver plans. The Departments also noted they 
intend to continue providing information and details regarding the 
section 1332 waiver amendment process in the specific terms and 
conditions for an approved waiver plan. The proposals were intended to 
align with the current amendment request process outlined in recent 
specific terms and conditions (STCs) for states with approved 
waivers.\206\
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    \206\ For example, see STC 9 in New Hampshire's Approval Letter 
and STCs: https://www.cms.gov/CCIIO/Programs-and-Initiatives/State-Innovation-Waivers/Downloads/1332-NH-Approval-STCs.pdf.
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a. Definition of Waiver Amendment
    For purposes of these requirements, the Departments proposed to 
define the term ``section 1332 waiver amendment'' as a change to a 
section 1332 waiver plan that is not otherwise allowable under the STCs 
of an approved waiver, a change that could impact any of the section 
1332 statutory guardrails, or a change to the program design for an 
approved waiver. Such potential changes include, but are not limited 
to, changes to eligibility, coverage, benefits, premiums, out-of-pocket 
spending, and cost sharing. The Departments proposed to codify this 
definition in new proposed 31 CFR 33.130(a) and 45 CFR 155.1330(a).
b. Waiver Amendment Process
    To request a waiver amendment, the Departments proposed that the 
state must submit a letter in electronic format to the Departments to 
notify them in writing of its intent to request an amendment to its 
approved section 1332 waiver plan(s). The state would be required to 
include a detailed description of all of the intended change(s), 
including the proposed implementation date(s), in its letter of intent. 
The Departments explained they would encourage the state to submit the 
letter of intent at least 15 months prior to the section 1332 waiver 
amendment's proposed implementation date and to engage with the 
Departments early in its development of a potential waiver amendment. 
The state may want to submit this letter of intent more than 15 months 
prior to the section 1332 waiver amendment's proposed implementation 
date, depending on the complexity of the amendment request and the 
timeline for implementation, among other factors.
    The Departments would review the state's letter of intent request. 
The Departments proposed that, within approximately 30 days of the 
Departments' receipt of the letter of intent, the Departments would 
respond to the state and confirm whether the change requested is a 
section 1332 waiver amendment, as well as identify the information the 
state needs to submit in its waiver amendment request. This written 
response would also include whether or not the proposed section 1332 
waiver amendment(s) would be subject to any additional or different 
requirements. For example, depending on the complexity of the section 
1332 amendment request, scope of changes from the approved waiver plan, 
operational/technical changes, or implementation considerations, the 
Departments may impose requirements similar to those specified in 31 
CFR 33.108(f) and 45 CFR 155.1308(f) for initial section 1332 waiver 
applications. The preamble regarding section 1332 waiver amendment 
content that follows further describes the proposed content 
requirements for section 1332 waiver amendment requests.
    Under the proposed section 1332 waiver amendment framework, the 
state should generally plan to submit its waiver amendment request no 
later than 9 months prior to when the proposed amendment would take 
effect in order to allow for sufficient time for review of the waiver 
amendment request. Similar to the regulations at 31 CFR 33.108(a) and 
45 CFR 155.1308(a) for new section 1332 waiver applications, the 
Departments proposed that applications for waiver amendments of a 
section 1332 waiver must be submitted in electronic format to the 
Departments. Similar to the regulations at 31 CFR 33.108(b) and 45 CFR 
155.1308(b) for new section 1332 waiver applications, the Departments 
proposed that the state would be required to submit the section 1332 
waiver amendment request sufficiently in advance of the requested 
waiver implementation date, particularly when the waiver plan impacts 
premium rates, to allow for an appropriate review and implementation 
timeframe. Depending on the complexity of the section 1332 amendment 
request, the state may want to submit the amendment request earlier 
than 9 months prior to implementation. In developing the implementation 
timeframe for its section 1332 waiver amendment request, the 
Departments proposed that the state must maintain uninterrupted 
operations of the Exchange in the state and provide adequate notice to 
affected stakeholders and issuers of health insurance plans that would 
be (or may be) affected by the amendment to take necessary action based 
on approval of the section 1332 waiver amendment request. As detailed 
later in this section of this preamble, these are operational details 
that the state would be required to address as part of its waiver 
amendment request. In addition, as reflected in the new proposed 
regulations at 31 CFR 33.130(a) and 45 CFR 155.1330(a), a state would 
not be authorized to implement any aspect of the proposed amendment 
without prior approval from the Secretaries.
    The Departments proposed a similar process for section 1332 waiver 
amendment requests as is outlined for new section 1332 waiver 
applications in 31 CFR 33.108 and 45 CFR 155.1308. In line with these 
requirements, the Departments proposed to define the type of 
information and what information a state is required to provide to the 
public prior to the submission of a section 1332 waiver amendment 
request to the Departments. Similar to new section 1332 waiver 
applications, the Departments proposed to evaluate the state's section 
1332 waiver amendment request and may approve the request if the 
waiver, as amended, meets the statutory guardrails as defined in 
section 1332(b)(1)(A)-(D) of the ACA and other applicable requirements. 
In general, states are permitted to have a waiver plan that consists of 
different components or parts. As proposed, states would be permitted 
to propose an amendment, which could build on an approved section 1332 
waiver plan. The Departments proposed that a state's approved section 
1332 waiver plan and the proposed waiver amendment request should be 
analyzed together, and the state would receive pass-through funding for 
implementation of the amended waiver plan (including the amendment, if 
approved) if the amended waiver plan yields Federal financial 
assistance savings, net of any reductions necessary to ensure deficit 
neutrality. For example, if a state has an approved reinsurance program 
for plan year 2021 through 2025, and is seeking approval for a waiver 
amendment request to begin in 2023, the analysis in the section 1332 
waiver amendment request should demonstrate that the reinsurance 
program combined with any proposed amendments meets the guardrails. In 
comparing scenarios with and without the section 1332 waiver, the 
Departments proposed to consider

[[Page 53485]]

the without-waiver scenario to include neither the reinsurance program 
nor the section 1332 waiver amendment request and the with-waiver 
scenario to include the combined impact of the reinsurance program and 
the section 1332 waiver amendment request. In terms of pass-through 
funding, the Departments proposed that, if the section 1332 waiver 
amendment request described in the example is approved and determined 
to yield additional reductions in Federal financial assistance (in the 
form of PTC, CSR, or SBTC), the state would continue to receive pass-
through funding annually for combined reductions in Federal financial 
assistance for the entire section 1332 waiver plan, rather than 
receiving a separate pass through funding amount for the reinsurance 
component of the waiver and a separate pass-through funding amount for 
the waiver amendment component. As noted in the earlier in preamble on 
pass-through funding, such amounts could be updated by the Departments, 
as necessary, to reflect applicable changes in state or Federal law.
    Similar to the requirements in 31 CFR 33.108 and 45 CFR 155.1308, 
the Departments also proposed that the public must have a meaningful 
opportunity to provide input at the state and Federal level on waiver 
amendment requests. Section 1332(a)(4)(B) of the ACA requires the 
Secretaries to issue regulations that provide a process for public 
notice and comment at the state level, including public hearings, that 
is sufficient to ensure a meaningful level of public input. The 
Departments propose that a state pursuing a section 1332 waiver 
amendment must conduct the state public notice process that is 
specified for new applications at 31 CFR 33.112 and 45 CFR 155.1312. As 
such, to ensure a meaningful level of public input, the comment period 
would generally need to be no less than 30 days. The Departments also 
proposed that it would be permissible for a state to use its annual 
public forum required under 31 CFR 33.120(c) and 45 CFR 155.1320(c) for 
the dual purpose of soliciting public input on a proposed section 1332 
waiver amendment request and on the progress of its approved waiver 
plan. This policy proposal is in line with the flexibility the 
Departments permitted in the 2012 Final Rule section 1332 regulations 
\207\ to allow for states to use Medicaid tribal consultation to also 
satisfy the requirements as set forth in 31 CFR 33.112(a)(2) and 45 CFR 
155.1312(a)(2), that require a state with one or more federally-
recognized tribes within its borders to conduct a separate process for 
meaningful consultation with the tribes as part of the state section 
1332 waiver public notice and comment process. The Departments 
explained they are of the view that allowing states to use the annual 
public forum for the dual purpose of soliciting public input on the 
state's proposed section 1332 waiver amendment request and on the 
progress of its approved waiver plan would create a more efficient 
process for both the state and the public to provide a meaningful level 
of input. Furthermore, the proposal would allow a state to explain to 
the public how the state's proposed section 1332 waiver amendment would 
interact with the state's approved waiver plan, and thus would be 
beneficial to the public in understanding the impact of the state's 
proposed waiver amendment.
---------------------------------------------------------------------------

    \207\ See 77 FR at 11706.
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    The Departments proposed a similar Federal public notice and 
approval process for section 1332 waiver amendment requests as is 
outlined for new section 1332 waiver applications in 31 CFR 33.116 and 
45 CFR 155.1316. In line with these requirements, the Departments 
proposed that following a determination that a state's section 1332 
waiver application request for a section 1332 waiver is complete, the 
Secretaries will provide for a public notice and comment period that is 
sufficient to ensure a meaningful level of public input, and the 
comment period would generally be no less than 30 days. The Departments 
would make available through an HHS website the complete section 1332 
waiver amendment request, information relating to how and where written 
comments may be submitted, and the timeframe during which comments will 
be accepted. Additionally, the Departments will make available public 
comments received on the section 1332 waiver amendment request during 
the Federal public notice and comment period. The Departments explained 
they are of the view that these proposals would increase transparency 
of the Federal review process and create a clear path for states and 
the Departments to determine if the information submitted is sufficient 
to continue review and when to start a Federal public comment period on 
the state's proposed waiver amendment. In addition, the Departments 
noted these proposals provide the public with a meaningful opportunity 
to provide input on a section 1332 waiver request in line with the 
intent of the statute.
c. Waiver Amendment Content
    The Departments proposed that a state that wants to pursue a 
section 1332 waiver amendment request must furnish information and 
analysis regarding the state's proposed waiver amendment that is 
necessary to permit the Departments to evaluate the request. The 
proposed information and analysis are similar to the existing 
requirements for new section 1332 waiver applications.\208\ As such, 
the Departments proposed that a section 1332 waiver amendment request 
must include the following:
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    \208\ See 31 CFR 33.108 and 45 CFR 155.1308.
---------------------------------------------------------------------------

    (1) A detailed description of the requested amendment, including 
the impact on the guardrails, and related changes to the section 1332 
waiver program elements as applicable, including sufficient supporting 
documentation;
    (2) An explanation and evidence of the process used by the state to 
ensure meaningful public input;
    (3) Evidence of sufficient authority under state law(s) in order to 
meet the ACA section 1332(b)(2)(A) requirement for purposes of pursuing 
the section 1332 waiver amendment;
    (4) An updated actuarial and/or economic analysis demonstrating how 
the section 1332 waiver, as amended, will meet the section 1332 
statutory guardrails;
    (5) An explanation of the estimated impact, if any, of the section 
1332 waiver amendment on pass-through funding; and
    (6) Any further requested information and/or analysis that is 
determined necessary by the Departments to evaluate the section 1332 
waiver amendment.
    For the required updated actuarial and/or economic analysis, the 
Departments proposed that such analysis must identify the ``with 
waiver'' impact of the requested amendment on the statutory guardrails. 
Such analysis would also be required to include a ``with waiver'' and 
``without waiver'' status on both a summary and detailed level through 
the current approval period using data from recent experience, as well 
as a summary of and detailed projections of the change in the ``with 
waiver'' scenario. In addition, as described earlier, the Departments 
proposed that the analysis submitted by the state with its section 1332 
waiver amendment request must demonstrate how the state's approved 
section 1332 waiver plan, combined with any proposed amendments, 
impacts the guardrails.
    The Departments solicited comments on the proposals, including 
whether the proposed framework for section 1332 waiver amendment 
requests should be codified in regulation.

[[Page 53486]]

    The following is a summary of the comments received and the 
Departments' responses to the waiver amendment request proposals and 
the proposed adoption of 31 CFR 33.130 and 45 CFR 155.1330.
    Comment: The Departments received some comments on the proposals 
regarding waiver amendments. Commenters were supportive of the 
proposals overall and appreciated the clarification on what is required 
for a state with an approved waiver to request to make changes to the 
approved waiver. Several commenters sought further clarification on the 
definition of a waiver amendment under various scenarios. One commenter 
requested clarification regarding whether a state may have two separate 
section 1332 waivers or if any additional waiver request, while a state 
has an approved waiver, would be considered a waiver amendment. Another 
commenter relatedly asked if, for example, a state with an approved 
waiver plan were to seek both an extension and an amendment to its 
waiver plan, whether the state would be able to accomplish the two 
requests through one submission, rather than by making separate 
requests under 31 CFR 33.130 and 45 CFR 155.1330 for the amendment 
request and 31 CFR 33.132 and 45 CFR 155.1332 for the extension 
request. As another example, the commenter questioned whether a second 
waiver request submitted by a state with an approved waiver plan would 
automatically be considered an amendment request; or alternatively, 
whether the second waiver request would only be considered an amendment 
request if it was closely enough related to the state's approved waiver 
plan. Two commenters requested that the Departments minimize the burden 
on states seeking a section 1332 waiver amendment and only request from 
states the minimum documentation necessary to review the state's 
proposal. One commenter did not support the amendment provision because 
the commenter did not support the requirement for states to submit an 
amendment proposal at least 15 months prior to the waiver's 
implementation date, which in the commenter's view is too long and 
inflexible.
    Response: The Departments appreciate these comments and look 
forward to working with states on potential amendments to approved 
waivers, extensions of approved waivers, and new waiver application 
requests. The Departments note that state waiver proposals may present 
novel approaches for providing coverage to a state's residents, such 
that by nature, the outcomes may be difficult to predict and must be 
analyzed based on a state's specific proposal and circumstances. For 
example, as seen in each state's section 1332 waiver application, the 
required actuarial and economic analyses take into account various 
state-specific characteristics and data, such as historical and current 
information on premiums, target enrollee populations, market 
conditions, and other economic factors, in order to project the 
potential outcomes of implementing a section 1332 waiver under 
different scenarios. It would be difficult to ascertain whether a 
proposal is a waiver amendment, technical change to the existing 
waiver, or a new waiver application request without sufficient 
information and analysis. Accordingly, the Departments encourage states 
seeking to amend or otherwise modify a section 1332 waiver to contact 
the Departments early in their processes to discuss their plans and 
receive guidance on whether the request would be considered an 
amendment, a technical change, or a new waiver, taking into account 
their approved waiver plans and their proposals. This rulemaking 
provides a general framework for amendment requests, including the 
establishment of a definition for this key term, to provide states and 
other stakeholders with sufficient information to reasonably evaluate 
whether the state's proposal is an amendment. More specifically, as 
finalized, the term `section 1332 waiver amendment' is defined as a 
change to a section 1332 waiver plan that is not otherwise allowable 
under the STCs of an approved waiver, a change that could impact any of 
the section 1332 statutory guardrails, or a change to the program 
design for an approved waiver. Regarding the specific questions related 
to whether a state could seek an amendment and an extension (defined 
later in this preamble) through a single submission, the Departments 
encourage states with approved waiver plans to discuss specific waiver 
proposals with the Departments, as that determination will depend on 
the details of the waiver proposal(s) and the state's approved waiver 
plan.
    As discussed earlier in this preamble and in the proposed rule, the 
Departments will respond to the state and confirm whether the change 
requested is a section 1332 waiver amendment, as well as identify the 
information the state needs to submit in its waiver amendment request 
if the state's proposal is determined to be a waiver amendment. 
Depending on the complexity of the proposed waiver amendment request, 
the scope of changes from the approved waiver plan, operational/
technical changes, and implementation considerations, the Departments 
may impose requirements similar to those specified in 31 CFR 33.108(f) 
and 45 CFR 155.1308(f) for initial section 1332 waiver applications. In 
general, a waiver amendment request must include a detailed description 
of the requested amendment, including the impact on the guardrails; an 
explanation and evidence of the process used by the state to ensure 
meaningful public input; evidence of sufficient authority under state 
law to pursue the section 1332 waiver amendment; an updated actuarial 
and/or economic analysis; and an explanation of the estimated impact of 
the amendment on pass-through funding. This information is necessary to 
permit the Departments to evaluate the waiver amendment request. 
However, the Departments agree with certain commenters' concerns about 
minimizing the burden on states and will aim to request the minimum 
documentation and analysis necessary from states to review waiver 
amendment requests. For example, the Departments intend to use 
available data and resources, including the data and analysis in the 
periodic reports submitted by states with approved waivers under 31 CFR 
33.124 and 45 CFR 155.1324, if appropriate, to minimize the burden on 
states. The Departments also clarify that the Departments are not 
requiring that states submit the letter of intent at least 15 months 
prior to the section 1332 waiver amendment's proposed implementation 
date, but that the Departments are encouraging states to follow that 
timeline and submit the letter of intent at least 15 months prior to 
the section 1332 waiver amendment's proposed implementation date to 
allow enough time for submission and review of the amendment request 
and to allow for an appropriate timeline for implementation of the 
already approved waiver and amendment, if approved.
    After consideration of these comments, the Departments are 
finalizing the adoption of the waiver amendment framework along with 
clarifications outlined in this section of this preamble and the 
addition of 31 CFR 33.130 and 45 CFR 155.1330.
11. Waiver Extension (31 CFR 33.132 and 45 CFR 155.1332)
    Section 1332(e) of the ACA provides that no section 1332 waiver may 
extend over a period of longer than 5 years unless the state requests 
continuation of its waiver, and such request shall be deemed granted 
unless the Departments,

[[Page 53487]]

within 90 days after the date of its submission, either deny such 
request in writing or inform the state in writing with respect to any 
additional information which is needed in order to make a final 
determination with respect to the request. Recognizing that several of 
the existing section 1332 waivers were approved in 2016 and 2017 to 
begin in plan years 2017 and 2018, respectively, the Departments 
proposed new regulations at 31 CFR 33.132 and 45 CFR 155.1332 to codify 
section 1332(e) of the ACA and also proposed, in preamble, the proposed 
framework for section 1332 waiver extensions. In response to previously 
received comments, the Departments acknowledged that information 
regarding section 1332 waiver amendments and renewals would be needed 
in the future \209\ and noted they received several inquiries from 
states on these topics. As such, the Departments proposed new 
regulations at 31 CFR 33.132 and 45 CFR 155.1332 to permit, but not 
require, states to submit a section 1332 waiver extension request to 
continue an approved waiver plan. The proposed new regulations also 
provide that an extension request shall be deemed granted unless the 
Secretaries, within 90 days after the date of the state's submission of 
a complete section 1332 waiver extension request, either deny such 
request in writing or inform the state in writing with respect to any 
additional information needed to make a final determination with 
respect to the request. The proposed rule also set forth, in preamble, 
a proposed procedural framework for submission and review of extension 
requests for approved section 1332 waiver plans. The Departments 
explained they are of the view that this additional information would 
help states with approved section 1332 waiver plans better plan for and 
prepare for potential extensions to their waiver plans. The Departments 
also noted they intend to provide information and details regarding the 
section 1332 waiver extension process in the STCs for an approved 
waiver plan. The proposals were intended to align with the extension 
request process outlined in recent STCs for states with approved 
section 1332 waivers.\210\
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    \209\ See 77 FR 11700.
    \210\ For example, see STC 10 in New Hampshire's Approval Letter 
and STCs: https://www.cms.gov/CCIIO/Programs-and-Initiatives/State-Innovation-Waivers/Downloads/1332-NH-Approval-STCs.pdf.
---------------------------------------------------------------------------

    The Departments proposed to define a section 1332 waiver extension 
as an extension of an approved waiver under the existing waiver terms. 
As detailed further later in this section of this preamble, if a state 
wants to make changes to the existing terms of an approved section 1332 
waiver, the proposed waiver amendment request framework would apply. 
The Departments proposed that states with approved section 1332 waivers 
that want to pursue a waiver extension would be required to inform the 
Departments if the state will apply for extension of its waiver at 
least one year prior to the waiver's end date. To request a section 
1332 waiver extension, the Departments proposed that the state must 
submit a letter of intent in an electronic format to the Departments to 
notify them in writing of its intent to request a waiver extension of 
its approved waiver plan(s). The Departments would then review the 
state's letter of intent request. The Departments proposed that, within 
approximately 30 days of the Departments' receipt of the letter of 
intent, the Departments would respond to the state and confirm whether 
the extension request would be considered as an extension request or 
whether any changes requested result in the need for a waiver amendment 
request instead. The Departments would also identify the information 
the state needs to submit in its section 1332 waiver extension request. 
The Departments also proposed that section 1332 waiver extension 
requests must also be submitted in electronic format to the 
Departments, consistent with the format and manner requirements 
applicable to initial waiver applications under 31 CFR 33.108(a) and 45 
CFR 155.1308(a).
    The Departments also proposed that they may request an updated 
economic or actuarial analysis for the requested extension period in a 
section 1332 waiver extension request. Given that the Departments 
receive periodic reports from states with approved section 1332 waivers 
under 31 CFR 33.124 and 45 CFR 155.1324, in some circumstances the 
Departments may not need, and therefore, would not require full new 
analysis (as required under 31 CFR 33.108(f)(4) and 45 CFR 
155.1308(f)(4) for initial section 1332 waiver applications) and 
instead may rely on the updated analyses provided as part of these 
periodic reports. In other instances, depending on the complexity of 
the section 1332 waiver and the extension request, the Departments may 
require additional data and information to be submitted to review the 
extension request.
    The Departments proposed to evaluate the state's section 1332 
waiver extension request and may approve the request if it meets the 
statutory guardrails as defined in section 1332 (b)(1)(A)-(D) and meets 
other applicable requirements. The Departments proposed that a state 
waiver extension request may be required to include the following 
information:
    (1) Updated economic or actuarial analyses for the requested 
extension period in a format and manner specified by the Departments;
    (2) Preliminary evaluation data and analysis from the existing 
section 1332 waiver program;
    (3) Evidence of sufficient authority under state law(s) to meet the 
ACA section 1332(b)(2)(A) requirement for purposes of pursuing the 
requested extension;
    (4) An explanation of the process followed by the state to ensure 
meaningful public input on the extension request at the state level; 
and
    (5) Other information as requested by the Departments that is 
necessary to reach a decision on the requested extension.
    As noted earlier in this preamble, the Departments would identify 
the specific information a state needs to include as part of its 
section 1332 waiver extension request in the response to the state's 
letter of intent. Further, the Departments proposed that the updated 
economic or actuarial analyses for the requested extension period would 
be in a format and manner specified by the Departments. The Departments 
would also rely on available data, such as the analyses provided as 
part of the periodic reports required under 31 CFR 33.124 and 45 CFR 
155.1324, when evaluating a state's waiver extension request if 
appropriate.
    The Departments also proposed that it would be permissible for a 
state to use its annual public forum required under 31 CFR 33.120(c) 
and 45 CFR 155.1320(c) for the dual purpose of soliciting public input 
on a proposed section 1332 waiver extension request and on the progress 
of its approved waiver plan. This policy proposal is in line with the 
flexibility the Departments permitted in the 2012 Final Rule \211\ to 
allow states to use Medicaid tribal consultation to also satisfy the 
requirements as set forth in 31 CFR 33.112(a)(2) and 45 CFR 
155.1312(a)(2), that require a state with one or more federally-
recognized tribes within its borders to conduct a separate process for 
meaningful consultation with such tribes as part of the state section 
1332 waiver public notice and comment process. The Departments 
explained they are of the view that allowing states to use the annual 
public forum for the

[[Page 53488]]

dual purpose of soliciting public input on an extension request and on 
the progress of its approved section 1332 waiver would create a more 
efficient process for both the state and for the public to provide a 
meaningful level of input.
---------------------------------------------------------------------------

    \211\ See 77 FR at 11706.
---------------------------------------------------------------------------

    The Departments proposed a similar Federal public notice and review 
process for a section 1332 waiver extension request as is outlined for 
new section 1332 waiver applications in 31 CFR 33.116 and 45 CFR 
155.1316. The Departments proposed that the Departments would review a 
state's section 1332 waiver extension request and make a preliminary 
determination as to whether it is complete within approximately 30 days 
after it is submitted. In line with these requirements, the Departments 
proposed that after determining that the section 1332 waiver extension 
request is complete, the waiver extension request would be made public 
through the CMS website, and a 30-day Federal public comment period 
would commence while the extension request is under review. The 
Departments would make available through the CMS website the 
information relating to how and where written comments may be submitted 
and the timeframe during which comments will be accepted. Additionally, 
the Departments would make available public comments received on the 
section 1332 waiver amendment request during the Federal public notice 
and comment period. The determination that the section 1332 waiver 
extension request is complete would also mark the beginning of the 90-
day clock outlined in section 1332(e) of the ACA for the Secretaries to 
deny or request more information regarding the continuation, or 
extension, of the state's approved waiver plan. If, after the extension 
request has been determined complete, the Departments find that content 
is missing, additional information is required, or the state needs to 
respond to public comments received during the Federal comment period, 
the Departments would notify the state and an additional review period 
would begin once the Departments received the requested information or 
responses from the state. The Departments proposed that this additional 
review period would be no longer than 90 days. The Departments 
explained they are of the view that these proposals increase 
transparency of the Federal review process and create a clear path for 
states and the Departments to determine if the information submitted is 
sufficient to continue review and when to start a Federal public 
comment period. In addition, the Departments noted they are of the view 
that this proposal provides the public with a meaningful opportunity to 
provide input on a section 1332 waiver extension request in line with 
the intent of the statute.
    The proposed section 1332 waiver extension request process would be 
separate from the waiver amendment framework described earlier in this 
rulemaking. A section 1332 waiver extension request under proposed 31 
CFR 33.132 and 45 CFR 155.1332 would only be available for an extension 
of the existing terms of an approved waiver plans and would not be 
applicable if the state was seeking to make substantive changes to its 
approved waiver plan beyond a continuation of the term of the waiver. 
If a state also seeks to make substantive changes to its approved 
section 1332 waiver plan along with seeking an extension, the 
Departments would treat those changes as amendments and the framework 
outlined in this preamble for waiver amendment requests would apply.
    The Departments solicited comments on these proposals, including 
whether the proposed framework for section 1332 waiver extension 
requests should be codified in regulation.
    The following is a summary of the comments received and the 
Departments' responses to the waiver extension request proposals and 
the proposed adoption of 31 CFR 33.132 and 45 CFR 155.1332.
    Comment: The Departments received some comments on the proposals 
regarding waiver extensions. Commenters were supportive of the 
proposals overall and appreciated the clarification on what is required 
for a state with an approved waiver to request an extension of the 
approved waiver. Several commenters requested clarification regarding 
whether a waiver could be extended with one or more amendments through 
one submission, rather than by making separate waiver extension and 
amendment requests.
    Response: The Departments appreciate commenters' support. As 
finalized, a section 1332 waiver extension is defined as an extension 
of an approved waiver under the existing waiver terms. For example, if 
a state with an approved section 1332 reinsurance waiver wanted to 
extend a reinsurance program for an additional three years, but was not 
seeking to make any other changes beyond a technical change as 
allowable under the STCs, the request would be treated as a waiver 
extension request. Examples of allowable technical changes are 
revisions to a state's reinsurance program parameters or a state's 
authorized funding source.\212\ Any changes to an approved waiver not 
otherwise allowable under the STCs would be considered an amendment. As 
explained earlier in this preamble regarding waiver amendments (31 CFR 
33.130 and 45 CFR 155.1330), the Departments will analyze state waiver 
proposals, including amendment and extension requests, based on a 
state's specific proposals and circumstances. Accordingly, the 
Departments encourage states seeking to amend or extend a section 1332 
waiver to contact the Departments early in their processes to discuss 
their plans and receive guidance on whether the request would be 
considered an amendment or an extension, as well as confirm the 
applicable requirements. In general, the Departments aim to work with 
states in a manner that provides clarity and transparency on the waiver 
extension and amendment process.
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    \212\ Technical changes are changes that do not impact the 
guardrails or any obligations of the state or the Departments, such 
as changes to the state-approved program funding level or program 
parameters like altering the attachment point, cap, coinsurance 
rate, or eligible conditions.
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    After consideration of these comments, the Departments are 
finalizing the adoption of the waiver extension framework along with 
clarifications outlined in this section of this preamble and the 
addition of 31 CFR 33.132 and 45 CFR 155.1332.

V. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, the Departments are 
required to provide notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
OMB for review and approval. In order to fairly evaluate whether an 
information collection should be approved by OMB, section 3506(c)(2)(A) 
of the Paperwork Reduction Act of 1995 requires that the Departments 
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.
    HHS solicited public comment on each of these issues for the 
following sections of this preamble that contain ICRs.

[[Page 53489]]

A. ICRs Regarding Navigator Program Standards (Sec.  155.210)

    The data collection requirements for FFE Navigator grantees are 
currently approved under OMB control 0938-1215/Expiration date: October 
31, 2023 (Cooperative Agreement to Support Navigators in federally-
facilitated Exchanges). The proposal to once again require FFE 
Navigators to provide consumers with information and assistance with 
regard to certain post-enrollment topics does not increase the number 
of reports that Navigator grantees are required to submit. 
Additionally, HHS does not anticipate changes to the data elements 
related to the expansion of required Navigator duties to be 
significant. HHS notes that since the 2020 Payment Notice made 
assistance with the topics at Sec.  155.210(e)(9) permissible, but no 
longer required, many Navigator grantees have continued to report on 
these activities as part of their weekly, monthly, and quarterly metric 
reports to HHS. Therefore, HHS does not project the information 
collection burden to increase.

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

    HHS is finalizing amendments to Sec.  156.280(e)(2)(ii) to repeal 
the separate billing regulation governing payments for QHPs that offer 
coverage of abortion services for which Federal funds are prohibited. 
As finalized, HHS is reverting to and codifying in amended regulatory 
text at Sec.  156.280(e)(2)(ii) the prior policy in the 2016 Payment 
Notice such that QHP issuers offering coverage of abortion services for 
which Federal funds are prohibited again have flexibility in selecting 
a method to comply with the separate payment requirement in section 
1303 of the ACA. Acceptable methods for satisfying the separate payment 
requirement include sending the policy holder a single monthly invoice 
or bill that separately itemizes the premium amount for coverage of 
abortion services for which Federal funds are prohibited; sending the 
policy holder a separate monthly bill for these services; or sending 
the policy holder 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. Repealing the separate billing 
regulation will remove the burden associated with the policy, as 
detailed below.
    The 2019 Program Integrity Rule \213\ estimated that the total one-
time burden to implement the separate billing regulation for the 94 
issuers that were offering coverage for abortion services for which 
Federal funds are prohibited at the time of finalization would be 
2,961,000 hours for a total cost of approximately $385 million. HHS 
anticipated the one-time burden for the 3 State Exchanges that 
performed premium billing and payment processing and had QHP issuers 
that offered coverage for abortion services for which Federal funds are 
prohibited to be 94,500 hours for a total cost of approximately $12.3 
million. In the May 2020 IFC,\214\ HHS reaffirmed these one-time 
estimates and anticipated that this one-time burden would still be 
incurred primarily in 2020, despite the 60-day delay to the 
implementation deadline.
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    \213\ 84 FR 71674 (December 27, 2019).
    \214\ 85 FR 27550 (May 8, 2020).
---------------------------------------------------------------------------

    The 2019 Program Integrity Rule also estimated ongoing annual costs 
for implementing the separate billing regulation. HHS estimated the 
total annual burden in 2020 for all 94 issuers would be 1,133,640 hours 
with an equivalent cost of approximately $50.1 million. From 2021 
onwards, HHS estimated the total annual burden for all 94 issuers to be 
approximately 2,267,280 hours with an associated cost of approximately 
$100.2 million. HHS estimated that for the 3 State Exchanges performing 
premium billing and payment processing, the total annual burden would 
be approximately 36,180 hours with an equivalent cost of approximately 
$1.6 million in 2020 and 72,360 hours with an associated cost of 
approximately $3.2 million starting in 2021. HHS predicted in the May 
2020 IFC that delaying the implementation of the deadline for the 
separate billing regulation by 60 days would result in a reduction to 
this annual burden in 2020 of 389,940 hours with an equivalent cost 
reduction of approximately $17.4 million for all 97 issuers and State 
Exchanges performing premium billing and payment processing.
    In addition, the Program Integrity Rule estimated that issuers and 
State Exchanges performing premium billing and payment processing would 
need to print and send approximately 1.82 million separate paper bills 
per month in 2020, incurring monthly costs of approximately $91,200. 
The Program Integrity Rule estimated the total cost for all issuers and 
State Exchanges to be approximately $547,225 in 2020. In 2021, HHS 
estimated that the annual cost for all issuers and State Exchanges to 
send separate paper bills would be approximately $1,070,129 and that, 
in 2022, the annual cost would be approximately $1,045,808. In the May 
2020 IFC, HHS anticipated that delaying the implementation of the 
deadline for the separate billing regulation by 60 days would reduce 
the cost of printing separate bills in 2020 by approximately $182,400.
    As described in further detail in the preamble to Sec.  156.280, 
the majority of commenters agreed with these burden estimates, citing 
significant concerns that the separate billing regulation was unduly 
burdensome to issuers, states, Exchanges, and consumers and could 
create consumer confusion, resulting in significant harm to consumers 
who inadvertently lose their coverage.
    HHS disagrees with comments contesting the validity of its burden 
estimates and suggesting that they are inflated. HHS again emphasizes 
that the 2019 Program Integrity Rule included a detailed account of the 
anticipated financial and operational burdens from the separate billing 
regulation, estimates which were based upon plan and premium data, 
actuarial estimates, public comments from issuers and states directly 
regulated by the separate billing policy, and consumer enrollment 
figures. Those burdens are discussed in further detail in sections 
III., ``Collection of Information Requirements,'' and IV., ``Regulatory 
Impact Analysis,'' of that rule, which explain from where such 
estimates are derived.
    Some commenters noted that issuers have already incurred ongoing 
costs for printing and mailing, additional staffing, and reprograming 
billing systems and that the separate billing regulation already 
resulted in increased burden for issuers and consumers, widespread 
confusion by consumers and other stakeholders, and an increase in 
frustration and confusion around grace periods and terminations. HHS 
acknowledges that some costs may have already been incurred by issuers 
and that the actual cost savings, especially for one-time IT related 
costs, may be lower than HHS estimates. Unfortunately, HHS does not 
have an estimate of costs already incurred by issuers and can only 
estimate savings going forward. HHS continues to believe the timing of 
the courts' actions likely dissuaded most issuers from assuming further 
costly administrative and operational burdens required to build the 
separate billing policy into their billing and IT systems. Further, as 
the courts' nationwide invalidation of the policy prevented HHS from 
requiring initial implementation of the separate billing regulation, 
the potential consumer confusion over payment obligations, which could 
have inadvertently led to non-payment of enrollee premium and 
subsequent

[[Page 53490]]

termination of consumer coverage, was also avoided.
    Therefore, HHS believes repeal of the separate billing regulation 
removes the associated ICRs and the anticipated burden on QHP issuers 
and State Exchanges that perform premium billing and payment 
processing, which have not been approved by OMB. HHS will not pursue 
OMB approval of the ICRs associated with the repealed separate billing 
regulation (OMB control number: 0938-1358, Billing and Collection of 
the Separate Payment for Certain Abortion Services (CMS-10681)). As 
repeal of the separate billing regulation removes the associated ICRs 
with that regulation, the currently approved ICRs associated with 
issuer compliance with other longstanding requirements of Sec.  156.280 
in existence prior to finalization of the separate billing regulation 
apply and capture the associated burden with issuer compliance of Sec.  
156.280 (OMB control number: 0938-1156, Establishment of Exchanges and 
Qualified Health Plans (CMS-10400)). Those ICRs capture the estimated 
associated burden with issuer compliance under Sec.  156.280(e)(5)(ii), 
which requires each QHP issuer offering coverage of abortion services 
for which Federal funding is prohibited to submit to the relevant state 
insurance commissioner a plan describing how the issuer will establish 
and maintain a separate payment account for any QHP that covers 
abortion services for which Federal funding is prohibited, and Sec.  
156.280(e)(5)(iii) which requires each QHP issuer to annually attest to 
compliance with section 1303 of the ACA and applicable regulations.

C. ICRs Regarding Section 1332 Waivers (31 CFR Part 33 and 45 CFR Part 
155)

    The Departments are finalizing modifications to the section 1332 
waiver implementing regulations, including changes related to the 
interpretation of the statutory guardrails, the establishment of 
processes for section 1332 waiver amendment and extension requests, and 
the codification of new regulatory text related to pass-through funding 
for approved section 1332 waiver plans. In the proposed rule, the 
Departments discussed that the proposed policies and interpretations, 
if finalized, would supersede and replace prior finalized policies and 
interpretations. The Departments are also finalizing modifications to 
the regulations to set forth flexibilities in the public notice 
requirements and post award public participation requirements for 
section 1332 waivers during emergent situations, building off of the 
flexibilities provided during the COVID-19 PHE. These altered 
requirements related to section 1332 waiver applications, compliance 
and monitoring, or evaluation do not impose any additional costs or 
burdens for states seeking waiver approval or those states with 
approved waiver plans that have not already been captured in prior 
burden estimates. Therefore, the Departments do not expect that 
implementing these provisions will significantly change the associated 
burden currently approved under OMB control number: 0938-1389/
Expiration date: February 29, 2024.

VI. Regulatory Impact Analysis

A. Statement of Need

    This rule implements revised FFE and SBE-FP user fees for the 2022 
benefit year. It also repeals the Exchange DE option. The rule also 
includes changes related to the annual open enrollment period; 
Navigator program standards; and separate billing and segregation of 
funds for abortion services. In addition, it clarifies a provision 
related to special enrollment periods for enrollees that are newly 
eligible or ineligible for APTC, and establishes a monthly special 
enrollment period for qualified individuals who are eligible for APTC, 
and whose household income is expected to be no greater than 150 
percent of the FPL during periods of time when APTC benefits are 
available such that the applicable taxpayers' applicable percentage is 
set at zero, such as during tax years 2021 and 2022, as provided by 
section 9661 of the ARP. Finally, relating to section 1332 waivers, it 
implements several changes, including the repeal of the incorporation 
of many policies and interpretations from the 2018 Guidance into the 
section 1332 waiver implementing regulations. This rule also finalizes 
proposed policies and interpretations governing section 1332 waivers 
that are consistent with providing more accessible and affordable 
health care through the individual and small group markets.
    HHS is extending the annual open enrollment period to provide 
individuals with a longer opportunity to enroll in coverage, which will 
expand access to health insurance coverage, and HHS is codifying 
flexibility for State Exchanges that operate their own eligibility and 
enrollment platform to set annual open enrollment period end dates no 
earlier than December 15. Similarly, HHS is reinstituting prior 
requirements that FFE Navigators provide information and assistance 
with regard to certain post-enrollment topics, including helping 
consumers understand basic concepts and rights related to health 
coverage and how to use it. In addition, HHS repeals the separate 
billing regulation at Sec.  156.280(e)(2)(ii) that required individual 
market QHP issuers to send a separate bill for that portion of a policy 
holder's premium that is attributable to coverage for abortion services 
for which Federal funds are prohibited and to instruct such policy 
holders to pay for the separate bill in a separate transaction. This 
rule also reduces administrative burden on issuers, states, Exchanges, 
and consumers, as well as consumer confusion and unintended losses of 
coverage.

B. Overall Impact

    HHS has examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980; Pub. L. 96354), section 1102(b) of the 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), and the 
Congressional Review Act (5 U.S.C. 804(2)).
    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 rule: (1) Having an 
annual effect on the economy of $100 million or more in any 1 year, or 
adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or state, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.

[[Page 53491]]

    A regulatory impact analysis (RIA) must be prepared for major rules 
with economically significant effects ($100 million or more in any 1 
year). Based on HHS's estimates, OMB's Office of Information and 
Regulatory Affairs has determined this rulemaking is ``economically 
significant'' as measured by the $100 million threshold, and hence also 
a major rule under Subtitle E of the Small Business Regulatory 
Enforcement Fairness Act of 1996 (also known as the Congressional 
Review Act). Accordingly, HHS has prepared a Regulatory Impact Analysis 
that to the best of its ability presents the costs and benefits of the 
rulemaking.
    The provisions in this final rule will expand consumer access to 
affordable health care. The provisions in this final rule will extend 
the annual open enrollment period and codify flexibility for State 
Exchanges that operate their own eligibility and enrollment platform to 
set annual open enrollment period end dates no earlier than December 
15, expand Navigator duties, repeal the Exchange DE option, provide 
more funding for FFE Navigators and consumer outreach and education, 
and reduce administrative burden and confusion for consumers. These 
provisions will also reduce regulatory burden for states and 
administrative costs for Exchanges and issuers. Through the 
improvements in enrollment accessibility and increased affordability 
for consumers, these provisions will increase access to affordable 
health coverage.
    The user fee rates in this final rule are higher than those 
previously finalized for 2022 in part 1 of the 2022 Payment Notice 
final rule,\215\ which could increase premiums for consumers. In 
accordance with Executive Order 12866, HHS believes that the benefits 
of this regulatory action justify the costs.
---------------------------------------------------------------------------

    \215\ 86 FR 6138.
---------------------------------------------------------------------------

C. Impact Estimates of the Proposed Rule Provisions and Accounting 
Table

    In accordance with OMB Circular A-4, Table 1 depicts an accounting 
statement summarizing HHS's assessment of the benefits, costs, and 
transfers associated with this regulatory action.
    This final rule implements standards for programs that will have 
numerous effects, including allowing consumers to have continued access 
to coverage and health care and stabilizing premiums in the individual 
and small group health insurance markets, including in the Exchanges. 
HHS is unable to quantify all benefits and costs of this final rule. 
The effects in Table 1 reflect qualitative impacts and estimated direct 
monetary costs and transfers resulting from the provisions of this 
final rule for health insurance issuers and consumers.

                                          Table 1--Accounting Statement
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Benefits:
----------------------------------------------------------------------------------------------------------------
Qualitative:
     Consumers will benefit from a longer annual open enrollment period, as they will have a greater
     opportunity to enroll in coverage..
     State Exchanges that operate their own eligibility and enrollment platform will benefit from
     flexibility to set annual open enrollment period end dates no earlier than December 15, as they will retain
     flexibility to determine the optimal annual open enrollment period length for their state..
     The special enrollment period clarification will benefit individuals who experience a decrease in
     household income that makes them newly eligible for an APTC amount of greater than zero dollars..
     Consumers will benefit from repeal of the separate billing regulation, as they will no longer be
     subject to the risk of confusing billing processes..
     APTC-eligible qualified individuals whose household income does not exceed 150 percent of the FPL
     will benefit from the new special enrollment period during periods of time when APTC benefits are available
     such that the applicable taxpayers' applicable percentage is set at zero, such as during tax years 2021 and
     2022, as provided by section 9661 of the ARP, as they will have more opportunities to enroll in coverage
     throughout the year..
----------------------------------------------------------------------------------------------------------------
Costs:                                          Estimate            Year dollar    Discount rate  Period covered
                                                                                        (%)
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($/year)           -$261.8 million.........            2020               7       2021-2025
                                        -$259.0 million.........            2020               3       2021-2025
----------------------------------------------------------------------------------------------------------------
Quantitative:
     Reduction in costs to all issuers, states, State Exchanges performing premium billing and payment
     processing, Exchanges on the Federal platform, and consumers due to the separate billing regulation of
     approximately $407.05 million in 2021, $230.7 million in 2022, and $229.3 million annually in 2023 and
     onwards. In addition to annual costs, the reduction in costs in 2021 includes the one-time implementation
     changes that issuers, states, States Exchanges performing premium billing and payment processing, and the
     Exchanges on the Federal platform would have incurred if the separate billing policy had been implemented
     in 2020. Because the separate billing policy was not implemented in 2020 due to courts invalidating the
     policy, these one-time costs could have been incurred in 2021, had the separate billing policy remained
     applicable..
     Increase in costs to Exchanges on the Federal platform of $8.3 million annually to extend the
     annual open enrollment period to January 15..
----------------------------------------------------------------------------------------------------------------
Qualitative:
     Increased costs due to increases in provision of medical services (if health
     insurance enrollment increases).
----------------------------------------------------------------------------------------------------------------
Transfers:                                      Estimate            Year dollar    Discount rate  Period covered
                                                                                        (%)
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($/year)           $480.9 million to                   2021               7       2022-2026
                                         $1.2309 billion.
                                        $481.5 million to                   2021               3       2022-2026
                                         $1.2315 billion.
----------------------------------------------------------------------------------------------------------------
Quantitative:

[[Page 53492]]

 
     Increase in transfers from issuers to Federal Government by approximately $200 million in 2022 and
     approximately $240 million in 2023 onwards due to changes in user fee rates and state transitions from FFEs
     to SBE-FPs or from SBE-FPs to State Exchanges..
     A potential 0.5 to 2 percent increase in premiums in 2022 and onwards as a result of the monthly
     special enrollment period for APTC-eligible qualified individuals whose household income does not exceed
     150 percent of the FPL, during periods of time when APTC benefits are available such that the applicable
     taxpayers' applicable percentage is set at zero, such as during tax years 2021 and 2022, as provided by
     section 9661 of the ARP, with a corresponding potential increase in APTC/PTC annual outlays and decrease in
     income tax revenues of approximately $250 million to $1 billion..
----------------------------------------------------------------------------------------------------------------

    This RIA expands upon the impact analyses of previous rules and 
utilizes the CBO analysis of the ACA's impact on Federal spending, 
revenue collection, and insurance enrollment. In addition to utilizing 
CBO projections, HHS conducted an internal analysis of the effects of 
its regulations on enrollment and premiums. Based on these internal 
analyses, HHS anticipates that the quantitative effects of the 
provisions in this rule are consistent with its previous estimates in 
the 2021 Payment Notice for the impacts associated with APTC, expanded 
consumer outreach and education and Navigators, and FFE user fee 
requirements.
1. Navigator Program Standards (Sec.  155.210)
    HHS is amending Sec.  155.210(e)(9) to reinstitute the requirement 
that FFE Navigators provide consumers with information and assistance 
with regard to certain post-enrollment topics. In FFEs, Navigators will 
continue to be permitted to undertake the Navigator duties specified in 
Sec.  155.210(e)(9) until this provision becomes effective. FFE 
Navigators will be required to perform the Navigator duties specified 
in Sec.  155.210(e)(9) beginning with Navigator grants awarded in 2022, 
including non-competing continuation awards. As finalized in this rule, 
prior to Navigator grant funding being awarded in FY 2022, FY 2021 
Navigator grantees will be required to perform these duties beginning 
with the Navigator grant funding awarded in FY 2022 for the second 12-
month budget period of the 36-month period of performance. To the 
extent Navigators awarded grant funding in FY 2021 are not already 
performing these duties under their year one project plans when this 
provision becomes effective, they can revise their project plans to 
incorporate performance of the duties specified in Sec.  155.210(e)(9) 
as part of their non-competing continuation application for their FY 
2022 funding.
    These duties were previously required of Navigators in all 
Exchanges before the 2020 Payment Notice amended Sec.  155.210(e)(9) 
and made assistance with these post-enrollment topics permissible for 
FFE Navigators, but not required, beginning with FFE Navigator grants 
awarded in 2019. Despite no longer being required, the majority of FFE 
Navigators continue to provide information and assistance to consumers 
and report metrics on the post-enrollment topics outlined in Sec.  
155.210(e)(9). Additionally, by reinstituting the requirements at Sec.  
155.210(e)(9), HHS will be able to both require applicants to include 
plans for performing these post-enrollment activities as part of their 
annual applications for new or continued Navigator grant funding, as 
well as include Navigator assistance with these post-enrollment 
activities as part of their performance evaluations. All costs 
associated with reaching these consumers in FFEs would be considered 
allowable costs that would be covered by the Navigator grants for the 
FFEs and that may be drawn down as the grantee incurs such costs.
2. Exchange Direct Enrollment Option (Sec.  155.221(j))
    HHS is removing Sec.  155.221(j) and repealing the Exchange DE 
option, which established a process for states to use direct enrollment 
technology to transition to private-sector-focused enrollment pathways 
operated by QHP issuers, web-brokers, and agents and brokers, instead 
of or in addition to a centralized eligibility and enrollment website 
operated by an Exchange. HHS believes that repealing the Exchange DE 
option will have minimal impact on stakeholders at this time since no 
resources have been expended by states or HHS on implementing it. Any 
potential costs and burdens associated with the Exchange DE option 
would be eliminated. These include costs to develop consumer-facing 
enrollment functionality and meet eligibility application technical 
requirements, as well as to maintain back-end eligibility determination 
functionality and other back-end eligibility services; start-up and 
implementation costs to develop the appropriate privacy and security 
infrastructure and business controls; as well as costs related to 
ongoing oversight and monitoring of DE entities and maintaining the 
individual interfaces and transactions with each DE entity. HHS also 
believes that repealing the Exchange DE option would mitigate potential 
negative downstream impacts, including consumer confusion and an 
increased uninsured and underinsured population. A more detailed 
discussion of potential impacts appears earlier in this preamble in the 
discussion of public comments on this provision.
3. Annual Open Enrollment Period Extension (Sec.  155.410(e))
    HHS is extending the individual market annual open enrollment 
period from November 1 through January 15 for the 2022 coverage year 
and beyond, with a modification to codify flexibilities for State 
Exchanges not utilizing the Federal platform to choose an annual open 
enrollment period end date no earlier than December 15 and to adopt 
accelerated effective dates. HHS does not believe a significant impact 
on the Exchange risk pool will result from this change. Consumers will 
benefit from a longer annual open enrollment period without additional 
demand placed on them. A lengthened annual open enrollment period may 
result in an increase of $8.3 million in technical infrastructure costs 
to the FFEs annually to support extended Cloud and application services 
associated with the extension. A lengthened annual open enrollment 
period may also lead to increased enrollments which could impose 
additional costs on Exchanges and enrollment assisters to conduct 
outreach and assist new consumers. However, this change could also 
reduce outreach costs on Exchanges and enrollment assisters by 
spreading out enrollments over a greater length of time, resulting in 
opportunities for efficiency and increased health coverage.
4. Monthly Special Enrollment Period for APTC-Eligible Qualified 
Individuals With a Household Income No Greater Than 150 Percent of the 
Federal Poverty Level Whose Applicable Taxpayer Has an Applicable 
Percentage of Zero (Sec.  155.420(d)(16))
    HHS is finalizing the monthly special enrollment period for APTC 
eligible consumers with a projected annual

[[Page 53493]]

household income no greater than 150 percent of the FPL with coverage 
effective dates and other eligibility parameters as proposed, but is 
finalizing it so that the special enrollment period is only available 
during periods of time during which APTC benefits are available such 
that the applicable taxpayers' applicable percentage is set at zero, 
such as during tax years 2021 and 2022, as provided by section 9661 of 
the ARP. HHS is also finalizing that plan category limitations apply to 
this special enrollment period, and in consideration of concerns from 
certain commenters as further discussed in preamble, HHS is also 
finalizing Sec.  155.420(a)(4)(ii)(D) with revisions to reflect that an 
enrollee who is adding a qualified individual or dependent through this 
special enrollment period may add the newly enrolling household member 
to their current QHP; or, change to a silver-level QHP and add their 
newly enrolling household member to this silver-level QHP; or, change 
to a silver-level QHP and enroll the newly enrolling qualified 
individual or dependent in a separate QHP. HHS believes that this 
modification is appropriate to provide clarity on options and 
limitations for enrollees whose household members newly enroll through 
this special enrollment period. In particular, HHS is finalizing that, 
while newly enrolling qualified individuals and dependents are not 
subject to plan category limitations, enrollees with a newly-enrolling 
dependent or other household member may not use the new monthly special 
enrollment period to change to a plan of any metal level to enroll 
together with their newly-enrolling household member, but can stay in 
the same plan or change to a silver plan to enroll together with the 
newly-enrolling household member.\216\ Additionally, this special 
enrollment period will be available at the option of the Exchange, as 
proposed, in order to allow State Exchanges to decide whether to 
implement it based on their specific market dynamics, needs, and 
priorities. HHS is also finalizing that Exchanges on the Federal 
platform will implement this special enrollment period by providing 
qualified individuals who are eligible with a pathway to access it 
through the HealthCare.gov application.
---------------------------------------------------------------------------

    \216\ As noted in the proposed rule, this provision does not 
prevent enrollees who qualify for the new special enrollment period 
from changing to a plan of any category through a special enrollment 
period that provides this flexibility, including the special 
enrollment periods at Sec.  155.420(d)(4), (8), (9), (10), (12), and 
(14).
---------------------------------------------------------------------------

    To provide Exchanges with flexibility to prioritize ensuring that 
qualifying individuals are able to obtain coverage through this special 
enrollment period quickly following plan selection, or to implement 
this special enrollment period in keeping with their current 
operations, HHS is adding a new paragraph at Sec.  155.420(b)(2)(vii) 
to provide that the Exchange must ensure that coverage is effective in 
accordance with paragraph (b)(1) of this section or on the first day of 
the month following plan selection, at the option of the Exchange. 
Finally, HHS is adding a new paragraph at Sec.  147.104(b)(2)(i)(G) to 
specify that issuers are not required to provide this special 
enrollment period in the individual market with respect to coverage 
offered outside of an Exchange, because eligibility for the special 
enrollment period is based on eligibility for APTC, and APTC cannot be 
applied to coverage that is not a QHP offered through an Exchange.\217\
---------------------------------------------------------------------------

    \217\ See IRC 36B(b)(2)(A), (c)(2)(A)(i).
---------------------------------------------------------------------------

    This special enrollment period availability will provide more 
opportunities for certain low-income APTC- and CSR-eligible consumers 
to take advantage of the financial assistance available to them. As 
discussed in the preamble for this rulemaking, HHS believes that the 
benefit to providing these opportunities outweighs adverse selection 
concerns. Further, HHS believes the risk of adverse selection is 
mitigated to some degree by most qualifying individuals having access 
to a premium-free silver plan with a 94 percent AV after application of 
APTC, because consumers eligible for a premium-free plan after 
application of APTC which, due to its 94 percent AV, covers such a 
significant portion of health care services, would likely already be 
enrolled if they were aware of their eligibility for such coverage. 
Additionally, HHS believes that those for whom this is the case are not 
likely to move in and out of coverage once they have enrolled, for 
example to end coverage once an immediate health care need is met, 
which may also limit some adverse selection risk. HHS also believes 
that applying plan category limitations to this special enrollment 
period will help to mitigate adverse selection because it will limit 
the ability of enrollees to change to a higher metal level plan based 
on a new health care need and then change back to a silver or bronze 
plan once the health issue is resolved. HHS also believes that 
enrollees who are interested in changing plans during the year through 
this special enrollment period will likely be deterred because such a 
change would generally mean they lose progress they have made toward 
meeting their deductibles and other accumulators. However, HHS 
acknowledges that enrollees may still choose to enroll in a silver 
level plan that is more expensive than their zero-dollar option, and, 
with a monthly special enrollment period, could make this change during 
the plan year based on a difference in provider network or prescription 
drug formulary.
    HHS requested comment on practices, including education and 
outreach, that could help ensure that consumers who are eligible for 
this special enrollment period enroll in the silver plan with a zero-
dollar premium after application of APTC that is available to them. HHS 
also sought comment on the remaining risk for issuers; for example, on 
the extent to which there is risk related to consumers who become aware 
of the availability of the special enrollment period after they become 
sick and seek to enroll because they need medical care. Based on the 
possibility that consumers could enroll through the special enrollment 
period only after they need to use health care services, HHS sought 
comment on whether issuers may account for this risk through premium 
increases. HHS estimated a 0.5 to 2 percent increase in premiums when 
the enhanced APTC provisions of the ARP are in effect in states where 
this special enrollment period is implemented, due to increased adverse 
selection risk, resulting in an estimated $250 million to $1 billion 
increase in APTC/PTC outlays and decrease in income tax revenues 
nationwide, and HHS sought comment on this estimate.
    HHS also sought comment on potential risk that individuals, 
including those who enroll in coverage due to a health event, later 
experience a household income change or change their primary place of 
residence such that they are no longer eligible for a silver plan with 
a zero-dollar premium, and that these individuals will end coverage at 
that point. Because this special enrollment period has the potential to 
introduce new adverse selection risk into the individual market, HHS 
also sought comment generally on the impact on premiums of this policy 
in Exchanges where it is implemented, and potential regulatory tools 
that could mitigate these risks.
    For example, Exchanges that implement this special enrollment 
period could try to mitigate some risks with a robust outreach and 
education campaign to promote awareness of the special enrollment 
period. However, because the special enrollment period will be based on 
projected annual household income level, and Exchanges rely on 
applicants to report their most

[[Page 53494]]

up to date household income information, it may be difficult for 
Exchanges to assess which individuals might be eligible for outreach 
and education purposes and could make targeted marketing and outreach 
difficult. HHS also sought comment on practices that could help 
mitigate this challenge, and ways to improve outreach to low-income 
consumers more generally. Relatedly, HHS sought comment on how 
Exchanges could help to mitigate potential confusion on the part of 
stakeholders that provide enrollment assistance, such as HHS Navigator 
grantees, and agents and brokers. HHS sought comment on how Exchanges 
and stakeholders that provide enrollment assistance could develop 
effective outreach and education campaigns to target this population.
    Finally, HHS requested comment on level of effort for Exchanges to 
implement this special enrollment period, especially within the amount 
of time required to make it available to consumers during the 2022 plan 
year.
    The following is a summary of the comments received and HHS's 
responses to the comment solicitations related to the estimated impact 
of the monthly special enrollment period for APTC-eligible qualified 
individuals with a household income no greater than 150 percent of the 
FPL (Sec.  155.420(d)(16)).
    Comment: As further discussed in preamble, some commenters 
supported the monthly special enrollment period and stated that the 
risk of adverse selection as a result of the policy would be limited 
due to the enhanced subsidy provisions of the ARP. Some of these 
commenters also stated that risk would be limited because younger and 
healthier individuals would be more likely to enroll when given 
additional opportunities to do so. As further discussed in preamble, 
many commenters also cited comparable state experiences as evidence of 
the low likelihood of adverse selection, such as the Massachusetts 
State Exchange's enrollment opportunity for individuals with a 
household income no higher than 300 percent of the FPL, and the ability 
of consumers up to 200 percent of the FPL to enroll in the Basic Health 
Program year-round in Minnesota and New York.
    Some commenters added that State Exchange data on risk factors 
associated with enrollees who accessed coverage through a special 
enrollment period, including the special enrollment period that State 
Exchanges provided during the 2020 or 2021 plan years due to the COVID-
19 pandemic, indicated that these enrollees did not pose significant 
additional risk and in some cases were younger than the average age of 
enrollees who did not access coverage through the special enrollment 
period. One of these commenters asked that CMS analyze data on special 
enrollment period enrollees in states that use the HealthCare.gov 
platform, and suggested that such analysis would yield a similar 
result. Other commenters suggested that HHS could extend the special 
enrollment period to APTC-eligible individuals with household incomes 
up to 200 or 250 percent of the FPL with only a relatively small 
increase in adverse selection.
    Response: HHS appreciates commenters' support of the monthly 
special enrollment period and agree that adverse selection will be 
mitigated during the period of enhanced subsidies due to the ARP. The 
goal of this policy is to increase access to affordable health care, 
consistent with E.O. 14009, and HHS appreciates comments stating that 
the monthly special enrollment period would increase the number of 
subsidized enrollees in the individual market. As further discussed in 
preamble, HHS also agrees that, in many cases, special enrollment 
periods may encourage consumers who are younger and healthier than 
average to enroll. Additionally, HHS acknowledges that some Exchanges 
that have expanded enrollment opportunities for consumers with a 
projected annual household income below a certain threshold have not 
experienced significant negative impacts from adverse selection. 
However, because HHS appreciates concerns that the risk of adverse 
selection may vary significantly based on market conditions specific to 
different Exchanges, and HHS's goal is also to achieve a balanced 
approach that takes into account these varying conditions as much as 
possible, HHS is finalizing this special enrollment period to limit it 
to be available only during periods of time when APTC benefits are 
available such that the applicable taxpayers' applicable percentage is 
set at zero, such as during tax year 2022, as provided by section 9661 
of the ARP.
    Comment: As noted in preamble, some commenters were concerned that 
the monthly special enrollment period would result in increased 
premiums, narrowed networks, fewer plan choices, and market instability 
due to adverse selection created by newly enrolling consumers but also, 
perhaps more significantly, by current enrollees using the special 
enrollment period to change plans mid-year based on provider network or 
other plan characteristics. Several of these commenters stated that 
HHS's estimated increase in premiums of 0.5 to 2 percent was an 
underestimate of the true impact of this policy and argued that adverse 
selection would increase if the special enrollment period extends 
beyond the current expiration date of the ARP.
    Several commenters agreed that adverse selection and related 
increases in individual health insurance premiums would vary 
significantly by state based on specific market conditions such as 
Medicaid expansion status. A few commenters voiced concerns that the 
HHS-operated risk adjustment methodology does not adequately compensate 
for individuals with partial-year or short-term enrollment. Several 
commenters, including some that supported the proposal, asked that CMS 
monitor the individual market for impacts of adverse selection, and one 
commenter asked us to engage in additional rulemaking if evidence of 
significant adverse selection is found. One commenter stated that this 
special enrollment period would increase enrollment and the increased 
costs would be overwhelmingly borne by the Federal Government in the 
form of increased APTC, but that these costs would be an appropriate 
use of Federal resources. However, other commenters voiced the concern 
that adverse selection would drive up rates and that these increases 
would disproportionately impact unsubsidized consumers.
    Response: As further discussed in preamble, HHS acknowledges the 
potential impacts to premiums and adverse selection as a result of this 
special enrollment period and appreciates comments on its estimates of 
potential premium increases related to adverse selection. HHS also 
clarifies that HHS calculated this estimate based on currently 
available data and internal analyses, and based on the assumption that 
the proposed special enrollment period would only be available for 
coverage for periods of time during which APTC benefits are available 
such that the applicable taxpayers' applicable percentage is set at 
zero; in particular, during tax year 2022, as provided by section 9661 
of the ARP. Based on this internal analysis and the balance of public 
comments, including those that cite other Exchanges' experiences with 
open-ended special enrollment periods, HHS continues to believe the 
risk of adverse selection with respect to this new special enrollment 
period is limited and is outweighed by the gains in coverage that would 
result from this special enrollment period.
    Further, as discussed in preamble and the proposed rule, HHS 
believes that

[[Page 53495]]

applying plan category limitations to this special enrollment period 
will help to mitigate adverse selection, and HHS has updated the 
proposed regulatory text at Sec.  155.420(a)(4)(ii)(D) to clarify that 
an enrollee who is adding a qualified individual or dependent may add 
the newly enrolling household member to their current QHP; or, change 
to a silver-level QHP and add their newly enrolling household member to 
this silver-level QHP; or, change to a silver-level QHP and enroll the 
newly enrolling qualified individual or dependent in a separate QHP. 
HHS notes that per the time limitation HHS is finalizing, the special 
enrollment period will be available only for coverage for periods of 
time during which APTC benefits are available such that the applicable 
taxpayers' applicable percentage is set at zero, which is currently 
limited to tax year 2022, as provided by section 9661 of the ARP. HHS 
believes that the time-limited nature of this special enrollment period 
and the applicable plan category limitations will help to mitigate 
concerns about adverse selection, especially when combined with robust 
outreach and education efforts to maximize the number of qualifying 
individuals who gain coverage through the special enrollment period 
based on an understanding of its availability as opposed to enrolling 
due to an emerging health care need.
    However, as also noted in preamble, HHS appreciates that adverse 
selection will likely vary across different Exchanges based on a 
variety of factors, such as whether a state has expanded its Medicaid 
program, and HHS will work with stakeholders to monitor individual 
health insurance markets while the special enrollment period is in 
place to track potential adverse selection impacts of the special 
enrollment period, as well as access to coverage for higher-income 
individuals, in particular those who do not qualify for a monthly APTC 
payment of more than zero dollars, and to consider possible approaches 
to address any issues that arise.
    Last, as discussed in this preamble, the HHS-operated risk 
adjustment methodology added enrollment duration factors to the adult 
risk adjustment models starting with the 2017 benefit year. These 
enrollment duration factors are used in the calculation of adult 
enrollee risk scores under the state payment transfer formula to 
account for additional risk associated with enrollees with partial-year 
enrollment. They do so through a set of 11 enrollment duration binary 
indicatory variables that signify that an enrollee had exactly one to 
11 months of enrollment in a given plan. The value of these indicators 
decreases monotonically from one to 11 months, reflecting the increased 
annualized costs associated with fewer months of enrollment. Adult 
enrollees who enrolled during this special enrollment period will 
receive the applicable enrollment duration factor in the risk score 
calculation. While HHS continues to evaluate the current enrollment 
duration factors, HHS generally disagrees with comments asserting the 
risk adjustment methodology does not adequately address partial year 
enrollees.
    Comment: As also discussed in preamble, some commenters stated the 
concern that issuers had not had time to incorporate adverse selection 
risk related to the proposed special enrollment period into their rates 
for the 2022 plan year. However, no commenters recommended giving 
issuers an additional opportunity to adjust rates before the 2022 plan 
year. Several commenters requested that HHS delay making the proposed 
special enrollment period available until the 2023 plan year if HHS 
finalized the proposal, in order to provide issuers with adequate time 
to incorporate related risk into their rates.
    Response: Based on HHS's determination that consumers who are 
eligible for free or very low-cost coverage provided by enhanced APTC 
through the ARP will benefit from additional opportunities to enroll in 
Exchange coverage while this enhanced assistance is in place, HHS is 
finalizing the special enrollment period to be available for the 2022 
plan year, and to be limited to provide coverage for periods of time 
during which APTC benefits are available such that the applicable 
taxpayers' applicable percentage is set at zero, including tax year 
2022, as provided by section 9661 of the ARP.
5. Clarification of Special Enrollment Periods for Enrollees Who Are 
Newly Eligible or Newly Ineligible for Advance Payments of the Premium 
Tax Credit (Sec.  155.420(f))
    HHS is finalizing new language to clarify, for purposes of the 
special enrollment period rules at Sec.  155.420, that a qualified 
individual, enrollee, or his or her dependent, who qualifies for APTC 
because they meet the criteria at Sec.  155.305(f), but who qualifies 
for a maximum APTC amount of zero dollars, is not considered APTC 
eligible, even when they have previously been APTC ineligible for 
another reason, such as having other MEC. HHS believes that the special 
enrollment period rules that reference APTC eligibility at Sec.  
155.420(d)(6) could have permitted inconsistent interpretations of what 
it means to be newly eligible or ineligible for APTC when an individual 
is found to be eligible generally to receive APTC, but for a specific 
APTC amount of zero dollars. HHS believes that this clarification will 
help ensure that the special enrollment periods at Sec.  155.420(d)(6) 
are available to individuals as intended: Those determined to be newly 
eligible for an APTC amount greater than zero dollars.
    HHS believes that this change will not be relevant to a significant 
number of individuals in Exchanges on the Federal platform, but that 
for the reasons described in preamble, it will be important in light of 
the removal of the upper APTC eligibility limit on household income at 
400 percent of the FPL for taxable years 2021 and 2022 under the 
ARP.\218\ More specifically, this definition makes clear that an 
individual who qualifies for a maximum APTC amount of zero dollars 
would qualify for a special enrollment period per Sec.  
155.420(d)(6)(i) or (ii) if, later in the plan year, they became newly 
eligible for an APTC amount greater than zero dollars based on a 
decrease in their household income. This clarification may be helpful 
for any individual who experiences a decrease in household income that 
makes them newly eligible for an APTC amount of greater than zero 
dollars.
---------------------------------------------------------------------------

    \218\ Public Law 117-2.
---------------------------------------------------------------------------

    As of March 1, 2021 (prior to the passage of the ARP), 
approximately 7.25 million enrollees through Exchanges on the Federal 
platform were APTC eligible, but only 36,000 (or 0.5 percent) were APTC 
eligible with a maximum APTC amount of zero dollars. However, just 
under 119,000 enrollees through Exchanges on the Federal platform 
reported a household income that was greater than 400 percent of the 
FPL. HHS analysis indicated that roughly 35,000 of this greater than 
400 percent FPL population would automatically be considered APTC 
eligible with a maximum APTC amount of zero dollars once the 400 
percent FPL limit on household income had been removed and these 
enrollees were no longer considered APTC ineligible simply by virtue of 
exceeding that limit, doubling the number of potentially impacted 
enrollees through Exchanges on the Federal platform even before to the 
passage of the ARP. Additionally, as of March 1, 2021, HHS identified 
roughly 501,000 enrollees that did not report any household income on 
their application; some of these enrollees may

[[Page 53496]]

also be newly eligible for APTC under the new rules. After passage of 
the ARP and CMS's removal of the 400 percent FPL limit on household 
income regarding qualifying individuals applying for coverage through 
an Exchange on the Federal platform, the number of enrollees who did 
not provide household income decreased slightly, to just under 472,000, 
and the number of enrollees reporting a household income greater than 
400 percent of the FPL has increased to over 191,000. The number of 
enrollees eligible for a maximum APTC amount of zero dollars has also 
increased slightly, to just under 42,000 individuals. More recently, 
the number of enrollees who did not provide household income decreased 
further, to just under 458,000, and the number of enrollees reporting a 
household income greater than 400 percent of the FPL has increased to 
over 280,000. The number of enrollees eligible for a maximum APTC 
amount of zero dollars has also increased, to just over 51,000 
individuals.\219\ As noted in the proposed rule, HHS expects these 
trends continue during 2022 in Exchanges on the Federal platform and 
likely in other State Exchanges, as well, making this clarification 
especially relevant at that time.
---------------------------------------------------------------------------

    \219\ Figures repeated here that were also included in the 
proposed rule were drawn from internal CMS analysis as of late May 
2021, almost 2 months after CMS updated HealthCare.gov to reflect 
the removal of the 400 percent FPL limit on household income on 
applicants applying for coverage with APTC. New figures are from 
internal CMS analysis as of late August 2021.
---------------------------------------------------------------------------

    HHS sought comment on the proposal, including from State Exchanges 
regarding whether this definition of APTC eligibility reflects their 
current implementation of the special enrollment period qualifying 
events per Sec.  155.420(d)(6), and if not, whether there are policy 
concerns about this clarification, or concerns about the burden of 
making related changes to State Exchanges' operations. HHS also sought 
comment on whether any group of individuals who may qualify for one or 
more of the special enrollment periods at Sec.  155.420(d)(6) could be 
harmed by this clarification, and if so, how such harm could be 
mitigated.
    The summary of the comments received and HHS's responses to the 
comment solicitations related to the clarification of special 
enrollment period for enrollees who are newly eligible or newly 
ineligible for advance payments of the premium tax credit (Sec.  
155.420(f)) appears in that preamble section earlier in this rule.
6. FFE and SBE-FP User Fees (Sec.  156.50)
    HHS is finalizing an increased FFE user fee rate of 2.75 percent 
for the 2022 benefit year, which is higher than the 2.25 percent FFE 
user fee rate finalized in part 1 of the 2022 Payment Notice. HHS is 
also increasing the SBE-FP user fee rate to 2.25 percent for the 2022 
benefit year from the 1.75 percent SBE-FP user fee rate finalized in 
part 1 of the 2022 Payment Notice final rule.\220\ Based on HHS's 
estimated costs, enrollment (including anticipated transitions of 
states from the FFE and SBE-FP models to either the SBE-FP or State 
Exchange models), premiums for the 2021 and 2022 benefit years, and 
user fee rates, HHS expects transfers from issuers to Federal 
Government to be increased by approximately $200 million in plan year 
2022.
---------------------------------------------------------------------------

    \220\ 86 FR 6138.
---------------------------------------------------------------------------

    HHS is repealing the 2023 benefit year user fee rate for the 
Exchange DE option in FFE and SBE-FP states, which was finalized in 
part 1 of the 2022 Payment Notice final rule. No state entity has 
approached HHS to consider this option. Since this option has not been 
implemented in any state, HHS does not expect any changes to user fee 
transfers from issuers to the Federal Government due to this 
rescission.
7. Segregation of Funds for Abortion Services (Sec.  156.280)
    HHS is amending the separate billing regulation at Sec.  
156.280(e)(2)(ii) that governs payments for QHPs that provide coverage 
of abortion services for which Federal funds are prohibited. As 
finalized, HHS reverts to codifies prior policy that allowed QHP 
issuers offering coverage of such abortion services flexibility in 
selecting a method to comply with the separate payment requirement in 
section 1303 of the ACA. As finalized, the acceptable methods for 
satisfying the separate payment requirement include sending the policy 
holder a single monthly invoice or bill that separately itemizes the 
premium amount for coverage of such abortion services; sending the 
policy holder a separate monthly bill for these services; or sending 
the policy holder 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.
    The 2019 Program Integrity Rule extensively detailed the 
anticipated financial and operational burdens from the separate billing 
regulation. HHS continues to believe removal of the separate billing 
regulation will remove the significant burden associated with the 
separate billing regulation. Those burdens included costly estimates 
for issuer implementation of the technical build to implement the 
necessary system changes to support separate billing and receipt of 
separate payments, which would require significant changes to current 
billing practice and pose increased challenges for some states and 
issuers given the mid-plan year implementation timeline. These 
activities included planning, assessment, budgeting, contracting, and 
building and testing their systems; as well as one-time changes such as 
billing-related outreach and call center training. The burdens also 
included ongoing costs related to sending a separate bill, such as 
those related to identifying impacted enrollees, ensuring billing 
accuracy, reconciliation, quality assurance, record keeping, document 
retention, support for enrollees who enter grace periods for non-
payments, customer service, outreach, and compliance. Issuers would 
also be expected to assume annual materials costs related to printing 
of and sending the separate bill. HHS anticipated that State Exchanges 
would experience increased burden associated with one-time technical 
changes such as updating online payment portals to accept separate 
payments and updating enrollment materials and notices that reference 
binder payments, and ongoing costs related to increased customer 
service, outreach, and compliance.
    HHS also stated in the 2019 Program Integrity Rule that QHP issuers 
were likely to consider these new costs when setting actuarially sound 
rates and that this would likely lead to higher premiums for enrollees. 
Specifically, HHS estimated there would be an approximate premium 
impact of up to 1.0 percent in plan year 2021 and each year thereafter 
in states with QHP issuers offering coverage of abortion services for 
which Federal funds are prohibited. HHS also estimated that enrollment 
would be slightly reduced in the impacted states as a result of the 
increase to premiums. In plan year 2021 and each year after, HHS 
estimated that APTC amounts would increase up to $146 million when 
premium rates reflect the projected additional administrative and 
operational expense burdens.
    HHS also projected in the 2019 Program Integrity Rule that the FFEs 
would incur additional costs due to one-time technical changes and 
increased call volumes and additional customer service efforts. HHS 
estimated that the FFEs would incur a one-time cost of $750,000 in 2020 
and ongoing annual costs of approximately $400,000 in

[[Page 53497]]

2020, $800,000 in 2021, $600,000 in 2022, and $400,000 in 2023 onwards 
to implement the separate billing policy.
    HHS also anticipated that all impacted State Exchanges would incur 
one-time costs of $9 million in 2020 for necessary technical changes 
such as updating online payment portals to accept separate payments and 
updating enrollment materials. In addition, HHS estimated that State 
Exchanges would incur ongoing annual costs associated with increased 
customer service, outreach, and compliance totaling $2.4 million in 
2020, $4.8 million in 2021, $3.6 million in 2022, and $2.4 million 2023 
onwards for all impacted State Exchanges.
    HHS also anticipated increased costs to consumers for the time 
required to read and understand the separate bills and seek help from 
customer service, and additional time to read and send separate 
payments in subsequent months. For the estimated 2 million policy 
holders in plans offering coverage of abortion services for which 
Federal funds are prohibited, the Program Integrity Rule estimated a 
total annual cost for of 2.9 million hours in 2020 with an associated 
annual cost of $35.5 million. HHS decreased this estimated burden 
slightly in the May 2020 IFC to account for a burden reduction of 
approximately 337,793 hours with an equivalent cost savings of 
approximately $4.2 million. For subsequent years, HHS estimated in the 
2019 Program Integrity Rule that the annual enrollee burden would be 
approximately 2 million hours with an associated annual cost of 
approximately $25.1 million.
    In total, the projected burden to all issuers, states, State 
Exchanges performing premium billing and payment processing, the FFEs, 
and consumers due to the separate billing policy regulation totaled 
$546.1 million in 2020, $232.1 million in 2021, $230.7 million in 2022, 
and $229.3 million annually in 2023 and onwards.
    HHS also believes the consumer confusion and new logistical 
obstacles due to the separate billing regulation would 
disproportionately harm and burden communities that already face 
barriers to accessing care and that any potential coverage losses 
caused by the separate billing regulation could further exacerbate 
existing health disparities and jeopardize health outcomes. Further, 
issuers dropping coverage of abortion services for which Federal funds 
are prohibited as a result of the burden associated with the separate 
billing regulation could transfer out-of-pocket costs for this coverage 
to enrollees, which may disproportionately impact low-income women who 
already face barriers to accessing quality health care.
    Comment: Commenters supporting repeal of the separate billing 
regulation and codification of the prior policy confirmed these 
estimates and expressed support for removal of an onerous billing 
requirement on issuers, states, Exchanges, and consumers. Commenters 
stated that issuers would have had to redesign their billing systems 
for only a small portion of their business in the individual market 
Exchanges. Commenters agreed that the separate billing regulation would 
have imposed expensive IT changes on issuers and states, requiring 
creation of a billing system only for individual Exchanges and not for 
products sold in any other market. Commenters also agreed that the 
separate billing regulation would have required costly changes to other 
issuer operations such as invoice processing, collections, customer 
service support, and other transactions with Exchanges. Commenters also 
agreed there would be added administrative costs of mailing separate 
bills in separate envelopes and collecting separate payments. Some 
commenters noted that issuers have already incurred ongoing costs for 
printing and mailing, additional staffing, and reprograming billing 
systems and that the separate billing regulation already resulted in 
increased burden for issuers and consumers, widespread confusion by 
consumers and other stakeholders, and an increase in frustration and 
confusion around grace periods and terminations. Commenters also 
expressed concern that the highest costs from the separate billing 
regulation would have been concentrated in states that require abortion 
coverage.
    For example, one commenter noted that many of its QHPs that offer 
abortion coverage for which Federal funding is prohibited are in states 
where the State Exchange operationalizes the premium billing and 
collections process on behalf of issuers, while others directly bill 
consumers. This commenter noted that for issuers operating in states 
that operationalize the billing and collections themselves, issuers 
expected that there would be an additional assessment to cover the 
costs to the state, which will ultimately be factored into premiums, as 
the 2019 Program Integrity Rule acknowledged. In other states, 
including those where abortion coverage for which Federal funding is 
prohibited is mandatory, the commenter explained that issuers would 
have been tasked with the complete operational and financial burden. 
This commenter asserted that the separate billing regulation therefore 
conflicted with the common goal among QHPs to keep costs and premiums 
low in order to provide affordable care for low-income and vulnerable 
populations.
    Commenters also asserted that the separate billing regulation 
seemed to serve no discernible purpose beyond the introduction of 
easily-avoidable administrative complexity for health plans and red 
tape for consumers. As such, commenters believe that the separate 
billing regulation would have caused issuers to stop covering abortion 
services for which Federal funding is prohibited in states where such 
coverage is not mandated. Commenters agreed that, if issuers were to 
drop such abortion coverage, the costs would be transferred to 
consumers and would likely disproportionately impact low-income women 
that already face barriers to accessing health care services. 
Commenters also noted that the burden would have been particularly 
significant in states that require individual market QHP coverage of 
abortion because, in such states, every QHP policy holder would have 
received two separate bills and been instructed to pay those bills in 
two separate transactions. Commenters assert that this would have 
caused significant harm to individual market enrollees and that 
implementation costs for issuers would have further harmed consumers by 
causing their premiums to increase. Commenters again agreed that these 
negative impacts, including the widespread consumer confusion that 
could result in an increased number of consumers losing their health 
coverage, would have had a disproportionate impact on the state's most 
vulnerable residents.
    Commenters objecting to repeal of the separate billing regulation 
argued that HHS has not shown how repeal of the separate billing 
regulation and codification of the prior policy will add a financial 
benefit to either consumers or insurers that outweighs the harm caused 
to consumer transparency, conscience protections, and statutory 
compliance with section 1303. Objecting commenters also broadly 
criticized HHS's cost estimates for the burden associated with the 
separate billing regulation, arguing that HHS failed to consider 
important factors, explore sufficient data, and make necessary 
estimates. Objecting commenters also alleged that, regardless of the 
extent of burden associated with the separate billing regulations on 
issuers, states, Exchanges, and consumers, that any such burden is not 
unreasonable, but necessary to ensure compliance with section 1303 of 
the

[[Page 53498]]

ACA. Commenters also asserted that HHS did not provide sufficient 
evidence that certain groups of people are more likely to be impacted 
by the separate billing regulation than others and that, in any event, 
such arguments cannot justify violating the separate billing 
requirement that commenters argue is expressly required under section 
1303 of the ACA.
    Commenters objecting to repeal of the separate billing regulation 
asserted that the cost estimates fail to address or take into account 
recent changes in the law made by the ARP. Commenters stated that 
millions of Americans are newly eligible for zero-dollar coverage under 
ARP but that, in states where all or most ACA individual market plans 
cover abortion for which Federal funding is prohibited, consumers will 
not be able to purchase a zero-dollar premium plan because of section 
1303's funding restrictions. Commenters therefore argued that 
individuals in such situations are already paying, in effect, a 
``separate bill'' for that coverage and would not face additional 
burdens established by the separate billing regulation. Commenters 
raising this objection asked HHS to explain how the Department will 
enforce section 1303's funding restrictions for otherwise zero-premium 
Exchange plans and to provide a state-by-state analysis of the effects 
of the proposed rule.
    Response: HHS agrees with commenters concerns regarding the costs 
and burdens the separate billing policy would have imposed on 
stakeholders. As raised by some commenters, HHS also acknowledges that 
some costs may have already been incurred by issuers and that the 
actual cost savings, especially for one-time IT related costs, may be 
lower than HHS estimates. Unfortunately, HHS does not have an estimate 
of costs already incurred by issuers and can only estimate savings 
going forward. HHS disagrees with comments contesting the validity of 
these burden estimates. Further, as the courts' nationwide invalidation 
of the policy prevented HHS from requiring initial implementation of 
the separate billing regulation, the potential consumer confusion over 
payment obligations, which could have inadvertently led to non-payment 
of enrollee premium and subsequent termination of consumer coverage, 
was also avoided.
    HHS acknowledges that consumers who live in states where premiums 
for Exchange coverage cannot be fully paid for with APTC, such as 
states that require coverage of abortion services for which Federal 
funding is prohibited, will not have access to a silver plan with a 
zero-dollar premium, as further explained in the preamble to Sec.  
155.420(d)(16) of the proposed rule.\221\ However, HHS also notes that 
individual market QHP issuers covering abortion services for which 
Federal funds are prohibited offering coverage to consumers who qualify 
for zero-dollar premium plans are still required to comply with section 
1303 of the ACA and all applicable requirements codified at Sec.  
156.280. HHS also notes that the ARP was enacted in 2021, and 
therefore, the consumer cost and burden estimates in each respective 
rule regarding the separate billing regulation were based on the 
estimated number of all consumers enrolled in QHPs offering coverage 
for abortion and are reflective of the anticipated burden at that time.
---------------------------------------------------------------------------

    \221\ 86 FR 35156.
---------------------------------------------------------------------------

    The 2019 Program Integrity Rule included a detailed account of the 
anticipated financial and operational burdens from the separate billing 
regulation, estimates which were based upon plan and premium data, 
actuarial estimates, public comments from issuers and states directly 
regulated by the separate billing regulation, and consumer enrollment 
figures. Those burdens are discussed in further detail in sections 
III., ``Collection of Information Requirements,'' and IV., ``Regulatory 
Impact Analysis,'' of that rule, which explain from where such 
estimates are derived. As explained in more detail in the preamble to 
Sec.  156.280, HHS also agrees with commenters that the consumer 
confusion and new logistical obstacles from the separate billing 
regulation would disproportionately burden communities who already face 
barriers to accessing care.
    Upon reassessing the separate billing regulation, and in light of 
the legal developments, HHS no longer sees a discernible benefit to 
requiring separate billing that would be sufficient to outweigh its 
burdens. Section 1303 does not specify the method a QHP issuer must use 
to collect the separate payment \222\ and multiple Federal district 
courts have already invalidated the separate billing regulation, 
preventing HHS from requiring its implementation.\223\ HHS is therefore 
finalizing a policy that allows issuers to satisfy the separate payment 
requirement through methods consistent with section 1303 of the ACA; 
that imposes no more burden on issuers, states, Exchanges, and 
consumers than is necessary; and that removes unreasonable barriers to 
obtaining appropriate medical care. HHS anticipates repeal of the 
separate billing regulation will remove the associated burdens to 
issuers, states, Exchanges, and consumers by allowing issuers to 
continue the billing practices and collection methods previously 
adopted and relied upon since publication of the 2016 Payment Notice.
---------------------------------------------------------------------------

    \222\ 84 FR 71674, 71683.
    \223\ Planned Parenthood of Maryland, Inc. v. Azar, No. CV CCB-
20-00361 (D. Md. July 10, 2020); 5 U.S.C. 706; California v. U.S. 
Dep't of Health & Hum. Servs., 473 F. Supp. 3d 992 (N.D. Cal. July 
20, 2020); Washington v. Azar, 461 F. Supp. 3d 1016 (E.D. Wash. 
2020).
---------------------------------------------------------------------------

8. Section 1332 Waivers
    In this rule, the Departments are finalizing modifications to the 
section 1332 waiver implementing regulations, including the adoption of 
new policies and interpretations of the statutory guardrails. The 
Departments also finalize new processes and procedures for amendment 
and extension requests for approved section 1332 waiver plans. As 
outlined in this final rule, the policies and interpretations in this 
rule will supersede and replace prior finalized policies and 
interpretations. The Departments are also modifying these regulations 
to set forth flexibilities in the public notice requirements and post 
award public participation requirements for section 1332 waivers during 
future emergent situations. However, this rule does not alter any of 
the requirements related to state innovation waiver applications, 
compliance and monitoring, or evaluation in a way that would create any 
additional costs or burdens for states submitting proposed waiver 
applications or those states with approved waiver plans that has not 
already been captured in prior burden estimates. As such, the 
Departments are of the view that both states with approved section 1332 
waivers and states that are considering section 1332 waivers would 
continue to comply with the requirements noted earlier without creating 
any additional costs or burdens that have not already been accounted 
for in prior impact estimates of benefits and costs. The Departments 
anticipate that implementing these provisions would not significantly 
change the associated burden currently approved under OMB control 
number: 0938-1389/Expiration date: February 29, 2024. The Departments 
are of the view that section 1332 waivers could help increase state 
innovation, which in turn could lead to more affordable health coverage 
for individuals and families in states that consider implementing a 
section 1332 waiver program.

[[Page 53499]]

9. Regulatory Review Cost Estimation
    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this proposed or final 
rule, HHS should estimate the cost associated with regulatory review. 
Due to the uncertainty involved with accurately quantifying the number 
of entities that will review the rule, HHS assumes that the total 
number of unique commenters on part three of the 2022 Payment Notice 
proposed rule will be the number of reviewers of this final rule. HHS 
acknowledges that this assumption may understate or overstate the costs 
of reviewing this rule. It is possible that not all commenters reviewed 
the proposed rule in detail, and it is also possible that some 
reviewers chose not to comment on the proposed rule. For these reasons, 
HHS believed that the number of commenters on part three of the 2022 
Payment Notice proposed rule, in addition to the number of states and 
issuers in the individual, small and large group markets nationwide, 
would be a fair estimate of the number of reviewers of the final rule. 
HHS welcomed any comments on the approach in estimating the number of 
entities which will review the proposed rule.
    HHS also recognized that different types of entities are in many 
cases affected by mutually exclusive sections of this final rule, and 
therefore, for the purposes of this estimate, HHS assumes that each 
reviewer reads approximately 50 percent of the rule. HHS sought 
comments on this assumption.
    Using the wage information from the Bureau of Labor Statistics 
(BLS) for medical and health service managers (Code 11-9111), HHS 
estimates that the cost of reviewing this rule is $114.24 per hour, 
including overhead and fringe benefits.\224\ Assuming an average 
reading speed, HHS estimates that it would take approximately 1 hour 
for the staff to review half of this final rule. HHS assumes 652 
entities will review this final rule. For each entity that reviews the 
rule, the estimated cost is approximately $114.24 (1 hour x $114.24). 
Therefore, HHS estimates that the total cost of reviewing this 
regulation is approximately $74,588.80 ($114.24 x 652 reviewers).
---------------------------------------------------------------------------

    \224\ https://www.bls.gov/oes/current/oes_nat.htm.
---------------------------------------------------------------------------

D. Regulatory Alternatives Considered

    In developing the policies contained in this final rule, HHS 
considered numerous alternatives to the provisions. Below HHS discusses 
the key regulatory alternatives that HHS considered.
    HHS considered taking no action related to adding a new paragraph 
at Sec.  155.420(d)(16), to provide a monthly special enrollment period 
for qualified individuals or enrollees, or the dependent of a qualified 
individual or enrollee, who are eligible for APTC and whose household 
income is expected to be no greater than 150 percent of the FPL. 
However, HHS believes that many consumers will benefit from having 
additional opportunities to enroll in low-cost Exchange coverage, and 
that those who will be eligible for this special enrollment period and 
who do not enroll during the annual open enrollment period are likely 
to have been unaware of their option to enroll in a plan with no 
monthly premium through the Exchange, after application of APTC. HHS 
also considered whether, if HHS were to provide this special enrollment 
period, whether it should be limited to periods of time when enhanced 
APTC benefits were also available, such as those provided by the 
section 9661 of the ARP. Based on public comments and in order to help 
mitigate adverse selection concerns, HHS is limiting availability of 
this special enrollment period to periods of time when APTC benefits 
are available such that the applicable taxpayers' applicable percentage 
is set at zero, such as during tax years 2021 and 2022, as provided by 
section 9661 of the ARP. Finally, HHS also considered and received 
comment on other strategies to help individuals who may benefit from 
the proposed special enrollment period, some of whom may qualify for 
another existing special enrollment period or could benefit from 
assistance with transitioning between Medicaid and Exchange coverage. 
HHS will continue to consider innovative and thoughtful steps that HHS 
and Exchanges may take to assist consumers with transitions between 
different coverage types and help them to maintain continuous coverage. 
However, HHS is also finalizing the proposed special enrollment period 
to maximize opportunities for consumers to enroll in free or low-cost 
coverage of which they may not be aware.
    HHS considered taking no action related to its clarification, for 
purposes of the special enrollment period rules at Sec.  155.420, that 
a qualified individual, enrollee, or his or her dependent who qualifies 
for APTC because they meet the criteria at Sec.  155.305(f), but who 
qualifies for a maximum APTC amount of zero dollars, is not considered 
APTC eligible. However, HHS is finalizing as proposed because, in 
consideration of generally supportive public comments, HHS continues to 
believe that consumers and other stakeholders will benefit from this 
clarification because it improves transparency of Exchanges' 
implementation of the special enrollment period qualifying events 
provided at Sec.  155.420(d)(6).
    HHS considered restoring user fee rates to their 2021 levels at 3 
percent and 2.5 percent of total monthly premium for issuers in the 
FFEs and SBE-FPs, respectively. However, based on HHS's analysis of 
estimated 2022 enrollment, premiums, and contract costs, HHS determined 
that this increase would be unnecessary to finance the Exchange 
essential functions.
    Regarding the section 1332 waiver provisions in this rule, the 
Departments considered rescinding the 2018 Guidance and the regulatory 
updates and policies finalized in part 1 of the 2022 Payment Notice 
final rule such that the Departments would rely on the statute for 
review and approval of section 1332 waiver applications. The 
Departments did not choose this option because not outlining policies, 
interpretations, and standards to help explain the section 1332 program 
requirements and the Departments' interpretations thereof would lead to 
uncertainty for states considering section 1332 waiver applications. 
The Departments also considered codifying the policies and 
interpretations in the 2015 Guidance in regulation, but determined 
finalizing new policies and interpretations (some of which align with 
previous guidance and rulemaking) was the clearest way to explain the 
requirements for submission and approval of section 1332 waivers.

E. Regulatory Flexibility Act (RFA)

    The Regulatory Flexibility Act, (5 U.S.C. 601, et seq.), requires 
agencies to prepare a final regulatory flexibility analysis to describe 
the impact of the final rule on small entities, unless the head of the 
agency can certify that the rule will not have a significant economic 
impact on a substantial number of small entities. The RFA generally 
defines a ``small entity'' as (1) A proprietary firm meeting the size 
standards of the Small Business Administration (SBA), (2) a not-for-
profit organization that is not dominant in its field, or (3) a small 
government jurisdiction with a population of less than 50,000. States 
and individuals are not included in the definition of ``small entity.'' 
HHS considers a rule to have a significant economic impact on a 
substantial number of small entities if at least 5 percent of small 
entities experience a change in revenues of more than 3 to 5 percent.

[[Page 53500]]

    In this rule, HHS finalizes revised 2022 user fee rates, which will 
impact issuer rate setting. HHS believes that health insurance issuers 
and group health plans would be classified under the North American 
Industry Classification System code 524114 (Direct Health and Medical 
Insurance Carriers). According to SBA size standards, entities with 
average annual receipts of $41.5 million or less would be considered 
small entities for these North American Industry Classification System 
codes. Issuers could possibly be classified in 621491 (HMO Medical 
Centers) and, if this is the case, the SBA size standard would be $35 
million or less.\225\ HHS believes that few, if any, insurance issuers 
underwriting comprehensive health insurance policies (in contrast, for 
example, to travel insurance policies or dental discount policies) fall 
below these size thresholds. Based on data from MLR annual report \226\ 
submissions for the 2019 MLR reporting year, approximately 77 out of 
479 issuers of health insurance coverage nationwide had total premium 
revenue of $41.5 million or less. This estimate may overstate the 
actual number of small health insurance issuers that may be affected, 
since over 67 percent of these small companies belong to larger holding 
groups, and many, if not all, of these small companies are likely to 
have non-health lines of business that will result in their revenues 
exceeding $41.5 million. The user fee rates finalized in this rule are 
lower than the 2021 benefit year user fee rates by 0.25 percent, and 
these new rates are higher than the previously finalized 2022 benefit 
year user fee rates by 0.5 percent. Therefore, these user fee rates 
will only impact premium revenue for these issuers by approximately 
0.25 percent, since no issuer has effectuated payments under the 
previously finalized user fee rates, and this impact is below HHS's 3 
to 5 percent significance threshold stated earlier.
---------------------------------------------------------------------------

    \225\ https://www.sba.gov/document/support-table-size-standards.
    \226\ Available at https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html.
---------------------------------------------------------------------------

    In this final rule, HHS also codifies a new monthly special 
enrollment period for certain APTC-eligible individuals. Because this 
special enrollment period has the potential to introduce new adverse 
selection risk into the individual market, HHS sought comment in the 
RIA on the impact on premiums of this policy in Exchanges where it is 
implemented. HHS estimates that this policy could result in an increase 
in premiums of 0.5 to 2 percent when the enhanced APTC provisions of 
the ARP are in effect, and this impact is below HHS's 3 to 5 percent 
significance threshold stated earlier in this preamble.
    In addition, the other provisions in this rule will either reduce 
costs or have no cost impact. Therefore, HHS does not expect the 
provisions of this rule to affect a substantial number of small 
entities. HHS does not believe that this threshold will be reached by 
the requirements in this final rule. Therefore, the Secretary of HHS 
has determined that this final rule will not have a significant 
economic impact on a substantial number of small entities.
    In addition, section 1102(b) of the Act requires HHS to prepare a 
regulatory impact analysis in certain cases if a rule may have a 
significant impact on the operations of a substantial number of small 
rural hospitals. This analysis must conform to the provisions of 
section 604 of the RFA. For purposes of section 1102(b) of the Act, HHS 
defines a small rural hospital as a hospital that is located outside of 
a metropolitan statistical area and has fewer than 100 beds. While this 
rule is not subject to section 1102 of the Act, HHS has determined that 
this final rule would not affect small rural hospitals, as the policies 
finalized in this rule impact consumer assisters, Exchanges, states, 
issuers, and consumers, but do not directly pertain to providers or 
facilities. Therefore, the Secretary of HHS has determined that this 
rule will not have a significant impact on the operations of a 
substantial number of small rural hospitals.

F. Unfunded Mandates Reform Act (UMRA)

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
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 2021, that 
threshold is approximately $158 million. Although HHS has not been able 
to quantify all costs, HHS expects the combined impact on state, local, 
or Tribal governments and the private sector to be below the threshold.

G. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a 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. In HHS's view, while this final rule does not impose 
substantial direct requirement costs on state and local governments, 
this regulation has federalism implications due to potential direct 
effects on the distribution of power and responsibilities among the 
state and Federal governments relating to determining standards 
relating to health insurance that is offered in the individual and 
small group markets.
    In compliance with the requirement of Executive Order 13132 that 
agencies examine closely any policies that may have federalism 
implications or limit the policy making discretion of the states, HHS 
has engaged in efforts to consult with and work cooperatively with 
affected states, including participating in conference calls with and 
attending conferences of the NAIC, and consulting with state insurance 
officials on an individual basis.
    While developing this rule, HHS attempted to balance the states' 
interests in regulating health insurance issuers with the need to 
ensure market stability. By doing so, HHS complied with the 
requirements of E.O. 13132.
    Because states have flexibility in designing their Exchange and 
Exchange-related programs, state decisions will ultimately influence 
both administrative expenses and overall premiums. States are not 
required to establish an Exchange. For states that elected previously 
to operate an Exchange, those states had the opportunity to use funds 
under Exchange Planning and Establishment Grants to fund the 
development of data. Accordingly, some of the initial cost of creating 
programs was funded by Exchange Planning and Establishment Grants. 
After establishment, Exchanges must be financially self-sustaining, 
with revenue sources at the discretion of the state. A user fee is 
assessed on issuers under all existing Exchange models, including State 
Exchanges where the user fee is assessed by the state, SBE-FPs, and the 
FFEs. HHS solicited comment on the proposed user fee rate of 2.75 
percent of monthly premiums for issuers in FFEs and 2.25 percent of 
monthly premiums for issuers in SBE-FPs.

H. Congressional Review Act

    This final rule is subject to the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801, et seq.), which specifies that before a rule can 
take effect, the Federal agency promulgating the rule shall submit to 
each House of the Congress and to the Comptroller General a report 
containing a copy of the rule along with other specified information, 
and has been transmitted to the Congress and the Comptroller for 
review. This final rule is a ``major rule'' as that term is

[[Page 53501]]

defined in 5 U.S.C. 804(2), because it is likely to result in an annual 
effect on the economy of $100 million or more.

    Chiquita Brooks-LaSure, Administrator of the Centers for 
Medicare & Medicaid Services, approved this document on September 
13, 2021.

List of Subjects

31 CFR Part 33

    Health care, Health insurance, Reporting and recordkeeping 
requirements.

45 CFR Part 147

    Age discrimination, Citizenship and naturalization, Civil rights, 
Health care, Health insurance, Individuals with disabilities, 
Intergovernmental relations, Reporting and recordkeeping requirements, 
Sex discrimination.

45 CFR Part 155

    Administrative practice and procedure, Advertising, Age 
discrimination, Brokers, Civil rights, Citizenship and naturalization, 
Conflict of interests, Consumer protection, Grant programs--health, 
Grants administration, 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, Sex discrimination, State and local governments, 
Technical assistance, Taxes, Women, Youth.

45 CFR Part 156

    Administrative practice and procedure, Advertising, Advisory 
committees, Age discrimination, Alaska, Brokers, Citizenship and 
naturalization, Civil rights, 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, 
Intergovernmental relations, Loan programs--health, Medicaid, 
Organization and functions (Government agencies), Prescription drugs, 
Public assistance programs, Reporting and recordkeeping requirements, 
Sex discrimination, State and local governments, Sunshine Act, 
Technical assistance, Women, Youth.

    For the reasons set forth in the preamble, the Department of the 
Treasury amends 31 CFR part 33 as set forth below:

PART 33--WAIVERS FOR STATE INNOVATION

0
1. The authority citation for part 33 continues to read as follows:

    Authority: Sec. 1332, Pub. L. 111-148, 124 Stat. 119.


0
2. Amend Sec.  33.108 by revising paragraphs (f)(3)(iv) introductory 
text and (f)(3)(iv)(A) through (C) to read as follows:


Sec.  33.108  Application procedures.

* * * * *
    (f) * * *
    (3) * * *
    (iv) The analyses, actuarial certifications, data, assumptions, 
targets, and other information set forth in paragraph (f)(4) of this 
section sufficient to provide the Secretary and the Secretary of Health 
and Human Services, as applicable, with the necessary data to determine 
that the State's proposed waiver satisfies the general requirements for 
approval under section 1332(b)(1) of the Affordable Care Act consistent 
with the provisions of this paragraph (f)(3)(iv):
    (A) As required under section 1332(b)(1)(A) of the Affordable Care 
Act (the comprehensive coverage requirement), will provide coverage 
that is at least as comprehensive as the coverage defined in section 
1302(b) of the Affordable Care Act and offered through Exchanges 
established under the Affordable Care Act as certified by the Office of 
the Actuary of the Centers for Medicare & Medicaid Services based on 
sufficient data from the State and from comparable States about their 
experience with programs created by the Affordable Care Act and the 
provisions of the Affordable Care Act that the State seeks to waive. To 
satisfy the comprehensive coverage requirement, the Secretary and the 
Secretary of Health and Human Services, as applicable, must determine 
that the coverage under the State plan is forecasted to be at least as 
comprehensive overall for residents of the State as coverage absent the 
waiver;
    (B) As required under section 1332(b)(1)(B) of the Affordable Care 
Act (the affordability requirement), will provide coverage and cost 
sharing protections against excessive out-of-pocket spending that are 
at least as affordable as the provisions of Title I of the Affordable 
Care Act would provide. To satisfy the affordability requirement, the 
Secretary and the Secretary of Health and Human Services, as 
applicable, must determine that the coverage under the State plan is 
forecasted to be as affordable overall for State residents as coverage 
absent the waiver;
    (C) As required under section 1332(b)(1)(C) of the Affordable Care 
Act (the scope of coverage requirement), will provide coverage to at 
least a comparable number of its residents as the provisions of Title I 
of the Affordable Care Act would provide. To satisfy the scope of 
coverage requirement, the Secretary and the Secretary of the Health and 
Human Services, as applicable, must determine that the State plan will 
provide coverage to a comparable number of State residents under the 
waiver as would have coverage absent the waiver; and
* * * * *


0
3. Amend Sec.  33.118 by revising the section heading and paragraphs 
(a) and (b)(3) and adding paragraphs (b)(5) and (g) to read as follows:


Sec.  33.118  Modification from the normal public notice requirements 
during an emergent situation.

    (a) The Secretary and the Secretary of Health and Human Services 
may modify, in part, the State public notice requirements under Sec.  
33.112(a)(1), (b), (c), and (d) and the Federal public notice 
procedures under Sec.  33.116(b) to expedite a decision on a proposed 
section 1332 waiver request during an emergent situation, when a delay 
would undermine or compromise the purpose of the proposed waiver 
request and be contrary to the interests of consumers. These 
flexibilities are limited to emergent situations, including natural 
disasters; public health emergencies; or other emergent situations that 
threaten consumers' access to comprehensive coverage, consumers' access 
to health care, or human life.
    (b) * * *
    (3) The State must, as applicable, detail in its request for a 
modification from State-level notice procedures under paragraph (a) of 
this section the justification for the request as it relates to the 
emergent situation and the alternative public notice procedures it 
proposes to implement at the State level, including public hearings, 
that are designed to provide the greatest opportunity and level of 
meaningful public input from impacted stakeholders that is practicable 
given the emergency circumstances underlying the State's request for a 
modification.
* * * * *
    (5) The State must explain in its request for a modification from 
State-level notice procedures under paragraph (a) of this section how 
the emergent circumstances underlying its request

[[Page 53502]]

results from a natural disaster; public health emergency; or other 
emergent situations that threaten consumers' access to comprehensive 
coverage, consumers' access to health care, or human life could not 
reasonably have been foreseen and how a delay would undermine or 
compromise the purpose of the waiver and be contrary to the interests 
of consumers.
* * * * *
    (g) The Departments will consider circumstances to be emergent when 
they could not have been reasonably foreseen. The Departments will 
assess ``reasonable foreseeability'' based on the specific issues that 
a section 1332 waiver proposes to address and other relevant factors, 
and will not make this assessment based solely on the number of days a 
State may have been aware of such issues.


0
4. Amend Sec.  33.120 by revising paragraphs (a) and (c)(2)(i) and 
adding paragraphs (c)(2)(ii)(F) and (c)(2)(iii) to read as follows:


Sec.  33.120  Monitoring and compliance.

    (a) General. (1) Following the issuance of a final decision to 
approve a section 1332 waiver by the Secretary and the Secretary of 
Health and Human Services, as applicable, a State must comply with all 
applicable Federal laws and regulations, unless expressly waived. A 
State must, within the timeframes specified in law and regulation come 
into compliance with any changes in Federal law and regulation 
affecting section 1332 waivers, unless the provision being changed is 
expressly waived.
    (2) The Secretary and the Secretary of Health and Human Services 
will examine compliance with Federal and regulatory requirements 
consistent with Sec.  155.1308(f)(3)(iv) when conducting implementation 
reviews under paragraph (b) of this section.
* * * * *
    (c) * * *
    (2) * * *
    (i) The Secretary and the Secretary of Health and Human Services 
may modify, in part, State post award requirements under this paragraph 
(c)(2) for an approved section 1332 waiver request during an emergent 
situation, when the application of the post award public notice 
requirements would be contrary to the interests of consumers. These 
flexibilities are limited to emergent situations, including natural 
disasters; public health emergencies; or other emergent situations that 
threaten consumers' access to comprehensive coverage, consumers' access 
to health care, or human life.
    (ii) * * *
    (F) The State must explain in its request for modification under 
this paragraph (c)(2) how the emergent circumstances underlying its 
request results from a natural disaster; public health emergency; or 
other emergent situations that threaten consumers' access to 
comprehensive coverage, consumers' access to health care, or human life 
and could not reasonably have been foreseen and how the application of 
the post-award public notice requirements would be contrary to the 
interests of consumers.
    (iii) The Secretary and the Secretary of Health and Human Services 
will consider circumstances to be emergent when they could not have 
been reasonably foreseen. The Secretary and the Secretary of Health and 
Human Services will assess ``reasonable foreseeability'' based on the 
specific issues that a section 1332 waiver proposes to address and 
other relevant factors, and will not make this assessment based solely 
on the number of days a State may have been aware of such issues.
* * * * *


0
5. Section 33.122 is added to read as follows:


Sec.  33.122  Pass-through funding for approved waivers.

    (a) Pass-through funding. With respect to a State's approved 
section 1332 waiver, under which, due to the structure of the approved 
State waiver plan, individuals and small employers in the State would 
not qualify for or would qualify for a reduced amount of premium tax 
credit under section 36B of the Internal Revenue Code, small business 
tax credit under section 45R of the Internal Revenue Code, or cost-
sharing reductions under ACA part I of subtitle E for which they would 
otherwise be eligible, the Secretary and the Secretary of the Health 
and Human Services shall provide for an alternative means by which the 
aggregate amount of such credits or reductions that would have been 
paid on behalf of participants in the Exchanges had the State not 
received such waiver shall be paid to the State for purposes of 
implementing the approved State waiver plan. Such amount shall be 
determined annually by the Secretary and the Secretary of Health and 
Human Services, taking into consideration the experience of other 
States with respect to participation in an Exchange and credits and 
reductions provided under such provisions to residents of the other 
States. This amount can be updated to reflect applicable changes in 
Federal or State law.
    (b) [Reserved]

0
6. Amend Sec.  33.128 by revising paragraph (a) to read as follows:


Sec.  33.128  Periodic evaluation requirements.

    (a) The Secretary and the Secretary of Health and Human Services, 
as applicable, shall periodically evaluate the implementation of a 
program under a section 1332 waiver consistent with Sec.  
33.108(f)(3)(iv) and any terms and conditions governing the section 
1332 waiver.
* * * * *


0
7. Section 33.130 is added to read as follows:


Sec.  33.130  Waiver amendment.

    (a) Amendment to an approved section 1332 waiver. A State may 
request an amendment to an approved section 1332 waiver from the 
Secretary and the Secretary of Health and Human Services. A section 
1332 waiver amendment is considered a change to an approved section 
1332 waiver plan that is not otherwise allowable under the terms and 
conditions of an approved waiver, a change that could impact any of the 
section 1332 statutory guardrails or a change to the program design for 
an approved waiver. A State is not authorized to implement any aspect 
of the proposed amendment without prior approval by the Secretary and 
the Secretary of Health and Human Services.
    (b) [Reserved]

0
8. Section 33.132 is added to read as follows:


Sec.  33.132  Waiver extension.

    (a) Extension. A State may request continuation of an approved 
section 1332 waiver, and such request shall be deemed granted unless 
the Secretary and the Secretary of Health and Human Services, within 90 
days after the date of submission of a complete waiver extension 
request to the Secretary and the Secretary of Health and Human 
Services, either denies such request in writing or informs the State in 
writing with respect to any additional information that is needed in 
order to make a final determination with respect to the request.
    (b) [Reserved]

    For the reasons set forth in the preamble, under the authority at 5 
U.S.C. 301, the Department of Health and Human Services amends 45 CFR 
subtitle A, subchapter B, as set forth below.

[[Page 53503]]

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

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

    Authority:  42 U.S.C. 300gg through 300gg-63, 300gg-91, and 
300gg-92, as amended, and section 3203, Pub. L. 116-136, 134 Stat. 
281.


0
10. Amend Sec.  147.104 by revising paragraphs (b)(2)(i)(E) and (F) and 
adding paragraph (b)(2)(i)(G) to read as follows:


Sec.  147.104  Guaranteed availability of coverage.

* * * * *
    (b) * * *
    (2) * * *
    (i) * * *
    (E) Section 155.420(d)(12) of this subchapter (concerning plan and 
benefit display errors);
    (F) Section 155.420(d)(13) of this subchapter (concerning 
eligibility for insurance affordability programs or enrollment in the 
Exchange); and
    (G) Section 155.420(d)(16) of this subchapter (concerning 
eligibility for advance payments of the premium tax credit and 
household income, as defined in 26 CFR 1.36B-1(e), that is expected to 
be no greater than 150 percent of the Federal poverty level).
* * * * *

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

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

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


0
12. Amend Sec.  155.210 by revising paragraph (e)(9) to read as 
follows:


Sec.  155.210  Navigator program standards.

* * * * *
    (e) * * *
    (9) The Exchange may require or authorize Navigators to provide 
information and assistance with any of the following topics. In 
federally-facilitated Exchanges, FY 2021 Navigator grantees will be 
required to perform these duties beginning with the Navigator grant 
funding awarded in FY 2022 for the second 12-month budget period of the 
36-month period of performance. Beginning with Navigator grants awarded 
in 2022, including non-competing continuation awards, Navigators are 
required to provide information and assistance with all of the 
following topics:
    (i) Understanding the process of filing Exchange eligibility 
appeals;
    (ii) Understanding and applying for exemptions from the requirement 
to maintain minimum essential coverage granted through the Exchange;
    (iii) The Exchange-related components of the premium tax credit 
reconciliation process, and understanding the availability of IRS 
resources on this process;
    (iv) Understanding basic concepts and rights related to health 
coverage and how to use it; and
    (v) Referrals to licensed tax advisers, tax preparers, or other 
resources for assistance with tax preparation and tax advice related to 
consumer questions about the Exchange application and enrollment 
process, and premium tax credit reconciliations.
* * * * *


Sec.  155.221  [Amended]

0
13. Amend Sec.  155.221 by removing paragraph (j).

0
14. Amend Sec.  155.410 by--
0
a. Revising paragraph (e)(3);
0
b. Adding paragraph (e)(4);
0
c. Revising paragraph (f)(2) introductory text; and
0
d. Adding paragraph (f)(3).
    The revisions and additions read as follows:


Sec.  155.410  Initial and annual open enrollment periods.

* * * * *
    (e) * * *
    (3) For the benefit years beginning on January 1, 2018 through 
January 1, 2021, the annual open enrollment period begins on November 1 
and extends through December 15 of the calendar year preceding the 
benefit year.
    (4) For the benefit years beginning on or after January 1, 2022--
    (i) Subject to paragraph (e)(4)(ii) of this section, the annual 
open enrollment period begins on November 1 of the calendar year 
preceding the benefit year and extends through January 15 of the 
benefit year.
    (ii) For State Exchanges not utilizing the Federal platform, for 
the benefit years beginning on or after January 1, 2022, an alternative 
annual open enrollment period end date may be adopted, provided the end 
date is no earlier than December 15 of the calendar year preceding the 
benefit year.
    (f) * * *
    (2) For the benefit years beginning on January 1, 2016 through 
January 1, 2021, the Exchange must ensure coverage is effective--
* * * * *
    (3) For benefit years beginning on or after January 1, 2022, the 
Exchange must ensure that coverage is effective--
    (i) Subject to paragraph (f)(3)(ii) of this section--
    (A) January 1, for QHP selections received by the Exchange on or 
before December 15 of the calendar year preceding the benefit year.
    (B) February 1, for QHP selections received by the Exchange from 
December 16 of the calendar year preceding the benefit year through 
January 15 of the benefit year.
    (C) The first of the following month, for QHP selections received 
by the 15 of a month after January, if applicable under paragraph 
(e)(4)(ii) of this section.
    (D) The first of the second following month, for plan selections 
received between the 16th and the end of a month, beginning January 16 
of the benefit year, if applicable under paragraph (e)(4)(ii) of this 
section.
    (ii) For State Exchanges not utilizing the Federal platform, for a 
QHP selection received by the Exchange during the open enrollment 
period for which effective dates specified in paragraph (f)(3)(i) of 
this section would apply, the Exchange may provide a coverage effective 
date that is earlier than specified in such paragraph.
* * * * *

0
15. Amend Sec.  155.420--
0
a. In paragraph (a)(4)(ii)(B), by removing the phrase ``enrollment; 
or'' and adding in its place ``enrollment;'';
0
b. By revising paragraph (a)(4)(ii)(C);
0
c. By adding paragraph (a)(4)(ii)(D);
0
d. By revising paragraph (a)(4)(iii) introductory text; and
0
e. By adding paragraphs (b)(2)(vii), (d)(16), and (f).
    The revision and additions read as follows:


Sec.  155.420  Special enrollment periods.

    (a) * * *
    (4) * * *
    (ii) * * *
    (C) No later than January 1, 2024, if an enrollee or his or her 
dependents become newly ineligible for advance payments of the premium 
tax credit in accordance with paragraph (d)(6)(i) or (ii) of this 
section, the Exchange must allow the enrollee and his or her dependents 
to change to a QHP of any metal level, if they elect to change their 
QHP enrollment; or
    (D) If an enrollee or his or her enrolled dependents qualify for a 
special enrollment period in accordance with paragraph (d)(16) of this 
section, the Exchange must allow the enrollee and his or her enrolled 
dependents to change to any available silver-level QHP

[[Page 53504]]

if they elect to change their QHP enrollment. If a qualified individual 
or a dependent who is not an enrollee qualifies for a special 
enrollment period in accordance with paragraph (d)(16) of this section 
and has one or more household members who are enrollees, the Exchange 
must allow the enrollee to add the newly enrolling household member to 
his or her current QHP; or, to change to a silver-level QHP and add the 
newly enrolling household member to this silver-level QHP; or, to 
change to a silver level QHP and enroll the newly enrolling qualified 
individual or dependent in a separate QHP;
    (iii) For the other triggering events specified in paragraph (d) of 
this section, except for paragraphs (d)(2)(i), (d)(4), and (d)(6)(i) 
and (ii) of this section for becoming newly eligible or ineligible for 
CSRs and paragraphs (d)(8), (9), (10), (12), (14), and (16) of this 
section:
* * * * *
    (b) * * *
    (2) * * *
    (vii) If a qualified individual or enrollee, or the dependent of a 
qualified individual or enrollee, who is eligible for advance payments 
of the premium tax credit, and whose household income, as defined in 26 
CFR 1.36B-1(e), is expected to be no greater than 150 percent of the 
Federal poverty level, enrolls in a QHP or changes from one QHP to 
another one time per month in accordance with paragraph (d)(16) of this 
section, the Exchange must ensure that coverage is effective in 
accordance with paragraph (b)(1) of this section or on the first day of 
the month following plan selection, at the option of the Exchange.
* * * * *
    (d) * * *
    (16) At the option of the Exchange, a qualified individual or 
enrollee, or the dependent of a qualified individual or enrollee, who 
is eligible for advance payments of the premium tax credit, and whose 
household income, as defined in 26 CFR 1.36B-1(e), is expected to be no 
greater than 150 percent of the Federal poverty level, may enroll in a 
QHP or change from one QHP to another one time per month during periods 
of time when the applicable taxpayer's applicable percentage for 
purposes of calculating the premium assistance amount, as defined in 
section 36B(b)(3)(A) of the Internal Revenue Code, is set at zero.
* * * * *
    (f) For purposes of this section, references to eligibility for 
advance payments of the premium tax credit refer to being eligible for 
such advance payments in an amount greater than zero dollars per month. 
References to ineligibility for advance payments of the premium tax 
credit refer to being ineligible for such payments or being eligible 
for such payments but being eligible for a maximum of zero dollars per 
month of such payments.

0
16. Amend Sec.  155.1308 by revising paragraphs (f)(3)(iv) introductory 
text and (f)(3)(iv)(A) through (C) to read as follows:


Sec.  155.1308  Application procedures.

* * * * *
    (f) * * *
    (3) * * *
    (iv) The analyses, actuarial certifications, data, assumptions, 
targets, and other information set forth in paragraph (f)(4) of this 
section sufficient to provide the Secretary and the Secretary of the 
Treasury, as applicable, with the necessary data to determine that the 
State's proposed waiver satisfies the general requirements for approval 
under section 1332(b)(1) of the Affordable Care Act consistent with the 
provisions of this paragraph;
    (A) As required under section 1332(b)(1)(A) of the Affordable Care 
Act (the comprehensive coverage requirement), will provide coverage 
that is at least as comprehensive as the coverage defined in section 
1302(b) of the Affordable Care Act and offered through Exchanges 
established under the Affordable Care Act as certified by the Office of 
the Actuary of the Centers for Medicare & Medicaid Services based on 
sufficient data from the State and from comparable States about their 
experience with programs created by the Affordable Care Act and the 
provisions of the Affordable Care Act that the State seeks to waive. To 
satisfy the comprehensive coverage requirement, the Secretary and the 
Secretary of the Treasury, as applicable, must determine that the 
coverage under the State plan is forecasted to be at least as 
comprehensive overall for residents of the State as coverage absent the 
waiver;
    (B) As required under section 1332(b)(1)(B) of the Affordable Care 
Act (the affordability requirement), will provide coverage and cost 
sharing protections against excessive out-of-pocket spending that are 
at least as affordable as the provisions of Title I of the Affordable 
Care Act would provide. To satisfy the affordability requirement, the 
Secretary and the Secretary of the Treasury, as applicable, must 
determine that the coverage under the State plan is forecasted to be at 
least as affordable overall for State residents as coverage absent the 
waiver;
    (C) As required under section 1332(b)(1)(C) of the Affordable Care 
Act (the scope of coverage requirement), will provide coverage to at 
least a comparable number of its residents as the provisions of Title I 
of the Affordable Care Act would provide. To satisfy the scope of 
coverage requirement, the Secretary and the Secretary of the Treasury, 
as applicable, must determine that the State plan will provide coverage 
to a comparable number of State residents under the waiver as would 
have coverage absent the waiver; and
* * * * *

0
17. Amend Sec.  155.1318 by revising the section heading and paragraphs 
(a) and (b)(3) and adding paragraphs (b)(5) and (g) to read as follows:


Sec.  155.1318  Modification from the normal public notice requirements 
during an emergent situation.

    (a) The Secretary and the Secretary of the Treasury may modify, in 
part, the State public notice requirements under Sec.  155.1312(a)(1), 
(b), (c), and (d) and the Federal public notice procedures under Sec.  
155.1316(b) to expedite a decision on a proposed section 1332 waiver 
request during an emergent situation, when a delay would undermine or 
compromise the purpose of the proposed waiver request and be contrary 
to the interests of consumers. These flexibilities are limited to 
emergent situations, including natural disasters; public health 
emergencies; or other emergent situations that threaten consumers' 
access to comprehensive coverage, consumers' access to health care, or 
human life.
    (b) * * *
    (3) The State must, as applicable, detail in its request for a 
modification from State-level notice procedures under paragraph (a) of 
this section the justification for the request as it relates to the 
emergent situation and the alternative public notice procedures it 
proposes to implement at the State level, including public hearings, 
that are designed to provide the greatest opportunity and level of 
meaningful public input from impacted stakeholders that is practicable 
given the emergency circumstances underlying the State's request for a 
modification.
* * * * *
    (5) The State must explain in its request for a modification from 
State-level notice procedures under paragraph (a) of this section how 
the emergent circumstances underlying its request result from a natural 
disaster; public health emergency; or other emergent

[[Page 53505]]

situations that threaten consumers' access to comprehensive coverage, 
consumers' access to health care, or human life could not reasonably 
have been foreseen and how a delay would undermine or compromise the 
purpose of the waiver and be contrary to the interests of consumers.
* * * * *
    (g) The Secretary and the Secretary of the Treasury will consider 
circumstances to be emergent when they could not have been reasonably 
foreseen. The Secretary and the Secretary of the Treasury will assess 
``reasonable foreseeability'' based on the specific issues that a 
section 1332 waiver proposes to address and other relevant factors, and 
will not make this assessment based solely on the number of days a 
State may have been aware of such issues.

0
18. Amend Sec.  155.1320 by--
0
a. Revising paragraph (a);
0
b. Revising the subject heading for paragraph (c)(2);
0
c. Revising paragraph (c)(2)(i); and
0
d. Adding paragraphs (c)(2)(ii)(F) and (c)(2)(iii).
    The revisions and additions read as follows:


Sec.  155.1320  Monitoring and compliance.

    (a) General. (1) Following the issuance of a final decision to 
approve a section 1332 waiver by the Secretary and the Secretary of the 
Treasury, as applicable, a State must comply with all applicable 
Federal laws and regulations, unless expressly waived. A State must, 
within the timeframes specified in law and regulation come into 
compliance with any changes in Federal law and regulation affecting 
section 1332 waivers, unless the provision being changed is expressly 
waived.
    (2) The Secretary and the Secretary of the Treasury will examine 
compliance with Federal and regulatory requirements consistent with 
Sec.  155.1308(f)(3)(iv) when conducting implementation reviews under 
paragraph (b) of this section.
* * * * *
    (c) * * *
    (2) Modification from the normal post award requirements during an 
emergent situation. (i) The Secretary and the Secretary of the Treasury 
may modify, in part, State post award requirements under this paragraph 
(c)(2) for an approved section 1332 waiver request during an emergent 
situation when the application of the post award public notice 
requirements would be contrary to the interests of consumers. These 
flexibilities are limited to emergent situations, including natural 
disasters; public health emergencies; or other emergent situations that 
threaten consumers' access to comprehensive coverage, consumers' access 
to health care, or human life.
    (ii) * * *
    (F) The State must explain in its request for a modification under 
paragraph (c)(2) of this section how the emergent circumstances 
underlying its request results from a natural disaster; public health 
emergency; or other emergent situations that threaten consumers' access 
to comprehensive coverage, consumers' access to health care, or human 
life and could not reasonably have been foreseen and how the 
application of the post award public notice requirements would be 
contrary to the interests of consumers.
    (iii) The Secretary and the Secretary of the Treasury will consider 
circumstances to be emergent when they could not have been reasonably 
foreseen. The Secretary and the Secretary of the Treasury will assess 
``reasonable foreseeability'' based on the specific issues that a 
section 1332 waiver proposes to address and other relevant factors, and 
will not make this assessment based solely on the number of days a 
State may have been aware of such issues.
* * * * *

0
19. Section 155.1322 is added to subpart N to read as follows:


Sec.  155.1322  Pass-through funding for approved waivers.

    (a) Pass-through funding. With respect to a State's approved 
section 1332 waiver, under which, due to the structure of the approved 
State waiver plan, individuals and small employers in the State would 
not qualify for or would qualify for a reduced amount of premium tax 
credit under section 36B of the Internal Revenue Code, small business 
tax credit under section 45R of the Internal Revenue Code, or cost-
sharing reductions under ACA part I of subtitle E for which they would 
otherwise be eligible, the Secretary and the Secretary of the Treasury 
shall provide for an alternative means by which the aggregate amount of 
such credits or reductions that would have been paid on behalf of 
participants in the Exchanges had the State not received such waiver 
shall be paid to the State for purposes of implementing the approved 
State waiver plan. Such amount shall be determined annually by the 
Secretary and the Secretary of the Treasury, taking into consideration 
the experience of other States with respect to participation in an 
Exchange and credits and reductions provided under such provisions to 
residents of the other States. This amount can be updated to reflect 
applicable changes in Federal or State law.
    (b) [Reserved]

0
20. Amend Sec.  155.1328 by revising paragraph (a) to read as follows:


Sec.  155.1328  Periodic evaluation requirements.

    (a) The Secretary and the Secretary of the Treasury, as applicable, 
shall periodically evaluate the implementation of a program under a 
section 1332 waiver consistent with Sec.  155.1308(f)(3)(iv) and any 
terms and conditions governing the section 1332 waiver.
* * * * *

0
21. Section 155.1330 is added to subpart N to read as follows:


Sec.  155.1330  Waiver amendment.

    (a) Amendment to an approved section 1332 waiver. A State may 
request an amendment to an approved section 1332 waiver from the 
Secretary and the Secretary of the Treasury. A section 1332 waiver 
amendment is considered a change to a section 1332 waiver plan that is 
not otherwise allowable under the terms and conditions of an approved 
waiver, a change that could impact any of the section 1332 statutory 
guardrails or a change to the program design for an approved waiver. A 
State is not authorized to implement any aspect of the proposed 
amendment without prior approval by the Secretary and the Secretary of 
the Treasury.
    (b) [Reserved]

0
22. Section 155.1332 is added to subpart N to read as follows:


Sec.  155.1332  Waiver extension.

    (a) Extension. A State may request continuation of an approved 
section 1332 waiver, and such request shall be deemed granted unless 
the Secretary and the Secretary of the Treasury, within 90 days after 
the date of submission of a complete waiver extension request to the 
Secretary and the Secretary of the Treasury, either denies such request 
in writing or informs the State in writing with respect to any 
additional information that is needed in order to make a final 
determination with respect to the request.
    (b) [Reserved]

[[Page 53506]]

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

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

    Authority: 42 U.S.C. 18021-18024, 18031-18032, 18041-18042, 
18044, 18054, 18061, 18063, 18071, 18082, and 26 U.S.C. 36B.


0
24. Amend Sec.  156.115 by revising paragraph (a)(3) to read as 
follows:


Sec.  156.115  Provision of EHB.

    (a) * * *
    (3) With respect to the mental health and substance use disorder 
services, including behavioral health treatment services, required 
under Sec.  156.110(a)(5), comply with the requirements under section 
2726 of the Public Health Service Act and its implementing regulations.
* * * * *

0
25. Amend Sec.  156.280 by revising the section heading and paragraph 
(e)(2)(ii) to read as follows:


Sec.  156.280  Segregation of funds for abortion services.

* * * * *
    (e) * * *
    (2) * * *
    (ii) An issuer will be considered to satisfy the obligation in 
paragraph (e)(2)(i) of this section if it sends the policy holder a 
single monthly invoice or bill that separately itemizes the premium 
amount for coverage of abortion services described in paragraph (d)(1) 
of this section; sends the policy holder a separate monthly bill for 
these services; or sends the policy holder 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 specifies the charge.
* * * * *

Xavier Becerra,
Secretary, Department of Health and Human Services.
Mark J. Mazur,
Deputy Assistant Secretary (Tax Policy), Department of the Treasury.
[FR Doc. 2021-20509 Filed 9-20-21; 4:15 pm]
BILLING CODE 4120-28-P