[Federal Register Volume 87, Number 3 (Wednesday, January 5, 2022)]
[Proposed Rules]
[Pages 584-728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-28317]



[[Page 583]]

Vol. 87

Wednesday,

No. 3

January 5, 2022

Part III





Department of Health and Human Services





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45 CFR Parts 144, 147, 153, et al.





Patient Protection and Affordable Care Act; HHS Notice of Benefit and 
Payment Parameters for 2023; Proposed Rule

  Federal Register / Vol. 87 , No. 3 / Wednesday, January 5, 2022 / 
Proposed Rules  

[[Page 584]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 144, 147, 153, 155, 156 and 158

[CMS-9911-P]
RIN 0938-AU65


Patient Protection and Affordable Care Act; HHS Notice of Benefit 
and Payment Parameters for 2023

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule includes proposed payment parameters and 
provisions related to the risk adjustment and risk adjustment data 
validation programs, as well as proposed 2023 user fee rates for 
issuers offering qualified health plans (QHPs) through federally-
facilitated Exchanges and State-based Exchanges on the Federal 
platform. This proposed rule also proposes requirements related to 
prohibiting discrimination based on sexual orientation and gender 
identity; guaranteed availability; the offering of QHP standardized 
options through Exchanges on the Federal platform; requirements for 
agents, brokers, web-brokers, and issuers assisting consumers with 
enrollment through Exchanges that use the Federal platform; 
verification standards related to employer sponsored coverage; Exchange 
eligibility determinations during a benefit year; special enrollment 
period verification; cost-sharing requirements; Essential Health 
Benefits (EHBs); Actuarial Value (AV); QHP issuer quality improvement 
strategies; accounting for quality improvement activity (QIA) expenses 
and provider incentives for medical loss ratio (MLR) reporting and 
rebate calculation purposes; re-enrollment, and requirements related to 
a new State Exchange improper payment measurement program. This 
proposed rule also seeks comment on how HHS can advance health equity 
through QHP certification standards and otherwise in the individual and 
group health insurance markets, and how HHS might address plan choice 
overload in the Exchanges.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on January 27, 2022.

ADDRESSES: In commenting, please refer to file code CMS-9911-P.
    You may submit comments in one of three ways (please choose only 
one of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-9911-P, P.O. Box 8016, 
Baltimore, MD 21244-8016.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-9911-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: 
    Jeff Wu, (301) 492-4305, Rogelyn McLean, (301) 492-4229, Grace 
Bristol, (410) 786-8437, Sara Rosta, (301) 492-4223, or Kaye Wells, 
(301) 492-4301, for general information.
    Cam Moultrie Clemmons, (206) 615-2338, or Anthony Galace, (301) 
492-4400, for matters related to past-due premiums.
    Allison Yadsko, (410) 786-1740, John Barfield, (301) 492-4433, or 
Jacqueline Wilson, (301) 492-4286 for matters related to risk 
adjustment or risk adjustment data validation (HHS-RADV).
    Aaron Franz, (410) 786- 8027, or John Barfield, (301) 492-4433, for 
matters related to federally-facilitated Exchange (FFE) and State-based 
Exchange on the Federal platform (SBE-FP) user fees.
    Nora Simmons, (410) 786-1981, for matters related to advance 
payment of the premium tax credit (APTC) proration.
    Aaron Franz, (410) 786- 8027, or Hi'ilei Haru, 301-492-4363, for 
matters related to cost-sharing reduction reconciliation.
    Josh Van Drei, (410) 786-1659, for matters related to actuarial 
value (AV).
    Becca Bucchieri, (301) 492-4341, for matters related to essential 
health benefit (EHB)-benchmark plans and defrayal of state-required 
benefits.
    Marisa Beatley, (301) 492-4307, for matters related to employer 
sponsored coverage verification.
    Susan Kalmus, (301) 492-4275, for matters related to agent, broker, 
and web-broker guidelines. Dena Nelson, 240-401-3535, or Carly Rhyne, 
301-492-4188, for matters related to income calculation for eligibility 
for advance payments of premium tax credits.
    Katherine Bentley, (301) 492-5209, or Ariel Kennedy, (301) 492-
4306, for matters related to special enrollment period verification.
    Leigha Basini, (301) 492-4380, for matters related to 
nondiscrimination based on sexual orientation and gender identity; and 
EHB nondiscrimination.
    Christina Whitefield, (301) 492-4172, for matters related to the 
medical loss ratio (MLR) program.
    Nidhi Singh Shah, (301) 492-5110, for matters related to quality 
improvement strategy standards for Exchanges.
    Erika Ourisman, (301) 492-4170, for matters related to downstream 
and delegated entities.
    Nikolas Berkobien, (301) 492-4400, or Leigha Basini, (301) 492-4380 
for matters related to standardized options.
    Erika Melman, (301) 492-4348, Deborah Hunter, (443) 386-3651, or 
Whitney Allen, (667) 290-8748, for matters related to network adequacy 
and essential community providers.
    Linus Bicker, (803) 931-6185, for matters related to State Exchange 
improper payment measurement.
    Phuong Van, (202) 570-5594, for matters related to advancing health 
equity through qualified health plans (QHPs).
    Angelica Torres-Reid, (410) 786-1721, and Robert Yates, (301) 492-
5151, for matters related to State Exchange general program integrity 
and oversight requirements.
    Zarah Ghiasuddin, (301) 492-4308, for matters related to re-
enrollment in the Exchanges.

SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments 
received before the close of the comment period are available for 
viewing by the public, including any personally identifiable or 
confidential business information that is included in a comment. We 
post comments received before the close of the comment period on the 
following website as soon as possible after they have been received: 
http://www.regulations.gov. Follow the search instructions on that 
website to view public comments. CMS will not post on Regulations.gov 
public comments that make threats to individuals or institutions or 
suggest that the individual will take actions to harm the individual. 
CMS continues to encourage individuals not to submit duplicative 
comments. We will post acceptable comments from multiple unique 
commenters even if the content is identical or nearly identical to 
other comments.

[[Page 585]]

Table of Contents

I. Executive Summary
II. Background
    A. Legislative and Regulatory Overview
    B. Stakeholder Consultation and Input
    C. Structure of Proposed Rule
III. Provisions of the Proposed HHS Notice of Benefit and Payment 
Parameters for 2023
    A. Part 144--Requirements Relating to Health Insurance Coverage
    B. Part 147--Health Insurance Reform Requirements for the Group 
and Individual Health Insurance Markets
    C. Part 153--Standards Related to Reinsurance, Risk Corridors, 
and Risk Adjustment
    D. Part 155--Exchange Establishment Standards and Other Related 
Standards Under the Affordable Care Act
    E. Part 156--Health Insurance Issuer Standards Under the 
Affordable Care Act, Including Standards Related to Exchanges
    F. Part 158--Issuer Use of Premium Revenue: Reporting and Rebate 
Requirements
    G. Solicitation of Comments Regarding Health Equity and 
Qualified Health Plans
IV. Collection of Information Requirements
    A. Wage Estimates
    B. ICRs Regarding State Flexibility for Risk Adjustment (Sec.  
153.320)
    C. ICRs Regarding Distributed Data and Risk Adjustment Data 
Submission Requirements (Sec. Sec.  153.610, 153.700, and 153.710)
    D. ICRs Regarding Ability of States To Permit Agents and Brokers 
and Web-brokers To Assist Qualified Individuals, Qualified 
Employers, or Qualified Employees Enrolling in QHPs (Sec.  155.220)
    E. ICRs Regarding Verification of Eligibility for Special 
Enrollment Periods (Sec.  155.420)
    F. ICRs Regarding General Program Integrity and Oversight 
Requirements (Sec.  155.1200)
    G. ICRs Regarding State Exchange Improper Payment Measurement 
program (Sec. Sec.  155.1500-155.1540)
    H. ICRs Regarding State Selection of EHB-Benchmark Plan for Plan 
Years Beginning on or After January 1, 2020 (Sec.  156.111)
    I. ICR Regarding Differential Display of Standardized Options on 
the websites of Web-Brokers (Sec.  155.220) and QHP Issuers (Sec.  
156.265)
    J. ICRs Regarding Network Adequacy and Essential Community 
Providers (Sec. Sec.  156.230 and 156.235)
    K. ICRs Regarding Payment for Cost-Sharing Reductions (Sec.  
156.430)
    L. ICRs Regarding Quality Improvement Strategy (Sec.  156.1130)
    M. ICRs Regarding Medical Loss Ratio (Sec. Sec.  158.140, 
158.150, 158.170)
    O. Summary of Annual Burden Estimates for Proposed Requirements
    P. Submission of PRA-related Comments
V. Response to Comments
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

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 health insurance coverage in qualified health plans (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. The ACA also established the risk adjustment 
program, which transfers funds from issuers that attract lower-than-
average risk populations to issuers that attract higher-than-average 
risk populations to reduce incentives for issuers to avoid higher-risk 
enrollees.
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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 rulemaking, the two 
statutes are referred to collectively as the ``Patient Protection 
and Affordable Care Act'', ``Affordable Care Act'', or ``ACA.''
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    In previous rulemakings, we established provisions and parameters 
to implement many ACA requirements and programs. In this proposed rule, 
we propose to amend some of these provisions and parameters, with a 
focus on maintaining a stable regulatory environment. These proposed 
changes are intended to provide issuers with greater predictability for 
upcoming plan years (PYs), while simultaneously enhancing the role of 
states in these programs. The proposals would provide states with 
additional flexibilities, reduce unnecessary regulatory burdens on 
stakeholders, empower consumers, ensure program integrity, and improve 
affordability.
    On January 20, 2021, the President issued an Executive Order which 
stated the Administration's policy on preventing and combating 
discrimination on the basis of gender identity and sexual 
orientation.\2\ This Executive Order instructed the Secretary of Health 
and Human Services (Secretary of HHS, or HHS Secretary) 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. In consideration of this 
Executive Order, and as a result of our review of certain regulations, 
we propose to amend HHS regulations such that Exchanges, issuers, and 
agents and brokers are prohibited from discriminating based on sexual 
orientation and gender identity. The provisions in this proposed rule 
reflect the aspects of the Executive Order 13988 and aligns with the 
HHS' Notice, released on May 10, 2021, that HHS interprets and enforces 
section 1557's and Title IX's prohibition on discrimination on the 
basis of sex to include: (1) Discrimination on the basis of sexual 
orientation; and (2) discrimination on the basis of gender identity, 
based on the Supreme Court's decision in Bostock v. Clayton County.\3\
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    \2\ Executive Order 13988 on Preventing and Combating 
Discrimination on the Basis of Gender Identity or Sexual 
Orientation, January 20, 2021, see 86 FR 7023.
    \3\ U.S. Dep't of Health & Hum. Servs., Notification of 
Interpretation and Enforcement of Section 1557 of the Affordable 
Care Act and Title IX of the Education Amendments of 1972, 86 FR 
27984 (May 25, 2021). Also see, Bostock v. Clayton County, 140 S. 
Ct. 1731 (2020). https://www.supremecourt.gov/opinions/19pdf/17-1618_hfci.pdf.
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    Risk adjustment continues to be a core program in the individual, 
small group, and merged markets both on and off Exchanges, and we 
propose recalibrated parameters for the HHS-operated risk adjustment 
methodology. We published a technical paper, the 2021 HHS-Operated Risk 
Adjustment Technical Paper on Possible Model Changes \4\ in October 
2021, and sought comment on potential updates to the risk adjustment 
models. Consistent with the model changes discussed in the October 2021 
Risk Adjustment (RA) Technical Paper, in this rule, we propose the 
following three updates to the HHS risk adjustment models beginning 
with the 2023 benefit year: (1) Adding a two-stage weighted approach to 
the adult and child models; (2) removing the current severity illness 
factors from the adult models and adding an interacted hierarchical 
condition category (HCC) count model specification to the adult and 
child models; and (3) replacing the current enrollment duration factors 
in the adult models with HCC-contingent enrollment duration factors. 
These proposals are intended to improve prediction in the adult and 
child risk adjustment models for the lowest-risk enrollees, the 
highest-risk enrollees, and partial-year enrollees, whose plan 
liabilities are underpredicted in the

[[Page 586]]

current models. We also propose to recalibrate the 2023 benefit year 
risk adjustment models using the 2017, 2018, and 2019 enrollee-level 
External Data Gathering Environment (EDGE) data. We further propose to 
continue applying a market pricing adjustment to the plan liability 
associated with Hepatitis C drugs in the risk adjustment models, 
consistent with the approach adopted beginning with the 2020 models. We 
discuss our consideration of the targeted removal of the mapping of 
hydroxychloroquine sulfate to Immune Suppressants and Immunomodulators 
(RXC 09) in the 2018 and 2019 benefit year enrollee-level EDGE data 
used for the 2023 benefit year model recalibration,\5\ as well as the 
targeted removal of Descovy[supreg] from mapping to Anti-HIV Agents 
(RXC 01) in all three benefit years' enrollee-level EDGE datasets used 
for the 2023 benefit year model recalibration. We also propose for the 
2024 benefit year and beyond to recalibrate the adult models using the 
final, fourth quarter (Q4) RXC mapping document that was applicable for 
each benefit year of data that is included in the current year's model 
recalibration. We propose to begin to use this approach for 
recalibration of the 2023 adult risk adjustment models, with the 
exception of the 2017 enrollee-level EDGE data year, for which we 
propose to use the most recent RXC mapping document that was available 
when we first processed the 2017 enrollee-level EDGE data (that is, Q2 
2018).
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    \4\ Available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
    \5\ The same concern was not present for the 2016 or 2017 
enrollee-level EDGE data because hydroxychloroquine was not included 
in the crosswalk until 2018.
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    Additionally, we propose to repeal the ability of states to request 
a reduction in risk adjustment state transfers starting with the 2024 
benefit year, while proposing to provide an exception for states that 
previously requested a reduction to transfers under Sec.  153.320(d). 
In addition, we solicit comments on the requests from Alabama to reduce 
risk adjustment state transfers for the 2023 benefit year in the 
individual (including the catastrophic and non-catastrophic risk pools) 
and small group markets.
    We also propose the 2023 benefit year risk adjustment user fee for 
states where HHS operates the risk adjustment program. We also propose 
to collect and extract five new data elements including ZIP code, race, 
ethnicity, individual coverage health reimbursement arrangement (ICHRA) 
indicator, and a subsidy indicator as part of the required risk 
adjustment data that issuers must make accessible to HHS in states 
where HHS is operating the risk adjustment program. We also propose to 
extract three new data elements issuers already provide to HHS as part 
of the required risk adjustment data submissions (plan ID, rating area, 
and subscriber indicator) and to expand the permitted uses of the risk 
adjustment data and reports. Finally, we propose that whenever HHS 
recoups high-cost risk pool funds as a result of audits of risk 
adjustment covered plans, actionable discrepancies, or successful 
appeals, the recouped funds would be used to reduce high-cost risk pool 
charges for that national high-cost risk pool for the next applicable 
benefit year for which high-cost risk pool payments have not already 
been calculated.
    We propose further refinements to the HHS-RADV error estimation 
methodology beginning with the 2021 benefit year to (1) extend the 
application of Super HCCs (which are currently based on the coefficient 
estimation groups defined in the applicable benefit year's ``Additional 
Adult Variables'' Table of the ``Do It Yourself (DIY)'' software (Table 
6 in the 2021 Benefit Year DIY Software), which is published on the 
CCIIO website) \6\ from their current application only in the sorting 
step that assigns HCCs to failure rate groups to broader application 
throughout the HHS-RADV error rate calculation process, (2) specify 
that Super HCCs will be defined separately according to the age group 
model to which an enrollee is subject, and (3) constrain to zero any 
failure rate group outlier with a negative failure rate, regardless of 
whether the outlier issuer has a negative or positive error rate.
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    \6\ https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance. The August 3, 2021 version of the 2021 DIY Software Tables 
is available at https://www.cms.gov/files/document/cy2021-diy-tables-07092021.xlsx.
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    As we do every year in the HHS notice of benefit and payment 
parameters, we propose updated parameters applicable in the individual 
and small group markets. We propose the PY 2023 user fee rates for 
issuers offering plans through the Exchanges using the Federal 
platform. We propose maintaining the Federal-facilitated Exchange (FFE) 
and State-based Exchange on the Federal platform (SBE-FP) user fees at 
the current PY 2022 rates, 2.75 and 2.25 percent of total monthly 
premiums, respectively, in order to preserve and ensure that the FFEs 
and Federal platform have sufficient funding to cover the cost of all 
special benefits provided to FFE and SBE-FP issuers during PY 2023. We 
also note that HHS will issue the 2023 benefit year premium adjustment 
percentage index and related payment parameters in guidance, consistent 
with the policy finalized in part 2 of the 2022 Payment Notice.
    We also propose to require all Exchanges to prorate premiums and 
advance payments of the premium tax credit (APTC) when administering 
APTC for enrollees enrolled in a particular policy for less than the 
full coverage month, including when the enrollee is enrolled in 
multiple policies within a month, each lasting less than the full 
coverage month.
    We are proposing changes to clarify that the cost-sharing reduction 
(CSR) data submission process is mandatory only for those issuers that 
received CSR payments from HHS for any part of the benefit year, and 
voluntary for other issuers. We propose a technical correction to the 
definition of large group market in Sec.  144.103 to delete the 
concluding phrase ``unless otherwise provided under state law.''
    We propose new display requirements for web-broker non-Exchange 
websites, including requirements related to QHP comparative information 
and standardized disclaimer language; a prohibition on displaying QHP 
advertisements or otherwise providing favored or preferred display of 
QHPs based on compensation agents, brokers, or web-brokers receive from 
QHP issuers; and a requirement to prominently display a clear 
explanation of the rationale for explicit QHP recommendations and the 
methodology for the default display of QHPs on web-broker non-Exchange 
websites to better inform and protect consumers using such websites.
    We propose a number of policies to address certain agent, broker, 
and web-broker practices. These policies would be added as part of the 
FFE standards of conduct codified at Sec.  155.220(j)(2), improving 
CMS's ability to enforce existing responsibilities agents, brokers, and 
web-brokers utilizing the Exchange are required to adhere to without 
substantially burdening other agents, brokers, and web-brokers, while 
also providing more detail about specific business practices that are 
prohibited. We believe the proposed new regulatory text would protect 
consumers, ensure the efficient operation of the Exchange, minimize the 
risk of future tax discrepancies, reduce unauthorized enrollments in 
Exchange coverage, and provide a stronger basis for CMS to take 
enforcement action against agents, brokers, and web-brokers for 
violations of these requirements.
    We propose revising our interpretation of the guaranteed 
availability requirement to prohibit

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issuers from applying a premium payment to an individual's or 
employer's past debt owed for coverage and refusing to effectuate 
enrollment in new coverage. We believe this proposal would have a 
positive impact on the risk pool by removing barriers to enrollment for 
low-income individuals who lost prior coverage due to nonpayment of 
premiums. In addition, this proposal would promote more equitable 
access to health insurance coverage by ensuring that enrollment is not 
delayed as a result of non-payment of past-due premiums to the same 
issuer or control group, regardless of an individual's or employee's 
status as an APTC recipient.
    Stable and affordable Exchanges with healthy risk pools are 
necessary for ensuring consumers maintain stable access to health 
insurance options. In order to minimize the potential for adverse 
selection in the Exchanges, we propose to allow Exchanges to conduct 
risk-based employer sponsored coverage verification.
    We propose to clarify that only those provider incentives and 
bonuses that are tied to clearly defined, objectively measurable, and 
well-documented clinical or quality improvement standards that apply to 
providers may be included in incurred claims for MLR reporting and 
rebate calculation purposes. We also propose to specify that only 
expenses directly related to activities that improve health care 
quality may be included as quality improvement activity (QIA) expenses 
for MLR reporting and rebate calculation purposes.
    In addition, we propose to make a technical amendment to remove a 
reference to a provision that was vacated by the United States District 
Court for the District of Maryland in City of Columbus, et al. v. 
Cochran, 523 F. Supp. 3d 731 (D. Md. 2021), and thus deleted in part 2 
of the 2022 Payment Notice final rule.
    With regards to the essential health benefits (EHB), we propose an 
evergreen deadline for EHB-benchmark plan applications by states, as 
well as proposing to remove the ability for states to permit issuers to 
substitute benefits between EHB categories. In addition, we propose 
changed de minimis thresholds for the actuarial value (AV) for plans 
subject to EHB requirements, as well as narrower de minimis thresholds 
for individual market silver QHPs and income-based CSR plan variations. 
We also propose to remove the state annual reporting requirement to 
report state-required benefits in addition to the EHB to HHS. We 
believe there may be ways to achieve compliance with the defrayal 
policy without imposing the rigid submission requirements on states 
that exist under the annual reporting requirement.
    We propose policies to strengthen and clarify our network adequacy 
standards, including expanding the provider specialty list for time and 
distance standards and adding appointment wait time standards. For 
plans with tiered networks, we propose that, to count toward the 
issuer's satisfaction of the network adequacy and essential community 
provider (ECP) standards, providers must be contracted within the 
network tier that results in the lowest cost-sharing obligation. We 
also propose to require issuers to submit information about whether 
providers offer telehealth services. We propose to increase the ECP 
threshold from 20 percent to 35 percent.
    We also propose to amend the current regulation, which provides 
that, notwithstanding any relationship or relationships a QHP issuer 
may have with delegated or downstream entities, the QHP issuer 
maintains responsibility for its compliance and the compliance of any 
of its delegated or downstream entities with all applicable Federal 
standards related to Exchanges. Specifically, HHS proposes adding a 
requirement that all agreements between QHP issuers and their 
downstream and delegated entities include language stating that any 
Exchange authority, including State Exchanges, may demand and receive 
records related to the QHP issuers' obligations and compliance with 
applicable Federal standards related to Exchanges. We also propose 
other amendments to extend the obligation to oversee compliance of 
delegated and downstream entities to QHP issuers in all models of 
Exchange. These proposals would hold QHP issuers in all models of 
Exchange responsible for their downstream and delegated entities' 
adherence to applicable Federal standards, and make their oversight 
obligations, and the obligations of their downstream and delegated 
entities, explicit. We also propose to amend the title of subpart D of 
45 CFR part 156 from ``Standards for Qualified Health Plan Issuers on 
Federally Facilitated Exchanges and State-Based Exchanges on the 
Federal platform'' to ``Standards for Qualified Health Plan Issuers on 
Specific Types of Exchanges'' to more accurately reflect the 
applicability of the regulations within the subpart.
    We solicit comments on incorporating the net premium, maximum out-
of-pocket (MOOP), deductible, and annual out-of-pocket costs (OOPC) of 
a plan into the Exchange re-enrollment hierarchy as well as additional 
criteria or mechanisms HHS could consider to ensure the Exchange 
hierarchy for re-enrollment aligns with plan generosity and consumer 
needs, such as, re-enrolling a current bronze QHP enrollee into an 
available silver QHP with a lower net premium and higher plan 
generosity offered by the same QHP issuer. We also propose to update 
the quality improvement strategy (QIS) standards to require QHP issuers 
to address health and health care disparities as a specific topic area 
within their QIS beginning in 2023.
    We also propose to require issuers of QHPs in FFEs and SBE-FPs to 
offer through the Exchange standardized QHP options beginning in PY 
2023.
    Finally, we solicit comments regarding additional ways HHS could 
incentivize QHP issuers to design plans that improve health equity and 
health conditions in enrollees' environments, as well as how QHP 
issuers could address other social determinants of health (SDOH) 
outside of the QHP certification process.

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 Public Health Service 
Act (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 and health insurance issuers in 
the group and individual markets. The term ``group health plan'' 
includes both insured and self-insured group health plans.\7\
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    \7\ 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 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.
    Section 2718 of the PHS Act, as added by the ACA, generally 
requires health insurance issuers to submit an annual MLR report to 
HHS, and provide rebates to enrollees if the issuers do not achieve 
specified MLR thresholds.
    Section 2791 of the PHS Act defines several terms, including 
``large group market''.

[[Page 588]]

    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 of 
HHS), cost-sharing limits, and AV requirements. The law 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 of HHS 
to develop guidelines that allow for de minimis variation in AV 
calculations. Sections 1302(b)(4)(A) through (D) establish that the 
Secretary must define EHB in a manner that: (1) Reflects appropriate 
balance among the 10 categories; (2) is not designed in such a way as 
to discriminate based on age, disability, or expected length of life; 
(3) takes into account the health care needs of diverse segments of the 
population; and (4) does not allow denials of EHBs based on age, life 
expectancy, disability, degree of medical dependency, or quality of 
life.
    Section 1311(c) of the ACA provides the Secretary the authority to 
issue regulations to establish criteria for the certification of QHPs. 
Section 1311(c)(1)(B) of the ACA requires among the criteria for 
certification that the Secretary must establish by regulation that QHPs 
ensure a sufficient choice of providers. 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) 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)(C) of the ACA establishes special enrollment periods and 
section 1311(c)(6)(D) of the ACA establishes the monthly enrollment 
period for Indians, as defined by section 4 of the Indian Health Care 
Improvement Act.\8\
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    \8\ The Indian Health Care Improvement Act (IHCIA), the 
cornerstone legal authority for the provision of health care to 
American Indians and Alaska Natives, was made permanent when 
President Obama signed the bill on March 23, 2010, as part of the 
Patient Protection and Affordable Care Act.
---------------------------------------------------------------------------

    Section 1311(c)(1)(E) of the ACA specifies that to be certified as 
a QHP, each health plan must implement a QIS, which is described in 
section 1311(g)(1) of the ACA. Section 1311(g)(1) of the ACA describes 
this strategy as a payment structure that provides increased 
reimbursement or other incentives to improve health outcomes of plan 
enrollees, to prevent hospital readmissions, improve patient safety and 
reduce medical errors, promote wellness and health, and reduce health 
and health care disparities.
    Section 1311(d)(3)(B) of the ACA permits a state, at its option, to 
require QHPs to cover benefits in addition to EHB. This section also 
requires a state to make payments, either to the individual enrollee or 
to the issuer on behalf of the enrollee, to defray the cost of these 
additional state-required benefits.
    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 provides the Secretary with the 
authority to establish procedures under which a state may allow agents 
or brokers to (1) enroll qualified individuals and qualified employers 
in qualified health plans offered through Exchanges and (2) assist 
individuals in applying for PTC and CSRs for qualified health plans 
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 1313(a)(5)(A) of 
the ACA provides the Secretary with the authority to implement any 
measure or procedure that the Secretary determines is appropriate to 
reduce fraud and abuse in the administration of the Exchanges. Section 
1321 of the ACA provides for state flexibility in the operation and 
enforcement of Exchanges and related requirements.
    Section 1321(a) of the ACA provides broad authority for the 
Secretary to establish standards and regulations to implement the 
statutory requirements related to Exchanges, QHPs and other components 
of title I of the ACA, including such other requirements as the 
Secretary determines appropriate. 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 Revised 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 1343 of the ACA establishes a permanent risk adjustment 
program to provide payments to health insurance issuers that attract 
higher-than-average risk populations, such as those with chronic 
conditions, funded by payments from those that attract lower-than-
average risk populations, thereby reducing incentives for issuers to 
avoid higher-risk enrollees.
    Section 1401(a) of the ACA amended the Internal Revenue Code (the 
Code) to add Section 36B, which, among other things, requires that a 
taxpayer reconcile APTC for a year of coverage with the amount of the 
PTC the taxpayer is allowed for the year.

[[Page 589]]

    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 qualified health plans 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) 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 Treasury and Homeland Security Department Secretaries 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 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, and 
limits the disclosure of such information.
    Section 1557 of the ACA applies certain long-standing civil rights 
nondiscrimination requirements to ``any health program or activity, any 
part of which is receiving Federal financial assistance, including 
credits, subsidies, or contracts of insurance, or under any program or 
activity that is administered by an Executive agency, or any entity 
established under'' Title I of the ACA (or amendments). It did so by 
referencing statutes that specify prohibited grounds of discrimination, 
namely, race, color, national origin, sex, age, or disability, in an 
array of federally funded and administered programs or activities.\9\ 
In addition, HHS has previously finalized rules unrelated to section 
1557 of the ACA to address populations that have historically been 
subject to discrimination.
---------------------------------------------------------------------------

    \9\ 42 U.S.C. 18116.
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    Section 5000A of 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, which was 
enacted on December 22, 2017, the individual shared responsibility 
payment is reduced to $0, effective for months beginning after December 
31, 2018.\10\ Notwithstanding that reduction, certain exemptions are 
still relevant to determine whether individuals age 30 and above 
qualify to enroll in catastrophic coverage under Sec. Sec.  155.305(h) 
and 156.155(a)(5).
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    \10\ Public Law 115-97, 131 Stat. 2054 (2017).
---------------------------------------------------------------------------

1. Premium Stabilization Programs
    In the July 15, 2011 Federal Register (76 FR 41929), we published a 
proposed rule outlining the framework for the premium stabilization 
programs.\11\ We implemented the premium stabilization programs in a 
final rule, published in the March 23, 2012 Federal Register (77 FR 
17219) (Premium Stabilization Rule). In the December 7, 2012 Federal 
Register (77 FR 73117), we published a proposed rule outlining the 
benefit and payment parameters for the 2014 benefit year to expand the 
provisions related to the premium stabilization programs and set forth 
payment parameters in those programs (proposed 2014 Payment Notice). We 
published the 2014 Payment Notice final rule in the March 11, 2013 
Federal Register (78 FR 15409). In the June 19, 2013 Federal Register 
(78 FR 37032), we proposed a modification to the HHS-operated 
methodology related to community rating states. In the October 30, 2013 
Federal Register (78 FR 65046), we finalized the proposed modification 
to the HHS-operated methodology related to community rating states. We 
published a correcting amendment to the 2014 Payment Notice final rule 
in the November 6, 2013 Federal Register (78 FR 66653) to address how 
an enrollee's age for the risk score calculation would be determined 
under the HHS-operated risk adjustment methodology.
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    \11\ The term premium stabilization programs refers to the risk 
adjustment, risk corridors, and reinsurance programs established by 
the ACA. See 42 U.S.C. 18061, 18062, and 18063.
---------------------------------------------------------------------------

    In the December 2, 2013 Federal Register (78 FR 72321), we 
published a proposed rule outlining the benefit and payment parameters 
for the 2015 benefit year to expand the provisions related to the 
premium stabilization programs, setting forth certain oversight 
provisions and establishing the payment parameters in those programs 
(proposed 2015 Payment Notice). We published the 2015 Payment Notice 
final rule in the March 11, 2014 Federal Register (79 FR 13743). In the 
May 27, 2014 Federal Register (79 FR 30240), the 2015 fiscal year 
sequestration rate for the risk adjustment program was announced.
    In the November 26, 2014 Federal Register (79 FR 70673), we 
published a proposed rule outlining the benefit and payment parameters 
for the 2016 benefit year to expand the provisions related to the 
premium stabilization programs, setting forth certain oversight 
provisions and establishing the payment parameters in those programs 
(proposed 2016 Payment Notice). We published the 2016 Payment Notice 
final rule in the February 27, 2015 Federal Register (80 FR 10749).
    In the December 2, 2015 Federal Register (80 FR 75487), we 
published a proposed rule outlining the benefit and payment parameters 
for the 2017 benefit year to expand the provisions related to the 
premium stabilization programs, setting forth certain oversight 
provisions and establishing the payment parameters in those programs 
(proposed 2017 Payment Notice). We published the 2017 Payment Notice 
final rule in the March 8, 2016 Federal Register (81 FR 12203).
    In the September 6, 2016 Federal Register (81 FR 61455), we 
published a proposed rule outlining the benefit and payment parameters 
for the 2018 benefit year and to further promote stable premiums in the 
individual and small group markets. We proposed updates to the risk 
adjustment methodology, new policies around the use of external data 
for recalibration of our risk adjustment models, and amendments to the 
HHS-RADV process (proposed 2018 Payment Notice). We published the 2018 
Payment Notice final rule in the December 22, 2016 Federal Register (81 
FR 94058).
    In the November 2, 2017 Federal Register (82 FR 51042), we 
published a proposed rule outlining the benefit and payment parameters 
for the 2019 benefit year, and to further promote stable premiums in 
the individual and small group markets. We proposed updates to the risk 
adjustment methodology and amendments to the HHS-RADV process (proposed 
2019 Payment Notice). We published the 2019 Payment Notice final rule 
in the April 17, 2018 Federal Register (83 FR 16930). We published a 
correction to the 2019 risk adjustment coefficients in the 2019 Payment 
Notice final rule in the May 11, 2018 Federal Register (83 FR 21925). 
On July 27,

[[Page 590]]

2018, consistent with 45 CFR 153.320(b)(1)(i), we updated the 2019 
benefit year final risk adjustment model coefficients to reflect an 
additional recalibration related to an update to the 2016 enrollee-
level External Data Gathering Environment (EDGE) dataset.\12\
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    \12\ ``Updated 2019 Benefit Year Final HHS Risk Adjustment Model 
Coefficients.'' July 27, 2018. Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2019-Updtd-Final-HHS-RA-Model-Coefficients.pdf.
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    In the July 30, 2018 Federal Register (83 FR 36456), we published a 
final rule that adopted the 2017 benefit year risk adjustment 
methodology as established in the final rules published in the March 
23, 2012 (77 FR 17220 through 17252) and March 8, 2016 editions of the 
Federal Register (81 FR 12204 through 12352). That final rule set forth 
additional explanation of the rationale supporting use of statewide 
average premium in the HHS-operated risk adjustment state payment 
transfer formula for the 2017 benefit year, including the reasons why 
the program is operated in a budget-neutral manner. That final rule 
also permitted HHS to resume 2017 benefit year risk adjustment payments 
and charges. HHS also provided guidance as to the operation of the HHS-
operated risk adjustment program for the 2017 benefit year in light of 
publication of the final rule.\13\
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    \13\ ``Update on the HHS-operated Risk Adjustment Program for 
the 2017 Benefit Year.'' July 27, 2018. Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2017-RA-Final-Rule-Resumption-RAOps.pdf.
---------------------------------------------------------------------------

    In the August 10, 2018 Federal Register (83 FR 39644), we published 
a proposed rule seeking comment on adopting the 2018 benefit year risk 
adjustment methodology in the final rules published in the March 23, 
2012 (77 FR 17219) and in the December 22, 2016 editions of the Federal 
Register (81 FR 94058). The proposed rule set forth additional 
explanation of the rationale supporting use of statewide average 
premium in the HHS-operated risk adjustment state payment transfer 
formula for the 2018 benefit year, including the reasons why the 
program is operated in a budget-neutral manner. In the December 10, 
2018 Federal Register (83 FR 63419), we issued a final rule adopting 
the 2018 benefit year HHS-operated risk adjustment methodology as 
established in the final rules published in the March 23, 2012 (77 FR 
17219) and the December 22, 2016 (81 FR 94058) editions of the Federal 
Register. That final rule sets forth additional explanation of the 
rationale supporting use of statewide average premium in the HHS-
operated risk adjustment state payment transfer formula for the 2018 
benefit year, including the reasons why the program is operated in a 
budget-neutral manner.
    In the January 24, 2019 Federal Register (84 FR 227), we published 
a proposed rule outlining updates to the calibration of the risk 
adjustment methodology, the use of EDGE data for research purposes, and 
updates to HHS-RADV audits. We published the 2020 Payment Notice final 
rule in the April 25, 2019 Federal Register (84 FR 17454).
    In the February 6, 2020 Federal Register (85 FR 7088), we published 
a proposed rule that included updates to the risk adjustment models' 
HCCs and a modification HHS-RADV error rate calculation methodology. We 
published the 2021 Payment Notice final rule in the May 14, 2020 
Federal Register (85 FR 29164).
    In the June 2, 2020 Federal Register (85 FR 33595), we published a 
proposed rule that proposed updates to various aspects of the HHS-RADV 
methodologies and processes. We published a final rule titled, the 
Amendments to the HHS-Operated Risk Adjustment Data Validation Under 
the Patient Protection and Affordable Care Act's HHS-Operated Risk 
Adjustment Program (2020 HHS-RADV Amendments Rule) in the December 1, 
2020 Federal Register (85 FR 76979). That final rule revised the 
failure rate grouping algorithm, finalized a sliding scale adjustment 
in HHS-RADV error rate calculation, and a constraint on risk score 
adjustments for low-side failure rate outliers. The final rule also 
established a transition from the prospective application of HHS-RADV 
adjustments to apply HHS-RADV results to risk scores from the same 
benefit year as that being audited.
    In the September 2, 2020 Federal Register (85 FR 54820), HHS issued 
an interim final rule containing certain policy and regulatory 
revisions in response to the COVID-19 public health emergency (PHE), 
wherein we set forth risk adjustment reporting requirements for issuers 
offering temporary premium credits in the 2020 benefit year (interim 
final rule on COVID-19).
    In the January 20, 2021 Federal Register (86 FR 6138), HHS issued a 
final rule containing certain policy and regulatory revisions related 
to the risk adjustment program (hereinafter referred to as ``part 1 of 
the 2022 Payment Notice final rule''). In the May 5, 2021 Federal 
Register (86 FR 24140), HHS issued another final rule containing policy 
and regulatory revisions related to the risk adjustment program, 
including approval of the request from Alabama to reduce risk 
adjustment transfers by 50 percent in the individual and small group 
markets for the 2022 benefit year (hereinafter referred to as ``part 2 
of the 2022 Payment Notice final rule''). In addition, part 2 of the 
2022 Payment Notice final rule established a revised schedule of 
collections for HHS-RADV and updated the provisions regulating second 
validation audit (SVA) and initial validation audit (IVA) entities.
2. Program Integrity
    In the June 19, 2013 Federal Register (78 FR 37031), we 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).
3. 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 the 2014 health insurance market 
rules was published in the November 26, 2012 Federal Register (77 FR 
70584). A final rule implementing the health insurance market rules was 
published in the February 27, 2013 Federal Register (78 FR 13406) (2014 
Market Rules).
    A proposed rule relating to Exchanges and Insurance Market 
Standards for 2015 and beyond was published in the March 21, 2014 
Federal Register (79 FR 15808) (2015 Market Standards Proposed Rule). A 
final rule implementing the Exchange and Insurance Market Standards for 
2015 and Beyond was published in the May 27, 2014 Federal Register (79 
FR 30240) (2015 Market Standards Rule). 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), we further 
interpreted the guaranteed availability provision. In the 2019 Payment 
Notice final rule in the April 17, 2018 Federal Register (83 FR 17058), 
we clarified that certain exceptions to the special enrollment periods 
only apply with respect to coverage offered outside of the Exchange in 
the individual market.

[[Page 591]]

In the Nondiscrimination in Health and Human Education Programs or 
Activities final rule on section 1557 of the ACA, published in the June 
19, 2020 Federal Register (85 FR 37160), we removed nondiscrimination 
protections on the basis of gender identity and sexual orientation from 
the guaranteed availability regulation.
    In part 2 of the 2022 Payment Notice final rule in the May 5, 2021 
Federal Register (86 FR 24140), we 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. 
In the final rule Updating Payment Parameters, Section 1332 Waiver 
Implementing Regulations, and Improving Health Insurance Markets for 
2022 and Beyond published in the September 27, 2021 Federal Register 
(86 FR 53412) (part 3 of the 2022 Payment Notice) by HHS and the 
Department of the Treasury, HHS finalized additional amendments to the 
guaranteed availability regulations regarding special enrollment 
periods.
4. Exchanges
    We published a request for comment relating to Exchanges in the 
August 3, 2010 Federal Register (75 FR 45584). We issued initial 
guidance to states on Exchanges on November 18, 2010. We proposed a 
rule in the July 15, 2011 Federal Register (76 FR 41865) 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, as well as network adequacy and ECP 
certification standards, 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), we set 
forth standards related to Exchange user fees. We 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, we also set forth the ECP certification 
standard at Sec.  156.235, with revisions in the 2017 Payment Notice in 
the March 8, 2016 Federal Register (81 FR 12203) and the 2018 Payment 
Notice in the December 22, 2016 Federal Register (81 FR 94058).
    In an interim final rule, published in the May 11, 2016 Federal 
Register (81 FR 29146), we made amendments to the parameters of certain 
special enrollment periods (2016 Interim Final Rule). We finalized 
these in the 2018 Payment Notice final rule, published in the December 
22, 2016 Federal Register (81 FR 94058).
    In the April 18, 2017 Market Stabilization final rule Federal 
Register (82 FR 18346), we 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), we modified parameters around certain special enrollment 
periods. In the April 25, 2019 Federal Register (84 FR 17454), the 
final 2020 Payment Notice established a new special enrollment period.
    In the February 6, 2020 Federal Register (85 FR 7088), we published 
a proposed rule (proposal 2021 Payment Notice). We published the final 
rule in the May 14, 2020 Federal Register (85 FR 29164) (2021 Payment 
Notice).
    In the December 4, 2020 Federal Register (85 FR 78572), we issued a 
proposed rule containing certain policy and regulatory revisions 
related to user fees (proposed 2022 Payment Notice). In the January 19, 
2021 Federal Register (86 FR 6138), HHS issued a rule finalizing 
certain of the provisions in the proposed 2022 Payment Notice (part 1 
of the 2022 Payment Notice final rule). In the May 5, 2021 Federal 
Register (86 FR 24140), HHS published a second final rule addressing 
the remainder of the proposed provisions (part 2 of the 2022 Payment 
Notice final rule). In the July 1, 2021 Federal Register (86 FR 35156), 
HHS and the Department of the Treasury released a proposed rule 
proposing to amend certain policies in part 1 of the 2022 Payment 
Notice final rule, and finalized the rule in the September 27, 2021 
Federal Register (86 FR 53412) (part 3 of the 2022 Payment Notice final 
rule).
5. Essential Health Benefits
    On December 16, 2011, HHS released a bulletin that outlined an 
intended regulatory approach for defining EHB, including a benchmark-
based framework.\14\ A proposed rule relating to EHBs was published in 
the November 26, 2012 Federal Register (77 FR 70643). We 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 FR 12833) 
(EHB Rule). In the 2019 Payment Notice, published in the April 17, 2018 
Federal Register (83 FR 16930), we added Sec.  156.111 to provide 
states with additional options from which to select an EHB-benchmark 
plan for PYs 2020 and beyond.
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    \14\ ``Essential Health Benefits Bulletin.'' December 16, 2011. 
Available at https://www.cms.gov/CCIIO/Resources/Files/Downloads/essential_health_benefits_bulletin.pdf.
---------------------------------------------------------------------------

6. Medical Loss Ratio (MLR)
    We published a request for comment on section 2718 of the PHS Act 
in the April 14, 2010 Federal Register (75 FR 19297), and published an 
interim final rule with a 60-day comment period relating to the MLR 
program on December 1, 2010 (75 FR 74863). A final rule with a 30-day 
comment period was published in the December 7, 2011 Federal Register 
(76 FR 76573). An interim final rule with a 60-day comment period was 
published in the December 7, 2011 Federal Register (76 FR 76595). A 
final rule was published in the Federal Register on May 16, 2012 (77 FR 
28790). The MLR program requirements were amended in final rules 
published in the March 11, 2014 Federal Register (79 FR 13743), the May 
27, 2014 Federal Register (79 FR 30339), the February 27, 2015 Federal 
Register (80 FR 10749), the March 8, 2016 Federal Register (81 FR 
12203), the December 22, 2016 Federal Register (81 FR 94183), the April 
17, 2018 Federal Register (83 FR 16930), the May 14, 2020 Federal 
Register (85 FR 29164), and the May 5, 2021 Federal Register (86 FR 
24140), and an interim final rule that was published in the September 
2, 2020 Federal Register (85 FR 54820).
7. Quality Improvement Strategy
    We promulgated regulations in 45 CFR 155.200(d) to direct Exchanges 
to evaluate quality improvement strategies, and 45 CFR 156.200(b) that 
direct QHP issuers to implement and report on a quality improvement 
strategy or strategies consistent with section 1311(g) standards as a 
QHP certification criteria for participation in an Exchange. In the 
2016 Payment Notice, published in the February 27, 2015 Federal 
Register (80 FR 10749), we finalized

[[Page 592]]

regulations at Sec.  155.1130 to establish standards and the associated 
timeframe for QHP issuers to submit the necessary information to 
implement QIS standards for QHPs offered through an Exchange.
8. Nondiscrimination
    Section 1311(b) and section 1321(b) of the ACA provide that each 
state has the opportunity to establish an Exchange. In the July 15, 
2011 Federal Register (76 FR 41866), HHS published the ``Patient 
Protection and Affordable Care Act; Establishment of Exchanges and 
Qualified Health Plans'' proposed rule to implement section 1311(b) and 
section 1321(b) of the ACA. In the March 27, 2012 Federal Register (77 
FR 18310), HHS published the ``Patient Protection and Affordable Care 
Act; Establishment of Exchanges and Qualified Health Plans; Exchange 
Standards for Employers'' final rule and interim final rule 
(hereinafter referred to as the ``Exchange Standards final rule''), 
which included nondiscrimination protections.
    Section 1302 of the ACA provides for the establishment of an EHB 
package that includes coverage of EHB and actuarial value requirements. 
In the November 26, 2012 Federal Register (77 FR 70644), HHS published 
the ``Patient Protections and Affordable Care Act; Standards Related to 
Essential Health Benefits, Actuarial Value, and Accreditation'' 
proposed rule to implement section 1302 of the ACA. In the February 25, 
2013 Federal Register (78 FR 12834), HHS published the ``Patient 
Protections and Affordable Care Act; Standards Related to Essential 
Health Benefits, Actuarial Value, and Accreditation'' final rule, which 
included nondiscrimination protections.
    Sections 2701, 2702, and 2703 of the PHS Act and Section 1312(c) of 
the ACA provide protections to individuals and employers in obtaining 
health insurance coverage. In the November 26, 2012 Federal Register 
(77 FR 70584), HHS published the ``Patient Protection and Affordable 
Care Act; Health Insurance Market Rules; Rate Review'' proposed rule to 
implement sections 2701, 2702, and 2703 of the PHS Act and section 
1312(c) of the ACA. In the February 27, 2013 Federal Register (78 FR 
13406), HHS published the ``Patient Protections and Affordable Care 
Act; Health Insurance Market Rules; Rate Review'' final rule, which 
included nondiscrimination protections.
    In the HHS Notice of Benefit and Payment Parameters for 2017 
proposed rule, published in the December 2, 2015 Federal Register (80 
FR 75488), HHS proposed policies for nondiscrimination protections into 
the relevant notice of benefit and payment parameters. In the March 8, 
2016 Federal Register (81 FR 12204), HHS published the HHS Notice of 
Benefit and Payment Parameters for 2017 final rule, which included 
nondiscrimination protections.
    In the Nondiscrimination in Health and Human Education Programs or 
Activities final rule on section 1557 of the ACA, published in the June 
19, 2020 Federal Register (85 FR 37160), HHS removed nondiscrimination 
protections on the basis of gender identity and sexual orientation from 
various CMS nondiscrimination regulations. In the HHS Notice of 
Interpretation and Enforcement of Section 1557 of the Affordable Care 
Act and Title IX of the Education Amendments of 1972, published in the 
May 25, 2021 Federal Register (86 FR 27984), HHS informed the public 
that HHS will interpret and enforce section 1557's and Title IX's 
prohibition on discrimination on the basis of sex to include 
discrimination based on sexual orientation and gender identity.

B. Stakeholder Consultation and Input

    HHS has consulted with stakeholders on policies related to the PHS 
Act federal market reform requirements, the operation of Exchanges and 
the risk adjustment (including HHS-RADV) program. We have held a number 
of meetings with consumers, providers, employers, health plans, 
advocacy groups and the actuarial community to gather public input. We 
have solicited input from state representatives on numerous topics, 
particularly EHBs, state mandates, and risk adjustment. We consulted 
with stakeholders through regular meetings with the National 
Association of Insurance Commissioners (NAIC), regular contact with 
states through the Exchange Blueprint approval and general Exchange 
oversight processes, and meetings with Tribal leaders and 
representatives, health insurance issuers, trade groups, consumer 
advocates, employers, and other interested parties. We considered all 
public input we received as we developed the policies in this proposed 
rule.

C. Structure of Proposed Rule

    The regulations outlined in this proposed rule would be codified in 
45 CFR parts 144, 147, 153, 155, 156 and 158.
    The proposed changes to 45 CFR part 144 would remove superfluous 
language from the definition of large group market.
    The proposed changes to 45 CFR part 147 would prohibit issuers from 
discriminating against individuals in issuer marketing practices and 
benefit designs based on sexual orientation and gender identity. We 
also propose to reinterpret the guaranteed availability requirements in 
Sec.  147.104 such that issuers could not refuse to effectuate new 
coverage based on failure of an individual or employer to pay premiums 
owed for prior coverage.
    The proposed changes to 45 CFR part 153 would recalibrate the 2023 
benefit year risk adjustment models using the 2017, 2018, and 2019 
enrollee-level External Data Gathering Environment (EDGE) data. We also 
propose to update the adult and child risk adjustment models for 2023 
and beyond to better predict plan liability for certain subpopulations. 
We propose to update the adult risk adjustment models by removing the 
current severity illness factors and replacing the current enrollment 
duration factors with enrollment duration factors contingent on the 
enrollee having at least one HCC. In addition, we propose to update the 
adult and child risk adjustment models by adding a two-stage weighted 
approach to model recalibrations and an interacted HCC count model 
specification for 2023 and beyond. We propose to continue applying a 
market pricing adjustment to the plan liability associated with 
Hepatitis C drugs in the risk adjustment models, consistent with the 
approach adopted beginning with the 2020 models. We discuss removing 
the mapping of hydroxychloroquine sulfate to RXC 09 (Immune 
Suppressants and Immunomodulators) in the 2018 and 2019 benefit year 
enrollee-level EDGE data used for the annual recalibration of the HHS 
risk adjustment models. We also propose for the 2024 benefit year and 
beyond to recalibrate the models using the final, fourth quarter (Q4) 
RXC mapping document that was applicable for each benefit year of data 
that is included in the current year's model recalibration. We propose 
using this approach for recalibration of the 2023 adult risk adjustment 
models with the exception of the 2017 enrollee-level EDGE data year, 
for which we propose to use the most recent RXC mapping document that 
was available when we first processed the 2017 enrollee-level EDGE data 
(that is, Q2 2018).We also propose to collect and extract five new data 
elements including ZIP code, race, ethnicity, ICHRA indicator, and a 
subsidy indicator as part of the required risk adjustment data that 
issuers must make accessible to HHS in states where HHS is operating 
the risk adjustment program. We also propose to extract three new data 
elements issuers already

[[Page 593]]

provide to HHS as part of the required risk adjustment data submissions 
(plan ID, rating area, and subscriber indicator) and to expand the 
permitted uses of the risk adjustment data and reports. Additionally, 
we propose an amendment to Sec.  153.730 to address situations when 
April 30 does not fall on a business day and to provide that when this 
occurs, the deadline for issuers to submit the required risk adjustment 
data in states where HHS operates the program would be the next 
applicable business day.
    The proposals in part 153 also relate to risk adjustment state 
flexibility requests. We propose to repeal the ability of states to 
request a reduction in risk adjustment transfers calculated by HHS 
under the state payment transfer formula starting with the 2024 benefit 
year, while proposing to create an exception for any state that has 
requested a reduction in prior benefit years. In addition, we solicit 
comments on the requests from Alabama to reduce risk adjustment state 
transfers for the 2023 benefit year in the individual (including the 
catastrophic and non-catastrophic risk pools) and small group markets.
    In part 153 we also propose the risk adjustment user fee for the 
2023 benefit year and modifications to the error estimation methodology 
applied in HHS-RADV. We propose updating the HHS-RADV error estimation 
process to extend the application of Super HCCs beyond the sorting step 
that assigns HCCs to failure rate groups to also apply throughout the 
HHS-RADV error rate calculation processes and to specify that Super 
HCCs will be defined separately according to the model (infant, child, 
adult) to which an enrollee is subject. We also propose to constrain to 
zero any failure rate group outlier negative failure rate, regardless 
of whether the outlier issuer has a negative or positive error rate. 
Finally, we propose that whenever HHS recoups high-cost risk pool funds 
as a result of audits of risk adjustment covered plans, an actionable 
discrepancy, or a successful administrative appeal, the recouped high-
cost risk pool funds will be used to reduce high-cost risk pool charges 
for that national high-cost risk pool beginning for the next benefit 
year for which a high cost risk pool payment has not already been 
calculated.
    In addition, the proposals regarding part 153 also relate to MLR 
reporting requirements and clarify how issuers should report certain 
ACA program amounts that could be subject to reconsideration for MLR 
reporting purposes. We propose to separately address and reference HHS-
RADV adjustments to make clear that HHS expects issuers to report HHS-
RADV adjustments as part of their MLR reports in the same manner as 
they report risk adjustment payment and charge amounts.
    The proposed changes to 45 CFR part 155 would allow Exchanges to 
implement a verification process for enrollment in or eligibility for 
an eligible employer sponsored plan based on the Exchange's assessment 
of risk for inappropriate payments of APTC/CSR. In part 155 we also 
propose to require all Exchanges to prorate when administering APTC for 
enrollees enrolled in a particular policy for less than the full 
coverage month, including when the enrollee is enrolled in multiple 
policies within a month, each lasting less than the full coverage 
month. We also propose new requirements in part 155 related to the QHP 
comparative information and standardized disclaimer required to be 
displayed on web-broker non-Exchange websites, a prohibition on 
displaying QHP advertisements or otherwise providing favored or 
preferred placement in the display of QHPs on web-broker non-Exchange 
websites based on compensation agents, brokers, or web-brokers receive 
from QHP issuers, and a requirement regarding the prominent display of 
a clear explanation of the rationale for explicit QHP recommendations 
and the methodology for the default display of QHPs on web-broker non-
Exchange websites to better inform and protect consumers using such 
websites. We also propose changes to part 155, to clarify the FFE 
standards of conduct and what it means for agents, brokers, and web-
brokers to provide the Exchange with correct information under section 
1411(b) of the ACA, including ensuring that accurate consumer 
information is being entered on Exchange applications. Finally, we 
propose changes to part 155 to set forth prohibited agent, broker, and 
web-broker business practices commonly observed by HHS and to create 
enforceable standards under which HHS may take enforcement action 
against agents, brokers, and web-brokers when these prohibited business 
practices are discovered.
    In 45 CFR part 156, as we do every year in the HHS notice of 
benefit and payment parameters, we propose to update the user fee rates 
for the 2023 benefit year for all issuers participating on the 
Exchanges using the Federal platform. We note that we intend to publish 
the 2023 premium adjustment percentage index and related payment 
parameters in guidance as finalized in part 2 of the 2022 Payment 
Notice. The proposed changes to part 156 also include technical 
amendments to Sec.  156.50 to conform the user fee regulations with the 
repeal of Exchange Direct Enrollment (DE) option finalized in part 3 of 
the 2022 Payment Notice.\15\ We are proposing changes to Sec.  156.430 
to clarify that the CSR data submission process is mandatory only for 
those issuers that receive CSR payments from HHS for any part of the 
benefit year as a result of HHS possessing a valid appropriation to 
make CSR payments, and voluntary for other issuers.
---------------------------------------------------------------------------

    \15\ 86 FR 53412.
---------------------------------------------------------------------------

    In part 156, we also propose an evergreen deadline for EHB-
benchmark plan applications by states, as well as proposing to remove 
the ability for states to permit issuers to substitute benefits between 
EHB categories, proposing to change de minimis thresholds for the AV of 
plans subject to the AV requirements, as well as narrower de minimis 
thresholds for individual market silver QHPs and income-based CSR plan 
variations; and proposing to remove the annual reporting requirement on 
states to report state-required benefits in addition to the EHB to HHS.
    In part 156, we also propose to require issuers of QHPs in FFEs and 
SBE-FPs to offer through the Exchange standardized QHP options 
beginning in PY 2023. We also propose to update the QIS standards in 
part 156 to require QHP issuers to address health and health care 
disparities as a specific topic area within their QIS beginning with PY 
2023.
    The proposed changes to part 158 would clarify that only those 
provider incentives and bonuses that are tied to clearly defined, 
objectively measurable, and well-documented clinical or quality 
improvement standards that apply to providers may be included in 
incurred claims for MLR reporting and rebate calculation purposes. The 
proposed changes to part 158 would also specify that only expenses 
directly related to activities that improve health care quality may be 
included as QIA expenses for MLR reporting and rebate calculation 
purposes. In addition, the proposed changes to part 158 would make a 
technical amendment to Sec.  158.170(b) to correct an oversight and 
remove the reference to the percentage of premium QIA reporting option 
described in Sec.  158.221(b)(8), a provision that was vacated by the 
United States District Court for the District of Maryland in City of 
Columbus, et al. v.

[[Page 594]]

Cochran,\16\ and thus deleted in part 2 of the 2022 Payment Notice 
final rule.
---------------------------------------------------------------------------

    \16\ 523 F. Supp. 3d 731 (D. Md. 2021).
---------------------------------------------------------------------------

III. Provisions of the Proposed HHS Notice of Benefit and Payment 
Parameters for 2023

A. Part 144--Requirements Relating to Health Insurance Coverage

1. Definitions (Sec.  144.103)
    We propose to remove superfluous language from the definition of 
large group market. The definition currently provides that ``Large 
group market'' means the health insurance market under which 
individuals obtain health insurance coverage (directly or through any 
arrangement) on behalf of themselves (and their dependents) through a 
group health plan maintained by a large employer, unless otherwise 
provided under State law. We propose to amend the definition by 
deleting the phrase ``unless otherwise provided under State law.'' The 
phrase has no meaning or application, and does not appear in the 
statutory definition of the term in section 2791(e)(3) of the PHS Act. 
That phrase was initially included in the PHS Act regulatory 
definitions of large group market, large employer, and small employer 
adopted by HHS under HIPAA.\17\ However, in final rules published on 
October 30, 2013 (78 FR 65045), we amended the definitions of large 
employer and small employer to make them consistent with PHS Act 
section 2791(e), as amended by the ACA, and in so doing, removed that 
phrase from the definitions. At that time, we inadvertently neglected 
to delete the phrase from the regulatory definition of large group 
market, and we now propose to do so, in order to align these 
definitions and make the regulatory definition for large group market 
consistent with the definition under the ACA.
---------------------------------------------------------------------------

    \17\ 62 FR 16894 (April 8, 1997) and 69 FR 78720 (Dec. 30, 
2004).
---------------------------------------------------------------------------

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

1. Guaranteed Availability of Coverage (Sec.  147.104)
a. Past-Due Premiums
    We propose to re-interpret the guaranteed availability requirement 
at section 2702 of the PHS Act and its implementing regulation at Sec.  
147.104 to require issuers to accept individuals and employers who 
apply for coverage, even where the individual or employer owes past-due 
premiums for coverage from the same issuer or another issuer in the 
same controlled group. On January 28, 2021, President Biden issued 
Executive Order 14009, ``Strengthening Medicaid and the Affordable Care 
Act'' (E.O. 14009).\18\ 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 and making high-quality health 
care accessible and affordable for all individuals. Consistent with 
E.O. 14009, specifically section 3(iv), this proposal intends to remove 
an unnecessary barrier to individuals and families attempting to enroll 
into health coverage in the individual market.
---------------------------------------------------------------------------

    \18\ E.O. 14009; 86 FR 7793 (Feb. 2, 2021).
---------------------------------------------------------------------------

    Specifically, we propose to redesignate Sec.  147.104(i) as Sec.  
147.104(j) and add a new Sec.  147.104(i) to specify that a health 
insurance issuer that denies coverage to an individual or employer due 
to the individual's or employer's failure to pay premium owed under a 
prior policy, certificate, or contract of insurance, including by 
attributing payment of premium for a new policy, certificate, or 
contract of insurance to the prior policy, certificate, or contract of 
insurance, violates Sec.  147.104(a). The guaranteed availability 
provisions require health insurance issuers offering non-grandfathered 
coverage in the individual or group market to accept every individual 
and employer in the state that applies for such coverage unless an 
exception applies. Individuals and employers typically are required to 
pay the first month's premium to effectuate coverage. Under the current 
interpretation of the guaranteed availability requirement stated in the 
Market Stabilization final rule, to the extent permitted by applicable 
state law, an issuer does not violate the guaranteed availability 
requirements under Sec.  147.104 where the issuer attributes a premium 
payment made for new coverage to any past-due premiums owed for 
coverage from the same issuer or another issuer in the same controlled 
group within the prior 12-month period before effectuating enrollment 
in the new coverage. This policy addressed concerns that individuals 
might take unfair advantage of the rules regarding grace periods.\19\ 
However, in part 3 of the 2022 Payment Notice proposed rule, we stated 
our intention to reassess this interpretation to analyze whether this 
policy presents unnecessary barriers to accessing health coverage.\20\
---------------------------------------------------------------------------

    \19\ QHP issuers are required, under Sec.  156.270, to provide a 
grace period of 3 consecutive months for an enrollee, who, when 
failing to timely pay premiums, is receiving APTC. If the enrollee 
exhausts the grace period without paying all outstanding premiums, 
subject to a premium payment threshold implemented under Sec.  
155.400(g), then the QHP issuer must terminate the enrollee's 
enrollment back to the last day of the first month of the 3-month 
grace period. As a result, an individual receiving APTC whose 
coverage is terminated after the exhaustion of a grace period would 
owe at most 1 month of premiums, net of any APTC paid on their 
behalf to the issuer; however, an individual who attempts to enroll 
in new coverage while in a grace period, and whose coverage has not 
yet been terminated, could owe up to 3 months of premium, net of any 
APTC paid on their behalf to the issuer.
    \20\ 86 FR 35156, 36071.
---------------------------------------------------------------------------

    After reevaluating our interpretation of the guaranteed 
availability requirement, we propose reinstating our previous 
interpretation of the guaranteed availability rules with respect to 
non-payment of premiums.\21\ Under this interpretation, an issuer may 
not apply any premium payment made for new coverage in the same or a 
different plan or product to any outstanding debt owed from any 
previous coverage and then refuse to effectuate the new enrollment 
based on failure to pay premiums. Thus, the guaranteed availability 
requirement would prohibit issuers from refusing to effectuate new 
coverage due to failure to pay outstanding premium debt from the 
previous year.
---------------------------------------------------------------------------

    \21\ Federally-facilitated Marketplace (FFM) and Federally-
facilitated Small Business Health Options Program Enrollment Manual, 
Section 6.3 Terminations for Non-Payment of Premiums, https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/ENR_FFMSHOP_Manual_080916.pdf (describing operational requirements 
effective as of July 19, 2016, which were superseded by subsequent 
publications).
---------------------------------------------------------------------------

    Based on HHS' experience since we codified the currently-effective 
interpretation of guaranteed availability, we believe the current 
policy, has the unintended consequence of creating barriers to health 
coverage that disproportionately affect low-income individuals, and is 
therefore inconsistent with the intent of the guaranteed availability 
statutory requirements. The current policy heightens the risk of 
economic hardships for low-income individuals enrolled in health 
insurance coverage with APTC. Individuals stop paying premiums (and 
lose coverage due to nonpayment of premiums) for a variety of reasons 
throughout the year. For example, commenters to the Market 
Stabilization proposed rule stated that individuals who are victims of 
crime, or those grappling with domestic violence,

[[Page 595]]

medical emergencies, incarceration, or other urgent circumstances are 
often forced to make difficult financial decisions that may lead to 
failure to pay their health insurance premiums. Even for some middle-
income families, the high cost of health care for multiple family 
members with chronic health conditions may result in non-payment of 
premiums.\22\ Requiring such individuals to pay back past-due premium 
plus a binder payment prior to enrollment may present an insurmountable 
barrier leading to gaps in coverage. For this reason, HHS is of the 
view that the current interpretation of the guaranteed availability 
requirement creates unnecessary barriers to accessing health coverage.
---------------------------------------------------------------------------

    \22\ John Tozzi. (March 2018). ``Why Some Americans Are Risking 
It and Skipping Health Insurance.'' Bloomberg News. Retrieved from 
https://www.bloomberg.com/news/features/2018-03-26/why-some-americans-are-risking-it-and-skipping-health-insurance.
---------------------------------------------------------------------------

    HHS is also concerned that the barriers created by the current 
interpretation of guaranteed availability disproportionately affect 
low-income enrollees for whom APTC is paid. Under federal law governing 
grace periods for enrollees for whom APTC is paid, QHP issuers must 
provide a 3-month grace period before they are allowed to terminate an 
enrollee's coverage for non-payment of premiums and must continue to 
provide coverage during the first month of the grace period. As a 
result, those enrollees who are unable to satisfy outstanding premium 
payments by the end of the 3-month grace period generally may owe at 
least one month of past due premium after their coverage is terminated. 
In contrast, grace period rules for individuals who are not eligible 
for APTC are governed by state law. Many state laws allow for 
termination back to the end of the period for which an enrollee paid 
premium, in which case an enrollee without APTC whose coverage is 
terminated for nonpayment would not owe past-due premium when they 
attempt to enroll in coverage during a subsequent open enrollment or 
special enrollment period. Enrollees for whom APTC is paid generally 
may have household incomes as low as 100 percent of the federal poverty 
level (FPL) (which, for the 2021 benefit year, is $12,760 for a single 
person household).\23\ Thus, premium payment policies that require 
payment of past-due premiums prior to effectuation of new coverage are 
likely to disproportionately affect low-income enrollees with APTC, the 
individuals who may be least able to pay all outstanding premium debt 
among those seeking coverage in the individual market.
---------------------------------------------------------------------------

    \23\ See 2021 Poverty Guidelines for the 48 Contiguous States 
and the District of Columbia, available at https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines/prior-hhs-poverty-guidelines-federal-register-references/2020-poverty-guidelines.
---------------------------------------------------------------------------

    Conditioning health insurance enrollment on the payment of past-due 
premiums could disincentivize health insurance enrollment altogether, 
reducing the rate of enrollment for low-income individuals. The 
economic burden associated with being required to pay past-due premiums 
prior to enrolling in new coverage may prevent low-income individuals 
from enrolling in coverage and affect the demographics of the risk 
pool. Various studies have found that low-income families often 
struggle to balance out-of-pocket health care costs alongside rent or 
mortgage payments, and other necessary living expenses.\24\ Maintaining 
the current interpretation of the guaranteed availability rules would 
uphold barriers to health insurance coverage for low-income 
individuals, who face a greater risk of poorer health outcomes.\25\ 
Reverting to the previous interpretation of the guaranteed availability 
rules would ensure individuals who stand to benefit the most from 
health insurance coverage can enroll in coverage, and would promote 
more equitable access to health insurance coverage. In addition, the 
public health and economic crises caused by the COVID-19 pandemic 
exacerbated the hardships facing low-income individuals and families. 
The resulting financial and health insecurity caused by the pandemic 
underscores the critical role that access to continuous health coverage 
will continue to play during the ongoing and often unpredictable 
challenges of the pandemic and beyond. Returning to the previous 
interpretation of the guaranteed availability rule would remove a 
barrier to accessing health coverage that compounds the economic 
challenges from the COVID-19 crisis.
---------------------------------------------------------------------------

    \24\ Tim Thomas, Ph.D.; Jose Hernandez, Ph.D.; et al. (2019). 
The Evictions Study. The University of California Berkeley and the 
University of Washington. Retrieved from https://evictions.study/index.html.
    \25\ P.J. Cunningham; T.L. Green; R.T. Braun. (February 2018). 
Income Disparities in the Prevalence, Severity, and Costs of Co-
Occurring Chronic and Behavioral Health Conditions. Medical Care. 
Retrieved from https://www.commonwealthfund.org/publications/journal-article/2018/feb/income-disparities-prevalence-severity-and-costs-co-occurring.
---------------------------------------------------------------------------

    In the Market Stabilization rule, we noted concern that enrollees 
with APTC may take advantage of guaranteed availability by declining to 
make premium payments for coverage at the end of a benefit year without 
losing coverage. Although this remains possible, we are of the view 
that the disparate negative impact on low-income populations outweighs 
the possible deterrent effect on individuals who may try taking 
advantage of the guaranteed availability rules. We seek comment 
regarding the frequency of any potential gaming behavior, as well as 
information on the primary diagnoses and services that may be involved 
in suspected gaming situations so that we may better assess any 
contributing causes of such non-payment. For example, non-payment may 
not be the result of gaming, but could be indicative of contextual 
challenges individuals face in satisfying payment obligations. We are 
particularly interested in comments from issuers that have not adopted 
a premium payment policy that requires payment of past-due premiums 
prior to effectuating enrollment. In addition, we note that issuers are 
generally not permitted to forgive past-due premium debt, and can 
pursue other mechanisms to collect past-due premiums. We believe this 
mitigates the risk that some enrollees may take advantage of the 
guaranteed availability rules.
    We seek comment on this proposal.
b. Nondiscrimination Based on Sexual Orientation and Gender Identity
    We propose to amend 45 CFR 147.104(e) such that its 
nondiscrimination protections would explicitly prohibit discrimination 
based on sexual orientation and gender identity. HHS previously 
codified such nondiscrimination protections at Sec.  147.104(e), but 
amendments made in 2020 to Sec.  147.104(e) removed any reference to 
sexual orientation and gender identity. If finalized, this proposal 
would revert Sec.  147.104(e) to the pre-2020 nondiscrimination 
protections.
    Section 147.104(e) states that a health insurance issuer and its 
officials, employees, agents, and representatives must not employ 
marketing practices or benefit designs that would have the effect of 
discouraging the enrollment of individuals with significant health 
needs in health insurance coverage or discriminate based on race, 
color, national origin, present or predicted disability, age, sex, 
expected length of life, degree of medical dependency, quality of life, 
or other health conditions. Previously, in the 2014 Market Rules, we 
finalized Sec.  147.104(e) to also prohibit discrimination based on 
sexual orientation and gender

[[Page 596]]

identity.\26\ However, in the 2020 final rule that revised regulations 
implementing section 1557 of the ACA, HHS also revised certain CMS 
regulations, including those at Sec.  147.104(e), by removing sexual 
orientation and gender identity as bases of discrimination subject to 
the CMS regulations' nondiscrimination protections.\27\ The 2020 
section 1557 final rule is the subject of ongoing litigation.\28\
---------------------------------------------------------------------------

    \26\ 78 FR 13406 (February 27, 2013).
    \27\ 85 FR 37160 (June 19, 2020); See id. at 37218-21 (the 2020 
section 1557 final rule revised the following CMS regulations: 45 
CFR 147.104, 155.120, 155.220, 156.200, 156.1230).
    \28\ The 2020 section 1557 final rule is the subject of several 
lawsuits and court orders. For more information, see https://www.hhs.gov/civil-rights/for-individuals/section-1557/index.html.
---------------------------------------------------------------------------

    Pursuant to section 1311(c)(1)(A) of the ACA, the HHS Secretary was 
required to establish by regulation criteria for certification that 
require QHP issuers to meet marketing requirements and not employ 
marketing practices or benefit designs that will have the effect of 
discouraging the enrollment of individuals with significant health 
needs in QHPs. Under the authority of section 1321(a) of the ACA, which 
provides the HHS Secretary broad rulemaking authority with respect to 
the establishment and operation of Exchanges and the offering of QHPs 
through such Exchanges, in the 2012 Exchange Standards final rule, CMS 
codified a regulation implementing this requirement at Sec.  156.225. 
Under the general rulemaking authority in section 2792 of the PHS Act, 
which provides the HHS Secretary broad rulemaking authority to 
promulgate regulations as may be necessary or appropriate to carry out 
the provisions of title XXVII of the PHS Act, the 2014 Market Rules 
adopted a similar standard in Sec.  147.104(e), applying this 
requirement to the group and individual health insurance markets. 
Furthermore, in order to ensure consistency against employing 
discriminatory marketing practices and benefit designs, HHS finalized 
Sec.  147.104(e) to align with other prohibitions on discrimination 
that HHS had already codified at that time with respect to EHB in Sec.  
156.125, with respect to standards applicable to QHPs under Sec.  
156.200(e) that included protections against discrimination on the 
basis of sexual orientation and gender identity, and with respect to 
marketing standards in Sec.  156.225. The 2014 Market Rules further 
clarified that discriminatory marketing practices or benefit designs 
represent a failure by issuers to comply with the guaranteed 
availability requirements in PHS Act section 2702, as such practices or 
designs can have the effect of discouraging or preventing the 
enrollment of individuals in health insurance coverage.
    In the 2020 section 1557 final rule, HHS revised the section 1557 
implementing regulation. Among other things, the rule removed the 
definition of ``on the basis of sex,'' which included gender identity, 
and instead purported to rely upon the ``plain meaning'' of the word 
``sex'' in the underlying Title IX regulation.\29\ However, as HHS 
noted in the 2020 section 1557 final rule, CMS possesses statutory 
authority independent of section 1557 of the ACA to prohibit 
discrimination in the group and individual markets.\30\
---------------------------------------------------------------------------

    \29\ 85 FR 37160, 37166 (June 19, 2020). The 2016 and 2020 
section 1557 final rules are the subject of several lawsuits and 
court orders. For more information, see https://www.hhs.gov/civil-rights/for-individuals/section-1557/index.html, https://www.hhs.gov/civil-rights/for-individuals/section-1557/index.html.
    \30\ 85 FR 37160, 37219, 37218-21 (June 19, 2020).
---------------------------------------------------------------------------

    Following public posting of the 2020 section 1557 final rule on the 
agency's website, the Supreme Court held in Bostock v. Clayton County, 
140 S. Ct. 1731 (2020), that discrimination on the basis of sex under 
Title VII of the Civil Rights Act of 1964 includes discrimination on 
the basis of sexual orientation and gender identity. On January 20, 
2021, the President signed Executive Order 13988 stating that it is the 
Administration's policy to prevent and combat discrimination on the 
basis of gender identity and sexual orientation, and that under 
Bostock's reasoning, laws that prohibit sex discrimination also 
prohibit discrimination on the basis of gender identity and sexual 
orientation, so long as the laws do not contain sufficient indications 
to the contrary.\31\ The Executive Order (E.O.) also instructed all 
agency heads, including the HHS Secretary, 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. The Department of Justice (DOJ) issued a 
memorandum on March 26, 2021 that determined the court's reasoning in 
Bostock applies to Title IX and thus that Title IX's prohibition on 
discrimination on the basis of sex includes discrimination on the basis 
of gender identity and sexual orientation.\32\ Following the E.O. and 
DOJ's memorandum, HHS released on May 10, 2021 a Notice that HHS will 
interpret and enforce section 1557's and Title IX's prohibition on 
discrimination on the basis of sex to include: (1) Discrimination on 
the basis of sexual orientation; and (2) discrimination on the basis of 
gender identity.\33\
---------------------------------------------------------------------------

    \31\ Executive Order 13988 on Preventing and Combating 
Discrimination on the Basis of Gender Identity or Sexual 
Orientation, 86 FR 7023 (Jan. 20, 2021).
    \32\ U.S. Dep't of Justice, Memorandum on Application of Bostock 
v. Clayton County to Title IX of the Education Amendments of 1972 
(Mar. 26, 2021), https://www.justice.gov/crt/page/file/1383026/download. On June 16, 2021, the Department of Education's Office for 
Civil Rights issued a similar Notice explaining that it too will 
enforce Title IX's prohibition on discrimination on the basis of sex 
to include: (1) Discrimination based on sexual orientation; and (2) 
discrimination based on gender identity (available at https://www2.ed.gov/about/offices/list/ocr/docs/202106-titleix-noi.pdf).
    \33\ 86 FR 27984.
---------------------------------------------------------------------------

    Likewise, CMS is not relying on authority from section 1557 of the 
ACA for the proposal at Sec.  147.104(e) or the parallel proposals to 
nondiscrimination regulations at Sec. Sec.  155.120(c), 155.220(j), 
156.125(b), 156.200(e), and 156.1230(b). We will further elaborate in 
the respective preambles to Sec. Sec.  147.104(e), 155.120(c), 
155.220(j), 156.125(b), 156.200(e), and 156.1230(b) the specific ACA 
authority CMS is relying on to prohibit discrimination in the group and 
individual markets. CMS proposes to exercise the same authority as it 
exercised in the 2014 Market Rules to amend Sec.  147.104(e) to again 
prohibit a health insurance issuer and its officials, employees, 
agents, and representatives from discriminating in its marketing 
practices or benefit designs on the basis of sexual orientation and 
gender identity. Specifically, CMS proposes to again rely on section 
2702 of the PHS Act, as well as section 2792 of the PHS Act, which 
provides the HHS Secretary broad rulemaking authority to promulgate 
regulations as may be necessary or appropriate to carry out the 
provisions of title XXVII of the PHS Act. These are the same 
authorities CMS relies upon for implementation of existing 
nondiscrimination protections at Sec.  147.104(e). Utilizing these same 
authorities to again prohibit discrimination based on sexual 
orientation and gender identity would be consistent with the authority 
CMS relies upon for those existing protections at Sec.  147.104(e) that 
currently prohibit discrimination on the basis of race, color, national 
origin, present or predicted disability, age, sex, expected length of 
life, degree of medical dependency, quality of life, or other health 
conditions.
    People who identify as part of the lesbian, gay, bisexual, 
transgender, and

[[Page 597]]

queer (LGBTQI+) community face pervasive health and health care 
disparities, and are at higher risk for many concomitant conditions, 
including substance use and \34\ mental health disorders, sexually 
transmitted infections,\35\ HIV,\36\ cancer, cardiovascular disease, 
and obesity.\37\ Overall, LGBTQI+ people report being in poorer health 
than non-LGBTQI+ individuals. LGBTQI+ people of all genders are more 
likely to become disabled at a younger age than heterosexual 
individuals.\38\ In addition to disparities in health outcomes, LGBTQI+ 
people face barriers to obtaining appropriate health care and 
transgender people who can access insurance may nonetheless be denied 
coverage for needed services. For example, nearly half of transgender 
respondents in one survey said their health insurance company denied 
them gender affirming surgery,\39\ and a similar proportion reported 
that they were denied coverage for hormone therapy.\40\ Beyond health 
coverage issues, LGBTQI+ people may struggle to access care because of 
cost barriers. LGBTQI+ people are also more likely than others to 
report postponing or forgoing health care due to costs, and costs were 
an even greater obstacle for younger LGBTQI+ people and those who are 
transgender--especially transgender people of color.\41\
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    \34\ Hilary Daniel et al, Annals of Internal Med. Position 
Papers, Lesbian, Gay, Bisexual, and Transgender Health Disparities: 
Executive Summary of a Policy Position Paper From the American 
College of Physicians (July 21, 2105), https://www.acpjournals.org/doi/full/10.7326/M14-2482?journalCode=aim.
    \35\ Hilary Daniel et al, Annals of Internal Med. Position 
Papers, Lesbian, Gay, Bisexual, and Transgender Health Disparities: 
Executive Summary of a Policy Position Paper From the American 
College of Physicians (July 21, 2105), https://www.acpjournals.org/doi/full/10.7326/M14-2482?journalCode=aim.
    \36\ U.S. Dep't of Health & Human Servs., Ctrs. for Disease 
Control and Prevention, HIV Surveillance Report, 2019; Vol. 32 (May 
2021), https://www.cdc.gov/hiv/pdf/library/reports/surveillance/cdc-hiv-surveillance-report-2018-updated-vol-32.pdf.
    \37\ See, for example, Lesbian, Gay, Bisexual, and Transgender 
Health, Healthy People 2020, https://www.healthypeople.gov/2020/
topics-objectives/topic/lesbian-gay-bisexual-and-transgender-
health#:~:text=Research%20suggests%20that%20LGBT%20individuals,%2C2%2
C%203%20and%20suicide; Hafeez, Hudaisa et al. ``Healthcare 
Disparities Among Lesbian, Gay, Bisexual, and Transgender Youth: A 
Literature Review.'' Cureus vol. 9,4 e1184. 20 Apr. 2017, 
doi:10.7759/cureus.1184 (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5478215/); Fredriksen-Goldsen KI, Kim H-J, Barkan SE, Muraco A 
and Hoy-Ellis CP (2013) Health disparities among lesbian, gay, and 
bisexual older adults: Results from a population-based study. 
American Journal of Public Health 103, 1802-1809; Billy A. Caceres 
et al. ``A Systematic Review of Cardiovascular Disease in Sexual 
Minorities'', American Journal of Public Health 107, no. 4 (April 1, 
2017): pp. e13-e21.
    \38\ Hilary Daniel et al, Annals of Internal Med. Position 
Papers, Lesbian, Gay, Bisexual, and Transgender Health Disparities: 
Executive Summary of a Policy Position Paper From the American 
College of Physicians (July 21, 2105), https://www.acpjournals.org/doi/full/10.7326/M14-2482?journalCode=aim.
    \39\ For purposes of this preamble, the term ``gender affirming 
care'' means gender affirming care for transgender individuals. This 
may also be referred to as ``transition related care.''
    \40\ Sharita Gruberg et al, Center for American Progress, The 
State of the LGBTQ Community in 2020 (Oct. 6, 2020), https://www.americanprogress.org/issues/lgbtq-rights/reports/2020/10/06/491052/state-lgbtq-community-2020/.
    \41\ Sharita Gruberg et al, Center for American Progress, The 
State of the LGBTQ Community in 2020 (Oct. 6, 2020), https://www.americanprogress.org/issues/lgbtq-rights/reports/2020/10/06/491052/state-lgbtq-community-2020/.
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    We believe that prohibiting discrimination based on sexual 
orientation or gender identity can lead to improved health outcomes for 
this community \42\ and that the removal of such protections in the 
2020 section 1557 final rule frustrated not only guaranteed 
availability requirements, but also the broader aim of improving health 
equity. Without protection from discrimination, individuals may 
continue to face barriers to accessing medically necessary health care. 
For example, without protection from discrimination, transgender 
individuals may face barriers or be denied medically necessary gender-
affirming care. We believe amending the nondiscrimination protections 
as proposed at Sec.  147.104(e) to again explicitly prohibit 
discrimination based on sexual orientation and gender identity is 
warranted in light of the existing trends in health care discrimination 
and to better address barriers to health equity for LGBTQI+ 
individuals.\43\ As proposed, such revisions to Sec.  147.104(e) would 
also support the original objective of ensuring consistency against 
employing discriminatory marketing practices and benefit designs, as we 
are proposing parallel changes to nondiscrimination regulations at 
Sec. Sec.  147.104(e), 155.120(c), 155.220(j), 156.125(b), 156.200(e), 
and 156.1230(b).
---------------------------------------------------------------------------

    \42\ Ward, BW, Dahlhamer, JM, Galinsky, AM, and Joestl, SS. 
Sexual Orientation & Health Among U.S. Adults: National Health 
Interview Survey, CDC National Health Statistics Report 77, 2014.
    \43\ Nguyen, T.T., Vable, A.M., Glymour, M.M. et al. Trends for 
Reported Discrimination in Health Care in a National Sample of Older 
Adults with Chronic Conditions. J GEN INTERN MED 33, 291-297 (2018). 
https://doi.org/10.1007/s11606-017-4209-5.
---------------------------------------------------------------------------

    If any of the provisions at Sec. Sec.  147.104(e), 155.120(c), 
155.220(j), 156.125(b), 156.200(e), and 156.1230(b) are held to be 
invalid or unenforceable by its terms, or as applied to any person or 
circumstance, it shall be severable from this part and shall not affect 
the remainder thereof or the application of the provision to other 
persons not similarly situated or to other dissimilar circumstances. In 
enforcing the nondiscrimination provisions in the corresponding CMS 
regulations, HHS will comply with laws protecting the exercise of 
conscience and religion, including the Religious Freedom Restoration 
Act (42 U.S.C. 2000bb through 2000bb-4) and all other applicable legal 
requirements.
    We seek comment on this proposal.

C. Part 153--Standards Related to Reinsurance, Risk Corridors, and Risk 
Adjustment

    In subparts A, D, G, and H of part 153, we established standards 
for the administration of the risk adjustment program. The risk 
adjustment program is a permanent program created by section 1343 of 
the ACA that transfers funds from lower-than-average risk, risk 
adjustment covered plans to higher-than-average risk, risk adjustment 
covered plans in the individual, small group markets, or merged 
markets, inside and outside the Exchanges. In accordance with Sec.  
153.310(a), a state that is approved or conditionally approved by the 
Secretary to operate an Exchange may establish a risk adjustment 
program, or have HHS do so on its behalf.\44\ HHS did not receive any 
requests from states to operate risk adjustment for the 2023 benefit 
year. Therefore, HHS will operate risk adjustment in every state and 
the District of Columbia for the 2023 benefit year.
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    \44\ Also see 42 U.S.C. 18041(c)(1).
---------------------------------------------------------------------------

1. Sequestration
    In accordance with the OMB Report to Congress on the Joint 
Committee Reductions for Fiscal Year 2022, the permanent risk 
adjustment program is subject to the fiscal year 2022 
sequestration.\45\ The federal government's 2022 fiscal year begins 
October 1, 2021. Therefore, the risk adjustment program will be 
sequestered at a rate of 5.7 percent for payments made from fiscal year 
2022 resources (that is, funds collected during the 2022 fiscal year).
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    \45\ https://www.whitehouse.gov/wp-content/uploads/2021/05/BBEDCA_251A_Sequestration_Report_FY2022.pdf.
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    HHS, in coordination with OMB, has determined that, under section 
256(k)(6) of the Balanced Budget and Emergency Deficit Control Act of 
1985 (Pub. L. 99-177, enacted December 12, 1985), as

[[Page 598]]

amended, and the underlying authority for the risk adjustment program, 
the funds that are sequestered in fiscal year 2022 from the risk 
adjustment program will become available for payment to issuers in 
fiscal year 2023 without further Congressional action. If Congress does 
not enact deficit reduction provisions that replace the Joint Committee 
reductions, the program would be sequestered in future fiscal years, 
and any sequestered funding would become available in the fiscal year 
following that in which it was sequestered.
    Additionally, we note that the Coronavirus Aid, Relief, and 
Economic Security (CARES) Act amended section 251A(6) of the Balanced 
Budget and Emergency Deficit Control Act of 1985 and extended 
sequestration for the risk adjustment program through fiscal year 2030 
at a rate of 5.7 percent per fiscal year.\46\
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    \46\ https://www.congress.gov/116/bills/s3548/BILLS-116s3548is.pdf.
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2. HHS Risk Adjustment (Sec.  153.320)
    The HHS risk adjustment models predict plan liability for an 
average enrollee based on that person's age, sex, and diagnoses (also 
referred to as hierarchical condition categories (HCCs)), producing a 
risk score. The HHS risk adjustment methodology utilizes separate 
models for adults, children, and infants to account for clinical and 
cost differences in each age group. In the adult and child models, the 
relative risk assigned to an individual's age, sex, and diagnoses are 
added together to produce an individual risk score. Additionally, to 
calculate enrollee risk scores in the adult models, we added enrollment 
duration factors beginning with the 2017 benefit year, and prescription 
drug categories (RXCs) beginning with the 2018 benefit year.\47\ Infant 
risk scores are determined by inclusion in one of 25 mutually exclusive 
groups, based on the infant's maturity and the severity of diagnoses. 
If applicable, the risk score for adults, children, or infants is 
multiplied by a CSR factor. The enrollment-weighted average risk score 
of all enrollees in a particular risk adjustment covered plan (also 
referred to as the plan liability risk score) within a geographic 
rating area is one of the inputs into the risk adjustment state payment 
transfer formula, which determines the state transfer payment or charge 
that an issuer will receive or be required to pay for that plan for the 
applicable state market risk pool. Thus, the HHS risk adjustment models 
predict average group costs to account for risk across plans, in 
keeping with the Actuarial Standards Board's Actuarial Standards of 
Practice for risk classification.
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    \47\ For the 2018 benefit year, there were 12 RXCs, but starting 
with the 2019 benefit year, the two severity-only RXCs were removed 
from the adult risk adjustment models. See, for example, 83 FR 
16941.
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a. Data for Risk Adjustment Model Recalibration for 2023 Benefit Year 
and Beyond
    We are proposing to recalibrate the 2023 benefit year risk 
adjustment models with the 2017, 2018, and 2019 enrollee-level EDGE 
data. Consistent with the approach outlined in the 2020 Payment Notice 
to no longer rely upon MarketScan[supreg] data for recalibrating the 
risk adjustment models, we will recalibrate the risk adjustment models 
for the 2023 benefit year using only enrollee-level EDGE data, and we 
will continue to use blended, or averaged, coefficients from the 3 
years of separately solved models for the 2023 benefit year model 
recalibration.\48\ Additionally, as outlined in the 2022 Payment 
Notice, we will use the 3 most recent consecutive years of enrollee-
level EDGE data that are available at the time we incorporate the data 
in the draft recalibrated coefficients published in the proposed rule 
for the applicable benefit year,\49\ and will not update the 
coefficients between the proposed and final rules if an additional year 
of enrollee-level EDGE data becomes available for incorporation.\50\ We 
believe this promotes stability, better meets the goal of the risk 
adjustment program, and allows issuers more time to incorporate this 
information when pricing their plans for the upcoming benefit year.
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    \48\ 84 FR 17463 through 17466.
    \49\ While we do receive the next year of enrollee-level EDGE 
data prior to the proposed rule, that data must go through several 
quality and analysis checks before it is useable for risk adjustment 
model recalibration.
    \50\ 86 FR 24140 at 24152.
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    As such, we propose to determine coefficients for the 2023 benefit 
year based on a blend of separately solved coefficients from the 2017, 
2018, and 2019 benefit years' enrollee-level EDGE data.\51\ The draft 
coefficients listed in Tables 1 through 6 reflect the use of 2017, 
2018, and 2019 benefit year enrollee-level EDGE data, as well as other 
risk adjustment model updates proposed in this proposed rule (including 
changes to the model specifications, the pricing adjustment to 
Hepatitis C drugs, and the removal of the mapping of hydroxychloroquine 
sulfate to an RXC). However, we note that the coefficients could change 
if we identify an error or if some or all of the proposed model changes 
are not finalized or are modified in response to comments. In addition, 
consistent with Sec.  153.320(b)(1)(i), if we are unable to finalize 
the final coefficients in time for publication in the final rule, we 
would publish the final coefficients for the 2023 benefit year in 
guidance soon after the publication of the final rule. We seek comment 
on the proposal to determine 2023 benefit year coefficients based on a 
blend of separately solved coefficients from the 2017, 2018, and 2019 
enrollee-level EDGE data.
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    \51\ As discussed later in this proposed rule, we propose to 
remove the mapping of hydroxychloroquine to RXC 09 (Immune 
Suppressants and Immunomodulators) and the related RXC 09 
interactions.
---------------------------------------------------------------------------

    We also solicit comments on the future use of the 2020 enrollee-
level EDGE data due to the COVID-19 PHE. Under current policy, 2020 
enrollee-level EDGE data would be used in recalibration of the HHS risk 
adjustment models for the 2024 benefit year and that data would 
continue to be used for the 2025 and 2026 benefit year models.\52\ 
Although HHS has not analyzed the 2020 enrollee-level EDGE data yet, we 
solicit comment on the future use of the 2020 enrollee-level EDGE data 
for the annual recalibration of the HHS risk adjustment models.
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    \52\ Consistent with the approach finalized in the 2022 Payment 
Notice, use of the 3 most recent consecutive years of enrollee-level 
EDGE data would result in the use of 2018, 2019, and 2020 enrollee-
level EDGE data for the recalibration of the 2024 benefit year 
models; the use of 2019, 2020, and 2021 enrollee-level EDGE data for 
recalibration of the 2025 benefit year models; and the use of 2020, 
2021, and 2022 enrollee-level EDGE data for recalibration of the 
2026 benefit year models.
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b. Risk Adjustment Model Updates
    Beginning with the 2023 benefit year, we are proposing three 
modeling updates to the risk adjustment models. Consistent with the 
potential model updates discussed in the 2021 RA Technical Paper, we 
propose the following model updates, which are the same as those 
proposed but not finalized in the 2022 Payment Notice: \53\ (1) Adding 
a two-stage weighted model specification to the adult and child models; 
(2) removing the severity illness factors in the adult models and

[[Page 599]]

replacing them with new severity and transplant indicators interacted 
with HCC count factors in the adult and child models; and (3) replacing 
the current enrollment duration factors in the adult models with HCC-
contingent enrollment duration factors in the adult models.
---------------------------------------------------------------------------

    \53\ See 85 FR 78572 at 78583-78586. In the 2022 Payment Notice 
Final Rule, in response to comments, we did not finalize the 
proposed updates and announced that we would publish a technical 
paper on the proposed model changes; see 86 FR 24140 at 24151-24162. 
See also the 2021 HHS-Operated Risk Adjustment Technical Paper on 
Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf and the HHS-Operated Risk 
Adjustment Technical Paper on Possible Model Changes: Summary 
Results for Transfer Simulations, available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs.
---------------------------------------------------------------------------

    As described in prior rulemakings and in the 2021 RA Technical 
Paper, the current HHS-HCC models, which are linear models, 
underpredict plan liability for enrollees without HCCs and the lowest 
expected expenditures, underpredict plan liability for enrollees with 
the highest HCC counts and the highest expected expenditures, and 
underpredict plan liability for partial-year enrollees with HCCs.\54\ 
The proposals in this proposed rule are intended to improve the risk 
adjustment adult and child models' prediction for these subpopulations. 
We released the 2021 RA Technical Paper in response to stakeholder 
requests for more information on the impacts of these proposals before 
they were adopted and released simulated transfer estimates reflecting 
the combination of these proposed changes in December 2021.\55\ We 
continue to believe the combination of these proposed model changes 
will improve the current models' predictive accuracy for the lowest-
risk enrollees, certain partial-year adult enrollees, and the very 
highest-risk enrollees, while limiting trade-offs in other areas of 
model performance and complexity. As such, we are re-proposing these 
combined model specification changes in this rule, and the following 
sections describe these proposed model specification changes in detail.
---------------------------------------------------------------------------

    \54\ See, for example, 85 FR 29164 at 29188-29190; 85 FR 78572 
at 78583-78586; and 86 FR 24140 at 24151-24162. See also the 2021 
HHS-Operated Risk Adjustment Technical Paper on Possible Model 
Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
    \55\ See the 2021 HHS-Operated Risk Adjustment Technical Paper 
on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf and the HHS-Operated Risk 
Adjustment Technical Paper on Possible Model Changes: Summary 
Results for Transfer Simulations, available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs. 
Issuers that participated in the simulation also received issuer-
specific data, including risk score and transfer estimates for the 
simulated results.
---------------------------------------------------------------------------

i. Two-Stage Weighted Model Specification
    We propose to use a two-stage weighted model specification to 
recalibrate the adult and child risk adjustment models starting with 
the 2023 benefit year to improve the underprediction of plan liability 
for the lowest-risk enrollees (that is, enrollees in low risk deciles 
and enrollees without HCCs).\56\ Since approximately 80 percent of 
enrollees in the individual and small group (or merged) markets do not 
have HCCs, this underprediction, while small in magnitude, represents a 
large number of enrollees.\57\
---------------------------------------------------------------------------

    \56\ When we refer to the enrollees without HCCs, we are 
referring to enrollees without payment HCCs.
    \57\ See Chapter 2 of the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf, and the HHS-
Operated Risk Adjustment Technical Paper on Possible Model Changes: 
Summary Results for Transfer Simulations, available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs.
---------------------------------------------------------------------------

    To improve prediction for the lowest-risk enrollees, we explored 
calibrating the adult and child models in two stages to reweight the 
healthier enrollees more heavily. In the first-stage estimation, the 
model coefficients would be estimated using the current model 
specifications; and in the second stage, we would re-estimate the model 
weighting enrollees in the recalibration sample by the capped 
reciprocal of the predicted values of relative expenditures from the 
first step estimation with the same model specification. More 
specifically, the first stage of this proposed weighted estimation 
method for the adult models involves a linear regression (weighted by 
the person-specific eligibility fraction of the number of months 
enrolled divided by 12) of simulated plan liability \58\ on age-sex 
factors, payment HCC factors, severity illness factors,\59\ the 
enrollment duration factors,\60\ and RXCs. For the child models, the 
first stage of the proposed weighted estimation method involves a 
linear regression of simulated plan liability on age-sex factors and 
payment HCC factors.\61\ The methodology for conducting the proposed 
first stage regression would be essentially identical to the current 
adult and child risk adjustment recalibrations. The second stage of the 
proposed two-stage weighted model specification involves using 
recalibration sample enrollees' inverse (also referred to as 
reciprocal) capped predictions from the first stage as weights for a 
second linear regression. As such, this step has the material effect of 
weighting healthier enrollees more heavily so that the statistical 
model predicts their expenditures more accurately. It also 
systematically reduces the influence of very expensive enrollees on the 
final model factors.
---------------------------------------------------------------------------

    \58\ We simulate plan liability expenditures for each metal 
level for each enrollee in the recalibration dataset (that is, we 
apply different standardized benefit design parameters to the same 
sample for each metal level). See https://www.cms.gov/mmrr/Downloads/MMRR2014_004_03_a03.pdf.
    \59\ We are also proposing to remove the current severity 
illness indicators in the adult models and add new severity and 
transplant indicators interacted with HCC count factors in the adult 
and child models, as described elsewhere in this proposed rule.
    \60\ We are also proposing to modify the enrollment duration 
factors in the adult models, as described elsewhere in this proposed 
rule.
    \61\ See supra note 58.
---------------------------------------------------------------------------

    To help provide stability to the proposed two-stage weighted model 
specification, we imposed lower and upper bound caps on the first-stage 
predictions at the 2.5th and 97.5th percentiles in the adult models, 
and the 2.5th and 99.5th percentiles in the child models. This capped 
weighted approach avoids excessively large or small weights for any 
observations for the second stage estimation, and therefore mitigates 
the potential to underpredict at the high end for expensive enrollees, 
as well as any possible low-end overprediction of healthier enrollees. 
We tested various caps for the weights based on the distribution of 
costs and found these lower and upper bound caps achieved better 
prediction on average.\62\
---------------------------------------------------------------------------

    \62\ See Section 2.2 in the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf. Also see 85 
FR at 78667 and 86 FR at 24283.
---------------------------------------------------------------------------

    Additionally, in our consideration of the two-stage weighted model 
specification, we tested various methods of determining weights for the 
second stage, including reciprocals of the square root of predictions, 
log of predictions, and residuals from the first stage estimation, but 
the reciprocal of the capped predictions from the first stage resulted 
in better predictive ratios for low-cost enrollees compared to any of 
these alternative weighting functions.\63\
---------------------------------------------------------------------------

    \63\ Ibid.
---------------------------------------------------------------------------

    Our conceptual reasoning for pursuing the two-stage weighted model 
specification is to retain the simple linear, additive structure of the 
current models while forcing the model to better predict lowest-risk 
enrollees, who our analyses identified as underpredicted in the current 
adult and child models. Based on analyses using 2018 enrollee-level 
EDGE data, the two-stage weighted approach significantly improves the 
predictive ratios (PRs) of the lower deciles and the PRs for enrollees 
without HCCs compared to the current models.\64\ Similar results were 
also seen when using 2016 and 2017 enrollee-

[[Page 600]]

level EDGE data.\65\ In addition, the two-stage weighted approach 
eliminated the overprediction observed in risk decile 8.\66\ We also 
found that the two-stage weighted approach did not meaningfully change 
factor coefficients for most HCCs, providing stability to the risk 
adjustment model factors.
---------------------------------------------------------------------------

    \64\ See Figure 2.2 in the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
    \65\ The PRs calculated in the 2021 RA Technical Paper are 
calculated using the same samples on which the models were 
calibrated. However, as is common practice in evaluating model fit, 
we also tested splitting the sample for calibration and validation 
purposes and the results were unchanged. Further, for purposes of 
the analysis in the 2021 RA Technical Paper, we calculated PRs for 
at least three data years and the results always appear the same. We 
therefore generally only reported results in the 2021 RA Technical 
Paper from the 2018 data year, which was the most recently available 
dataset at the time that we ran these analyses in preparation for 
announcing the proposed model changes in the proposed 2022 Payment 
Notice.
    \66\ See Figure 2.2 in the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------

    At the same time, we also considered whether the two-stage weighted 
approach worsens the fit of the models along other dimensions, 
identifying three areas that had minor, negative impacts on the model 
fit. First, the two-stage weighted approach predicts plan liability by 
age-sex factor less accurately than the current models, especially for 
younger and older women. Overall, we considered this to be an 
acceptable trade-off, because across all age and sex factors, most PRs 
were within a tolerable threshold of +/-5 percent (for example, 0.95 to 
1.05), and the two-stage weighted approach has the major benefit of 
more accurately predicting the age-sex factors for the enrollees 
without HCCs, which is a much larger population than enrollees with 
HCCs. Second, the two-stage weighted approach is somewhat less accurate 
at predicting certain HCCs, with the two-stage weighted approach 
worsening adult model silver plan PRs by at least 5 percentage points 
for 14 (out of 91) ungrouped HCCs and 3 (out of 18) grouped HCCs. For 
the vast majority of HCCs, the impact is very small and most affected 
HCCs or HCC groups have small sample sizes.\67\ Again, we considered 
this reduced accuracy to be an acceptable trade-off because most of the 
PRs for the two-stage weighted approach were within a tolerable 
threshold of +/-5 percent (for example, 0.95 to 1.05), most enrollees 
do not have HCCs, and the two-stage weighted approach predicts plan 
liability better for those no HCC enrollees. Third, the two-stage 
weighted approach had lower R-squared values compared to the current 
models. However, the decrease in R-squared is at most 0.1 percentage 
points for all metal levels, which is a minor reduction in fit across 
models.\68\ Similar to the worsening of the age-sex cell and the HCC 
PRs, we were not concerned about the lower R-squared as the reduction 
in fit was minor at all metal levels, the values remained within the 
range of R-squared statistics of other concurrent models predicting 
expenditures for commercial insurance enrollees,\69\ and the proposed 
two-stage weighted model specification better predicts plan liability 
for enrollees with no HCCs, which is the majority of enrollees. After 
considering the impact of the approach on model performance, we 
determined that the proposed two-stage weighted model specification 
does not have material unintended consequences in model performance and 
achieves the aim of improving the predictive accuracy of the current 
adult and child models for enrollees in the lowest risk deciles and for 
enrollees without HCCs. For these reasons, we believe that the two-
stage weighted approach can improve prediction for lowest-risk 
enrollees with limited trade-offs in other parts of the models' 
performance. Therefore, we are proposing to add the two-stage weighted 
model specification to the adult and child models beginning with the 
2023 benefit year in combination with the proposed interacted HCC 
counts model specification and the updated adult model enrollment 
duration factors described later in this proposed rule.
---------------------------------------------------------------------------

    \67\ For example, only one HCC or HCC group whose PR was 
identified in our analysis as worsening by at least 5 percentage 
points was present in greater than 1 percent of the adult silver 
plan enrollees in the 2018 enrollee-level EDGE dataset (HCC 142 
Specified Heart Arrhythmias). Our analysis found that all other HCCs 
had recalibration dataset frequencies of less than 0.5 percent of 
enrollees. See Chapter 2.3 and Table 2.1 in the 2021 HHS-Operated 
Risk Adjustment Technical Paper on Possible Model Changes, available 
at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
    \68\ See Figure 2.6 in the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
    \69\ See Winkelman, R., & Mehmud, S. (2007). A Comparative 
Analysis of Claims-Based Tools for Health Risk Assessment. 
Schaumberg, IL: Society of Actuaries.
---------------------------------------------------------------------------

    In the 2021 RA Technical Paper, we explained that we believe that 
by addressing the underprediction of costs associated with lowest-risk 
enrollees in the adult and child models, we could further encourage the 
retention and offering of plans that enroll a higher proportion of this 
subpopulation of enrollees. We believe issuers offering these types of 
plans are at greater risk of exiting the market if transfers calculated 
under the state payment transfer formula undercompensate for the true 
plan liability of the lowest-risk enrollees. We received stakeholder 
comments in this regard, noting that the underprediction of the lowest-
risk enrollees could disincentivize issuers from attracting healthy 
enrollees to their plans, thereby undermining the goals of developing a 
healthy and stable market and encouraging competition on the basis of 
high quality rather than risk selection. However, other stakeholders 
have questioned if we should focus model changes on improving 
prediction for the lowest-risk enrollees when the risk adjustment 
program is intended to reduce incentives for issuers to avoid enrolling 
individuals with higher risk.
    We also received comments concerned that the two-stage weighted 
model would be redundant of other elements in the state payment 
transfer formula, which stated that the administrative cost adjustment 
to statewide average premium \70\ already addresses some of the 
underprediction of the lowest-risk enrollees in the risk adjustment 
models. We clarify that the proposed two-stage weighted model 
specification and existing administrative cost adjustment to statewide 
average premium are not redundant and address separate considerations. 
As detailed in the 2018 Payment Notice, the purpose of the 
administrative cost adjustment to statewide average premium is to 
exclude fixed administrative costs that are not dependent on enrollee 
risk, such as taxes.\71\ In contrast, and as previously described 
elsewhere,\72\ the purpose of the proposed two-stage weighed model 
specification is to improve the current adult and child models' 
prediction for the lowest risk enrollees.
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    \70\ 81 FR at 94099-94100.
    \71\ See 81 FR at 61488-61489. Also see 81 FR at 94099-94100.
    \72\ See Section 2.2 in the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf. Also see 85 
FR at 78667 and 86 FR at 24283.
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    We seek comment on the two-stage weighted model specification 
proposal, specifically regarding whether we should implement the 
proposed two-stage weighted model specification alone, independent of 
the other proposed model specification changes outlined in this rule, 
beginning with the 2023 benefit year; whether we should implement the 
proposed two-stage weighted model specification in conjunction with 
these other proposals; or whether we should not implement the two-stage 
weighted model specification at all. Additionally, given the 
stakeholder comments we received

[[Page 601]]

questioning the need for this type of model update, we also generally 
solicit comments on whether we should seek to improve the current 
models' prediction for the lowest-risk enrollees.
ii. Interacted HCC Counts Model Specification
    In addition to the two-stage weighted approach, we are proposing to 
add an interacted HCC counts model specification to the adult and child 
risk adjustment models starting with the 2023 benefit year to address 
the current models' underprediction of plan liability for the very 
highest-risk enrollees (that is, those in the top risk percentile and 
those enrollees with the most HCCs). While this highest-risk 
subpopulation represents a small number of enrollees, it represents a 
large portion of expenditures. As described in the 2021 RA Technical 
Paper, enrollees in risk decile 10 represent roughly 74.29 percent of 
actual plan liability, compared to only 1.36 percent for enrollees in 
risk decile 1.\73\ We found that for enrollees with a high HCC count, 
there is an increasing, non-linear effect that leads to higher costs 
than are currently predicted by adding up the incremental effects of 
each HCC.
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    \73\ See Table 4.1 in the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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    Therefore, to address the underprediction of the highest-cost 
enrollees, we explored the addition of severity and transplant factors 
interacted with HCC counts in the adult and child models, wherein a 
factor flagging the presence of at least one severe or transplant 
payment HCC is interacted with counts of the enrollee's payment 
HCCs.\74\ The purpose of adding severity and transplant factors 
interacted with HCC count factors to the adult and child models is to 
address the underprediction of the highest risk enrollees (as the 
proposed two-stage-weighted model specification addresses the 
underprediction of the healthiest enrollees) by accounting for the fact 
that costs of certain HCCs rise significantly when they occur with 
multiple other HCCs. Specifically, the goals of this approach were to:
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    \74\ For HCCs in a coefficient estimation group, the group is 
counted at most once. These groups of HCCs in the HHS risk 
adjustment adult and child models are detailed in the HHS-Developed 
Risk Adjustment Model Algorithm ``Do It Yourself (DIY)'' Software 
``Additional Adult Variables'' and ``Additional Child Variables'' 
table logic (Tables 6 and 7 in the 2021 Benefit Year DIY Software). 
The August 3, 2021 version of the DIY software is available at 
https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance.
---------------------------------------------------------------------------

    1. Address the non-linearity in costs between enrollees without 
HCCs or with very low costs and enrollees with multiple HCCs or with 
high costs;
    2. Empirically incorporate the cost impact of multiple complex 
diseases; and
    3. Reduce incentives for coding proliferation to mitigate the 
gaming concerns with HCC counts models.
    In developing this interacted HCC counts approach, we identified 
common HCCs for enrollees with extremely high costs, as well as HCCs 
that were being underpredicted in the current risk adjustment adult and 
child models. We found that many of the HCCs that were flagged as being 
underpredicted were the current severe illness HCCs, the transplant 
HCCs, and other HCCs related to the severity of disease. Therefore, we 
considered dropping the current severity illness factors in the adult 
models and replacing them with severity and transplant factors 
interacted with HCC count factors in the adult models, as well as 
adding the severity and transplant factors interacted with HCC count 
factors to the child models.
    We propose the inclusion of the factors in Tables 1 and 2 as the 
interacted severity and transplant factors in the adult and child 
models starting with the 2023 benefit year. We separated out transplant 
HCCs and severity HCCs into their own separate set of interacted 
factors, as expressed in Tables 1 and 2, because we found that this 
approach improved prediction for high-cost enrollees better than an 
approach that combined severity and transplant HCCs into a single set 
of factors. Furthermore, under the current risk adjustment models, 
adult severity illness interaction factors are collapsed into a single 
binary variable indicating the presence of any severity illness 
interaction. In contrast, the proposed severity factors would not be 
collapsed and would instead be separated out by the HCC count with 
which the severity or transplant illness indicator was interacted.
    We defined the new proposed interaction factors such that an 
enrollee would receive one or more of these factors if they had any 
HCCs in the severity or transplant indicator groups in Table 3 and 
according to how many HCCs were recorded in the enrollee's data in 
total. As such, the proposed severity and transplant interaction 
factors would express the presence of one or more of the selected 
severity or transplant HCCs in Table 3. That is, an enrollee must have 
at least one HCC in the ``severity'' or ``transplant'' indicator groups 
in Table 3 to receive the interacted HCC count factor toward their risk 
score, but would not receive any additional flags for having more than 
one of the ``severity'' or ``transplant'' HCCs in an indicator group 
beyond the total HCC count.
    The proposed severity-HCC-count-interaction factors were calculated 
as 10 separate factors for the adult models, and seven separate factors 
for the child models. In the adult models, the first nine factors 
specified the presence of (1) an HCC in the severity list in Table 3 
and (2) exactly one payment HCC in the enrollee's data, exactly two, 
exactly three, and so on, up to exactly nine payment HCCs. The tenth 
factor specified the presence of (1) an HCC in the severity list in 
Table 3 and (2) ten or more payment HCCs in the enrollee's data. For 
the child models, the first five factors represented the presence of 
(1) an HCC in the severity list in Table 3 and (2) exactly one payment 
HCC in the enrollee's data, exactly two, exactly three, and so on, but 
the sixth factor represents the presence of (1) an HCC in the severity 
list in Table 3 and (2) six to seven payment HCCs, and the seventh 
factor represents the presence of (1) an HCC in the severity list in 
Table 3 and (2) eight or more payment HCCs in the enrollee's data.
    The proposed transplant-HCC-count-interaction factors were 
calculated similarly. However, the transplant factors were calculated 
using a different range of HCC counts. In the adult models, five 
separate transplant interaction factors were created, representing the 
presence of (1) an HCC in the transplant list in Table 3 and (2) 
payment HCC counts of exactly four, exactly five, exactly six, exactly 
seven, and eight or more payment HCCs in the enrollee's data. For the 
child models, we created only one transplant interaction factor 
indicating the presence of (1) an HCC in the transplant list in Table 3 
and (2) a total of four or more payment HCCs in the enrollee's data. As 
detailed later in this section, this treatment of transplant-HCC-count-
interaction factors stabilized the child model estimates by increasing 
the sample size used to estimate the factor coefficients.
    To illustrate how the proposed severity- (or transplant-) HCC-
count-interaction factors would be assigned to an enrollee, consider an 
adult enrollee with four payment HCCs, one of which is HCC 34 ``Liver 
Transplant Status/Complications''. Because HCC 34 appears in both the 
severity and transplant indicator groups in Table 3, this enrollee 
would receive the following factor coefficients toward their risk score 
in the adult models: (1) The four factor coefficients for their 
individual HCCs (the three non-transplant HCC factors and the HCC 34

[[Page 602]]

transplant HCC factor), (2) the factor coefficient for the severity-
HCC-count-interaction indicating four payment HCCs, and (3) the factor 
coefficient for the transplant-HCC-count-interaction indicating four 
payment HCCs.\75\ The child model would operate similarly. For a child 
enrollee with a transplant HCC in the transplant factor group and three 
other payment HCCs, the following would be used to calculate the 
enrollee's risk score: (1) The factor coefficients for all four HCCs 
(that is, the three non-transplant HCCs and the transplant HCC), (2) 
the factor coefficient for the severity-HCC-count-interaction 
indicating four payment HCCs, and (3) the factor coefficient for the 
transplant-HCC-count-interaction indicating four or more payment HCCs.
---------------------------------------------------------------------------

    \75\ This is in addition to other factors that the adult 
enrollee has that are used to calculate their risk score (such as 
the applicable demographic factors, RXCs (if any), and the 
applicable enrollment duration factors).
---------------------------------------------------------------------------

    To implement the severity- and transplant-HCC-count-interaction 
factors in the regression model and estimate the value of their factor 
coefficients, we are proposing to remove the current severity illness 
factors in the adult models, and add severity- and transplant-HCC-
count-interaction factors for the adult and child models beginning with 
the 2023 benefit year. Although the severity (or transplant) HCC-count-
interaction factor coefficients may be estimated as having negative 
values, the combination of these interaction factor coefficients with 
the factor coefficient of the HCC that triggered the severity factor 
will always be positive. For example, the proposed adult silver metal 
level model factor coefficient for Viral or Unspecified Meningitis (HCC 
04), which is proposed as a severe illness HCC, is 6.914, when combined 
with the proposed severity-HCC-count-interaction factor coefficient for 
one HCC of -4.603 (indicating that the enrollee only has HCC 04 present 
in their data), would increase the enrollee's risk score by 2.311. 
Moreover, an increase in the count of HCCs would lead to a monotonic 
increase in the enrollee risk score, because the severity-HCC-count-
interaction factor coefficients are less negative (and sometimes 
positive) with a larger number of payment HCCs.
    One potential concern with this proposed model specification change 
is that the severity- and transplant-HCC-count-interaction factor 
coefficients might be based on small sample sizes. In recognition of 
this issue, we considered sample sizes of the various interacted HCC 
count factors when developing this proposal and the proposed factor 
coefficients. We explored alternative methods of interacting HCC counts 
with severity and transplant HCCs, including interacting the HCC counts 
with individual selected severity and transplant HCCs, but found that 
interacting the HCC counts with a factor indicating the presence of at 
least one of the selected HCCs in each group produced PR improvements 
and sufficient sample sizes for reasonably stable factor coefficient 
estimates. To that end, we analyzed 2016, 2017, and 2018 enrollee-level 
EDGE data and chose the model specifications that grouped the HCC 
counts interacted with individual severity and transplant HCCs into two 
sets of aggregated factors to maximize sample size, reduce concerns of 
overfitting the model, and reduce the number of factors being added to 
the models. More specifically, in the adult models, we found that 
starting with 4+ HCCs for the transplant interacted factors improved 
predictions of enrollees at the very high end in terms of risk and cost 
and ending at 8+ HCCs for the transplant interacted factors, instead of 
10+ HCCs, addressed the small sample sizes of enrollees with a 
transplant and 9 or more HCCs. For the child models, we found having 
one transplant interacted factor for 4+ HCCs provided more stable 
estimates given the smaller sample sizes for children than those for 
adults. With the proposed structure for transplant and severity 
interacted factors in place, the resulting sample sizes for both 
proposed sets of factors in the child and adult models in the proposed 
2022 Payment Notice and in this rule are consistent with the sample 
sizes used for individual HCCs in the adult and child risk adjustment 
models.
    We also considered potential gaming concerns in developing the 
proposed interacted HCC counts factors. We believe that the proposal to 
restrict the incremental risk score adjustment to enrollees with at 
least one severe illness HCC, which accounts for less than 2 percent of 
the adult enrollee-level EDGE data population across the 2016, 2017, 
and 2018 benefit years, helps mitigate the concern that issuers may 
attempt to inflate HCC counts to influence their transfers under the 
state payment transfer formula. In other words, the scope for 
potentially inflating HCC coding frequency under this proposal would be 
limited to a small fraction of total enrollees, in contrast to an 
approach that would interact HCC counts for any payment HCC, where a 
payment HCC is present in approximately 20 percent of the adult 
enrollee population across the same three benefit years of enrollee-
level EDGE data.\76\ We also note that enrollees with interacted HCCs 
are likely to have more HCCs and higher risk scores and therefore are 
more likely to be sampled and have their risk scores reviewed in the 
HHS-operated risk adjustment data validation (HHS-RADV) process due to 
our use of stratified sampling and application of the Neyman 
allocation.\77\
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    \76\ This analysis was based on 2016, 2017, and 2018 enrollee-
level EDGE data. See Chapter 4.2 in the 2021 HHS-Operated Risk 
Adjustment Technical Paper on Possible Model Changes, available at 
https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
    \77\ For a discussion of our use of stratified sampling and 
application of the Neyman allocation, see 79 FR at 13756-13758; and 
84 FR at 17494-17495.
---------------------------------------------------------------------------

    Our analysis of the proposed interacted HCC counts factors combined 
with the proposed HCC-contingent enrollment duration factors in the 
adult models (discussed in the following section) significantly 
improves predictions across most deciles and HCC counts for the very 
highest-risk enrollees, as well as the lowest-risk enrollees without 
HCCs. Specifically, as described in the 2021 RA Technical Paper, the 
proposed interacted HCC counts approach improves the PRs for enrollees 
across most HCC counts, with significant improvements for enrollees 
with high numbers of HCCs (greater than 6).\78\ The proposed interacted 
HCC counts approach also demonstrated improved R-squared statistics 
across all metal levels in the adult and child models using 2016, 2017, 
and 2018 enrollee-level EDGE data.\79\
---------------------------------------------------------------------------

    \78\ See Figure 4.3 in the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
    \79\ See Figure 4.4 in the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------

    Some commenters on the 2021 RA Technical Paper were concerned about 
potential data bias because of the exclusion of enrollees with 
capitated claims from the analytic sample used to test the model 
specification changes. As previously stated in the 2016 RA White 
Paper,\80\ we have historically excluded enrollees with capitated 
claims from the recalibration sample due to concerns that methods for 
computing and reporting derived amounts from capitated claims would not 
result in

[[Page 603]]

reliable data for recalibration or analysis.\81\
---------------------------------------------------------------------------

    \80\ See 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.
    \81\ See Chapter 1.4 in the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------

    Beyond the predictive improvements, an additional benefit of the 
proposed interacted HCC count model specification is that it would not 
overhaul the existing risk adjustment factors and would instead build 
upon the current models. Additionally, the factors would remain fairly 
stable, could be used in combination with other refinements and model 
updates, and could be easily modified, adjusted, expanded, or 
constrained in the future to include additional HCCs or to remove HCCs. 
For all of these reasons, we are proposing to add the proposed 
interacted HCC counts model specification as outlined above to the 
adult and child risk adjustment models beginning with the 2023 benefit 
year.
    We seek comment on this proposal, specifically regarding whether we 
should implement the proposed interacted HCC counts model specification 
alone, independent of the other proposed model specification changes 
outlined in this rule, beginning with the 2023 benefit year; whether we 
should implement the proposed interacted HCC counts model specification 
in conjunction with these other proposals; or whether we should not 
implement the proposed interacted HCC counts model specification at 
all. We also seek comment on the variations on the HCC counts model 
specification discussed in this section, including whether we should 
interact severity or transplant factors with individual HCCs, or should 
interact HCC counts with individual selected severity and transplant 
HCCs, rather than interacting HCC counts with only an indicator of the 
presence of severity or transplant HCCs, as proposed. Finally, we seek 
comment on the proposed list of severity and transplant HCCs in Table 3 
that would be used to calculate the proposed interacted HCC count 
factor coefficients and whether other HCCs should be to added to the 
proposed list that trigger the interacted HCC count factor coefficients 
or whether any of the HCCs on the proposed list should be removed.
iii. Changes to the Adult Model Enrollment Duration Factors \82\
---------------------------------------------------------------------------

    \82\ As explained in the 2021 Payment Notice proposed rule, we 
found that partial year enrollees in the child models did not have 
the same risk differences as partial year enrollees in the adult 
models and they tended to have similar risk to full year enrollees 
in the child models. See 85 FR 7103-7104. In the infant models, we 
found that partial year infants had higher expenditures on average 
compared to their full year counterparts; however, the incorporation 
of enrollment duration factors created interaction issues with the 
current severity and maturity factors and did not have a meaningful 
impact on the general predictive accuracy of the infant models. 
Ibid. We therefore propose to continue to apply enrollment duration 
factors to the adult models only.
---------------------------------------------------------------------------

    In addition to the proposed two-stage weighted model specification 
and the interacted HCC counts model specification, we are also 
proposing to change the enrollment duration factors in the adult risk 
adjustment models to improve the prediction for partial-year adult 
enrollees with and without HCCs. Although the value for the factors 
change from year to year as part of the annual recalibration of the 
adult models, we have not made changes to the structure of the 
enrollment duration factors since they were first adopted for the 2017 
benefit year. To develop the current enrollment duration factors for 
the adult models, we reviewed the annualized predicted expenditures, 
actual expenditures, and PRs by enrollment duration groups (for each: 1 
month, 2 months, and so on up to 12 months) for our risk adjustment 
concurrent modeling sample, which was made up of adults in the 2014 
MarketScan[supreg] data.\83\ This analysis found that actuarial risk 
for adult enrollees with short enrollment periods tended to be 
underpredicted in our methodology, and actuarial risk for adult 
enrollees with full enrollment periods (12 months) tended to be 
overpredicted. We therefore proposed and finalized in the 2018 Payment 
Notice that, beginning for the 2017 benefit year, the adult models 
would include enrollment duration factors that apply to all adults with 
partial-year enrollment.\84\ The value for the enrollment duration 
factors have generally decreased since they were first introduced in 
the adult models for the 2017 benefit year, reflecting a reduced impact 
of enrollment duration on risk scores of partial year enrollees. After 
a slight increase between 2017 and 2018, the factors have decreased 
significantly from 2018 to 2021, and in some cases (the 10- and 11-
month factors) the factors are now 0.000, relative to a 12-month 
enrollment baseline.\85\
---------------------------------------------------------------------------

    \83\ See pages 35-39 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.
    \84\ 81 FR 94058 at 94071-94074.
    \85\ In unconstrained models, these factors are negative; 
therefore, we constrained them to zero because we do not believe 
negative enrollment duration factors are appropriate, as this would 
create inappropriate incentives. See Figure 3.1 in the 2021 HHS-
Operated Risk Adjustment Technical Paper on Possible Model Changes, 
available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------

    As described in prior rulemakings and the 2021 RA Technical Paper, 
we have been considering potential adjustments to the enrollment 
duration factors and our more recent analysis of enrollee-level EDGE 
data found that the current adult model enrollment duration factors 
underpredicted plan liability for partial-year adult enrollees with 
HCCs and overpredicted plan liability for partial-year adult enrollees 
without HCCs.\86\ \87\ More specifically, our analysis of 2017 and 2018 
enrollee-level EDGE data found that the current enrollment duration 
factors are driven by enrollees with HCCs.\88\ That is, partial-year 
enrollees with HCCs had higher per member, per month (PMPM) 
expenditures on average as compared to full-year enrollees with HCCs, 
and partial-year enrollees without HCCs were not significantly 
different in PMPM expenditures compared to full-year enrollees without 
HCCs.\89\
---------------------------------------------------------------------------

    \86\ See 85 FR 29164 at 29188-29190.; 86 FR 24140 at 24151-
24162.; and the 2021 HHS-Operated Risk Adjustment Technical Paper on 
Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
    \87\ When we refer to the enrollees with and without HCCs, we 
are referring to enrollees without payment HCCs.
    \88\ See, for example, Chapters 1.4 and 3.2 of the 2021 HHS-
Operated Risk Adjustment Technical Paper on Possible Model Changes, 
available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf. Also see 85 FR at 7103-7104 and 85 FR at 78585-78586.
    \89\ See Chapter 1.4 of the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------

    Therefore, beginning with the 2023 benefit year, we are proposing 
to eliminate the current monthly enrollment duration factors of up to 
11 months for all enrollees in the adult models, and replace them with 
new monthly enrollment duration factors of up to 6 months that would 
apply only to adult enrollees with HCCs. If finalized as proposed, this 
would mean there would be no enrollment duration factors for adult 
enrollees without HCCs starting with the 2023 benefit year nor would 
there be enrollment duration factors for adult enrollees with HCCs and 
more than 6 months of enrollment.
    While we considered other enrollment duration factor structures, we 
are proposing to limit the enrollment duration factors to 6 months 
because we found that the monthly average cost variation by number of 
months enrolled is meaningfully reduced after 6 months for adult 
enrollees with HCCs, and enrollment duration factors beyond 6 months 
did not meaningfully improve

[[Page 604]]

prediction for the adult models. As part of our analysis of enrollment 
duration factor options, we also considered adoption of enrollment 
duration factors by market, but we did not find a meaningful 
distinction in relative costs between markets on average once we 
implemented the proposed enrollment duration factors of up to 6 months 
for adult enrollees with HCCs.\90\ We also considered HCC-type 
contingent enrollment duration factors. Specifically, we found that the 
distribution of enrollment duration and PMPM allowed charges by 
enrollment duration is similar for adults with any acute HCCs versus 
adults with only chronic HCCs.\91\ We therefore determined that, on 
balance, it would add unnecessary complexity to introduce enrollment 
duration factors by market type or that are contingent on types of HCCs 
with little benefit. Therefore, we are not proposing enrollment 
duration factors for the adult models by market type or that are 
contingent on types of HCCs at this time.
---------------------------------------------------------------------------

    \90\ See Chapter 3.3.2 of the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
    \91\ See Chapter 3.3.3 of the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------

    We also considered previous comments we received that expressed 
concerns that certain issuers--particularly small group market issuers, 
small issuers, or Medicaid issuers--may have partial-year enrollees 
with HCCs that are not coded. These commenters expressed concerns that 
these issuers may have difficulty obtaining diagnoses for these 
enrollees, creating cases where the issuer may pay claims, and incur 
costs, for services associated with a condition for the partial-year 
enrollee, but the issuer's limited time with the partial-year enrollee 
may not be adequate to capture the diagnosis code associated with the 
HCC.\92\ \93\ In response to the 2021 RA Technical Paper, we got 
further comment from stakeholders who questioned whether the HCC-
contingent enrollment duration factors would have negative impacts on 
small group market issuers that offer non-calendar year coverage and 
take on new business later in the year. As we noted in the 2021 RA 
Technical Paper, our analysis did not find evidence that issuers are 
unable to capture cost-meaningful HCCs for partial-year enrollees in 
the individual or small group (including merged) market.\94\
---------------------------------------------------------------------------

    \92\ See Chapter 3.4 of the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
    \93\ This issue differs from situations where issuers may not 
have a complete diagnostic profile for a partial-year enrollee 
because the services received were not related to the diagnoses that 
were not captured. For example, if an enrollee received services due 
to a condition while enrolled with a different issuer, then the 
current issuer may not have all diagnosis codes for a partial-year 
enrollee. However, such cases do not have cost implications for the 
current issuer since the partial-year enrollee received no services 
associated with that diagnosis.
    \94\ See Chapter 3.4 of the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------

    We solicit comments on the proposed changes to the enrollment 
duration factors for the adult models. We also solicit comments 
regarding whether we should implement the proposed changes to 
enrollment duration factors alone, independent of the other proposed 
model specification changes outlined in this rule, beginning with the 
2023 benefit year; whether we should implement the proposed changes to 
enrollment duration factors in conjunction with these other proposals; 
or whether we should not implement the proposed changes to enrollment 
duration factors at all and maintain the current structure for these 
factors.
iv. Combined Impact of the Proposed Model Changes
    In sum, we are proposing to modify the HHS risk adjustment model 
specifications for the adult and child models beginning with the 2023 
benefit year by combining a two-stage weighted approach with the 
removal of the current adult model severe illness interaction factors 
and the addition of new severe illness and transplant interacted HCC 
count factors to the adult and child models. We are also proposing to 
replace the current enrollment duration factors in the adult models. 
For the two-stage weighted approach, we propose calibrating the adult 
and child models in two stages. The first stage of the weighted 
estimation method would involve a linear regression of simulated plan 
liability on age-sex factors and payment HCC factors for the adult and 
child models, with the addition of RXCs and the new proposed enrollment 
duration factors for the adult models. The second stage would use the 
reciprocal of prediction from the first step to weight a second stage 
linear regression. To stabilize the weights from the first stage 
predictions, we propose lower and upper bound caps on the predictions 
used as weights at the 2.5th and 97.5th percentiles in the adult models 
and the 2.5th and 99.5th percentiles in the child models. This two-
stage weighted approach would be combined with the new severity and 
transplant indicators from the interacted HCC count factors. For the 
severity indicator group, we propose to add separate count factors for 
one to 10+ payment HCCs (1, 2, . . . , 10+) for the adult models and 
one to 5, 6 or 7, and 8+ payment HCCs (1, 2, . . . 5, 6 or 7, 8+) for 
the child models. The proposed HCCs that would flag the severity 
indicator are listed in Table 3. For the transplant HCCs, we propose to 
incorporate factors for 4 to 8+ payment HCCs (4, 5, 6, 7, 8+) for the 
adult models and one factor for 4+ payment HCCs for the child models. 
The proposed HCCs that would flag the transplant indicator are listed 
in Table 3. The severity- (and transplant-) HCC-count-interaction 
factors would be included in both stages of the regressions. We propose 
to incorporate the two-stage weighted approach and the interacted HCC 
count specification updates beginning with the 2023 benefit year HHS 
risk adjustment adult and child models. We also propose to remove the 
current severity illness factors in the adult models beginning with the 
2023 benefit year. Lastly, we propose to remove the current 11 
enrollment duration factors for all enrollees in the adult models and 
replace them with new monthly enrollment duration factors of up to 6 
months that only apply to enrollees with HCCs. We propose to 
incorporate the new HCC-contingent enrollment duration factors 
beginning with the 2023 benefit year adult models.
    We tested combining these model specifications into an approach 
that incorporated the two-stage weighted approach, the severity and 
transplant factors interacted with HCC count factors, and the HCC-
contingent enrollment duration factors. We found that, together, these 
changes are expected to improve model performance in comparison to the 
current models. Our analysis found this combined approach generally 
improved prediction for enrollees at both the low and high ends of 
expected expenditures and had higher R-squared statistics across metal 
levels than the current models, indicating a better individual-level 
fit.\95\ Our analysis also found general improvement in PRs for the 
models with the combined proposed model specification changes across 
each decile of predicted plan liability, by age-sex factor for adult 
enrollees with and without HCCs, and by enrollment

[[Page 605]]

length.\96\ We also found that the mean absolute error did not 
materially differ between the current adult and child models and the 
proposed adult and child models with the combined proposed model 
specification changes incorporated.\97\ These observations support our 
belief that the best way to comprehensively improve the predictive 
accuracy of the current models across the risk spectrum is to implement 
all three proposed model specification changes together. To further 
assist issuers and other stakeholders with analyzing the impact of the 
combination of these proposed model specification changes, HHS also 
conducted a transfer simulation and provided summary-level and issuer-
specific risk score and transfer estimates.\98\ \99\
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    \95\ See Chapter 5.1 of the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
    \96\ Ibid.
    \97\ Ibid.
    \98\ See the 2021 HHS-Operated Risk Adjustment Technical Paper 
on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf. See also the HHS-Operated Risk 
Adjustment Technical Paper on Possible Model Changes: Summary 
Results for Transfer Simulations, available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs. 
Issuers that participated in the simulation also received detailed 
issuer-specific data, including risk score and transfer estimates 
for the simulated results.
    \99\ If an issuer wishes to use the simulation results to assist 
in assessing the impact of these model specification changes on 
future benefit year transfer amounts, it should do so with caution 
and in combination with other significant data.
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    As detailed in the 2021 RA Technical Paper, this transfer 
simulation applied the proposed model specification changes to 2020 
benefit year EDGE data to illustrate and estimate what 2020 benefit 
year risk adjustment transfers would have been if the combined model 
specification changes were applied.\100\ The transfer simulation 
provided issuers with detailed, plan-level simulated results.\101\ The 
coefficients values presented in Tables 1 and 2 incorporate the 
combination of these proposed model specification changes and Table 3 
provides the list of the proposed severity and transplant HCCs that 
would apply for the proposed interacted HCC counts factors. We seek 
comment on the combination of these proposed model changes and the 
adoption of these changes beginning with the 2023 benefit year.
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    \100\ See Chapter 5.2 of the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
    \101\ See the HHS-Operated Risk Adjustment Technical Paper on 
Possible Model Changes: Summary Results for Transfer Simulations, 
available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs.
---------------------------------------------------------------------------

    We seek comment on finalizing each of these proposed model 
specification changes as a whole, in part, or in combination or for 
example, whether we should finalize the proposed interaction HCC counts 
model specification and the proposed changes to the adult model 
enrollment duration factors without the proposed two stage weighted 
model specification. Finally, we seek comment on finalizing the 2023 
models without the proposed model specification changes, but with 
updates to the data years used for recalibration, (that is, to use 
2017, 2018, and 2019 enrollee-level EDGE data, as detailed elsewhere in 
this proposed rule); or, alternatively, using the updated final 2022 
risk adjustment model coefficients \102\ for the 2023 benefit year risk 
adjustment models, trended forward to project 2023 costs or not trended 
forward to project 2023 costs.
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    \102\ See ``Final 2021 Benefit Year Final HHS Risk Adjustment 
Model Coefficients.'' May 12, 2020. Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-2021-Benefit-Year-Final-HHS-Risk-Adjustment-Model-Coefficients.pdf.
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c. Pricing Adjustment for the Hepatitis C Drugs
    For the 2023 benefit year, we propose to continue applying a market 
pricing adjustment to the plan liability associated with Hepatitis C 
drugs in the risk adjustment models.\103\ Since the 2020 benefit year 
risk adjustment models, we have been making a market pricing adjustment 
to the plan liability associated with Hepatitis C drugs to reflect 
future market pricing prior to solving for coefficients for the 
models.\104\ This market pricing adjustment has been necessary to 
account for the significant pricing changes associated with the 
introduction of new and generic Hepatitis C drugs between the data 
years used for recalibrating the models and the applicable 
recalibration benefit year. We also continue to be cognizant that 
issuers might seek to influence provider prescribing patterns if a drug 
claim can trigger a large increase in an enrollee's risk score that is 
higher than the actual plan liability of the drug claim, and therefore, 
make the transfer results more favorable for the issuer. We have 
committed to reassessing this pricing adjustment with additional years 
of enrollee-level EDGE data, as data become available. As part of the 
2023 benefit year model recalibration, we reassessed the Hepatitis C 
RXC using available enrollee-level EDGE data (including 2019 benefit 
year data) to consider whether the adjustment was still needed and if 
it is still needed, whether it should be modified. We found that the 
data for the Hepatitis C RXC that would be used for the 2023 benefit 
year recalibration (that is, the 2017, 2018, and 2019 enrollee-level 
EDGE data) still do not account for the significant pricing changes due 
to the introduction of new Hepatitis C drugs and, therefore, do not 
precisely reflect the average cost of Hepatitis C treatments applicable 
to the benefit year in question.
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    \103\ See, for example, 84 FR 17463 through 17466.
    \104\ The Hepatitis C drugs market pricing adjustment to plan 
liability is applied for all enrollees taking Hepatitis C drugs in 
the data used for recalibration.
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    Specifically, we are proposing to recalibrate the 2023 benefit year 
risk adjustment models with the 2017, 2018, and 2019 enrollee-level 
EDGE data. Generic Hepatitis C drugs did not become available on the 
market until 2019.\105\ Due to the lag between the data years used to 
recalibrate the risk adjustment models and the applicable benefit year 
of risk adjustment, we do not believe that the data used for 
recalibrating the models precisely reflect the average cost of 
Hepatitis C treatments expected in the 2023 benefit year. Therefore, we 
continue to believe a market pricing adjustment for the 2023 benefit 
year is necessary to account for the significant pricing changes 
associated with the introduction of new and generic Hepatitis C drugs 
between the data years used for recalibrating the models and the 
applicable recalibration benefit year. We intend to continue to assess 
this pricing adjustment in future benefit year recalibrations using 
additional years of enrollee-level EDGE data. We seek comment on our 
proposal to continue applying a market pricing adjustment to the plan 
liability associated with Hepatitis C drugs for the 2023 benefit year.
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    \105\ See https://www.gilead.com/news-and-press/company-statements/authorized-generics-for-hcv. See also https://news.abbvie.com/news/abbvie-receives-us-fda-approval-mavyret-glecaprevirpibrentasvir-for-treatment-chronic-hepatitis-c-in-all-major-genotypes-gt-1-6-in-as-short-as-8-weeks.htm.
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d. Risk Adjustment RXC Mapping for Recalibration
i. Inclusion and Exclusion Criteria for Drugs in RXC Mapping and 
Recalibration
    This section provides an overview of the inclusion and exclusion 
criteria HHS uses to identify drugs for mapping to RXCs in the adult 
risk adjustment models, reviews what version of the RXC mapping 
document HHS uses when processing the enrollee-level EDGE data for a 
benefit year for recalibration of the adult risk adjustment models, and 
outlines the criteria that warrant consideration for changes to the 
incorporation (or

[[Page 606]]

exclusion) of particular drugs from the RXC mappings in future benefit 
year recalibrations. We also propose a change to the approach for 
identifying the version of the RXC mapping document HHS would use to 
process a given benefit year's enrollee-level EDGE data for 
recalibration of the adult risk adjustment models.
    In accordance with Sec.  153.320, HHS develops and publishes the 
risk adjustment methodology applicable in states where HHS operates the 
program, including the draft factors to be employed in the models for 
the benefit year. This includes the annual recalibration of the adult 
risk adjustment models' RXC coefficients using data from the applicable 
prior benefit years trended forwarded to reflect the applicable benefit 
year of risk adjustment. Drugs that appear on claims data, either 
through National Drug Codes (NDCs) or Healthcare Common Procedural 
Coding System (HCPCS), are cross walked to RxNorm Concept Unique 
Identifiers (RXCUIs).\106\ RXCUI mappings are always matched to the 
NDCs and HCPCS applicable to the particular EDGE data year as the NDC 
and HCPCS reflect the drugs that were available in the market during 
the benefit year.\107\ Currently, we use the most recent RXC mappings 
(RXCUIs that map to RXCs) that are available when we first process the 
enrollee-level EDGE data for a benefit year for recalibration of the 
adult risk adjustment models. For example, for the 2022 benefit year, 
we recalibrated the adult risk adjustment models using 2016, 2017, and 
2018 enrollee-level EDGE data and applied the second quarter (Q2) 2018 
RXC mapping document for both 2016 and 2017,\108\ and applied the Q2 
2019 mapping document for 2018 for recalibration of the adult risk 
adjustment models RXC factors.\109\
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    \106\ See, for example, 81 FR at 94074-94080.
    \107\ See, for example, Creation of the 2018 Benefit Year HHS-
Operated Risk Adjustment Models Draft Prescription Drug (RXCUIs) to 
HHS Drug Classes (RXCs) Crosswalk Memorandum at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Draft-RxC-Crosswalk-Memo-9-18-17.pdf.
    \108\ RXCs were not added to the risk adjustment models until 
2018 benefit year; therefore, we used 2018 RXC mappings for both 
2016 and 2017 enrollee-level EDGE data as there were no 2016 and 
2017 RXC mapping documents. Note that, even though 2018 RXC mappings 
were applied to these earlier years, they were cross walked to the 
NDCs and HCPCS that describe the applicable drugs during those 
earlier years.
    \109\ Although the recalibration proposals are typically 
released towards the end of the calendar year, we generally receive 
the prior benefit year enrollee-level EDGE data in the summer or 
fall, at which point we apply the most recently available mapping 
document as we begin to prepare the data to recalibrate the models 
for the applicable benefit year. This is why, for example, we used 
the 2019 Q2 mapping document when processing the 2018 enrollee-level 
EDGE data for recalibration of the 2022 benefit year adult models.
---------------------------------------------------------------------------

    As noted in the 2022 Payment Notice, we also continuously assess 
the availability of drugs in the market and the associated mapping of 
those drugs to RXCs in the adult risk adjustment models.\110\ More 
specifically, during a benefit year, HHS conducts quarterly reviews of 
RXCUIs that map to RXCs in the adult risk adjustment models for that 
benefit year. During our annual review of enrollee-level EDGE data for 
recalibration purposes, and to a certain extent during quarterly 
reviews of RXCUIs that map to RXCs in the adult risk adjustment models, 
HHS evaluates the inclusion and exclusion of RXCUIs based on criteria 
such as: (1) Whether costs for an individual drug are comparable to the 
costs of other drugs in the same class, (2) whether a drug is a good 
predictor of the presence of the diseases that map to the HCCs that an 
RXC indicates (which can be evaluated through clinical expert review in 
the absence of data), (3) whether clinical expert reviews of the 
pharmacological properties and prescribing patterns are consistent with 
treatment of a particular condition, and (4) stakeholder feedback.\111\ 
As a result of this on-going assessment, we may make quarterly updates 
to the RXC Crosswalk, which identifies the list of NDCs and HCPCS 
indicating the presence of an RXC in the current benefit year DIY and 
EDGE reference data, to ensure drugs are mapped to RXCs, where 
appropriate. This can include the addition or removal of drugs based on 
market availability and the other criteria identified above. As such, 
the risk adjustment mapping of RXCUIs to RXCs, along with the list of 
NDCs and HCPCS that crosswalk to each RXCUI, may be updated throughout 
a particular benefit year of risk adjustment. HHS provides information 
to issuers on these updates through the DIY software, which is 
published on the CCIIO website,\112\ as well as through the EDGE global 
reference updates, which are published on the Distributed Data 
Collection program page on the Registration for Technical Assistance 
Portal (REGTAP).\113\
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    \110\ See 86 FR at 26164.
    \111\ See, for example, the Creation of the 2018 Benefit Year 
HHS-Operated Risk Adjustment Adult Models Draft Prescription Drug 
(RXCUIs) to HHS Drug Classes (RXCs) Crosswalk (September 17, 2017), 
available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Draft-RxC-Crosswalk-Memo-9-18-17.pdf.
    \112\ The August 3, 2021 version of the DIY software is 
available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance.
    \113\ Available at https://www.regtap.info/reg_library.php?libfilter_topic=3.
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    This ongoing updating process occurs on a different timeline than 
the annual model recalibration activities for a given benefit year.
    In this rule, we propose to change the approach for identifying the 
version of the RXC mapping document HHS would use to process a given 
benefit year's enrollee-level EDGE data for the annual recalibration of 
the adult risk adjustment models. More specifically, we propose to 
recalibrate the adult risk adjustment models using the final, fourth 
quarter (Q4) RXC mapping document that was applicable for each benefit 
year of data that is included in the applicable benefit year's model 
recalibration, while continuing to engage in annual and quarterly 
review processes using the inclusion and exclusion criteria described 
above. For example, if we recalibrate the 2024 benefit year adult risk 
adjustment models using 2018, 2019, and 2020 benefit years of enrollee-
level EDGE data, we would use the Q4 RXC mapping document for each of 
those benefit years (that is, Q4 2018, Q4 2019, and Q4 2020, 
respectively) for recalibration purposes. We would also use the 
criteria described above to evaluate the inclusion and exclusion of 
RXCUIs and may make other updates to the 2024 benefit year RXC 
Crosswalk to ensure drugs are mapped to RXCs, where appropriate.
    We propose to begin to use this approach for recalibration of the 
2023 adult risk adjustment models with the exception of the 2017 
enrollee-level EDGE data year, for which we propose to use the most 
recent RXC mapping document that was available when we first processed 
the 2017 enrollee-level EDGE data (that is, Q2 2018). We propose to use 
the applicable benefit year's Q4 RXC mapping documents for both the 
2018 and 2019 benefit years of enrollee-level EDGE data for the 
recalibration of the adult risk adjustment models for the 2023 benefit 
year. Under this proposal, we would hold those mappings constant when 
using the 2018 and 2019 enrollee level EDGE data years in future 
benefit year model recalibrations--meaning that we would use the 
applicable benefit year's Q4 RXC mapping documents when the 2018 or 
2019 benefit year of enrollee-level EDGE data is used for future 
benefit year model recalibrations.\114\

[[Page 607]]

The purpose of maintaining a specific version of the same RXC mapping 
document for future recalibrations under this proposal is to limit the 
volatility of some coefficients from year-to-year and to ensure that we 
are capturing the utilization and costs observed for the underlying 
drugs in use in that year for the condition. Because the final DIY 
software update contains the Q4 list, this approach would also have the 
added benefit of providing issuers the opportunity to see the mappings/
crosswalk that will be applied to that data year in the final DIY 
software release before it is used for recalibration.
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    \114\ Consistent with the approach finalized in the 2022 Payment 
Notice, the 2018 and 2019 enrollee-level EDGE data would be used for 
the recalibration of the 2024 benefit year models and the 2019 
enrollee-level EDGE data would be used for the recalibration of the 
2025 benefit year models. See, supra, note 47.
---------------------------------------------------------------------------

    For purposes of the 2023 benefit year recalibration, we are 
proposing an exception for the 2017 benefit year enrollee-level EDGE 
data and would instead use the most recent RXC mapping document that 
was available when we first processed the benefit year's enrollee-level 
EDGE data for recalibration purposes (that is, Q2 2018). We are 
proposing this approach for the 2017 benefit year enrollee-level EDGE 
data because we did not include RXCs in the adult risk adjustment 
models until 2018 \115\ and therefore, we do not have a Q4 RXC mapping 
for the 2017 benefit year. Thus, we propose to use the Q2 2018 RXC 
mapping document for the 2017 benefit year enrollee-level EDGE data 
year for 2023 model recalibration, consistent with the mapping used for 
processing the 2017 data for recalibration of the 2021 and 2022 adult 
models. We seek comment on this proposal to change the approach for 
identifying the version of the RXC mapping document that would be used 
to process a given benefit year's data for the annual recalibration of 
the adult models, as well as the proposed applicability beginning with 
the 2023 benefit year model recalibration and the proposed exception 
for the mapping document for the 2017 benefit year enrollee-level EDGE 
data.
---------------------------------------------------------------------------

    \115\ See 81 FR at 94075.
---------------------------------------------------------------------------

    Alternatively, we seek comment on whether we should take a 
different approach to recalibration of the RXC mappings for the adult 
risk adjustment models. Under this alternative, we would use the latest 
RXC mapping document available at the time that we recalibrate the 
adult risk adjustment models and apply it to all three underlying EDGE 
data years used to recalibrate the models for the benefit year. This 
alternative is in contrast to the current approach of using the most 
recent RXC mappings (RXCUIs that map to RXCs) that are available when 
we first process the enrollee-level EDGE data for recalibration of the 
applicable benefit year's adult models and the above proposed approach 
to use the final Q4 RXC mappings that was applicable for each benefit 
year of data included in the applicable benefit year's model 
recalibration. More specifically, under this alternative approach, we 
would instead use the most recent RXCUI to RXC mapping document 
available at the time of developing a benefit year's proposed model 
factors for publication in the applicable benefit year's Payment 
Notice. As the recalibration process typically begins several months 
prior to the proposed Payment Notice being released, the most recently 
available RXCUI to RXC mapping document available at the time of 
developing a benefit year's proposed model factors would generally be 
either the Q4 mapping from the prior benefit year (for 2023 benefit 
year (BY) model recalibration that would have been the Q4 mapping for 
BY 2020), or the Q1 or Q2 mapping document from the year in which 
recalibration is occurring (for 2023 benefit year model recalibration 
that would have been the Q1 or Q2 mapping for BY 2021). Under this 
approach, the RXCUI to RXC mappings applied to the underlying data 
years used in model recalibration would be updated each year of model 
recalibration to reflect the most recently available decisions in the 
quarterly mapping document about which RXCUIs map to RXCs in the adult 
models. While this approach would represent what is most likely to map 
to the RXCs in the upcoming benefit year of risk adjustment, the RXC 
mapping document used would still lag behind what the RXC mapping 
document will be in the applicable benefit year due to the inherent 
time lag between when recalibration occurs for a benefit year and the 
actual benefit year.\116\ Also, while we believe that the impact will 
likely be minimal, this approach to remapping the RXCs every year may 
contribute to volatility of some coefficients, as the RXC mappings for 
the underlying data years would be updated each year during the annual 
model recalibration. Another drawback of this approach is that the most 
recent RXC mappings will be reflective of similarly recent costs, 
clinical relevancies, and prescribing patterns. If changes to any of 
these have occurred between an earlier data year and the most recent 
year, RXC mappings reflecting the latter will generally be applied to 
the former.\117\ We seek comment on all aspects of this alternative 
approach.
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    \116\ For example, the current recalibration activities (in 
calendar year 2021) relate to the 2023 benefit year risk adjustment 
models.
    \117\ As noted elsewhere in this rule, in certain circumstances, 
HHS may consider changes to the RXCUIs from the applicable data year 
crosswalk as part of future benefit year model recalibration and 
quarterly review processes.
---------------------------------------------------------------------------

ii. Targeted Changes to RXC Mappings for Recalibration
    Regardless of the version of the RXC mapping document we use during 
the annual adult risk adjustment model recalibration, there may be a 
relatively small number of drugs that still require additional analysis 
and consideration given the changes that can occur in the market 
between the data year and the applicable benefit year of risk 
adjustment. The targeted changes to particular drugs' mappings would 
typically occur when performing recalibration for future benefit years. 
Based on our experience since the incorporation of RXCs into risk 
adjustment models in the 2018 benefit year, we do not believe that the 
removal or addition of an RXCUI from the RXC mappings (and the 
associated removal of the NDCs and HCPCS associated with that RXCUI) 
are typically material to recalibration because most drug removals are 
not associated with utilization and cost levels that would have a 
meaningful impact on model coefficients.\118\ However, in extenuating 
circumstances where HHS believes there will be a significant impact 
from a change in an RXCUI to RXC mapping, such as: (1) Evidence of 
significant off-label prescribing (as was the case with 
hydroxychloroquine sulfate \119\); (2) abnormally large changes in 
clinical indications or practice patterns associated with drug usage; 
or (3) certain situations in which the cost of a drug (or biosimilars) 
become much higher or lower than the typical cost of drugs in the same 
prescription drug category, HHS will consider whether changes to the 
RXCUI to RXC mapping from the applicable data year crosswalk are needed 
for future benefit year recalibrations. In the following sections of 
this proposed rule, we illustrate cases where we believe extenuating

[[Page 608]]

circumstances existed and our evaluation of whether to make targeted 
changes to the mapping of select RXCUIs to RXCs due to those 
extenuating circumstances as part of the annual recalibration process 
for the 2023 benefit year adult models. In particular, we consider the 
cases of RXCUI to RXC mapping of Descovy[supreg] and hydroxychloroquine 
sulfate. We also note that, as discussed above, HHS may make other 
exception-based adjustments during the recalibration process to reflect 
changes in clinical practice and prescribing between recalibration and 
the benefit year, such as the adjustment for Hepatitis C drugs, where 
HHS determines it is necessary and appropriate to do so. We are not 
proposing changes to this approach or the criteria used for these 
reviews, but are sharing these examples to further promote transparency 
about the process for targeted changes to mapping of select RXCUI to 
RXCs.\120\
---------------------------------------------------------------------------

    \118\ For example, the average effect of the removal of a single 
therapeutic drug ingredient in the 2019 Drug Removal Review on 2020 
Q1 was an approximate decrease of 0.14% percent in total pharmacy 
claims spending among RXC drugs, and the average effect of the 
removal of a single non-hydroxychloroquine therapeutic drug 
ingredient in the 2020 Drug Removal Review on 2021 Q1 was an 
approximate decrease of 0.68 percent in total pharmacy claims 
spending among RXC drugs.
    \119\ See, for example, 86 FR at 24180.
    \120\ As noted above, HHS also conducts quarterly reviews of 
RXCUIs that map to RXCs in the adult models and may make targeted 
changes to RXC mappings during a benefit year as a result of these 
reviews. We are not proposing any changes to the quarterly update 
process or the criteria used for such reviews.
---------------------------------------------------------------------------

(a) Descovy[supreg]
    Descovy[supreg] has been included in RXC 01 (Anti-HIV Agents) since 
RXCs were initially added to the adult risk adjustment models for the 
2018 benefit year because it met the inclusion criteria of being a 
reliable predictor of the presence of HIV and being representative of 
the costs of other drugs associated with the treatment of HIV. However, 
in October 2019, Descovy[supreg] was approved by the Food and Drug 
Administration (FDA) for pre-exposure prophylaxis (PrEP).\121\ As noted 
in the 2022 Payment Notice, HHS removed Descovy[supreg] from the Q4 
2020 RXCUI to RXC mappings for consistency with the treatment of other 
PrEP drugs.122 123 The 2023 benefit year model 
recalibration, however, is the first benefit year recalibration that 
will use the 2019 benefit year enrollee-level EDGE data. HHS therefore 
considered removal of Descovy[supreg] from the RXC mappings applied to 
the 2019 benefit year enrollee-level EDGE data year. The reason for 
this consideration was that some enrollees in 2019 would have used 
Descovy[supreg] for PrEP, which would have an impact on the 
recalibration of the coefficients for RXC 01 (Anti-HIV Agents) and was 
in keeping with the previously mentioned criteria of changes in 
clinical indications or practice patterns associated with drug usage 
for further evaluation for potential exception. However, our internal 
analysis of available enrollee-level EDGE data indicated that most 
Descovy[supreg] users in 2019 were using the drug as part of active HIV 
treatment, rather than PrEP.\124\ This, supported by the fact that 
Descovy[supreg] was approved for PrEP late in the calendar year of 
2019, suggested that the benefits of keeping Descovy[supreg] mapped to 
RXC 01 (Anti-HIV Agents) outweighed the tradeoffs of removing it.\125\ 
Similarly, the 2019 approval and subsequent change in Descovy[supreg] 
use that triggered its removal from the crosswalk in Q4 BY 2020 was not 
applicable to its use in 2017 or 2018 when it was not approved PrEP. 
Therefore, we are not proposing to make an exception to the RXCUI to 
RXC mappings to remove Descovy[supreg] from mapping to RXC 01 in 2017, 
2018 and 2019 benefit year enrollee-level EDGE datasets used for the 
2023 benefit year recalibration of the adult models. We further note 
that, regardless of the mapping approach adopted for Descovy[supreg], 
enrollees in risk adjustment covered plans that use Descovy[supreg] (or 
other PrEP drugs) in combination with another HIV treatment drug that 
maps to RXC 01 would still receive credit for RXC 01 in the 2023 
benefit year of risk adjustment. If we adopt the alternative mapping 
approach of using the latest RXC mapping document available at the time 
that we recalibrate adult risk adjustment models and apply it to all 
three underlying EDGE data years used to recalibrate the models for the 
benefit year, Descovy[supreg] would not map to RXC 01 and we would have 
to make an exception to include it in the mapping. We seek comment on 
whether we should make such an exception to include and map 
Descovy[supreg] to RXC 01 in the datasets used to recalibrate the 2023 
benefit year adult models, should the alternative approach be 
finalized.
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    \121\ See https://www.fda.gov/news-events/press-announcements/fda-approves-second-drug-prevent-hiv-infection-part-ongoing-efforts-end-hiv-epidemic.
    \122\ See 86 FR at 24164. Also see HHS-Developed Risk Adjustment 
Model Algorithm ``Do It Yourself (DIY)'' Software Instructions for 
the 2020 Benefit Year (April 15, 2021 Update), available at https://www.cms.gov/files/document/cy2020-diy-instructions04132021.pdf.
    \123\ We further explained that enrollees that use 
Descovy[supreg] (or other PrEP drugs) in combination with other HIV 
treatment drugs would still receive credit for RXC 01. See 86 FR at 
24164.
    \124\ Assessing the use of Descovy[supreg] for PrEP involved 
identifying instances of the use of Descovy[supreg] without an 
accompanying HIV diagnosis (as defined by the presence of HCC01) or 
use of any other anti-HIV agent (as defined by the use of any drug 
in RXC01 other than Descovy[supreg]). The reason the latter helps to 
identify non-PrEP Descovy[supreg] use is because Descovy[supreg] for 
active HIV-1 treatment is required to be co-administered with other 
anti-HIV agents.
    \125\ Consistent with the approach outlined in this rule, 
Descovy[supreg] was mapped to RXC 01 in the Q4 2019 RXC mapping 
applied to enrollee-level EDGE data that was used to develop the 
proposed 2023 benefit year factors for the adult models in this 
rule. If the alternative approach to RXC mapping is adopted, such 
that the Q4 2020 RXC mapping is applied for the 2023 benefit year 
recalibration of the adult models, Descovy[supreg] would not map to 
RXC 01 unless an exception is made.
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(b) Hydroxychloroquine Sulfate
    Hydroxychloroquine sulfate was initially mapped to RXC 09 (Immune 
Suppressants and Immunomodulators) in the Q3 BY 2018 review because it 
was believed to be a reliable predictor of the presence of conditions 
associated with RXC 09. However, HHS removed the RXCU for 
hydroxychloroquine sulfate from mapping to RXC 09 (Immune Suppressants 
and Immunomodulators) in the Q4 BY 2020 RXC mappings because of 
concerns regarding unrepresentative expenditures and off-label 
prescribing during the COVID-19 PHE.\126\ This meant that beginning 
with the 2020 benefit year of risk adjustment, hydroxychloroquine 
sulfate no longer mapped to RXC 09.
---------------------------------------------------------------------------

    \126\ 85 FR at 24180. Also see the HHS-Developed Risk Adjustment 
Model Algorithm ``Do It Yourself (DIY)'' Software Instructions for 
the 2020 Benefit Year, April 15, 2021 Update, available at https://www.cms.gov/files/document/cy2020-diy-instructions04132021.pdf.
---------------------------------------------------------------------------

    Then, in part 2 of the 2022 Payment Notice final rule, we finalized 
proposals for the 2022 benefit year model recalibration, including the 
targeted removal of hydroxychloroquine sulfate for recalibration of the 
adult models.\127\ As we explained, our analysis of pre-2020 data 
showed that the cost of hydroxychloroquine sulfate drugs were much 
lower than the costs of other drugs taken by enrollees assigned RXC 
09.\128\ However, even though hydroxychloroquine sulfate was no longer 
mapping to the RXC 09 in the Q4 2020 DIY software, hydroxychloroquine 
sulfate was still mapping to RXC 09 in the 2018 enrollee-level EDGE 
data that would be used for the 2022 benefit year model 
recalibration.\129\ Additionally, after hydroxychloroquine sulfate was 
removed from mapping to RXC 09 in the
---------------------------------------------------------------------------

    \127\ 86 FR at 24180.
    \128\ 86 FR at 24180.
    \129\ The same concern was not present for the 2016 or 2017 
enrollee-level EDGE datasets used for the 2022 benefit year model 
recalibration because hydroxychloroquine sulfate was not mapped to 
RXC 09 until the Q3 2018 crosswalk.

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[[Page 609]]

Q4 2020 RXC mapping, stakeholders expressed concern about the impact on 
the coefficients for RXC 09, and associated interaction terms, of 
including hydroxychloroquine sulfate in RXC mapping for recalibration 
given that these drugs were such low-cost. After consideration of these 
issues, HHS determined that hydroxychloroquine sulfate met the criteria 
of significant off-label prescribing, changes in clinical practice 
patterns associated with drug usage, and the cost of the drug being 
much lower than the typical cost of drugs in the same prescription drug 
category that warrants further consideration of whether an exception is 
appropriate. After determining that hydroxychloroquine sulfate met 
those criteria and considering the feedback from stakeholders, HHS made 
the determination that it should be removed. Therefore, to effectuate 
the targeted removal of hydroxychloroquine sulfate for the 
recalibration of the 2022 benefit year adult risk adjustment models, we 
only used 2016 and 2017 enrollee-level EDGE data, where 
hydroxychloroquine sulfate was not mapped to RXC 09, for the limited 
purpose of developing the coefficients for RXC 09 (Immune Suppressants 
and Immunomodulators) and the related RXC 09 interactions (RXC 09 x 
HCC056 or 057 and 048 or 041; RXC 09 x HCC056; RXC 09 x HCC057; RXC 09 
x HCC048, 041).\130\
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    \130\ 86 FR at 24180.
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    Our consideration of the targeted removal of select drugs from RXC 
mappings for purposes of the 2023 benefit year model recalibration 
similarly identified hydroxychloroquine sulfate as a drug for further 
consideration. It continues to meet the criteria of significant off-
label prescribing, changes in clinical practice patterns associated 
with drug usage, and the cost of the drug being much lower than the 
typical cost of drugs in the same prescription drug category. However, 
unlike the 2022 benefit year model recalibration, the 2023 benefit year 
updates involve two years of enrollee-level EDGE data (2018 and 2019 
data years) where the inclusion of hydroxychloroquine sulfate could 
impact the annual model recalibration updates to the coefficients and 
associated interaction terms for RXC 09. Therefore, we determined that 
the targeted removal of this drug from mapping to RXC 09 was again 
appropriate, but to effectuate the targeted removal of this drug for 
purposes of the 2023 benefit year recalibration of the adult models, we 
would adopt a different approach than 2022 risk adjustment model 
recalibration and would remove the RXCUI to RXC mapping in the 2018 and 
2019 enrollee-level EDGE data for hydroxychloroquine sulfate to RXC 09 
(Immune Suppressants and Immunomodulators) and the related RXC 09 
interactions (RXC 09 x HCC056 or 057 and 048 or 041; RXC 09 x HCC056; 
RXC 09 x HCC 057; RXC 09 x HCC048, 041). We would adopt a similar 
approach for any future year that uses the enrollee-level EDGE data for 
the 2018 and 2019 benefit years for purposes of the annual model 
recalibration.\131\ We note that the same concern was not present for 
the 2017 benefit year enrollee-level EDGE data--the other benefit year 
of data that will be used for the 2023 benefit year model 
recalibration--because hydroxychloroquine was not included in the RXC 
crosswalk until the 2018 benefit year.
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    \131\ Consistent with the approach finalized in the 2022 Payment 
Notice, the 2018 and 2019 benefit year enrollee-level EDGE datasets 
would continue to be used for recalibration of the 2024 benefit year 
models; and the 2019 benefit year enrollee-level EDGE dataset would 
also be used for recalibration of the 2025 benefit year models.
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    We seek comment on these proposals.
e. List of Factors To Be Employed in the Risk Adjustment Models
    The proposed 2023 benefit year risk adjustment model factors 
resulting from the equally weighted (averaged) blended factors from 
separately solved models using the 2017, 2018, and 2019 enrollee-level 
EDGE data, including all of the model specification changes and 
recalibration proposals detailed above, are shown in Tables 1 through 
6. The adult, child, and infant models have been truncated to account 
for the high-cost risk pool payment parameters by removing 60 percent 
of costs above the $1 million threshold.\132\ Table 1 contains factor 
coefficients for each adult model, including the age-sex, HCCs, RXCs, 
RXC-HCC interactions, interacted HCC counts, and enrollment duration 
coefficients. Table 2 contains the factor coefficients for each child 
model, including the age-sex, HCCs, and interacted HCC counts 
coefficients. Table 3 lists the proposed HHS-HCCs that have been 
selected for the proposed interacted HCC counts factors that would 
apply to the adult and child models. Table 4 contains the factors for 
each infant model. Tables 5 and 6 contain the HCCs included in the 
infant models' maturity and severity categories, respectively.
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    \132\ We are not proposing changes to the high-cost risk pool 
parameters for the 2023 benefit year. Therefore, we would maintain 
the $1 million threshold and 60 percent coinsurance rate.
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f. Cost-Sharing Reduction Adjustments
    We propose to continue including an adjustment for the receipt of 
CSRs in the risk adjustment models in all 50 states and the District of 
Columbia. While we continue to study and explore ways to update the CSR 
adjustments to improve prediction for CSR enrollees,\136\ for the 2023 
benefit year, to maintain stability and certainty for issuers, we are 
proposing to maintain the CSR adjustment factors finalized in the 2019, 
2020, 2021, and 2022 Payment Notices.\137\ See Table 7. We also propose 
to continue to use a CSR adjustment factor of 1.12 for all 
Massachusetts wrap-around plans in the risk adjustment plan liability 
risk score calculation, as all of Massachusetts' cost-sharing plan 
variations have AVs above 94 percent.\138\ We seek comment on these 
proposals.
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    \136\ See Appendix A of the 2021 HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
    \137\ See 83 FR 16930 at 16953; 84 FR 17454 at 17478 through 
17479; 85 FR 29164 at 29190; and 86 FR 24140 at 24181.
    \138\ See 81 FR 12203 at 12228.

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g. Model Performance Statistics
    Each benefit year, to evaluate risk adjustment model performance, 
we examine each model's R-squared statistic and PRs. The R-squared 
statistic, which calculates the percentage of individual variation 
explained by a model, measures the predictive accuracy of the model 
overall. The PR for each of the HHS risk adjustment models is the ratio 
of the weighted mean predicted plan liability for the model sample 
population to the weighted mean actual plan liability for the model 
sample population. The PR represents how well the model does on average 
at predicting plan liability for that subpopulation.
    A subpopulation that is predicted perfectly would have a PR of 1.0. 
For each of the current and proposed HHS risk adjustment models, the R-
squared statistic and the PRs are in the range of published estimates 
for concurrent risk adjustment models.\139\ As detailed in the 2021 RA 
Technical Paper, the proposed model specification updates, when taken 
together, generally demonstrate improvements in R-squared as well as 
PRs.\140\ Because we propose to blend the coefficients from separately 
solved models based on the 2017, 2018, and 2019 benefit years' 
enrollee-level EDGE data, we are publishing the R-squared statistic for 
each model separately to verify their statistical validity. The R-
squared statistics for the proposed 2023 benefit models are shown in 
Table 8.
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    \139\ Hileman, Geof and Spenser Steele. ``Accuracy of Claims-
Based Risk Scoring Models.'' Society of Actuaries. October 2016.
    \140\ See, for example, Chapter 5.1 in the 2021 HHS-Operated 
Risk Adjustment Technical Paper on Possible Model Changes, available 
at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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[[Page 625]]


BILLING CODE 4120-01-C
3. Overview of the HHS Risk Adjustment Methodology (Sec.  153.320)
    In part 2 of the 2022 Payment Notice final rule, we finalized the 
proposal to continue to use the state payment transfer formula 
finalized in the 2021 Payment Notice for the 2022 benefit year and 
beyond, unless changed through notice-and-comment rulemaking.\141\ We 
explained that under this approach, we will no longer republish these 
formulas in future annual HHS notice of benefit and payment parameter 
rules unless changes are being proposed. We are not proposing any 
changes to the formula in this rule and therefore are not republishing 
the formulas in this rule. We would continue to apply the formula as 
finalized in the 2021 Payment Notice in the states where HHS operates 
the risk adjustment program in the 2023 benefit year.\142\ 
Additionally, as finalized in the 2020 Payment Notice, we will maintain 
the high-cost risk pool parameters for the 2020 benefit year and 
beyond, unless amended through notice-and-comment rulemaking.\143\ We 
are not proposing any changes to the high-cost risk pool parameters for 
the 2023 benefit year; therefore, we would maintain the $1 million 
threshold and 60 percent coinsurance rate.
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    \141\ See 86 FR at 24183-24186.
    \142\ For an illustration and further details on the state 
payment transfer formula, see 86 FR at 24183-24186.
    \143\ See 84 FR at 17466-17468.
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4. Risk Adjustment State Flexibility Requests (Sec.  153.320(d))
    We propose to repeal the ability of states to request a reduction 
in risk adjustment state transfers starting with the 2024 benefit year, 
with an exception for states that have requested such reductions in 
prior benefit years. We also solicit comments on requests from Alabama 
to reduce risk adjustment state transfers for the 2023 benefit year in 
the individual (including the catastrophic and non-catastrophic risk 
pools) and small group markets. In the 2019 Payment Notice, we provided 
states the flexibility to request a reduction to the applicable risk 
adjustment state transfers calculated by HHS using the state payment 
transfer formula for the state's individual (catastrophic or non-
catastrophic risk pools), small group, or merged markets by up to 50 
percent to more precisely account for differences in actuarial risk in 
the applicable state's markets.\144\ We finalized that any requests we 
received would be published in the applicable benefit year's proposed 
HHS notice of benefit and payment parameters, and the supporting 
evidence provided by the state in support of its request would be made 
available for public comment.\145\
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    \144\ 83 FR 16955-16960.
    \145\ If the state requests that HHS not make publicly available 
certain supporting evidence and analysis because it contains trade 
secrets or confidential commercial or financial information within 
the meaning of the HHS Freedom of Information Act (FOIA) regulations 
at 45 CFR 5.31(d), HHS will only make available on the CMS website 
the supporting evidence submitted by the state that is not a trade 
secret or confidential commercial or financial information by 
posting a redacted version of the state's supporting evidence. See 
45 CFR 153.320(d)(3).
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    In accordance with Sec.  153.320(d)(2), beginning with the 2020 
benefit year, states must submit such requests with the supporting 
evidence and analysis outlined under Sec.  153.320(d)(1) by August 1st 
of the calendar year that is 2 calendar years prior to the beginning of 
the applicable benefit year. If approved by HHS, state reduction 
requests will be applied to the plan PMPM payment or charge state 
payment transfer amount (Ti in the state payment transfer 
formula).\146\ For the 2020 and 2021 benefit years, the state of 
Alabama submitted a 50 percent risk adjustment transfer reduction 
request for its small group market and HHS approved both requests.\147\ 
For the 2022 benefit year, the state of Alabama submitted 50 percent 
risk adjustment transfer reduction requests for its individual 
(including catastrophic and non-catastrophic risk pools) and small 
group markets, and HHS approved both requests.\148\
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    \146\ For an illustration of the state payment transfer formula, 
see 86 FR at 24184.
    \147\ See 84 FR 17484-17485 and 85 FR 29193-29194.
    \148\ See 86 FR 24187-24189.
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a. Requests To Reduce Risk Adjustment Transfers for the 2023 Benefit 
Year
    For the 2023 benefit year, HHS received requests from Alabama to 
reduce risk adjustment state transfers for its individual and small 
group markets by 50 percent.\149\ Alabama asserts that the state 
payment transfer formula produces imprecise results in Alabama because 
of the extremely unbalanced market share in the individual and small 
group markets. Specifically, Alabama asserts that the presence of a 
dominant issuer in the individual and small group markets precludes the 
HHS-operated risk adjustment program from working as precisely as it 
would with a more balanced distribution of market share, which Alabama 
believes precludes the HHS-operated risk adjustment program from 
working as precisely as it would with a more balanced distribution of 
market share. The state regulators stated that their review of the 
issuers' financial data suggested that any premium increase resulting 
from a reduction to risk adjustment payments of 50 percent in the 
individual market for the 2023 benefit year would not exceed 1 percent, 
the de minimis premium increase threshold set forth in Sec.  
153.320(d)(1)(iii) and (d)(4)(i)(B).
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    \149\ Alabama's individual market request is for a 50 percent 
reduction to risk adjustment transfers for its individual market 
non-catastrophic and catastrophic risk pools.
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    In the small group market request, Alabama states that its review 
of the issuers' financial data from the 2020 benefit year suggests that 
any premium increase resulting from a reduction to risk adjustment 
payments of 50 percent in the small group market for the 2023 benefit 
year would exceed the de minimis threshold. However, Alabama asserts 
that HHS should consider data for years prior to 2021 to analyze its 
small group market request for the 2023 benefit year because the COVID-
19 PHE renders an analysis based on 2020 data unreliable. Alabama 
further notes that there is no regulatory requirement to analyze the 
request using the most recent available year of data. Alabama further 
states that the de minimis regulatory threshold does not work when a 
small issuer receives a risk adjustment payment, and that the test 
should instead be based on what percentage market share the large 
issuer in Alabama holds compared to the other issuers in the market.
    We seek comment on the requests to reduce risk adjustment state 
transfers in the Alabama individual and small group markets by 50 
percent for the 2023 benefit year. The requests and additional 
documentation submitted by Alabama are posted under the ``State 
Flexibility Requests'' heading at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/index.html.
b. Repeal of Risk Adjustment State Flexibility To Request a Reduction 
in Risk Adjustment State Transfers (Sec.  153.320(d))
    We propose to generally repeal the flexibility for states to 
request reductions of transfers calculated by HHS under the state 
payment transfer formula in all state market risk pools starting with 
the 2024 benefit year, with an exception for states that previously 
requested a reduction in risk adjustment state transfers under Sec.  
153.320(d). Section 3 of E.O. 14009 directs HHS, and the heads of all 
other executive departments and agencies with authorities and 
responsibilities related

[[Page 626]]

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 and making high-quality health care accessible 
and affordable for all individuals.\150\ Consistent with this 
directive, we have been considering whether the risk adjustment state 
flexibility under Sec.  153.320(d) is inconsistent with policies 
described in Sections 1 and 3 of E.O. 14009.
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    \150\ E.O. 14009; 86 FR 7793 (Feb. 2, 2021).
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    In prior rulemakings, we received comments stating that this policy 
does not strengthen the ACA and requesting that HHS repeal this policy, 
as risk adjustment state flexibility may result in risk selection, 
market destabilization, increased premiums, smaller networks, and worse 
plan options. Specifically, these commenters stated that reducing 
transfers to plans with higher-risk enrollees could create incentives 
for issuers to avoid enrolling high-risk enrollees in the future 
through distorting plan offering and designs, including by avoiding 
broad network plans, not offering platinum plans at all, and only 
offering limited gold plans. Commenters further stated that issuers 
could also distort plan designs by excluding coverage or imposing high 
cost sharing for certain drugs or services. Some commenters stated that 
the risk adjustment state payment transfer formula already adjusts for 
differences in types of individuals enrolled in different states and 
aggregate differences in prices and utilization by using the statewide 
average premium as a scaling factor, so state flexibility to account 
for state-specific factors is unnecessary.\151\ The commenters also 
generally noted that states that believe the HHS risk adjustment 
methodology does not work properly in their markets have the option, if 
they operate their Exchange, to operate a state-based risk adjustment 
program.
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    \151\ See https://www.brookings.edu/wp-content/uploads/2020/12/FiedlerLaytonCommentLetterNBPP2022.pdf.
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    Moreover, since HHS finalized the risk adjustment state flexibility 
policy in the 2019 Payment Notice, there have been changes in 
Administration policy priorities. This Administration's stated 
priorities include protecting and strengthening the ACA, of which the 
risk adjustment program is an integral part, and supporting protections 
for people with pre-existing conditions; \152\ in contrast, past 
Administration priorities included reducing economic burden on states 
and other entities and maximizing state flexibility.\153\ Market 
participation has also stabilized in recent years, with new issuers 
entering the market and premiums remaining stable since 2019.\154\
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    \152\ Executive Order 14009; 86 FR 7793 (Feb. 2, 2021).
    \153\ Executive Order 13765; 82 FR 8351 (Jan. 24, 2017).
    \154\ See, for example, the 2019, 2020, and 2021 Unified Rate 
Review Public Use Files, available at https://www.cms.gov/CCIIO/Resources/Data-Resources/ratereview. See also the Summary Report on 
Permanent Risk Adjustment Transfers for the 2020 Benefit Year, 
available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2020.pdf. See 
also the Summary Report on Permanent Risk Adjustment Transfers for 
the 2019 Benefit year, available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2019.pdf.
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    Following our further consideration of this policy consistent with 
the instructions in the E.O., prior comments on this policy, and the 
earlier described changes, as well as the general low level of interest 
states have expressed in the policy, we propose, beginning for the 2024 
benefit year, to repeal the ability for states to request a reduction 
in risk adjustment state transfers of up to 50 percent in any state 
market risk pool with an exception for states who previously requested 
this flexibility in prior benefit years. We propose to effectuate this 
change by amending the introductory text to Sec.  153.320(d) to reflect 
that this flexibility was available from the 2020 through 2023 benefit 
years for all states and to add a new second sentence to the 
introductory text in Sec.  153.320(d) to capture the proposal to permit 
states that previously participated to request these reductions 
beginning with the 2024 benefit year.
    In addition, we propose to add new Sec.  153.320(d)(5) to define 
prior participants as any state that previously submitted a risk 
adjustment state flexibility request for any market risk pool. We are 
proposing to create an exception for states that previously 
participated because there is one state, Alabama, that requested this 
flexibility since 2020 (the first benefit year these requests were 
permitted). Alabama has generally been able to demonstrate a de minimis 
impact on the market risk pool in which the reduction in transfers was 
requested, meaning any impacted issuer would not need to increase their 
premiums by more than 1 percent to account for the reduction to risk 
adjustment transfers. As explained in the state's requests, Alabama has 
unique state characteristics, in which there is an extremely unbalanced 
market share in both its individual and small group markets, with one 
very dominant issuer and a few very small competitors that produces 
imprecise results under the HHS risk adjustment methodology, which is 
calibrated on a national dataset.\155\ We do not believe that 
continuing to permit a reduction in risk adjustment transfers in this 
state, given its unique characteristics, undermines the efficacy of 
risk adjustment. In addition, we believe that any minimal impact on 
transfers in this state is outweighed by the benefit of maintaining and 
taking steps to support the state's effort to maximize participation in 
its state market risk pools that have developed as a result of this 
flexibility in prior years, and that might otherwise only have a single 
issuer offering coverage in the absence of this flexibility.
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    \155\ See Alabama requests for 2020 through 2022 under the Risk 
Adjustment State Flexibility Requests heading at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs. Some of the information in these requests is redacted in 
accordance with 45 CFR 153.320(d)(3). If the state requests that HHS 
not make publicly available certain supporting evidence and analysis 
because it contains trade secrets or confidential commercial or 
financial information within the meaning of the HHS Freedom of 
Information Act (FOIA) regulations at 45 CFR 5.31(d), HHS will only 
make available on the CMS website the supporting evidence submitted 
by the state that is not a trade secret or confidential commercial 
or financial information by posting a redacted version of the 
state's supporting evidence.
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    We note that this proposal to retain this flexibility for prior 
participants is only intended to permit such states to continue to 
request risk adjustment state flexibility in benefit year 2024 and 
beyond, not to automatically apply previously approved transfer 
reductions to future benefit years. Under this proposal, a prior 
participant will still be required to submit its request(s) to reduce 
risk adjustment state transfers each year in the timeframe, form, and 
manner set forth in Sec.  153.320(d)(1) and (2), and HHS will continue 
to evaluate risk adjustment state flexibility requests for approval as 
set forth in Sec.  153.320(d)(4). If state requests do not meet the 
applicable approval criteria, HHS will not approve the requests. The 
flexibility for HHS to approve a reduction amount that is lower than 
the amount requested by the State in Sec.  153.320(d)(4)(ii) would also 
be retained.
    Finally, for reduction requests for the 2024 benefit year and 
beyond, we also propose to remove the option for the state to 
demonstrate the state-specific factors that warrant an adjustment to 
more precisely account for relative risk differences in the state 
individual catastrophic, individual non-catastrophic, small group, or 
merged

[[Page 627]]

market risk pool as one of the justifications for the state's request 
and one of the criteria for HHS approval. Instead, we propose to 
require prior participants to meet the other existing criterion that 
the requested reduction would have de minimis impact on the necessary 
premium increase to cover the transfers for issuers that would receive 
reduced transfer payments, as the sole justification for the state's 
request and criterion for HHS approval beginning with 2024 benefit year 
requests. To effectuate this change, we propose to amend paragraph 
(d)(1)(iii) of Sec.  153.320 to add the phrase ``For the 2020 through 
2023 benefit years'' to reflect that state requests submitted for those 
benefit years must include a justification for the reduction requested 
demonstrating either of the existing criteria, that is, the state-
specific factors that warrant an adjustment to more precisely account 
for relative risk differences in the state individual catastrophic, 
individual non-catastrophic, small group, or merged market risk pool, 
or that the requested reduction would have de minimis impact on the 
necessary premium increase to cover the transfers for issuers that 
would receive reduced transfer payments. We also propose to add a new 
Sec.  153.320(d)(1)(iv) to capture the requirement that prior 
participant requests beginning with the 2024 benefit year must include 
a justification demonstrating the requested reduction would have de 
minimis impact on the necessary premium increase to cover the transfers 
for issuers that would receive reduced transfer payments. We similarly 
propose to amend the standards for HHS approval under Sec.  
153.320(d)(4)(i) to create a new paragraph (d)(4)(i)(A) to capture the 
existing options available for 2020 through 2023 benefit year requests 
and a new paragraph (d)(4)(i)(B) to capture the new proposed option 
that would apply to prior participants' requests beginning with the 
2024 benefit year. Retaining the de minimis standard as the only option 
for prior participants to justify the reduction and for HHS to approve 
a request would help ensure that consumers would not experience an 
increase in premiums greater than 1 percent as the result of a state 
requested reduction in transfers, which aligns with the priorities 
under E.O. 14009 to ensure that health care remains affordable for 
consumers. HHS would continue to publish any requests submitted under 
this revised framework, make them available for public comment, and 
announce any approved or denied reduction requests in the applicable 
benefit year's HHS notice of benefit and payment parameters, as set 
forth in Sec.  153.320(d)(3).
    We seek comment on this proposal to generally repeal the state 
flexibility to request reductions in the transfers calculated by HHS 
under the state payment transfer formula beginning with 2024 benefit 
year, with the exception of states that previously submitted a risk 
adjustment state flexibility request for any market risk pool. We also 
seek comment on whether we should limit this repeal to the individual 
market catastrophic and non-catastrophic risk pools (including merged 
market states whose issuers report risk adjustment data in the 
individual market) and continue to permit the submission of these 
requests in the small group market only (including merged market states 
whose issuers report risk adjustment data in the small group market). 
We further seek comment on the proposed prior participant exception, 
including the proposed definition for prior participants. We also seek 
comment on the proposal to retain as the only option for state 
justification and HHS approval of requested reductions beginning with 
the 2024 benefit year the demonstration that the requested reduction 
would have de minimis impact on the necessary premium increase to cover 
the transfers for issuers that would receive reduced transfer payments, 
and to remove the criterion related to the state demonstrating the 
state-specific factors that warrant an adjustment to more precisely 
account for relative risk differences in the applicable state market 
risk pool. Finally, we seek comment on the health equity impacts of 
these proposals, especially for underserved and minority communities.
5. Risk Adjustment Issuer Data Requirements (Sec. Sec.  153.610, 
153.700, and 153.710)
    In this section, we propose that issuers collect and make available 
for HHS' extraction from issuers' EDGE servers five new data elements--
ZIP code,\156\ race, ethnicity, an ICHRA indicator, and a subsidy 
indicator (APTC indicator at the policy-level)--as part of the required 
risk adjustment data that issuers must make accessible to HHS in states 
where HHS operates the risk adjustment program,\157\ beginning with the 
2023 benefit year. We also propose that beginning with the 2022 benefit 
year, HHS would extract from issuers' EDGE servers the following three 
data elements that issuers already are required to make accessible to 
HHS as part of the required risk adjustment data: Plan ID (which 
represents the HIOS ID, state, product ID, standard component number, 
and variant), rating area, and subscriber indicator. We also propose to 
exclude plan ID, ZIP code, and rating area from the limited data set 
HHS makes available to requestors for research purposes, but include 
race, ethnicity, ICHRA indicator, subsidy indicator, and subscriber 
indicator in that limited data set once available. Lastly, we propose 
to expand and clarify the scope of permissible HHS uses for the data 
and the reports extracted from issuer EDGE servers (including data 
reports and ad hoc query reports). Related to these proposals, we also 
consider the burden associated with the proposed collection and 
extraction of these data elements and whether there are any policies 
that HHS could pursue to encourage the consistent use and reporting of 
ICD-10-CM z codes. The following subsections provide further discussion 
of these proposals.
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    \156\ ZIP code\TM\ is a trademark of the United States Postal 
Service.
    \157\ HHS has been operating the risk adjustment program in all 
50 states and the District of Columbia since the 2017 benefit year.
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a. Background
    Section 1343(b) of the ACA provides that the Secretary, in 
consultation with States, shall establish criteria and methods to be 
used in carrying out the risk adjustment activities under this section. 
Consistent with section 1321(c) of the ACA, the Secretary is 
responsible for operating the risk adjustment program in any state that 
fails to do so.\158\ 45 CFR 153.610(a) requires that health insurance 
issuers of risk adjustment covered plans submit or make accessible all 
required risk adjustment data in accordance with the data collection 
approach established by HHS \159\ in states where HHS operates the 
program on behalf of a state. In the 2014 Payment Notice, HHS 
established an approach for obtaining the necessary data for risk 
adjustment calculations in states where HHS operates the program 
through a distributed data collection model that prevented the transfer 
of individuals' personally identifiable information (PII).\160\ Since 
the 2016 benefit year, HHS required issuers of risk adjustment covered 
plans to submit 95 data elements to their EDGE servers

[[Page 628]]

to support the HHS' calculation of risk adjustment transfers.\161\
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    \158\ In the 2014 through 2016 benefit years, HHS operated the 
risk adjustment program in every state and the District of Columbia, 
except Massachusetts. Beginning with the 2017 benefit year, HHS has 
operated the risk adjustment program in all 50 states and the 
District of Columbia.
    \159\ Also see 45 CFR 153.700-153.740.
    \160\ See 78 FR at 15497-15500 and 45 CFR 153.720.
    \161\ The full list of required data elements can be found in 
Appendix A of OMB control number 0938-1155 (Standards Related to 
Reinsurance, Risk Corridors, and Risk Adjustment (CMS-10401)), which 
is currently being updated. The current Appendix A is available at 
https://omb.report/icr/201712-0938-015/doc/79644301.pdf. The 
previous version is available at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201712-0938-015.
---------------------------------------------------------------------------

    Then, in the 2018 Payment Notice, we finalized policies for the 
extraction and use of enrollee-level EDGE data beginning with the 2016 
benefit year.\162\ The purpose of collecting and extracting enrollee-
level EDGE data was to provide HHS with more granular data to use to 
recalibrate the HHS risk adjustment models and to use actual data from 
issuers' individual and small group (and merged) market populations, as 
opposed to the MarketScan[supreg] commercial database that approximates 
these populations, for model recalibration purposes. We also finalized 
the use of the extracted enrollee-level EDGE data to inform development 
of the AV Calculator and methodology and noted the data could be a 
valuable source for calibrating other HHS programs in the individual 
and small group markets. In the 2020 Payment Notice, we expanded the 
permitted uses of the extracted enrollee-level EDGE data to provide 
that HHS may use these data and the reports extracted from issuers' 
EDGE servers (including data reports and ad hoc query reports) to 
calibrate and operationalize our individual and small group (including 
merged) market programs, including to recalibrate the HHS risk 
adjustment models, to inform updates to the AV Calculator, and to 
conduct policy analysis for the individual and small group (including 
merged) markets.\163\ These additional uses of the enrollee-level EDGE 
data and reports enhance HHS' ability to develop and set policy for the 
individual and small group (including merged) markets and avoid the 
need to pursue alternative burdensome data collections from 
issuers.\164\
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    \162\ 81 FR 94058 at 94101.
    \163\ 84 FR 17454, 17488.
    \164\ We also clarified that our policies regarding HHS uses of 
the enrollee-level EDGE data apply to the HHS components that 
currently receive and use such data for purposes of the HHS risk 
adjustment program. See ibid at 17488.
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b. Proposed Collection and Extraction of New Data Elements and 
Extraction of Current Data Elements
    Based on our experience accessing EDGE server data for the risk 
adjustment model recalibration and analytics purposes, and as part of 
our ongoing efforts to continuously improve HHS programs, we propose to 
collect and extract new data elements from issuers' EDGE servers 
through issuers' EDGE Server Enrollment Submission (ESES) files and 
risk adjustment recalibration enrollment files, specifically: (1) ZIP 
code, (2) race, (3) ethnicity, (4) subsidy indicator, and (5) ICHRA 
indicator. For race and ethnicity data, we propose to require issuers 
to report race and ethnicity in accordance with the October 30, 2011 
HHS Implementation Guidance on Data Collection Standards for Race, 
Ethnicity, Sex, Primary Language, and Disability Status (2011 HHS Data 
Standards),\165\ which is collected at a granular level that would 
allow HHS to better analyze more subpopulations than our current data 
allows us to do, thereby allowing us to consider more areas of health 
equity, as well as to better address discrimination in health care and 
health disparities.\166\ We propose to require issuers of risk 
adjustment covered plans to submit and make accessible these new data 
elements to HHS in states where HHS operates the risk adjustment 
program beginning with the 2023 benefit year. Extraction of these new 
five data elements as part of the enrollee-level EDGE data and the 
reports extracted from issuers' EDGE servers (including data reports 
and ad hoc query reports) would begin with the 2023 benefit year.\167\ 
In addition to collecting and extracting these new data elements, we 
also propose to extract plan ID, rating area, and subscriber indicator 
as part of the enrollee-level EDGE data beginning with the 2022 benefit 
year data and reports extracted from issuers' EDGE servers. For the 
plan ID, rating area, and subscriber indicator, we note that issuers 
are already required under current HHS program requirements to submit 
these data elements to their EDGE servers.\168\
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    \165\ https://aspe.hhs.gov/reports/hhs-implementation-guidance-data-collection-standards-race-ethnicity-sex-primary-language-disability-0.
    \166\ As detailed further later in this preamble, issuers would 
have the option of selecting ``unknown'' for this data element if 
they do not have this information for a particular enrollee.
    \167\ The deadline for submission of 2023 benefit year risk 
adjustment data submissions is April 30, 2024. See 45 CFR 153.730.
    \168\ The full list of required data elements can be found in 
Appendix A of OMB control number 0938-1155 (Standards Related to 
Reinsurance, Risk Corridors, and Risk Adjustment (CMS-10401)), which 
is currently being updated. The current Appendix A is available at 
https://omb.report/icr/201712-0938-015/doc/79644301.pdf. The 
previous version is available at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201712-0938-015.
---------------------------------------------------------------------------

    Collecting and extracting these new and current data elements would 
allow HHS to further assess and analyze actuarial risk and risk 
patterns in the individual, small group, and merged markets, and 
determine if, based on future analysis, any refinements to the HHS risk 
adjustment methodology, the AV Calculator, or other HHS individual or 
small group (including merged) market programs should be proposed 
through notice-and-comment rulemaking. For example, we propose to 
collect and extract the ICHRA indicator to conduct analyses on whether 
there are any unique actuarial characteristics of the ICHRA population 
\169\ and to examine if employers with sicker enrollees are more 
attracted to offering ICHRAs, and if ICHRA enrollment is impacting 
state individual (or merged) market risk pools. We similarly want to 
examine whether there are any risk patterns or impacts when analyzing 
risk adjustment data using ZIP codes, race, ethnicity, and the subsidy 
indicator. For example, we are interested in conducting analysis on 
whether there are any cost differentials for certain conditions based 
on race, ethnicity or subsidy indicator. For the three current data 
elements that we are proposing to newly extract, our purpose would be 
to similarly use these data to further assess risk patterns and the 
impact of risk adjustment policies. For example, the extraction of 
rating area data would provide HHS with more granular data to assess 
risk patterns and impacts based on geographic differences. In addition, 
the proposal to newly extract plan ID and subscriber indicator from 
issuers' EDGE servers would allow HHS to be able to simulate transfers 
using the enrollee-level data, which is currently not possible without 
the plan ID.\170\
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    \169\ Currently, HHS only collects information on an enrollee's 
ICHRA status in connection with a special enrollment period 
eligibility determination for Exchanges, which does not provide us 
with complete data.
    \170\ For the transfer simulation of the combined model 
specification changes, HHS was not able to use the available 
enrollee-level EDGE datasets. Instead, issuers needed to run 
multiple EDGE Ad Hoc commands on their respective EDGE servers for 
the simulation to be successful. See Section 5.2 of the 2021 RA 
Technical Paper, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf and the HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes: Summary Results for 
Transfer Simulations, available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs.
---------------------------------------------------------------------------

    We believe these proposed data collections and extractions would 
serve the compelling government interest of promoting equity in health 
coverage and care, as well as the ACA's goal of making high-quality 
health care accessible and affordable for all individuals. 
Specifically, we believe that the collection and extraction of these 
new data elements would allow HHS to analyze and assess health equity

[[Page 629]]

impacts more than current data allow. Consistent with Executive Order 
13985, ``Advancing Racial Equity and Support for Underserved 
Communities Through the Federal Government,'' \171\ we believe this 
proposal would facilitate our ability to assess the extent to which 
specific communities experience barriers or challenges in accessing 
benefits and opportunities available related to our individual, small 
group, and merged market programs. This proposed data collection could 
also facilitate our ability to assess whether new policies, regulation, 
or guidance may be necessary or appropriate to further advance equity 
within our programs in the individual, small group and merged markets. 
We believe that the proposed collection and extraction of these data 
elements is narrowly tailored to serve this compelling government 
interest because this is the minimum data anticipated at this time that 
would allow HHS to further assess and analyze actuarial risk and risk 
patterns in the individual, small group, and merged markets. Consistent 
with the policy adopted in the 2020 Payment Notice regarding the use of 
data and reports extracted from issuer EGDE servers (including data 
reports and ad hoc query reports), and our proposal below to expand the 
permissible HHS uses of such data and reports, we would collect, 
extract and use these new and current data elements to conduct policy 
analysis for HHS programs in the individual and small group (including 
merged) markets and to inform policy analyses and improve the integrity 
of other HHS federal health-related programs to the extent such use is 
otherwise authorized by, required under, or not inconsistent with 
applicable federal law.
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    \171\ E.O. 13985 is 86 FR 7009 available at https://www.federalregister.gov/documents/2021/01/25/2021-01753/advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government.
---------------------------------------------------------------------------

    In the proposed 2020 Payment Notice, we sought comment on the 
advantages and disadvantages of extracting state and rating area data 
as part of the enrollee-level EDGE data for use to recalibrate the HHS-
operated risk adjustment models, to inform updates to the AV Calculator 
and methodology, and to conduct policy analyses for other HHS 
individual and small group (including merged) market programs.\172\ We 
explained that extracting these geographic details could enable HHS to 
assess the impact of differences in geographic factors in the HHS risk 
adjustment methodology and to better estimate the AV of plans based on 
cost differences across regions. We also noted that extraction of 
geographic details (state and rating area) could help support other HHS 
programs and policy priorities, as well as provide additional data 
elements for researchers. However, after consideration and review of 
the public comments received on the proposed 2020 Payment Notice, we 
did not finalize the proposed extraction of these data elements. We 
explained that, at that time, in response to stakeholder feedback, we 
did not believe that the benefits of these additional data element 
extractions would outweigh the potential increased risk to issuers' 
proprietary information and increased issuer burden.\173\
---------------------------------------------------------------------------

    \172\ 84 FR 227 at 251.
    \173\ 84 FR 17454 at 17488.
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    However, in light of E.O. 13985 and E.O. 14009, we have continued 
to consider whether extraction of these data elements would support and 
enhance HHS' policy analysis capabilities with regard to the HHS risk 
adjustment program, as well as other HHS individual and small group 
(including merged) market programs that seek to provide access to 
health care to consumers. Based on this further analysis and 
consideration, HHS has determined that the proposed extraction of 
rating area data, along with the proposed collection and extraction of 
the other data elements discussed in this proposal, align with the 
policy goals in E.O. 13985 and E.O. 14009 and would provide HHS with 
more granular data to help improve HHS' analytical capacity to assess 
equity impacts of programs impacted by this proposed rule, including 
our capacity to identify potential refinements to the HHS risk 
adjustment methodology, consider policy and operational changes to 
improve other HHS individual and small group (including merged) market 
programs, and identify ways to address health equity issues in these 
programs. For example, HHS believes that analysis of the additional 
data elements proposed for collection and extraction from issuers' EDGE 
servers would help HHS better monitor trends in the health insurance 
markets, inform HHS analyses of whether updates to the QHP 
certification review processes would be necessary or appropriate,\174\ 
and inform QHP compliance reviews and subregulatory guidance. HHS also 
is of the view that the additional data elements proposed for 
collection and extraction from EDGE servers could be valuable in 
assessing policy and operational issues in connection with programs 
that are not centered around the individual or small group (including 
merged) commercial health insurance markets, such as the wrap-around 
QHP coverage offered to Medicaid expansion populations in some states 
\175\ and coverage offered by non-federal governmental plans.\176\
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    \174\ Each year, HHS provides an overview of its QHP 
certification review processes in the annual Letter to Issuers in 
the FFEs. The 2022 Final Letter to Issuers in the FFEs is available 
at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-2022-Letter-to-Issuers-in-the-Federally-facilitated-Marketplaces.pdf.
    \175\ See, e.g., https://www.medicaid.gov/medicaid/downloads/wraparound-benefits.pdf.
    \176\ Non-federal governmental plans are subject to many PHS Act 
federal market reform requirements. See, e.g., 42 U.S.C. 300gg-
21(a)(1)(A). Also see 42 U.S.C. 300bb-1, et seq. HHS is generally 
responsible for enforcement of provisions of the PHS Act that apply 
to non-federal governmental plans. See, e.g., 42 U.S.C. 300gg-
22(b)(1)(B) and 45 CFR 150.301, et seq.
---------------------------------------------------------------------------

    Additionally, HHS continually considers methods and mechanisms to 
identify discriminatory practices in the commercial health insurance 
markets and HHS federal health-related programs. The additional data we 
propose to collect and extract from issuers' EDGE servers also would 
inform future policy to better address discrimination and other 
systemic barriers in health care and health disparities that may exist 
in connection with coverage offered in the commercial health insurance 
markets, as well as in other HHS federal health-related programs that 
do not focus on commercial health insurance.
    For all of the reasons discussed in this section, HHS proposes to 
collect and extract the proposed five new data elements outlined above 
as part of the required risk adjustment data issuers must make 
accessible to HHS through their respective EDGE servers beginning with 
the 2023 benefit year. We also propose to extract plan ID, rating area, 
and subscriber indicator as part of the EDGE enrollee-level data set 
beginning with the 2022 benefit year.\177\ We note that any changes to 
the risk adjustment methodology or other policies based on HHS's 
analysis of these data would be set forth in notice and comment 
rulemaking.
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    \177\ We propose to extract plan ID, rating area, and subscriber 
indicator for the 2022 benefit year, which is one year earlier than 
we propose to extract the other five new data elements, because 
issuers already submit plan ID, rating area, and subscriber 
indicator to their EDGE servers.
---------------------------------------------------------------------------

    We seek comments on these proposals, including feedback 
specifically on whether we should extract only certain portions of the 
plan ID, such as the five-digit HIOS ID, two-character state ID, three-
digit product number, four-digit standard component

[[Page 630]]

number, two-digit variant ID, or any combination thereof.\178\
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    \178\ For additional explanation of the plan ID components, see 
pg. 42 of the CMS Standard Companion Guide Transaction Information: 
Instructions related to the ASC X12 Benefit Enrollment and 
Maintenance (834) transaction, based on the 005010X220 
Implementation Guide and its associated 005010X220A1 addenda for the 
FFE, available at https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/companion-guide-for-ffe-enrollment-transaction-v15.pdf.
---------------------------------------------------------------------------

c. Limited Data Set
    In conjunction with the proposed collection and extraction of the 
new and current data elements in this proposed rule, we propose to 
exclude plan ID, ZIP code, and rating area from the limited data set 
containing enrollee-level EDGE data that HHS makes available to 
qualified researchers.\179\ However, we propose to include race, 
ethnicity, ICHRA indicator, subsidy indicator, and subscriber indicator 
in the limited data set once they are available.\180\ In the 2020 
Payment Notice, we finalized our proposal to create on an annual basis 
a limited data set file using masked enrollee-level data submitted to 
HHS from issuers' EDGE servers. The limited data set file is made 
available to requestors who seek the data for research purposes 
only.\181\ We adopted this policy because we believed making the 
limited data set file available to qualified researchers upon request 
would increase understanding of these markets and contribute to greater 
transparency. HHS strictly adheres to all the requirements and CMS 
guidelines related to providing the limited data set to qualified 
researchers, including requiring the recipient of the limited data set 
to enter into a data use agreement that establishes the permitted uses 
or disclosures of the information and prohibits the recipient from 
identifying the information. We believe that including race, ethnicity, 
ICHRA indicator, subsidy indicator, and subscriber indicator would 
enhance the usefulness of the limited data set for research and would 
continue to protect enrollees' PII and issuers' proprietary 
information. Although we believe that including plan ID, ZIP code, and 
rating area in the limited data set similarly would enhance the 
usefulness of the limited data set, we believe this would raise 
significant concerns for issuers given previous comments noting the 
competitive and proprietary nature of these geographic identifiers. We 
therefore propose to not include these geographic identifiers as part 
of the limited data set that HHS makes available to qualified 
researchers upon request. We seek comments on the proposal to exclude 
plan ID, ZIP code, and rating area, and to include race, ethnicity, 
ICHRA indicator, subsidy indicator, and subscriber indicator as part of 
the enrollee-level EDGE limited data set made available to qualified 
researchers upon request. We seek comment on this proposal, including 
about whether collecting race and ethnicity data in accordance with the 
2011 HHS Data Standards would require systems changes and about any 
costs associated with such changes. If finalized as proposed, race, 
ethnicity, the ICHRA indicator, and the subsidy indicator would be 
included beginning with the 2023 benefit year enrollee-level EDGE 
limited data set. Subscriber indicator would be included beginning with 
the 2022 benefit year enrollee-level EDGE limited data set if the 
proposal to extract that data element is finalized as proposed. We 
appreciate the sensitivities related to enrollee-level EDGE data and 
the importance of ensuring that our policies continue to safeguard 
enrollees' privacy and security and issuers' proprietary information. 
Thus, we are particularly interested in feedback on any privacy or 
confidentiality concerns with including these elements in the limited 
data set made available to qualified researchers upon request.
---------------------------------------------------------------------------

    \179\ See 84 FR at 17487.
    \180\ As proposed, the subscriber indicator would be included in 
the enrollee-level data HHS extracts from issuer EDGE servers 
beginning with the 2022 benefit year; therefore, this new data field 
would be included beginning with the 2022 benefit year limited data 
set. As proposed, race, ethnicity, ICHRA indicator, and subsidy 
indicator would be included in the enrollee-level data HHS extracts 
from issuer EDGE servers beginning with the 2023 benefit year; 
therefore, these data fields would be included beginning with the 
2023 benefit year limited data set.
    \181\ As explained in the 2020 Payment Notice, we do not 
currently make the limited data set available to requestors for 
public health or health care operation activities. See 84 FR at 
17488.
---------------------------------------------------------------------------

d. Proposal To Expand Permissible Uses of EDGE Data
    We also propose to expand the permitted uses of the data and 
reports (including data reports and ad hoc query reports) extracted 
from issuers' EDGE servers to include other HHS federal health-related 
programs outside of the commercial individual and small group 
(including merged) markets. This proposed expansion would apply to data 
that HHS already collects as well as the proposed collection and 
extraction of ZIP code, race, ethnicity, subsidy indicator, ICHRA 
indicator, plan ID, rating area, and subscriber indicator as outlined 
in this rule. The proposed expansion to the permitted uses of the EDGE 
data and reports would apply as of the effective date of the final 
rule. Specifically, HHS proposes to expand the uses of the data and 
reports HHS extracts from issuers' EDGE servers to include not only the 
specific uses for purposes we identified in the 2020 Payment Notice 
\182\--that is, to calibrate and operationalize our individual and 
small group (including merged) market programs (including assessing 
risk in the market for risk adjustment purposes and informing updates 
to the AV Calculator), and to conduct policy analysis for the 
individual and small group (including merged) markets--but also for the 
purposes of informing policy analyses and improving the integrity of 
other HHS federal health-related programs, to the extent such use of 
the data is otherwise authorized by, required under, or not 
inconsistent with applicable federal law. For example, certain states 
have wrap-around coverage that include enrolling their Medicaid 
expansion populations in QHPs and those enrollees are currently 
reflected in the enrollee-level EDGE data. Under this proposal to 
expand the permitted uses of EDGE data and reports, it would be clear 
that HHS could use this information to inform policy analyses and 
improve the integrity of these Medicaid expansion population 
approaches. Similarly, to the extent appropriate, this proposal would 
allow HHS to use the EDGE data and reports to inform policy analyses 
related to PHS Act requirements enforced by HHS that are applicable 
market-wide \183\ and those that are applicable to non-federal 
governmental plans.\184\ Consistent with our current policy, the 
proposals in this rule related to HHS use of the enrollee-level EDGE 
data and reports would apply to the HHS components that currently 
receive and use such data for purposes of the HHS risk adjustment 
program. Other government components would be able to request the 
enrollee-level EDGE limited data set file for research, as that term is 
defined under Sec.  164.501. We also note that the enrollee-level EDGE 
data, including the data elements proposed for collection and 
extraction in this rule, may be subject to disclosure as otherwise 
required by law.\185\
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    \182\ See 84 FR 17488.
    \183\ See, for example, 42 U.S.C. 300gg-300gg-28.
    \184\ Non-federal governmental plans are subject to many PHS Act 
federal market reform requirements. See, e.g., 42 U.S.C. 300gg-
21(a)(1)(A). Also see 42 U.S.C. 300bb-1, et seq. HHS is generally 
responsible for enforcement of provisions of the PHS Act that apply 
to non-federal governmental plans. See, e.g., 42 U.S.C. 300gg-
22(b)(1)(B) and 45 CFR 150.301, et seq.
    \185\ See, for example, 2 U.S.C. 601(d).

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[[Page 631]]

    We note that any changes to our policies that result from analysis 
of these data, such as using the data to modify the state payment 
transfer formula, would be subject to notice and comment rulemaking. 
Furthermore, we would not use the additional data elements or any 
analysis of them to pursue changes to our policies until we conduct 
thorough data quality checks. For example, in submitting data on race 
and ethnicity, issuers would have the option of selecting ``unknown'' 
for these data elements and we would ensure an adequate response rate 
before conducting analyses that could inform policy decisions. We would 
similarly ensure an adequate response rate with respect to submission 
of the ICHRA indicator before conducting analyses that could inform 
policy decisions.\186\ We solicit comment on this proposal to expand 
the permitted uses of the enrollee-level EDGE data.
---------------------------------------------------------------------------

    \186\ As detailed later, we propose to adopt a transition 
approach for the ICHRA indicator, which would make this data field 
optional for the 2023 and 2024 benefit years.
---------------------------------------------------------------------------

e. Burden for Collecting and Extracting Additional Data Elements
    As stated above, we propose to extract plan ID, rating area, and 
subscriber indicator from issuers' EDGE servers to consider for use in 
risk adjustment model recalibration and other potential refinements to 
the HHS-operated risk adjustment program, as well as to conduct policy 
analysis for HHS federal health-related programs, including those 
related to the individual and small group (including merged) health 
insurance markets and HHS non-commercial market programs, beginning 
with the 2022 benefit year. While collecting additional data elements 
may represent increased burden for issuers, there would be little to no 
additional issuer burden related to extracting these three proposed 
data elements because HHS extracts and stores the data, and issuers 
would only be required to execute a command provided by HHS to generate 
the EDGE report(s) containing all required data elements. Since issuers 
are already required to include these three data elements (plan ID, 
rating area, and subscriber indicator) as part of the required risk 
adjustment submissions to their respective EDGE servers, we believe 
there would be little to no additional burden associated with the 
proposed extraction of these three data elements beginning with the 
2022 benefit year.
    As stated above, we also propose to require issuers to include five 
new data elements--ZIP code, race, ethnicity, an ICHRA indicator, and a 
subsidy indicator--as part of their risk adjustment submissions to 
issuer EDGE servers beginning with the 2023 benefit year. We believe 
issuers currently collect ZIP codes; therefore, the burden associated 
with the proposed collection of this data element through issuer EDGE 
servers would only be the additional effort and expense for issuers to 
compile and submit this additional data element to their EDGE servers, 
as well as to retain this data element as part of their risk adjustment 
records as required under Sec.  153.620(b). Because the subsidy 
indicator is derived from existing data,\187\ we believe the burden 
would again only be the additional effort and expense for issuers to 
compile and submit this data element to their EDGE servers, as well as 
to retain this data element as part of their risk adjustment records as 
required under Sec.  153.620(b). In contrast, we do not believe 
information to populate the ICHRA indicator is routinely collected by 
all issuers at this time; therefore, in recognition of the burden that 
collection of this new data element potentially would pose for some 
issuers, we propose to make submission of the ICHRA indicator on 
issuers' EDGE servers optional for the 2023 and 2024 benefit years. 
This transitional approach for the ICHRA indicator would be similar to 
how we have handled other new data collection requirements \188\ and 
would allow issuers additional time to develop processes for 
collection, validation and submission of this new data field before it 
is required.
---------------------------------------------------------------------------

    \187\ Subsidy indicator is derived from the Marketplace 
enrollment data communicated to issuers where this data provides the 
APTC amount for an enrollee. Issuers would be able to use this 
information to derive the subsidy indicator for each enrollee.
    \188\ For example, HHS did not penalize issuers for temporarily 
submitting a default value for the in/out-of-network indicator for 
the 2018 benefit year in order to give issuers time to make the 
necessary changes to their operations and systems to comply with the 
new data collection requirement, but required issuers to provide 
full and accurate information for the in/out-of-network indicator 
beginning with the 2019 benefit year.
---------------------------------------------------------------------------

    We believe that most issuers currently collect race and ethnicity 
data in some manner, and therefore the burden associated with the 
collection of this information through issuer EDGE servers would only 
be the additional effort and expense for issuers to compile and submit 
these additional data elements to their EDGE servers and retain these 
data elements as part of their risk adjustment records as required 
under Sec.  153.620(b). However, we are interested in comments on the 
collection of these data elements, issuers' rate of collections of 
these data elements in accordance with the 2011 HHS Data Standards 
\189\ and whether there are any considerations about the availability 
and current collection of these data elements that HHS should be aware 
of, given that these data fields are often an optional field on health 
insurance application and enrollment forms.\190\ We also acknowledge 
that some of these new proposed data elements, such as race and 
ethnicity and the ICHRA indicator, may be collected by HHS from FFE or 
SBE-FP enrollees through the QHP application process and from State 
Exchange enrollees through the State Exchange enrollment and payment 
files and our intention would be to structure these data elements 
similar to current collections, where possible. However, this proposal 
would require all issuers of risk adjustment covered plans to make 
these data elements accessible to HHS through their EDGE servers as 
part of the required risk adjustment data submissions in states where 
HHS operates the risk adjustment program. The data that issuers submit 
to their EDGE servers would be more uniform and comprehensive than 
information submitted by FFE and SBE-FP enrollees on a QHP application 
and by State Exchange enrollees through enrollment and payment files, 
as it would represent all enrollees in risk adjustment covered plans, 
including coverage offered inside and outside of Exchanges. By 
collecting these data as part of the required risk adjustment data 
issuers submit to their respective EDGE servers, HHS would also have 
the ability to extract and aggregate these data elements with other 
claims and enrollment data accessible through issuer EDGE servers, 
which would not be possible with the data collected from consumers 
through other processes because the EDGE data is masked \191\ and 
therefore cannot be linked with other sources. We considered the 
possibility of using data imputation methods with existing 
HealthCare.gov application data to construct a simulated dataset and 
conduct preliminary exploratory analysis, but once again determined 
that

[[Page 632]]

we would be unable to impute data from the applications due to the EDGE 
data being masked. We therefore do not view this as a duplicative data 
collection. Our proposal also would ensure HHS has access to the same 
information in the same format for on- and off-Exchange enrollments, as 
well as across all Exchange types--FFEs, SBE-FPs and State Exchanges--
for the individual, small group and merged markets.
---------------------------------------------------------------------------

    \189\ HHS Implementation Guidance on Data Collection Standards 
for Race, Ethnicity, Sex, Primary Language, and Disability Status 
[bond] ASPE See HHS Implementation Guidance on Data Collection 
Standards for Race, Ethnicity, Sex, Primary Language, and Disability 
Status [bond] ASPE, available at https://aspe.hhs.gov/reports/hhs-implementation-guidance-data-collection-standards-race-ethnicity-sex-primary-language-disability-0.
    \190\ Race and ethnicity questions, for example, are optional on 
the HealthCare.gov application. See https://www.reginfo.gov/public/do/PRAICList?ref_nbr=201903-0938-016 (Attachment A, page 27-28).
    \191\ 45 CFR 153.720.
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    To fully assess the additional issuer burden resulting from this 
proposal, we seek comment on the relative value of the additional data 
elements we propose to require when compared to other data elements we 
could propose to collect. For instance, we seek comment on whether HHS 
should consider collecting county data in lieu of ZIP code, and also 
solicit comment on whether HHS should consider requiring issuers to 
report census tract data, instead of ZIP codes or county data. 
Specifically, we understand that five-digit ZIP codes can change on a 
regular basis, which could limit the usefulness of this data element 
when comparing data across benefit years. Census tract data or county 
data, therefore, may be more useful. We also clarify that, while race 
and ethnicity would be required data submission elements under these 
proposals, issuers would have the option of selecting ``unknown'' for 
this data element, which aligns with the approach taken for application 
and enrollment forms. In other words, issuers would not be penalized if 
they did not have the data for a particular enrollee. Instead, this 
proposal is designed to require the submission of race and ethnicity 
data if a particular enrollee provided it to their respective issuer. 
We also seek comment on how issuers may already be collecting data on 
race and ethnicity in order to identify alternatives that HHS could 
consider to further ease the burden of this collection while also 
meeting the stated goals of collecting data to analyze more 
subpopulations than the current data allows, consider more areas of 
health equity, and better address discrimination in health care and 
health disparities.
f. Encouraging the Use of Z Codes
    We seek comment on the collection and extraction of z codes 
(particularly Z55-Z65), a subset of ICD-10-CM encounter reason codes 
used to identify, analyze, and document social determinants of 
health.\192\ We are currently collecting z codes in the enrollee-level 
EDGE data and have started analyzing those codes.\193\ However, we 
understand there have been reports of a lack of consistent use of z 
codes by providers \194\ and we want to encourage consistent use of z 
codes to help further assess risk in the individual, small group and 
merged market risk pools. We solicit comment on whether there are 
policies that HHS should pursue that could encourage consistent use of 
z codes by providers to support collection and use of the data for the 
HHS-operated risk adjustment program. In light of E.O. 13985 and E.O. 
14009, HHS is interested in analyzing z code data to learn about the 
relationship between risk and the social determinants of health. 
Finally, we seek comment on whether there are other data elements HHS 
should consider collecting and extracting to support the operation of 
the HHS-operated risk adjustment program.
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    \192\ See CMS Infographic: Using Z Codes: The Social 
Determinants of Health; Data Journey to Better Outcomes, available 
at https://www.cms.gov/files/document/zcodes-infographic.pdf, last 
accessed Nov. 5, 2021. See also Utilization of Z Codes for Social 
Determinants of Health Among Medicare Fee-for-Service Beneficiaries, 
2019, available at https://www.cms.gov/files/document/zcodes-infographic.pdf.
    \193\ Using the 2019 enrollee-level EDGE data, we found that 
only 0.49 percent of the population had a code within Z55-Z65 range. 
These enrollees had higher costs than enrollees without a Z55-Z65 
code across all age/sex and market/metal/CSR categories.
    \194\ See https://journals.lww.com/lww-medicalcare/Fulltext/2020/12000/Utilization_of_Social_Determinants_of_Health.2.aspx.
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6. Risk Adjustment User Fee for 2023 Benefit Year (Sec.  153.610(f))
    HHS proposes a risk adjustment user fee for the 2023 benefit year 
of $0.22 per member per month (PMPM). Under Sec.  153.310, if a state 
is not approved to operate, or chooses to forgo operating, its own risk 
adjustment program, HHS will operate risk adjustment on its behalf. As 
noted previously in this proposed rule, for the 2023 benefit year, HHS 
will be operating the risk adjustment program in every state and the 
District of Columbia. As described in the 2014 Payment Notice, HHS' 
operation of risk adjustment on behalf of states is funded through a 
risk adjustment user fee.\195\ Section 153.610(f)(2) provides that, 
where HHS operates a risk adjustment program on behalf of a state, an 
issuer of a risk adjustment covered plan must remit a user fee to HHS 
equal to the product of its monthly billable member enrollment in the 
plan and the PMPM risk adjustment user fee specified in the annual HHS 
notice of benefit and payment parameters for the applicable benefit 
year.
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    \195\ 78 FR 15409 at 15416-15417.
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    OMB Circular No. A-25 established 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. The HHS-
operated risk adjustment program provides special benefits as defined 
in section 6(a)(1)(B) of Circular No. A-25 to issuers of risk 
adjustment covered plans because it mitigates the financial instability 
associated with potential adverse risk selection. The risk adjustment 
program also contributes to consumer confidence in the health insurance 
industry by helping to stabilize premiums across the individual, 
merged, and small group markets.
    In part 2 of the 2022 Payment Notice final rule, we calculated the 
federal administrative expenses of operating the risk adjustment 
program for the 2022 benefit year to result in a risk adjustment user 
fee rate of $0.25 PMPM based on our estimated costs for risk adjustment 
operations and estimated billable member months for individuals 
enrolled in risk adjustment covered plans.\196\ For the 2023 benefit 
year, HHS proposes to use the same methodology to estimate our 
administrative expenses to operate the risk adjustment program. These 
costs cover development of the model and methodology, collections, 
payments, account management, data collection, data validation, program 
integrity and audit functions, operational and fraud analytics, 
stakeholder training, operational support, and administrative and 
personnel costs dedicated to risk adjustment program activities. To 
calculate the user fee, we divided HHS' projected total costs for 
administering the risk adjustment program on behalf of states by the 
expected number of billable member months in risk adjustment covered 
plans in states where the HHS-operated risk adjustment program will 
apply in the 2023 benefit year.
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    \196\ 86 FR 24140 at 24195-24196.
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    We estimate that the total cost for HHS to operate the risk 
adjustment program on behalf of states for the 2023 benefit year will 
be approximately $60 million, and therefore, the proposed risk 
adjustment user fee is $0.22 PMPM. The risk adjustment user fee costs 
for the 2023 benefit year are expected to remain steady from the prior 
2022 benefit year estimates. However, we project a small increase in 
billable member months in the individual and small group (including 
merged) markets overall in the 2023 benefit year based on the 
enrollment increases observed in the 2020 benefit year prior to 
implementation of the ARP in 2021. The

[[Page 633]]

assumption that the enhanced premium tax credit subsidies in section 
9661 of the ARP will expire after the 2022 benefit year significantly 
influenced our development of the 2023 enrollment and premium 
projections used to develop the proposed risk adjustment user fee for 
the 2023 benefit year. We expect the expiration of this ARP provision 
to revert enrollment projections to the pre-ARP level observed in the 
2020 benefit year. We seek comment on the proposed risk adjustment user 
fee for the 2023 benefit year.
7. Compliance With Risk Adjustment Standards; High-Cost Risk Pool 
Funds--Audits of Issuers of Risk Adjustment Covered Plans (Sec.  
153.620(c))
    HHS proposes that whenever HHS recoups high-cost risk pool funds as 
a result of audits of risk adjustment covered plans under Sec.  
153.620(c)(5)(ii), the high-cost risk pool funds recouped from an 
issuer in an applicable national high-cost risk pool \197\ would be 
used to reduce high-cost risk pool charges for that national high-cost 
risk pool beginning for the current benefit year, if high-cost risk 
pool payments have not already been calculated for that benefit year. 
If high-cost risk pool payments have already been calculated for the 
current benefit year, we propose to use the recouped high-cost risk 
pool funds to reduce the next applicable benefit year's high-cost risk 
pool charges for all issuers owing high-cost risk pool charges for that 
national high-cost risk pool.
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    \197\ The high-cost risk pool calculation under the HHS risk 
adjustment methodology involves two national risk pools--one for the 
individual market (including catastrophic and non-catastrophic 
plans, and merged market plans), and another for the small group 
market. See, for example, 81 FR at 94080-94082.
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    In part 2 of the 2022 Payment Notice final rule, HHS codified 
several requirements related to the audits and compliance reviews of 
risk adjustment covered plans.\198\ We did not finalize our 
disbursement proposal for high-cost risk pool payments or charges 
recovered by HHS during an audit of a risk adjustment covered plan 
under Sec.  153.620(c), but stated our intention to address this issue 
in future rulemaking.\199\ As such, we are proposing here that any 
high-cost risk pool funds recouped through an audit under Sec.  
153.620(c)(5)(ii) would be disbursed in the next benefit year for which 
high-cost risk pool payments have not already been calculated, in the 
form of reduced charges for all issuers owing high-cost risk pool 
charges in the applicable national high-cost risk pool. If HHS recoups 
high-cost risk pool funds after the current benefit year's high-cost 
risk pool payments have been calculated, we propose to apply the high-
cost risk pool funds recouped through an audit under Sec.  
153.620(c)(5)(ii) to reduce the next applicable benefit year's high-
cost risk pool charges for all issuers owing high-cost risk pool 
charges for the applicable national high-cost risk pool. For example, 
if a 2018 high-cost risk pool audit results in funds being recouped for 
the national high-cost risk pool for the individual market in March 
2022, then these recouped funds would be disbursed in the form of 
reduced 2021 benefit year high-cost risk pool charges for issuers in 
the national high-cost risk pool for the individual market because 
high-cost risk pool payments for the 2021 benefit year are not 
calculated until June 2022. Notwithstanding any reduction to a national 
high-cost risk pool's charges for a given benefit year, this proposed 
policy would not impact the amount of high-cost risk pool payments made 
to eligible issuers, because the reduction in charges is due to the 
recoupment of funds as the result of an audit of a prior benefit year 
rather than a change in payments for the given benefit year. In 
addition, the calculation of high-cost risk pool charges and payments 
will continue to be calculated in accordance with the established 
policies, terms and factors.200 201 We believe this proposal 
is consistent with our general policy that HHS would not rerun or 
otherwise recalculate high-cost risk pool charges and payments for the 
applicable benefit year if monies are recouped as a result of an audit 
under Sec.  153.620(c).\202\
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    \198\ See 86 FR 24140 at 24287.
    \199\ We proposed that any high-cost risk pool payments or 
charges recovered by HHS during an audit of a risk adjustment 
covered plan would be paid on a pro rata basis to other issuers in 
the relevant national high-cost risk pool in the form of a reduced 
high-cost risk pool charge in the applicable benefit year. See 85 FR 
78572 at 78604.
    \200\ See 81 FR 94058, 94081. Also see 84 FR 17454, 17467 (We 
are finalizing the $1 million threshold and 60 percent coinsurance 
rate for 2020 benefit year and beyond without requiring notice and 
comment on the high-cost risk pool thresholds each year.). We are 
not proposing changes to the high-cost risk pool parameters for the 
2023 benefit year. Therefore, we would maintain the $1 million 
threshold and 60 percent coinsurance rate.
    \201\ For a visual illustration of the high-cost risk pool terms 
and factors, see 86 FR at 24184-24185.
    \202\ 86 FR 24140 at 24193.
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    We also clarify that when HHS recoups high-cost risk pool funds as 
a result of an audit, the issuer subject to the audit would then be 
responsible for reporting that adjustment to its high-cost risk pool 
payments or charges in the next MLR reporting cycle consistent with the 
applicable instructions in Sec.  153.710(h). Additionally, for any 
benefit year in which high-cost risk pool charges are reduced as a 
result of recouped audit funds, issuers whose charge amounts are 
reduced would report the high-cost risk pool charges paid for that 
benefit year net of recouped audit funds in the next MLR reporting 
cycle consistent with Sec.  153.710(h).
    We also propose that any high-cost risk pool funds recouped as a 
result of an actionable discrepancy or successful administrative appeal 
filed pursuant to Sec. Sec.  153.710(d) and 156.1220, respectively, 
would be treated the same way, that is, any high-cost risk pool funds 
recouped based on an actionable discrepancy or successful appeal would 
be used to reduce high-cost risk pool charges for that national high-
cost risk pool for the next benefit year for which high-cost risk pool 
payments have not already been calculated. Additionally, issuers would 
similarly be responsible for reporting any high-cost risk pool related 
adjustments that result from the recoupment of funds due to an 
actionable discrepancy or successful administrative appeal in the next 
MLR reporting cycle consistent with Sec.  153.710(h).
    We seek comment on these proposals.
8. Risk Adjustment Data Validation Requirements When HHS Operates Risk 
Adjustment (HHS-RADV) (Sec. Sec.  153.350 and 153.630)
    To ensure the integrity of the HHS-operated risk adjustment 
program, HHS conducts risk adjustment data validation (HHS-RADV) under 
Sec. Sec.  153.350 and 153.630 in any state where HHS is operating risk 
adjustment on a state's behalf. \203\ The purpose of HHS-RADV is to 
ensure issuers are providing accurate and complete risk adjustment data 
to HHS, which is crucial to the purpose and proper functioning of the 
HHS-operated risk adjustment program. HHS-RADV also ensures that risk 
adjustment transfers reflect verifiable actuarial risk differences 
among issuers, rather than risk score calculations that are based on 
poor data quality, thereby helping to ensure that the HHS-operated risk 
adjustment program assesses charges to issuers with plans with lower-
than-average actuarial risk while making payments to issuers with plans 
with higher-than-average actuarial risk. HHS-RADV consists of an IVA 
and an SVA. Under Sec.  153.630, each issuer of a risk

[[Page 634]]

adjustment covered plan must engage an independent IVA entity. The 
issuer provides demographic, enrollment, prescription drug, and medical 
record documentation for a sample of enrollees selected by HHS to the 
issuer's IVA entity. Each issuer's IVA is followed by an SVA, which is 
conducted by an entity HHS retains to verify the accuracy of the 
findings of the IVA. Based on the findings from the IVA and SVA as 
applicable, HHS conducts error estimation to calculate an error rate.
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    \203\ HHS has operated the risk adjustment program in all 50 
states and the District of Columbia since the 2017 benefit year.
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    In the 2020 HHS-RADV Amendments Rule,\204\ we described and 
finalized the error rate calculation methodology for HHS-RADV 
applicable for benefit years 2019 and onward. In this rule, we propose 
further refinements to the HHS-RADV error rate calculation methodology 
beginning with the 2021 benefit year and beyond to: (1) Extend the 
application of Super HCCs to also apply to coefficient estimation 
groups throughout the HHS-RADV error rate calculation processes, (2) 
specify that the Super HCC will be defined separately according to the 
age group model to which an enrollee is subject, and (3) constrain to 
zero any outlier negative failure rate in a failure rate group, 
regardless of whether the outlier issuer has a negative or positive 
error rate.
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    \204\ 85 FR 76979.
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    HHS is committed to ensuring the integrity and reliability of HHS-
RADV and continuously improving the error rate calculation methodology 
and program requirements. As part of our ongoing efforts to explore 
potential modifications to the HHS-RADV error rate calculation 
methodology, we have identified through our own analysis, and through 
feedback from stakeholders, these areas for further refinement. We 
believe these proposals will better align the calculation and 
application of error rates with the intent of the HHS-RADV program, 
thereby enhancing the integrity of HHS-RADV and the HHS-operated risk 
adjustment program.
a. Coefficient Estimation Groups in Error Estimation
    First, we propose to modify our process for grouping coefficient 
estimation groups in error estimation. In the 2020 HHS-RADV Amendments 
Rule,\205\ we finalized a policy to ensure that HCCs that share a 
coefficient estimation group used in the risk adjustment models are 
sorted into the same failure rate groups by first aggregating any HCCs 
that share a coefficient estimation group into Super HCCs before 
applying the HHS-RADV failure rate group sorting algorithm. Since 
implementing the Super HCC policy, we found there are rare occasions 
where there is a minor misalignment between the calculation of risk 
adjustment plan liability risk score (PLRS) values and HHS-RADV error 
estimation. To address these rare situations, in this rule we propose 
to modify the Super HCC policy to apply the coefficient estimation 
group logic as expressed in the applicable benefit year's DIY software 
throughout the HHS-RADV error rate calculation methodology, as they are 
in risk adjustment. We propose to adopt these changes beginning with 
the 2021 benefit year of HHS-RADV.
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    \205\ See 85 FR 76979 at 76984-76989.
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    The majority of HCCs in a coefficient estimation group are in the 
same hierarchy, but in rare instances an individual enrollee may be 
recorded on an issuer's EDGE server as having multiple HCCs in an HCC 
coefficient estimation group that do not have a direct hierarchical 
relationship to one another. For example, based on the 2021 DIY 
software Tables 4 and 6,\206\ HCC 61 Osteogenesis Imperfecta and Other 
Osteodystrophies shares coefficient estimation group G04 with HCC 62 
Congenital/Developmental Skeletal and Connective Tissue Disorders in 
the adult risk adjustment models, but the two HCCs are not 
hierarchically related. However, even if an enrollee has both unrelated 
conditions, the enrollee only receives the coefficient for one of those 
conditions in the enrollee's risk adjustment risk score calculation 
because both conditions share the same coefficient estimation group.
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    \206\ See, for example, the August 3, 2021 version of the DIY 
software is available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance.
---------------------------------------------------------------------------

    To further explain, when such HCCs share a direct hierarchical 
relationship, the presence of the more severe condition nullifies the 
presence of the less severe condition; that is, the enrollee will 
receive credit in risk adjustment and HHS-RADV for only the most severe 
of the two conditions. Similarly, in risk adjustment, when HCCs that 
share a coefficient estimation group do not share a direct hierarchical 
relationship, an enrollee will have both HCCs nullified and replaced 
with a single instance of a variable indicating the presence of HCCs in 
that coefficient estimation group, as seen in DIY software Tables 6 and 
7, leading to the enrollee only receiving one indicator of risk across 
both conditions. However, in this latter case, the process of 
nullifying and replacing the HCCs with the variable representing the 
coefficient estimation group is not currently replicated in the 
calculation of HHS-RADV failure rates, group adjustment factors, or 
enrollee adjustment factors, so it is possible for an enrollee to be 
recorded in their EDGE, IVA, or SVA data as having both conditions for 
the purposes of HHS-RADV.
    The nullification and replication process in the risk adjustment 
risk score calculation de-duplicates conditions in coefficient 
estimation groups in the same way that multiple HCCs that share a 
hierarchical relationship are de-duplicated. However, there is no 
analogous de-duplication process for coefficient estimation groups in 
HHS-RADV.\207\ As such, it is possible for an enrollee to be recorded 
as having multiple conditions in a coefficient estimation group for 
HHS-RADV, requiring the issuer to be able to validate both conditions 
to avoid receiving an HHS-RADV adjustment to the enrollee's risk score, 
even though the enrollee only received the coefficient for one of those 
conditions in the enrollee's risk adjustment risk score calculation. 
Therefore, beginning with the 2021 benefit year of HHS-RADV, we are 
proposing to extend the Super HCC policy finalized in the 2020 HHS-RADV 
Amendments Rule, such that HHS will apply the coefficient estimation 
group logic as expressed in the applicable benefit year's DIY software 
\208\ throughout HHS-RADV error estimation, rather than just at the 
sorting step that assigns HCCs to failure rate groups. This change 
would mean that an issuer would only need to validate one HCC in a 
coefficient estimation group to avoid further impacting an adjustment 
to an enrollee's risk score in HHS-RADV, aligning with how an 
enrollee's risk score \209\ would be calculated under the state payment 
transfer formula.
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    \207\ It is rare for an enrollee to have two HCCs in the same 
coefficient estimation group that are not also in a hierarchical 
relationship. This situation occurred in no more than 0.1 percent of 
enrollees sampled for 2017 and 2018 HHS-RADV.
    \208\ In section III.C.8.b. of this proposed rule, we propose 
how the coefficient estimation group logic would be applied to 
adult, child, and infant enrollees and discuss alternative 
application methodologies.
    \209\ In the application of the coefficient estimation group 
logic to HHS-RADV, the definition of coefficient estimation groups 
for the infant models depends upon proposals in section III.C.8.b. 
of this proposed rule. If the approach in section III.C.8.b. is 
finalized as proposed, Super HCCs for the infant models would be 
based on the calculated model factors used for the infant models, as 
described in the applicable benefit year's DIY software ``Additional 
Infant Variables'' table logic (Table 8 of the 2021 Benefit Year DIY 
Software). In section III.C.8.b. of this rule, we also briefly 
describe alternative approaches wherein Super HCCs for infants would 
be identical to those for the child models, or identical to those 
for the adult models, and would involve additional steps analogous 
to those described in Chapter 11.3.4 of the 2020 Benefit Year HHS-
RADV Protocols, available at https://www.regtap.info/uploads/library/2020_RADV_Protocols__042921_5CR_060421.pdf. These additional 
steps would not be necessary if the Super HCCs proposals in this 
rule to define Super HCCs separately for adults, children, and 
infants are finalized as proposed.

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[[Page 635]]

    If finalized as proposed, this update to the Super HCC policy would 
necessitate a change to the policy finalized in the 2021 Payment Notice 
\210\ which amended the outlier identification process to not consider 
an issuer as an outlier in any failure rate group in which that issuer 
has fewer than 30 HCCs.\211\ That policy was developed based on results 
of analysis that showed that if the number of EDGE HCCs per sample of 
enrollees was below 30 HCCs, the implied alpha of our statistical tests 
for outliers was higher than our 5 percent target, thereby failing to 
meet the threshold for statistical significance. Moreover, statistical 
practice often relies on a standard recommendation regarding the 
determination of sample size, which states that sample sizes below 30 
observations are often insufficient to assume that the sampling 
distribution is normally distributed.\212\
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    \210\ 85 FR at 29196 through 29198.
    \211\ Under the outlier identification policy finalized in the 
2021 Payment Notice, data from an issuer who has fewer than 30 HCCs 
in a failure rate group is included in the calculation of national 
metrics for that failure rate group, including the national mean 
failure rate, standard deviation, and upper and lower confidence 
interval bounds. However, the issuer does not have its risk score 
adjusted for that group, even if the magnitude of its failure rate 
appeared to otherwise be very large relative to other issuers. In 
addition, we clarified that this issuer may be considered an outlier 
in other failure rate groups in which it has 30 or more HCCs.
    \212\ For example, David C. Howell, ``Hypothesis Tests Applied 
to Means'' In Statistical Methods for Psychology (8th Ed.), 177-228. 
Belmont, CA: Wadsworth, 2010.
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    The 2021 Payment Notice policy was developed when individual HCCs 
were the unit of analysis for calculating failure rates. However, the 
proposed policy in this rule to de-duplicate coefficient estimation 
groups in HHS-RADV would alter the unit of analysis of failure rates to 
be de-duplicated Super HCCs,\213\ rather than individual HCCs. Although 
the unit of analysis would have changed, the underlying issue with 
sample size in the outlier identification process would remain the 
same. As such, as a part of this proposal, we propose to generally 
maintain the outlier identification approach adopted in the 2021 
Payment Notice and propose to not consider an issuer as an outlier in 
any failure rate group in which that issuer has fewer than 30 de-
duplicated EDGE Super HCCs (which would include, as proposed below, 
maturity-severity factors for infant enrollees) beginning with 2021 
benefit year HHS-RADV. Consistent with the policies adopted in the 2021 
Payment Notice,\214\ we also propose to continue to include data from 
an issuer who has fewer than 30 de-duplicated EDGE Super HCCs in a 
failure rate group in the calculation of national metrics for that 
failure rate group, including the national mean failure rate, standard 
deviation, and upper and lower confidence interval bounds. However, the 
issuer would not have its risk score adjusted for that group, even if 
the magnitude of its failure rate appeared to otherwise be very large 
relative to other issuers. In addition, we clarify that under this 
proposal this issuer may be considered an outlier in other failure rate 
groups in which it has 30 or more de-duplicated EDGE Super HCCs.
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    \213\ If the approach in section III.C.8.b. is finalized as 
proposed, Super HCCs for the infant models would be based on the 
calculated model factors used for the infant models, as described in 
the applicable benefit year's DIY software ``Additional Infant 
Variables'' table logic (Table 8 of the 2021 Benefit Year DIY 
Software). In section III.C.8.b. of this rule, we also briefly 
describe alternative approaches under which Super HCCs for infants 
would be identical to those for the child models, or identical to 
those for the adult models, and would involve additional steps 
analogous to those described in Chapter 11.3.4 of the 2020 Benefit 
Year HHS-RADV Protocols (available at). These additional steps would 
not be necessary if the Super HCCs proposals in this rule proposed 
to define Super HCCs separately for adults, children, and infants 
are finalized as proposed.
    \214\ 85 FR at 29196 through 29198.
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    We seek comment on this proposal and whether HCCs in coefficient 
estimation groups should be de-duplicated before they are sorted into 
failure rate groups and in all subsequent stages of HHS-RADV error 
estimation.
b. Defining Super HCCs Separately for Adults, Children, and Infants
    In conjunction with our proposal to modify the application of 
coefficient estimation groups in section III.C.8.a. of this proposed 
rule, we also propose to modify the Super HCC policy to apply 
coefficient estimation groups to enrollees according to the risk 
adjustment model to which they are subject. Under the current Super HCC 
policy, coefficient estimation group logic from the adult models is 
applied to all enrollees, including those subject to the child and 
infant models.\215\ As detailed in the 2020 HHS-RADV Amendments Rule, 
we adopted this approach because the adult models' HCC coefficient 
estimation groups will be applicable to the vast majority of enrollees 
\216\ and our belief that the use of HCC coefficient estimation groups 
present in the adult risk adjustment models sufficiently balances the 
representativeness and accuracy of HCC failure rate estimates across 
the entire population in aggregate.\217\
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    \215\ See 85 FR at 76984 through 76900.
    \216\ The majority of the population with HCCs in the HHS-RADV 
samples are subject to the adult models (88.3 percent for the 2017 
benefit year; 88.7 percent for the 2018 benefit year). For 2017, 
this was calculated after removing issuers in Massachusetts and 
incorporating cases where issuers failed pairwise and the SVA 
subsample was used.
    \217\ See 85 FR at 76987.
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    However, there are some differences in the structure of the risk 
adjustment model coefficient estimation groups between the adult, 
child, and infant models that the current approach does not take into 
account. For example, the child and adult risk adjustment models' 
coefficient estimation groups for the 2021 benefit year and onward 
\218\ are almost identical with the exception of two adult-only 
coefficient estimation groups and five child-only coefficient 
estimation groups (Table 9).
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    \218\ Starting in 2021 benefit year, the HHS risk adjustment 
models use Version 07 for the HHS-HCC classification. Prior to the 
2021 benefit year, the HHS risk adjustment models used Version 05 
for HHS-HCC classification.
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BILLING CODE 4120-01-P

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[GRAPHIC] [TIFF OMITTED] TP05JA22.022


[[Page 637]]


[GRAPHIC] [TIFF OMITTED] TP05JA22.023

BILLING CODE 4120-01-C
    The infant models also are composed of variables that function 
analogously to coefficient estimation groups in that they can represent 
the presence of a large number of HCCs, or just a single HCC. However, 
these variables in the infant models, the severity-maturity interaction 
factors, are structured completely differently from the coefficient 
estimation groups in the adult and child models. We have continued to 
consider these issues as we gained more experience with operating HHS-
RADV and had access to additional years of HHS-RADV data to analyze.
    In recognition of the differences in each age group model's 
definitions, and based on the results of further analysis on the year-
over-year stability of sorting Super HCCs into three failure rate 
groups, described below, we propose to define Super HCCs as:
     The HCC-derived adult model variables after the 
application of the relevant rows in the applicable benefit year's DIY 
software adult variable logic (for example, for 2021 HHS-RADV, in the 
2021 Benefit Year DIY Software,\219\ the ``HCC group'' rows in Table 6: 
Additional Adult Variables),
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    \219\ See, for example, the August 3, 2021 version of the DIY 
software is available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance.
---------------------------------------------------------------------------

     The HCC-derived child model variables after the 
application of the relevant rows in the applicable benefit year's DIY 
software child variable logic (for example, for 2021 HHS-RADV, in the 
2021 Benefit Year DIY Software, the ``HCC group'' rows in Table 7: 
Additional Child Variables), and
     The HCC-derived infant model variables after the 
application of the relevant rows in the applicable benefit year's DIY 
software infant variable logic (for example, for 2021 HHS-RADV, in the 
2021 Benefit Year DIY Software, the ``Severity level'', ``Maturity 
level'', ``Assign as IHCC AGE1 if needed'', ``Impose hierarchy'', and 
``Maturity x severity level interactions'' rows in Table 8: Additional 
Infant Variables). Under this approach, we would sort the adult and 
child coefficient estimation groups into failure rate groups together, 
when they are identical in definition between the adult and child 
models, and independently from one another when they are not identical. 
For infant enrollees, rather than have individual HCCs sorted into 
failure rate groups, or use the adult or child coefficient estimation 
group (Super HCC) definitions, we would sort the infant enrollees' 
maturity-severity level interaction factors themselves into failure 
rate groups as Super HCCs after they have been de-duplicated. In short, 
for the risk adjustment models for 2021 benefit year and onward, using 
each age group's model factors to define Super HCCs, and sorting adult 
and child Super HCCs together when they have identical definitions, 
would increase the number of factors used in sorting from 110 under the 
current Super HCC grouping policy established in the 2020 RADV 
Amendments Rule to 146 under this approach. We propose to adopt these 
changes to the Super HCC policy beginning with the 2021 benefit year of 
HHS-RADV.
    When we established the current Super HCC grouping policy in the 
2020 HHS-RADV Amendments Rule,\220\ we acknowledged the possibility of 
defining Super HCCs based on each model separately. Nevertheless, we 
proposed and finalized Super HCCs based on only the adult models due to 
concerns that using the child and infant models separately would result 
in some infant model Super HCCs with very small sample sizes, leading 
to less stable failure rate group assignments year-over-year. We also 
finalized a policy to use the adult models to create Super HCCs because 
the adult models' HCC coefficient estimation groups will be applicable 
to the vast majority of enrollees (including most children, considering 
the strong overlap between the structure of the adult and child models) 
and our belief that the use of HCC coefficient estimation groups 
present in the adult risk adjustment models sufficiently balances the 
representativeness and accuracy of HCC failure rate estimates across 
the entire population in aggregate. However, simulations run using 2018 
HHS-RADV data \221\ have shown that if we were to use each model's 
factor definitions separately as proposed in this rule, with adult and 
child coefficient estimation groups that have identical definitions 
being sorted together, we would expect 93.4 percent of factors for one 
benefit year of HHS-RADV to be sorted into the same failure rate group 
for the subsequent benefit year of HHS-RADV. Similarly, according to 
our simulation of 1,000 subsequent years of HHS-RADV, if we were to 
base Super HCCs on the adult models for adults and the child models for 
children and infants, the percentage of factors whose sorting would 
remain stable between subsequent years would be 93.2 percent. In 
contrast, and contrary to expectations, if Super HCCs were only based 
on the definitions in the adult

[[Page 638]]

models, we would expect only 91.4 percent of factors to remain in the 
same failure rate group across subsequent benefit years.
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    \220\ See 85 FR at 76984-76900.
    \221\ The 2018 risk adjustment models, to which the 2018 HHS-
RADV data were subject, were based on the V05 HHS-HCC classification 
for the HHS risk adjustment models, which is the version of the HHS-
HCC classification that applies through the 2020 benefit year. The 
2021 risk adjustment models, to which the 2021 HHS-RADV data will be 
subject, were based on the V07 HHS-Condition Categories, which 
applies for the 2021 benefit year and beyond.
---------------------------------------------------------------------------

    This analysis demonstrates that the very small sample sizes for 
enrollees subject to the infant models would not lead to more overall 
instability if the Super HCC policy was modified to use each age 
group's model factor definitions separately, except for where child and 
adult coefficient estimation groups have identical definitions, to 
define Super HCCs. In fact, our continued study of these issues found 
that using each model's factor definitions separately, except for where 
child and adult coefficient estimation groups have identical 
definitions, to define Super HCCs could provide more stability than 
using only the adult models, or a combination of the child and adult 
models. In addition, we note that beginning with the 2021 benefit year, 
the risk adjustment models were updated based on Version 07 (V07) of 
the HHS-HCC classification.\222\ When the Super HCC policy was first 
implemented in the 2020 HHS-RADV Amendments Rule,\223\ the risk 
adjustment models for the earliest HHS-RADV benefit years to which the 
policy was effective (HHS-RADV benefit years 2019 and 2020) were based 
on Version 05 (V05) of the HHS-HCC classification.\224\ Due to the 
change in the HHS-HCC hierarchies in the V07 classification,\225\ the 
structure of the coefficient estimation groups for the child models for 
the 2021 benefit year and beyond differs further from the structure of 
the coefficient estimation groups for the adult models than it did for 
the 2019 and 2020 benefit years. For these reasons, we are proposing to 
define Super HCCs based on each age group's model factor definitions 
separately, except for where child and adult coefficient estimation 
groups have identical definitions, as described in the relevant rows in 
the applicable benefit year's DIY software adult variable logic (for 
example, for 2021 HHS-RADV, in the 2021 Benefit Year DIY Software,\226\ 
the ``HCC group'' rows in Table 6: Additional Adult Variables), the 
relevant rows in the applicable benefit year's DIY software child 
variable logic (for example, for 2021 HHS-RADV, in the 2021 Benefit 
Year DIY Software, the ``HCC group'' rows in Table 7: Additional Child 
Variables), and the relevant rows in the applicable benefit year's DIY 
software infant variable logic (for example, for 2021 HHS-RADV, in the 
2021 Benefit Year DIY Software, the ``Severity level'', ``Maturity 
level'', ``Assign as IHCC AGE1 if needed'', ``Impose hierarchy'', and 
``Maturity x severity level interactions'' rows in Table 8: Additional 
Infant Variables).
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    \222\ 85 FR 29164.
    \223\ See 85 FR 76984-76990.
    \224\ See Table 4 of the 2019 DIY software tables, available at 
https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/DIY-Tables-2019.04.2020.xlsx. See also Table 4 of the 2020 
DIY software tables, available at https://www.cms.gov/files/document/hhs-hcc-software-v0520128q2-tables-04132021.xlsx.
    \225\ For a discussion of these changes, see 85 FR at 7098-7101 
and 85 FR at 29175-29185. Also see the Potential Updates to HHS-HCCs 
for the HHS-operated Risk Adjustment Program (June 17, 2019), 
available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Potential-Updates-to-HHS-HCCs-HHS-operated-Risk-Adjustment-Program.pdf.
    \226\ The August 3, 2021 version of the DIY software is 
available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance.
---------------------------------------------------------------------------

    These relevant rows of the applicable benefit year's DIY software 
tables would be applied such that each instance of a Super HCC is only 
counted once per enrollee, even if that enrollee has multiple HCCs in 
that Super HCC. Furthermore, any payment HCCs that are not modified by 
the DIY software table logic rows referenced above would be treated as 
individual Super HCCs, such that all Super HCCs are aligned with how 
their component HCCs are treated in the risk adjustment models for the 
applicable benefit year. We propose to apply this change beginning with 
the 2021 benefit year of HHS-RADV.
    We seek comment on these proposals and whether Super HCCs should 
continue to be defined for all enrollees based on only the adult 
models,\227\ should be defined for adult enrollees based on the adult 
models and for child and infant enrollees based on the child 
models,\228\ or should be defined for each age group according to the 
age group risk adjustment model to which they are subject, as proposed.
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    \227\ If this alternative approach is adopted, for infant 
enrollees, Super HCCs would not align with the structure of the 
infant risk adjustment models, as such the HHS-RADV process would 
involve additional steps analogous to those described in Chapter 
11.3.4 of the 2020 Benefit Year HHS-RADV Protocols (available at 
https://www.regtap.info/uploads/library/2020_RADV_Protocols__042921_5CR_060421.pdf). The additional steps 
described in Chapter 11.3.4 of the 2020 Benefit Year HHS-RADV 
Protocols would not be necessary if the Super HCCs proposals in this 
rule are finalized as proposed such that infant enrollee Super HCCs 
are based on the calculated model factors used for the infant 
models.
    \228\ Ibid.
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c. Negative Failure Rate Constraint
    In the 2020 HHS-RADV Amendments Rule,\229\ we finalized a policy to 
constrain outlier issuers' error rate calculations to zero in cases 
when an issuer is a negative error rate outlier and its failure rate is 
negative, beginning with 2019 benefit year HHS-RADV. We finalized this 
policy in order to distinguish between low failure rates due to 
accurate data submission and failure rates that have been depressed 
through the presence of HCCs in the audit data that were not present in 
the EDGE data. If a negative failure rate is due to a large number of 
found HCCs, it does not reflect accurate reporting through the EDGE 
server for risk adjustment.
---------------------------------------------------------------------------

    \229\ 85 FR at 76994-76998.
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    In this rule, we propose modifying the application of that policy 
beginning with the 2021 benefit year of HHS-RADV to constrain to zero 
the failure rate of any issuer who is a negative failure rate outlier 
in a failure rate group, regardless of whether the outlier issuer has a 
negative or positive error rate. We believe this proposed policy is 
appropriate and necessary to account for the fact that, because there 
are three failure rate groups in HHS-RADV, it is possible for a 
positive error rate outlier issuer to have a negative failure rate in 
one failure rate group and a positive failure rate in another failure 
rate group. To address those cases, we propose to amend the application 
of the negative failure rate constraint policy such that, for the 
purposes of calculating the group adjustment factor (GAF), we would 
constrain to zero the failure rate of any failure rate group in which 
an issuer is a negative failure rate outlier, regardless of whether the 
outlier issuer has an overall negative or positive error rate. We 
propose to adopt this policy beginning with the 2021 benefit year HHS-
RADV. Although our experience to date leads us to believe that this 
scenario is unlikely to occur often, this refinement is consistent with 
the intent of the policy to reduce potential incentives for issuers to 
use HHS-RADV to identify more HCCs than were reported to their EDGE 
servers for an applicable benefit year.
    We seek comment on this proposal.
9. Disbursement of Recouped High-Cost Risk Pool Funds--Discrepancies of 
Issuers of Risk Adjustment Covered Plans (Sec.  153.710(d))
    HHS proposes that any funds recouped as a result of an actionable 
high-cost risk pool-related discrepancy under Sec.  153.710(d) would be 
used to reduce high cost-risk pool charges for that national high-cost 
risk pool for the current benefit year if high-cost risk pool payments 
have not already been calculated for that benefit year. If high-cost 
risk pool payments have already been calculated for that benefit year, 
we propose to use the high-cost risk pool funds recouped based on an 
actionable

[[Page 639]]

discrepancy to reduce the next applicable benefit year's high-cost risk 
pool charges for all issuers owing high-cost risk pool charges for that 
national high-cost risk pool. As elsewhere discussed in this preamble, 
under ``High-Cost Risk Pool Funds--Audits of Issuers of Risk Adjustment 
Covered Plans (Sec.  153.620(c))'' and ``Disbursement of Recouped High-
Cost Risk Pool Funds--Administrative Appeals of Issuers of Risk 
Adjustment Covered Plans (Sec.  156.1220),'' we also propose similar 
disbursement policies for high-cost risk pool funds HHS recoups as a 
result of audits of risk adjustment covered plans under Sec.  
153.620(c)(5)(ii) and successful administrative appeals under Sec.  
156.1220(a)(1)(ii). We propose to treat funds recouped as a result of 
an actionable high-cost risk pool-related discrepancy the same way. 
That is, the recouped discrepancy funds would be used to reduce high-
cost risk pool charges for that market for the next benefit year for 
which high-cost risk pool payments have not already been calculated. We 
also clarify that when HHS recoups high-cost risk pool funds as a 
result of an actionable discrepancy, the issuer that filed the 
discrepancy would then be responsible for reporting that adjustment to 
its high-cost risk pool payments or charges in the next MLR reporting 
cycle consistent with the applicable instructions in Sec.  153.710(h). 
Additionally, for any benefit year in which high-cost risk pool charges 
are reduced as a result of high-cost risk pool funds recouped as a 
result of an actionable discrepancy, issuers whose charge amounts are 
reduced would be required to report the high-cost risk pool charges 
paid for that benefit year net of recouped audit funds in the next MLR 
reporting cycle consistent with Sec.  153.710(h).
    We seek comment on this proposal.
10. Medical Loss Ratio Reporting Requirements (Sec.  153.710(h))
    HHS established a framework in prior rulemakings to guide issuer 
treatment of certain payments and charges that could be subject to 
reconsideration for purposes of risk corridors and MLR reporting.\230\ 
For example, because risk adjustment transfer amounts are factors in an 
issuer's MLR calculations, a delay in resolving final risk adjustment 
payments and charges, including HHS-RADV adjustments to transfers, 
could make it difficult for issuers to comply with reporting 
requirements under the MLR program. A delay in resolving final risk 
adjustment transfer amounts could occur due to audits, actionable 
discrepancies, or successful appeals. Therefore, we clarified in Sec.  
153.710(h) \231\ how issuers should report certain ACA program amounts 
that could be subject to reconsideration for risk corridors and MLR 
reporting purposes. In this rule, we propose to amend the introductory 
sentence in Sec.  153.710(h)(1) and to add a proposed new paragraph 
(h)(1)(v) to separately address and explicitly capture a reference to 
HHS-RADV adjustments to make clear that HHS expects issuers to report 
HHS-RADV adjustments as part of their MLR reports in the same manner as 
they report risk adjustment payment and charge amounts (including high-
cost risk pool payments and charges). That is, notwithstanding any HHS-
RADV discrepancy filed under Sec.  153.630(d)(2), or any HHS-RADV 
request for reconsideration under Sec.  156.1220(a)(1)(vii) and (viii), 
unless the dispute has been resolved, issuers must report, as 
applicable, the HHS-RADV adjustment to a risk adjustment payment or 
charge as calculated by HHS in the applicable benefit year's Summary 
Report of Benefit Year Risk Adjustment Data Validation Adjustments to 
Risk Adjustment Transfers.\232\ We also propose to add a reference to 
HHS-RADV discrepancies under Sec.  153.630(d)(2) to the introductory 
sentence in Sec.  153.710(h)(1).
---------------------------------------------------------------------------

    \230\ See 45 CFR 153.710(h). Also see 79 FR at 13789-13790 and 
81 FR at 12235-12236.
    \231\ These instructions were previously codified in 45 CFR 
153.710(g) and recently redesignated to 45 CFR 153.710(h). See 79 FR 
at 13789-13790 and 86 FR at 24194-24195.
    \232\ See Table 9 in the part 2 of the 2022 Payment Notice, 86 
FR at 24201. For example, the 2019 and 2020 benefit year HHS-RADV 
Summary Report for non-exiting issuers will be published in early 
summer of 2022 and those issuers would be expected to report those 
amounts in their 2021 MLR Reports (filed by July 31, 2022).
---------------------------------------------------------------------------

    We propose conforming amendments to paragraph (h)(2) to add a 
reference to HHS-RADV adjustments to address situations where there 
could be subsequent changes to HHS-RADV adjustments calculated by HHS 
in the applicable benefit year's HHS-RADV Summary Report of Benefit 
Year Risk Adjustment Data Validation Adjustments to Risk Adjustment 
Transfers, such as modifications resulting from an actionable 
discrepancy or successful appeal. In these situations, an issuer would 
be required to report during the current MLR reporting year any 
adjustment to an HHS-RADV adjustment made or approved by HHS before 
August 15, or the next applicable business day, of the current 
reporting year unless otherwise instructed by HHS. Issuers would be 
required to report any adjustment to an HHS-RADV adjustment made or 
approved by HHS where such adjustment has not been accounted for in a 
prior MLR Reporting Form, in the following reporting year. For example, 
if an issuer's successful administrative appeal results in changes to 
HHS-RADV adjustments for a state market risk pool and issuers in that 
state market risk pool are notified of those modifications in 
September, those issuers would be required to report these adjusted 
amounts in the next MLR reporting cycle, after the appeal has been 
resolved and they receive notice of the adjusted amounts. However, if 
an appeal is resolved and issuers are notified about modifications to 
HHS-RADV adjustments for a given benefit year as a result of that 
appeal before August 15, or the next applicable business day, those 
issuers must report the adjusted amounts in the current MLR reporting 
year.
    Recognizing that flexibility is often needed in reporting these 
amounts on MLR forms, consistent with existing framework in Sec.  
153.710(h)(3), HHS would have the ability to modify these instructions 
in guidance in cases where HHS reasonably determines that these 
reporting instructions would lead to unfair or misleading financial 
reporting. Our intent in issuing any such guidance would be to avoid 
having the application of the instructions in exceptional circumstances 
lead to unfair or misleading financial reporting.\233\
---------------------------------------------------------------------------

    \233\ See, for example, Treatment of Risk Corridors Recovery 
Payments in the Medical Loss Ratio and Rebate Calculations (December 
30, 2020), available at https://www.cms.gov/files/document/mlr-guidance-rc-recoveries-and-mlr-final.pdf.
---------------------------------------------------------------------------

    Finally, we propose a technical amendment to Sec.  153.710(h)(3) to 
replace the current cross-reference to paragraph (g)(1) and (2) of this 
section with a reference to paragraph (h)(1) and (2) of this section to 
point to the correct sections that contain the relevant reporting 
instructions. We inadvertently omitted this update as part of the 
amendments in the 2022 Payment Notice to incorporate an EDGE 
materiality threshold as part of Sec.  153.710 that redesignated the 
risk corridors and MLR reporting instructions provisions from paragraph 
(g) to paragraph (h).\234\
---------------------------------------------------------------------------

    \234\ See 85 FR at 78604-78605 and 86 FR at 24194-24195.
---------------------------------------------------------------------------

    We seek comments on these proposals.
11. Deadline for Submission of Data (Sec.  153.730)
    A risk adjustment covered plan must submit data to HHS in states 
where HHS is operating the risk adjustment program that is necessary 
for HHS to calculate

[[Page 640]]

risk adjustment payments and charges.235 236 In the 2014 
Payment Notice, HHS established that the deadline for issuers to submit 
the required risk adjustment data is April 30 of the year following the 
applicable benefit year.\237\ For example, the deadline for issuers of 
risk adjustment covered plans to submit the required 2020 benefit year 
risk adjustment data was April 30, 2021. HHS explained that this 
deadline provides ample time to allow for claims run-out from the prior 
benefit year to ensure that diagnoses for the benefit year are 
captured, while also providing HHS sufficient time to calculate 
payments and charges and meet the June 30 deadline for notifying 
issuers of risk adjustment transfer amounts at Sec.  153.310(e).\238\
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    \235\ See 45 CFR 153.610 and 153.710. Since the 2017 benefit 
year, HHS has operated the risk adjustment program in all 50 states 
and the District of Columbia.
    \236\ Issuers of reinsurance-eligible plans in states where HHS 
operated the reinsurance program were similarly required to submit 
the data necessary for HHS to calculate reinsurance payments. See, 
for example, 45 CFR 153.420 and 153.710. The reinsurance program 
under section 1341 of the ACA was a temporary program that applied 
to the 2014-2016 benefit years. The risk adjustment program under 
section 1343 of the ACA is a permanent program and therefore is the 
primary focus of this discussion.
    \237\ See 78 FR 15410 at 15434.
    \238\ Ibid.
---------------------------------------------------------------------------

    We are not proposing to change this deadline but propose to amend 
Sec.  153.730 to address situations when April 30 does not fall on a 
business day. Currently, when April 30 falls on a non-business day, HHS 
has exercised enforcement discretion to extend the deadline to the next 
applicable business day.\239\ This occurred in the past for the 2016 
and 2017 benefit year data submissions and will occur again for the 
2022 benefit year data submissions. Recognizing there will be future 
benefit years when April 30 does not fall on a business day, HHS 
proposes to amend Sec.  153.730 to provide that when April 30 of the 
year following the applicable benefit year falls on a non-business day, 
the deadline for issuers to submit the required risk adjustment data 
would be the next applicable business day. We solicit comments on this 
proposal.
---------------------------------------------------------------------------

    \239\ See 81 FR 12204 at 12234 n.20; see also Evaluation of EDGE 
Data Submissions for 2016 Benefit Year at 1 (Dec. 23, 2016), 
available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/EDGE-2016-Q_Q-Guidance_20161222v1.pdf.
---------------------------------------------------------------------------

D. Part 155--Exchange Establishment Standards and Other Related 
Standards Under the Affordable Care Act

1. Non-Interference With Federal Law and Non-Discrimination Standards 
(Sec.  155.120(c))
    We propose to amend 45 CFR 155.120(c) such that its 
nondiscrimination protections would explicitly prohibit discrimination 
based on sexual orientation and gender identity. HHS previously 
codified such nondiscrimination protections at Sec.  155.120(c), but 
amendments made in 2020 to Sec.  155.120(c) removed any reference to 
sexual orientation and gender identity. If finalized, this proposal 
would revert Sec.  155.120(c) to the pre-2020 nondiscrimination 
protections.
    Section 155.120(c) currently provides that in order to avoid 
interference and comply with applicable non-discrimination statutes, 
the states and the Exchanges must not discriminate based on race, 
color, national origin, disability, age, or sex. Previously, in the 
final rule ``Patient Protection and Affordable Care Act; Establishment 
of Exchanges and Qualified Health Plans; Exchange Standards for 
Employers'' (Exchange Standards final rule), pursuant to the authority 
provided in section 1321(a)(1)(A) of the ACA to regulate the 
establishment and operation of an Exchange, we finalized Sec.  
155.120(c) to also prohibit discrimination based on sexual orientation 
and gender identity.\240\ However, in the 2020 final rule related to 
section 1557 of the ACA, HHS revised certain CMS regulations, including 
those at Sec.  155.120(c), by removing sexual orientation and gender 
identity as bases of discrimination subject to the CMS regulations' 
nondiscrimination protections.\241\
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    \240\ 77 FR 18310 (March 27, 2012).
    \241\ 85 FR 37160 (June 19, 2020). See also id. at 37218-21 (the 
2020 section 1557 final rule revised the following CMS regulations: 
45 CFR 147.104, 155.120, 155.220, 156.200, and 156.1230).
---------------------------------------------------------------------------

    CMS possesses statutory authority independent of section 1557 of 
the ACA to prohibit discrimination in Exchanges pursuant to the 
authority to establish requirements with respect to the operation of 
Exchanges in section 1321(a)(1)(A) of the ACA.\242\ Pursuant to this 
authority, HHS finalized in the Exchange Standards final rule that a 
State must comply with any applicable non-discrimination statutes, 
specifically finalizing that a State must not operate an Exchange in 
such a way as to discriminate on the basis of race, color, national 
origin, disability, age, sex, gender identity, or sexual orientation. 
CMS proposes to exercise that same authority here to amend Sec.  
155.120(c) to again prohibit states and Exchanges carrying out Exchange 
requirements from discriminating based on sexual orientation and gender 
identity. Section 1321(a)(1)(A) of the ACA is the same authority CMS 
relies upon for implementation of existing nondiscrimination 
protections at Sec.  155.120(c). Utilizing this same authority to again 
prohibit discrimination based on sexual orientation and gender identity 
at Sec.  155.120(c) would be consistent with the authority CMS relies 
upon for the existing protections at Sec.  155.120(c) that currently 
prohibit discrimination on the basis of race, color, national origin, 
disability, age, or sex. We believe such amendments are warranted in 
light of the existing trends in health care discrimination and are 
necessary to better address barriers to health equity for LGBTQI+ 
individuals.
---------------------------------------------------------------------------

    \242\ 85 FR 37218-21 (June 19, 2020).
---------------------------------------------------------------------------

    A more in-depth discussion of these developments and other factors 
considered in proposing these amendments to CMS nondiscrimination 
protections is included earlier in the preamble to Sec.  147.104 under 
section III.B.1.b. of this preamble. For brevity, we refer back to 
Sec.  147.104 under section III.B.1.b. of the preamble rather than 
restating the issues here.
    We seek comment on this proposal.
3. Civil Money Penalties for Violations of Applicable Exchange 
Standards by Consumer Assistance Entities in Federally-Facilitated 
Exchanges (Sec.  155.206)
    We propose to make a technical correction to 45 CFR 155.206(i) to 
add language that would cross-reference to the authority to implement 
annual inflation-related increases to civil money penalties (CMPs) 
pursuant to the Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015 (2015 Act).\243\ Because of an oversight, this 
language was not added to Sec.  155.206(i) as part of prior efforts and 
rulemaking to implement the 2015 Act.\244\ Additionally, a reference to 
Sec.  155.206 and any accompanying CMP amounts have not been included 
in HHS's annual inflation update

[[Page 641]]

rulemakings.\245\ Therefore, in this rule, we propose to amend Sec.  
155.206(i) to add the phrase ``as adjusted annually under 45 CFR part 
102'' after the phrase ``$100 for each day'' in order to correct this 
oversight. The associated CMP table in 45 CFR 102.3 is updated 
annually, and Sec.  155.206(i) will be included in the next annual 
update. To date, no CMPs have been imposed under this authority, but 
any that are will reflect the current inflationary adjusted amount as 
required by the 2015 Act and will be calculated in accordance with 
applicable OMB guidance to all Executive Departments on the 
implementation of the 2015 Act.
---------------------------------------------------------------------------

    \243\ Sec. 701 of the Bipartisan Budget Act of 2015, Public Law 
114-74, which amended the Federal Civil Penalties Inflation 
Adjustment Act of 1990, Public Law 101-410, 104 Stat. 890 (1990).
    \244\ See, e.g., Department of Health and Human Services; 
Adjustment of Civil Monetary Penalties for Inflation; Interim Final 
Rule, 81 FR 61538 (Sept. 6, 2016), available at https://www.govinfo.gov/content/pkg/FR-2016-09-06/pdf/2016-18680.pdf.
    \245\ See, e.g., the Department of Health and Human Services; 
Annual Civil Monetary Penalties Inflation Adjustment; Final Rule, 85 
FR 2869 (Jan. 17, 2020), available at https://www.govinfo.gov/content/pkg/FR-2020-01-17/pdf/2020-00738.pdf. See also the 
Department of Health and Human Services; Adjustment of Civil 
Monetary Penalties for Inflation and the Annual Civil Monetary 
Penalties Inflation Adjustment for 2021, 86 FR 62928 (Nov. 15, 
2021), available at https://www.govinfo.gov/content/pkg/FR-2021-11-15/pdf/2021-24672.pdf and 45 CFR 102.3.
---------------------------------------------------------------------------

4. Ability of States To Permit Agents and Brokers and Web-Brokers To 
Assist Qualified Individuals, Qualified Employers, or Qualified 
Employees Enrolling in QHPs (Sec.  155.220)
a. Required QHP Comparative Information on Web-Broker Websites and 
Related Disclaimer
    We propose to amend Sec.  155.220(c)(3)(i)(A) to include at 
proposed new Sec. Sec.  155.220(c)(3)(i)(A)(1) through (c)(3)(i)(A)(5) 
a list of the QHP comparative information web-broker non-Exchange 
websites are required to display consistent with Sec.  155.205(b)(1). 
We also propose to revise the disclaimer requirement in Sec.  
155.220(c)(3)(i)(A) so that web-broker non-Exchange websites would be 
required to prominently display a standardized disclaimer provided by 
HHS stating that enrollment support is available on the Exchange 
website and provide a web link to the Exchange website where enrollment 
support for a QHP is not available using the web-broker's non-Exchange 
website.
    Currently, Sec.  155.220(c)(3)(i)(A) requires that a web-broker 
non-Exchange website must disclose and display all QHP information 
provided by the Exchange or directly by QHP issuers consistent with the 
requirements of Sec.  155.205(b)(1) and (c). To the extent that not all 
information required under Sec.  155.205(b)(1) is displayed on the web-
broker's website for a QHP, the web-broker's website must prominently 
display a standardized disclaimer provided by HHS stating that 
information required under Sec.  155.205(b)(1) for the QHP is available 
on the Exchange website, and provide a link to the Exchange website. 
The preamble in the proposed \246\ and final \247\ rules that 
established the current text in Sec.  155.220(c)(3)(i)(A) explained the 
intent of this requirement was that a web-broker website must display 
all information required under Sec.  155.205(b)(1) unless the 
information was not available to the web-broker, in which case the web-
broker website must display the standardized disclaimer. Section 
155.220(c)(3)(i)(D) similarly requires web-brokers to display all QHP 
data provided by an Exchange on its non-Exchange website used to 
participate in the FFE direct enrollment (DE) program (whether Classic 
DE or enhanced direct enrollment (EDE)).
---------------------------------------------------------------------------

    \246\ See 78 FR at 37046.
    \247\ See 78 FR at 54077.
---------------------------------------------------------------------------

    In the early years of Exchange operations, we released a data file 
with limited QHP details (the QHP limited file) that provided web-
brokers with a basic set of QHP information that could be used to 
satisfy the display requirements. Display of the data elements from the 
QHP limited file, in combination with a standardized disclaimer (the 
plan detail disclaimer), became the de facto minimum required to 
satisfy the web-broker's obligation to display QHP information on its 
non-Exchange website. In adopting this approach, we recognized that the 
Exchange may not have been able to provide web-brokers with certain 
data elements necessary to meet the Sec.  155.205(b)(1) requirements, 
such as premium information, due to confidentiality requirements, web-
broker appointments with QHP issuers, and state law. We also recognized 
some of the data elements, such as quality rating information, were not 
going to be available in the initial years of the Exchanges' 
operation.\248\
---------------------------------------------------------------------------

    \248\ See Patient Protection and Affordable Care Act; Program 
Integrity: Exchange, SHOP, and Eligibility Appeals; Final Rule, 78 
FR 54069 at 54077 (August 30, 2013).
---------------------------------------------------------------------------

    In the proposed 2022 Payment Notice, we proposed to establish an 
exception to the web-broker display requirements captured at paragraphs 
(c)(3)(i)(A) and (D).\249\ We proposed to revise paragraph (c)(3)(i)(A) 
to require a web-broker non-Exchange website to disclose and display 
all QHP information provided by the Exchange or directly by QHP issuers 
consistent with the requirements of Sec.  155.205(b)(1) and (c), except 
when a web-broker's website does not support enrollment in a QHP. We 
proposed a similar revision to Sec.  155.220(c)(3)(i)(D). A web-
broker's non-Exchange website may not support enrollment in a QHP if 
the web-broker does not have an appointment with a QHP issuer and 
therefore is not permitted under state law to enroll consumers in the 
coverage offered by that QHP issuer. In such circumstances, we proposed 
that the web-broker's non-Exchange website would not be required to 
provide all the information identified under Sec.  155.205(b)(1). 
Instead, we proposed to require web-brokers to display the following 
limited, minimum information for such QHPs: Issuer marketing name, plan 
marketing name, product network type, metal level, and premium and 
cost-sharing information. To take advantage of this proposed 
flexibility, we also proposed that web-broker non-Exchange websites 
would be required to identify to consumers the QHPs, if any, for which 
the web-broker websites did not facilitate enrollment by prominently 
displaying the plan detail disclaimer provided by the Exchange. The 
plan detail disclaimer explains that the consumer can get more 
information about such QHPs on the Exchange website, and includes a 
link to the Exchange website. We noted that we believed this proposal 
struck an appropriate balance by recognizing that web-brokers may not 
be permitted to assist with enrollments in QHPs for which they do not 
have an appointment while still providing key information about all 
QHPs on web-broker non-Exchange websites to allow consumers to window 
shop and identify whether they may want to explore other QHP options. 
We noted that it also would minimize burdens for web-brokers by not 
requiring them to develop processes to display all of the required 
comparative information listed in Sec.  155.205(b)(1) for those QHPs 
for which they do not have an appointment to sell. We invited comments 
on the proposed limited, minimum QHP details that would be required to 
be displayed for those QHPs that the web-broker does not facilitate 
enrollment in through its non-Exchange website. We sought comment on 
whether to require display of any additional elements identified under 
Sec.  155.205(b)(1) among the limited, minimum information, such as 
summaries of benefits and coverage.\250\
---------------------------------------------------------------------------

    \249\ See 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, 85 FR 78572 at 
78614 (December 4, 2020).
    \250\ 45 CFR 155.205(b)(1) references the following comparative 
QHP information: Premium and cost-sharing information, the summary 
of benefits and coverage, metal level, results of enrollee 
satisfaction surveys, quality ratings, medical loss ratio 
information, transparency of coverage measures, and the provider 
directory.

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[[Page 642]]

    Almost all public comments received in response to the proposal in 
the proposed 2022 Payment Notice advocated for requiring that web-
broker non-Exchange websites display more QHP information than the rule 
proposed to require, even in cases in which the web-broker non-Exchange 
website does not support enrollment in a QHP. The vast majority of 
commenters either advocated for requiring web-broker non-Exchange 
websites to display all available QHP information for all available 
QHPs, or generally supported making it easier for consumers to obtain 
comparative information for all available QHPs when consumers are using 
web-broker non-Exchange websites. After consideration of the comments 
received, we did not finalize the proposed amendments to Sec.  
155.220(c)(3)(i)(A) and (c)(3)(i)(D). We agreed that the display of 
more QHP information on web-broker non-Exchange websites is in the best 
interest of consumers to aid them in comparing QHP options without 
having to potentially navigate to multiple websites, consistent with 
the views of a majority of commenters who advocated for requiring that 
web-broker non-Exchange websites display all of the comparative 
information listed in Sec.  155.205(b)(1). We also noted our belief 
that requiring web-broker non-Exchange websites to display additional 
QHP information is reasonable given that QHP information has been more 
readily accessible for some time, both through public use files and the 
Marketplace API.
    As a result, we communicated in the preamble of part 2 of the 2022 
Payment Notice final rule our intent, pending future rulemaking when 
these issues could be further clarified, to limit our current use of 
enforcement discretion that permits web-brokers to only display issuer 
marketing name, plan marketing name, product network type, and metal 
level for all available QHPs, beginning with the PY 2022 open 
enrollment period.\251\ We stated that web-broker non-Exchange websites 
would be required to display all QHP information consistent with Sec.  
155.205(b)(1) and (c), with the exception of MLR information and 
transparency of coverage measures under Sec.  155.205(b)(1)(vi) and 
(vii), for all available QHPs, beginning with the PY 2022 open 
enrollment period. We indicated we would not deem a web-broker non-
Exchange website out of compliance with Sec.  155.220(c)(3)(i)(A) and 
(D) with respect to the display of MLR information and transparency of 
coverage measures if the web-broker non-Exchange website displays the 
other required standardized comparative information consistent with 
Sec.  155.205(b)(1) and (c). We also explained that prior to the start 
of the open enrollment period for PY 2022, if a web-broker's non-
Exchange website did not display all QHP information consistent with 
the requirements of Sec.  155.205(b)(1) and (c), other than MLR 
information and transparency of coverage measures, it would be required 
to prominently display the plan detail disclaimer and provide a link to 
the Exchange website. We noted that this interim approach did not 
establish new requirements and instead represented a change in the 
exercise of enforcement discretion regarding the standardized 
comparative information web-brokers are required to display under 
existing regulations following our consideration of comments on the 
proposed changes to the web-broker QHP display requirements in the 
proposed 2022 Payment Notice.
---------------------------------------------------------------------------

    \251\ See Patient Protection and Affordable Care Act; HHS Notice 
of Benefit and Payment Parameters for 2022 and Pharmacy Benefit 
Manager Standards; Final Rule, 86 FR 24140 at 24206 (May 5, 2021).
---------------------------------------------------------------------------

    We now propose to revise Sec.  155.220(c)(3)(i)(A) to incorporate a 
general requirement that web-broker non-Exchange websites display the 
QHP comparative information from Sec.  155.205(b)(1), consistent with 
our forecast in the preamble of part 2 of the 2022 Payment Notice final 
rule.\252\ Specifically, we propose to codify new Sec. Sec.  
155.220(c)(3)(i)(A)(1) through (5) to require web-broker websites to 
display premium and cost-sharing information, the summary of benefits 
and coverage established under section 2715 of the PHS Act; 
identification of the metal level of the QHP as defined by section 
1302(d) of the ACA or whether it is a catastrophic plan as defined by 
section 1302(e) of the ACA; the results of the enrollee satisfaction 
survey as described in section 1311(c)(4) of the ACA; quality ratings 
assigned in accordance with section 1311(c)(3) of the ACA; and the 
provider directory made available to the Exchange in accordance with 
Sec.  156.230 as the minimum QHP comparative information web-broker 
non-Exchange websites must display for all available QHPs. Including 
this information within Sec.  155.220, instead of through a cross-
reference to Sec.  155.205(b)(1), would provide better clarity and ease 
of reference and establish a list of required QHP comparative 
information consistent with our current enforcement approach, which, as 
discussed above, does not require the display of MLR information and 
transparency of coverage measures.
---------------------------------------------------------------------------

    \252\ Ibid.
---------------------------------------------------------------------------

    In addition, we propose to modify the language in Sec.  
155.220(c)(3)(i)(A) that served as the basis for the plan detail 
disclaimer requirement to instead require web-broker non-Exchange 
websites that do not support enrollment in all available QHPs to 
provide notice to consumers of that fact, and direct consumers to the 
Exchange website where they may obtain enrollment support. We propose 
to revise Sec.  155.220(c)(3)(i)(A) to state that web-broker websites 
must disclose and display the following QHP information provided by the 
Exchange or directly by QHP issuers consistent with the requirements of 
Sec.  155.205(c), and to the extent that enrollment support for a QHP 
is not available using the web-broker's website, prominently display a 
standardized disclaimer provided by HHS stating that enrollment support 
for the QHP is available on the Exchange website, and provide a web 
link to the Exchange website. Historically the plan detail disclaimer 
served as the mechanism and visual cue to convey to consumers where 
they may find additional information about particular QHPs and how they 
may enroll in those QHPs (that is, using HealthCare.gov). However, 
requiring the continued display of the plan detail disclaimer is 
unnecessary and would be confusing as the plan detail disclaimer states 
more information about QHPs is available on HealthCare.gov when in fact 
web-broker non-Exchange websites will be displaying the same QHP 
comparative information as HealthCare.gov.\253\ In the absence of the 
plan detail disclaimer, the secondary function of conveying those QHPs 
for which enrollment support is not available through the web-broker's 
non-Exchange website and how consumers may obtain enrollment support is 
lost. This proposal to modify the disclaimer requirement in Sec.  
155.220(c)(3)(i)(A) to convey to consumers those QHPs for which a web-
broker website does not provide enrollment support and to direct them 
to where they can obtain enrollment support would serve the function 
lost by

[[Page 643]]

the elimination of the plan detail disclaimer requirement.
---------------------------------------------------------------------------

    \253\ The Plan Detail Disclaimer states: ``[Name of Company] 
isn't able to display all required plan information about this 
Qualified Health Plan at this time. To get more information about 
this Qualified Health Plan, visit the Health Insurance 
Marketplace[supreg] website at HealthCare.gov.'' See p.53 Federally-
Facilitated Exchanges (FFEs) and Federally-Facilitated Small 
Business Health Options Program (FF-SHOP) Enrollment Manual, section 
5.3.2, August 18, 2021, available at https://www.regtap.info/uploads/library/ENR_FFEFFSHOPEnrollmentManual2020_5CR_090220.pdf 
https://www.cms.gov/files/document/ffeffshop-enrollment-manual-2021.pdf.
---------------------------------------------------------------------------

    We seek comment on these proposals.
b. Prohibition of QHP Advertising on Web-Broker Websites
    Section 155.220(c)(3)(i)(L) prohibits web-broker non-Exchange 
websites from displaying QHP recommendations based on compensation an 
agent, broker, or web-broker receives from QHP issuers. We propose to 
amend Sec.  155.220(c)(3)(i)(L) to make clear that web-broker non-
Exchange websites are also prohibited from displaying QHP 
advertisements, or otherwise providing favored or preferred placement 
in the display of QHPs, based on compensation agents, brokers, or web-
brokers receive from QHP issuers. We have observed a web-broker 
marketing to QHP issuers on its website the option for their QHPs to 
receive ``preferred placement'' on the web-broker website for a fee. 
The marketing materials indicated preferred placement on the web-
broker's website would position selected QHPs at the forefront of the 
user experience on the website. The marketing materials also suggested 
that users would not be made aware that preferred plan placements were 
purchased for a fee, and such placements were not assigned based on the 
specific attributes of the plans in relation to other available plans 
for which issuers did not purchase preferred placement.
    We believe QHP advertising on web-broker websites, whether or not 
characterized as such or using other terms such as ``preferred 
placement,'' is not in the best interest of consumers. QHP 
advertisements on web-broker websites could be perceived by consumers, 
and agents and brokers assisting consumers, as permissible QHP 
recommendations by the web-broker based on the best interests of the 
consumer rather than on the basis of payment from the QHP issuer to the 
web-broker. Consumers, and agents and brokers assisting consumers, may 
also inadvertently perceive advertisements placing a QHP in a favored 
position on a web-broker's website as the result of a neutrally applied 
filter of all available QHPs. These risks are substantially increased 
if the advertisements are not clearly identified as advertisements. 
However, even if QHP advertisements are clearly identified, we believe 
it is not in the interest of consumers to allow them on web-broker 
websites. In light of the many different approaches to advertising that 
exist now or may be adopted in the future, we do not believe that 
attempting to identify which advertising practices are permissible and 
which are not is practical or sufficiently protective of consumers' 
interests. Advertising is intended to bias consumer, agent, or broker 
perceptions in a way that benefits the advertiser, rather than the 
consumer or client. QHP advertisements on web-broker websites could 
take forms other than favored or preferred placement among a list of 
other QHPs (for example, obscuring the availability of other QHPs), 
including forms that could be more confusing or deceptive to consumers, 
in particular those consumers who may have limited familiarity with 
health insurance products and terminology and may be easily misled by 
advertising claims.
    Although Sec.  155.220(c)(3)(i)(L) prohibits web-broker websites 
from displaying QHP recommendations based on compensation an agent, 
broker, or web-broker receives from QHP issuers, it does not explicitly 
prohibit QHP advertising, or otherwise providing favored or preferred 
placement in the display of QHPs, based on compensation an agent, 
broker, or web-broker receives from QHP issuers. Therefore, we propose 
to amend Sec.  155.220(c)(3)(i)(L) to make clear that when a web-broker 
website is used to complete the QHP selection, the website must not 
display QHP advertisements or recommendations, or otherwise provide 
favored or preferred placement in the display of QHPs, based on 
compensation the agent, broker, or web-broker receives from QHP 
issuers. For purposes of this proposal, we intend for advertisements to 
include any form of marketing or promotion of QHPs based on 
compensation from QHP issuers, as opposed to the application of a 
neutral filter or sorting methodology that may promote particular QHPs 
and that are not based on compensation an agent, broker, or web-broker 
receives from QHP issuers.
    We seek comment on this proposal.
c. Explanation of Rationale for QHP Recommendations on Web-Broker 
Websites
    We propose to amend Sec.  155.220 to add a proposed new paragraph 
(c)(3)(i)(M) that would require web-broker websites to prominently 
display a clear explanation of the rationale for explicit QHP 
recommendations and the methodology for the default display of QHPs on 
their websites (for example, alphabetically based on plan name, from 
lowest to highest premium, etc.). We believe this proposed new 
requirement would provide consumers with a better understanding of the 
information being presented to them on web-broker websites, thereby 
enabling them to make better informed decisions and shop for and select 
QHPs that best fit their needs.
    Web-broker websites typically begin their consumer experiences with 
a series of screening questions. Often these screening questions are 
intended to assist consumers with determining whether they may qualify 
for insurance affordability programs (for example, APTC or Medicaid). 
Sometimes the screening questions request additional information 
unrelated to potential eligibility for insurance affordability 
programs, such as asking about preferred providers, prescription drug 
needs, or expected need for health care services in the coming year. 
Some web-brokers use the information collected in response to the 
preliminary screening questions to recommend one or more QHPs to 
consumers, or to rank all available QHPs from most to least 
recommended. Web-broker websites may recommend QHPs so long as they do 
not do so based on compensation an agent, broker, or web-broker 
receives from QHP issuers, consistent with Sec.  155.220(c)(3)(i)(L), 
as described above. Current rules do not require web-broker websites to 
include an explanation of the rationale for QHP recommendations. All 
web-broker websites must adopt a default display of QHPs by virtue of 
providing consumers a list of available QHPs, and the default display 
implicitly recommends those QHPs displayed at the top of the list.\254\ 
In addition, many web-broker websites offer filtering tools that 
consumers may use to adjust the default display of QHPs (for example, 
reordering the QHPs from lowest to highest deductible or limiting the 
display to silver metal level QHPs). In cases in which QHP display 
filtering tools are available and prominently displayed on a web-broker 
website, and when the default application of a filter produces the 
default ordering of QHPs displayed, the methodology for the default QHP 
display may be apparent. However, in other cases, consumers may not 
realize the implications of the default display of QHPs or may find it 
difficult to understand the methodology underlying the default display. 
Current rules do not require web-broker websites to include an 
explanation of the methodology used for their default displays of QHPs.
---------------------------------------------------------------------------

    \254\ 45 CFR 155.220(c)(3)(i)(B) requires web-broker websites to 
provide consumers the ability to view all QHPs offered through the 
Exchange.
---------------------------------------------------------------------------

    We support web-broker websites' use of innovative decision-support 
tools for consumers to help them shop for and select QHPs that best fit 
their needs. However, web-broker websites that explicitly recommend or 
rank QHPs do

[[Page 644]]

not always provide an explanation for their recommendations or 
rankings. Similarly, web-broker websites may not include an explanation 
of the methodology used for their default displays of QHPs, and it may 
not otherwise be apparent what methodologies are used. The absence of 
such explanations may cause some consumers to misunderstand the bases 
for the recommendations displayed to them on web-broker websites 
(whether explicit or implicit), or may prevent them from assessing the 
value of the recommendations (for example, whether a recommendation is 
based on the factors most important to them). In addition, the lack of 
explanations for QHP recommendations on web-broker websites may obscure 
that the web-broker is recommending QHPs based on compensation the web-
broker receives from QHP issuers in violation of Sec.  
155.220(c)(3)(i)(L). For these reasons, we propose to amend Sec.  
155.220 to add proposed new paragraph (c)(3)(i)(M) that would require 
web-broker websites to prominently display a clear explanation of the 
rationale for QHP recommendations and the methodology for its default 
display of QHPs.
    We seek comment on this proposal.
d. Federally-Facilitated Exchange Standards of Conduct (Sec.  
155.220(j))
    We propose to amend Sec.  155.220(j)(2)(i) such that its 
nondiscrimination protections would explicitly prohibit discrimination 
based on sexual orientation and gender identity. HHS previously 
codified such nondiscrimination protections at Sec.  155.220(j), but 
amendments made in 2020 to Sec.  155.220(j) removed any reference to 
sexual orientation and gender identity. If finalized, this proposal 
would revert Sec.  155.220(j) to the pre-2020 nondiscrimination 
protections.
    Section 155.220(j)(2)(i) describes that an individual or entity 
described in paragraph (j)(1) must provide consumers with correct 
information, without omission of material fact, regarding the FFE, QHPs 
offered through the FFE, and insurance affordability programs, and 
refrain from marketing or conduct that is misleading (including by 
having a direct enrollment website that HHS determines could mislead a 
consumer into believing they are visiting HealthCare.gov), coercive, or 
discriminates based on race, color, national origin, disability, age, 
or sex. Previously, in the 2017 Payment Notice final rule, we finalized 
Sec.  155.220(j)(2)(i) to also prohibit discrimination based on sexual 
orientation and gender identity.\255\ However, in the 2020 final rule 
related to section 1557 of the ACA, HHS revised certain CMS 
regulations, including Sec.  155.220(j)(2)(i), by removing sexual 
orientation and gender identity as bases of discrimination subject to 
the CMS regulations' nondiscrimination protections.\256\
---------------------------------------------------------------------------

    \255\ 80 FR 12204 (March 8, 2016).
    \256\ 85 FR 37160 (June 19, 2020); See id. at 37218-21 (the 2020 
section 1557 final rule revised the following CMS regulations: 45 
CFR 147.104, 155.120, 155.220, 156.200, 156.1230).
---------------------------------------------------------------------------

    CMS possesses statutory authority independent of section 1557 of 
the ACA to prohibit discrimination in the group and individual market 
pursuant to the Secretary's authority to establish procedures for 
States to permit agents and brokers to enroll consumers in QHPs through 
the FFEs, as described in sections 1312(e) of the ACA,\257\ and the 
authority to establish requirements with respect to the operation of 
Exchanges, the offering of QHPs through such Exchanges, and other 
requirements as the Secretary determines appropriate under sections 
1321(a)(1)(A), (B), and (D) of the ACA. Pursuant to this authority, in 
the 2017 Payment Notice final rule, HHS finalized at Sec.  155.220 
standards of conduct for agents and brokers that assist consumers to 
enroll in coverage through the FFEs to protect consumers and ensure the 
proper administration of the FFEs, including nondiscrimination 
standards at Sec.  155.220(j)(2)(i) that prohibited agents, brokers and 
web-brokers described in paragraph (j)(1) from discriminating based on 
sexual orientation and gender identity. CMS further explained that such 
standards of conduct were necessary to protect against agent and broker 
conduct that is harmful towards consumers, or that prevents the 
efficient operation of the FFEs. CMS proposes to exercise that same 
authority here to amend Sec.  155.220(j)(2)(i) to again prohibit an 
individual or entity described in paragraph (j)(1) from discriminating 
based on sexual orientation and gender identity. Sections 1312(e) and 
1321(a)(1)(A), (B), and (D) of the ACA are the same authorities CMS 
relies upon for implementation of existing nondiscrimination 
protections at Sec.  155.220(j)(2)(i). Utilizing these same authorities 
to again prohibit discrimination based on sexual orientation and gender 
identity at Sec.  155.220(j)(2)(i) would be consistent with the 
authority CMS relies upon for the existing protections at Sec.  
155.220(j)(2)(i) that currently prohibit discrimination on the basis of 
race, color, national origin, disability, age, or sex. We believe such 
amendments are warranted in light of the existing trends in health care 
discrimination and are necessary to better address barriers to health 
equity for LGBTQI+ individuals.
---------------------------------------------------------------------------

    \257\ 85 FR 37218-21 (June 19, 2020).
---------------------------------------------------------------------------

    A more in-depth discussion of these developments and other factors 
considered in proposing amendments to CMS nondiscrimination protections 
is included earlier in the preamble to Sec.  147.104 under section 
III.B.1.b. of this preamble. For brevity, we refer back to Sec.  
147.104 under section III.B.1.b. of the preamble rather than restating 
the issues here.
    We seek comment on this proposal.
i. Providing Correct Information to the FFEs
    Section 155.220(j)(2) sets forth the standards of conduct for 
agents, brokers, or web-brokers that assist with or facilitate 
enrollment of qualified individuals, qualified employers, or qualified 
employees in coverage in a manner that constitutes enrollment through 
an FFE or that assist individuals in applying for APTC and CSRs for 
QHPs sold through an FFE. As explained in the 2017 Payment Notice 
proposed rule, these standards are designed to protect against agent, 
broker, and web-broker conduct that is harmful towards consumers or 
prevents the efficient operation of the FFEs.\258\ Pursuant to Sec.  
155.220(j)(2)(ii), agents, brokers, or web-brokers must provide the 
FFEs with ``correct information under section 1411(b) of the Affordable 
Care Act.'' Section 1411(b) of the ACA details the information required 
to be provided by applicants to the Exchange to determine eligibility 
for Exchange coverage, APTC, CSRs, and individual responsibility 
exemptions, including the applicant's name, address, and information 
regarding household income.\259\ Section 1411(h) of the ACA provides 
for the imposition of civil penalties if any person fails to provide 
correct information under section 1411(b) to the Exchange. Consistent 
with Sec.  155.220(l), agents, brokers and web-brokers that assist with 
or facilitate enrollment of qualified individuals, qualified employers, 
or qualified employees in states with SBE-FPs must comply with all 
applicable FFE standards. This includes, but is not limited to, 
compliance with the FFE standards of conduct in Sec.  155.220(j). We 
propose to amend Sec.  155.220(j)(2)(ii) to add proposed new Sec.  
155.220(j)(2)(ii)(A) through (D) to codify additional details regarding 
the requirement that agents,

[[Page 645]]

brokers, and web-brokers provide correct information to FFEs and SBE-
FPs. More specifically, we propose to capture specific examples of what 
it means to provide correct information to the FFEs and SBE-FPs with 
respect to the consumer's email address, mailing address, telephone 
number, and household income projection based on our experience 
operating the FFEs and the Federal platform on which certain State-
based Exchanges rely.
---------------------------------------------------------------------------

    \258\ 80 FR at 75526-75527.
    \259\ Also see 45 CFR 155.285(a)(1)(i) and (ii).
---------------------------------------------------------------------------

    HHS has frequently observed applications submitted to the FFEs that 
contain incorrect consumer information, including applications that 
contain incorrect email addresses, telephone numbers, and mailing 
addresses. As administrator of the FFEs, HHS also has received 
applications that contain incorrect consumer household income 
projections that do not accurately reflect future consumer household 
income. These practices can harm consumers and prevent the efficient 
operation of the FFEs. Therefore, we propose to add language to Sec.  
155.220(j)(2)(ii) to address these common problems occurring on 
Exchange applications and provide clear standards intended to 
substantially reduce the occurrence of those problems to protect 
consumers and the efficient operation of the Exchanges. We also propose 
to amend Sec.  155.220(j)(2)(ii) to make clear that the proposed 
standards of conduct related to agents, brokers, and web-brokers 
providing the FFEs and SBE-FPs with correct information that are listed 
in proposed new Sec.  155.220(j)(2)(ii)(A) through (D) are not 
exhaustive, but are simply the areas where HHS has thus far identified 
a need for more direct and clear guidance.
    First, we propose to add proposed new Sec.  155.220(j)(2)(ii)(A), 
which would provide that an agent, broker, or web-broker may only enter 
an email address on an application for Exchange coverage or for APTC 
and CSRs for QHPs sold through an FFE or SBE-FP that is secure, not 
disposable, and belongs to the consumer or the consumer's authorized 
representative designated in compliance with Sec.  155.227. We also 
propose to clarify that email addresses may only be entered on Exchange 
applications with the consent of the consumer or the consumer's 
authorized representative, and that properly entered email addresses 
would be required to adhere to the following guidelines pursuant to 
proposed new Sec.  155.220(j)(2)(ii)(A)(1) through (3): (1) The 
consumer's email addresses may not have domains that remove email from 
an inbox after a set period of time; (2) the consumer's email address 
must be accessible by the consumer, or the consumer's authorized 
representative designated in compliance with Sec.  155.227, and may not 
be accessible by the agent, broker, or web-broker, and (3) the 
consumer's email addresses may not have domains that belong to the 
agent, broker, or web-broker or their business or agency. These 
proposed standards align with existing guidance provided to agents, 
brokers, and web-brokers.\260\
---------------------------------------------------------------------------

    \260\ https://www.regtap.info/uploads/library/AB_Slides_Compliance_052021_5CR_062221.pdf See Compliance with 
Marketplace Requirements: Reminders for Agents and Brokers, May 20, 
2021, available at https://www.regtap.info/uploads/library/AB_Slides_Compliance_052021_5CR_062221.pdf.
---------------------------------------------------------------------------

    HHS is proposing to codify these standards because it has observed 
numerous Exchange applications that contain email addresses that are 
disposable (where emails disappear after a set number of days), 
unsecure (where emails may be accessed without a password), or 
temporary (where the email address will cease to receive messages after 
a set time). HHS' concern arises from the fact that it has observed 
agents, brokers, and web-brokers submitting unauthorized Exchange 
applications on behalf of consumers without their knowledge or consent 
that contain these types of email addresses. HHS recognizes that such 
email addresses may be used by consumers to avoid receiving spam emails 
to a main inbox, but the use of these email addresses on Exchange 
applications defeats the purpose of entering an email address and 
occurs at a higher rate on applications assisted by agents, brokers, 
and web-brokers, many of which are unauthorized. Consumers who wish to 
avoid receiving emails from the Exchange and who are being assisted by 
an agent, broker, or web-broker may simply omit a contact email address 
from their Exchange application.
    The email address provided as part of an Exchange application 
should provide a secure place for a consumer to receive vital 
information from the Exchange about their application. Emails sent to 
consumers through the Exchange often contain important information. As 
such, the consumer's email address entered on an Exchange application 
should be secure and only accessible by the consumer or the consumer's 
authorized representative designated in compliance with Sec.  155.227. 
Allowing the use of email addresses that are disposable, unsecure, or 
temporary may harm the consumer by preventing the consumer from 
receiving important information from the Exchange regarding their 
Exchange application. It also could prevent the efficient operation of 
the Exchange. We therefore propose in this rule to clarify and codify 
that if an email address is included on the Exchange application, it 
must be the consumer's, or that of the consumer's authorized 
representative designated in compliance with Sec.  155.227, to comply 
with the FFE standard of conduct under Sec.  155.220(j)(2)(ii) to 
provide correct information to the Exchange.
    Second, we propose to add proposed new Sec.  155.220(j)(2)(ii)(B), 
which would provide that an agent, broker, or web-broker may only enter 
a telephone number on an application for Exchange coverage or an 
application for APTC and CSRs for QHPs that belongs to the consumer or 
their authorized representative designated in compliance with Sec.  
155.227. We also propose to provide that telephone numbers entered on 
Exchange applications may not be the personal number or business number 
of the agent, broker, or web-broker assisting with or facilitating 
enrollment through an FFE or assisting the consumer in applying for 
APTC and CSRs for QHPs, or their business or agency, unless the 
telephone number is actually that of the consumer or their authorized 
representative. These proposed standards align with existing guidance 
provided to agents, brokers, and web-brokers.\261\
---------------------------------------------------------------------------

    \261\ Ibid.
---------------------------------------------------------------------------

    Similar to email addresses, a telephone number belongs to the 
consumer if they, or their authorized representative, are accessible at 
the number and have access to the number. A telephone number provides a 
way for the consumer or their authorized representative to be contacted 
if there is an issue or question with the Exchange application. 
Allowing an agent, broker, or web-broker to list their telephone number 
or a telephone number associated with their business or agency in the 
place of the consumer's telephone number would not serve or benefit the 
consumer, but may harm the consumer by preventing the consumer from 
receiving important information from the Exchange regarding their 
Exchange application. It also could prevent the efficient operation of 
the Exchange. In addition, unlike email addresses, a telephone number 
is a required field when creating and submitting an Exchange 
application. We therefore propose in this rule to clarify and codify 
that the telephone number included on the Exchange application must be 
the consumer's, or that of the consumer's authorized representative as 
designated in compliance with Sec.  155.227, to comply with the FFE 
standard of conduct under Sec.  155.220(j)(2)(ii) to provide correct 
information to the Exchange.

[[Page 646]]

    Third, we propose to add proposed new Sec.  155.220(j)(2)(ii)(C), 
which would provide that an agent, broker, or web-broker may only enter 
a mailing address on an application for Exchange coverage or an 
application APTC and CSRs for QHPs that belongs to, or is primarily 
accessible by, the consumer or their authorized representative 
designated in compliance with Sec.  155.227. Further, the mailing 
address entered on the Exchange application must not be for the 
exclusive or convenient use of the agent, broker, or web-broker, and 
must be an actual residence or a secure location where the consumer or 
their authorized representative may receive correspondence, such as a 
P.O. Box or homeless shelter. These proposed standards align with 
existing guidance provided to agents, brokers, and web-brokers.\262\ We 
also propose to provide that mailing addresses entered on Exchange 
applications may not be that of the agent, broker, or web-broker, or 
their business or agency, unless it is the rare situation where that 
address is the actual residence of the consumer or their authorized 
representative. HHS is proposing this change because it has observed 
numerous instances in which agents, brokers, or web-brokers have 
engaged in unauthorized enrollments of consumers in Exchange coverage 
without their knowledge or consent that involve the use of the same 
common mailing address on multiple Exchange applications that are not 
the actual residence of the consumer or their authorized 
representative.
---------------------------------------------------------------------------

    \262\ Ibid.
---------------------------------------------------------------------------

    As with telephone numbers, Exchange applications must provide a 
mailing address where the consumer or their authorized representative 
may be reached. Application or plan information may be sent to this 
mailing address, which is why it is important that the mailing address 
be the actual residence or a secure location where the consumer or 
their authorized representative may receive correspondence. Entering an 
incorrect mailing address on a consumer's Exchange application would 
result in situations where the consumer would not receive this 
information. This would harm consumers and prevent the efficient 
operation of the Exchange. We therefore propose in this rule to clarify 
and codify that the mailing address included on the Exchange 
application must be the consumer's, or the consumer's authorized 
representative as designated in compliance with Sec.  155.227, to 
comply with the FFE standard of conduct under Sec.  155.220(j)(2)(ii) 
to provide correct information to the Exchange.
    Fourth, to minimize consumer harm stemming from the IRS 
reconciliation process, as well as to protect Exchange operations from 
inaccurate APTC and CSR determinations, we propose to add proposed new 
Sec.  155.220(j)(2)(ii)(D), which would provide that when submitting 
household income projections on applications submitted to the Exchange 
to determine a tax filer's eligibility for APTC in accordance with 
Sec.  155.305(f) or CSRs in accordance with Sec.  155.305(g), an agent, 
broker, or web-broker may only enter a household income projection for 
a consumer that the consumer or the consumer's authorized 
representative designated in compliance with Sec.  155.227, has 
authorized and confirmed is an accurate estimate. We propose to require 
that household income projections on Exchange applications must be 
attested to by the consumer or their authorized representative, and 
clarify that the agent, broker, or web-broker may answer questions 
posed by the consumer or their authorized representative related to 
household income projection, such as helping determine what qualifies 
as household income.
    HHS is proposing this change because it has observed several 
instances in which agents, brokers, and web-brokers have provided 
inaccurate consumer household income projections on Exchange 
applications to obtain the lowest monthly premium rate for QHP 
coverage. This is problematic in situations when consumers are enrolled 
without their knowledge or consent because if a consumer is enrolled in 
an Exchange policy with a zero-dollar monthly payment, the consumer may 
not be aware they have been enrolled because there would not be a 
monthly bill. HHS has observed several instances where consumers have 
gone months without realizing they are enrolled in a QHP with APTC, 
typically finding out about the unauthorized enrollment when the IRS 
contacts them regarding money they owe due to not qualifying for all or 
part of the APTC paid for this coverage or when the IRS delays release 
of a tax refund.
    Pursuant to Sec.  155.305(f), a tax filer is, in general, not 
eligible for APTC unless the Exchange determines that the tax filer is 
expected to have household income, as defined in 26 CFR 1.36B-1(e), of 
greater than or equal to 100 percent but not more than 400 percent of 
the FPL for the year for which coverage is requested.\263\ It is 
crucial that consumers applying for a QHP or applying for APTC and CSRs 
for QHPs provide an estimate of their projected household income that 
is as accurate as possible for an Exchange to be able to determine 
their eligibility for APTC. Failure to provide correct information on 
household income can harm consumers by creating liability during the 
reconciliation process or delaying the issuance of a tax refund, as 
well as prevent the efficient operation of the Exchange. More 
specifically, although eligible consumers may use APTC to lower their 
monthly premiums for QHP coverage through an Exchange if a consumer's 
projected household income on his or her Exchange application 
submission is inaccurate and lower than the actual household income, 
the consumer is likely to have excess APTC (the extent to which APTC 
exceeds the allowed PTC), all or a portion of which must be repaid when 
the consumer files his or her federal income tax return for the year of 
coverage as required under 26 U.S.C. 36B(f) and 26 CFR 1.36B-4. Each 
year, consumers for whom APTC is paid must submit Form 8962 with their 
annual federal income tax return to the IRS. On Form 8962, the consumer 
must reconcile the APTC paid on his or her behalf with the PTC \264\ 
the consumer is allowed. Generally, consumers whose projected household 
annual income at enrollment is less than the actual annual household 
income will have excess APTC that must be repaid, subject to a 
repayment limit for consumers with household income below 400 percent 
of the FPL. Consumers are required to repay excess APTC by increasing 
their tax liability for the year by all or a portion of the excess 
APTC. Good-faith income projections, versus an income projection 
designed to achieve the lowest monthly rate, better protect the 
consumer from the unexpected cost and burden of repaying large amounts 
of APTC. Additionally, per Sec.  155.305(b), Exchange enrollees must 
report changes that may impact their eligibility for financial 
assistance or coverage, including their projected annual household 
income, within 30 days of the change.
---------------------------------------------------------------------------

    \263\ Section 9661 of the American Rescue Plan Act of 2021 makes 
individuals with household incomes above 400 percent of the FPL who 
meet all other eligibility criteria eligible for APTC, but only 
through PY 2022.
    \264\ https://www.irs.gov/pub/irs-pdf/p974.pdf.
---------------------------------------------------------------------------

    CSRs are similarly tied to a consumer's household income and they 
lower the amount that certain eligible individuals have to pay for 
deductibles, copayments, and coinsurance. Incorrect projections of a 
consumer's household income would also lead to incorrect CSR 
determinations, which would harm

[[Page 647]]

QHP issuers and prevent the efficient operation of the Exchange.
    An estimate of a consumer's household income is required on the 
Exchange application if the consumer is applying for APTC and CSRs. As 
outlined above, agents, brokers, or web-brokers who are intentionally 
or negligently entering inaccurate household income projections on a 
consumer's Exchange application can harm consumers and prevent the 
efficient operation of the Exchange. We therefore propose in this rule 
to clarify and codify that if household income projections are included 
on the Exchange application, the estimate must be attested to by the 
consumer or the consumer's authorized representative as designated in 
compliance with Sec.  155.227 to comply with the FFE standard of 
conduct under Sec.  155.220(j)(2)(ii) to provide correct information to 
the Exchange.
    As noted previously in this rule, the proposal to amend Sec.  
155.220(j)(2)(ii) to add proposed new Sec.  155.220(j)(2)(ii)(A) 
through (D) is not intended to constitute an exhaustive list of 
practices that govern providing correct information to the Exchange 
under Sec.  155.220(j)(2)(ii); rather, these are areas where HHS has 
thus far identified a need for more direct and clear guidance to 
protect consumers and the efficient operation of the Exchanges.
    We seek comment on these proposals.
ii. Prohibited Business Practices
    We propose to amend Sec.  155.220(j)(2) to add several new 
standards of conduct for agents, brokers, and web-brokers that assist 
consumers with applying for and enrolling in coverage through an FFE or 
SBE-FP, with or without APTC and CSRs. Similar to the standards first 
established in the 2017 Payment Notice, these additional standards are 
also intended to protect against agent, broker, and web-broker conduct 
that is harmful towards consumers or frustrates the efficient operation 
of the Exchange. More specifically, we propose to codify standards 
related to the use of scripting and other automation interactions with 
CMS Systems or the DE Pathways (including both Classic DE and EDE), 
identity proofing consumer accounts on HealthCare.gov, and providing 
assistance with SEP enrollments. HHS is proposing these new FFE 
standards of conduct for agents, brokers, and web-brokers assisting 
consumers in FFEs and SBE-FPs because it has observed practices in 
these areas that have caused or can cause harm to consumers, as well as 
impede the efficient operation of the Exchange.
iii. Prohibited Automated Interactions With CMS Systems
    In order to enroll qualified individuals in a QHP in a manner that 
constitutes enrollment through the Exchange and assist individuals in 
applying for APTC and CSRs for QHPs, agents, brokers, and web-brokers 
must comply with the regulatory requirements contained in Sec.  
155.220, including the requirement that such agents, brokers, and web-
brokers comply with the terms of applicable agreements between the 
agent, broker, or web-broker and the Exchange.\265\ One such agreement, 
the ``Agent Broker General Agreement for Individual Market Federally-
Facilitated Exchanges and State-Based Exchanges on the Federal platform 
(IM General Agreement),'' \266\ sets forth requirements related to 
automation. Specifically, section IV(c)(i)(4) of the IM General 
Agreement provides that scripting and other automation of interactions 
with CMS Systems or the DE Pathways are strictly prohibited, unless 
approved in advance by CMS. While these requirements are addressed in 
the IM General Agreement, they are not currently explicitly set forth 
in regulation. Therefore, we propose to amend Sec.  155.220(j)(2) to 
add proposed new Sec.  155.220(j)(2)(vi) to codify requirements and 
limitations on the use of automation and align the regulation with the 
IM General Agreement. New proposed Sec.  155.220(j)(2)(vi) would 
provide that an agent, broker, or web-broker that assists with or 
facilitates enrollment of qualified individuals, qualified employers, 
or qualified employees, in coverage in a manner that constitutes 
enrollment through an FFE or SBE-FP, or assists individuals in applying 
for APTC and CSRs for QHPs sold through an FFE, or SBE-FP must not 
engage in scripting and other automation of interactions with CMS 
Systems or DE Pathways, unless approved in advance in writing by CMS.
---------------------------------------------------------------------------

    \265\ 45 CFR 155.220(d).
    \266\ https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/ab_py2020_im_general_agreement_final_1.pdf.
_____________________________________-

    CMS Systems to which CMS-registered agents, brokers, and web-broker 
may have access include HealthCare.gov, and the CMS Enterprise Portal. 
Codifying a regulation that addresses the use of automation in relation 
to these systems and platforms would help to establish clear and 
enforceable standards that would govern the behavior of agents, 
brokers, and web-brokers when assisting Exchange applicants. It would 
also clarify CMS' authority to take enforcement action against agents, 
brokers, and web-brokers for violations of these requirements.
    HHS is proposing this standard of conduct because it has observed 
instances where unauthorized automated browser-based interactions with 
Exchange systems have led to unauthorized enrollments, unauthorized 
application changes, or unauthorized access to consumer PII. The risk 
of harm to consumers and the efficient operation of the Exchange is 
heightened when automated interactions occur because more consumer 
information can be downloaded using automation than through a manual 
process. Automated browser-based interactions with Exchange systems can 
lead to increases in unauthorized enrollments, unauthorized application 
changes, or unauthorized access to consumer PII because agents, 
brokers, and web-brokers could find far more consumer information using 
automation, which could result in the unauthorized taking, use, or sale 
of significant amounts of consumer PII for unlawful purposes. Allowing 
automation would also create significant traffic in the system, which 
could result in increased risk of system speed slowdowns and stability 
issues, as these automated interactions would cause a lot more system 
activity per user than anticipated and planned for. We seek comments on 
these concerns and this proposal. While this proposed rule is under 
consideration, CMS will continue to take appropriate enforcement action 
in response to situations resulting from unauthorized use of automation 
in connection with CMS Systems.\267\
---------------------------------------------------------------------------

    \267\ See 45 CFR 155.220(g), (k), and (m).
---------------------------------------------------------------------------

    We note that certain web-broker interactions with the Exchange were 
created with the intention of being automated, including the plan 
finder Application Program Interface (API) and Marketplace API. Thus, 
this proposal to prohibit use of automation in other circumstances is 
sufficiently narrowly tailored to accommodate these limited instances 
when automation is permitted in connection with CMS Systems or DE 
Pathways when approved in advance in writing by CMS. CMS believes that 
other uses of automation beyond what is currently approved may have 
appropriate business use cases. We therefore seek comment on 
appropriate uses of automation that may contribute to the efficient 
operation of the FFEs and SBE-FPs, and the DE Pathways.
iv. Identity Proofing
    HealthCare.gov utilizes identity proofing to verify the identity of 
a consumer when a new Exchange

[[Page 648]]

account is created. We propose to amend Sec.  155.220(j)(2) to add 
proposed new Sec.  155.220(j)(2)(vii), which would provide that when 
identity proofing accounts on HealthCare.gov, agents, brokers, or web-
brokers must only use an identity that belongs to the consumer. 
Currently, identity proofing is required when a consumer creates an 
account on HealthCare.gov via an EDE site, and when a consumer works 
with an agent or broker in person.\268\ When a consumer creates an 
account on HealthCare.gov or an EDE site, they go through a remote 
identity proofing (RIDP) process. The RIDP process is an Experian 
service that takes basic demographic information regarding the consumer 
and requires the consumer to answer multiple choice questions correctly 
to proceed. This is done to ensure the consumer is a real person, to 
protect the consumer's personal information, and to prevent someone 
else from creating an Exchange account and applying for Exchange 
coverage in another's name without their knowledge or consent.
---------------------------------------------------------------------------

    \268\ Section 1411(g)(1) of the ACA.
---------------------------------------------------------------------------

    We are proposing this amendment to Sec.  155.220(j)(2), as we have 
observed situations in which agents have used the same identity 
information to complete the identity proofing process for multiple 
consumer Exchange accounts, which can harm to consumers and prevent the 
efficient operation of the Exchange, undermines the purpose of identity 
proofing consumers and is often associated with unauthorized 
enrollments, identity theft, and fraud.
    We seek comment on this proposal.
v. Providing Information to Federally-Facilitated Exchanges in 
Connection With Special Enrollment Periods
    Finally, Sec.  155.420(a)(1) provides that the Exchange must 
provide SEPs during which qualified individuals may enroll in QHPs and 
enrollees may change QHPs. We propose to amend Sec.  155.220(j)(2) to 
add proposed new Sec.  155.220(j)(2)(viii), which would state that when 
providing information to FFEs that may result in a determination of 
eligibility for an SEP under Sec.  155.420, agents, brokers, and web-
brokers must obtain authorization from the consumer to submit the 
request for a determination of eligibility for a SEP (although this 
authorization does not need to be in writing) and make the consumer 
aware of the specific triggering event and SEP for which the agent, 
broker, or web-broker will be submitting an eligibility determination 
request on the consumer's behalf. Under this new proposed standard of 
conduct, agents, brokers, and web-brokers providing assistance with SEP 
enrollments would be required to make reasonable, good faith efforts to 
ascertain the consumer's eligibility for the SEP, consistent with the 
existing standard under Sec.  155.220(j)(3). We propose this 
requirement to address circumstances HHS has observed under which 
consumers who apply for QHP enrollment through an SEP with the 
assistance of an agent, broker, or web broker are not made aware of the 
basis upon which their QHP application claims entitlement to an SEP, or 
who otherwise did not authorize an agent, broker, or web-broker to 
enroll them in a QHP or make a change to their current QHP enrollment.
    The purpose of SEPs is to promote access to health insurance 
coverage and continuous coverage by allowing individuals to enroll 
outside of the open enrollment period only if they experience certain 
SEP triggering events; this helps to avoid and control against adverse 
selection that would destabilize the Exchanges. The purpose of 
proposing to codify this requirement in proposed new Sec.  
155.220(j)(2)(viii) is to ensure the validity and integrity of the SEP 
process, avoid Exchange destabilization, and to create clear, 
enforceable standards to help mitigate consumer harm by establishing 
that agents, brokers, and web-brokers are responsible for providing 
information to the FFE that is accurate to the best of their knowledge, 
and to which the consumer has attested.
    We seek comment on these proposals.
5. Premium Calculation (Sec.  155.240(e))
    HHS proposes to add language at Sec.  155.240(e)(2) to apply the 
premium calculation methodology currently applicable in the FFEs and 
SBE-FPs to all Exchanges, beginning with PY 2024. This proposed 
amendment to Sec.  155.240(e), along with the proposed amendments to 
Sec. Sec.  155.305(f)(5) and 155.340, support HHS's proposal to clarify 
that an Exchange is required to prorate the calculation of premiums for 
individual market policies and the calculation of APTC in cases where 
an enrollee is enrolled in a particular policy for less than the full 
coverage month, including when the enrollee is enrolled in multiple 
policies within a month, each lasting less than the full coverage 
month. We further discuss these proposed changes in the Administration 
of Advance Payments of the Premium Tax Credit and Cost-Sharing 
Reductions (Sec.  155.340) section of this proposed rule where we 
propose to require all Exchanges to prorate premium and APTC amounts in 
cases where an enrollee is enrolled in a particular policy for less 
than the full coverage month. We seek comment on these proposals.
6. Eligibility Standards (Sec.  155.305)
    We are proposing a technical amendment to Sec.  155.305(f)(1)(i) to 
clarify that the income eligibility standards used by the Exchange for 
determining whether an individual is an applicable taxpayer for 
purposes of APTC eligibility are the same as the income thresholds at 
IRS regulation 26 CFR 1.36B-2(b). Whereas the current regulation states 
expected household income must be ``greater than or equal to 100 
percent but not more than 400 percent of the FPL for the benefit year 
for which coverage is requested,'' the proposed amendment specifies the 
individual must have an expected household income which will qualify 
the tax filer as an applicable taxpayer according to 26 CFR 1.36B-2(b). 
In turn, 26 CFR 1.36B-2(b) outlines the FPL percentage thresholds that 
are used for determining PTC eligibility. In practice, the federal and 
state Exchanges have always relied on thresholds outlined in 26 CFR 
1.36B-2(b) to determine APTC eligibility, but we note that this 
proposed change allows for greater regulatory consistency and minimizes 
the need to update Sec.  155.305(f)(1)(i) in response to legislative 
changes that may alter FPL percentage thresholds, as occurred for 
certain years under the ARP.
7. Eligibility for Advance Payments of the Premium Tax Credit (Sec.  
155.305(f)(5))
    HHS proposes to amend Sec.  155.305(f)(5) to require that APTC must 
be calculated in accordance with 26 CFR 1.36B-3 and would be subject to 
the prorating methodology at proposed Sec.  155.340(i). This proposed 
amendment to Sec.  155.305(f)(5), along with the proposed amendments at 
Sec. Sec.  155.240(e), and 155.340, detailed elsewhere in this rule, 
support HHS's proposal to clarify that an Exchange is required to 
prorate the calculation of premiums for individual market policies and 
the calculation of APTC in cases where an enrollee is enrolled in a 
particular policy for less than the full coverage month, including when 
the enrollee is enrolled in multiple policies within a month, each 
lasting less than the full coverage month. We further discuss these 
proposals in the Administration of Advance Payments of the Premium Tax 
Credit and Cost-Sharing Reductions (Sec.  155.340) section of this 
proposed rule. We seek comment on this proposal.

[[Page 649]]

8. Verification Process Related to Eligibility for Insurance 
Affordability Programs--Employer Sponsored Plan Verification (Sec.  
155.320)
    Strengthening program integrity with respect to subsidy payments in 
the individual market continues to be a top HHS priority. Accordingly, 
we propose to revise Sec.  155.320(d)(4) to provide each Exchange with 
the flexibility to tailor its employer sponsored plan verification 
process based on its assessment of the risk of inappropriate payments 
of APTC and CSRs as a result of associated risk and composition of 
their enrolled population.
    Currently, Exchanges must verify whether an applicant for APTC and 
CSRs is eligible for or enrolled in an eligible employer sponsored plan 
for the benefit year for which coverage is requested using available 
data sources, if applicable, as described in Sec.  155.320(d)(2). For 
any coverage year that an Exchange does not reasonably expect to obtain 
sufficient verification data as described in Sec.  155.320(d)(2)(i) 
through (iii), an alternate procedure applies. Specifically, Exchanges 
must select a random sample of applicants and meet the requirements 
under Sec.  155.320(d)(4). For benefit years 2016 through 2019, 
Exchanges also could use an alternative process approved by HHS.
    In the 2021 Payment Notice final rule, we finalized the policy that 
for PYs 2020 and 2021, HHS would not take enforcement action against 
Exchanges that do not perform random sampling as required by Sec.  
155.320(d)(4), when the Exchange does not reasonably expect to obtain 
sufficient verification data as described in Sec.  155.320(d)(2)(i) 
through (iii). This policy was designed to reduce burden on Exchanges 
while HHS finalized the results of a study to determine the potential 
risk and risk factors, if any, that may be associated with applicants 
that choose to enroll in an Exchange QHP with APTC/CSRs, rather than 
coverage offered through their employer. In the 2022 Payment Notice 
Final Rule, we extended this non-enforcement to PY 2022.
    As we will discuss later in this preamble, HHS reviewed the results 
of the 2019 study and found that the risk for inappropriate eligibility 
or payment of APTC and CSRs based on applicant eligibility for or 
enrollment in qualifying employer sponsored coverage was low. 
Therefore, we are now proposing a new optional alternate procedure to 
replace the current procedures under Sec.  155.320(d)(4). Under this 
proposed option, an Exchange would have flexibility to design its 
verification process based on the Exchange's assessment of risk for 
inappropriate eligibility or payment for APTC or CSRs. Until a new 
alternate procedure becomes effective, Exchanges must continue to use 
the procedures set forth under Sec.  155.320(d)(4)(i), subject to the 
enforcement policy in effect for PYs 2021 and 2022.
    HHS' experience conducting random sampling revealed that the burden 
associated with the verification activity far outweighed the activity's 
value to the integrity of the program. We found that employer response 
rates to HHS' requests for information were low. We further found that 
the manual verification process described in Sec.  155.320(d)(4)(i) 
requires significant resources and government funds, and the value of 
the results ultimately did not appear to outweigh the costs of 
conducting the work because only a small percentage of sampled 
enrollees had been determined by HHS to have received APTC or CSRs 
inappropriately. Based on our experiences with the random sampling 
methodology under Sec.  155.320(d)(4)(i), HHS concluded that the 
methodology may not be the best approach for all Exchanges to assess 
the risk for inappropriate payment of APTC/CSRs associated with 
applicants who may be eligible for or enrolled in qualifying employer 
sponsored coverage.
    As a result, in 2019, HHS conducted a study to: (1) Determine the 
unique characteristics of the population with offers of employer 
sponsored coverage that meets minimum value and affordability 
standards, (2) compare premium and out-of-pocket costs for consumers 
enrolled in affordable employer sponsored coverage to Exchange 
coverage, and (3) identify the incentives, if any, that drive consumers 
to enroll in Exchange coverage rather than coverage offered through 
their current employer. The results of this study were finalized in 
early 2020 and aligned with HHS' previous findings from past studies 
that there is likely a very low volume of applicants with offers of 
affordable coverage through their employer that choose to 
inappropriately enroll in an Exchange QHP with APTC and CSRs.
    Specifically, the study found that no more than 2 percent of 
enrollees received APTC/CSR inappropriately, and that lower income 
individuals and families had the most incentive to enroll in an 
Exchange QHP with APTC/CSR rather than coverage offered through an 
employer. HHS is therefore of the view that the risk for inappropriate 
payment of APTC and CSRs is low; thus, we propose to provide each 
Exchange with the flexibility to tailor its verification process based 
on its assessment of the risk of inappropriate payments of APTC/CSRs as 
a result of associated risk and composition of their enrolled 
population. This includes the ability of State Exchanges that operate 
their own eligibility and enrollment platform and have implemented, or 
are finalizing their implementation of, the current random sampling 
requirements under Sec.  155.320(d)(4)(i), to continue employing the 
random sampling process and requirements and refining the process, as 
needed, under the proposed risk-based approach under Sec.  
155.320(d)(4)(i). HHS believes that these changes will serve to protect 
the integrity of the Exchange program by allowing all Exchanges to 
proactively identify risk factors attendant to QHP enrollees' receipt 
of APTC/CSRs for which they may not be eligible.
    Specifically, we propose to allow Exchanges to implement a 
verification method that utilizes an approach based on a risk 
assessment identified through analysis of an Exchange's experience in 
relation to APTC/CSRs payments. HHS expects that this risk assessment 
would be informed by and identified through research and analysis of an 
Exchange's experiences with current and past enrollments, and not 
solely based on previously published research or literature. 
Furthermore, there are certain standards that HHS requires that all 
Exchanges adhere to when designing a risk-based approach to verify an 
applicant's offer of employer sponsored coverage. As such, HHS requires 
that any risk-based verification process be reasonably designed to 
ensure the accuracy of the data and is based on the activities or 
methods used by an Exchange such as studies, research, and analysis of 
an Exchange's own enrollment data. For example, if an Exchange's 
experience is that applicants from large companies that have different 
classes of employees, who may or may not qualify for employer sponsored 
coverage due to the number of hours they work per week, represent a 
higher risk of improper APTC/CSR payments, then the Exchange may 
implement a risk-based verification process to confirm whether 
applicants employed by such companies appropriately received APTC/CSRs.
    Given that the proposed risk-based approach to verify whether an 
applicant has received an offer of coverage through an employer or is 
enrolled in employer sponsored coverage depends largely on an 
Exchange's assessment of risk and unique populations, HHS believes that 
there are various ways in which a risk-based approach can be

[[Page 650]]

operationalized. Below we outline a few scenarios to provide 
illustrative examples of the procedures an Exchange may follow.
    The first scenario concerns Exchanges that do not have access to an 
approved trusted data source that provides accurate and up-to-date 
information regarding enrollment or pre-enrollment in coverage offered 
through an employer and have determined that manual verification, such 
as conducting random sampling of enrollees to determine if any had an 
offer of affordable coverage through their employer but chose to enroll 
in an Exchange QHP with APTC/CSR instead, requires significant 
resources to conduct and have determined that the risk for improper 
APTC/CSR payment is low. In this scenario, Exchanges may make a 
reasonable determination and decide to accept a consumer(s)' 
attestation without any further manual verification, similar to current 
procedures to accept attestation only for residency and incarceration 
status. Conversely, if an Exchange has determined a high risk for 
improper APTC/CSR payment exists within its enrolled population, but 
also doesn't have access to an approved trusted data source for 
electronic verification, an Exchange may make a reasonable 
determination that conducting manual verification as part of its risk-
based approach, such as conducting random sampling, is the appropriate 
risk-based approach to conduct employer sponsored coverage 
verification. Finally, there may be Exchanges that have determined that 
they do have access to an approved, accurate, and up-to-date trusted 
data source that allows for electronic verification of offers of 
employer sponsored coverage. In this scenario, an Exchange may choose 
to conduct electronic verification of their entire population through 
that trusted data source to verify offers of employer sponsored 
coverage. HHS believes that any of these approaches will serve to 
satisfy the requirement to conduct employer sponsored coverage 
verification using a risk-based approach while providing flexibility 
for all Exchanges to determine the process that best meets the needs of 
their populations.
    Because HHS found that the risk for improper APTC payment is low in 
Exchanges using the federal eligibility and enrollment platform, such 
Exchanges would leverage the current attestation questions on the 
single, streamlined application and accept attestation without further 
verification against other trusted data sources. The attestation 
questions include, ``Are any of these people currently enrolled in 
health coverage?'' and ``Will any of these people be offered health 
coverage through their job, or through the job of another person, like 
a spouse or parent?''. HHS would also accept attestations related to 
employer sponsored coverage because HHS currently lacks access to 
another approved data source to verify whether an applicant has an 
offer of employer sponsored coverage that is affordable and meets 
minimum value standards. In the 2019 study referenced earlier in the 
preamble, HHS examined whether the use of other data sources would be 
feasible to verify offers and affordability of employer sponsored 
coverage, such as the National Directory of New Hires (NDNH) database. 
HHS determined that all available data sources were insufficient and 
did not provide the necessary information to satisfy the requirement, 
or would require legislative changes to give Exchanges permission to 
access and use them for verification of employer sponsored coverage. 
CMS notes that additional data source access, such as the NDNH, would 
improve accuracy and reduce administrative burden to consumers for the 
income verification step during the eligibility process.
    Finally, under this proposal, we clarify that since SBE-FPs use the 
HealthCare.gov platform for eligibility and enrollment determinations, 
SBE-FPs would be required to follow the approach outlined above 
consistent with CMS regulations and the agreements SBE-FPs sign with 
CMS. Current Federal platform agreements require that SBE-FPs adhere to 
the same policy and operations as Exchanges that use the federal 
eligibility and enrollment platform regarding eligibility for and 
enrollment in QHP coverage.
    Furthermore, in accordance with Sec.  155.120(c), an Exchange's 
verification program cannot be discriminatory in nature, and State 
Exchange's verification processes will be monitored by HHS in 
accordance with its authority under Sec. Sec.  155.1200 and 155.1210. 
In designing their verification program, Exchanges should pay special 
attention to known risks, including risk pool manipulation or steering 
high risk employees from the group health market into the Exchanges. 
The goal of this proposed policy is to ensure that only applicants 
eligible to receive APTC/CSRs receive these subsidies, and we would 
exercise our oversight authorities to ensure an Exchange's verification 
policies are not used to prevent any particular class of applicants 
from enrolling in QHP coverage with APTC/CSRs. We believe this approach 
would allow Exchanges to proactively identify and target applicants who 
may, for example, have an incentive to enroll in Exchange coverage with 
APTC/CSRs rather than their employer sponsored plan that meets minimum 
value and affordability standards. Further, we believe that a risk-
based approach for verification of eligibility for employer sponsored 
eligibility or coverage verification would allow Exchanges to identify 
a larger population of Exchange enrollees who would be ineligible for 
APTC/CSRs due to an offer of employer sponsored coverage, as compared 
to the random sampling method. We believe the new policy we propose 
would more effectively protect the integrity of Exchange programs, as 
Exchanges would be able to mitigate the risk of improper federal 
payments in the form of APTC during the year more effectively.
    Therefore, we propose to revise Sec.  155.320(d)(4) by removing the 
requirement that the Exchange select a random sample of applicants for 
whom the Exchange does not have data as specified in Sec.  
155.320(d)(2)(i) through (iii) effective upon the finalization of the 
final rule. we encourage State Exchanges to submit comments on the 
proposed timing, especially if the proposal causes operational 
challenges or undue hardship as a result. We propose adding new 
language at Sec.  155.320(d)(4) under which an Exchange would be 
permitted to design its verification process for enrollment in or 
eligibility for qualifying coverage in an eligible employer sponsored 
plan based on the Exchange's assessment of risk for inappropriate 
payment of APTC/CSRs or eligibility for CSRs, as appropriate. The 
proposed language at Sec.  155.320(d)(4) would provide all Exchanges 
with the flexibility to determine the best means to design and 
implement a process to verify an applicant's enrollment in or 
eligibility for employer sponsored coverage, through analyses of 
relevant Exchange data, research, studies, and other means appropriate 
and necessary to identify risk factors for inappropriate payment of 
APTC or eligibility for CSRs. As previously discussed earlier in this 
rule, Exchanges must continue to use the procedures set forth in Sec.  
155.320(d)(4)(i) until a new alternate procedure becomes effective. We 
also propose to retain the current requirement at Sec.  
155.320(d)(4)(i)(A) that the Exchange provide notice to the applicant, 
but amend it such that it is contingent on whether the Exchange will be 
contacting the employer of an applicant to verify whether an applicant 
is enrolled in an

[[Page 651]]

eligible employer sponsored plan or is eligible for qualifying coverage 
in an eligible employer sponsored plan for the benefit year for which 
coverage is requested. Second, to provide more flexibility for 
Exchanges, we propose no longer applying the requirement at Sec.  
155.320(d)(4)(i)(D), which requires the Exchange to make reasonable 
attempts to contact an employer listed on an applicant's Exchange 
application to verify whether an applicant is enrolled in an employer 
sponsored plan or is eligible for qualifying coverage in an eligible 
employer sponsored plan.
    As we explained above, HHS' experience has been that employer 
compliance with these notices was low, which led to the proposal to 
remove the random sampling requirement. However, Exchanges may continue 
to send notification to employers as part of their risk-based 
verification processes if they so choose. Third, we propose removing 
the requirement at Sec.  155.320(d)(4)(i)(F), which states that after 
90 days from the date on which the Exchange first provides notice to an 
applicant as described in Sec.  155.320(d)(4)(i)(A), the Exchange must 
redetermine eligibility for APTC and CSRs if the Exchange is unable to 
obtain the necessary information from an applicant's employer regarding 
enrollment in or eligibility for qualifying coverage in an employer 
sponsored plan. We believe these proposed changes provide Exchanges 
with the flexibility to implement a verification process for enrollment 
in or eligibility for an employer sponsored plan that is tailored to 
risks observed in their respective populations. As previously discussed 
earlier in preamble, Exchanges must continue to use the procedures set 
forth in Sec.  155.320(d)(4)(i) until a new alternate procedure becomes 
effective.
    Finally, we propose to remove the option for Exchanges to follow 
the procedures outlined in Sec.  155.320(d)(4)(ii) to develop an 
alternative verification process that is approved by HHS. The revisions 
to Sec.  155.320(d)(4)(i) provide enough flexibility for Exchanges to 
develop a risk-based verification process for eligibility for or 
enrollment in employer sponsored coverage. Therefore, extending Sec.  
155.320(d)(4)(ii) indefinitely would prove to be redundant in light of 
the proposed changes discussed earlier in preamble.
    We seek comment on these proposals.
9. Annual Eligibility Redetermination (Sec.  155.335)
    We solicit comments on incorporating the net premium, MOOP, 
deductible, and annual out-of-pocket costs (OOPC) of a plan into the 
re-enrollment hierarchy as well as additional criteria or mechanisms 
HHS could consider to ensure the Exchange hierarchy for re-enrollment 
aligns with plan generosity and consumer needs, such as, re-enrolling a 
current bronze QHP enrollee into an available silver QHP with a lower 
net premium and higher plan generosity offered by the same QHP issuer.
    In the Patient Protection and Affordable Care Act; Annual 
Eligibility Redeterminations for Exchange Participation and Insurance 
Affordability Programs; Health Insurance Issuer Standards Under the 
Affordable Care Act, Including Standards Related to Exchanges final 
rule, we established the renewal and re-enrollment hierarchy at Sec.  
155.335(j) to minimize potential enrollment disruptions. Under Sec.  
155.335(j), we modified the standards for re-enrollment in coverage 
through Exchanges by proposing, in paragraph (j)(1), that if an 
enrollee remains eligible for enrollment in a QHP through the Exchange 
upon annual redetermination, and the product under which the QHP in 
which he or she was enrolled remains available for renewal, consistent 
with Sec.  147.106 such enrollee will have his or her enrollment in a 
QHP through the Exchange under the product renewed unless he or she 
terminates coverage, including termination of coverage in connection 
with voluntarily selecting a different QHP, in accordance with Sec.  
155.430. In this situation, we proposed that the QHP in which the 
enrollee will be renewed will be selected according to the following 
order of priority: (1) In the same plan as the enrollee's current QHP; 
(2) if the enrollee's current QHP is not available, the enrollee's 
coverage will be renewed in a plan at the same metal level as the 
enrollee's current QHP; (3) if the enrollee's current QHP is not 
available and the enrollee's product no longer includes a plan at the 
same metal level as the enrollee's current QHP, the enrollee's coverage 
will be renewed in a plan that is one metal level higher or lower than 
the enrollee's current QHP; and (4) if the enrollee's current QHP is 
not available and the enrollee's product no longer includes a plan that 
is at the same metal level as, or one metal level higher or lower than 
the enrollee's current QHP, the enrollee's coverage will be renewed in 
any other plan offered under the product in which the enrollee's 
current QHP is offered in which the enrollee is eligible to enroll.
    Under paragraph (j)(2), we finalized standards to address re-
enrollment in situations in which no plans under the product under 
which an enrollee's QHP is offered are available through the Exchange 
for renewal, consistent with Sec.  147.106. In this situation, the 
enrollee may be enrolled in a QHP under a different product offered by 
the same issuer, to the extent permitted by applicable state law, 
unless the enrollee terminates coverage including termination of 
coverage in connection with voluntarily selecting a different QHP, in 
accordance with Sec.  155.430. In such cases, the re-enrollment will 
occur according to the following order of priority: (1) In a QHP 
through the Exchange at the same metal level as the enrollee's current 
QHP in the product offered by the issuer that is the most similar to 
the enrollee's current product; (2) if the issuer does not offer 
another QHP through the Exchange at the same metal level as the 
enrollee's current QHP, the enrollee will be re-enrolled in a QHP 
through the Exchange that is one metal level higher or lower than the 
enrollee's current QHP in the product offered by the issuer through the 
Exchange that is the most similar to the enrollee's current product; 
and (3) if the issuer does not offer another QHP through the Exchange 
at the same metal level as, or one metal level higher or lower than the 
enrollee's current QHP, the enrollee will be re-enrolled in any other 
QHP offered through the Exchange by the QHP issuer in which the 
enrollee is eligible to enroll.
    In the 2017 Payment Notice, we finalized the rule that provides for 
auto-reenrollment in a QHP offered by another issuer through the 
Exchange, as opposed to permitting a QHP issuer that no longer has a 
QHP available to an enrollee through an Exchange to reenroll the 
enrollee outside the Exchange in order to maintain coverage with APTC 
and CSRs for the majority of Exchange enrollees who are receiving these 
subsidies. Under this rule, we established, beginning in PY 2017, that 
if no QHP from the same issuer is available to enrollees through the 
Exchange, then to the extent permitted by applicable State law, the 
Exchange could direct alternate enrollments for such enrollees into a 
QHP from a different issuer unless the enrollee terminates coverage, 
including termination of coverage in connection with voluntarily 
selecting a different QHP, in accordance with Sec.  155.430. If the 
applicable State regulatory authority declines to act to direct this 
activity, such alternate enrollments would be directed by the Exchange. 
With regard to how Exchanges will determine which plans such enrollees 
should be auto-

[[Page 652]]

reenrolled into, we noted that this policy provided considerable 
flexibility to Exchanges to implement this rule, in recognition of the 
operational realities of implementing a re-enrollment hierarchy in the 
often unique circumstances in which an issuer no longer has QHPs 
available to an enrollee through the Exchange.
    HHS is aware of stakeholder concerns that the enrollees in the FFEs 
may fail to return to the Exchange to make an active plan selection in 
situations in which changing plans could be beneficial to the enrollee, 
and that re-enrollment rules may default enrollees into less beneficial 
plans than other available plans.
    We solicit comments on whether factors such as net premium, MOOP, 
deductible, and OOPC should be reflected in a revised re-enrollment 
hierarchy for all Exchanges, with consideration for the potential 
impact of the actuarial value de minimis guidelines proposed in this 
rule at Sec. Sec.  156.135 and 156.140 on cost-sharing. For example, 
HHS could consider re-enrolling a current bronze QHP enrollee into an 
available silver QHP with a lower net premium and higher plan 
generosity offered by the same QHP issuer. Additionally, HHS could 
consider re-enrolling a current silver QHP enrollee into another 
available silver QHP, under the enrollee's current product and with a 
service area that is serving the enrollee that is issued by the same 
QHP issuer, that has lower OOPC. We also solicit comments on additional 
criteria or mechanisms HHS could consider to ensure the hierarchy for 
re-enrollment in all Exchanges takes into account plan generosity and 
consumer needs beyond merely the retention of the most similar plan 
available.
10. Administration of Advance Payments of the Premium Tax Credit and 
Cost-Sharing Reductions (Sec.  155.340)
    HHS is proposing to amend Sec. Sec.  155.240(e), 155.305(f)(5), and 
155.340 to clarify that an Exchange is required to prorate the 
calculation of premiums for individual market policies and the 
calculation of the APTC in cases where an enrollee is enrolled in a 
particular policy for less than the full coverage month, including when 
the enrollee is enrolled in multiple policies within a month, each 
lasting less than the full coverage month. HHS would require all 
Exchanges, including the Exchanges on the Federal platform and State 
Exchanges that operate their own eligibility and enrollment platforms 
to implement the proposed proration methodology in the PY 2024 benefit. 
HHS is limiting this proposed requirement to individual market policies 
because many SHOP Exchanges, particularly those that operate in a 
leaner fashion, like the federally-facilitated SHOP Exchanges, do not 
calculate premiums. Additionally, APTC are not available through SHOPs.
    Currently, Exchanges apply APTC to an applicable taxpayer's monthly 
premium based on calculation, eligibility, and administration 
requirements from two sources: (1) IRS regulations at 26 CFR 1.36-B-1 
through 1.36B-3, and (2) HHS regulations at 45 CFR part 155. IRS 
regulation at 26 CFR 1.36B-3(d) calculates PTC eligibility for a 
partial month of coverage as the lesser of the premiums for the month 
(reduced by any amount of such premiums refunded), or the monthly 
premium for the second lowest cost silver plan (SLCSP) reduced by the 
taxpayer's monthly contribution amount. Although 26 CFR 1.36B-3(d) 
defines the calculation of the premium assistance amount for a coverage 
month, and thus defines the calculation of the maximum APTC amount an 
applicable taxpayer may apply to their monthly premium, it does not 
describe how APTC is administered, which is regulated by HHS. When 
administering APTC, Exchanges must adhere to requirements at 45 CFR 
155.305(f), which establishes eligibility and calculation requirements 
for APTC, 45 CFR 155.310(d)(2)(i), which requires the Exchange to 
permit an applicable taxpayer to accept less than the full amount of 
APTC for which they are eligible, and 45 CFR 155.340, which defines how 
Exchanges must administer and allocate APTC amounts applied to 
enrollees' monthly premiums.
    Calculating maximum APTC as required under Sec.  155.305(f) 
obligates the Exchange to calculate payments of the APTC in accordance 
with the way PTC is calculated at 26 CFR 1.36B-3. The IRS methodology 
described at 26 CFR 136.B-3 is appropriate for PTC, as PTC is 
calculated retrospectively and can account for the changes in an 
applicable taxpayer's premium across the entire tax year before the 
applicable final amount is calculated at the time of tax filing. 
Conversely, Exchanges administer APTC prospectively to issuers by 
advancing premium assistance to issuers based on enrollees' eligibility 
determinations and elections, which could change month-to-month before 
final reconciliation occurs. Currently, HHS regulations governing APTC 
eligibility and administration do not contain specific requirements on 
how APTC should be administered for a policy in which an enrollee is 
enrolled for less than the full coverage month. While the FFEs and SBE-
FPs already prorate APTC and premium amounts, State Exchanges presently 
handle this scenario inconsistently, which may result in over-payment 
of APTC to issuers that exceeds the monthly PTC amount for which an 
applicable taxpayer will be eligible, thereby potentially triggering a 
federal income tax liability for the applicable taxpayer.\269\
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    \269\ HHS notes that an applicable taxpayer's excess APTC and 
accompanying tax liability for such excess APTC is determined after 
the taxpayer's PTC for the year of coverage has been calculated. 
Consequently, the potential to incur income tax liability for excess 
APTC is not limited to situations in which a consumer is enrolled in 
a policy for less than a full coverage month and our proposed policy 
will not completely eliminate an applicable taxpayer's risk of 
incurring tax liability from excess APTC.
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    By amending Sec. Sec.  155.240(e), 155.305(f)(5) and 155.340 to 
require that the Exchange prorate the calculation of premiums and APTC 
in cases where an enrollee is enrolled in a particular policy for less 
than the full coverage month, HHS would provide needed clarification 
for all Exchanges, resulting in greater consistency in APTC 
administration and the consumer experience.
    As explained earlier in this preamble, HHS proposes to add language 
at Sec.  155.240(e)(2) to apply the methodology currently applicable in 
the FFEs and SBE-FPs to all Exchanges, beginning with PY 2024. This 
proposed amendment to Sec.  155.240(e) would support the accurate and 
consistent calculation of partial-month enrollment premium amounts in a 
way that aligns with the method of administering the APTC that we 
propose in Sec. Sec.  155.305(f)(5) and 155.340.
    HHS also proposes to amend Sec.  155.305(f)(5) by adding that APTC 
must be calculated in accordance with 26 CFR 1.36B-3, subject to the 
prorating methodology at proposed Sec.  155.340(i). This would create 
uniform standards for taxpayers on how the APTC will be calculated for 
months in which an enrollee is enrolled in a particular policy for less 
than the full coverage month.
    Finally, HHS proposes to amend Sec.  155.340 by adding paragraph 
(i) to establish that, beginning with the PY 2024 benefit, all 
Exchanges would be required to calculate applied APTC when an enrollee 
is enrolled in a particular policy for less than the full coverage 
month, including when the enrollee is enrolled in multiple policies 
within a month, each lasting less than the full coverage month, as 
equal to the product of (1) the APTC applied on the

[[Page 653]]

policy for 1 month of coverage divided by the number of days in the 
month, and (2) the number of days for which coverage is provided on 
that policy during the applicable month. This methodology would align 
with the prorated calculation of premium amounts under Sec.  
155.240(e). Furthermore, this proposed methodology would provide 
Exchanges with a consistent method of prorating applied APTC amounts 
that aligns with the calculation of PTC under 26 CFR 1.36B-3(d) while 
ensuring that the calculation of APTC in situations in which an 
enrollee is enrolled in a particular policy for less than the full 
coverage month, including when the enrollee is enrolled in multiple 
policies within a month, each lasting less than the full coverage 
month, does not cause the APTC to exceed the PTC for the month as 
calculated per 26 CFR 1.36B-3(d). This proposal would create 
consistency for issuers across all Exchanges, help the enrollee by 
keeping the enrollee's share of premiums stable, and reduce the 
instances in which a taxpayer would have to repay excess APTC during 
tax filing per section 36B(f)(2) of the Code and 26 CFR 1.36B-4. If the 
proposal results in an excess of PTC over the amount of APTC paid for 
an enrollee's coverage (net PTC), the applicable taxpayer would claim 
the net PTC as a refundable tax credit.
    These proposals are intended to protect consumers. State Exchanges 
are not currently required to prorate APTC for mid-month policy changes 
and, as a result, HHS may overpay APTC amounts to issuers in State 
Exchanges not currently prorating in this manner. Income tax liability 
due to excess APTC could pose significant financial burden to 
applicable taxpayers, particularly low-income taxpayers, and creates 
confusion about the affordability of health care coverage offered by an 
Exchange.
    Additionally, E.O. 14009 \270\ calls for a review of policies or 
practices that may present unnecessary barriers to individuals and 
families attempting to access Medicaid or ACA coverage, or that may 
reduce the affordability of coverage or financial assistance for 
coverage. Low-income populations are more likely to qualify for many 
federal and state health and human services programs, including 
APTC.\271\ The proposed methodology aligns with the goals of E.O. 
14009, as it would promote consumer protection, encourage continuity of 
coverage for individuals, and ensure consistent application of APTC 
which makes Exchange coverage more affordable.
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    \270\ Executive Order 14009; 86 FR 7793 (Feb. 2, 2021).
    \271\ See https://familiesusa.org/wp-content/uploads/2021/04/2021-79_ARP-Coverage-Summary_Analysis_03_2021.pdf.
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    Establishing a proration methodology that would apply universally 
across all Exchange types--FFEs, SBE-FPs, and State Exchanges--would 
ensure all Exchanges and issuers report and pay APTC similarly when 
enrollees are enrolled in a particular policy for less than the full 
coverage month, including when the enrollee is enrolled in multiple 
policies within a month, each lasting less than the full coverage 
month. HHS notes that this proposal would codify a methodology that the 
FFEs, SBE-FPs, and some State Exchanges already utilize to prorate 
APTC.
    We are proposing to require this proposed proration methodology for 
all Exchanges to implement beginning with the PY 2024 benefit, as HHS 
acknowledges that implementing this proposed methodology will require 
implementation and operational costs and time on the part of most State 
Exchanges. HHS seeks comment on this proposal. HHS also seeks comment 
on whether PY 2023 benefit implementation is feasible.
10. Special Enrollment Periods--Special Enrollment Period Verification 
(Sec.  155.420)
    In 2017, the HHS Market Stabilization Rule preamble explained that 
HHS would implement pre-enrollment verification of eligibility for 
certain special enrollment periods in all Exchanges on the Federal 
platform.\272\ HHS also clarified its intention to not establish a 
regulatory requirement that all Exchanges conduct special enrollment 
period verifications in order to allow State Exchanges additional time 
and flexibility to adopt policies that fit the needs of their 
state.\273\ However, all State Exchanges conduct verification of at 
least one special enrollment period type, and most State Exchanges have 
implemented a process to verify the vast majority of special enrollment 
periods requested by consumers.
---------------------------------------------------------------------------

    \272\ 82 FR at 18355 through 18358.
    \273\ Ibid.
---------------------------------------------------------------------------

    We are now proposing to amend Sec.  155.420 to add new paragraph 
(g) to state that Exchanges may conduct pre-enrollment verification of 
eligibility for special enrollment periods, at the option of the 
Exchange, and that Exchanges may provide an exception to pre-enrollment 
special enrollment period verification for special circumstances, which 
could include natural disasters or public health emergencies that 
impact consumers or the Exchange. This is in order to encourage State 
Exchanges to conduct special enrollment period verification but also 
allow the FFEs, SBE-FPs, and State Exchanges to maintain flexibility in 
implementing and operating special enrollment period verification.
    Since 2017, Exchanges on the Federal platform implemented pre-
enrollment special enrollment period verification for certain special 
enrollment period types commonly used by consumers to enroll in 
coverage. New consumers, meaning consumers who are not currently 
enrolled in coverage through the Exchange, who apply for coverage 
through a special enrollment period type that requires pre-enrollment 
verification by the Exchanges on the Federal platform must have their 
eligibility electronically verified using available data sources or 
submit supporting documentation to verify their eligibility for the 
special enrollment period before their enrollment can become effective. 
As stated in the HHS Marketplace Stabilization Rule, pre-enrollment 
special enrollment period verification is only conducted for consumers 
newly enrolling due to the potential for additional burden on issuers 
and confusion for consumers if required for existing enrollees.\274\
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    \274\ 82 FR at 18355 through 18360.
---------------------------------------------------------------------------

    While pre-enrollment special enrollment period verification can 
decrease the risk for adverse selection and improve program integrity, 
it can also deter eligible consumers from enrolling in coverage through 
a special enrollment period because of the barrier of document 
verification. Younger, often healthier consumers submit acceptable 
documentation to verify their special enrollment period eligibility at 
much lower rates than older consumers, which can negatively impact the 
risk pool. Additionally, our experience operating the FFEs and the 
Federal platform shows that pre-enrollment special enrollment period 
verification disproportionately negatively impacts Black and African 
American consumers who submit acceptable documentation to verify their 
special enrollment period eligibility at much lower rates than White 
consumers.
    To support program integrity and streamline the consumer 
experience, we are also proposing that the Exchanges on the Federal 
platform would only continue to conduct pre-enrollment verification of 
eligibility for one type of special enrollment period: The special

[[Page 654]]

enrollment period for new consumers who attest to losing minimum 
essential coverage.\275\ The loss of minimum essential coverage special 
enrollment period type comprises the majority, about 58 percent, of all 
special enrollment period enrollments on the Exchanges on the Federal 
platform and has electronic data sources that can be leveraged for 
auto-verification. By verifying eligibility for this special enrollment 
period type and not for other special enrollment periods, the Exchanges 
on the Federal platform could limit the negative impacts of special 
enrollment period verification and decrease overall consumer burden 
without substantially sacrificing program integrity.
---------------------------------------------------------------------------

    \275\ See 45 CFR 155.420(d)(1)(i).
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    We seek comment on these proposals.
11. General Program Integrity and Oversight Requirements (Sec.  
155.1200)
    The Payment Integrity Information Act of 2019 (PIIA) \276\ requires 
federal agencies to annually identify, review, measure, and report on 
the programs they administer that are considered susceptible to 
significant improper payments. Pursuant to the PIIA, HHS is in the 
planning phase of establishing a State Exchange Improper Payment 
Measurement (SEIPM) program, as HHS has determined that APTC payments 
may be susceptible to significant improper payments and are subject to 
additional oversight. Therefore, we announced that we would be 
implementing the SEIPM program and establishing requirements, which are 
laid out in proposed provisions in a new subpart P.\277\
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    \276\ Public Law 116-117 (Mar. 2, 2020).
    \277\ Presentation and materials provided to the then 
operational State Exchanges as part of ``All States'' meeting held 
on February 21, 2019.
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    The SEIPM program would allow for the accurate calculation of an 
improper payment rate through the development of annual improper 
payment estimates and subsequent reporting of improper payments. To 
ensure improper payments can be calculated accurately, the SEIPM 
program would require State Exchanges to provide HHS with access to 
certain State Exchange data, including eligibility determinations and 
enrollment information. State Exchanges with significant improper 
payments may also be required to develop corrective action plans (CAP) 
to correct the causes of the identified improper payments.
    Currently, HHS approves or conditionally approves a state's 
Blueprint Application to establish a State Exchange based on an 
assessment of a state's attested compliance with relevant Exchange 
statutory and regulatory requirements at section 1311 of the ACA and 45 
CFR part 155. Thereafter, State Exchanges must meet specific program 
integrity and oversight requirements specified at section 1313(a) of 
the ACA, as well as Sec. Sec.  155.1200 and 155.1210. These 
requirements provide HHS with the authority to oversee the Exchanges 
after their establishment. There are various annual reporting 
requirements for State Exchanges at Sec.  155.1200(b) including the 
annual submission of: (1) A financial statement presented in accordance 
with generally accepted accounting principles (GAAP); (2) an annual 
report showing compliance with Exchange requirements; (3) performance 
monitoring data; and (4) the annual submission of a report on instances 
in which the State Exchange did not reduce an enrollee's premium by the 
amount of the APTC in accordance to Sec.  155.340(g)(1) and (2).
    Additionally, under Sec.  155.1200(c), each State Exchange is 
required to engage or contract with an independent qualified auditing 
entity that follows generally accepted government auditing standards 
(GAGAS) to perform annual independent external financial and 
programmatic audits. State Exchanges are required to provide HHS with 
the results of the audits, to inform HHS of any material weakness or 
significant deficiency identified in the audit, to develop and inform 
HHS of any CAPs for such material weakness or significant deficiency, 
and to make a public summary of the results of the external audit. The 
CAPs are monitored by HHS until the findings are resolved. 
Specifically, for the annual programmatic audit requirement, State 
Exchanges must ensure that auditors address compliance with subparts D 
and E under 45 CFR part 155, and other requirements under part 155, as 
specified by HHS. This allows HHS to oversee compliance with 
eligibility and enrollment standards to ensure that State Exchanges are 
conducting accurate eligibility determinations and enrollment 
transactions.
    We propose to add new Sec.  155.1200(e) to permit a State Exchange 
to meet the requirement to conduct an annual independent external 
programmatic audit, as described at Sec.  155.1200(c), by completing 
the required annual SEIPM program process. Therefore, HHS would 
generally accept a State Exchange's completion of the SEIPM process for 
a given benefit year as acceptable to meet the annual programmatic 
audit requirement for that benefit year. We also propose to amend Sec.  
155.1200(c) to cross-reference proposed Sec.  155.1200(e) to ensure the 
coordination of these two requirements. We believe that these proposed 
changes would ensure HHS retains necessary oversight authority of the 
State Exchanges, particularly in the event that there are changes to 
the SEIPM program in future benefit years. However, we would strive to 
provide ample advance notice of any potential changes to the SEIPM 
program, or to potentially allow for flexibility to satisfy 
requirements at paragraph (c) in the event the SEIPM program is 
unexpectedly suspended. These proposed changes would eliminate 
duplicate efforts specific to the annual programmatic audit requirement 
and reduce burden on the State Exchanges. They would also allow HHS to 
continue to require programmatic audits of other subparts beyond 
eligibility and enrollment, should HHS deem it necessary in future 
years to ensure programmatic oversight and program integrity.
    As described in new proposed subpart P, section 14, HHS intends to 
implement the SEIPM program beginning with the 2023 benefit year. Thus, 
measurement of improper payments for the 2023 benefit year would take 
place in benefit year 2024, and reporting of the improper payment rate 
would not occur until November 2025, at the earliest. Thereafter, State 
Exchanges that HHS determines must submit CAPs would do so no sooner 
than 2026. We would continue to closely coordinate with State Exchanges 
as these timeframes are finalized and provide as much advance notice as 
possible of relevant deadlines as they come due.
    We seek comment on these proposals.
12. State Exchange Improper Payment Measurement Program (Sec. Sec.  
155.1500 Through 155.1540)
    In 2016, HHS completed a risk assessment of the APTC program. 
Similar to other public-facing benefit programs, HHS determined that 
the APTC program is susceptible to significant improper payments, and 
as a result, HHS announced plans to increase the oversight of the APTC 
program through the development and reporting of annual improper 
payment estimates, and facilitating corrective actions.\278\ At that 
time, we also announced that we would undertake rulemaking before 
implementing the improper payment measurement methodology.
---------------------------------------------------------------------------

    \278\ Ibid.

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[[Page 655]]

    In line with our prior announcement \279\ HHS is establishing a 
pilot program and, as mentioned in section 12, is proposing regulations 
governing HHS' SEIPM program. The SEIPM program would address all HHS 
and State Exchange responsibilities so that HHS can accurately 
calculate the SEIPM improper payment rate. Specifically, these proposed 
regulations would pertain to State Exchanges that operate their own 
eligibility and enrollment platform. These proposed regulations would 
not pertain to State Exchanges that use the Federal platform to conduct 
eligibility determinations and enrollment transactions. Additionally, 
the proposed regulations would contain key SEIPM program definitions 
and specify the manner in which HHS would collect information from 
State Exchanges in order to estimate the SEIPM improper payment rate. 
The proposed regulations would also account for the State Exchanges' 
obligation to provide the required information and the manner in which 
State Exchanges can contest HHS' findings regarding errors. Also, the 
proposed regulations would convey State Exchange responsibilities 
regarding CAPs that State Exchanges must submit to HHS for approval in 
order to correct improper payments.
---------------------------------------------------------------------------

    \279\ Ibid.
---------------------------------------------------------------------------

    We would calculate the SEIPM improper payment rate for each benefit 
year and expect the first calculation beginning with the 2023 benefit 
year. Since the rate cannot be calculated until all SEIPM appeals are 
resolved, we anticipate that the improper payment rate for the 2023 
benefit year would be published in approximately November 2025. The 
proposed regulations are necessary for HHS to properly oversee the 
State Exchanges and ensure that errors resulting in improper payments 
are corrected.
    Current regulations found at 45 CFR 155.1200 and 155.1210 require 
that a State Exchange have financial and operational safeguards in 
place to avoid making inaccurate eligibility determinations, including 
those related to APTC, CSR, and enrollments. However, as we stated in 
our 2013 regulation, Sec. Sec.  155.1200 and 155.1210 were not intended 
to be a part of any measurement program that may have been required 
under the Improper Payments Elimination and Recovery Act of 2010,\280\ 
as updated by PIIA.\281\ Current program integrity audits, especially 
as they relate to subparts D (eligibility) and E (enrollment) of part 
155, focus on the processes and procedures that a State Exchange has 
established to verify that a qualified individual meets eligibility 
requirements. Current regulations at Sec.  155.1200(c) require State 
Exchanges to hire an independent qualified auditing entity and submit 
the external audit results to HHS. These programmatic audits do not 
review, estimate, or report on the amounts or rates of improper 
payments as the result of eligibility determination errors made by 
State Exchanges. To meet the requirements of PIIA, to reduce burden on 
State Exchanges, and to ensure consistency across State Exchanges in 
terms of our review methodology, we propose to update programmatic 
auditing requirements such that the completion of the annual SEIPM 
program, as required by this subpart P, would satisfy the current 
auditing requirements prescribed in Sec.  155.1200(c). As we 
transition, we would coordinate our efforts with the CMS Center for 
Consumer Information and Insurance Oversight and the CMS Office of 
Financial Management. The goal of this coordination is to gain 
efficiencies and avoid duplicative requirements that would 
unnecessarily increase State Exchanges' workload, as well as the 
requirement and burden of hiring independent qualified auditing 
entities. Doing so would enable HHS and its Federal contractors to 
obtain consistent information across all State Exchanges and to meet 
our statutory mandate under PIIA. Therefore, we propose to establish a 
new subpart P under 45 CFR part 155 (containing Sec. Sec.  155.1500 
through 155.1540) to codify the SEIPM program requirements.
---------------------------------------------------------------------------

    \280\ Public Law 111-204, 124 Stat. 2224 (July 22, 2010). The 
original Improper Payment Information Act, Public Law 107-300 (2002) 
has been updated by it successors, which include the Improper 
Payment Elimination and Recovery Act, Public Law 111-204 (2010), the 
Improper Payment Elimination and Recovery Improvement Act, Public 
Law 112-248 (2012), and the Payment Integrity Information Act, 
Public Law 116-117 (2020).
    \281\ Patient Protection and Affordable Care Act; Program 
Integrity: Exchange, SHOP, Premium Stabilization Programs, and 
Market Standards, Proposed Rule, 78 FR 37032 at 37053 (Jun. 19, 
2013).
---------------------------------------------------------------------------

    We propose that the proposed regulations at subpart P would be 
applicable in 2023 when the SEIPM program is proposed to begin its 
operations.
a. Purpose and Definitions (Sec.  155.1500)
    We are proposing to add new subpart P to part 155, which would 
address various State Exchange and HHS responsibilities. HHS may use 
Federal contractors as needed to support the performance of 
statistical, review, or other activities.
    We are proposing to add new Sec.  155.1500 to convey the purpose of 
subpart P and definitions that are relevant to the SEIPM program.
     At paragraph (a), we are proposing the purpose of subpart 
P as setting forth the requirements of the SEIPM program for State 
Exchanges.
     At paragraph (b), we are proposing to codify the 
definitions that are specific to the SEIPM program and key to 
understanding the process requirements.
     We are proposing the definition of ``Appeal of 
redetermination decision (or appeal decision)'' to mean HHS' appeal 
decision resulting from a State Exchange's appeal of a redetermination 
decision.
     We are proposing the definition of ``Corrective action 
plan (CAP)'' to mean the plan a State Exchange develops in order to 
correct errors resulting in improper payments.
     We are proposing the definition of ``Error'' to mean a 
finding by HHS that a State Exchange did not correctly apply a 
requirement in subparts D and E of part 155 regarding eligibility for 
and enrollment in a qualified health plan; APTC, including the 
calculation of APTC; redeterminations of eligibility determinations 
during a benefit year; or annual eligibility redeterminations.
     We are proposing the definition of ``Error findings 
decision'' to mean HHS' enumeration of errors made by a State Exchange, 
including a determination of how the enumerated errors inform improper 
payment estimation and reporting requirements.
     We are proposing the definition of ``Redetermination of an 
error findings decision (or redetermination decision)'' to mean HHS' 
decision resulting from a State Exchange's request for a 
redetermination of HHS' error findings decision.
     We are proposing the definition of ``Review'' to mean the 
process of analyzing and assessing data submitted by a State Exchange 
to HHS in order for HHS to determine a State Exchange's compliance with 
subparts D and E of part 155 as it relates to improper payments.
     We are proposing the definition of ``State Exchange 
improper payment measurement (SEIPM) program'' to mean the process for 
determining

[[Page 656]]

estimated improper payments and other information required under the 
PIIA, and implementing guidance, for APTC, which includes a review of a 
State Exchange's determinations regarding eligibility for and 
enrollment in a QHP; the calculation of APTC; redeterminations of 
eligibility determinations during a benefit year; and annual 
eligibility redeterminations.
b. Program Notification and Planning Process (Sec.  155.1505)
    We are proposing to add new Sec.  155.1505 to outline the annual 
program notification requirements related to the SEIPM program.
     At paragraph (a), we are proposing the requirements 
associated with HHS' responsibility to notify the State Exchanges prior 
to the start of the measurement year regarding information pertinent to 
the SEIPM program and the program's upcoming measurement cycle, which 
may include but would not be limited to review criteria; key changes 
from prior measurement cycles, where applicable; or other modifications 
regarding specific SEIPM activities. This notification would occur 
during the benefit year (that is, the year under review for which data 
would be collected), which immediately precedes the measurement year 
(that is, the year in which the measurement will be completed). The 
measurement cycle would conclude with the reporting year during which 
all data issues would be resolved and the improper payment rate would 
be calculated and published.
     At paragraph (b), we are proposing the requirements 
associated with HHS' responsibility to notify the State Exchanges prior 
to the measurement year regarding SEIPM schedules, which will include 
relevant timelines. For example, among other things, the SEIPM annual 
program schedule would detail the time period during which HHS would 
provide the SEIPM data request form to State Exchanges with 
instructions regarding how to complete each part of the form. The SEIPM 
annual program schedule would also provide the deadlines prescribed for 
State Exchanges to complete each part of the form.
     At paragraph (c), we are proposing the requirements 
associated with information to be provided by State Exchanges to HHS 
regarding the operations and policies of the State Exchange, and 
changes that have been made by the State Exchange which could impact 
the SEIPM review process such as changes to business rules, business 
practices, policies, and information systems (for example, data 
elements and table relationships), which are used to review the State 
Exchange's execution of consumer verifications, verification 
inconsistency resolutions, eligibility determinations, enrollment 
management, and APTC calculations. HHS anticipates that State Exchanges 
may make changes periodically that could affect a State Exchange's 
eligibility determinations or other decisions relating to the SEIPM 
program. For example, HHS would need to be made aware of changes to the 
State Exchange's technical platform or modifications to its policies or 
procedures as these changes may impact specific review criteria, the 
data to be reviewed and ultimately a State Exchange's eligibility 
determinations. Other decisions or changes by a State Exchange could 
affect the SEIPM program, including any changes regarding items such as 
naming conventions or definitions of specific data elements used in the 
SEIPM program, since any lack of clarity in how determinations and 
payment calculations are being made could impact HHS' decisions 
regarding errors made by the State Exchanges.
c. Data Collection (Sec.  155.1510)
    We are proposing to add new Sec.  155.1510 to address the data 
collection requirements to support the SEIPM process. Consistent with 
this, we are establishing an SEIPM data request form that would 
incorporate two basic parts: (1) The pre-sampling data request; and (2) 
the sampled unit data request. We would use this form to compile 
information from each State Exchange in an ongoing manner.
     At paragraph (a)(1), we are proposing the requirement that 
the State Exchange annually provide pre-sampling data to HHS by the 
deadline provided in the annual program schedule. The pre-sampling data 
request would provide HHS with essential information about the 
composition of the State Exchange's application population in order to 
appropriately stratify and sample the population. In the pre-sampling 
data request, HHS would provide each State Exchange with a list of 
policy identifications (that is, policy ID, which is a unique 
identifier for a policy) that would have been analyzed to produce an 
aggregate applied APTC greater than $0. HHS would request each State 
Exchange to map the given policy IDs for their State Exchange to a tax 
household identifier (or a proxy if the State Exchange does not have an 
equivalent identifier) and provide characteristics of the population, 
which include counts of (or an indication of the presence in) different 
verification inconsistency types and the number of tax household 
members. HHS would then analyze these characteristics and select a 
statistically valid sample according to OMB requirements for estimating 
improper payments. For these sampled units, HHS would also request 
associated application and enrollment data and supporting consumer 
documentation, which will be used to conduct its review. HHS has 
submitted a PRA package to OMB for approval as detailed in ICR sections 
IV.G.1. and 2 of this proposed rule.
    As explained below in section IV, Collection of Information 
Requirements, the SEIPM data request form has been submitted to the OMB 
for review and approval. The pre-sampling data are a building block for 
the development of the sampled unit data, which associate consumer 
attestation documentation to each sampled unit. As such, the timely 
receipt of the completed pre-sampling data from the State Exchange is 
imperative.
    The cumulative sample size across all State Exchanges and the 
associated State Exchange-specific sample size would be determined 
using a statistically valid sampling and estimation methodology, in a 
manner that is consistent with Appendix C of OMB Circular A-123 and 
that would be designed to produce an aggregate estimated improper 
payment rate across all State Exchanges with a 3 percent margin of 
error and a 95 percent confidence interval.\282\ HHS researched various 
sampling methodologies, for example, simple random sampling, stratified 
random sampling, and probability proportional to size sampling, taking 
into account level of burden, (for example, time and resources), on 
State Exchanges as well as enabling meaningful reviews for each State 
Exchange. Based on information currently available, we expect that a 
sample size of approximately 100 tax households for each State Exchange 
will be necessary to achieve this precision level. HHS will provide 
State Exchanges with an annual program notification that may include 
sampling methodology and sample size. Burden estimates contained within 
this document have been created using that sample size estimate. There 
are a variety of factors that we may consider each review cycle to 
determine the sample size and

[[Page 657]]

methodology. Such factors may include the size of the State Exchange 
measured either by the number of payments or by the total dollar 
amount, specific factors that drive the improper payment rate, the 
number of State Exchanges under measurement for a given review cycle, 
or improper payment rates and margins of error from previous benefit 
years. Regardless of potential variations from one review cycle to the 
next, we would continue to use a methodology that supports 
statistically valid sampling and estimation.
---------------------------------------------------------------------------

    \282\ While OMB Memorandum M-21-19, dated March 5, 2021 at 
https://www.whitehouse.gov/wp-content/uploads/2021/03/M-21-19.pdf no 
longer includes the requirements of a 95 percent confidence interval 
or a 3% margin of error, we are using those measures that were 
included in Appendix C to the OMB circular prior to the 2021 
changes.
---------------------------------------------------------------------------

     As stated previously, we would provide to each State 
Exchange an SEIPM data request form that includes the sampled unit data 
request. At paragraph (a)(2) we are proposing the requirement that 
annually the State Exchange provide to HHS, in a manner and within a 
deadline specified by HHS in the annual program schedule, sampled unit 
data. To meet this requirement, a State Exchange can submit consumer-
submitted documentation in one or more batches so long as all of the 
batches are provided to HHS within the deadline specified in the annual 
program schedule. The sampled unit data request would include the list 
of sampled units and the associated information specific to each unit. 
The information required for the sampled units would include data and 
supporting documentation regarding various State Exchange functions, 
for example, electronic verifications, manual reviews of data matching 
inconsistencies, special enrollment period verifications, eligibility 
determinations, redeterminations, enrollment reconciliation, and plan 
management.
     At paragraph (b), we are proposing language regarding 
requests for extension which may be submitted by State Exchanges. Given 
the importance of the time frames associated with the measurement 
process, we do not anticipate granting extensions in most situations. 
The approval of extension requests would be reserved for extreme 
circumstances that directly impact operations of the particular State 
Exchange. This includes situations such as natural disasters, 
interruptions in business operations such as major system failures, or 
other extenuating circumstances.
     At paragraph (c), we are proposing language regarding 
potential consequences as a result of a State Exchange's failure to 
timely provide the information in accordance with the schedule and 
deadlines detailed in the annual program schedule, or in response to a 
request for extension in paragraph (b). As a result of not timely 
providing required data, we may cite errors due to lack of 
documentation to support the state's eligibility or payment decisions, 
inadvertently resulting in an increase in the State Exchange's improper 
payment rate.
d. Review Process and Improper Payment Rate Determination (Sec.  
155.1515)
    We are proposing to add new Sec.  155.1515 to address the review 
process and the determination of the improper payment rate.
     At paragraph (a), we are proposing that HHS would keep a 
record of the status of receipt for information requested from each 
State Exchange for a minimum of 10 years.
     At paragraph (b), we are proposing to review the following 
for compliance with subparts D and E of part 155: A State Exchange's 
determinations regarding eligibility for and enrollment in a QHP; APTC, 
including the calculation of APTC; redeterminations of eligibility 
determinations during a benefit year; and annual eligibility 
redeterminations. As part of the review process, HHS would issue error 
findings decisions and render redeterminations of error findings 
decisions within the timeframe specified in the annual program 
schedule.
     At paragraph (c), we are proposing to notify each State 
Exchange of HHS' error findings decisions for that State Exchange and 
HHS' calculation of that State Exchange's improper payment rate.
e. Error Findings Decisions (Sec.  155.1520)
    We are proposing to add new Sec.  155.1520 to address the issuance 
of error findings decisions and the content of error findings 
decisions.
     At paragraph (a), we are proposing that HHS will issue 
error findings decisions to each State Exchange. While we anticipate 
that error findings decisions would be issued at regular and recurring 
points of time within the measurement year during each review cycle, we 
recognize that certain events could result in necessary delays, for 
example, public health emergencies, natural disasters, interruptions in 
business practices, or other extenuating circumstances. Thus, should 
these types of events warrant additional time, we would notify State 
Exchanges of the delay via the CMS website. In the situation where no 
errors are found during the course of the review, HHS will still issue 
an error findings decision to the State Exchange indicating that no 
errors were identified. The error findings decisions are intended to be 
communicated to each respective State Exchange only and would not be 
published publicly.
     At paragraph (b), we are proposing language regarding the 
specific information that would be included in error findings 
decisions. We propose that, at a minimum, error findings decisions will 
include HHS' findings regarding errors made by the State Exchange and 
information about the State Exchange's right to request a 
redetermination of the error findings decision in accordance with 
proposed Sec.  155.1525. We anticipate that these are the key items to 
be conveyed through the error findings decision. However, should we 
determine that other information is warranted, the language of proposed 
Sec.  155.1520 does not prohibit additional information from being 
included within the error findings decision.
f. Redetermination of Error Findings Decisions (Sec.  155.1525)
    We are proposing to add new Sec.  155.1525 to address a State 
Exchange's request for a redetermination as well as HHS' issuance of 
the redetermination decision and the content of that decision.
     At paragraph (a), we are proposing language indicating a 
State Exchange's ability to request a redetermination of the error 
findings decision within the deadline prescribed in the annual program 
schedule. During the period for a State Exchange to request a 
redetermination of the error findings decision, HHS would consider a 
request for an extension in extreme circumstances, which includes but 
is not limited to situations such as natural disasters, interruptions 
in business operations such as major system failures, or other extreme 
circumstances. While we recognize that each State Exchange has a 
multitude of responsibilities, HHS would not otherwise accept any 
request for a redetermination received after the expiration of the 
deadline prescribed by the annual program schedule, which is designed 
to enable HHS to meet deadlines for publication of the improper payment 
rate.
     At paragraph (a)(1), we are proposing language requiring 
that the State Exchange identify the specific error(s) for which the 
State Exchange is requesting a redetermination. This identification may 
pertain to a single individual's application or to a type of error 
affecting a class of applications. Since this redetermination 
constitutes a review of the initial decision and not a de novo 
investigation, the State Exchange must base its request on 
documentation and other information

[[Page 658]]

already submitted to HHS (for example, if the application lacked income 
information, the State Exchange may not retrospectively seek this 
documentation and add it to the record). Any issues that do not relate 
to an error identified by HHS in the initial error findings decision 
would not be addressed.
     At paragraph (a)(2), we are proposing language that the 
State Exchange must include all data and information that support the 
State Exchange's request for a redetermination. Note that while State 
Exchanges are able to submit data and information in requesting a 
redetermination, new information submitted as part of the request for 
redetermination should supplement data previously submitted as part of 
the SEIPM data request form for the benefit year under review and would 
be accepted at HHS' discretion. State Exchanges may not use the 
redetermination process as a means to circumvent prior deadlines for 
submitting data or information to HHS.
     At paragraph (a)(3), we are proposing language that would 
require a State Exchange to provide an explanation of how the data and 
information submitted under paragraph (a)(2) pertains to the error(s) 
identified in the error findings decision. The State Exchange should 
clearly articulate how the data and information is related to HHS' 
findings, and also how it impacts HHS findings. If a State Exchange 
does not provide this explanation, HHS would not anticipate or assume a 
State Exchange's reasoning in requesting a redetermination on a 
particular error.
     At paragraph (b), we are proposing language regarding the 
issuance of redetermination decision. The redetermination of an error 
findings decision would be issued within the deadline prescribed in the 
annual program schedule. Our goal is to ensure that each State Exchange 
has ample time to assess the error findings decision, give HHS adequate 
time to thoroughly evaluate a State Exchange's request for a 
redetermination, and calculate an improper payment rate in adequate 
time to publish aggregate findings across all State Exchanges in the 
Agency Financial Report. As with the error findings decision, we 
anticipate HHS' redetermination decisions would be issued at regular 
and recurring points of time within the measurement year during each 
review cycle and in accordance with the annual program schedule. 
However, we also recognize that certain circumstances could result in 
necessary delays, for example, public health emergencies, natural 
disasters, interruptions in business operations, or other extenuating 
circumstances. Thus, we are proposing that if these types of 
circumstances result in HHS needing additional time to render the 
redetermination decisions, a state Exchange would be notified of the 
delay.
     At paragraph (c), we are proposing language conveying the 
minimum content requirements for HHS' redetermination decision.
     At paragraph (c)(1), we are proposing language specifying 
that HHS' decision must address its findings regarding the impact of 
any additional data and information provided by the State Exchange on 
the error(s) for which the State Exchange requested a redetermination.
     At paragraph (c)(2), we are proposing language that would 
establish HHS' responsibility to give a State Exchange information 
about the right to request an appeal of the redetermination of error 
findings decision in accordance with proposed Sec.  155.1530.
g. Appeal of Redetermination Decision (Sec.  155.1530)
    We are proposing to add new Sec.  155.1530 to address a State 
Exchange's ability to request an appeal of the redetermination 
decision. Appeals will be administered by HHS.
     At paragraph (a), we are proposing language regarding a 
State Exchange's right to request an appeal of a redetermination within 
the deadline prescribed in the annual program schedule. Moreover, we 
are proposing that, in the request for an appeal, the State Exchange 
must indicate the specific error(s) identified in the redetermination 
decision for which the State Exchange is requesting an appeal. In 
accordance with proposed Sec.  155.1530(d), which specifies that 
findings would be restricted to those errors for which a 
redetermination was sought, this proposed language also indicates that 
a State Exchange is prohibited from requesting an appeal of any 
error(s) that were not specified in a State Exchange's redetermination 
request.
     At paragraph (b), we are proposing language that conveys 
the appeal entity's review would be an on-the-record review, meaning 
that the appeal entity would only review data and information provided 
at the time of a State Exchange's redetermination request. No 
additional new data or information submitted in support of the request 
for appeal would be considered.
     At paragraph (c), we are proposing language that the 
appeal decision would be issued within the deadline prescribed in the 
annual program schedule. Again, as with the earlier time frames set in 
the annual program schedule, the time frame for appeal allows HHS 
adequate time to review information provided by the State Exchange, 
assess errors, and calculate an improper payment rate in adequate time 
to publish findings in the Agency Financial Report. We also acknowledge 
that unforeseen circumstances could result in necessary delays in the 
issuance of the appeal decision for example, public health emergencies, 
natural disasters, interruptions in business practices, or other 
extenuating circumstances. Thus, we are proposing that if these types 
of circumstances necessitate the appeals entity's need for additional 
time in rendering an appeal decision, the State Exchange would be 
notified about the delay.
     At paragraph (d), we are proposing the content of the 
appeal decision.
     At paragraph (d)(1), we are proposing that the appeal 
decision would include the final disposition of the on-the-record 
review and that findings would be restricted to those error(s) for 
which an appeal was sought.
     At paragraph (d)(2), we are proposing that the appeal 
decision would include the estimated improper payment rate for the 
State Exchange.
     At paragraph (e), we are proposing that upon completion of 
the review and the closure of all appeals, HHS would issue to each 
individual State Exchange, a report containing the error findings and 
the estimated improper payment rate for their respective program. That 
report will not be made public. The estimated improper payment rates 
for each State Exchange will be used to estimate an aggregate improper 
payment rate across all State Exchanges. That aggregate rate will be 
published in the agency's Annual Financial Report.
h. Corrective Action Plan (Sec.  155.1535)
    We propose to add new Sec.  155.1535 to address the scenario in 
which a State Exchange's improper payment rate for a given benefit 
year, in HHS's reasonable discretion, necessitates a CAP to correct the 
causes of any payment errors. Our goal is to lay out a set of minimum 
requirements in future rulemaking, using the standards provided under 
Appendix C to OMB Circular No. A-123, to support State Exchanges in 
satisfying the requirement of developing, implementing, and monitoring 
a CAP. Otherwise, State Exchanges should have the flexibility to 
conduct these activities in a manner that is tailored to their specific 
needs, including any standard practices, policies and procedures, or 
business needs. We also anticipate that there

[[Page 659]]

would be collaboration required between HHS and the State Exchange to 
ensure the effectiveness of any CAP, and we underscore the importance 
of maintaining open lines of communication on significant CAP-related 
updates. As needed, a State Exchange should be prepared to consult with 
HHS and provide timely responses to any requests for clarification or 
additional information regarding the CAP.
    As we gather additional information and data, and observe trends 
based on experience with implementing the SEIPM program, we will detail 
CAP parameters or requirements in future rulemaking. We note, as well, 
that the first improper payment report would not be released until 
November 2025 at the earliest, and so the first SEIPM program CAP 
likely would not be due until early 2026.
     At paragraph (a), we propose that, depending on a State 
Exchange's error rate for a given benefit year, we may require the 
State Exchange to develop and submit a CAP to HHS to correct errors 
resulting in improper payments. In future rulemaking, we may define a 
threshold error rate, dollar amount, or other scenarios that could 
necessitate a CAP. We do not, however, anticipate that these standards 
would deviate significantly from the standards of other improper 
payment measurement programs, such as the standards under the Medicaid 
and CHIP Payment Error Rate Measurement (PERM) program.
     At paragraph (b), we propose that Appendix C to OMB 
Circular No. A-123 would serve as a minimum set of guidelines to any 
State Exchange that is developing a CAP. The State Exchange otherwise 
has broad discretion to utilize a format tailored to its specific 
needs, so long as it can demonstrate that the CAP is effectively and 
timely correcting error causes.
     At paragraph (c), we propose that a State Exchange would 
be required to develop an implementation schedule to accompany its CAP, 
and implement any CAP initiatives in accordance with that schedule. In 
conjunction with completing CAP initiatives timely, a State Exchange 
would be required to regularly evaluate whether those initiatives are 
effective at correcting errors identified. It is critical that the 
State Exchange maintains regular communications with HHS of any 
evaluation findings, particularly for any CAP initiatives that are not 
correcting errors. In this situation a State Exchange may need to 
revise or discontinue these initiatives, or develop new ones.
     At paragraph (d), we propose the recourse HHS has in the 
event that a State Exchange that is required to submit a CAP fails to 
timely do so by stating that HHS may take actions consistent with Sec.  
155.1540.
i. Failure To Comply (Sec.  155.1540)
    We propose to add new Sec.  155.1540 that would address failures to 
comply with SEIPM requirements. At paragraph (a), we propose that HHS 
would have discretion to address failures of compliance with audit data 
submission and CAP requirements contained in subpart P, consistent with 
authorities HHS possesses under title I of the ACA or any other Federal 
law.
    Based on experiences with other audit programs, HHS is of the view 
that without measures to ensure State Exchanges' compliance with SEIPM 
requirements, the audit program could easily become frustrated and 
inefficient, needlessly burdensome to the government and wasteful of 
government funds and resources, as well as ineffective to detect and 
prevent improper payments of APTC in State Exchanges. HHS finds that 
such failures would undermine or prohibit HHS's efficient 
administration of Exchange activities, including the administration of 
APTC. For this reason, we propose that if a State Exchange fails to 
substantially comply with the data collection requirements or the CAP 
provisions contained in subpart P, HHS may implement measures or 
procedures in relation to the State Exchange that HHS determines are 
appropriate to secure compliance with data collection and CAP 
provisions contained in subpart P of this part, and to detect, prevent, 
or reduce abuses in the administration of APTC under title I of the 
ACA, so long as such actions are within HHS's authorities under title I 
of the ACA or any other Federal law.
    The ACA grants HHS broad discretion to ensure the effective and 
efficient administration of Exchange activities through audits and 
other authorized means, such as those HHS proposes in this rule to 
support its compliance with the PIIA.\283\ Section 1313(a)(5) of the 
ACA authorizes HHS to implement any measure or procedure it determines 
appropriate to reduce fraud and abuse in the administration of title I 
of the ACA, which includes the conduct of APTC eligibility 
determinations and the administration of APTCs. HHS is considering 
exercising this authority to ensure State Exchange compliance with 
SEIPM program data collection and CAP requirements. For instance, upon 
a State Exchange's failure to substantially comply with data collection 
requirements, HHS could require the State Exchange to provide on-site 
access to required data and Exchange personnel capable of displaying 
requested data directly to HHS personnel or contractors.\284\ If a 
State Exchange failed to substantially comply with requirements under 
an existing CAP, HHS could require the State Exchange to revise the CAP 
and its related implementation plan to contain revised or additional 
requirements specifically designed to address the State Exchange's 
compliance failures and ensure the State Exchange's future compliance 
with CAP requirements. We seek comment on these measures and invite 
suggestions for other measures HHS might undertake in relation to State 
Exchanges to incentivize compliance with data collection and CAP 
requirements (or cure non-compliance) and to ensure the efficient 
administration of APTCs.
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    \283\ Although proposed Sec.  155.1540 and other rules we 
propose to codify in part 155, subpart P, are specifically intended 
to support compliance with requirements under the PIIA, section 
1313(a)(3) also authorizes HHS to subject State Exchanges to annual 
financial audits.
    \284\ See, for example, section 1313(a)(2) of the ACA (HHS may 
investigate the affairs of an Exchange, may examine the properties 
and records of an Exchange, and may require periodic reports in 
relation to activities undertaken by an Exchange, and an Exchange 
must fully cooperate in any investigation conducted under this 
paragraph).
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    We note that if the proposed SEIPM program requirements are 
finalized, HHS does not anticipate broad or willful noncompliance with 
data collection and CAP requirements by State Exchanges. Rather, we 
expect that HHS and State Exchanges would continue to work 
collaboratively to ensure the accuracy and integrity of APTC 
eligibility determinations and payments during SEIPM audits. Where a 
State Exchange's compliance failure is due to impediments outside of 
the Exchange's control or due to its need for technical assistance, HHS 
would provide such technical assistance and, when appropriate, could 
grant reasonable accommodations (such as additional time to submit data 
or implement elements of a CAP), in order to provide the State Exchange 
the resources and support it needs to meet SEIPM audit requirements. 
Considering the extremely close working relationships between HHS and 
State Exchanges and their combined interests in ensuring the integrity 
of APTC eligibility determinations, HHS does not anticipate that it 
would need to exercise its authority under title I of the ACA to impose 
financial penalties for substantial noncompliance resulting from 
serious or willful noncompliance with SEIPM requirements. Rather, we

[[Page 660]]

expect that such penalties would be necessary to address only the most 
egregious situations that would amount to serious misconduct in 
relation to a State Exchange's administration of APTCs and its failure 
to comply with audit requirements.\285\
---------------------------------------------------------------------------

    \285\ See, for example, section 1313(a)(4) of the ACA (in such 
cases, the Secretary may rescind from payments due to the State an 
amount not to exceed one percent of such payments until corrective 
actions are taken by the State and determined to be adequate by the 
Secretary).
---------------------------------------------------------------------------

    We invite comment on these proposals.

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

1. FFE and SBE-FP User Fee Rates for the 2023 Benefit Year (Sec.  
156.50)
    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), we specified 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.
    OMB Circular No. A-25 established federal policy regarding user 
fees; it specifies 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.
a. FFE User Fee Rates for the 2023 Benefit Year
    Activities performed by the federal government that do not provide 
issuers participating in an FFE with a special benefit are not covered 
by the FFE user fee. As in benefit years 2014 through 2022, issuers 
seeking to participate in an FFE in the 2023 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. For the 2023 benefit year, issuers 
participating in an FFE will receive special benefits from the 
following federal activities:
     Provision of consumer assistance tools;
     Consumer outreach and education;
     Management of a Navigator program;
     Regulation of agents and brokers;
     Eligibility determinations;
     Enrollment processes; and
     Certification processes for QHPs (including ongoing 
compliance verification, recertification, and decertification).
    To provide additional transparency into HHS' user fee calculation, 
we set forth below the costs, premium, and enrollment projections that 
went into calculating the proposed 2023 FFE user fee rates based on the 
best available data at the time of this proposed rulemaking, to the 
extent that none of this information is considered proprietary for 
issuers or confidential for the federal government. For the 2023 
benefit year, we anticipate that spending on consumer outreach and 
education, eligibility determinations, and enrollment process 
activities will increase by approximately $140 million above the 2022 
benefit year level. We anticipate spending on consumer assistance 
tools, management of a Navigator program, regulation of agents and 
brokers, and certification of QHPs activities will be similar to what 
was estimated for the 2022 benefit year. We do not anticipate any new 
services or contracts will fall under the FFE user fees for the 2023 
benefit year.
    Additionally, we considered a range of premium and enrollment 
projections in setting the proposed 2023 benefit year FFE user fee 
rates.\286\ The weighted average premium projections that we considered 
ranged from $618 to $625 per month. The annual enrollment percentage 
change projections that we considered ranged from -1 percent to 2 
percent. We took a number of factors into consideration in choosing 
which premium and enrollment projections should inform the proposed 
2023 FFE user fee rates. The assumption that the enhanced premium tax 
credit subsidies in section 9661 of the ARP will expire after the 2022 
benefit year significantly influenced our development of the 2023 
enrollment and premium projections.\287\ We expect the expiration of 
this provision of the ARP to revert enrollment and premium projections 
to the pre-ARP level observed in the 2020 benefit year. Our 2023 
enrollment estimates also account for the 2021 benefit year transition 
(and projected transitions through the 2023 benefit year) of states 
from FFEs or SBE-FPs to State Exchanges, as well as the enrollment 
impacts of section 1332 state innovation waivers. We project that 2023 
benefit year premiums will generally increase at the rate of medical 
inflation after expiration of the enhanced premium tax credit subsidies 
in section 9661 of the ARP. After considering the range of costs, 
premium and enrollment projections, we propose a 2023 user fee rate 
that will not result in a substantial increase to consumer premiums 
from prior years, and that also ensures adequate funding for federal 
Exchange operations.
---------------------------------------------------------------------------

    \286\ We used the most recent projections from the Congressional 
Budget Office, the Office of Management and Budget, the Office of 
the Actuary, and the Office of Financial Management.
    \287\ Public Law 117-2.
---------------------------------------------------------------------------

    As such, based on estimated costs, enrollment, and premiums for the 
2023 benefit year, we propose a 2023 benefit year user fee rate for all 
participating FFE issuers of 2.75 percent of total monthly premiums. 
This is the same user fee rate that we established for the 2022 benefit 
year.\288\ We seek comment on this proposal.
---------------------------------------------------------------------------

    \288\ Part 3 of the 2022 Payment Notice (86 FR 53412).
---------------------------------------------------------------------------

b. SBE-FP User Fee Rates for the 2023 Benefit Year
    As discussed above, OMB Circular No. A-25 established federal 
policy regarding user fees, and specified 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), we 
specified 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 instead of direct collection from SBE-FP issuers.
    The benefits provided to issuers in SBE-FPs by the federal 
government include use of the federal Exchange

[[Page 661]]

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 45 CFR part 155, 
subpart E. The user fee rate for SBE-FPs is calculated based on the 
proportion of user fee eligible 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. To calculate 
the proposed SBE-FP rates for the 2023 benefit year, we used the same 
assumptions on contract costs, enrollment, and premiums as the proposed 
FFE user fee rates. We calculated the SBE-FP user fee rate based on the 
proportion of all FFE functions that are also conducted for SBE-FPs. 
The final SBE-FP user fee rate for the 2022 benefit year of 2.25 
percent of premiums was based on HHS' calculation of the percent of 
costs of the total FFE functions utilized by SBE-FPs--the costs 
associated with the information technology, call center infrastructure, 
and eligibility determinations for enrollment in QHPs and other 
applicable state health subsidy programs, which we estimate to be 
approximately 80 percent. Based on this methodology, we propose to 
charge issuers offering QHPs through an SBE-FP a user fee rate of 2.25 
percent of the monthly premium charged by the issuer for each policy 
under plans offered through an SBE-FP for the 2023 benefit year. This 
is the same user fee rate that we established for the 2022 benefit 
year. We seek comment on this proposal.
2. User Fees for FFE-DE and SBE-FP-DE States
    Consistent with the removal of Sec.  155.221(j) and the repeal of 
the Exchange DE option in part 3 of the 2022 Payment Notice,\289\ we 
propose a technical correction to remove from Sec.  156.50 all 
references to the Exchange DE option and cross-references to Sec.  
155.221(j). In that rule, we also finalized the repeal of the 
accompanying user fee rate for FFE-DE and SBE-FP-DE states for 2023; 
however, HHS inadvertently did not amend the accompanying regulatory 
text in Sec.  156.50 related to the Exchange DE option user fees.\290\ 
As such, we propose to make conforming changes to Sec.  156.50(c) and 
(d) to remove all references to the Exchange DE option and Sec.  
155.221(j). Specifically, we propose to remove Sec.  156.50(c)(3), and 
amend Sec. Sec.  156.50(d)(1); (d)(2)(i)(A) and (B); (d)(2)(ii); 
(d)(2)(iii)(B); (d)(3); (d)(4); (d)(6); and (d)(7) to remove the 
references to the Exchange DE option. We seek comment on these proposed 
technical amendments.
---------------------------------------------------------------------------

    \289\ 86 FR 53412 at 53424-53429, 53445. We also clarified that 
the repeal of the Exchange DE option 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, and that the other federal 
requirements applicable to the FFE DE Pathways, as outlined in 
Sec. Sec.  155.220, 155.221, and 156.1230, remain intact. See 86 FR 
at 53427.
    \290\ 86 FR at 53429.
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3. State Selection of EHB-Benchmark Plan for Plan Years Beginning on or 
After January 1, 2020 (Sec.  156.111)
a. States' EHB-Benchmark Plan Options
    At Sec.  156.111(a), we allow a state to modify its EHB-benchmark 
plan by: (1) Selecting the EHB-benchmark plan that another state used 
for PY 2017; (2) replacing one or more EHB categories of benefits in 
its EHB-benchmark plan used for PY 2017 with the same categories of 
benefits from another state's EHB-benchmark plan used for PY 2017; or 
(3) otherwise selecting a set of benefits that would become the state's 
EHB-benchmark plan. In implementing this section, we stated in the 2019 
Payment Notice that we would propose EHB-benchmark plan submission 
deadlines in the HHS annual Notice of Benefit and Payment Parameters.
    Since we finalized that rule, we have set an early-May deadline for 
the submission of EHB-benchmark plans by states for each year from PY 
2021-2024.\291\ We believe that requiring these submissions in the 
first week of May that is two years before the effective date of the 
new EHB-benchmark plan has worked well. The feedback received from 
states that have submitted new EHB-benchmark plans indicates that this 
timeframe provides the states with enough time to prepare EHB-benchmark 
submissions. It also provides CMS with sufficient time to review and 
respond to these submissions in advance of issuers needing to make 
changes to plan design to conform with EHB changes.
---------------------------------------------------------------------------

    \291\ For PY 2021, the deadline was May 6, 2019 (see 84 FR at 
17534); for PY 2022, it was May 8, 2020 (84 FR at 17534); for PY 
2023, it was May 7, 2021 (85 FR at 29226); for PY 2024 it is May 6, 
2022 (86 FR at 24232).
---------------------------------------------------------------------------

    Thus, we do not believe it is necessary to continue proposing 
deadlines for EHB-benchmark submissions under Sec.  156.111 in each 
annual Notice of Benefit and Payment Parameters. We believe that it is 
in the interest of states and issuers that we formalize a consistent, 
permanent annual deadline in early-May for EHB-benchmark submissions. 
Accordingly, we propose that the first Wednesday in May that is two 
years before the effective date of the new EHB-benchmark plan to be the 
deadline for states to submit the required documents for the state's 
EHB-benchmark plan selection for that PY. For example, under this 
proposal, the deadline for PY 2025 would be May 3, 2023, and the 
deadline for PY 2026 would be May 4, 2024. We propose corresponding 
edits to Sec.  156.111(d) and (e) to reflect this proposed deadline.
    If finalized, this proposed deadline would obviate the need to 
propose deadlines in future annual Notices of Benefit and Payment 
Parameters. We invite comment on this approach, including whether there 
are any unforeseen consequences to establishing this perpetual 
deadline.
    We again emphasize that this would be a firm deadline, and that 
states should optimally have one of their points of contact who has 
been predesignated to use the EHB Plan Management Community reach out 
to us using the EHB Plan Management Community well in advance of the 
deadline with any questions. Although not a requirement, we recommend 
states submit applications at least 30 days prior to the submission 
deadline to ensure completion of their documents by the proposed 
deadline. We also remind states that they must complete the required 
public comment period and submit a complete application by the 
deadline. We seek comment on the proposed deadline.
b. Annual Reporting of State-Required Benefits
    In the 2021 Payment Notice, we amended Sec.  156.111(d) and added 
paragraph (f) to require states to annually notify HHS in a form and 
manner specified by HHS, and by a date determined by HHS, of any state-
required benefits applicable to QHPs in the individual or small group 
market that are considered to be ``in addition to EHB'' in accordance 
with Sec.  155.170(a)(3) and any benefits the state has identified as 
not in addition to EHB and not subject to defrayal, describing the 
basis for the state's determination.
    Under this requirement, a state's submission must describe all 
benefits requirements under state mandates applicable to QHPs in the 
individual or small group market that were imposed on or before 
December 31, 2011, and that were not withdrawn or otherwise no longer 
effective before December 31, 2011, as well as all benefits 
requirements under state mandates that were imposed any time after 
December

[[Page 662]]

31, 2011, applicable to the individual or small group market. The 
state's report is also required to describe whether any of the state 
benefit requirements in the report were amended or repealed after 
December 31, 2011. Information in the state's report is required to be 
accurate as of the day that is at least 60 days prior to the annual 
reporting submission deadline set by HHS.
    Pursuant to Sec.  156.111(d)(2), if the state does not notify HHS 
of its required benefits considered to be in addition to EHB by the 
annual reporting submission deadline, or does not do so in the form and 
manner specified by HHS, HHS will identify which benefits are in 
addition to EHB for the state for the applicable PY.
    In the 2021 Payment Notice, we finalized July 1, 2021 as the first 
deadline for states to submit annual reports to HHS. Additionally, in 
the 2022 Payment Notice, HHS finalized July 1, 2022 as the deadline for 
states to submit to HHS their annual reports for the second year of 
annual reporting. However, we simultaneously announced our intent to 
exercise enforcement discretion with regard to the first annual 
reporting submission deadline of July 1, 2021 due to delays in 
finalizing the reporting templates that states are required to use for 
their submissions, delays in issuing additional technical assistance on 
defrayal, and the added burden of the COVID-19 PHE on states. Pursuant 
to this enforcement posture, we explained that we would not take 
enforcement action against states that do not submit an annual report 
in 2021. Rather, we would begin enforcing the annual reporting 
requirement on July 1, 2022.
    Since finalizing the annual reporting requirement in the 2021 
Payment Notice, we have received consistent feedback from states and 
stakeholders restating the concerns raised by the majority of public 
comments on the annual reporting requirement in the 2021 and 2022 
Payment Notices. Although we received some comments agreeing that this 
policy is important to ensure states are defraying state benefit 
requirements consistently, most commenters objected to the policy as 
unnecessary, burdensome on states, and without adequate justification. 
Several commenters explained that, contrary to HHS' concerns expressed 
in the 2021 and 2022 Payment Notices, states are already regularly 
making careful assessments about whether their state benefit 
requirements are in addition to EHB and are doing so in accordance with 
federal requirements. Commenters opposing the reporting policy as 
unnecessary also stated that existing regulations already establish 
robust requirements for states and issuers to follow when a state 
benefit requirement is in addition to EHB and requires defrayal, 
including performing actuarially sound analyses of costs associated 
with state benefit requirements in addition to EHB when calculating 
APTCs. Commenters noted that HHS already has existing authority to 
investigate states that are not complying with defrayal requirements 
and that, as such, imposing a reporting requirement on states is not 
necessary for federal oversight purposes. Other commenters expressed 
concern about the lack of transparency around the annual reporting and 
review process, requesting that HHS delay the reporting requirement 
until HHS provides further clarification and releases additional 
guidance clarifying its defrayal policies.
    We have reassessed the value of the annual reporting policy in 
light of these comments and other stakeholder feedback and believe it 
is important to explore whether there may be ways to achieve compliance 
with the defrayal policy without imposing a requirement on states to 
submit detailed annual reports on state-required benefits. We therefore 
propose to eliminate the requirement at Sec.  156.111(d) and (f) to 
require states to annually notify HHS of any state-required benefits 
applicable to QHPs in the individual or small group market that are 
considered to be ``in addition to EHB'' and any benefits the state has 
identified as not in addition to EHB and not subject to defrayal. We 
also propose to revise the section heading to Sec.  156.111 to reflect 
the proposed removal of the annual reporting requirements such that it 
would instead read, ``State selection of EHB-benchmark plan for PYs 
beginning on or after January 1, 2020.''
    Under this proposal, we would continue to engage in technical 
assistance with states to help ensure state understanding of when a 
state-benefit requirement is in addition to EHB and requires defrayal. 
We also intend to provide additional written technical assistance and 
outreach to clarify the defrayal policy more generally and to provide 
states with a more precise understanding of how HHS analyzes and 
expects states to analyze whether a state-required benefit is in 
addition to EHB pursuant to Sec.  155.170. We believe this approach 
would still effectively promote state compliance with the defrayal 
requirement in the interim as we reassess whether or when an annual 
reporting policy may be warranted.
    Although this proposal would relieve states of the annual reporting 
requirements, it would not pend or otherwise impact the defrayal 
requirements under section 1311(d)(3)(B) of the ACA, as implemented at 
Sec.  155.170. Under this proposal, states remain responsible for 
making payments to defray the cost of additional required benefits and 
issuers are still responsible for quantifying the cost of these 
benefits and reporting the cost to the state. We also note that the 
obligation for a state to defray the cost of QHP coverage of state-
required benefits in addition to EHB is an independent statutory 
requirement from the annual reporting policy finalized at Sec.  
156.111(d) and (f).
    We solicit comment on this proposal, including on whether we should 
retain the reporting requirement or make it voluntary.
4. Provision of EHB (Sec.  156.115)
    In the 2019 Payment Notice, we finalized flexibility through which 
states may opt to permit issuers to substitute benefits between EHB 
categories. In the preamble to that rule, we stated that this option 
would promote greater flexibility, consumer choice, and plan innovation 
through coverage and plan design options. Under this policy, a state 
must notify HHS if will permit issuers to substitute benefits between 
EHB categories by the deadlines specified by HHS in future Payment 
Notices.
    To date, no state has ever notified HHS that it would permit 
issuers to substitute benefits between EHB categories. To our 
knowledge, no state has ever even approached HHS to discuss the merits 
of allowing this flexibility. In addition, we have received feedback 
from consumer advocates that the potential for between-category 
substitution could be particularly harmful to people living with 
chronic conditions and disabilities. Given that this policy has never 
been utilized, it has not promoted greater flexibility, consumer 
choice, or plan innovation through coverage and plan design options as 
intended. Rather, HHS is of the view that it may only create potential 
harm for consumers with chronic conditions and disabilities. 
Accordingly, whatever theoretical flexibility this policy could have 
afforded to states, such untapped flexibility is not justified given 
the potential negative effects on consumers. Thus, we propose to 
withdraw this flexibility by amending Sec.  156.115 to no longer allow 
states to permit issuers to substitute benefits between EHB categories.
    In the event we do not finalize this proposal to eliminate the 
state option

[[Page 663]]

for between-category substitution, we propose to publish in guidance 
future deadlines for states to notify HHS that they wish to permit 
issuers to substitute benefits between EHB categories. We believe that 
it is in the interest of states and issuers that we establish a static, 
permanent annual deadline for such notifications. Accordingly, 
consistent with the deadline proposed for state submission of EHB-
benchmark plans, we propose the first Wednesday in May to be the 
deadline for states to submit notifications to HHS that they wish to 
permit issuers to substitute benefits between EHB categories for the PY 
that is 2 years before the PY that the state wishes to permit. For 
example, under this alternate proposal, the deadline for issuers to 
notify HHS that they wish to permit issuers to substitute benefits 
between EHB categories for PY 2025 would be May 3, 2023; and the 
deadline for PY 2026 would be May 4, 2024. States wishing to make such 
an election must continue to do so via the EHB Plan Management 
Community. For additional discussion of this proposed deadline, see the 
preamble to Sec.  156.111.
    We seek comment on these proposals.
5. Prohibition on Discrimination (Sec.  156.125)
    If the proposed nondiscrimination protections are finalized at 
Sec.  156.200(e) that would explicitly prohibit discrimination based on 
sexual orientation and gender identity; Sec.  156.125(b) would 
accordingly require issuers providing EHB to comply with such 
nondiscrimination requirements. Specifically, Sec.  156.125(b) states 
that an issuer providing EHB must comply with the requirements of Sec.  
156.200(e), which currently states that a QHP issuer must not, with 
respect to its QHP, discriminate on the basis of race, color, national 
origin, disability, age, or sex. Elsewhere in this rule we propose to 
amend Sec.  156.200(e) to prohibit discrimination based on sexual 
orientation and gender identity. HHS previously codified such 
nondiscrimination protections at Sec.  156.200(e), simultaneously 
requiring that issuers providing EHB comply with such requirements by 
virtue of the cross-reference in Sec.  156.125(b) to Sec.  156.200(e). 
However, amendments made in 2020 to Sec.  156.200(e) removed any 
reference to sexual orientation and gender identity. If the proposals 
at Sec.  156.200(e) are finalized, issuers providing EHB would again be 
required under Sec.  156.125(b) to comply with nondiscrimination 
protections in Sec.  156.200(e) that prohibit discrimination on the 
basis of sexual orientation and gender identity.
    In the March 27, 2012 Exchange Standards final rule, we finalized 
Sec.  156.200(e) to also prohibit discrimination based on sexual 
orientation and gender identity.\292\ In the February 2013 ``Patient 
Protection and Affordable Care Act; Standards Related to Essential 
Health Benefits, Actuarial Value, and Accreditation; Final Rule'' (EHB 
final rule), we finalized at Sec.  156.125 that the nondiscrimination 
requirements in Sec.  156.200 also apply to all issuers required to 
provide coverage of EHB, thereby prohibiting discrimination based on 
factors such as sexual orientation and gender identity.\293\ In the 
2020 section 1557 final rule, HHS revised certain CMS regulations, 
including Sec.  156.200(e), by removing sexual orientation and gender 
identity as bases of discrimination subject to the CMS regulations' 
nondiscrimination protections.\294\ As a result, Sec.  156.200(e) 
currently prohibits a QHP issuer from discriminating on the basis of 
race, color, national origin, disability, age, or sex with respect to 
its QHP, but does not reference sexual orientation or gender identity.
---------------------------------------------------------------------------

    \292\ 77 FR 18310 (March 27, 2012).
    \293\ 78 FR 12834 (February 25, 2013).
    \294\ 85 FR 37160 (June 19, 2020); See id. at 37218-21 (the 2020 
section 1557 final rule revised the following CMS regulations: 45 
CFR 147.104, 155.120, 155.220, 156.200, 156.1230).
---------------------------------------------------------------------------

    CMS possesses statutory authority independent of section 1557 of 
the ACA to prohibit discrimination in the small group and individual 
markets pursuant to the authority to define EHB at section 1302(b) of 
the ACA.\295\ The statute specifies that in defining EHB the Secretary 
must take into account the health care needs of diverse segments of the 
population, including women, children, persons with disabilities, and 
other groups. The EHB requirements apply to non-grandfathered health 
insurance coverage in the individual and small group markets under 
section 2707(a) of the PHS Act. CMS has the authority to interpret and 
implement these provisions under its general rulemaking authorities in 
sections 1321(a)(1)(B) and (D) of the ACA and section 2792 of the PHS 
Act. Pursuant to those authorities, HHS finalized in the EHB final rule 
that Sec.  156.125 prohibits benefit discrimination on the grounds 
articulated by Congress in section 1302(b)(4) of the ACA, as well as 
those in Sec.  156.200(e), which at the time included race, color, 
national origin, disability, age, sex, gender identity, and sexual 
orientation. It is under that same exercise of authority here that 
Sec.  156.125 would again prohibit discrimination on the basis of 
sexual orientation and gender identity if the proposed changes to 
include such factors in the nondiscrimination protections at Sec.  
156.200(e) are finalized. Sections 1302(b) and 1321(a)(1)(B) and (D) of 
the ACA and section 2707(a) and 2792 of the PHS Act are the same 
authorities CMS relies upon for implementation of existing 
nondiscrimination protections at Sec.  156.125. Utilizing these same 
authorities to again prohibit discrimination based on sexual 
orientation and gender identity at Sec.  156.125 by cross-reference to 
the nondiscrimination protections at Sec.  156.200(e) would be 
consistent with the authority CMS relies upon for the existing 
protections at Sec.  156.125 that prohibit discrimination on the basis 
of race, color, national origin, disability, age, or sex by cross-
reference to Sec.  156.200(e). We believe such protections are 
warranted in light of the existing trends in health care discrimination 
and are necessary to better address barriers to health equity for 
LGBTQI+ individuals.
---------------------------------------------------------------------------

    \295\ 85 FR 37218-21 (June 19, 2020).
---------------------------------------------------------------------------

    A more in-depth discussion of these developments and other factors 
considered in proposing amendments to CMS nondiscrimination protections 
is included earlier in the preamble to Sec.  147.104 under section 
III.B.1.b. of this preamble. For brevity, we refer back to Sec.  
147.104 under section III.B.1.b. of the preamble rather than restating 
the issues here.
    We seek comment on this proposal.
a. Refine EHB Nondiscrimination Policy for Health Plan Designs (Sec.  
156.125)
    We propose refining the EHB nondiscrimination policy and propose a 
clear regulatory framework for entities that are required to comply 
with EHB nondiscrimination policy. This proposed refinement would not 
only ensure consistent application of EHB nondiscrimination policy but 
would also better safeguard consumers who depend on nondiscrimination 
protections.
    Under Sec.  156.125(a) an issuer does not provide EHB ``if its 
benefit design, or the implementation of its benefit design, 
discriminates based on an individual's age, expected length of life, 
present or predicted disability, degree of medical dependency, quality 
of life, or other health conditions.'' \296\ Section

[[Page 664]]

156.125(b) provides that issuers must also comply with Sec.  156.200(e) 
which states that ``a QHP issuer must not, with respect to its QHP, 
discriminate on the basis of race, color, national origin, disability, 
age, or sex.'' \297\ Section 156.110(d) states that an EHB benchmark 
plan may not include discriminatory benefit design that contravenes 
Sec.  156.125. In the 2016 Payment Notice, we provided examples of 
potentially discriminatory practices, and in the 2017 Payment Notice we 
noted that we would consider providing further guidance regarding 
discriminatory benefit designs in the future.\298\
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    \296\ ACA section 1302(b)(4) prohibits discrimination based on 
``age, disability, or expected length of life'' and requires that 
benefits not be subject to denial based on ``age or expected length 
of life, present or predicted disability, degree of medical 
dependency, or quality of life.''
    \297\ 45 CFR 156.200(e) states that a QHP issuer may not 
discriminate based on ``race, color, national origin, disability, 
age, or sex.''
    \298\ 80 FR 10750 (Feb. 27, 2015). The examples of potentially 
discriminatory practices were: (1) Attempting to circumvent coverage 
of medically necessary benefits by labeling the benefit as a 
``pediatric service,'' thereby excluding adults; (2) refusing to 
cover a single-tablet drug regimen or extended release product that 
is customarily prescribed and is just as effective as a multi-tablet 
regimen, absent an appropriate reason for such refusal; and (3) 
placing most or all drugs that treat a specific condition on the 
highest cost tiers; 81 FR 12244.
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    First, we propose revisions to Sec.  156.125.The proposed revisions 
are intended to ensure that benefit designs, and particularly benefit 
limitations and plan coverage requirements are based on clinical 
evidence. Specifically, we propose that a nondiscriminatory benefit 
design that provides EHB is one that is clinically based, that 
incorporates evidence-based guidelines into coverage and programmatic 
decisions and relies on current and relevant peer-reviewed medical 
journal article(s), practice guidelines, recommendations from reputable 
governing bodies, or similar sources. Uniformity of applying this 
policy will ensure that enrollees are able to access covered benefits 
fairly, regardless of the coverage or issuer they choose. Although this 
proposal specifically applies to issuers that are required to provide 
EHB, we expect that states and other entities will also find this 
standard illustrative and helpful when, for example, conducting form 
review, issuing guidance, and drafting bills for mandated benefits. 
Furthermore, because providing a nondiscriminatory benefit design is a 
prerequisite to issuers fulfilling EHB requirements, we would expect 
that issuer questions and concerns regarding whether a particular 
benefit design may be discriminatory would be addressed the same way as 
other EHB issues--by issuers working primarily and cooperatively with 
states, where applicable. While states are generally the primary 
enforcers of EHB requirements, CMS will be available to assist states 
with their enforcement efforts by providing relevant technical 
assistance, available data, research, or other information. CMS will 
continue to monitor issuer compliance with EHB nondiscrimination 
requirements and states' oversight and enforcement activities to 
discern whether additional CMS assistance, policy changes, or 
rulemaking is necessary.
    Under this proposal, unscientific \299\ evidence, disreputable 
sources, and other bases or justifications that lack the support of 
relevant, clinically based evidence would be an unacceptable basis upon 
which to dispute a claim that an issuer's benefit design is 
discriminatory. Examples of peer-reviewed medical journals that we 
would generally consider reputable for purposes of disputing a 
discriminatory benefit design claim include the Journal of the American 
Medical Association (JAMA), published by the American Medical 
Association; Anesthesia, published by the Association of Anesthetists; 
Pediatrics, published by the American Academy of Pediatrics; Physical 
Therapy and Rehabilitation Journal, published by the American Physical 
Therapy Association; the New England Journal of Medicine (NEJM), 
published by the Massachusetts Medical Society; and the American 
Journal of Psychiatry, published by the American Psychiatric 
Association. We do not propose limiting the scope of acceptable peer-
reviewed journal articles to those authored by persons who have earned 
the degree Doctor of Medicine (or M.D.). Rather, we would consider 
sufficient peer-reviewed articles authored by other relevant, licensed 
health professionals, including, for example, doctors of osteopathy, 
chiropractors, optometrists, nurses, occupational therapists, 
pharmacists, and dentists.
---------------------------------------------------------------------------

    \299\ See Merriam-Webster.com Dictionary, s.v. ``unscientific,'' 
accessed November 5, 2021, https://www.merriam-webster.com/dictionary/unscientific (defining `unscientific' as ``not based on 
or exhibiting scientific knowledge or scientific methodology: Not in 
accord with the principles and methods of science'').
---------------------------------------------------------------------------

    We would not consider to be acceptable articles that are not peer-
reviewed or that are written primarily for a lay audience. For example, 
we would not find relevant or consider a WebMD article or blog 
acceptable, in and of itself, even where it cites and provides links to 
supporting peer-reviewed journal materials. We would also not consider 
sufficient a peer-reviewed journal article that has not been accepted 
for publication in a reputable medical publication. For example, Health 
Affairs would not provide sufficient and reliable support for this 
purpose because, although it is peer-reviewed, it is not a medical 
journal.
    We also believe current evidence-based practice guidelines, 
sometimes called clinical guidelines, and recommendations from 
reputable governing bodies that are applicable to be a credible source. 
For example, we believe that practice guidelines from U.S. government 
bodies and government-created bodies, such as the HHS Agency for 
Healthcare Research and Quality (AHRQ) and the U.S. Preventive Services 
Task Force to be sufficient. Similarly, practice guidelines by health 
professional associations such as the American Academy of Family 
Physicians, American Academy of Pediatrics, American Society for 
Reproductive Medicine, and American Occupational Therapy Association 
would be relevant and credible. We also believe that any applicable 
source representing current thinking and subject to the previously 
discussed criteria would be relevant, since medicine is a constantly 
evolving field.
    We seek comment on the types of clinically based justifications and 
level of clinical evidence that should be acceptable. Specifically, we 
seek comment on whether we should further define the types of 
acceptable clinical evidence.
    Second, we are providing examples that illustrate presumptively 
discriminatory practices that HHS believes amount to prohibited 
discrimination. Individuals enrolled in health plans that have 
discriminatory benefit designs have been negatively impacted by the 
inherent design of such health plans. We are concerned that individuals 
with significant health needs have been discouraged from enrolling in 
such health insurance coverage altogether. Individuals may experience 
substantial improvements in health insurance coverage if the EHB 
nondiscrimination policy is refined.
    In addition, we explain the rationale of why an example benefit 
design is presumptively discriminatory under Sec.  156.125. HHS 
identified these examples as presumptively discriminatory practices 
based on clinical evidence related to each circumstance. We believe 
providing examples of presumptively discriminatory benefit designs will 
clarify EHB nondiscrimination policy and lead to greater protections 
for individuals seeking medically necessary treatment.
    These presumptively discriminatory practice examples may point to a 
state's

[[Page 665]]

benchmark plan, state law, or an issuer's application of a state's 
benchmark plan or law as being the source of the discriminatory benefit 
design. A benefit design that is discriminatory and inconsistent with 
Sec.  156.125 must be cured regardless of how it originated. Thus, for 
example, if a state EHB-benchmark plan has a discriminatory benefit 
design, that state may issue guidance to issuers in the state 
explaining that to be compliant plans providing benefits that are 
substantially equal to the EHB-benchmark plan must not replicate this 
design. Similarly, if a state-mandated benefit has a discriminatory 
benefit design, the state may attempt to remedy this through revising 
the mandate or issuing guidance. Regardless, plans required to provide 
EHB would need to alter the benefit design or justify their approach 
with clinical evidence when designing plans that meet EHB standards. We 
seek comment on whether there are any unforeseen barriers in the 
ability to remedy inconsistencies with this refined EHB 
nondiscrimination policy.
    In ensuring that benefit designs are not discriminatory, issuers 
should also consider the method that EHB are delivered and not 
inadvertently discriminate based on the service delivery model. 
Accessibility to EHB delivered virtually has significantly increased 
during the COVID-19 PHE as enrollees had limited options for in-person 
health care visits. We note that some issuers have designed health 
plans that deliver services virtually with no copay compared to in-
person health care services with a copay. This type of health plan 
design could inadvertently incentivize enrollees to access EHB in a 
certain delivery method. Although this approach may not be a 
discriminatory practice pursuant to Sec.  156.125, such a health plan 
design could influence whether an enrollee seeks medically-necessary 
in-person care due to the variation in the amount of copayment, 
potentially leading to adverse health outcomes. We intend to monitor 
the issue and remind issuers that while we encourage expanded use of 
EHB virtually, it should be done in a nondiscriminatory manner.
    The following is a non-exhaustive list of examples of presumptively 
discriminatory benefit designs that address some of the issues that we 
have seen most frequently.
Examples: Discrimination Based on Age
1. Limitation on Hearing Aid Coverage Based on Age
    a. Background: The National Institute on Deafness and Other 
Communication Disorders (NIDCD) defines a hearing aid as a small 
electronic device that you wear in or behind the ear. It makes some 
sounds louder so that a person with hearing loss can listen, 
communicate, and participate more fully in daily activities.\300\ The 
FDA defines a hearing aid as ``any wearable instrument or device 
designed for, offered for the purpose of, or represented as aiding 
persons with or compensating for, impaired hearing.'' \301\
---------------------------------------------------------------------------

    \300\ National Institute on Deafness and Other Communication 
Disorders FAQ on Hearing Aids: https://www.nidcd.nih.gov/health/hearing-aids#hearingaid_01.
    \301\ 21 CFR 801.420.
---------------------------------------------------------------------------

    b. Circumstance: We note that some states have included age limits 
in their benefit mandates that require coverage for hearing aids by 
specifying in the mandate that such coverage applies only to enrollees 
in a certain age group. For example, a state has required hearing aid 
coverage for enrollees only up to age 21 with certain cost-sharing 
conditions.
    c. Rationale: Individuals can experience hearing loss at any stage 
of life, and therefore the limitation in coverage would impact an 
individual in a different age group who has impaired hearing. Neither 
the FDA definition of hearing aid nor NIDCD specifies an age when 
individuals need hearing aids. However, the definitions explain that a 
hearing aid is for ``a person with hearing loss'' and as ``aiding 
persons with or compensating for, impaired hearing.'' Access to hearing 
aids can positively affect an individual's communication abilities, 
quality of life, social participation, and health.\302\
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    \302\ National Academies of Sciences, Engineering, and Medicine. 
2016. Hearing Health Care for Adults: Priorities for Improving 
Access and Affordability. Washington, DC: The National Academies 
Press. https://doi.org/10.17226/23446.
---------------------------------------------------------------------------

    d. Conclusion: Age limits, when applied to services that have been 
found clinically indicated for all ages, are presumed to be 
discriminatory under Sec.  156.125. Therefore, limiting coverage of 
hearing aids that are medically necessary to enrollees based on age 
presumptively conflicts with the prohibition under Sec.  156.125 
against discriminatory health plan design. For example, it would be 
arbitrary and discriminatory to limit a hearing aid to a subset of 
individuals such as enrollees who are 6 years of age and younger since 
there may be some older enrollees for whom a hearing aid is medically 
necessary.\303\
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    \303\ In the 2016 Payment Notice (which finalized as proposed), 
we cautioned ``both issuers and States that age limits are 
discriminatory when applied to services that have been found 
clinically effective at all ages. For example, it would be arbitrary 
to limit a hearing aid to enrollees who are 6 years of age and 
younger since there may be some older enrollees for whom a hearing 
aid is medically necessary.''
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2. Autism Spectrum Disorder (ASD) Coverage Limitations Based on Age
    a. Background: According to the American Psychiatric Association, 
``[p]eople with ASD may have communication deficits, such as responding 
inappropriately in conversations, misreading nonverbal interactions, or 
having difficulty building friendships appropriate to their age. In 
addition, people with ASD may be overly dependent on routines, highly 
sensitive to changes in their environment, or intensely focused on 
inappropriate items.'' \304\
---------------------------------------------------------------------------

    \304\ https://www.psychiatry.org/File%20Library/Psychiatrists/Practice/DSM/APA_DSM-5-Autism-Spectrum-Disorder.pdf.
---------------------------------------------------------------------------

    b. Circumstance: We note that some states have mandated coverage 
for the diagnosis and treatment for ASD up to a certain age. For 
example, a state has required coverage for enrollees up to age 18 with 
certain cost-sharing conditions. Similarly, some states' benchmark 
plans that cover applied behavior analysis (ABA therapy) include age 
limits.
    c. Rationale: The CDC recognizes the American Psychiatric 
Association's fifth edition of the Diagnostic and Statistical Manual of 
Mental Disorders (DSM-5) as standardized criteria to help diagnose 
ASD.\305\ Under the DSM-5 criteria, individuals with ASD must show 
symptoms from early childhood, but may not be fully recognized until 
later in life.\306\ We note that screening for ASD is usually done at a 
young age although an individual may not be diagnosed until later in 
life. The CDC estimates that 2.21 percent of adults in the U.S. have 
ASD.\307\
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    \305\ https://www.cdc.gov/ncbddd/autism/hcp-dsm.html.
    \306\ American Psychiatric Association. Diagnostic and 
statistical manual of mental disorders. 5th ed. Arlington, VA: 
American Psychiatric Association; 2013.
    \307\ https://www.cdc.gov/ncbddd/autism/features/adults-living-with-autism-spectrum-disorder.html.
---------------------------------------------------------------------------

    d. Conclusion: Limiting coverage of the diagnosis and treatment of 
ASD in a plan benefit design on the basis of the individual's age is 
presumed to be discriminatory under Sec.  156.125. Limiting coverage 
that is medically necessary in a subset of individuals presumptively 
conflicts with the prohibition under Sec.  156.125 against 
discriminatory benefit design.
3. Age Limits for Infertility Treatment Coverage When Treatment Is 
Clinically Effective for the Age Group
    a. Background: The National Center for Health Statistics reported 
that 8.8 percent of couples in the U.S. have

[[Page 666]]

experienced infertility issues while 9.5 percent have received 
infertility services (for example, medical assistance, counseling, 
testing for the woman and man, ovulation drugs, fallopian tube surgery, 
artificial insemination, assisted reproductive technology, and 
miscarriage preventive services).\308\
---------------------------------------------------------------------------

    \308\ https://www.cdc.gov/nchs/nsfg/key_statistics/i_2015-2017.htm#infertility.
---------------------------------------------------------------------------

    b. Circumstance: We note that some states have defined 
``infertility'' in state law, which impacts insurance companies, 
hospitals, medical service corporations, and health care centers 
providing coverage for medically necessary expenses of the diagnosis 
and treatment of infertility. For example, a state restricted coverage 
for treatment of infertility to individuals who are ``presumably 
healthy,'' thus excluding from coverage of treatment for infertility 
those who are not presumably healthy.
    c. Rationale: We note that an individual's age is an important 
factor for reproductive health and development. Fertility, especially 
in women, declines with age, which makes natural conception more 
unlikely as women get older.\309\ However, we also note that the mean 
age for individuals experiencing their first childbirth has increased 
in recent years.\310\ We also understand that not all individuals would 
be eligible for infertility treatment if they are not at the stage of 
development for reproduction or have certain medical conditions. 
Younger individuals, for example, who are not at the stage of 
reproductive development would reasonably not require treatment for 
infertility. Older adults as well would not need treatment for 
infertility, for example women who have reached post-menopause.
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    \309\ https://www.acog.org/womens-health/faqs/having-a-baby-after-age-35-how-aging-affects-fertility-and-pregnancy.
    \310\ Mean Age of Mothers is on the Rise: United States, 2000-
2014, NCHS Data Brief No. 232, January 2016, https://www.cdc.gov/nchs/products/databriefs/db232.htm.
---------------------------------------------------------------------------

    d. Conclusion: Age limits are presumptively discriminatory when 
applied to services that have been found clinically effective in 
certain age groups under Sec.  156.125. Limiting coverage of the 
treatment of infertility in a plan benefit design based on age 
presumptively conflicts with the prohibition under Sec.  156.125 
against discriminatory benefit design unless clinical evidence 
acceptable under the proposed refinements to Sec.  156.125 demonstrates 
that such a limitation is justifiable considering an individual's 
reproductive health and development. We would expect an issuer to be 
able to rebut a presumption that the plan's age limit on coverage for 
treatment of infertility is discriminatory by demonstrating clinical 
evidence that infertility treatments have low efficacy for the excluded 
age groups and/or are not clinically indicated for the excluded age 
groups.
Examples: Discrimination Based on Health Conditions
4. Limitation on Foot Care Coverage Based on Diagnosis (Whether 
Diabetes or Another Underlying Medical Condition)
    a. Background: Routine foot care includes cutting or removing corns 
and calluses; trimming, cutting, or clipping or debriding of nails; and 
hygienic or other preventive maintenance care, such as using skin 
creams, cleaning and soaking the feet.\311\ Although basic foot care is 
part of an individual's personal self-care, a health care provider in 
certain situations may perform routine foot care for a patient to the 
degree that is medically necessary to prevent perpetuation of chronic 
conditions.
---------------------------------------------------------------------------

    \311\ Medicare Benefit Policy Manual. Routine Foot Care. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf.
---------------------------------------------------------------------------

    b. Circumstance: We note that some issuers have restricted coverage 
for routine foot care to individuals diagnosed with diabetes. For 
example, several issuers have limited coverage for routine foot care to 
diabetes care only.
    c. Rationale: The American Diabetes Association estimates that over 
10 percent of the American population has diabetes, which costs $237 
billon for direct medical costs.\312\ The annual cost of diabetic foot 
ulcer treatment, for example, is significantly greater than non-
diabetic foot ulcer treatment, estimated at $1.38 billion versus $0.13 
billion.\313\ Although diabetes is a vast medical expenditure in the 
United States, individuals may need routine foot care to treat other 
conditions associated with metabolic, neurologic, or peripheral 
vascular disease.\314\
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    \312\ https://www.diabetes.org/resources/statistics/statistics-about-diabetes.
    \313\ Hicks CW, Selvarajah S, et al. Burden of infected diabetic 
foot ulcers on hospital admissions and costs. Ann Vasc Surg 
2016;33:149-58. 10.1016/j.avsg.2015.11.025.
    \314\ https://wayback.archive-it.org/2744/20191012061156/https:/www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/SE1113.pdf.
---------------------------------------------------------------------------

    d. Conclusion: Limiting coverage of routine foot care in a health 
plan based on an individual's diagnosis, whether for diabetes or 
another underlying medical condition, is presumed to be discriminatory 
under Sec.  156.125. Limiting coverage of routine foot care that is 
medically necessary for a subset of individuals with other health 
conditions presumptively conflicts with the prohibition under Sec.  
156.125 against discriminatory benefit designs.
Examples: Discrimination Based on Sociodemographic Factors
5. Coverage of EHB for Gender-Affirming Care
    a. Background: We refer to other nondiscrimination proposed 
provisions in Sec.  156.200(e) of this rulemaking related to protecting 
individuals from discrimination based on sexual orientation and gender 
identity. If the proposed provisions in that section are finalized, the 
below example will be illustrative of a presumptively discriminatory 
benefit design that denies coverage of medically necessary gender-
affirming care on the prohibited basis of gender identity. This example 
of presumptive discrimination also aligns with Executive Order 13988, 
which stated the Administration's policy on preventing and combating 
discrimination on the basis of gender identity and sexual 
orientation.\315\
---------------------------------------------------------------------------

    \315\ American Psychiatric Association. Diagnostic and 
statistical manual of mental disorders. 5th ed. Arlington, VA: 
American Psychiatric Association; 2013; Executive Order 13988 on 
Preventing and Combating Discrimination on the Basis of Gender 
Identity or Sexual Orientation, January 20, 2021, see 86 FR 7023.
---------------------------------------------------------------------------

    b. Circumstance: The American Psychiatric Association describes 
``gender dysphoria'' in transgender individuals as an experience of 
psychological distress that results from an incongruence between one's 
sex assigned at birth and one's gender identity.\316\ HeathCare.gov 
notes that many health plans have unclear terms of coverage for 
transgender individuals.\317\ Several states' EHB-benchmark plans 
contain either no language addressing coverage for gender dysphoria or 
limits coverage for specific gender-affirming services. Some states 
have updated their benchmark plan to add specific gender-affirming care 
benefits while other states prohibit discrimination based on sexual 
orientation and gender identity. We also note that issuers have 
published policies \318\ related to specific coverage of gender 
affirming-care.
---------------------------------------------------------------------------

    \316\ https://www.psychiatry.org/patients-families/gender-dysphoria/what-is-gender-dysphoria.
    \317\ HealthCare.gov states that ``many health plans are still 
using exclusions such as `services related to sex change' or `sex 
reassignment surgery' to deny coverage to transgender people for 
certain health care services. Coverage varies by state.'' ``These 
transgender health insurance exclusions may be unlawful sex 
discrimination.'' https://www.HealthCare.gov/transgender-health-care/.
    \318\ See, for example, Aetna Gender Affirming Surgery http://www.aetna.com/cpb/medical/data/600_699/0615.html.

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[[Page 667]]

    c. Rationale: As discussed in more detail in the preamble to Sec.  
147.104(e), transgender individuals face health and health care 
disparities, and are at higher risk for many concomitant 
conditions.\319\ Clinical evidence supports medically necessary gender 
affirming care and demonstrates that such coverage can significantly 
improve the health and well-being of individuals accessing medically 
necessary care. For example, for individuals diagnosed with gender 
dysphoria, the American Medical Association's Council on Science and 
Public Health supports the use of hormone therapy and supports health 
care providers that prescribe hormone therapy based on scientific 
evidence or sound medical opinion.\320\ In addition, other professional 
societies have published criteria for guidelines in treating gender 
dysphoria and gender-affirming care for transgender people.\321\
---------------------------------------------------------------------------

    \319\ See, for example, Lesbian, Gay, Bisexual, and Transgender 
Health, Healthy People 2020, https://www.healthypeople.gov/2020/
topics-objectives/topic/lesbian-gay-bisexual-and-transgender-
health#:~:text=Research%20suggests%20that%20LGBT%20individuals,%2C2%2
C%203%20and%20suicide; Hafeez, Hudaisa et al. ``Healthcare 
Disparities Among Lesbian, Gay, Bisexual, and Transgender Youth: A 
Literature Review.'' Cureus vol. 9,4 e1184. 20 Apr. 2017, 
doi:10.7759/cureus.1184 (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5478215/); Fredriksen-Goldsen KI, Kim H-J, Barkan SE, Muraco A 
and Hoy-Ellis CP (2013) Health disparities among lesbian, gay, and 
bisexual older adults: Results from a population-based study. 
American Journal of Public Health 103, 1802-1809; Billy A. Caceres 
et al. ``A Systematic Review of Cardiovascular Disease in Sexual 
Minorities'', American Journal of Public Health 107, no. 4 (April 1, 
2017): pp. e13-e21.
    \320\ Report of the Council on Science and Public Health, AMA. 
Hormone Therapies: Off-Label Uses and unapproved Formulations 
(Resolution 512-A-15). https://www.ama-assn.org/sites/ama-assn.org/files/corp/media-browser/2016-interim-csaph-report-4.pdf.
    \321\ World Professional Assn for Transgender Health, Standards 
of Care Version 7 (2018), available at https://www.wpath.org/publications/. J Clin Endocrinol Metab, November 2017, 102(11):3869-
3903 https://academic.oup.com/jcem.
---------------------------------------------------------------------------

    d. Conclusion: Pursuant to Sec. Sec.  156.125 and 156.200(e), as we 
have proposed to amend these provisions, benefit designs that restrict 
coverage of EHB due to gender identity are presumptively 
discriminatory. A health plan design, for example, is presumed to be 
discriminatory Sec. Sec.  156.125 and 156.200(e) if it limits coverage 
of an EHB based on gender identity in treating gender dysphoria when 
clinical evidence demonstrates that such coverage is medically 
necessary to provide gender-affirming care. For example, excluding 
coverage of medically necessary hormone therapy for treatment of gender 
dysphoria where hormone therapy is otherwise a covered EHB is 
presumptively discriminatory.
6. Access to Prescription Drugs for Chronic Health Conditions: Adverse 
Tiering
    Adverse tiering of prescription drugs presents unique issues 
different from presumptively discriminatory benefit designs in other 
categories of EHB. We acknowledge that cost is often an important 
factor in how plans and issuers, and their pharmacy benefit managers 
(PBMs) where applicable, tier their drugs and note that plans and 
issuers are permitted to use reasonable medical management practices 
and consider cost in structuring plan designs and cost sharing. 
However, we clarify that relying on cost alone is an insufficient basis 
to defend an otherwise discriminatory benefit design. An issuer 
providing EHB must not discriminate in its prescription drug tiering 
structure by discouraging enrollment of individuals with significant 
health needs. As proposed in Sec.  156.125(a), in order to not 
discriminate, the issuer's EHB prescription drug benefit design must be 
clinically based. Factors that might be relevant to successfully 
demonstrating to CMS that the prescription drug tiering is not 
discriminatory would be demonstrating that neutral principles were used 
in assigning tiers to drugs and that those principles were consistently 
applied across types of drugs, particularly as related to other drugs 
in the same class (for example, demonstrating that the issuer or PBM 
weighed both cost and clinical guidelines in setting tiers).
    a. Background: QHP issuers are allowed to structure and offer 
tiered prescription drug formularies. As a result, QHPs will have 
different tier structures depending on decisions, including on the 
basis of cost, that issuers make about their formulary structures. 
However, there is concern that formulary tiers may also be structured 
to discourage enrollment by consumers with certain chronic conditions. 
One approach to this, called adverse tiering, occurs when plans 
structure the formulary by assigning all or the majority of drugs for 
certain medical conditions to a high-cost prescription drug tier.\322\
---------------------------------------------------------------------------

    \322\ Jacobs, Douglas B. and Sommers, Benjamin D. ``Using Drugs 
to Discriminate--Adverse Selection in the Insurance Marketplace.'' 
New England Journal of Medicine. 372:399-402. 29 Jan 2015. <http://www.nejm.org/doi/citedby/10.1056/NEJMp1411376#t=citedby>.
---------------------------------------------------------------------------

    b. Circumstance: Individuals with certain chronic health 
conditions, for example, have reported that the majority of their 
prescription drugs have been designated as specialty drugs and placed 
in the highest cost tier. Individuals have also seen most or all 
prescription drugs in the same therapeutic class, used to treat their 
chronic health condition, placed on the highest cost tiers.
    c. Rationale: More than half of U.S. adults are diagnosed with a 
chronic condition. In 2018, prevalence of multiple chronic conditions 
was higher among women, non-Hispanic white adults, older adults, adults 
aged 18-64 enrolled in Medicaid, adults dually eligible for Medicare 
and Medicaid, and adults in rural areas.\323\ Adults with certain high-
cost chronic conditions require long-term treatment to manage their 
chronic health conditions. Health benefit designs with adverse tiering 
may discriminate based on an individual's present or predicted 
disability or other health conditions in a manner prohibited by Sec.  
156.125(a).
---------------------------------------------------------------------------

    \323\ Boersma P, Black LI, Ward BW. Prevalence of Multiple 
Chronic Conditions Among U.S. Adults, 2018. Prev Chronic Dis 
2020;17:200130. DOI: http://dx.doi.org/10.5888/pcd17.200130.
---------------------------------------------------------------------------

    d. Conclusion: The 2016 Payment Notice provides that if an issuer 
places most or all drugs that treat a specific condition on the highest 
cost tiers, that such plan designs possibly discriminate against, 
individuals who have those chronic high cost conditions under Sec.  
156.125. We are clarifying that such instances of adverse tiering are 
presumptively discriminatory and that issuers and PBMs assigning tiers 
to drugs should weigh cost of drugs on their formulary with clinical 
guidelines for any such drugs used to treat high-cost chronic health 
conditions to avoid tiering such drugs in a manner that would 
discriminate based on an individual's present or predicted disability 
or other health conditions in a manner prohibited by Sec.  156.125(a).
    In addition, we indicated in the 2014 Letter to Issuers that we 
will notify an issuer when we see an indication of a reduction in the 
generosity of a benefit in some manner for subsets of individuals that 
is not based on clinically indicated, reasonable medical management 
practices.\324\ Issuers should expect to cover and provide sufficient 
access to treatment recommendations that have the highest degree of 
clinical consensus based on available data, such as professional 
clinical practice guidelines. Placing all drugs for a high cost chronic 
condition on the highest formulary tier is a presumed discriminatory 
benefit design, even when those drugs are costly. Plans and issuers 
that tier specialty drugs higher

[[Page 668]]

for certain chronic conditions should expect to demonstrate that 
neutral principles were used in assigning tiers to such drugs and that 
those principles were consistently applied across types of drugs (for 
example, that the issuer weighed both cost and clinical guidelines in 
setting tiers).
---------------------------------------------------------------------------

    \324\ Letter to Issuers on Federally-facilitated and State 
Partnership Exchanges, April 5, 2013, page 15 and 2015 Letter to 
Issuers in the Federally facilitated Marketplaces, March 14, 2014, 
page 29.
---------------------------------------------------------------------------

    For example, a generic drug requiring no special handling that is 
inexpensive to obtain might be rightly placed on a generic tier or the 
lowest tier whereas a specialty drug requiring special handling and 
counseling, and that is also very costly, might be rightly placed on 
specialty tier that has the highest cost sharing. However, a generic 
drug or common brand drug that does not require special handling, 
counseling, or medication management, and is not expensive, should not 
be placed on a specialty tier just because it is used to treat a 
condition that is a high-cost chronic condition. Furthermore, issuers 
and PBMs should pay close attention to any instances where all drugs to 
treat chronic conditions are placed on the highest-cost tiers.
    In relation to the proposed refinement of the nondiscrimination 
standard under Sec.  156.125, we propose that the policy become 
effective 60 days after publication of the final rule in the Federal 
Register. We seek comment on this proposed effective date.
    In addition, we recognize that other nondiscrimination and civil 
rights law may apply. These laws are distinct from the 
nondiscrimination requirements in CMS regulations, and compliance with 
Sec.  156.125 is not determinative of compliance with any other 
applicable requirements, nor is additional enforcement precluded. 
Section 156.125 does not apply to the Medicaid and CHIP programs, but a 
parallel provision applies to EHB furnished by Medicaid Alternative 
Benefit Plans.\325\ We intend to provide additional examples and 
illustrative fact patterns of benefit designs that are discriminatory 
pursuant to Sec.  156.125 in the future, as warranted. We seek comment 
on the nondiscrimination examples in this proposal and whether the 
proposed effective date is sufficient to implement the refined policy.
---------------------------------------------------------------------------

    \325\ 42 CFR 440.347(e).
---------------------------------------------------------------------------

7. Publication of the 2023 Premium Adjustment Percentage, Maximum 
Annual Limitation on Cost Sharing, Reduced Maximum Annual Limitation on 
Cost Sharing and Required Contribution Percentage in Guidance (Sec.  
156.130)
    As established in part 2 of the 2022 Payment Notice, HHS will 
publish the premium adjustment percentage, the required contribution 
percentage, and maximum annual limitations on cost sharing and reduced 
maximum annual limitation on cost sharing, in guidance annually 
starting with the 2023 benefit year. We note that these parameters are 
not included in this rulemaking, as HHS does not propose to change the 
methodology for these parameters for the 2023 benefit year and 
therefore, HHS is required to publish these parameters in guidance no 
later than January 2022.
8. Levels of Coverage (Actuarial Value) (Sec. Sec.  156.140, 156.200, 
156.400)
    HHS proposes to change the de minimis ranges at Sec.  156.140(c) 
beginning in PY 2023 to +2/-2 percentage points for all individual and 
small group market plans subject to the AV requirements under the EHB 
package, other than for expanded bronze plans,\326\ for which HHS 
proposes a de minimis range of +5/-2. Under Sec.  156.200, HHS 
proposes, as a condition of QHP certification, to limit the de minimis 
range to +2/0 percentage points for individual market silver QHPs; HHS 
also proposes under Sec.  156.400 to specify a de minimis range of +1/0 
percentage points for income-based silver CSR plan variations.
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    \326\ Expanded bronze plans are bronze plans currently 
referenced in Sec.  156.140(c) that cover and pay for at least one 
major service, other than preventive services, before the deductible 
or meet the requirements to be a high deductible health plan within 
the meaning of section 223(c)(2) of the Code.
---------------------------------------------------------------------------

    Section 2707(a) of the PHS Act and section 1302 of the ACA direct 
issuers of non-grandfathered individual and small group health 
insurance plans (including QHPs) to ensure that these plans adhere to 
the levels of coverage specified in section 1302(d)(1) of the ACA. A 
plan's level of coverage, or actuarial value (AV), is determined based 
on its coverage of the EHB for a standard population. Section 
1302(d)(1) of the ACA requires a bronze plan to have an AV of 60 
percent, a silver plan to have an AV of 70 percent, a gold plan to have 
an AV of 80 percent, and a platinum plan to have an AV of 90 percent. 
Section 1302(d)(2) of the ACA directs the Secretary of HHS to issue 
regulations on the calculation of AV and its application to the levels 
of coverage. Section 1302(d)(3) of the ACA authorizes the Secretary to 
develop guidelines to provide for a de minimis variation in the 
actuarial valuations used in determining the level of coverage of a 
plan to account for differences in actuarial estimates.
    In the EHB Rule at Sec.  156.140(c), we established that the 
allowable de minimis variation in the AV of a health plan that does not 
result in a material difference in the true dollar value of the health 
plan was +2/-2 percentage points. In the 2018 Payment Notice, we 
revised Sec.  156.140(c) to permit a de minimis variation of +5/-2 
percentage points for bronze plans that either cover and pay for at 
least one major service other than preventive services before the 
deductible or meet the requirements to be a high deductible health 
plans (HDHP) within the meaning of section 223(c)(2) of the Code. In 
the 2017 Market Stabilization final rule, effective for PY 2018, we 
expanded the de minimis range for standard bronze, silver, gold, and 
platinum plans to +2/-4.\327\ In that final rule, we stated that we 
believed that flexibility was needed for the AV de minimis range for 
metal levels to help issuers design new plans for future PYs, thereby 
promoting competition in the market.\328\ In addition, we noted that 
changing the de minimis range would allow more plans to keep their cost 
sharing the same as well as provide additional flexibility for issuers 
to make adjustments to their plans within the same metal level. We 
stated our view that a de minimis range of +2/-4 percentage points 
provided the flexibility necessary for issuers to design new plans 
while ensuring comparability of plans within each metal level.
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    \327\ We did not in that rule modify the de minimis range for 
the income-based silver CSR plan variations (the plans with an AV of 
73, 87 and 94 percent) under Sec. Sec.  156.400 and 156.420. The de 
minimis variation for an income-based silver CSR plan variation is a 
single percentage point. In the Actuarial Value and Cost-Sharing 
Reductions Bulletin (2012 Bulletin) issued on February 24, 2012, we 
explained why we did not intend to require issuers to offer a silver 
CSR plan variation with an AV of 70 percent; to align with this 
change, we also modified the de minimis range for expanded bronze 
plans from +5/-2 to +5/-4.
    \328\ 82 FR at 18369.
---------------------------------------------------------------------------

    Since we finalized these de minimis ranges in the 2018 Payment 
Notice and the 2017 Market Stabilization final rule, we have observed 
an increasing percentage of bronze plans offered on HealthCare.gov with 
AVs in the upper end of the current de minimis range. In PY 2018, 8.45 
percent of all bronze plans offered on HealthCare.gov had an AV between 
64 and 65 percent. In PYs 2019 and 2020, this number grew to 14.29 
percent and 24.44 percent, respectively. For PY 2021, 67.55 percent of 
bronze plans offered on HealthCare.gov had an AV between 64 and 65 
percent. As the cost of health care services continues to increase, we

[[Page 669]]

expect more bronze plans to have an AV of at least 64 percent in future 
PYs.
[GRAPHIC] [TIFF OMITTED] TP05JA22.024

    During PYs 2018 through 2021, as the percentage of bronze plans 
within the upper limit of the +5/-4 percentage point range increases, 
the percentage of silver plans offered on HealthCare.gov within the 
lower end of the current +2/-4 percentage point range has remained 
consistent, with less than a third of silver plans having an AV between 
66 and 68 percent.
[GRAPHIC] [TIFF OMITTED] TP05JA22.025

    Despite the consistency of silver plan distribution by AV 
percentage, the number of enrollees in silver plans on HealthCare.gov 
within the lower end of the current +2/-4 percentage point range has 
decreased each year since 2018, while the number of enrollees in bronze 
plans within the upper end of the current +5/-4 percentage point range 
has increased each year since 2018.
[GRAPHIC] [TIFF OMITTED] TP05JA22.026

    As the availability of and enrollment in bronze plans within the 
upper end of the current de minimis range increases and the enrollment 
in silver plans within the lower end of the current de minimis range 
decreases, we believe that it is increasingly important for consumers 
to be able to distinguish the levels of coverage between bronze plans 
and silver plans and be assured that the level of coverage of their 
plan corresponds to the relevant metal tier. We are not confident that 
consumers can reliably distinguish plans that have similar AV 
percentages, but significantly different cost sharing. Despite their 
similar AVs, there is generally a 10 percentage point difference in 
median coinsurance per EHB between expanded bronze and base silver 
plans offered on HealthCare.gov. The difference between copayment 
amounts for expanded bronze plan and base silver plan is also apparent.
[GRAPHIC] [TIFF OMITTED] TP05JA22.027


[[Page 670]]


    Thus, we are no longer of the view that a silver de minimis range 
of +2/-4 percentage points ensures the meaningful comparison of plans 
between the silver and bronze levels of coverage. However, we continue 
to recognize the importance of permitting issuers to offer expanded 
bronze plans because the rationale for expanding the upper limit of the 
de minimis range for these plans to +5 still applies to the current 
market: Issuers continue to require greater flexibility for bronze plan 
design to assist with innovation, premium impact, and future impacts to 
the AV Calculator methodology, to ensure that bronze plans can continue 
to be more generous than catastrophic plans, and to ensure that HDHPs 
can be offered at the bronze level. At the same time, the 2017 Market 
Stabilization final rule also noted the narrow difference in bronze and 
silver QHPs and therefore, to improve a consumer's ability to 
meaningfully compare the bronze and silver levels of coverage, pursuant 
to our authority under sections 1302(d)(3) and 1321(a)(1)(A) and (D) of 
the ACA, and sections 2707 and 2792 of the PHS Act, we propose changing 
the de minimis range for standard silver plans.
    Additionally, as shown in Tables 14 and 15, we have observed a 
shift in enrollment for gold plans in 2021 and bronze plans since 2019 
within the +2/-4 de minimis towards the center of the de minimis (+2/-
2).
[GRAPHIC] [TIFF OMITTED] TP05JA22.028

[GRAPHIC] [TIFF OMITTED] TP05JA22.029

    Because of this shift, and for consistency across the metal levels, 
which would help reduce potential consumer confusion, we believe it is 
appropriate to propose, starting with PYs beginning in 2023, to change 
the de minimis ranges for the standard bronze, gold, and platinum 
levels of coverage from +2/-4 percentage points to +/-2 percentage 
points. Likewise, we have observed a similar shift in enrollment for 
expanded bronze plans that currently utilize a +5/-4 de minimis range. 
Because of this shift, and to align with the proposal above, we also 
propose, starting with PYs beginning in 2023, to change the de minimis 
range for expanded bronze plans from +5/-4 to +5/-2.
    Further, states generally remain the primary enforcers of the 
requirement to meet AV requirements, including, to the extent required 
by Sec.  156.135, the use of the federal AV Calculator or an AV 
Calculator that utilizes state-specific data under Sec.  156.135(e). In 
the 2017 Market Stabilization rule, we stated that states are the 
primary enforcers of AV requirements and can apply stricter AV 
standards that are consistent with federal law.\329\ We also stated 
that a state cannot require issuers to design plans that apply an AV 
range that is not consistent with our implementation of section 
1302(d)(1) and (d)(3) of the ACA (which defines the metal levels and de 
minimis ranges). We reiterate those statements here. Under this 
proposal, a state cannot apply an AV range that exceeds +2/-2 
percentage points, except for under the proposed expanded bronze range 
originally provided for in Sec.  156.140(c).
---------------------------------------------------------------------------

    \329\ 82 FR at 18369.
---------------------------------------------------------------------------

    In addition to the proposal applicable to non-grandfathered 
individual and small group market health insurance coverage market-
wide, we also propose to amend Sec.  156.200(b)(3) to state that, 
beginning with year PY 2023, as a requirement for certification, the 
allowable variation in AV for individual market silver QHPs would be + 
2/0 percentage points. Through the authority granted to HHS in sections 
1311(c) and 1321(a) of the ACA to establish minimum requirements for 
QHP certification, we propose this narrower de minimis range for 
individual market silver QHPs in order to maximize PTC and APTC for 
subsidized enrollees. Narrowing the de minimis range of individual 
market silver QHPs would influence the generosity of the SLCSP, the 
benchmark plan used to determine an individual's PTC. A subsidized 
enrollee who has a SLCSP that is currently below 70 percent AV would 
see the generosity of their current SLCSP increase, likely accompanied 
by a corresponding increase in premium, resulting in an increase in 
PTC. As shown in Table 12, since 2018, enrollment in 66.00 to 69.99 
percent AV silver plans has decreased and enrollment in 62 to 64.99 
percent AV bronze plans has increased; enrollees in such bronze plans 
now outnumber enrollees in such silver plans by more than 10 to 1. In 
addition, after implementation of the ARP enhanced financial subsidies, 
there are even fewer enrollees remaining in silver QHPs with AVs 
between 66.00 and 69.99 percent offered through Exchanges that use the 
Federal platform. Approximately 248,000 enrollees remain, of which 
about 91,000 are unsubsidized. By comparison, enrollment for the 
income-based silver CSR variations corresponding to the above silver 
QHPs has increased to about 4.2 million. This proposal would reduce the 
cost of insurance coverage for an increasing population of subsidized 
enrollees. It would also mitigate the net burden of the additional cost 
to a decreasing population of unsubsidized enrollees by incentivizing 
healthier, subsidy-eligible enrollees to participate in the 
Marketplaces.
    Thus, we believe maximizing PTC for all subsidized enrollees 
justifies a narrower de minimis range on

[[Page 671]]

individual market silver QHPs that have fewer enrollments each year. We 
solicit comment on other cost implications the proposal might have.
    Finally, we propose changing the de minimis variation for 
individual market income-based silver CSR plan variations from +1/-1 to 
+1/0 with a proposed revision to the definition of ``De minimis 
variation for a silver plan variation'' at Sec.  156.400. Similar to 
the +2/0 de minimis proposal for individual market silver QHPs, this 
proposal would deliver further subsidization of premiums via increased 
APTC and PTC for subsidized enrollees in the income-based silver CSR 
plan variations and increase the generosity of these plans. While there 
would be an expected increase to the premium for the CSR plan 
variations as a result of the increased generosity, it would be 
substantially offset by increases to the APTC and PTC. We do not 
propose edits to the minimum AV differential in Sec.  156.420(f) for 
silver QHPs and 73 percent income-based plan variations, where the AVs 
must differ by at least 2 percentage points. We would note for issuers 
that, similar to the current de minimis ranges, standard silver QHPs 
with plan AVs between 71 and 72 percent would require the corresponding 
73 percent income-based plan variation AV to be at least 2 percentage 
points above the standard plan's AV.
    We seek comment on this proposal.
9. QHP Issuer Participation Standards (Sec.  156.200)
    We propose to amend 45 CFR 156.200(e) such that its 
nondiscrimination protections would explicitly prohibit discrimination 
based on sexual orientation and gender identity. HHS previously 
codified such nondiscrimination protections at Sec.  156.200(e), but 
amendments made in 2020 to Sec.  156.200(e) removed any reference to 
sexual orientation and gender identity. If finalized, this proposal 
would revert Sec.  156.200(e) to the pre-2020 nondiscrimination 
protections.
    Section 156.200(e) states that a QHP issuer must not, with respect 
to its QHP, discriminate on the basis of race, color, national origin, 
disability, age, or sex. Previously, in the March 27, 2012 Exchange 
Standards final rule, we finalized Sec.  156.200(e) to also prohibit 
discrimination based on sexual orientation and gender identity.\330\ 
However, in the 2020 final rule related to section 1557, HHS revised 
certain CMS regulations, including Sec.  156.200(e), by removing sexual 
orientation and gender identity in Sec.  156.200(e) as bases of 
discrimination subject to the CMS regulations' nondiscrimination 
protections.\331\
---------------------------------------------------------------------------

    \330\ 77 FR 18310 (March 27, 2012).
    \331\ 85 FR 37160 (June 19, 2020); See id. at 37218-21 (the 2020 
section 1557 final rule revised the following CMS regulations: 45 
CFR 147.104, 155.120, 155.220, 156.200, 156.1230).
---------------------------------------------------------------------------

    CMS possesses statutory authority independent of section 1557 of 
the ACA to prohibit discrimination by issuers of QHPs. Pursuant to 
section 1311(c)(1)(A) of the ACA, QHP issuers are required to comply 
with applicable state laws and regulations regarding marketing by 
health insurance issuers and not employ marketing practices or benefit 
designs that will have the effect of discouraging the enrollment of 
individuals with significant health needs. CMS is authorized to 
interpret and implement this requirement, and to set additional 
requirements for QHPs under its authority to establish requirements 
with respect to the offering of QHPs through the Exchanges in section 
1321(a)(1)(B) of the ACA.\332\ Pursuant to this authority to set QHP 
standards in section 1321(a)(1)(B) of the ACA, HHS finalized in the 
2012 Exchange Standards final rule requirements at Sec.  156.200(e) 
intended to protect enrollees and potential enrollees from 
discriminatory practices, including on the basis of sexual orientation 
and gender identity. CMS proposes to exercise that same authority here 
to amend Sec.  156.200(e) to again prohibit QHPs from discriminating 
based on sexual orientation and gender identity. Section 1321(a)(1)(B) 
of the ACA is the same authority CMS relies upon for implementation of 
existing nondiscrimination protections at Sec.  156.200(e). Utilizing 
this same authority to again prohibit discrimination based on sexual 
orientation and gender identity at Sec.  156.200(e) would be consistent 
with the authority CMS relies upon for the existing protections at 
Sec.  156.200(e) that currently prohibit discrimination on the basis of 
race, color, national origin, disability, age, or sex. We believe such 
amendments are warranted in light of the existing trends in health care 
discrimination and are necessary to better address barriers to health 
equity for LGBTQI+ individuals.
---------------------------------------------------------------------------

    \332\ 85 FR 37218-37221 (June 19, 2020).
---------------------------------------------------------------------------

    A more in-depth discussion of these developments and other factors 
considered in proposing amendments to CMS nondiscrimination protections 
is included earlier in the preamble to Sec.  147.104 under section 
III.B.1.b. of this preamble. For brevity, we refer readers back to 
Sec.  147.104 under section III.B.1.b. of the preamble, rather than 
restating the issues here.
    We seek comment on this proposal.
10. Standardized Options (Sec.  156.201)
    Section 1311(c)(1) of the ACA directs the Secretary to establish 
criteria for the certification of health plans as QHPs. Section 
1321(a)(1)(B) of the ACA directs the Secretary to issue regulations 
that set standards for meeting the requirements of title I of the ACA 
with respect to, among other things, the offering of QHPs through such 
Exchanges. HHS proposes to exercise these authorities to require 
issuers of QHPs in FFEs and SBE-FPs, for PY 2023 and beyond, to offer 
through the Exchange standardized QHP options at every product network 
type, as described in the definition of ``product'' at Sec.  144.103, 
metal level, and throughout every service area that they offer non-
standardized QHP options. For example, if an issuer offers a non-
standardized gold health maintenance organization (HMO) plan in a 
particular service area, that issuer must also offer a standardized 
gold HMO plan in that same service area. HHS does not propose to limit 
the number of non-standardized QHP options that issuers of QHPs in FFEs 
and SBE-FPs can offer through the Exchange in PY 2023. As discussed 
later, HHS is considering whether for future years it would be 
appropriate to limit the number of non-standardized QHP options that 
issuers of QHPs in FFEs and SBE-FPs can offer through the Exchange.
    Standardized options were first introduced in the 2017 Payment 
Notice. In the first iteration of standardized options, HHS proposed 
one set of standardized options designed to be similar to the most 
popular QHPs in the 2015 individual market FFEs at the bronze, silver, 
and gold metal levels. Issuers were not required to offer standardized 
options. To facilitate plan shopping and to educate consumers about the 
distinctive cost sharing features of standardized options, standardized 
options were differentially displayed on HealthCare.gov per the 
authority at Sec.  155.205(b)(1). Specifically, consumers had the 
ability to filter plan options to view only standardized options and 
received an accompanying message explaining how standardized options 
differed from non-standardized options.
    In the 2018 Payment Notice, HHS proposed three new sets of 
standardized options. The original standardized options from the 2017 
Payment Notice were updated to reflect changes in QHP enrollment data 
in 2016, to include

[[Page 672]]

SBE-FP data, and to account for state cost sharing laws. Standardized 
options were once more differentially displayed, but this time, they 
were also labeled ``Simple Choice'' plans to make them more easily 
distinguishable from non-standardized options. HHS also established 
display requirements for approved web-brokers and QHP issuers using a 
direct enrollment pathway to facilitate enrollment through an FFE or 
SBE-FP--including both the Classic DE and EDE Pathways--at Sec. Sec.  
155.220(c)(3)(i)(H) and 156.265(b)(3)(iv), respectively. 
333 334 Per these requirements, these entities were required 
to differentially display standardized options in accordance with the 
requirements under Sec.  155.205(b)(1) in a manner consistent with how 
standardized options were displayed on HealthCare.gov, unless HHS 
approved a deviation.
---------------------------------------------------------------------------

    \333\ See 81 FR at 94117--94118, 94148.
    \334\ See 45 CFR 155.220(l) and 155.221(i).
---------------------------------------------------------------------------

    Standardized options were then discontinued in the 2019 Payment 
Notice, but the discontinuance was challenged in the United States 
District Court for the District of Maryland. On March 4, 2021, the 
court decided City of Columbus, et al. v. Cochran.\335\ The court 
reviewed nine separate policies HHS had promulgated in the 2019 Payment 
Notice, vacating four of them. The court specifically vacated the 
portion of the 2019 Payment Notice that ceased HHS's practice of 
designating some plans in the FFEs as ``standardized options,'' a 
policy that the 2019 Payment Notice stated was seeking to maximize 
innovation by issuers in designing and offering a wide range of plans 
to consumers.\336\ As such, HHS announced its intent to engage in 
rulemaking under which it would propose to resume standardized options 
in time for PY 2023.\337\ More recently, President Biden's Executive 
Order on Promoting Competition in the American Economy directed HHS to 
implement standardized options in order to facilitate the plan 
selection process for consumers on the Exchanges.\338\
---------------------------------------------------------------------------

    \335\ 523 F. Supp. 3d 731 (D. Md. 2021).
    \336\ 83 FR 16974--16975.
    \337\ In part 3 of the 2022 Payment Notice final rule, we 
explained that we would 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 Exchanges to be prepared to certify 
such plans as QHPs for PY 2022, and therefore intended to address 
these issues in time for plan design and certification for PY 2023. 
See 86 FR 24140, 24264.
    \338\ Executive Order 14036 on Promoting Competition in the 
American Economy, July 9, 2021, see 86 FR 36987.
---------------------------------------------------------------------------

    The standardized options that we are proposing are as follows: One 
bronze plan, one bronze plan that meets the requirement to have an AV 
up to 5 points above the 60 percent standard, as specified in Sec.  
156.140(c) (known as an expanded bronze plan), one standard silver 
plan, one version of each of the three income-based silver CSR plan 
variations, one gold plan, and one platinum plan. We do not propose to 
require FFE and SBE-FP issuers to offer standardized options for the 
Indian CSR plan variations given that the cost sharing parameters for 
these variations are already largely standard. Further, we do not 
propose to require State Exchange issuers to offer the standardized 
options in this proposal. We also propose that FFE and SBE-FP issuers 
that are already required to offer standardized options under state 
action taking place on or before January 1, 2020, such as issuers in 
the state of Oregon,\339\ be exempt from the standardized options 
requirements in this proposal.
---------------------------------------------------------------------------

    \339\ See Or. Admin. R. 836-053-0009.
---------------------------------------------------------------------------

    Additionally, in an approach similar to that taken in the 2018 
Payment Notice, we propose two sets of standardized options to 
accommodate different states' cost sharing laws. Specifically, we 
propose that the first set of standardized options apply to all FFE and 
SBE-FP issuers, excluding Delaware and Louisiana, and we propose that 
the second set of standardized options apply to issuers in Delaware and 
Louisiana in order to accommodate these two states' specialty tier 
prescription drug cost sharing laws.
    In conjunction with our standardized options proposal, we are 
considering exercising the existing authority under Sec.  155.205(b)(1) 
to differentially display standardized options on HealthCare.gov. 
Similarly, we are considering resuming enforcement of the standardized 
options display requirements for approved web-brokers and QHP issuers 
using a direct enrollment pathway to facilitate enrollment through an 
FFE or SBE-FP--including both the Classic DE and EDE Pathways--at 
Sec. Sec.  155.220(c)(3)(i)(H) and 156.265(b)(3)(iv), respectively. If 
we were to resume enforcement of these requirements, these entities 
would be required to differentially display standardized options 
beginning with the PY 2023 open enrollment period \340\ in accordance 
with the requirements under Sec.  155.205(b)(1) in a manner consistent 
with how standardized options are displayed on HealthCare.gov, unless 
HHS approves a deviation. Any requests from web-brokers and QHP issuers 
seeking approval for an alternate differentiation format would be 
reviewed based on whether the same or similar level of differentiation 
and clarity is being provided under the requested deviation as is 
provided on HealthCare.gov.
---------------------------------------------------------------------------

    \340\ The PY 2023 OEP is scheduled from November 1, 2022 to 
January 15, 2023. See 45 CFR 155.410(e)(3).
---------------------------------------------------------------------------

    We continue to believe that the differential display of 
standardized options will not require significant modification of web-
broker and QHP issuer platforms, but that such display would provide an 
important service and information for consumers seeking to enroll in 
Exchange coverage. However, consistent with the approach finalized in 
the 2018 Payment Notice,\341\ we also continue to recognize that system 
constraints may prevent some web-brokers and QHP issuers from precisely 
mirroring the HealthCare.gov display, which is why we would continue to 
allow these entities to submit a request to deviate from the manner in 
which standardized options are differentially displayed on 
HealthCare.gov.
---------------------------------------------------------------------------

    \341\ See 81 FR at 94118.
---------------------------------------------------------------------------

    If we were to resume enforcement of these requirements, we reaffirm 
that a QHP issuer using a direct enrollment pathway to facilitate 
enrollment through an FFE or SBE-FP--including both the Classic DE and 
EDE Pathways--would only need to differentially display those 
standardized options it offers.\342\ Additionally, we intend to provide 
access to information on standardized options to web-brokers and QHP 
issuers through the Health Insurance Marketplace Public Use Files 
(PUFs) and QHP Landscape file to further minimize burden on these 
entities. We seek comment on this potential approach to display 
requirements.
---------------------------------------------------------------------------

    \342\ Ibid.
---------------------------------------------------------------------------

    We are proposing this approach for several reasons. The 2019 
Payment Notice eliminated standardized options with the intention of 
maximizing innovation and variety at a time when the individual market 
was considered to be at risk of destabilization. We believe that 
current market conditions differ significantly from the market 
conditions that defined the individual market when standardized options 
were eliminated. For example, the number of issuers offering plans on 
the Exchanges has increased considerably, the number of counties with a 
single issuer offering plans through the Exchange has decreased 
significantly, and the number of plan options that consumers have 
access to on the Exchanges has increased substantially since 
standardized options were discontinued in the 2019 Payment Notice. With

[[Page 673]]

increased enrollment, increased issuer participation, decreased single 
issuer counties, and increased plan options available to consumers, we 
believe that resuming standardized options at this time can play a 
constructive role in enhancing consumer experience, increasing consumer 
understanding, simplifying the plan selection process, combatting 
discriminatory benefit designs that disproportionately impact 
disadvantaged populations, and advancing health equity.
    We are proposing to require issuers offering QHPs through FFEs and 
SBE-FPs to offer standardized options, as opposed to allowing them to 
choose to offer these standardized options, as was done in the past, 
due in large part to the enhanced stability of the market as well as 
the consumer benefits derived from the ability to compare the same 
plans across different issuers. For example, in the FFEs and SBE-FPs in 
PY 2019, there was an enrollee-weighted average of 1.2 catastrophic 
plans, 7.9 bronze plans, 12.3 silver plans, 4.6 gold plans, and 1.1 
platinum plans available per enrollee, amounting to a total of 25.9 
plans available per enrollee. In the FFEs and SBE-FPs in PY 2022, based 
on current filing data, it is expected that there will be an enrollee-
weighted average of 2.7 catastrophic plans, 40.4 bronze plans, 45.3 
silver plans, 19.2 gold plans, and 1.6 platinum plans available per 
enrollee, amounting to a total of 106.5 plans available per enrollee. 
The proliferation of choices available to consumers on the Exchanges 
that makes it more difficult to meaningfully assess all available plan 
options.
    The significant increase of plan offerings available on the 
Exchanges over the last several PYs highlights the need to facilitate 
the plan selection process for consumers. This is because when 
consumers are faced with an overwhelming amount of plan choices, each 
with slightly different cost sharing structures, these consumers can 
experience choice paralysis. Along with plan standardization, there are 
additional ways to facilitate more meaningful consumer choice, for 
example though directly limiting the number of allowable offerings by 
metal level or the imposition of strong meaningful difference 
standards. For example, six states limit the number of plans that 
issuers can offer through the Exchanges. We believe that requiring 
issuers to offer these standardized options will play a constructive 
role in facilitating the plan selection process, and we believe it will 
enable consumers to make more meaningful comparisons between plan 
offerings, thus optimizing the plan selection process. We also believe 
that given the large number of plan offerings on the Exchanges, a 
sufficiently diverse range of plan offerings exists for consumers to 
continue to select innovative plans that meet their unique health 
needs. We thus do not believe that requiring issuers to offer 
standardized options will hamper innovative plan designs, as we noted 
in the preamble to the 2017 Payment Notice.
    We are proposing to require issuers in FFEs and SBE-FPs, but not 
issuers in State Exchanges to offer standardized options for several 
reasons. Eight State Exchanges already require or will require issuers 
to offer standardized options by PY 2023. Imposing duplicative federal 
standardized options requirements on issuers in State Exchanges that 
already have existing state standardized options requirements runs 
counter to the aforementioned goals of enhancing the consumer 
experience, increasing consumer understanding, simplifying the plan 
selection process, combatting discriminatory benefit designs, and 
advancing health equity.
    Second, we believe State Exchanges are uniquely positioned to best 
understand the nature of their respective markets as well as the 
consumers in these markets. The eight State Exchanges that require or 
will require issuers to offer standardized options by PY 2023 have 
conducted extensive stakeholder engagement in designing standardized 
options that meet the unique needs of their respective consumers and 
stakeholders. As such, we believe State Exchanges are best positioned 
to design standardized options for their respective markets. We further 
believe that states that have invested the necessary time and resources 
to become State Exchanges have done so in order to implement innovative 
policies that differ from those on the FFEs. We do not wish to impede 
this innovation, so long as these innovations comply with existing 
legal requirements. However, because we propose to impose this 
requirement in the FFEs, and because the SBE-FPs use the same platform 
as the FFEs, we propose to apply the requirements equally on FFEs and 
SBE-FPs. Changing the platform to permit distinction on this proposal 
between FFEs and SBE-FPs would require a very substantial financial and 
operational burden that we believe outweighs the benefit of permitting 
such a distinction.
    We propose one exemption to the above requirement for FFE and SBE-
FP issuers to offer the specific standardized options that we propose 
in this rule. Specifically, we propose that FFE and SBE-FP issuers that 
are subject to existing state standardized options requirements under 
state action taking place on or before January 1, 2020, such as issuers 
in the state of Oregon, be exempt from being required to offer the 
specific standardized options that we propose in this rule. We do not 
wish to impose duplicative requirements that could conflict with these 
existing state standardized options requirements and the QHP plan 
designs applicable in such states. Regardless, HHS intends to 
differentially display these existing state standardized options on the 
Federal platform in the same manner as it displays the specific 
standardized options that we propose in this rule.
    We also believe that requiring FFE and SBE-FP issuers to offer 
standardized options at every product network type, metal level, and 
throughout every service area that they also offer non-standardized 
options will ensure consumers have access to plans that have greater 
pre-deductible coverage, as the standardized options included in this 
proposal have greater pre-deductible coverage than most of the most 
popular QHPs in the FFEs and SBE-FPs in PY 2021. Additionally, the fact 
that these plans have standardized cost sharing parameters will enable 
consumers to more meaningfully compare other meaningful plan 
attributes, such as networks, formularies, and quality ratings during 
the plan selection process, optimizing the plan selection process.
    We are not proposing standardized options for the Indian CSR plan 
variations at Sec. Sec.  156.420(b)(1) and (2) for several reasons. 
First, the cost sharing parameters for the zero cost-sharing Indian CSR 
plan variations are already designated. Specifically, in the zero cost-
sharing Indian CSR plan variations, eligible consumers do not have to 
pay for any out-of-pocket costs for EHB. Second, in the limited cost-
sharing Indian CSR plan variations, eligible consumers also pay no out-
of-pocket costs for EHB, but only when they receive them from an Indian 
health care provider or from another provider with a referral from an 
Indian health care provider.
    Similar to how we have not specified the cost-sharing parameters 
for more than one tier of in-network providers or for out-of-network 
providers for the standardized option plan designs that we are 
proposing, we are proposing to not specify the cost-sharing parameters 
for EHBs received from non-Indian health care providers for limited 
cost-sharing Indian CSR plan variations. This is because eligible 
consumers will also pay no costs for EHBs provided by

[[Page 674]]

Indian health care providers or from another provider with a referral 
from an Indian health care provider, obviating the need to specify the 
cost-sharing parameters for this type of plans. Altogether, we believe 
that proposing standardized options for the two Indian CSR plan 
variations, as well as applying the aforementioned requirements to the 
two Indian CSR plan variations, would impose duplicative requirements 
with little potential benefit since the cost sharing parameters for 
these plans are already specified.
    We believe that not limiting the number of non-standardized QHPs 
that issuers can offer through the FFEs and SBE-FPs in PY 2023 will 
ensure that consumers continue to have access to a range of plans that 
meet their unique health needs. Furthermore, we do not wish to cause an 
excessive amount of disruption, particularly in too condensed a 
timeframe, and we do not wish to cause an excessive number of consumers 
to have their coverage under their current plan discontinued for a 
future plan year due to limits on the number of non-standardized 
options. Therefore, to address choice overload and enhance consumer 
choice-making ability, we are considering whether to limit the number 
of non-standardized QHPs that issuers can offer through the FFEs and 
SBE-FPs in future PYs, particularly in light of the significant growth 
in the number of plan choices offered.
    We also believe concurrently resuming differential display of 
standardized options on HealthCare.gov per the authority at Sec.  
155.205(b)(1) as well as resuming enforcement of the accompanying 
display requirements applicable to approved web-brokers and QHP issuers 
using a direct enrollment pathway to facilitate enrollment through an 
FFE or SBE-FP--including both the Classic DE and EDE Pathways--at 
Sec. Sec.  155.220(c)(3)(i)(H) and 156.265(b)(3)(iv), respectively, is 
important considering that a steadily increasing number of consumers 
are enrolling in Exchange plans via these pathways. In addition, it 
will further streamline the plan selection and enrollment process for 
Exchange consumers, aid consumers in distinguishing standardized 
options from non-standardized options, and enhance consumer 
understanding of the benefits of standardized options, such as having 
more pre-deductible coverage, regardless of whether the consumer uses 
HealthCare.gov or a non-Exchange website.
    We also note that the comments we received in response to part 3 of 
the 2022 Payment Notice informed our decision to resume the designation 
of standardized options as well as our specific approach for doing so. 
We received substantial comment from diverse stakeholders and carefully 
considered these comments. Many commenters recommended requiring 
issuers to offer standardized options and differentially or 
preferentially displaying standardized options. Commenters explained 
the importance of simplifying the complex process of purchasing 
insurance and the role that standardized options could play in that 
simplification.
    Specifically, commenters explained that there is significant 
variation in the cost sharing structures of non-standardized options, 
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 instead 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 further 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 also 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 in the plan 
selection process would benefit these populations as well as 
populations with disproportionately high rates of chronic diseases.
    Commenters also explained that standardized options could help 
individuals more easily identify plans that may have potentially 
discriminatory benefit designs. 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 
PPACA's protections for people with preexisting conditions and its 
prohibition on discrimination based on race, sex, and disability.
    All of these considerations informed our decision to resume the 
designation of standardized options as well as our specific approach 
for designing and implementing standardized options requirements.
    Regarding the methodology employed in designing these standardized 
options, similar to the approach taken in past iterations of 
standardized options in the 2017 and 2018 Payment Notices, we designed 
these plans to be similar to the most popular QHPs in FFEs and SBE-FPs 
in PY 2021.Several comments we received in response to part 3 of the 
2022 Payment Notice proposed rule expressed support for continuing to 
use this methodology in our approach to standardized options. 
Commenters explained that continuing to use this methodology and 
designing plans to be similar to the most popular QHPs in FFEs and SBE-
FPs would minimize the degree of disruption when these requirements are 
implemented.
    We designed the proposed standardized options to be similar to the 
most popular QHPs based on an examination of the proportion of 
consumers enrolled in plans with different cost sharing types 
(including copay exempt from the deductible, copay subject to the 
deductible, coinsurance exempt from the deductible, and coinsurance 
subject to the deductible) for every benefit category in the actuarial 
value calculator (AVC) at each metal level. We chose the cost sharing 
type with the majority or plurality of enrollees. We then chose the 
enrollee-weighted median values for this cost sharing type as the copay 
amount or coinsurance rate for each benefit category before modifying 
these plans to have an AV near the lower end of the de minimis range 
for each metal level to ensure the competitiveness of these plans. 
Nothing in the design of these standardized options supersedes the 
obligation to cover certain benefits, such as the preventive services 
required under Sec.  147.130, without cost sharing, even if such 
benefits would also fall into a category for which cost sharing is 
specified for the standardized option.
    We applied this same methodology in selecting the deductible MOOPs 
for the proposed plans at each metal level. Specifically, we selected 
the enrollee-weighted median values for deductibles

[[Page 675]]

and MOOPs to ensure these plans would be similar to plans that the 
majority or plurality of consumers are already currently enrolled in.
    In addition to designing the proposed standardized options to be 
similar to the enrollee-weighted medians for each benefit category, we 
designed two sets of standardized options to accommodate applicable 
state cost sharing laws in different sets of FFE and SBE-FP states. 
This is similar to the approach taken the last time standardized 
options were offered. Specifically, In the 2018 Payment Notice, we 
designed three sets of plans tailored to unique cost sharing laws in 
different states. The second and third sets of these standardized 
options differed from the first set only to the extent necessary to 
comply with state cost sharing laws. The second set of standardized 
options in the 2018 Payment Notice was designed to work in states that: 
(1) Require that cost sharing for physical therapy, occupational 
therapy, and speech therapy be no greater than the cost sharing for 
primary care visits; (2) limit the cost-sharing amount that can be 
charged for a 30-day supply of prescription drugs by tier; or (3) 
require that all drug tiers carry a copayment rather than coinsurance. 
The second set of standardized options applied to Arkansas, Delaware 
Iowa, Kentucky, Louisiana, Missouri, Montana, and New Hampshire. The 
third set was designed to work in a state with maximum deductible 
requirements and other cost sharing standards. The third set of 
standardized options was designed to work in the Exchange in New 
Jersey, which has since transitioned to become a State Exchange and is 
thus outside the intended scope of this rulemaking for reasons 
described above.
    We included several of the defining features of the second set of 
standardized options from the 2018 Payment Notice in the first set of 
standardized options we are proposing in this rulemaking. As a result, 
in the first set of standardized options, there is cost sharing parity 
between the primary care visit, the speech therapy, and the 
occupational and physical therapy benefit categories. There are also 
copays for all prescription drug tiers, including the non-preferred 
brand and specialty tiers, instead of coinsurance rates. Finally, the 
copayment for the mental health/substance use disorder in-network 
outpatient office visit sub-classification is equal to the least 
restrictive level for copayments for medical/surgical benefits in the 
in-network, outpatient office visit sub-classification (and copayments 
apply to substantially all medical/surgical benefits in this sub-
classification), to ensure issuers are able to design plans that comply 
with the Paul Wellstone and Pete Domenici Mental Health Parity and 
Addiction Equity Act of 2008 (MHPAEA) and its implementing 
regulations.\343\ We propose that this first set of standardized 
options apply to all FFE and SBE-FP issuers, excluding issuers in 
Delaware and Louisiana.
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    \343\ In general, MHPAEA requires that the financial 
requirements (such as coinsurance and copays) and treatment 
limitations (such as visit limits) imposed on mental health or 
substance use disorder benefits cannot be more restrictive than the 
predominant financial requirements and treatment limitations that 
apply to substantially all medical/surgical benefits in a 
classification.
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    We included all of the defining features of the second set of 
standardized options from the 2018 Payment Notice in the second set of 
standardized option plan designs we are proposing in this rule. As a 
result, in this set of standardized options, similar to the first set 
of standardized options, there is cost sharing parity between the 
primary care visit, the speech therapy, and the occupational and 
physical therapy benefit categories, and there are copays for all 
prescription drug tiers, including the non-preferred brand and 
specialty tiers, instead of coinsurance rates. Finally, the copayment 
for the mental health/substance use disorder in-network outpatient 
office visit sub-classification is equal to the least restrictive level 
for copayments for medical/surgical benefits in the in-network, 
outpatient office visit sub-classification (and copayments apply to 
substantially all medical/surgical benefits in this sub-
classification), to ensure issuers are able to design plans that comply 
with MHPAEA and its implementing regulations.
    The feature that distinguishes the first set of standardized 
options from the second is that the second set of standardized options 
have copays of $150 or less for the specialty drug tiers of 
standardized options at all metal levels. This feature was included in 
the second set of standardized options to accommodate relevant 
specialty tier prescription drug cost sharing laws in Delaware and 
Louisiana. We therefore propose that this set of standardized options 
apply to issuers in these two specific states.
    The list of states for which these sets of standardized options 
apply differs slightly from the list of states for which the sets 
applied in the 2018 Payment Notice. Specifically, in the 2018 Payment 
Notice, the second set of standardized options applied to Arkansas, 
Delaware, Iowa, Kentucky, Louisiana, Missouri, Montana, and New 
Hampshire (with the first set applying to the rest of the FFE and SBE-
FP states), whereas in the current proposal, we propose that the second 
set of standardized options apply only to Delaware and Louisiana (with 
the first set applying to the rest of the FFE and SBE-FP states).
    This is because we incorporated the other two defining features of 
the second set of standardized options in the 2018 Payment Notice (that 
is, cost sharing parity between the physical therapy, occupational 
therapy, and speech therapy AVC benefit categories with the primary 
care visit AVC benefit category, and all drug tiers carry a copayment 
rather than coinsurance) in both sets of standardized options in the 
current proposal. We made this decision primarily because incorporating 
these two design features into the plan designs had a negligible impact 
to these plans' AVs, and including these features in both sets of 
standardized options decreases operational complexity and allows plan 
designs targeted to these specific states. As a result, the first set 
of standardized options can now be used in Arkansas, Iowa, Kentucky, 
Missouri, Montana, and New Hampshire.
    We seek comment on this proposal, including comment on (1) 
requiring FFE and SBE-FP issuers to offer standardized options at every 
product network type, metal level, and throughout every service area 
that they offer non-standardized options; (2) not limiting the number 
of non-standardized options that issuers can offer through the 
Exchanges; (3) the feasibility, advantages, and disadvantages of 
gradually limiting the number of plan options over the course of 
several PYs; (4) whether standardized options should be differentially 
displayed on HealthCare.gov as well as the best manner for doing so; 
(5) whether web-brokers and issuers using the Classic DE and EDE 
Pathways should remain subject to differential display requirements; 
(6) the continuation of an exceptions process that allows these 
entities to deviate from the display of standardized options on 
HealthCare.Gov; (7) exempting State Exchange issuers from these 
requirements; (8) whether these plan designs should apply to State 
Exchanges that do not use the Federal platform and that have not 
implemented their own standardized options; (9) exempting FFE and SBE-
FP issuers that are subject to existing state standardized options 
requirements under state action taking place on or before January 1, 
2020 from being required to offer the standardized options in this 
proposal; (10) the

[[Page 676]]

methodology used to design these standardized options; (11) if these 
standardized options are compliant with state cost sharing laws in FFE 
and SBE-FP states; (12) the cost sharing parameters and plan designs 
for these standardized options; (13) how these plans can be designed in 
a way that maximizes the likelihood that plans will be able to comply 
with MHPAEA; (14) the policy approach for PYs 2023 and beyond; and (15) 
having two sets of standardized options (that is, a separate set for 
Delaware and Louisiana).
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BILLING CODE 4120-01-C
11. Network Adequacy (Sec.  156.230)
    We propose to adopt FFE QHP certification standards that would 
ensure that QHP enrollees would have sufficient access to providers. 
HHS is of the view that strong network adequacy standards are necessary 
to achieve greater equity in health care and enhance consumer access to 
quality, affordable care through the Exchanges. We have engaged and 
received feedback from numerous stakeholders representing diverse 
perspectives in developing these policy proposals.
a. Background of Network Adequacy Standards
    Section 1311(c)(1)(B) of the ACA directs HHS to establish by 
regulation certification criteria for QHPs, including criteria that 
require QHPs to ensure a sufficient choice of providers (in a manner 
consistent with applicable provisions under section 2702(c) of the PHS 
Act), and provide information to current and prospective enrollees on 
the availability of in-network and out-of-network providers. Federal 
network adequacy standards were first detailed in the Patient 
Protection and Affordable Care Act; Establishment of Exchanges and 
Qualified Health Plans; Exchange Standards for Employers \344\ and 
codified at Sec.  156.230. HHS seeks to ensure that quantitative, 
prospective network adequacy reviews \345\ occur for QHPs offered 
through the FFEs so that enrollees have reasonable, timely access to 
health care providers.
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    \344\ https://www.federalregister.gov/documents/2012/03/27/2012-6125/patient-protection-and-affordable-care-act-establishment-of-exchanges-and-qualified-health-plans.
    \345\ Prospective network adequacy reviews would occur during 
the QHP certification process.
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    The FFEs conducted network adequacy reviews of time and distance 
standards for QHPs for PYs 2015-2017. The Market Stabilization \346\ 
final rule deferred reviews of network adequacy for QHPs to states that 
HHS determined to have a sufficient network adequacy review process, an 
approach that was extended by the 2019 Payment Notice.\347\ 
Specifically, CMS deferred to states that possessed sufficient 
authority to enforce standards that were at least equal to the 
reasonable access standard defined in Sec.  156.230 and that had the 
means to assess the adequacy of plans' provider networks. For PYs 2018-
2022, HHS determined that all states had sufficient legal authority and 
means to assess the adequacy of plans' provider networks. On March 4, 
2021, as noted previously, the United States District Court for the 
District of Maryland decided City of Columbus, et al. v. Cochran.\348\ 
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 and plans seeking QHP certification to be offered through the 
FFEs.
---------------------------------------------------------------------------

    \346\ https://www.federalregister.gov/documents/2017/04/18/2017-07712/patient-protection-and-affordable-care-act-market-stabilization.
    \347\ https://www.federalregister.gov/documents/2018/04/17/2018-07355/patient-protection-and-affordable-care-act-hhs-notice-of-benefit-and-payment-parameters-for-2019.
    \348\ 523 F. Supp. 3d 731 (D. Md. 2021).
---------------------------------------------------------------------------

    As such, we announced in Parts 2 and 3 of the 2022 Payment Notice 
final rules our intent to undertake rulemaking to establish network 
adequacy standards, beginning in this proposed rule for PY 2023.
b. FFE Network Adequacy Reviews
    For the QHP certification cycle for PYs beginning in 2023, HHS 
proposes to evaluate the adequacy of provider networks of QHPs offered 
through the FFEs, or of plans seeking certification as FFE QHPs, except 
for FFEs in certain states. HHS would not evaluate QHP network adequacy 
in FFE states performing plan management functions that elect to 
perform their own reviews of plans seeking QHP certification in their 
state, so long as the state applies and enforces quantitative network 
adequacy standards that are at least as stringent as the federal 
network adequacy standards established for QHPs under Sec.  156.230, 
and that network adequacy reviews are conducted prior to QHP 
certification. States performing plan management functions are states 
served by an FFE where the state has agreed to assume primary 
responsibility

[[Page 681]]

for reviewing issuer-submitted QHP certification material and making 
certification recommendations to HHS.
    We seek comment on this proposal.
c. FFE Network Adequacy Standards Beginning With PY 2023
    i. Network Adequacy Standards Applicable to Plans That Use a 
Provider Network
    Section 1311(c)(1)(B) of the ACA directs HHS to establish criteria 
for the certification of health plan as QHPs, which includes the 
requirement that QHPs must ``ensure a sufficient choice of providers.'' 
HHS codified QHP network adequacy requirements under Sec.  
156.230(a)(2). In the 2012 Exchange final rule, we established the 
minimum network adequacy criteria that health and dental plans must 
meet to be certified as QHPs at Sec.  156.230. This regulation provided 
that an issuer of a QHP that uses 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 ensure that all services will be accessible to enrollees 
without unreasonable delay. In the 2016 Payment Notice, we modified 
Sec.  156.230(a) in part to specify that network adequacy requirements 
only apply to QHPs that use a provider network, and that a provider 
network includes only providers that are contracted as in-network.
    Later in this section of the preamble, we propose to refine the 
FFE's QHP certification standards regarding the adequacy of plans' 
provider networks by imposing time and distance standards, appointment 
wait time standards, and standards related to tiered networks.
ii. Time and Distance Standards
    For the certification cycle for PYs beginning in 2023, HHS proposes 
to adopt for QHPs offered through the FFEs time and distance standards 
that HHS would use to assess whether FFE QHPs (or QHP candidates) 
fulfill network adequacy standards applicable to plans that use 
provider networks.
    The proposed provider specialty lists for time and distance 
standards for PY 2023 are informed by prior HHS network adequacy 
requirements, consultation with stakeholders, and other federal and 
state health care programs, such as Medicare Advantage and Medicaid. 
The provider specialty lists cover more provider types than previously 
evaluated under FFE standards so that QHP networks will be more robust, 
comprehensive, and responsive to QHP enrollees' needs. The proposed 
provider specialty lists are generally consistent with standards used 
for plans in the Medicare Advantage program. For brevity purposes, when 
discussing provider types for network adequacy, we will use the term 
``behavioral health'' to encompass mental health and substance use 
disorders.
    HHS proposes reviewing additional specialties for time and 
distance, beyond those included by Medicare Advantage, that are 
necessary to meet the health care needs of QHP enrollees since Medicare 
Advantage and the FFEs serve different enrollee populations. The 
additional specialties proposed are: Emergency medicine, outpatient 
clinical behavioral health, pediatric primary care, and urgent care. 
Individual market health insurance has typically provided coverage of 
these specialties, as well.
    We are aware of issues faced by consumers where in-network 
emergency physicians are in limited supply or not available at in-
network hospitals. To provide proactive consumer protections, and, 
similar to the No Surprises Act, incentivize contracting between 
emergency medicine physicians and issuers to increase enrollee access 
to in-network providers, we propose adding emergency medicine 
physicians to our provider specialty list for time and distance 
standards. Behavioral health services are similarly critical to meeting 
QHP enrollees' health needs, so we also propose to add outpatient 
clinical behavioral health to our provider specialty list for time and 
distance standards. Since QHP enrollees include dependents under the 
age of 18, we propose adding pediatric primary care as a specialty. We 
further propose to include urgent care facilities in our time and 
distance standards because they help meet QHP enrollees time-sensitive 
health care needs when primary care is unavailable and the issues do 
not require emergency intervention. We seek to ensure the QHP enrollees 
have access to a variety of behavioral health facilities at the 
residential and inpatient levels of care. Consequently, we are also 
proposing to broaden the inpatient psychiatry facility specialty to be 
inpatient or residential behavioral health facility.
    HHS proposes that time and distance standards would be calculated 
at the county level and vary by county designation. CMS would use a 
county type designation method that is based upon the population size 
and density parameters of individual counties, in alignment with 
Medicare Advantage. The time and distance standards would apply to the 
provider specialty lists contained in Tables 18 and 19. To count 
towards meeting the time and distance standards, individual and 
facility providers listed on Tables 18 and 19 would have to be 
appropriately licensed, accredited, or certified to provide services in 
their state, as applicable, and would need to have in-person services 
available.
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    The county-specific time and distance parameters that plans would 
be required to meet would be detailed in future guidance. These 
parameters would be informed by industry standards.
    Issuers that are unable to meet the specified standards would be 
able to submit a justification to account for variances. HHS would 
review such justifications to determine whether the variance(s) is/are 
reasonable based on circumstances, such as the local availability of 
providers and variables reflected in local patterns of care, and 
whether offering the plan through the FFE would be in the interest of 
qualified individuals and employers. We propose to codify the network 
adequacy justification process in regulation at Sec.  156.230.
    HHS seeks comment on this proposal, including on the specific 
parameters for time and distance standards, and flexibilities that may 
be needed in rural areas when there are provider or plan shortages. In 
particular, HHS seeks comment on the parameters that should apply with 
respect to behavioral health providers in order to ensure adequate 
access to these services. HHS also seeks comment on the specialty list 
to which time and distance standards would apply and whether HHS should 
establish time and distance standards for additional specialties in 
future PYs.
iii. Appointment Wait Times
    For the certification cycle for PYs beginning in 2023, HHS proposes 
to adopt appointment wait time standards to assess whether QHPs offered 
through the FFEs fulfill network adequacy standards applicable to plans 
that use a provider network. We are proposing a short list of critical 
service categories for which appointment wait time standards would be 
assessed. The proposed provider specialty list for appointment wait 
time standards for PY 2023 is included below and is informed by prior 
federal network adequacy requirements and consultation with 
stakeholders, including issuers and other federal and state health care 
programs, such as Medicare Advantage and Medicaid.
    The appointment wait time standards would apply to medical QHPs. 
For stand-alone dental plans (SADPs), only the dental provider 
specialty within the Specialty Care (Non-Urgent) category of 
appointment wait time standards would apply. To count towards meeting 
appointment wait time standards, providers listed in Table 20 must be 
appropriately licensed, accredited, or certified to practice in their 
state, as applicable, and must have in-person services available.
[GRAPHIC] [TIFF OMITTED] TP05JA22.036

BILLING CODE 4120-01-C
    The specific appointment wait time parameters that plans would be 
required to meet, including specifications for individual provider and 
facility types, would be detailed in future guidance. These parameters 
would be informed by industry standards. Issuers applying for FFE QHP 
certification would need to attest that they meet these standards as 
part of the certification process. HHS proposes to conduct post-
certification reviews to monitor compliance with these standards. These 
compliance reviews would occur in response to access to care complaints 
or through random sampling.
    Similar to the proposed justification process for time and distance 
standards, issuers that are unable to meet the appointment wait time 
standards would be able to submit a justification to account for 
variances. HHS would review such justifications to determine whether 
the variance(s) is/are reasonable based on circumstances,

[[Page 684]]

such as the local availability of providers and variables reflected in 
local patterns of care, and whether offering the plan through the FFE 
would be in the interest of qualified individuals and employers. We 
propose to codify the network adequacy justification process in 
regulation at Sec.  156.230.
    HHS seeks comment on this proposal, including on the specialty list 
to which appointment wait time standards would apply, specific 
parameters for appointment wait time standards, and other ideas to 
strengthen network adequacy policy in future years, such as provider-
enrollee ratios, provider demographics, and accessibility of services 
and facilities. We also seek comment on possible methods to collect and 
analyze claims data to inform future network adequacy standards and 
other aspects of QHP certification that impact health equity.
iv. Tiered Networks
    HHS proposes that, for plans that use tiered networks, to count 
toward the issuer's satisfaction of the network adequacy standards, 
providers must be contracted within the network tier that results in 
the lowest cost-sharing obligation. For example, a QHP issuer cannot 
use providers contracted with their PPO network when certifying a plan 
using their HMO network, if use of PPO network providers would result 
in higher cost-sharing obligations for HMO plan enrollees. For plans 
with two network tiers (for example, participating providers and 
preferred providers), such as many PPOs, where cost sharing is lower 
for preferred providers, only preferred providers would be counted 
towards network adequacy standards. We propose to codify the network 
tiering requirement for network adequacy in regulation at Sec.  
156.230.
    Network adequacy standards are tailored to ensure QHP enrollees 
have reasonable access to a sufficient number and type of providers to 
meet their health care needs. HHS is aware of instances in which 
issuers have attempted to satisfy QHP certification requirements 
related to networks, such as ECP standards, using providers that would 
require enrollees to pay higher cost sharing. We seek to ensure that 
QHP enrollees have access to networks with sufficient numbers and types 
of providers without the imposition of a higher cost-sharing 
requirement.
    HHS seeks comment on this proposal.
v. Telehealth Services
    HHS proposes to require all issuers seeking certification of plans 
to be offered as QHPs through the FFEs to submit information about 
whether network providers offer telehealth services. HHS proposes that 
this requirement would be applicable beginning with the QHP 
certification cycle for PY 2023. We believe this information could be 
relevant to HHS' analysis of whether a QHP meets network adequacy 
standards. For PY 2023, this data would be for informational purposes; 
it would be intended to help inform future development of telehealth 
standards and would not be displayed to consumers. Issuers should not 
construe this proposal to mean that telehealth services could be 
counted in place of in-person service access for the purpose of network 
adequacy standards.
    As further explained in the ICRs and Regulatory Impact Analysis 
sections for network adequacy, we believe the telehealth data 
collection would create some additional burden for issuers who do not 
already have this data. The estimated burden for the telehealth data 
collection is included as part of the total burden for completing and 
submitting the ECP/NA template and is detailed in the ICRs and 
Regulatory Impact Analysis sections for network adequacy. We believe 
that the potential benefits of obtaining this information and using it 
to inform future network adequacy standards are in the best interests 
of both QHP enrollees and QHP issuers. As such, we anticipate that the 
additional burden would be mitigated by the expected benefits.
    HHS seeks comment on this proposal, including comments on how HHS 
might incorporate telehealth availability into network adequacy 
standards in future PYs. We specifically seek comment on whether HHS 
should consider aligning the FFE network adequacy standards with 
Medicare Advantage's telehealth approach in which issuers are offered a 
credit towards meeting time and distance standards.
vi. Solicitation of Comments--Unintended Impacts of Stronger Network 
Adequacy Standards
    HHS is of the view that the network adequacy standards we propose 
in this rule are reasonable, necessary, and appropriate to ensure that 
QHPs enrollees have the access to the in-network providers the ACA 
requires. We acknowledge, however, that there is some risk that 
stronger network adequacy standards could be leveraged to create an 
uneven playing field in network agreement negotiations that could 
result in higher health care costs for consumers. We are also 
interested in exploring rules and policies that would promote 
competition, taking into consideration the interests of issuers, 
providers, and consumers by limiting the potential that network 
adequacy standards may be used by parties to network agreements as 
leverage to obtain more favorable contract terms, leading to higher 
health care costs for consumers.
    Strengthening network adequacy standards may increase the market 
power of some providers and inadvertently increase the cost of health 
care--for issuers, and, consequently, for enrollees. Some issuers seek 
to counteract these costs by incentivizing enrollees to seek care from 
lower-cost providers. However, some providers impose contractual 
steering restrictions in contracts with issuers. For example, where 
only one hospital is available to an issuer to meet the network 
adequacy standard, that hospital could charge higher prices without the 
threat of being excluded from the issuer's network. Such a price 
increase may be avoided if the issuer can include the hospital in its 
network, while giving incentives to its enrollees to use a more cost-
effective alternative. This procompetitive option to ``steer'' patients 
away from high-cost providers can be precluded by the provider imposing 
contractual steering restrictions on issuers. A rule that circumscribes 
such steering restrictions may prevent providers from exploiting 
network adequacy standards to charge higher prices. We seek comment on 
the feasibility and parameters of such a rule and other solutions that 
would balance bargaining power between issuers and providers in a way 
that protects the interests of consumers.
    The risk that a network adequacy standard may inadvertently empower 
a provider to charge higher prices is particularly problematic when the 
provider is part of a multi-provider hospital system and that system 
contracts on an all-or-nothing basis with issuers. An all-or-nothing 
contract is one that requires that an issuer contract with all 
facilities in a health system if the issuer wants to include any of the 
health system's facilities in its plan networks. When a multi-provider 
hospital system requires an all-or-nothing provision in its network 
agreements with issuers, issuers may be required to contract with the 
entire system in order to meet the network adequacy standard, and this 
may compel issuers to pay higher prices across the system, or else fail 
to meet the network adequacy standard. For this reason, we are 
interested in exploring how limiting ``all-or-nothing'' contracting 
provisions in payer contracts might counteract the potential for 
stronger network adequacy standards

[[Page 685]]

to increase health care costs and seek comment on this topic. We 
understand that provider organizations typically use all-or-nothing 
provisions to leverage the status of their facilities that plan 
networks must have to satisfy network adequacy standards. These 
circumstances may compel the issuer to pay higher prices across the 
system. We are interested in understanding how this practice affects 
enrollees' use of and access to in-network care and how it may 
contribute to the cost of care. We seek comment on these issues, 
including comments on ways that HHS could help stem the use of all-or-
nothing contracts that may drive up health care costs for consumers; 
how issuers can use provider networks to drive costs down; and what 
impact all-or-nothing contracting has on enrollees, plans, providers, 
and the market.
vii. Solicitation of Comments--Network Adequacy in State Exchanges
    HHS is interested in learning more about network adequacy in states 
with State Exchanges. HHS understands that State Exchanges have a mix 
of network adequacy policies in place, and that about 75 percent of 
those states have at least one quantitative standard for time and 
distance, appointment wait times, or both. While the new proposed 
network adequacy standards for QHP issuers in FFEs differ from those in 
State Exchanges, HHS has not been inclined to propose additional 
regulations that specifically target network adequacy reviews for QHP 
issuers in State Exchanges, and we are not inclined to propose 
regulating network adequacy for State Exchanges at this time. However, 
we are considering whether there is a need for greater alignment in FFE 
and State Exchange network adequacy standards.
    Starting in PY 2022, there will be 21 State Exchanges. We are 
concerned that there is no preferred network adequacy model that is 
shared among states, which indicates that there is no general agreement 
among states or Exchanges regarding what exactly constitutes an 
adequate network. Moreover, the proliferation of narrower networks in 
recent years presents a number of potential consumer protection 
concerns, including whether a narrow network has sufficient capacity to 
serve plan enrollees, or whether providers may be too geographically 
dispersed to be reasonably accessible. We are aware of the NAIC Health 
Benefit Plan Network Access and Adequacy Model Act,\349\ which includes 
recommendations for network adequacy standards to which states could 
hold their issuers accountable, and requires submission of access 
plans. Since there has been limited uptake of the full Model Act by 
states, there remains a lack of consistency in network adequacy 
standards among states and Exchanges.
---------------------------------------------------------------------------

    \349\ https://content.naic.org/sites/default/files/inline-files/MDL-074.pdf.
---------------------------------------------------------------------------

    HHS seeks comment on whether these conditions necessitate a more 
coordinated, national approach to network adequacy rules across all 
Exchanges that is suited to address contemporary conditions in the 
health care markets. For example, we seek comment on whether in future 
PYs, HHS should consider imposing network adequacy rules in FFEs and 
State Exchanges that would be intended to increase the standardization 
of network adequacy across the Exchanges. Moreover, we seek comment on 
specific measures to support such standardization to ensure that all 
Exchange enrollees can access the benefits and services under their 
plans as required by the ACA. We further seek comments that identify 
specific gaps in provider accessibility that exist under disparate 
State Exchange network adequacy standards that might be addressed 
through greater federal regulation of network adequacy standards across 
all Exchanges.
12. Essential Community Providers (Sec.  156.235)
    Essential community providers (ECPs) include providers that serve 
predominantly low-income and medically underserved individuals, and 
specifically include providers described in section 340B(a)(4) of the 
PHS Act and section 1927(c)(1)(D)(i)(IV) of the Social Security Act. 
The ECP categories include: Family planning providers, Indian health 
care providers, Federally Qualified Health Centers, hospitals, Ryan 
White providers, and other ECP providers. QHP issuers must include a 
sufficient number and geographic distribution of ECPs in their 
networks, where available. Section 156.235 establishes the requirements 
for inclusion of ECPs in QHP provider networks and provides an 
alternate standard for issuers that provide a majority of covered 
services through physicians employed directly by the issuer or a single 
contracted medical group.
    In assessing the appropriate PY 2023 ECP standard for medical QHP 
and SADP QHP certification, HHS has considered multiple options for 
strengthening our ECP policy. After careful consideration, HHS proposes 
the approaches described below. States performing plan management 
functions in the FFEs would be permitted to use a similar approach.
    Section 156.235(a)(2)(i) provides that a plan has a sufficient 
number and geographic distribution of ECPs if it demonstrates, among 
other criteria, that the network includes as participating 
practitioners at least a minimum percentage, as specified by HHS. HHS 
proposes that for PY 2023 and beyond, the required ECP provider 
participation standard be raised from 20 percent to 35 percent of 
available ECPs based on the applicable PY HHS ECP list, including 
approved ECP write-ins that would also count toward a QHP issuer's 
satisfaction of the 35 percent threshold. HHS would consider a plan to 
have satisfied the regulatory standard if the issuer contracts with at 
least 35 percent of available ECPs in each plan's service area to 
participate in the plan's provider network. The calculation methodology 
outlined in the 2018 Letter to Issuers in the federally-facilitated 
Marketplaces and 2018 Payment Notice would remain unchanged for issuers 
offering plans with a provider network.
    The PY 2023 HHS ECP list will be based on data maintained by HHS as 
well as provider data that HHS receives directly from providers through 
the ECP petition process for PY 2023. HHS will include on the PY 2023 
HHS ECP list those providers that submitted an ECP petition during the 
ECP petition window that closed on August 18, 2021, and that meet the 
definition of an ECP under Sec.  156.235.
    In developing this proposal, HHS considered that when the ECP 
threshold was 30 percent in PYs 2015-2017, all QHP issuers satisfied 
the 30 percent threshold with minimal reliance on ECP write-ins and 
justifications. In PYs 2018-2021, when the ECP threshold was 20 
percent, all QHP issuers satisfied the lower threshold with ease and 
very little reliance on ECP write-ins and justifications. Beginning in 
2019, HHS began publication of the ``Rolling Draft ECP list'', which 
significantly eased issuer burden for satisfying a higher threshold by 
allowing issuers to preview changes (that is, additions and removals) 
to the ECP list year-round in preparation for upcoming plan year 
contracting. Finally, in PY 2021, the percentage of medical and dental 
FFE issuers that could have satisfied a 35 percent ECP threshold was 80 
percent and 74 percent, respectively; while the mean and median ECP 
score across all FFE issuers was 55 percent and 54 percent, 
respectively.
    HHS anticipates that any QHP issuers falling short of the 35 
percent threshold for PY 2023 could satisfy the standard by using ECP 
write-ins and

[[Page 686]]

justifications. As in previous years, if an issuer's application does 
not satisfy the ECP standard, the issuer would be required to include 
as part of its application for QHP certification a satisfactory 
justification describing how the issuer's provider networks, as 
presently constituted, provides an adequate level of service for low-
income and medically underserved individuals and how the issuer plans 
to increase ECP participation in the issuer's provider network(s) in 
future years. At a minimum, such justification must include the number 
of contracts offered to ECPs for PY 2023, the number of additional 
contracts an issuer expects to offer and the timeframe of those planned 
negotiations, the names of the specific ECPs to which the issuer has 
offered contracts that are still pending, and contingency plans for how 
the issuer's provider network, as currently designed, will provide 
adequate care to enrollees who might otherwise be cared for by relevant 
ECP types that are missing from the issuer's provider network.
    HHS also proposes that, for plans that use tiered networks, to 
count toward the issuer's satisfaction of the ECP standard, ECPs must 
be contracted within the network tier that results in the lowest cost 
sharing obligation. For example, a QHP issuer cannot use the number of 
ECPs contracted with their PPO network when certifying a plan using 
their HMO network, if use of PPO network providers would result in 
higher cost sharing obligations for HMO plan enrollees. For plans with 
two network tiers (for example, participating providers and preferred 
providers), such as many PPOs, where cost sharing is lower for 
preferred providers, only the preferred network would be counted 
towards ECP standards. We propose to codify the network tiering 
requirement for ECP in regulation at Sec.  156.235.
    Additionally, for PY 2023 and beyond, HHS proposes that issuers 
could comply with the requirement at Sec.  156.235(a)(2)(ii)(B) to 
offers contracts to at least one ECP in the category of `other ECP 
providers'' by offering a contract to a Substance Use Disorder 
Treatment Center. These facilities are critical to HHS' efforts to 
ensure that low-income, medically underserved individuals have 
sufficient access to this EHB. We are also considering making non-
substantive revisions to Sec.  156.235, which requires QHPs to offer 
contracts to at least one ECP in each of the ECP categories, to improve 
readability and clarity, and to more closely reflect how Exchanges may 
operationalize this requirement. For example, the regulation text 
presently does not include language that specifically identifies which 
providers may fit the category of `Other ECP Providers.' We solicit 
comments on whether clarifying revisions are necessary and on how best 
to clarify this requirement in the regulation text.
    In addition to these proposed changes, HHS seeks comment on whether 
and how QHP issuers should increase the use of telehealth services as 
part of their contingency planning to ensure access to adequate care 
for enrollees who might otherwise be cared for by relevant ECP types 
that may be missing from the issuer's provider network. We also seek 
comment on if we should consider adding newly Medicare-certified Rural 
Emergency Hospitals to our Hospitals ECP category.
    These proposed changes are consistent with the directive from E.O. 
13985. HHS anticipates positive health equity impact as we believe 
these changes will increase access to quality, relevant health care for 
low-income and medically underserved individuals. HHS seeks comment on 
these proposals, including from ECPs and issuers serving low-income and 
medically underserved populations. HHS also seeks comment on ideas for 
further strengthening ECP policy.
14. Standards for Downstream and Delegated Entities (Sec.  156.340)
    We propose to amend and add language to Sec.  156.340 to extend the 
existing downstream and delegated standards to QHP issuers on all 
Exchange models, including State Exchanges and State Exchange SHOPs, 
and Exchange models that use the Federal platform, including, FFEs, 
SBE-FPs, FF-SHOPs; and HHS also proposes to add a requirement that all 
agreements between QHP issuers and their downstream and delegated 
entities include language stating that the relevant Exchange authority, 
including State Exchanges, may demand and receive the downstream or 
delegated entity's books, contracts, computers, or other electronic 
systems, including medical records and documentation, relating to the 
QHP issuer's obligations in accordance with Federal standards under 
paragraph (a) of this section until 10 years from the final date of the 
agreement period. These changes would hold QHP issuers in all models of 
Exchange responsible for their downstream and delegated entities' 
adherence to applicable federal standards related to Exchanges, and to 
make their oversight obligations, and the obligations of their 
downstream and delegated entities, explicit in regulation and in the 
QHP issuers' agreements with their downstream and delegated entities. 
We also propose to amend the title of subpart D of 45 CFR part 156 from 
``Standards for Qualified Health Plan Issuers on Federally Facilitated 
Exchanges and State-Based Exchanges on the Federal platform'' to 
``Standards for Qualified Health Plan Issuers on Specific Types of 
Exchanges'' to align with the proposed changes to extend the 
applicability of the Sec.  156.340 to all Exchange models.
    Section 156.340 was originally adopted in 2013 as part of the first 
Program Integrity Rule and is similar to existing standards for 
downstream and delegated entity that contract with Medicare Advantage 
Organizations.\350\ It currently provides that, notwithstanding any 
relationship(s) that a QHP issuer may have with delegated or downstream 
entities, the QHP issuer maintains responsibility for its compliance 
and the compliance of any of its delegated or downstream entities, with 
all applicable federal standards related to Exchanges, including those 
at Sec.  156.340(a)(1) through (4). Specifically, these paragraphs 
reference obligations set forth under: Subpart C of part 156, which 
governs QHP minimum certifications standards for all types of Exchange, 
with several provisions specific to FFEs or to Exchanges that use the 
Federal platform; subpart K of part 155, which governs Exchange 
functions pertaining to QHP certification for all types of Exchange, 
with several provisions specific to FFEs; subpart H of part 155, which 
governs the Exchange functions of the SHOP, including State Exchange 
SHOPs, SBE-FP-SHOPs and FF-SHOPs; standards in Sec.  155.220 with 
respect to agents, brokers, and web-brokers assisting with enrollment 
in QHPs offered through FFEs, FF-SHOPs, SBE-FPs, and SBE-FP-SHOPs; and 
standards in Sec. Sec.  156.705 and 156.715 for maintenance of records 
and compliance reviews for QHP issuers operating in an FFE and an FF-
SHOP. In the 2019 Payment Notice, we amended Sec.  156.340(a)(2) to 
include language incorporating cross-references to SHOP provisions, to 
ensure consumers on the FF-SHOPs received the protections the provision 
intended for them to receive.\351\
---------------------------------------------------------------------------

    \350\ 78 FR at 54120.
    \351\ 83 FR at 17028.
---------------------------------------------------------------------------

    In this rule, we propose to amend paragraph (a) by adding language 
stating that the applicable standards for which the QHP issuers and 
their downstream and delegated entities are responsible depend on the 
Exchange model in which the issuer provides coverage. We propose to 
remove existing paragraphs

[[Page 687]]

(a)(1) through (a)(4) that currently identify the key applicable 
standards as examples of the requirements with which QHP issuers must 
ensure their downstream and delegated entities comply, and create a new 
paragraph (a)(1) that outlines the standards applicable to QHP issuers 
participating in State Exchanges. In proposed new paragraph (a)(1), QHP 
issuers participating in State Exchanges, including State Exchange 
SHOPs, would be responsible for ensuring their downstream and delegated 
entities comply with the standards of subpart C of part 156 with 
respect to each of its QHPs on an ongoing basis and the Exchange 
processes, procedures, and standards in accordance with subparts H and 
K of part 155, including Sec. Sec.  155.705 and 155.706 for the small 
group market, unless the standard is specifically identified as 
applicable to only the FFE or FF-SHOP. This new proposed paragraph 
(a)(1) would generally extend applicability of the current downstream 
and delegated standards captured in existing paragraphs (a)(1)-(a)(2) 
of Sec.  156.340 to QHP issuers participating in State Exchanges, 
including State Exchange SHOPs, if the standard is otherwise applicable 
to the Exchange type in which the QHP issuer is operating.
    We further propose to create a new paragraph (a)(2) to outline the 
standards applicable to QHP issuers providing coverage on Exchange 
models that use the Federal platform. In proposed new paragraph (a)(2), 
QHP issuers participating in FFEs, FF-SHOPs, SBE-FPs, or SBE-FP-SHOPs 
would be responsible for ensuring their downstream and delegated 
entities comply with the standards of subpart C of part 156 with 
respect to each of its QHPs on an ongoing basis; the Exchange 
processes, procedures, and standards in accordance with subparts H and 
K of part 155, including Sec. Sec.  155.705 and 155.706 for the small 
group market; the standards of Sec.  155.220 with respect to agents, 
brokers and web-brokers assisting with enrollment in QHPs; and the 
standards of Sec. Sec.  156.705 and 156.715 for maintenance of records 
and compliance reviews if applicable to the Exchange type in which the 
QHP issuer is operating. This new proposed paragraph (a)(2) would apply 
the current downstream and delegated standards in existing paragraphs 
(a)(1) through (a)(4) of Sec.  156.340 to QHP issuers participating in 
FFEs, FF-SHOPs, SBE-FPs, and SBE-FP-SHOPs if the standard is otherwise 
applicable to the Exchange type in which the QHP issuer is operating.
    We also propose to add a new paragraph (b)(5), pertaining to record 
retention, incorporating the requirement that contracts between QHP 
issuers and their downstream and delegated entities include language 
that the relevant Exchange authority, including State Exchanges, may 
demand and receive the delegated or downstream entity's books, 
contracts, computers, or other electronic systems, including medical 
records and documentation, relating to the QHP issuer's obligations in 
accordance with Federal standards under paragraph (a) of this section 
until 10 years from the final date of the agreement period. This 
amendment would ensure the relevant Exchange authority--whether the 
FFE, SBE-FP or State Exchange--has access to the records and 
information from delegated and downstream entities that are necessary 
to ensure compliance with applicable minimum Federal standards related 
to Exchanges.
    These proposed amendments to Sec.  156.340 will better align the 
regulation with its intent and prevent confusion on the part of 
regulated entities and their downstream and delegated entities.
    We propose this amendment be applicable as of the effective date of 
the final rule. We seek comment on these proposed amendments.
15. Payment for Cost-Sharing Reductions--Clarification of CSR Payment 
and Data Collection Processes (Sec.  156.430)
    HHS proposes to amend Sec.  156.430 to clarify when CSR data 
submission is mandatory or voluntary. Section 156.430 establishes 
parameters for the advance payment for CSRs, the associated data 
submission standards, and how final CSR payment and charges are 
reconciled. On October 11, 2017, the Attorney General issued a legal 
opinion that HHS did not have a valid Congressional appropriation with 
which to make CSR payments to issuers.\352\ As a result, CSR payments 
ceased as of October 12, 2017.\353\ Because issuers were not receiving 
CSR payments from HHS, beginning with the 2018 benefit year CSR 
Reconciliation Data Submission process, HHS made the CSR data 
submission process voluntary. To clarify the data submission 
requirements, we propose to amend Sec.  156.430 to clarify that this 
data submission is mandatory for those issuers that receive CSR 
payments from HHS for any part of the benefit year and voluntary for 
other issuers.
---------------------------------------------------------------------------

    \352\ Acting Secretary's memorandum enclosing Attorney General's 
opinion regarding CSR payments (2017), available at https://www.hhs.gov/sites/default/files/csr-payment-memo.pdf.
    \353\ Ibid.
---------------------------------------------------------------------------

    To do this, we are proposing several modifications to Sec.  
156.430. First, we propose to amend Sec.  156.430(b)(1) to clarify that 
when there is an HHS appropriation to make CSR payments to issuers, an 
issuer will receive periodic advance payments to the extent permitted 
by the appropriation and based on the advance payment amounts 
established in guidance. We believe that this proposed change clarifies 
that the data submission requirements are mandatory for those issuers 
that receive CSR payments from HHS for any part of the benefit year. 
Further, and in line with the current practice, HHS will continue to 
provide those issuers that do not receive CSR payments from HHS the 
option to submit CSR data.
    Second, we propose to amend Sec.  156.430(d) to reflect a change of 
focus from reconciliation of CSR amounts to the timing and nature of 
CSR data submissions, specifically when CSR payments are made. We 
propose to amend Sec.  156.430(d) to state that HHS will periodically 
provide a submission window for issuers to submit CSR data documenting 
CSR amounts issuers paid, as specified in Sec.  156.430(d)(1) and (2), 
in a form and manner specified by HHS in guidance, and calculated in 
accordance with Sec.  156.430(c). When an appropriation is available 
for HHS to make CSR payments to QHP issuers, HHS will notify QHP 
issuers that the submission of the CSR data is mandatory for those 
issuers that received CSR payments from HHS for any part of the benefit 
year, and will use the data to reconcile advance CSR payments to 
issuers against the actual amounts of CSRs issuers provided, as 
determined by HHS based on amounts specified in Sec.  156.430(d)(1) and 
(2), and calculated in accordance with Sec.  156.430(c).
    When CSR payments are not made, HHS will notify those QHP issuers 
that did not receive CSR payments from HHS for any part of the benefit 
year that the submission of the CSR data is voluntary. The CSR data 
that must be submitted in either a voluntary or mandatory submission 
includes the data elements listed in Sec.  156.430(d)(1) and (2). The 
purpose of this change is to clarify when HHS will use CSR data to 
reconcile CSR payments. Specifically, we are proposing that to the 
extent that CSR payments from HHS are made to issuers, the CSR data 
submission process would be mandatory for those issuers having received 
CSR payments for any part of the benefit year from HHS, and would be 
voluntary for issuers that did not receive CSR

[[Page 688]]

payments from HHS for any part of the benefit year. This approach is 
consistent with how HHS has conducted these data submission processes 
since the 2018 benefit year CSR data submission process.
    Third, we propose to amend the title of Sec.  156.430(e) from 
``Payment of discrepancies'' to ``Cost-sharing Reductions Payments and 
Charges'' to reflect that this section governs both payments to issuers 
for CSR and charges levied against issuers for CSR.
    Lastly, we propose to amend Sec.  156.430(e)(1) to clarify that HHS 
will collect data regarding the CSRs actually provided by issuers to 
their enrollees as opposed to collecting data on the dollar value of 
CSRs HHS provided to the issuer, and to further clarify that HHS only 
pays reconciled CSR amounts when there is an appropriation to make CSR 
payments and to the extent permitted by such appropriation. We believe 
these proposed changes would provide issuers with further clarity 
regarding the intention of CSR data submission requirements.
    We note that, regardless of whether HHS makes CSR payments, issuers 
are required to provide CSRs to enrollees as specified at Sec.  
155.1030. We solicit comment on these proposals.
16. Quality Standards: Quality Improvement Strategy (Sec.  156.1130)
    In accordance with section 1311(c)(1)(E) of the ACA, quality 
improvement strategies described in section 1311(g)(1) of the ACA must 
be implemented across Exchanges as a QHP certification requirement. 
Section 1311(g)(1) of the ACA defines a QIS as a payment structure that 
provides increased reimbursement or other incentives for implementing 
activities related to the five health care topic areas defined in 
statute: Improving health outcomes of plan enrollees, preventing 
hospital readmissions, improving patient safety and reducing medical 
errors, promoting wellness and health, and reducing health and health 
care disparities. Under Sec.  156.1130(a), a QHP issuer participating 
in an Exchange for 2 or more consecutive years must implement and 
report on a QIS, including a payment structure that provides increased 
reimbursement or other market-based incentives in accordance with the 
health care topic areas in section 1311(g)(1) of the ACA, for each QHP 
offered in an Exchange, consistent with the guidelines developed by HHS 
under section 1311(g) of the ACA. In the 2016 Payment Notice, HHS 
established a phase-in approach for QIS implementation standards and 
reporting requirements to provide QHP issuers the necessary time to 
understand the populations enrolling in a QHP offered through the 
Exchange and to build quality performance data on their respective QHP 
enrollees.\354\ HHS noted that implementation of a QIS should be a 
continuous improvement process for which QHP issuers define the health 
outcome needs of their enrollees, set goals for improvement, and 
provide increased reimbursement to their providers or other market-
based incentives to reward achievement of those goals.\355\ In line 
with this approach and pursuant to the authority granted under Sec.  
156.1130(a) and section 1311(g) of the ACA, HHS proposes to update the 
QIS standards and enter the next phase of implementation by adopting a 
new guideline that would apply to QHP issuers beginning in 2023. 
Specifically, we propose a new guideline under which QHP issuers would 
be required to address health and health care disparities as a specific 
topic area within their QIS, in addition to at least one other topic 
area described in section 1311(g)(1) of the ACA beginning in 2023. We 
propose this expansion of the QIS standards, which aligns with health 
equity efforts across federal government policies and programs; 
however, we are not proposing amendments to the regulatory text 
outlined in Sec.  156.1130.
---------------------------------------------------------------------------

    \354\ 80 FR 10750 at 10844 (Feb. 27, 2015).
    \355\ Ibid.
---------------------------------------------------------------------------

    Persistent inequities in health care outcomes exist in the United 
States, including among populations enrolling in QHPs across Exchanges. 
Belonging to a racial or ethnic minority group, living with a 
disability, being a member of the lesbian, gay, bisexual, transgender, 
and queer (LGBTQI+) community, having limited English proficiency, 
living in a rural area, or being near or below the poverty level, is 
often associated with worse health outcomes.\356\ Such disparities in 
health outcomes are the result of a number of factors and exist 
irrespective of health insurance coverage type. Although not the sole 
determinant, poor health care access and provision of lower quality 
health care contribute to health disparities. In fact, research has 
shown that the expansion of health insurance coverage, for example 
through Medicaid expansion under the ACA, and the resulting increased 
access to health care, is linked to reductions in disparities in health 
insurance coverage as well as reductions in disparities in health 
outcomes.\357\
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    \356\ See Lindenauer PK, Lagu T, Rothberg MB, et al. Income 
Inequality and 30-Day Outcomes After Acute Myocardial Infarction, 
Heart Failure, and Pneumonia: Retrospective Cohort Study. British 
Medical Journal. 2013;346; Trivedi AN, Nsa W, Hausmann LRM, et al. 
Quality and Equity of Care in U.S. Hospitals. New England Journal of 
Medicine. 2014;371(24):2298-2308; Polyakova, M., et al. Racial 
Disparities In Excess All-Cause Mortality During The Early COVID-19 
Pandemic Varied Substantially Across States. Health Affairs. 2021; 
40(2): 307-316; Rural Health Research Gateway. Rural Communities: 
Age, Income, and Health Status. Rural Health Research Recap. 
November 2018; https://www.minorityhealth.hhs.gov/assets/PDF/Update_HHS_Disparities_Dept-FY2020.pdf; www.cdc.gov/mmwr/volumes/70/wr/mm7005a1.htm; Poteat TC, Reisner SL, Miller M, Wirtz AL. COVID-19 
Vulnerability of Transgender Women With and Without HIV Infection in 
the Eastern and Southern U.S. Preprint. medRxiv. 
2020;2020.07.21.20159327. Published 2020 Jul 24. doi:10.1101/
2020.07.21.20159327.
    \357\ Guth M, Garfield R, Rudowitz R. The Effects of Medicaid 
Expansion Under the ACA: Studies from Jan 2014 to Jan 2020.
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    We are specifically committed to achieving equity in health care 
outcomes for QHP enrollees by supporting QHP issuers in quality 
improvement activities to reduce health and health care disparities, 
and promoting issuer accountability for improving equity in the health 
and health care of their enrollee populations. For the purposes of this 
proposed rule, we are using the definition of ``equity'' established in 
Executive Order 13985, issued on January 20, 2021, as ``the consistent 
and systematic fair, just, and impartial treatment of all individuals, 
including individuals who belong to underserved communities who 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; LGBTQI+ 
persons; persons with disabilities; persons who live in rural areas; 
and persons otherwise adversely affected by persistent poverty or 
inequality.'' \358\ In light of the COVID-19 PHE, which is having a 
disproportionate and severe impact on underserved populations, and in 
line with the goals of Executive Order 13985, CMS is strengthening 
efforts across all programs to address disparities and advance health 
equity. This is a topic area that QHP issuers across the Exchanges have 
increasingly been focusing on in their QIS submissions.
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    \358\ 86 FR 7009 (Jan. 25, 2021), available at https://www.federalregister.gov/documents/2021/01/25/2021-01753/advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government.
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    Upon CMS evaluation of QHP issuer QIS submissions in the FFEs, an 
estimated 60 percent of QIS submissions in PY 2020 did address health 
care disparities. Building on the phase-in

[[Page 689]]

approach established in the 2016 Payment Notice and our experiences 
evaluating QIS submissions over the years and during the COVID-19 PHE, 
we now propose to update the QIS standards. We propose to require QHP 
issuers to address health and health care disparities as one topic area 
of their QIS in addition to at least one other topic area described in 
section 1311(g)(1) of the ACA beginning in 2023. As previously noted, 
we are proposing this expansion of the QIS standards, which aligns with 
health equity efforts across federal government policies and programs; 
however, we are not proposing amendments to the regulatory text 
outlined in Sec.  156.1130. We seek comment on this proposal.
17. Disbursement of Recouped High-Cost Risk Pool Funds--Administrative 
Appeals of Issuers of Risk Adjustment Covered Plans (Sec.  156.1220)
    HHS proposes that any funds recouped as a result of a successful 
high-cost risk pool administrative appeal under Sec.  
156.1220(a)(1)(ii) would be used to reduce high cost-risk pool charges 
for that national high-cost risk pool for the current benefit year, if 
high-cost risk pool payments have not already been calculated for that 
benefit year. If high-cost risk pool payments have already been 
calculated for that benefit year, we propose to use any funds recouped 
as a result of a successful high-cost risk pool administrative appeal 
to reduce high-cost risk pool charges for that national high-cost risk 
pool for the next benefit year. As discussed earlier in this rule, we 
also proposed similar treatment of high-cost risk pool funds HHS 
recoups as a result of audits of risk adjustment covered plans under 
Sec.  153.620(c)(5)(ii) and as a result of actionable discrepancies 
under Sec.  153.710(d). We propose to treat high-cost risk pool funds 
recouped as a result of a successful appeal the same way, that is, the 
recouped funds would be used to reduce high-cost risk pool charges for 
that national high-cost risk pool for the next benefit year for which 
high-cost risk pool payments have not already been calculated.
    We also clarify that when HHS recoups high-cost risk pool funds as 
a result of a successful administrative appeal, the issuer that filed 
the appeal would then be responsible for reporting that adjustment to 
its high-cost risk pool payments or charges in the next MLR reporting 
cycle consistent with the applicable instructions in 45 CFR 153.710(h). 
Additionally, for any benefit year in which high-cost risk pool charges 
are reduced as a result of high-cost risk pool funds recouped as a 
result of an actionable discrepancy, issuers whose charge amounts are 
reduced would report the high-cost risk pool charges paid for that 
benefit year net of recouped audit funds in the next MLR reporting 
cycle consistent with 45 CFR 153.710(h).
    We seek comment on this proposal.
18. Direct Enrollment With the QHP Issuer in a Manner Considered To Be 
Through the Exchange (Sec.  156.1230)
    We propose to amend Sec.  156.1230 such that its nondiscrimination 
protections would explicitly prohibit discrimination based on sexual 
orientation and gender identity. HHS previously codified such 
nondiscrimination protections at Sec.  156.1230, but amendments made in 
2020 to Sec.  156.1230 removed any reference to sexual orientation and 
gender identity. If finalized, this proposal would revert Sec.  
156.1230 to the pre-2020 nondiscrimination protections.
    Section 156.1230(b)(2) states that the QHP issuer must provide 
consumers with correct information, without omission of material fact, 
regarding the FFE, QHPs offered through the FFE, and insurance 
affordability programs, and refrain from marketing or conduct that is 
misleading a consumer into believing they are visiting HealthCare.gov, 
coercive, or discriminates based on race, color, national origin, 
disability, age, or sex. Previously, in the 2017 Payment Notice final 
rule, HHS finalized at Sec.  155.220(j)(2)(i) standards that prohibited 
agents, brokers and web-brokers from discriminating on the basis of 
sexual orientation and gender identity, among other factors.\359\ In 
the 2018 Payment Notice final rule, we added this nondiscrimination 
standard from Sec.  155.220(j) to Sec.  156.1230(b) so that the 
nondiscrimination protections on the basis of sexual orientation and 
gender identity also applied to issuers using direct enrollment on an 
FFE.\360\ However, in the 2020 final rule related to section 1557, HHS 
revised certain CMS regulations, including Sec.  156.1230(b)(2), by 
removing sexual orientation and gender identity as bases of 
discrimination subject to the CMS regulations' nondiscrimination 
protections.\361\
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    \359\ 81 FR 12204 (March 8, 2016).
    \360\ 81 FR 94058 (December 22, 2016).
    \361\ 85 FR 37160 (June 19, 2020); See id. at 37218-21 (the 2020 
section 1557 final rule revised the following CMS regulations: 45 
CFR 147.104, 155.120, 155.220, 156.200, 156.1230).
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    CMS possesses statutory authority independent of section 1557 of 
the ACA to prohibit discrimination in enrollment through the Exchanges 
by issuers of QHPs on the Exchanges under the authority to establish 
requirements with respect to the operation of Exchanges, the offering 
of QHPs through such Exchanges, and other requirements as the Secretary 
determines appropriate in sections 1321(a)(1)(A), (B), and (D) of the 
ACA. Pursuant to this authority, in the 2018 Payment Notice final rule, 
HHS finalized at Sec.  156.1230(b)(2) standards applicable to issuers 
using direct enrollment on an FFE to require that issuers refrain from 
marketing or conduct that is misleading, coercive, or discriminatory, 
including on the basis of sexual orientation or gender identity. HHS 
explained it was adding this nondiscrimination standard from Sec.  
155.220(j) to Sec.  156.1230(b) so that the nondiscrimination 
protections on the basis of sexual orientation and gender identity also 
applied to issuers using direct enrollment on an FFE. HHS proposes to 
exercise that same authority here to amend Sec.  156.1230(b) to again 
prohibit issuers using direct enrollment on an FFE from discriminating 
based on sexual orientation and gender identity. Sections 
1321(a)(1)(A), (B), and (D) of the ACA are the same authority CMS 
relies upon for implementation of existing nondiscrimination 
protections at Sec.  156.200(e). Utilizing this same authority to again 
prohibit discrimination based on sexual orientation and gender identity 
at Sec.  156.1230(b) would be consistent with the authority CMS relies 
upon for the existing protections at Sec.  156.1230(b) that currently 
prohibit discrimination on the basis of race, color, national origin, 
disability, age, or sex. We believe such amendments are warranted in 
light of the existing trends in health care discrimination and are 
necessary to better address barriers to health equity for LGBTQI+ 
individuals.
    A more in-depth discussion of these developments and other factors 
considered in proposing these amendments to CMS nondiscrimination 
protections is included earlier in the preamble to Sec.  147.104 under 
section III.B.1.b. of this preamble. For brevity, we refer back to that 
section of the preamble rather than restating the issues here.
19. Solicitation of Comments--Choice Architecture and Preventing Plan 
Choice Overload
    One of the primary goals of the ACA is to provide consumers access 
to quality, comprehensive health coverage options, as well as the 
information and assistance they need to make coverage choices that are 
right for them. For this reason, both Federal and State Exchanges 
invest significant time and resources to building Exchanges that

[[Page 690]]

support consumer access to competitive health plan options that offer 
sufficiently diverse benefit options that give consumers a meaningful 
choice between Exchange coverage options. Exchanges also work to ensure 
that QHP information is presented to consumers in a manner that is 
clear and easy to understand, and allows consumers to accurately 
recognize the material differences between plan options.
    Although HHS continues to prioritize competition and choice on the 
Exchanges, we are concerned about plan choice overload which can result 
when consumers have too many choices in plan options on an Exchange. A 
2016 report by the RAND Corporation reviewing over 100 studies 
concluded that having too many health plan choices can lead to poor 
enrollment decisions due to the difficulty consumers face in processing 
complex health insurance information.\362\
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    \362\ Taylor EA, Carman KG, Lopez A, Muchow AN, Roshan P, and 
Eibner C. Consumer Decisionmaking in the Health Care Marketplace. 
RAND Corporation. 2016.
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    Earlier under this section E. of the preamble, we introduced a 
proposal to require that FFE and SBE-FP issuers offer certain 
standardized options to be designed by HHS. Standardized options offer 
a solution to the problems of choice overload through simplifying cost 
sharing structures and increasing plan comparability by allowing 
consumers to focus on premium price, provider network, and plan 
quality.\363\ In light of the proliferation of seemingly similar plans 
offered through the Exchanges over the last several years, HHS wishes 
to explore whether it should limit the total number of plans issuers 
may offer through the FFEs and SBE-FPs in future PYs in order to 
further streamline and optimize the plan selection process for 
consumers on the Exchanges.
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    \363\ ``Facilitating Consumer Choice: Standardized Plans in 
Health Insurance Marketplaces.'' Office of the Assistant Secretary 
for Planning and Evaluation, U.S. Department of Health and Human 
Services. December 2021. Available at https://aspe.hhs.gov/.
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    HHS's desire to limit the number of plans that issuers can offer 
through the Exchanges arises following the sharp increase in plan 
offerings in recent years. For example, in the FFEs and SBE-FPs in PY 
2019, there was an enrollee-weighted average of 1.2 catastrophic plans, 
7.9 bronze plans, 12.3 silver plans, 4.6 gold plans, and 1.1 platinum 
plans available per enrollee, amounting to a total of 27.1 plans 
available per enrollee. In the FFEs and SBE-FPs in PY 2022, based on 
current filing data, it is expected that there will be an enrollee-
weighted average of 2.7 catastrophic plans, 40.4 bronze plans, 45.3 
silver plans, 19.2 gold plans, and 1.6 platinum plans available per 
enrollee, amounting to a total of 109.2 plans available per enrollee.
    In PY 2022, it is expected that several rating areas will have more 
than 50 silver plans, excluding CSR variations, available to 
consumers--a number we expect will make it difficult for consumers to 
make reasonably informed decisions. This proliferation of plans is only 
partially attributable to new market entrants, since in PY 2019, 
consumers could select QHPs from an enrollee-weighted average of 2.8 
issuers per enrollee, while in PY 2022, it is expected consumers will 
be able to select QHPs from an enrollee-weighted average of 6.3 issuers 
per enrollee. The fact that the enrollee-weighted average number of 
plan offerings increased by a factor of four while the enrollee-
weighted average number of issuers only increased by a factor of just 
over two between PYs 2019 and 2022 suggests consideration of the need 
to limit the proliferation of seemingly similar plans in order to 
further streamline and optimize the plan selection process for 
consumers on the Exchanges.
    HHS is concerned that having an excessive number of health plan 
options may make consumers less likely to complete any plan selection 
and more likely to select a plan that does not match their health 
needs. In studies of consumer behavior in Medicare Part D, Medicare 
Advantage, and Medigap, a choice of 15 or fewer plans was associated 
with higher enrollment rates, while a choice of 30 or more plans led to 
a decline in enrollment rates.\364\ These conclusions are supported by 
the comments received during prior rulemaking in which a significant 
number of commenters raised concerns that removing tools that 
facilitate the plan selection process causes consumers to face choice 
paralysis and leads to a reduction in overall enrollment in QHPs, 
undermining the purpose of Exchanges--to allow people to compare and 
purchase QHPs.
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    \364\ Chao Zhou and Yuting Zhang, ``The Vast Majority of 
Medicare Part D Beneficiaries Still Don't Choose the Cheapest Plans 
That Meet Their Medication Needs.'' Health Affairs, 31, no.10 
(2012): 2259-2265.
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    HHS's experience during its annual open enrollment period also 
suggests that ``many consumers, particularly those with a high number 
of health plan options, find the large variety of cost-sharing 
structures available on the Exchanges difficult to navigate.'' \365\ 
Thus, in order to streamline and optimize the plan selection process 
for consumers on the Exchanges, HHS is interested in exploring possible 
methods of improving choice architecture. Several proposals within this 
rulemaking complement this goal, including the standardized options 
proposal at Sec.  156.201 and the proposals to change the applicable AV 
de minimis range at Sec. Sec.  156.140, 156.200, and 156.400.
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    \365\ 80 FR 75,488, 75,542 (Dec. 2, 2015).
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    Specifically, the standardized options proposal at Sec.  156.201 
proposes to require FFE and SBE-FP issuers to offer plans with 
standardized cost-sharing parameters at every product network type, 
metal level, and throughout every service area that they offer non-
standardized options. Though this proposal does not limit the number of 
non-standardized options, HHS intends to consider and propose future 
rulemaking, as appropriate, to determine whether to limit the number of 
non-standard plans that FFE and SBE-FP issuers may offer through the 
Exchanges in PYs beginning on or after January 1, 2024.
    Additionally, the proposals at Sec. Sec.  156.140, 156.200, and 
156.400 propose to modify the AV de minimis ranges. HHS proposes to 
modify the de minimis ranges at Sec.  156.140(c) beginning in PY 2023 
to +2/-2 percentage points for all individual and small group market 
plans subject to the AV requirements under the EHB package, other than 
for expanded bronze plans, for which HHS proposes a de minimis range of 
+5/-2. Under Sec.  156.200, HHS proposes, as a condition of 
certification as a QHP, to limit the de minimis range to +2/0 
percentage points for individual market silver QHPs. HHS also proposes 
under Sec.  156.400 to specify de minimis ranges of +1/0 percentage 
points for income-based silver CSR plan variations. HHS anticipates 
that these proposals will have the effect of decreasing the number of 
plan offerings due to more restricted AV de minimis ranges.
    HHS is also considering resuming the meaningful difference standard 
that was previously codified at 45 CFR 156.298. The meaningful 
difference standard was first finalized in the 2015 Payment Notice, 
revised in the 2017 Payment Notice, and discontinued and removed from 
regulation in the 2019 Payment Notice. The meaningful difference 
standard was originally intended to enhance consumer understanding of 
the differences between plans and enable optimal consumer choice. It 
was then considered to be no longer necessary given the decreased 
number of issuers and plans offered through the FFEs and SBE-FPs in PY 
2019. Given that the

[[Page 691]]

number of plans offered through the Exchanges has increased sharply 
over the last several years, HHS believes that resuming the meaningful 
difference standard could play a constructive role in limiting the 
proliferation of seemingly similar plans on the Exchanges, thus further 
streamlining and optimizing the plan selection process for consumers on 
the Exchanges.
    HHS also acknowledges that a number of State Exchanges have 
successfully employed an active purchaser model in which these 
Exchanges selectively negotiate contracts with issuers, limit the total 
number of issuers that can offer QHPs through the Exchange, require 
issuers to offer standardized options exclusively, and exclude plans 
that have not demonstrated the administrative capability, prices, 
networks or product designs that improve consumer value. HHS intends to 
consider whether such a model would be appropriate in future PYs to 
achieve the aforementioned goals of streamlining the plan selection 
process for consumers on the Exchanges.
    We seek comment on the utility of limiting the number of plans that 
FFE and SBE-FP issuers can offer through the Exchanges in future PYs in 
order to avoid plan choice overload and to further streamline and 
optimize the plan selection process for consumers on the Exchanges. We 
also seek comment on the impact of limiting the number of plans that 
issuers can offer through the Exchanges and on effective methods to 
achieve this goal, the advantages and disadvantages of these methods, 
and if there are alternative methods we have not considered.
    We also seek comment on other evidence-based approaches to improve 
choice architecture within the Exchanges.

F. Part 158--Issuer Use of Premium Revenue: Reporting and Rebate 
Requirements

1. Reimbursement for Clinical Services Provided to Enrollees (Sec.  
158.140)
    We propose to amend Sec.  158.140(b)(2)(iii) to clarify that only 
those provider incentives and bonuses that are tied to clearly defined, 
objectively measurable, and well-documented clinical or quality 
improvement standards that apply to providers may be included in 
incurred claims for MLR reporting and rebate calculation purposes.
    Section 2718(a) of the PHS Act requires health insurance issuers 
offering group or individual health insurance coverage (including a 
grandfathered health plan) to, for MLR purposes, separately report the 
percentage of total premium revenue (after certain adjustments) 
expended on reimbursement for clinical services provided to enrollees 
under such coverage, for activities that improve health care quality, 
and on all other non-claims (administrative) costs. Section 2718(b) of 
the PHS Act requires a health insurance issuer to provide an annual 
rebate to each enrollee if the issuer's MLR falls below the applicable 
MLR standard established in section 2718(b)(1)(A)(i) and (ii). Section 
158.140 sets forth the MLR reporting requirements related to the 
reimbursement for clinical services provided to enrollees, including a 
requirement in Sec.  158.140(b)(2)(iii) that issuers must include in 
incurred claims the amount of incentive and bonus payments made to 
providers. Incentive and bonus payments made to providers were 
originally required to be included in incurred claims to reflect 
certain claim liability accounting practices of HMOs,\366\ but due to 
the lack of clarity and specificity in the regulations, have resulted 
in inclusion of a variety of incentive and bonus payments to providers. 
However, inclusion of many types of provider incentives and bonuses in 
incurred claims is appropriate and consistent with the purpose of the 
statute to the extent such bonuses reward or incentivize providers to 
deliver higher-quality care to consumers and thus lead to higher value 
for consumers' premium payments.
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    \366\ See 75 FR 74874 and https://www.govinfo.gov/content/pkg/FR-2010-12-01/pdf/2010-29596.pdf.
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    In the course of conducting MLR examinations pursuant to Sec. Sec.  
158.401 and 158.402, we have observed some issuers reporting incentive 
or bonus payments to providers that are not based on quality or 
performance metrics, but rather, involve transferring excess premium 
revenue to providers to circumvent MLR rebate requirements and avoid 
paying MLR rebates when issuers do not meet the applicable MLR 
standard.
    Most provider incentive and bonus agreements we encounter during 
MLR examinations tend to have clinical metrics that must be met by the 
provider, rather than the issuer, in order for payment to occur. 
However, we have observed arrangements where the issuer's failure to 
meet the MLR standard is itself the metric that triggers the payment of 
a bonus to the provider. Under such arrangements, any time an issuer's 
MLR falls below a specified threshold, including below the applicable 
MLR standard (or, similarly, a metric tied to the issuer's 
profitability or surplus exceeds a specified threshold), the issuer 
must pay the excess profits to a provider group or hospital system. If 
such payments are labeled as a provider ``incentive'' or ``bonus'' and 
are included in the issuer's incurred claims, the issuer's MLR is 
artificially raised so that it is close to or meets the applicable MLR 
standard. This artificial inflation of MLR often eliminates most, or in 
some cases even all, of the rebate owed to enrollees, regardless of how 
low enrollees' claims costs are relative to premiums those enrollees 
pay. Such artificial inflation of MLR denies consumers the protection 
of receiving premium rebates guaranteed by the statute for the years 
when claims costs are low due to low utilization of health care 
services, such as the years when numerous medical procedures are 
deferred due to a pandemic. In some cases, when such payments to 
providers are inappropriately labeled as ``incentives'' or ``bonuses,'' 
they inflate paid claims by as much as 30 percent to 40 percent. The 
incentive for such arrangements is particularly high for integrated 
medical systems where the issuer is the subsidiary, owner, or affiliate 
of a provider group or a hospital system. Further, in some cases these 
``incentives'' or ``bonuses'' are not even paid to the clinical 
providers, but rather to the non-clinical parent holding company of the 
hospital or provider group and the issuer.
    Although we consider inclusion of the provider ``incentives'' and 
``bonuses'' described above in incurred claims inappropriate under 
existing regulations because the described approach directly 
contravenes the statute, in order to increase compliance and improve 
program integrity, we propose to amend Sec.  158.140(b)(2)(iii) to 
clarify that only those provider incentives and bonuses made to 
providers that are tied to clearly defined, objectively measurable, and 
well-documented clinical or quality improvement standards that apply to 
providers may be included in incurred claims for MLR reporting and 
rebate calculation purposes. We seek comment on this proposal.
2. Activities That Improve Health Care Quality (Sec.  158.150)
    We propose to amend Sec.  158.150(a) to specify that only 
expenditures directly related to activities that improve health care 
quality may be included in QIA expenses for MLR reporting and rebate 
calculation purposes.
    Section 2718(a) of the PHS Act requires health insurance issuers 
offering group or individual health insurance coverage (including a

[[Page 692]]

grandfathered health plan) to, for MLR purposes, report the percentage 
of total premium revenue (after certain adjustments) expended on 
reimbursement for clinical services provided to enrollees under such 
coverage, for activities that improve health care quality, and on all 
other non-claims costs. Section 158.221 defines the numerator of an 
issuer's MLR to include the issuer's incurred claims plus the issuer's 
expenditures for activities that improve health care quality, as 
defined in Sec. Sec.  158.150 and 158.151. Section 158.150 describes 
the types of activities that qualify as QIA, but does not specify the 
types of expenses that may be included as QIA expenses, or the extent 
to which such expenses must relate to the activity. The lack of clarity 
in existing regulations has caused wide discrepancies in the types of 
expenses that issuers include in QIA expenses and creates an unequal 
playing field among issuers. Some issuers appropriately include only 
direct expenses, such as the salaries of the staff performing actual 
QIA functions in QIA expenses. However, other issuers additionally 
allocate indirect expenses such as overhead, marketing, lobbying, 
corporate or holding group overhead, and vendor profits in QIA 
expenses. To the extent they can be quantified, such indirect expenses 
often inflate QIA amounts by 33 percent to 50 percent, potentially 
reducing rebates provided to enrollees while providing no value for 
consumers' premium dollars. In many other cases, the amounts of 
indirect expenses included in QIA expenses appear to be arbitrary 
because there is no reasonable method to allocate them to QIA as the 
expenses have no direct or quantifiable relationship to health care 
quality.
    A significant portion of QIA expenses is attributable to salaries 
of employees actually performing the QIA. However, issuers' employees 
often perform QIA only part of the time, while performing cost 
containment and other strictly administrative and profit-generating 
functions (such as negotiating provider rates, or claims adjustment and 
appeals) the rest of the time. As a result, numerous fixed costs that 
some issuers allocate to QIA simply because some of their staff spend 
some of their time performing QIA would, for the most part, exist even 
if the issuer did not engage in any QIA. Examples of such indirect 
expenses include: Office space (including rent or depreciation, 
facility maintenance, janitorial, utilities, property taxes, insurance, 
wall art), human resources, salaries of general counsel and executives, 
computer and telephone usage, and company parties and retreats, 
including catering and travel.
    Some issuers additionally allocate a fixed percentage of their 
entire IT cost centers to QIA, even though the IT infrastructure 
disproportionately supports regular business functions such as billing, 
claims processing, financial analysis, and cost containment, and for 
the most part would exist even if the issuer did not engage in any QIA. 
Examples of such expenses include: Salaries of IT staff and call center 
or help desk staff, data centers and warehouses, mainframe equipment, 
network system applications and equipment, enterprise data management, 
as well as depreciation, maintenance, and utilities associated with IT 
equipment.
    Some issuers include in QIA expenses amounts exceeding the cost of 
providing the actual QIA service. For example, some issuers make a 
profit when providing wellness incentives to enrollees, but structure 
cost reporting in a manner that includes such profits in QIA expenses. 
In addition, some issuers include the promotion or marketing of their 
QIA services to group policyholders or enrollees as QIA expenses. Some 
issuers also include the cost of developing the prices of QIA services 
sold to group policyholders, or costs associated with calculating and 
reporting QIA expenses.
    Section 2718 of the PHS Act created the first national MLR 
reporting and rebating program with the goal of putting downward 
pressure on issuers' administrative expenses and encouraging issuers to 
devote more of the premium dollars to medical spending and enrollee 
health. Section 2718 of the PHS Act recognizes that investing in QIA 
may improve enrollee health, thereby increasing the value of their 
premium dollars. However, facility maintenance, utilities, human 
resources, salaries of counsel and executives, computers, travel and 
entertainment, IT systems, and marketing of issuers' products provide 
no benefit to an enrollee's health. By including such costs in the MLR 
numerator, the value of the enrollee's premium dollars is actually 
reduced. Thus, indirect expenses such as those are described here are 
classified as non-claims, administrative costs for purposes of 
reporting incurred claims under Sec.  158.140. Allowing issuers to 
report these same excluded expenses as expenditures on QIA is 
inappropriate and would undermine the very purpose and intent of 
section 2718 of the PHS Act. It would allow issuers to inflate QIA 
costs by including expenses that do not actually improve health care 
quality, particularly since these expenses are often fixed costs that 
would occur regardless of whether the issuer engages in QIA. Further, 
some issuers are not able to precisely determine what portion of 
indirect costs is tied to QIA, as many issuers do not have an accurate 
method to quantify the actual cost of each expense category as it 
relates to each QIA, and thus issuers are often arbitrarily determining 
or apportioning indirect expenses without adequate documentation to 
support their determinations. The lack of clarity in Sec.  158.150 as 
to what expenses may be included in QIA expenses has created an uneven 
playing field that is unfairly boosting the MLRs of issuers that 
include indirect or overhead expenses in QIA expenses as compared to 
those that are not reporting these expenses in QIA expenses, thus 
driving up health care spending and depriving consumers of value for 
their premium dollars.
    In order to ensure reporting consistency among issuers and ensure 
that QIA expenses included in the MLR numerator represent actual value 
provided for consumers' premium dollars, we propose to amend Sec.  
158.150(a) to specify that only expenditures directly related to 
activities that improve health care quality may be included in QIA 
expenses.
    We seek comment on this proposal.
3. Allocation of Expenses (Sec.  158.170)
    As noted in part 2 of the 2022 Payment Notice final rule, on March 
4, 2021, the United States District Court for the District of Maryland 
decided City of Columbus, et al. v. Cochran, 523 F. Supp. 3d 731 (D. 
Md. 2021). Among other things, the court vacated Sec.  158.221(b)(8), 
which provided that beginning with the 2017 MLR reporting year, an 
issuer had the option of reporting an amount equal to 0.8 percent of 
earned premium in the relevant State and market in lieu of reporting 
the issuer's actual expenditures for activities that improve health 
care quality, as defined in Sec. Sec.  158.150 and 158.151.\367\ 
Accordingly, in part 2 of the 2022 Payment Notice final rule, we 
finalized the deletion of Sec.  158.221(b)(8) and removed the option 
allowing issuers to report the fixed, standardized amount of QIA and 
reverted to requiring issuers to itemize QIA expenditures, beginning 
with the 2020 MLR reporting year (MLR reports that were due by July 31, 
2021). However, we inadvertently failed to make a conforming amendment 
to

[[Page 693]]

Sec.  158.170(b). Section 158.170 addresses allocation of expenses in 
relation to MLR reporting in general. Section 158.170(b) requires 
issuers to describe the methods used to allocate expenses. 
Specifically, Sec.  158.170(b) requires the report required in Sec.  
158.110 to include a detailed description of the methods used to 
allocate, among other things, ``quality improvement expenses (unless 
the report utilizes the percentage of premium option described in Sec.  
158.221(b)(8), in which case the allocation method description should 
state so),'' to each health insurance market in each State. Given the 
deletion of Sec.  158.221(b)(8) in part 2 of the 2022 Payment Notice 
final rule, the reference in Sec.  158.170(b) to the percentage of 
premium QIA reporting option described in Sec.  158.221(b)(8) is no 
longer applicable. Accordingly, we propose make a technical amendment 
to Sec.  158.170(b) to correct this oversight and remove the reference 
to the percentage of premium QIA reporting option described in Sec.  
158.221(b)(8).
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    \367\ 86 FR 24140.
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G. Solicitation of Comments on Health Equity, Climate Health, and 
Qualified Health Plans

    On January 20, 2021, President Biden issued Executive Order 13985, 
titled ``Advancing Racial Equity and Support for Underserved 
Communities through the Federal Government,'' which established a 
government-wide approach to advancing equity and addressing disparities 
for historically marginalized communities in the United States. The 
order defines equity as ``the consistent and systematic fair, just and 
impartial treatment of all individuals, including individuals who 
belong to underserved communities that have been denied such 
treatment.'' \368\
---------------------------------------------------------------------------

    \368\ Advancing Racial Equity and Support for Underserved 
Communities Through the Federal Government. Executive Office of the 
President. 2021, https://www.federalregister.gov/documents/2021/01/25/2021-01753/advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government.
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    CMS' Office of Minority Health (CMS OMH) aligns with Healthy People 
2030 that defines health disparities as ``a particular type of health 
difference that is closely linked with social, economic, and/or 
environmental disadvantage. Health disparities adversely affect groups 
of people who have systematically experienced greater obstacles to 
health based on their racial or ethnic group; religion; socioeconomic 
status; gender; age; mental health; cognitive, sensory, or physical 
disability; sexual orientation or gender identity; geographic location; 
or other characteristics historically linked to discrimination or 
exclusion.'' \369\
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    \369\ https://health.gov/our-work/national-health-initiatives/healthy-people/healthy-people-2030/questions-answers.
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    In alignment with the objectives set forth by the President's 
Executive Order and CMS OMH, CMS aims to proactively advance health 
equity and improve the health of all Americans, including racial and 
ethnic minorities, sexual and gender minorities, people with 
disabilities, individuals with limited English proficiency, rural 
populations, and historically underserved communities.
    Section 1311(e)(1)(B) of the ACA states an Exchange may certify a 
health plan as a QHP if the Exchange determines that making available 
such health plan through such Exchange is in the interests of qualified 
individuals and qualified employers. Section 1321(a)(1) of the ACA 
provides the Secretary with general rulemaking authority, including 
with respect to setting standards for meeting the requirements for 
offering QHPs through Exchanges and such other requirements as the 
Secretary determines appropriate. In addition to the proposals in this 
rule,\370\ CMS is considering other ways to incorporate health equity 
standards by using the Secretary's authority to enhance criteria for 
the certification of QHPs and/or leverage existing QHP requirements, 
such as the Network Adequacy Standards at 45 CFR 156.230 and 
Accreditation of QHP Issuers at 45 CFR 156.275. Furthermore, CMS seeks 
input on additional ways to incentivize QHP issuers to improve health 
equity and improve conditions in enrollees' environments, as well as to 
address other SDOH outside of the QHP certification process.
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    \370\ See, for example, the proposed updated quality standards 
under 45 CFR 156.1130 for QHP issuer quality improvement strategies 
and interoperability requirements under 45 CFR 156.221 for QHP 
issuers in the FFE to implement and maintain a patient access 
application programming interface.
---------------------------------------------------------------------------

    CMS seeks comment from stakeholders on advancing health equity 
through QHP certification standards; advancing CMS's understanding of 
the existing landscape of issuer collection of health equity data; and 
assessing data sources that focus on population-level factors made 
available by governments, quasi-governmental entities, data vendors and 
other organizations, both generally and with respect to the following 
specifics:
     CMS seeks input on:
    ++ Requiring QHP issuers to obtain the National Committee for 
Quality Assurance (NCQA) Health Equity Accreditation in addition to 
their existing accreditation requirements,
    ++ Other health equity assessment tools that achieve this goal, and 
(3) the challenges QHP issuers could face implementing a new 
accreditation product on health equity.\371\
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    \371\ https://store.ncqa.org/accreditation/health-equity-he.html.
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     What demographic and/or SDOH data do QHP issuers currently 
collect from enrollees? Should QHP issuers be required to collect 
demographic and other SDOH data to help issuers gain a better 
understanding of the populations they serve, and thereby develop more 
equity-focused QHPs? Which data elements should be considered to 
advance health equity within QHPs? What are some of the challenges and 
barriers to collect this data?
     What datasets related to population factors could CMS 
leverage to analyze whether QHP networks are providing adequate access 
to health care services for members within specific geographic areas?
     What ability do QHP issuers have to tailor provider 
networks based on the health needs of enrollees in specific geographic 
areas?
     What health conditions or outcome variables should CMS 
analyze to identify gaps in the health care services? What are some of 
the ways that CMS could measure QHP issuers' progress toward advancing 
health equity?
     Should CMS encourage QHP issuers to be accountable for 
improving health outcomes across all populations equitably, while 
acknowledging variations in SDOH?
     Are there ways that CMS could incentivize QHP issuers to 
advance health equity outside of the QHP certification requirement, 
such as through other federal reporting requirements, including MLR 
reporting?
     What are the challenges QHP issuers face in promoting and 
advancing health equity? What are some strategies that could overcome 
those challenges?
     What other health equity tools made available by 
organizations should CMS consider to address health disparities within 
QHPs?
    HHS further seeks to explore how Exchanges and their constituent 
organizations can more fully prepare for the harmful impacts of climate 
change on their enrollees. Since we know that climate change causes 
great and growing harm to Americans (through both catastrophic events 
and chronic disease) and since we know that it will disproportionately 
harm vulnerable populations, including those groups subject to health 
disparities described

[[Page 694]]

above, HHS and CMS believe that it is critical to study and prepare for 
these dire impacts. Generally, HHS seeks input on how Qualified Health 
Plans can more effectively: (1) Determine likely climate impacts on 
their enrollees and particularly the most vulnerable enrollees; (2) 
determine potential costs of these impacts; (3) develop plans to 
mitigate catastrophic and chronic impacts for these populations (that 
is, plans for resilience); and (4) take responsibility for greenhouse 
gas emission reduction across the networks of organizations that make 
up their exchanges. Specific questions include:
     Do Exchanges and issuers have a plan to assess, reduce or 
mitigate its emissions in its operations or organizations?
     What data do Exchanges and issuers currently collect with 
respect to the climate threats faced by their enrollees and 
particularly their most vulnerable enrollees? Do they complete risk 
assessments or surveys that have a geographic or population focus?
     What types of utilization reviews could issuers perform of 
medical or prescription data to better understand the impact of climate 
change events on their enrollees?
     Do National Committee for Quality Assurance (NCQA) health 
equity requirements include reviews of climate resilience?
     What would incentivize Exchanges and issuers participating 
in those Exchanges to more fully prepare for climate change's impacts 
on vulnerable populations? What would incentivize them to take action 
on decarbonization? How can issuers strengthen the overall health of 
their enrollees to be more resilient to harmful climate change events?
     Do issuers currently use, or could they use, apps and/or 
AI to alert enrollees of severe climate events and steps to mitigate 
related harmful effects (for example, extreme heat or wildfire events)?
     What measures would be appropriate for assessing QHP 
performance on climate change and health equity?

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
OMB for review and approval. This proposed rule contains information 
collection requirements that are subject to review by OMB. A 
description of these provisions is given in the following paragraphs 
with an estimate of the annual burden, summarized in Table 22. To 
fairly evaluate whether an information collection should be approved by 
OMB, section 3506(c)(2)(A) of the PRA requires that we solicit comment 
on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of the required issues 
under section 3506(c)(2)(A) of the PRA for the following information 
collection requirements.

A. Wage Estimates

    To derive wage estimates, we generally used data from the Bureau of 
Labor Statistics to derive average labor costs (including a 100 percent 
increase for fringe benefits and overhead) for estimating the burden 
associated with the ICRs.\372\ Table 21 in this proposed rule presents 
the mean hourly wage, the cost of fringe benefits and overhead, and the 
adjusted hourly wage. As indicated, employee hourly wage estimates have 
been adjusted by a factor of 100 percent. This is necessarily a rough 
adjustment, both because fringe benefits and overhead costs vary 
significantly across employers, and because methods of estimating these 
costs vary widely across studies. Nonetheless, there is no practical 
alternative, and we believe that doubling the hourly wage to estimate 
total cost is a reasonably accurate estimation method.
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    \372\ See May 2020 Bureau of Labor Statistics, Occupational 
Employment Statistics, National Occupational Employment and Wage 
Estimates. Available at https://www.bls.gov/oes/current/oes_stru.htm.
[GRAPHIC] [TIFF OMITTED] TP05JA22.037


[[Page 695]]



B. ICRs Regarding State Flexibility for Risk Adjustment (Sec.  153.320)

    We are proposing to generally repeal the ability of states to 
request a reduction in risk adjustment state transfers in any state 
market risk pool starting with the 2024 benefit year, with an exception 
for states that previously participated in risk adjustment state 
flexibility. We propose to provide an exception for states that 
previously submitted state flexibility requests under Sec.  153.320(d) 
so that only those states would be able to continue to request this 
flexibility in 2024 and future benefit years. We further propose to 
remove as an option for a prior participant justification and HHS 
approval of a state flexibility request the demonstration of state-
specific circumstances that warrant an adjustment to more precisely 
account for relative risk differences in the state individual 
catastrophic, individual non-catastrophic, small group, or merged 
market risk pool, and to retain as the only option for state 
justification and HHS approval the demonstration that the requested 
reduction would have de minimis impact on the necessary premium 
increase to cover the transfers for issuers that would receive reduced 
transfer payments. This change would also apply beginning with 2024 
prior participant benefit year requests from prior participant states. 
As such, we propose various amendments to the risk adjustment state 
flexibility regulations at Sec.  153.320(d) to reflect the general 
repeal of this flexibility, with the exception for states that 
previously participated, and to remove one of the criteria for state 
justification and HHS approval beginning with benefit year 2024 
requests. The burden associated with this requirement is the time and 
effort for the state regulator to submit its request and supporting 
evidence and analysis to HHS. We estimate that submitting the request 
and supporting evidence and analysis will take a business operations 
specialist 40 hours (at a rate of $75.32 per hour) to prepare the 
request and 20 hours for a senior operations manager (at a rate of 
$120.90 per hour) to review the request and transmit it electronically 
to HHS. We estimate that each state seeking a reduction will incur a 
burden of 60 hours at a cost of approximately $5,430.80 per state to 
comply with this reporting requirement (40 hours for the insurance 
operations analyst and 20 hours for the senior manager). The estimated 
burden related to submission of these requests would be reduced as a 
result of these proposed changes, since only one state, Alabama, 
previously participated and would still be able to request this 
flexibility. In the 2019 Payment Notice,\373\ we estimated that 25 
states would submit requests and provided a total burden of 
approximately 1,500 hours across all states, which would total $135,770 
based on current wage estimates. Since there is only one prior 
participating state, we estimate that this burden will be reduced by 
$130,339.20 to a total annual cost of $5,430.80, reflecting the burden 
associated with one state's submission. This information collection is 
approved under OMB control number 0938-115, and if this proposal is 
finalized, HHS would revise the information collection under OMB 
control number 0938-1155 accordingly and provide the applicable comment 
periods.
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    \373\ 82 FR at 51118.
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C. ICRs Regarding Distributed Data and Risk Adjustment Data Submission 
Requirements (Sec. Sec.  153.610 and 153.710)

    Pursuant to section 1343(b) of the ACA, the Secretary, in 
consultation with states, shall establish criteria and methods to be 
used in carrying out the risk adjustment activities under this section. 
Consistent with section 1321(c) of the ACA, the Secretary is 
responsible for operating the risk adjustment program in any state that 
fails to do so. As described in Sec.  153.610, health insurance issuers 
are required to maintain risk adjustment data in order for HHS to 
operate risk adjustment on behalf of a state. HHS employs a distributed 
data approach when running risk adjustment on behalf of a state and 
uses the same data for the purpose of determining the risk adjustment 
user fee for each issuer. In this proposed rule, we propose to collect 
five new data elements from issuers' EDGE servers through issuers' Edge 
Server Enrollment Submission (ESES) files and risk adjustment 
recalibration enrollment files: ZIP code, race, ethnicity, ICHRA 
indicator and subsidy indicator. We also propose to extract these new 
data elements as part of the enrollee-level EDGE data beginning with 
the 2023 benefit year. In addition, we propose to begin extracting 
three data elements issuers already report to their EDGE servers--plan 
ID, rating area and subscriber indicator--as part of the enrollee-level 
EDGE data beginning with the 2022 benefit year.
    Section 153.700(a), requires an issuer of a risk adjustment covered 
plan in a state where HHS is operating the risk adjustment program to 
provide HHS, through its dedicated distributed data environment, access 
to enrollee-level plan enrollment data, enrollee claims data, and 
enrollee encounter data as specified by plan ID, rating area, and 
subscriber indicator. Thus, the proposals to extract these data 
elements will not pose additional operational burden to issuers, since 
the creation and storage of the extract--which issuers do not receive--
is mainly handled by HHS. Therefore, we are not proposing to change the 
existing burden for the proposal to extract plan ID, rating area, and 
subscriber indicator.
    For the five new data elements we propose to collect beginning with 
the 2023 benefit year, we estimate that approximately 600 issuers would 
be subject to this new data collection. We propose to collect these new 
data elements via issuers' ESES files and risk adjustment recalibration 
enrollment files. We estimate a cost of approximately $375.28 in total 
labor costs for each issuer, which reflects 4 hours of work by a 
management analyst per issuer at an average hourly rate of $93.82 per 
hour. The cumulative additional cost estimate as a result of this 
proposal is $225,168 for 600 issuers (2,400 total hours per year for 
all issuers). The proposals to extract these data elements will not 
pose additional operational burden to issuers, since the creation and 
storage of the extract is mainly handled by HHS. If the proposed 
collection of ZIP code, race, ethnicity, the ICHRA indicator, and the 
subsidy indicator are finalized, we would revise the information 
collection under OMB control number 0938-1155 accordingly and provide 
the applicable comment periods.

D. ICRs Regarding Ability of States To Permit Agents and Brokers and 
Web-Brokers To Assist Qualified Individuals, Qualified Employers, or 
Qualified Employees Enrolling in QHPs (Sec.  155.220)

    We propose to revise Sec.  155.220(c)(3)(i)(A) to include at 
proposed new Sec. Sec.  155.220(c)(3)(i)(A)(1) through (5) a list of 
the QHP comparative information web-broker non-Exchange websites are 
required to display consistent with Sec.  155.205(b)(1). We also 
propose to revise the disclaimer requirement in Sec.  
155.220(c)(3)(i)(A) so that web-broker non-Exchange websites would be 
required to prominently display a standardized disclaimer provided by 
HHS stating that enrollment support is available on the Exchange 
website and provide a web link to the Exchange website where enrollment 
support for a QHP is not available using the web-broker's non-Exchange 
website.

[[Page 696]]

    This proposal should result in very limited new burden for web-
brokers. The proposed new standardized disclaimer would require web-
brokers to make minor updates to their non-Exchange websites in cases 
where they do not support enrollment in all available QHPs. However, in 
those cases, web-brokers would be displaying a disclaimer much like the 
plan detail disclaimer that they have historically been required to 
display.
    We estimate this proposal will affect approximately 20 web-brokers 
based on the number of web-brokers currently approved by CMS and our 
internal knowledge of entities that have expressed interest in becoming 
web-brokers. Given the minor modifications necessary to implement the 
revised disclaimer in this proposal, we estimate a cost of $411 in 
total labor costs for each web-broker, which reflects 5 hours of work 
by Web Developers and Digital Interface Designers (15-1257) per web-
broker (100 hours across all web-brokers annually) at an average hourly 
rate of $82.20. The cumulative additional cost estimate as a result of 
this proposal is $8,220 for 20 web-brokers in the 2022 benefit year. If 
this proposal is finalized, we would revise the information collection 
under OMB control number 0938-1349 accordingly and provide the 
applicable comment periods.
    We propose to amend Sec.  155.220 to add a proposed new paragraph 
(c)(3)(i)(M) that would require web-broker websites to prominently 
display a clear explanation of the rationale for explicit QHP 
recommendations and the methodology for the default display of QHPs on 
their websites (for example, alphabetically based on plan name, from 
lowest to highest premium, etc.). We believe this proposed new 
requirement would provide consumers with a better understanding of the 
information being presented to them on web-broker websites, thereby 
enabling them to make better informed decisions and shop for and select 
QHPs that best fit their needs.
    We support web-broker websites' use of innovative decision-support 
tools for consumers to help them shop for and select QHPs that best fit 
their needs. However, web-broker websites that explicitly recommend or 
rank QHPs do not always provide an explanation for their 
recommendations or rankings. Similarly, web-broker websites may not 
include an explanation of the methodology used for their default 
displays of QHPs, and it may not otherwise be apparent what 
methodologies are used. The absence of such explanations may cause some 
consumers to misunderstand the bases for the recommendations displayed 
to them on web-broker websites (whether explicit or implicit), or may 
prevent them from assessing the value of the recommendations (for 
example, whether a recommendation is based on the factors most 
important to them). In addition, the lack of explanations for QHP 
recommendations on web-broker websites may obscure that the web-broker 
is recommending QHPs based on compensation the web-broker receives from 
QHP issuers in violation of Sec.  155.220(c)(3)(i)(L). For these 
reasons, we propose to amend Sec.  155.220 to add proposed new 
paragraph (c)(3)(i)(M) that would require web-broker websites to 
prominently display a clear explanation of the rationale for QHP 
recommendations and the methodology for their default display of QHPs.
    This proposal should result in very limited new costs for web-
brokers, since the information it would require they display on their 
websites would only require text-based changes that are relatively easy 
to implement. Furthermore, the extent of those textual updates should 
be relatively minor in most cases. For example, if a web-broker is 
recommending a QHP based on the fact that it has the lowest monthly 
premiums for a consumer, that can likely be communicated in one or two 
sentences of informational text, or possibly even in a single phrase or 
set of short bullet points. Some web-brokers are already providing the 
information that would be required by this proposal, and therefore 
would not have to make any website updates. Other web-broker websites 
do not explicitly recommend QHPs, and therefore the impact of this 
proposal would be limited to providing similar information about the 
methodology for their default display of QHPs (for example, explaining 
QHPs are sorted from lowest to highest premium, etc.), assuming they do 
not already provide that information.
    We estimate this proposal will affect approximately 20 web-brokers. 
Given the minor text-based changes necessary to implement the 
informational text detailing the rationale for QHP recommendations and 
the methodology for a default display of QHPs, we estimate a cost of 
$411 in total labor costs for each web-broker, which reflects 5 hours 
of work by Web Developers and Digital Interface Designers (15-1257) per 
web-broker (100 hours across all web-brokers annually) at an average 
hourly rate of $82.20. The cumulative additional cost estimate as a 
result of this proposal is $8,220 for 20 web-brokers in the 2022 
benefit year. If this proposal is finalized, we would revise the 
information collection under OMB control number 0938-1349 accordingly 
and provide the applicable comment periods.

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

    Since 2017, the Exchanges on the Federal platform have implemented 
pre-enrollment special enrollment period verification for special 
enrollment period types commonly used by consumers to enroll in 
coverage. We propose to amend Sec.  155.420 to add new paragraph (g) to 
state that Exchanges may conduct pre-enrollment eligibility 
verification for special enrollment periods at the option of the 
Exchange. The Exchanges on the Federal platform would verify special 
enrollment period eligibility for the most common special enrollment 
period type, loss of minimum essential coverage. This special 
enrollment period type comprises the majority of all special enrollment 
period enrollments on the Exchanges on the Federal platform.
    Since consumers on Exchanges on the Federal platform currently must 
provide eligibility verification documentation for more special 
enrollment period types, the provision would decrease burden on 
consumers applying for special enrollment period types that no longer 
require pre-enrollment verification. We expect that it takes an 
individual, on average, about 1 hour to gather and submit the relevant 
documentation needed for pre-enrollment special enrollment period 
eligibility verification. This estimate is based on the assumption that 
each individual required to submit documentation will submit, on 
average, two documents for review. It could take significantly less 
time if an individual already has the documents on hand, or more time 
if the individual needs to procure documentation from a government 
agency or other source.
    Based on enrollment data for Exchanges on the Federal platform, we 
estimate that HHS eligibility support staff members would conduct pre-
enrollment verification for 194,000 fewer individuals. We estimate that 
Once individuals have submitted the required verification documents, it 
would take an Eligibility Interviewer approximately 12 minutes (at an 
hourly cost of $46.14) to review and verify submitted verification 
documents. In 2017, the Exchanges on the Federal platform expanded pre-
enrollment special enrollment period verification to include five 
special enrollment period types and estimated an annual additional 
administrative burden of

[[Page 697]]

130,000 hours at a cost of $5,306,600.\374\ Limiting pre-enrollment 
verification to one special enrollment period type would decrease the 
annual administrative burden of special enrollment period verification. 
The proposed change would result in a decrease in annual burden for the 
federal government of 38,800 hours at a cost of $1,790,232. It would 
also result in a decrease in annual burden for consumers attesting to 
special enrollment period types that no longer require document 
verification of 194,000 hours.
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    \374\ 82 FR 18346.
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    The proposed information collection requirements and the related 
burden decrease discussed in this section will be submitted for OMB 
review and approval as part of a revision of the information collection 
currently approved under OMB control number 0938-1207 (Expiration date: 
February 29, 2024).\375\
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    \375\ Essential Health Benefits in Alternative Benefit Plans, 
Eligibility Notices, Fair Hearing and Appeal Processes, and Premiums 
and Cost Sharing; Exchanges: Eligibility and Enrollment (CMS-10468).
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F. ICRs Regarding General Program Integrity and Oversight Requirements 
(Sec.  155.1200)

    We propose to add Sec.  155.1200(e) to permit a State Exchange to 
meet the requirement to conduct an annual independent external 
programmatic audit, as described at Sec.  155.1200(c), by completing an 
audit that year under the SEIPM audit process we propose under Part 
155, subpart P. We estimate that there would be a burden reduction for 
State Exchanges related to the programmatic audit requirement under 
Sec.  155.1200(c). In particular, the 18 State Exchanges that manage 
their own eligibility and enrollment platforms would no longer be 
required to dedicate resources to procure and reimburse auditing 
entities for services rendered to complete the annual independent 
external programmatic audits, assuming the State Exchanges were instead 
completing the required SEIPM program process that year. Based on 
industry estimates of the average cost of contracting an auditor to 
conduct an independent external programmatic audit, HHS estimates that 
the cessation of contracting such audit entities would result in an 
annual cost reduction of approximately $90,000 for each State Exchange, 
which is described in detail in the RIA section of this rule.
    Additionally, staff resources would no longer be needed to submit 
the results of the programmatic audit as a component of the State-based 
Marketplace Annual Reporting Tool (SMART). This would result in a 
reduction in cost and staff resources for each State Exchange. We 
anticipate a reduction in cost associated with compiling data, 
summarizing the programmatic audit results, and submitting to CMS. 
State Exchanges are required to provide the results of the programmatic 
audit in a public summary. This proposal would remove the burden 
associated with reporting requirements, which includes the burden for a 
management analyst taking 3 hours (at $93.82 an hour) to pull data into 
a report, the time and effort necessary for a policy analyst taking 2 
hours (at $93.82) to prepare the report of the audit results, and the 
time for a senior manager taking 1 hour (at $155.52 an hour) to review 
and submit to CMS. We estimate the burden of 6 hours at a cost of 
$624.62 for each State Exchange. Therefore, the aggregate burden for 
the 18 State Exchanges that manage their own eligibility and enrollment 
platforms is 108 hours at a cost of $11,243.16.
    Based on these estimates we expect the cost reduction associated 
with compiling and reporting audit data to total $11,243.16 across all 
18 State Exchanges beginning in the 2024 benefit year. The information 
collection associated with the burden being reduced is covered under 
OMB Control Number 0938-1244. If this rule is finalized as proposed, we 
would revise the burden estimates covered under 0938-1244 before the 
implementation of the SEIPM program.
    We estimate this impact to take effect in June 2024 at the 
earliest, which is when the State Exchanges would otherwise be 
providing completed independent external audits as a component of their 
PY 2023 SMART submissions. There would, however, be a corresponding new 
burden created to complete the SEIPM process. For an estimate of the 
burden created under SEIPM, please refer to section 14.
    We request comment on the reduction in burden proposed, and 
specifically seek feedback from State Exchanges regarding the annual 
cost of the programmatic audit process.

G. ICRs Regarding State Exchange Improper Payment Measurement Program 
(Sec. Sec.  155.1500-155.1540)

1. Data Collection (Sec.  155.1510)
    In the preamble to Sec.  155.1510, we explain the sampling process 
for each SEIPM review cycle. In Sec.  155.1510(a)(1), we propose that 
HHS will provide State Exchanges with the pre-sampling data request, 
which State Exchanges will complete and return to HHS. Both the pre-
sampling data request and the requested source data are in an 
electronic format. The burden associated with completion and return of 
the pre-sampling data request would be the time it would take each 
State Exchange to interpret the requirements, analyze and design the 
database queries based on the data elements identified in the SEIPM 
data request form, develop the database queries, test the data, perform 
verification and validation of the data, and return the form to HHS.
    Once the pre-sampling data request is returned to HHS, HHS will 
draw the sample for each State Exchange. In Sec.  155.1510(a)(2), we 
propose that HHS will provide the sampled unit data request to the 
State Exchange for completion and return to HHS. The sampled unit data 
request will include the sampled units specific to each State Exchange. 
Both the sampled unit data request and the requested source data are in 
an electronic format. The burden associated with completion and return 
of the sampled unit data request would be the time it would take each 
State Exchange to interpret the requirements, analyze and design the 
database queries based on the data elements identified in the SEIPM 
data request form, develop the database queries, test the data, perform 
verification and validation of the data, and return the form to HHS.
    We expect respondent costs will not substantially vary since the 
data being collected is largely in a digitized format and that each 
State Exchange will be providing information for approximately 100 
sampled units. We do not expect reporting costs to vary considerably 
based on sample size. We seek comment on these assumptions.
    We estimate completion of the pre-sampling data request would take 
12 hours per respondent at an estimated $1,364 per respondent. We 
estimate completion of the sampled unit data request would take 707 
hours per respondent at an estimated cost of $73,054 per respondent. To 
compile our estimates, we referenced our experience in collecting data 
in our FFE pilot initiative. We identified specific personnel and the 
number of hours that would be involved in collecting the sampled unit 
data broken down by specific area (for example, eligibility 
verification, auto re-enrollment, periodic data matching, enrollment 
reconciliation, plan management, and manual reviews including document 
retrieval). Additionally, to account for the time needed for any State 
Exchanges to convert hard copies to a digitized format, we added 20 
hours for each

[[Page 698]]

State Exchange into the burden estimates.
    Hourly wage rates are based on May 2020 Bureau of Labor Statistics 
Occupational Codes and vary from $45.98 (adjusted to $91.96 to account 
for overhead) to $77.76 (adjusted to $155.52 to account for overhead) 
depending on occupation code and function. With a mean hourly rate of 
$103.50 for the respective occupation codes, the burden across the 18 
State Exchanges equals 12,942 hours for a total cost of up to 
$1,339,523. The burden related to this information collection is being 
submitted to OMB for approval with this proposed regulation.
2. Determination of Error Findings Decision and Appeal Redetermination 
(Sec. Sec.  155.1525 and 155.1530)
    As described in the preamble to Sec.  155.1525, Redetermination of 
Error Findings Decision, a State Exchange may file a request with HHS 
to resolve issues with HHS' findings within the deadline prescribed in 
the annual program schedule.
    The burden associated with the information collection requirements 
contained in Sec. Sec.  155.1525 and 155.1530 is the time and effort 
necessary to draft and submit a request for a redetermination of an 
error findings decision and, if requested, an appeal of a 
redetermination decision. In accordance with 5 CFR 1320.4, information 
collected during the conduct of an administrative action is not subject 
to the PRA. As a result, we believe the burden associated with these 
requirements is exempt from the PRA under 44 U.S.C. 3502(3)(A)(i).
3. Corrective Action Plan (Sec.  155.1535)
    As described in the preamble to Sec.  155.1535, we are proposing 
that State Exchanges may be required to develop and implement 
corrective action plans following a completed SEIPM measurement 
designed to reduce improper payments as a result of eligibility 
determination errors. The burden associated with this requirement is 
the time and effort put forth by State Exchanges to develop and submit 
a corrective action plan to HHS. We estimate that it would take each 
selected State Exchange up to 1,000 hours to develop a CAP. We estimate 
that the total annual burden associated with this requirement for up to 
18 State Exchange respondents would be up to 18,000 hours. Assuming the 
management analyst average hourly rate of $93.82 per hour, we estimate 
that the cost of a corrective action plan per State Exchange could be 
up to $93,820, and for all 18 State Exchanges, up to $1,688,760. The 
burden related to this information collection will be submitted to OMB 
for approval after future rulemaking has been completed regarding the 
CAP process and requirements.

H. ICRs Regarding State Selection of EHB-Benchmark Plan for Plan Years 
Beginning on or After January 1, 2020 (Sec.  156.111)

    We are proposing to eliminate the requirement at Sec.  156.111(d) 
and (f) to require states to annually notify HHS in a form and manner 
specified by HHS, and by a date determined by HHS, of any state-
required benefits applicable to QHPs in the individual or small group 
market that are considered to be in addition to EHB in accordance with 
Sec.  155.170(a)(3) and any benefits the state has identified as not in 
addition to EHB and not subject to defrayal, describing the basis for 
the state's determination.
    Under this proposal, states would no longer be required to submit 
an annual report that complies with each requirement listed at Sec.  
156.111(f)(1) through (6), nor would HHS identify which benefits are in 
addition to EHB for the applicable PY in the state if a state does not 
submit an annual reporting package.
    As states are already required under Sec.  155.170 to identify 
which state-required benefits are in addition to EHB and to defray the 
cost of QHP coverage of those benefits, the 2021 Payment Notice 
estimated that a majority of states, approximately 41, would submit 
annual reports and that 10 states would not submit annual reports.\376\
---------------------------------------------------------------------------

    \376\ 85 FR 29164, 29244.
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    The 2021 Payment Notice estimated that the burden for each state to 
meet this reporting requirement in the first year would be 30 hours, 
with an equivalent cost of approximately $2,459, with a total first 
year burden for all 41 states of 1,230 hours and an associated total 
first year cost of approximately $100,829. Because the first year of 
annual reporting was intended to set the baseline list of state-
required benefits which states would update as necessary in future 
annual reporting cycles, the 2021 Payment Notice explained that the 
burden associated with each annual reporting thereafter would be lower 
than the first year. The 2021 Payment Notice therefore estimated that 
for each annual reporting cycle after the first year the burden for 
each state to meet the annual reporting requirement would be 13 hours 
with an equivalent cost of approximately $1,117, with a total annual 
burden for all 41 states of 533 hours and an associated total annual 
cost of approximately $45,817. The average annual burden over 3 years 
was estimated at approximately 765 hours with an equivalent average 
annual cost of approximately $64,154.
    Given that we did not require states to submit annual reports in 
2021 pursuant to our enforcement posture in part 2 of the 2022 Payment 
Notice final rule, if finalized as proposed, repealing the annual 
reporting requirement would also remove the associated ICRs and the 
anticipated burden on states submitting such reports. Thus, if 
finalized as proposed, we will request discontinuation of the ICRs 
associated with the repealed annual reporting requirement (OMB control 
number: 0938-1174 Essential Health Benefits Benchmark Plans (CMS-
10448)/Expiration date: February 29, 2024).

I . ICR Regarding Differential Display of Standardized Options on the 
Websites of Web-Brokers (Sec.  155.220) and QHP Issuers (Sec.  156.265)

    In the current rulemaking, we consider resuming the differential 
display of standardized options per the existing authority at Sec.  
155.205(b)(1). We also consider resuming enforcement of the 
standardized options differential display requirements for approved 
web-brokers and QHP issuers using a direct enrollment pathway to 
facilitate enrollment through an FFE or SBE-FP--including both the 
Classic DE and EDE Pathways--at Sec. Sec.  155.220(c)(3)(i)(H) and 
156.265(b)(3)(iv), respectively.
    We estimate that a total of 110 web-brokers and QHP issuers 
participating in the FFEs and SBE-FPs would be required to comply with 
these requirements. We estimate that it would take a web developer/
digital interface designer (OES occupational code 15-1257) 2 hours 
annually, at an average hourly cost of $82.20 per hour, to implement 
these changes, at a total annual cost of $164.40 per entity. We 
therefore estimate a total annual burden of 220 hours at a cost of 
$18,804 for all applicable web-brokers and QHP issuers.
    Consistent with the approach finalized in the 2018 Payment 
Notice,\377\ we continue to recognize that system constraints may 
prevent web-broker and QHP issuers from mirroring the HealthCare.gov 
display. We would therefore continue to permit web-brokers and QHP 
issuers that use a direct enrollment pathway to facilitate enrollment 
through an FFE or SBE-FP to submit a request to deviate from the 
display on HealthCare.gov, with approval from HHS. Any requests from

[[Page 699]]

web-brokers and QHP issuers seeking approval for an alternate 
differentiation format would be reviewed based on whether the same 
level of differentiation and clarity is being provided under the 
requested deviation as is provided on HealthCare.gov.
---------------------------------------------------------------------------

    \377\ See 81 FR at 94118.
---------------------------------------------------------------------------

    We estimate that 55 of the above web-brokers and QHP issuers would 
submit a request to deviate from the manner in which standardized 
options are differentially displayed on HealthCare.gov. We estimate it 
would take a compliance officer (OES occupational code 13-1041) 
approximately 1 hour annually, at a rate of $72.70 per hour, to 
complete the request to deviate from the display on HealthCare.gov as 
well as the justification for the request. We therefore estimate a 
total annual burden for all web-brokers and issuers subject to the 
differential display requirements submitting a request to deviate of 
approximately $3,998.50 beginning in 2023.
    To account for the burden associated with this ICR, HHS will submit 
a revised version of the existing PRA package for Non-Exchange Entities 
(under OMB control number: 0938-1329 (CMS-10633)) which was previously 
discontinued on March 4, 2020. This proposed rule serves as the initial 
notice for the revised PRA package.

J. ICRs Regarding Network Adequacy and Essential Community Providers 
(Sec. Sec.  156.230 and 156.235)

    In this rule, HHS is proposing amendments to Sec.  156.230, 
including adoption of standards related to time and distance and 
appointment wait time to assess QHP issuers' fulfillment of the 
reasonable access network adequacy standard. HHS is proposing to raise 
the ECP threshold from 20 percent to 35 percent. Issuers will continue 
to submit provider facility information and geographic location of 
participating ECPs participating in an issuer's provider network or 
other documentation necessary to demonstrate that an issuer has a 
sufficient number and geographic distribution of ECPs for the intended 
service areas. This is done to ensure QHP enrollees have reasonable and 
timely access to providers that serve predominantly low-income, 
medically underserved individuals in accordance with ECP inclusion 
requirements found at Sec.  156.235.
    Additionally, issuers must collect and submit provider information 
necessary to demonstrate satisfaction of time and distance standards 
and appointment wait time standards to ensure that an issuer's network 
has fulfilled the network adequacy reasonable access standard found at 
Sec.  156.230. Lastly, an issuer must report the offering of telehealth 
services for each provider to help inform future development of 
telehealth standards. We would provide the definition of telehealth and 
ask issuers to respond yes or no as to whether each network provider 
offers telehealth. As described in the preamble, issuers who do not 
have the information available by the time of the QHP certification 
process would be able to respond that they have requested the 
information from the provider and are awaiting the response.
    HHS anticipates burden for completing the ECP/NA template will 
increase based on the changes in this proposed rule to an estimated 20 
hours in total for each medical QHP submitted by issuers and 4 hours in 
total for each SADP submitted by issuers. This estimate is inclusive of 
the requirement to report provider facility information and geographic 
location of ECPs in an issuer's provider network. Since we propose to 
raise the ECP threshold from 20 percent to 35 percent, QHP issuers will 
need to submit information on a sufficient number of their contracted 
ECPs to meet the higher threshold.\378\ Some issuers have previously 
only included enough contracted ECPs on the template in order to meet 
the current threshold for that year's certification process. For those 
issuers, the proposed increase in the ECP threshold would somewhat 
increase burden in completing the ECP/NA template as they would need to 
include more contracted ECPs on the template to meet the standard. 
Notwithstanding, HHS estimates that the burden associated with showing 
compliance with the increased ECP threshold will account for 3 hours of 
the total 20 hours we estimate for completing the ECP/NA template for 
medical QHPs and 1 hour of the total 4 hours we estimate for SADPs.
---------------------------------------------------------------------------

    \378\ The ECP/NA template requires QHP issuers to report only 
that number of providers sufficient to demonstrate compliance with 
relevant requirements.
---------------------------------------------------------------------------

    The 20-hour burden estimate for the ECP/NA template also includes 
burden resulting from the requirement that QHP issuers report 
information relevant to compliance with time and distance standards and 
appointment wait time standards. For PYs 2018-2022, HHS deferred 
reviews of network adequacy for QHPs to states that HHS determined to 
have a sufficient network adequacy review process, which was all FFE 
states for that time period. As HHS resumes network adequacy reviews, 
we are proposing to include a broader provider specialty list for time 
and distance standards than was evaluated for PYs 2015-2017, and to add 
appointment wait time standards. HHS estimates that the burden 
associated with the requirement that QHPs report information sufficient 
to show compliance with the proposed network adequacy standards would 
account for 12 of the total 20 hours we estimate for completing the 
ECP/NA template for medical QHPs, and 1 hour of the total 4 hours we 
estimate for SADPs.
    The 20-hour estimate also includes the burden associated with the 
requirement that issuers report whether network providers provide 
telehealth services. HHS believes that many QHP issuers already collect 
and maintain information on whether network providers furnish 
telehealth services. Approximately half of the parent companies of 
issuers on the FFEs also offer Medicare Advantage plans. Since Medicare 
Advantage offers a telehealth credit for network adequacy, we expect 
those issuers would already have telehealth information available for 
their providers. HHS further is of the view that those QHP issuers that 
do not currently collect this information may do so using the same 
means and methods by which they already collect information from their 
network providers relevant to time and distance standards and provider 
directory information. For these reasons, HHS estimates that any 
additional burden relative to the requirement that QHP issuers report 
whether each network provider is furnishing telehealth services would 
lead to a minimal increase in burden for many issuers. The requirement 
to report whether providers offer telehealth services would account for 
four of the total 20 hours we estimate for completing the ECP/NA 
template for medical QHPs and 1 of the total 4 hours we estimate for 
SADPs. Finally, we estimate it will take 1 hour for issuers, including 
both medical QHPs and SADPs, to submit the ECP/NA template and complete 
the portions of the Issuer Module that are relevant to these reviews.
    We estimate that the total annual burden associated with completing 
the additional requirements proposed in this rule within the ECP/NA 
template for medical QHPs for up to 215 issuers would be up to 4,300 
hours. Assuming the compliance officer average hourly rate of $36.35 
per hour, we estimate that the cost of completing the ECP/NA template 
for an individual medical QHP could be up to $1,454, and for all 215 
issuers, up to $312,610. We estimate that the total annual burden 
associated

[[Page 700]]

with this requirement for SADPs for up to 270 issuers would be up to 
1,080 hours. Assuming the compliance officer average hourly rate of 
$36.35 per hour, we estimate that the cost of completing the ECP/NA 
template for an individual SADP could be up to $290.80, and for all 270 
issuers, up to $78,516. The total estimated cost for the annual burden 
associated with completing the ECP/NA template across both medical QHP 
and SADP issuers is $391,126.
    HHS is submitting a new information collection package to OMB to 
cover data collection related to essential community provider and 
network adequacy requirements, which will include the changes proposed 
in this proposed rule. This proposed rule serves as the initial notice 
for the PRA package. The existing information collection package for 
QHP certification (under OMB control number: 0938-1187 (CMS-10433)/
Expiration date: June 30, 2022) includes the data collection and burden 
information for the ECP/NA template, outside of what is proposed in 
this rule.

K. ICRs Regarding Payment for Cost-Sharing Reductions (Sec.  156.430)

    In this rule, HHS is proposing several amendments to Sec.  156.430 
to clarify that CSR data submission is mandatory for those issuers that 
received CSR payments from HHS for any part of the benefit year, and 
voluntary for other issuers. The currently approved burden estimate is 
a total cost of $235,683 (2,362.50 hours) across 150 issuers ($1,571.22 
per issuer), which accounts for 0.75 hours per issuer to complete and 
submit the Issuer Summary Report to HHS each year and 15 hours per 
issuer to complete and submit the Standard Methodology Plan and Policy 
Report to HHS each year.\379\ We expect that these proposals will 
reduce the burden associated with the CSR data submission process when 
HHS is not making CSR payments to QHP issuers, as we expect that the 
number of issuers submitting CSR data each year will decrease due to 
these proposals. We have revised the information collection currently 
approved under OMB control number: 0938-1266 (Cost-Sharing Reduction 
Reconciliation (CMS-10526)/Expiration date: July 31, 2024) to account 
for this decreased burden when HHS is not making CSR payments to QHP 
issuers.
---------------------------------------------------------------------------

    \379\ OMB control number 0938-1266 (Cost-Sharing Reduction 
Reconciliation (CMS-10526)/Expiration date: July 31, 2024).
---------------------------------------------------------------------------

L. ICRs Regarding Quality Improvement Strategy (Sec.  156.1130)

    We are not proposing to amend regulatory text in 45 CFR 156.1130 
which outlines QIS standards established in the 2016 Payment Notice. 
The information collections associated with QIS data collection and 
submission requirements are approved under OMB control number 0938-1286 
(Quality Improvement Strategy Implementation Plan and Progress Report 
(CMS-10540)/Expiration date: February 25, 2024) and encompasses the 
estimated burden and costs associated with a QIS submission that may 
include several QIS topic areas. In this proposed rule, we propose that 
beginning in 2023, a QHP issuer would be required to address reducing 
health and health care disparities as one of their QIS topic areas in 
addition to at least one other topic area outlined in section 
1311(g)(1) of the ACA, including: Improving health outcomes of plan 
enrollees, preventing hospital readmissions, improving patient safety 
and reducing medical errors, and promoting wellness and health. We do 
not estimate additional burden to be accounted for since the QIS 
submission form currently approved under OMB control number: 0938-1286 
(Quality Improvement Strategy Implementation Plan and Progress Report 
(CMS-10540)/Expiration date: February 25, 2024) already encompasses the 
estimated burden and costs associated with a QIS submission that may 
include several QIS topic areas.

M. ICRs Regarding Medical Loss Ratio (Sec. Sec.  158.140, 158.150, 
158.170)

    We propose to amend Sec.  158.140 to clarify that only those 
provider incentives and bonuses that are tied to clearly defined, 
objectively measurable, and well-documented clinical or quality 
improvement standards that apply to providers may be included in 
incurred claims for MLR reporting and rebate calculation purposes. We 
also propose to amend Sec.  158.150 to specify that only expenditures 
directly related to activities that improve health care quality may be 
included in QIA expenses for MLR reporting and rebate calculation 
purposes. We further propose to make a technical amendment to Sec.  
158.170(b) to correct an oversight and remove the reference to the 
percentage of premium QIA reporting option described in Sec.  
158.221(b)(8), which was deleted in part 2 of the 2022 Payment Notice 
final rule. We anticipate that implementing these provisions would 
require minor changes to the MLR Annual Reporting Form Instructions, 
but would not significantly increase the associated reporting burden. 
The burden related to this information collection is currently approved 
under OMB control number: 0938-1164 (Medical Loss Ratio Annual Reports, 
MLR Notices, and Recordkeeping Requirements (CMS-10418)). The control 
number is currently set to expire on July 31, 2024.

O. Summary of Annual Burden Estimates for Proposed Requirements

[[Page 701]]

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[GRAPHIC] [TIFF OMITTED] TP05JA22.039

    This proposed rule includes several proposals, including 
information collection requests for which we seek to use this 
rulemaking as the Federal Register notice through which to receive 
comment on their proposed revisions to or submissions of PRA packages. 
These proposals include Verification of Eligibility for Special 
Enrollment Periods (Sec.  155.420), Data Collection and Corrective 
Action Plans related to the SEIPM Program(Sec.  155.1510, 155.1535), 
and the proposals on Network Adequacy and Essential Community Providers 
(Sec. Sec.  156.230 and 156.235) and the proposal regarding 
Differential Display of Standardized Options (Sec. Sec.  155.220) and 
156.265).
    The following proposals with associated information collection 
requests, including the proposal regarding State Flexibility for Risk 
Adjustment (Sec.  153.320), the proposal regarding risk adjustment 
Distributed Data and Risk Adjustment Data Submission Requirements 
(Sec. Sec.  153.610 and 153.710), the proposal on General Program 
Integrity and Oversight Requirements (Sec.  155.1200), will be 
submitted for PRA approval outside of this rulemaking, through a 
separate Federal Register notice.
    The proposals for Quality Improvement Strategy (Sec.  156.1130), 
Medical Loss Ratio (Sec. Sec.  158.140, 158.150, 158.170), and Payment 
for Cost-Sharing Reductions (Sec.  156.430) contain information 
collections which are covered by existing PRA packages. One proposal, 
the State Selection of EHB-Benchmark Plan for Plan Years Beginning on 
or After January 1, 2020 (Sec.  156.111), proposes to discontinue the 
associated information collections and remove them from the PRA 
package, and the information collection in the Determination of Error 
Findings Decision and Appeal Redetermination (Sec. Sec.  155.1525 and 
155.1530) proposal is exempt from the PRA.

P. Submission of PRA-Related Comments

    We have submitted a copy of this proposed rule to OMB for its 
review of the rule's information collection and recordkeeping 
requirements. These requirements are not effective until they have been 
approved by the OMB.
    To obtain copies of the supporting statement and any related forms 
for the proposed collections discussed above, please visit CMS's 
website at https://www.cms.gov/regulations-and-guidance/legislation/PaperworkReductionActof1995, or call the Reports Clearance Office at 
410-786-1326.
    We invite public comments on these potential information collection 
requirements. If you wish to comment, please submit your comments 
electronically as specified in the

[[Page 702]]

ADDRESSES section of this proposed rule and identify the rule (CMS-
9911-P), the ICR's CFR citation, CMS ID number, and OMB control number.
    ICR-related comments are due March 7, 2022.

V. Response to Comments

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

VI. Regulatory Impact Analysis

A. Statement of Need

    This rule proposes standards related to the risk adjustment program 
for the 2023 benefit year and beyond, as well as standards for the HHS-
RADV program beginning with the 2021 benefit year. This rule proposes 
additional standards related to eligibility redetermination, special 
enrollment periods, requirements for agents, brokers, web-brokers, and 
issuers assisting consumers with enrollment through Exchanges that use 
the Federal platform; state selection of EHB-benchmark plan and annual 
reporting of state-required benefits, termination of coverage, the MLR 
program, and 2023 FFE and SBE-FP user fees. This rule also proposes to 
remove the annual reporting requirement on states to report state-
required benefits to HHS. In addition, it proposes to reinstate 
nondiscrimination provisions related to sexual orientation and gender 
identity. The rule also proposes to refine the EHB nondiscrimination 
framework by including examples of presumptively discriminatory cases. 
The rule also proposes to require issuers in FFEs and SBE-FPs to offer 
standardized options. This rule proposes to expand QIS standards and 
require QHP issuers to address health and health care disparities in 
their QIS submissions in addition to at least one other topic area 
outlined in section 1311(g)(1) of the ACA. Finally, this proposed rule 
would implement the PIIA requirements for State Exchanges.

B. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 202 of the Unfunded Mandates Reform Act 
of 1995 (March 22, 1995, Pub. L. 104-4) and Executive Order 13132 on 
Federalism (August 4, 1999).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. A regulatory impact analysis (RIA) must be prepared for 
rules with economically significant effects ($100 million or more in 
any one year).
    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 one 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. An RIA 
must be prepared for major rules with economically significant effects 
($100 million or more in any one year), and a ``significant'' 
regulatory action is subject to review by OMB. HHS has concluded that 
this rule is likely to have economic impacts of $100 million or more in 
at least 1 year. Based on HHS estimates, OMB's Office of Information 
and Regulatory Affairs has determined this rulemaking is ``economically 
significant'' as measured by the $100 million threshold. In accordance 
with the provisions of Executive Order 12866, this regulation was 
reviewed by the Office of Management and Budget.
    The provisions in this proposed rule aim to ensure that consumers 
continue to have access to affordable coverage and quality health care. 
Although there is still some uncertainty regarding the net effect on 
premiums, we anticipate that the provisions of this proposed rule would 
help further HHS' goal of ensuring that all consumers have access to 
quality and affordable health care and are able to make informed 
choices. In accordance with Executive Order 12866, HHS believes that 
the benefits of this regulatory action justify the costs.

C. Impact Estimates of the Payment Notice Provisions and Accounting 
Table

    In accordance with OMB Circular A-4, Table 24 depicts an accounting 
statement summarizing HHS' assessment of the benefits, costs, and 
transfers associated with this regulatory action.
    This proposed rule implements standards for programs that will have 
numerous effects, including providing consumers with access to 
affordable health insurance coverage, reducing the impact of adverse 
selection, and stabilizing premiums in the individual and small group 
health insurance markets and in an Exchange. We are unable to quantify 
all benefits and costs of this proposed rule. The effects in Table 24 
reflect qualitative assessment of impacts and estimated direct monetary 
costs and transfers resulting from the provisions of this proposed rule 
for health insurance issuers and consumers. The annual monetized 
transfers described in Table 24 include changes to costs associated 
with the risk adjustment user fee paid to HHS by issuers and the 
potential increase in rebates from issuers to consumers due to proposed 
amendments to MLR requirements.

[[Page 703]]

    We are proposing the risk adjustment user fee of $0.22 PMPM for the 
2023 benefit year to operate the risk adjustment program on behalf of 
states, which we estimate to cost approximately $60 million in benefit 
year 2023.\380\ We expect risk adjustment user fee transfers from 
issuers to the federal government to remain steady at $60 million, the 
same as estimated for the 2022 benefit year; this is included in Table 
24.
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    \380\ As noted previously in this proposed rule, no state has 
elected to operate the risk adjustment program for the 2023 benefit 
year; therefore, HHS will operate the program for all 50 states and 
the District of Columbia.
---------------------------------------------------------------------------

    Additionally, for 2023, we are proposing maintaining the FFE and 
the SBE-FP user fee rates at current levels, 2.75 and 2.25 percent of 
premiums, respectively.
    For our proposed implementation of the State Exchange Improper 
Payment Measurement program, we estimate record keeping costs for data 
collection and corrective action plan development and implementation to 
be approximately $3.0 million annually beginning in PY 2023.
BILLING CODE 4120-01-P

[[Page 704]]

[GRAPHIC] [TIFF OMITTED] TP05JA22.040


[[Page 705]]


     
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    \381\ Healthy People 2030 defines health equity as ``the 
attainment of the highest level of health for all people.'' https://health.gov/our-work/national-health-initiatives/healthy-people/healthy-people-2030/questions-answers.
[GRAPHIC] [TIFF OMITTED] TP05JA22.041

BILLING CODE 4120-01-C
    This RIA expands upon the impact analyses of previous rules and 
utilizes the Congressional Budget Office's (CBO) analysis of the ACA's 
impact on federal spending, revenue collection, and insurance 
enrollment. Table 25 summarizes the effects of the risk adjustment 
program on the federal budget from fiscal years 2023 through 2027, with 
the additional, societal effects of this proposed rule discussed in 
this RIA. We do not expect the

[[Page 706]]

provisions of this proposed rule to significantly alter CBO's estimates 
of the budget impact of the premium stabilization programs that are 
described in Table 25.
    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, we anticipate that, quantitatively, 
the effects of the provisions proposed in this rule are consistent with 
our previous estimates in the 2022 Payment Notice for the impacts 
associated with the APTCs, the premium stabilization programs, and FFE 
(including SBE-FP) user fee requirements.
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    \382\ Reinsurance collections ended in FY 2018 and outlays in 
subsequent years reflect remaining payments, refunds, and allowable 
activities.
[GRAPHIC] [TIFF OMITTED] TP05JA22.042

1. Guaranteed Availability of Coverage (Sec.  147.104(i))
    This proposed rule proposes amendments to Sec.  147.104(i), which 
would reverse the policy allowing an issuer to attribute a premium 
payment made for new coverage to any past-due premiums owed for 
coverage from the same issuer or another issuer in the same controlled 
group within the prior 12-month period preceding the effective date of 
coverage before effectuating enrollment in new coverage. Under current 
rules, individuals may have to pay up to 3 months of past-due premiums 
plus a binder payment before enrolling in coverage.\383\ CMS lacks 
information on the frequency with which consumers miss payments or the 
frequency with which binder payments are currently being made, and 
seeks data or information related to past-due premiums. CMS is also 
interested in learning more about the population and characteristics of 
individuals with past-due premiums.
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    \383\ Section 156.270(d) requires issuers to observe a 3-
consecutive month grace period before terminating coverage for those 
enrollees who upon failing to timely pay their premiums are 
receiving APTC. Section 155.430(d)(4) requires that when coverage is 
terminated following this grace period, the last day of enrollment 
in a QHP through the Exchange is the last day of the first month of 
the grace period. Therefore, individuals whose coverage is 
terminated at the conclusion of a grace period would owe at most 1 
month of premiums, net of any APTC paid on their behalf to the 
issuer. Individuals who attempt to enroll in new coverage while in a 
grace period (and whose coverage has not yet been terminated) could 
owe up to 3 months of premiums, net of any APTC paid on their behalf 
to the issuer.
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    Individuals often stop making premium payments or forgo health 
insurance because they are unable to afford the premium payments. In a 
2019 survey, 42 percent of insured adults reported being worried about 
paying for their monthly health insurance premium, with 18 percent 
being ``very worried'' and 24 percent being ``somewhat worried''.\384\ 
In addition, 28 percent of insured adults reported having a difficult 
time covering the cost of health insurance each month. In 2019, 73.7 
percent of uninsured adults pointed to high cost of coverage as the 
reason for being uninsured.\385\
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    \384\ Kirzinger, Ashley et al., Data Note: Americans' Challenges 
with Health Care Costs, KFF, June 11, 2019. https://www.kff.org/health-costs/issue-brief/data-note-americans-challenges-health-care-costs/.
    \385\ Tolbert, J. and Orgera, K., Key Facts about the Uninsured 
Population, KFF, November 6, 2020. https://www.kff.org/uninsured/issue-brief/key-facts-about-the-uninsured-population/.
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    Based on internal analysis, we estimate that approximately 7.8 
percent of enrollees in Exchanges using the Federal platform had their 
coverage terminated in 2020 for non-payment of premiums. That figure 
was 10.7 percent in 2019, 12.4 percent in 2018, and 17.3 percent in 
2017.\386\ Among those enrollees who had their coverage terminated in 
2019 and lived in an area where their issuer (or a different issuer in 
the same controlled group) had plans available the next year, we 
estimate that 16.9 percent enrolled with the same issuer (or a 
different issuer in the same controlled group) the following year. That 
figure was 16.5 percent in 2018 and 16.8 percent in 2017.\387\ For 
those enrollees with household incomes below the federal poverty level, 
15.3 percent of enrollees who had their coverage terminated in 2019 and 
lived in an area where their issuer (or a different issuer in the same 
controlled group) was available the next year enrolled with the same 
issuer (or a different issuer in the same controlled group) the 
following year.\388\ That figure was 13.5 percent in 2018 and 13.2 
percent in 2017. Our analysis also suggests that those enrollees with 
lower household incomes (specifically, household incomes below the 
federal poverty level) were less likely to enroll in coverage from the 
same issuer or another issuer in the same controlled group the 
following year. In 2017, 2018, and 2019, those enrollees who were less 
than 35 years old were also less likely to enroll in coverage from the 
same issuer or another issuer in the same controlled group the 
following year than those aged 35 to 54.
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    \386\ The annual figures presented in this section should not 
necessarily be interpreted as trends, as some states moved from 
Exchanges using the Federal platform to State Exchanges and the 
overall composition of the dataset may have changed.
    \387\ As we reported in the April 18, 2017 Federal Register (82 
FR 18346), that figure was approximately 16 percent in 2016.
    \388\ Of the 936,637 enrollees who had their coverage terminated 
in 2019 and lived in an area where their issuer (or a different 
issuer in the same controlled group) was available the next year, 
24,784 (or 2.6 percent) had incomes below the federal poverty level. 
Many, but not all, of these enrollees lived in states that did not 
expand Medicaid eligibility following the implementation of the ACA.
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    Due to data limitations, we are unable to directly attribute any 
changes in enrollment behavior in the Exchanges using the Federal 
platform to the interpretation of the guaranteed availability 
requirement stated in the Market Stabilization final rule. However, 
this proposed rule would

[[Page 707]]

increase access to health insurance coverage for individuals who stop 
paying premiums due to reasons such as financial hardship or 
affordability and who are currently unable to enroll in coverage 
because they cannot afford to pay past-due premiums. This increased 
access could lead to better health outcomes, if these individuals are 
able to maintain coverage.\389\ This proposed rule would also increase 
the ability for enrollees to access coverage with the same issuer in 
the next year. This would be of particular benefit to those Exchange 
enrollees living in counties with only one or two participating 
issuers.\390\ It could also reduce the costs and burden to enrollees 
related to searching for a new plan from another issuer when seeking to 
enroll in health care coverage. Being able to enroll with the same 
issuer would also allow individuals to have access to the same network 
of services and providers, which could improve continuity of care.
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    \389\ We request comment on whether there would be any impact on 
premiums, affordability, and access for the individuals who reliably 
pay. We are interested in comments regarding whether issuers who 
implemented policies requiring payment of past due premiums prior to 
reenrollment experienced declines in administrative costs related to 
the collection of past-due premiums.
    \390\ According to recent figures from KFF, in 2021, there were 
only two issuers participating in the ACA Exchanges in 44 percent of 
counties, and there was only one issuer participating in the ACA 
Exchanges in 10 percent of counties. Source: McDermott, Daniel and 
Cynthia Cox (2020). ``Insurer Participation on the ACA Marketplaces, 
2014-2021.'' KFF, November 23. https://www.kff.org/private-insurance/issue-brief/insurer-participation-on-the-aca-marketplaces-2014-2021/; This was noted by Sandy Ahn and JoAnn Volk in their 
analysis of the previous interpretation of the guaranteed 
availability requirement. Reference: Ahn, Sandy and JoAnn Volk 
(2017). ``Relaxing the Affordable Care Act's Guaranteed Issue 
Protection: Issues for Consumers and State Options.'' CHIRblog, June 
2. http://chirblog.org/relaxing-the-affordable-care-acts-guaranteed-issue-protection-issues-for-consumers-and-state-options/.
---------------------------------------------------------------------------

    This policy could result in transfers from issuers who would have 
been able to recoup unpaid premiums from enrollees to those enrollees 
who would now be able to enroll in coverage from the same issuer or 
another issuer in the same controlled group without having to pay past-
due premiums. However, we anticipate that these transfers would be 
minimal, as issuers are not permitted to waive past-due premiums and 
would be expected to pursue other means of collecting them.
    We seek comment on the potential costs, benefits, and transfers 
associated with this provision.
2. Nondiscrimination Based on Sexual Orientation and Gender Identity 
(Sec. Sec.  147.104(e), 155.120(c), 155.220(j), 156.125(b), 156.200(e), 
and 156.1230(b)), and EHB Nondiscrimination Policy for Health Plan 
Designs (Sec.  156.125)
    Many of the entities regulated by Sec. Sec.  147.104(e), 
155.120(c), 155.220(j), 156.125(b), 156.200(e), and 156.1230(b) may 
have previously incorporated the proposed nondiscrimination protections 
related to sexual orientation and gender identity into their operations 
in response to the inclusion of these protections in these regulations 
prior to the effective date of the June 19, 2020 rulemaking on section 
1557 that eliminated the references to these protections from these 
regulations. These regulated entities may have incurred any 
administrative costs at that time. We do not anticipate coming into 
compliance with these proposed changes would substantially impose 
administrative costs on any regulated entities that did not 
subsequently revise nondiscrimination policies based on the 2020 
section 1557 final rule. Although costs may be incurred by any 
regulated entities that did subsequently revise nondiscrimination 
policies in response to the removal of such protections from the 
affected regulations based on the 2020 section 1557 final rule, we 
believe such costs are justified in light of the potential significant 
benefits the proposed changes could provide to individuals in the 
LGBTQI+ community, by ensuring they are not subject to discrimination 
on the basis of their sexual orientation or gender identity.
    The EHB nondiscrimination policy proposals in this rulemaking will 
most likely impact the vast majority of state EHB-benchmark plans. If 
the nondiscrimination policy proposals become final, issuers subject to 
Sec.  156.125 and states subject to the standards under Sec.  156.125 
through the cross-reference at Sec.  156.111(b)(2)(v) will most likely 
need to take action to come into compliance with the updated 
nondiscrimination policies, and states may choose to provide guidance 
to assist issuers in doing so. The actions necessary to come into 
compliance with the updated nondiscrimination policies will likely 
impact and minimally increase premiums (for example, Colorado 2023 EHB-
benchmark plan \391\ noted a minimal increase to premiums with the 
updated benefits). States have the flexibility to design their EHB-
benchmark plans consistent with Sec.  156.111, which provides more 
options in plan designs. We note that several states have already used 
this flexibility to update their EHB-benchmark plans. CMS provides 
states with greater flexibility to select their EHB-benchmark plans by 
providing three new options for selection in PY 2020 and beyond, 
including: (1) Selecting the EHB-benchmark plan that another state used 
for PY 2017, (2) replacing one or more categories of EHBs under its 
EHB-benchmark plan used for PY 2017 with the same category or 
categories of EHB from the EHB-benchmark plan that another state used 
for PY 2017, or (3) otherwise selecting a set of benefits that would 
become the state's EHB-benchmark plan. Under each of these three 
options, the new EHB-benchmark also must comply with additional 
requirements, including scope of benefits requirements, under Sec.  
156.111(b).\392\
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    \391\ See for example, Colorado 2023 EHB Benchmark Plan 
Actuarial Report: Suite of Gender-affirming care benefits to treat 
gender dysphoria resulted cost estimate was 0.04% of the total 
allowed claims assuming utilization would be for adults. https://www.cms.gov/CCIIO/Resources/Data-Resources/ehb.
    \392\ Section 156.111(b). https://www.ecfr.gov/current/title-45/subtitle-A/subchapter-B/part-156.
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    We seek comment on the potential costs, benefits, and transfers 
associated with this provision.
3. Risk Adjustment (Sec. Sec.  153.320, 153.610, 153.620, 153.700, 
153.710, and 153.730)
    Beginning with the 2023 benefit year, we propose the following 
model specification changes to the HHS risk adjustment models: (1) To 
add a two-stage weighted model specification to the adult and child 
risk adjustment models, (2) to remove the existing severity illness 
factors in the adult models and add interacted HCC counts factors to 
the adult and child risk adjustment models, and (3) to revise the 
enrollment duration factors for the adult models. By prioritizing 
simplicity and limiting the number of changes to the current model 
structure, we minimize administrative burden for HHS, and as HHS runs 
risk adjustment in all 50 states and the District of Columbia, we do 
not expect these policies to place additional burden on state 
governments. These proposed model specifications would result in 
limited changes to the number and type of risk adjustment model 
factors; therefore, we do not expect these changes to impact issuer 
burden beyond the current burden for the risk adjustment program.\393\ 
To

[[Page 708]]

further assist issuers in understanding the potential impact of these 
changes on risk adjustment transfers, we released the 2021 RA Technical 
Paper and conducted an EDGE transfer simulation that estimated the 
impact on risk scores and transfers with and without these proposed 
changes using 2020 benefit year risk adjustment data.\394\ Based on 
results from this simulation, we estimate the impact of these policies 
on risk adjustment transfers to be relatively minor.\395\
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    \393\ See current burden estimates in the Supporting Statement 
of OMB control number 0938-1155 (Standards Related to Reinsurance, 
Risk Corridors, and Risk Adjustment (CMS-10401)), which is currently 
being updated. The previous version of the Supporting Statement is 
available at https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201712-0938-015.
    \394\ See the 2021 HHS-Operated Risk Adjustment Technical Paper 
on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf and the HHS-Operated Risk 
Adjustment Technical Paper on Possible Model Changes: Summary 
Results for Transfer Simulations, available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs. 
Issuers that participated in the simulation also received detailed 
issuer-specific data, including risk score and transfer estimates 
for the simulated results.
    \395\ We estimate that the impact of the model specification 
changes between the proposed and final 2022 benefit year risk 
adjustment models in total absolute value change in transfer over 
premium is -0.3 in the individual marker and -0.2 in the small group 
market.
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    Additionally, we propose to recalibrate the HHS risk adjustment 
models for the 2023 benefit year using the 2017, 2018, and 2019 
enrollee-level EDGE data. We believe that the approach of blending (or 
averaging) 3 years of separately solved coefficients will provide 
stability within the risk adjustment program and minimize volatility in 
changes to risk scores from the 2022 benefit year to the 2023 benefit 
year. We also propose to continue applying a market pricing adjustment 
to the plan liability associated with Hepatitis C drugs in the risk 
adjustment models, consistent with the approach adopted beginning with 
the 2020 models. For the 2023 benefit year, we propose to recalibrate 
the models using the final, fourth quarter (Q4) RXC mapping document 
that was applicable for the 2018 and 2019 benefit year, with the 
exception of the 2017 enrollee-level EDGE data year, for which we 
propose to use the most recent RXC mapping document that was available 
when we first processed the 2017 enrollee-level EDGE data (that is, Q2 
2018) for consistency with prior model year recalibrations, as we did 
not include RXCs in the adult risk adjustment models until 2018.\396\ 
For the 2024 benefit year and beyond, we propose to recalibrate the 
models using the final, fourth quarter (Q4) RXC mapping document that 
was applicable for each benefit year of data that is included in the 
current year's model recalibration. We also propose to continue to 
apply a pricing adjustment for Hepatitis C drugs for all three model 
types (adult, child, and infant), as well as outline our consideration 
for targeted removal of the mapping of hydroxychloroquine sulfate to 
RXC 09 (Immune Suppressants and Immunomodulators) and the related RXC 
09 interactions for the 2018 and 2019 benefit years' enrollee-level 
EDGE data used for model recalibration,\397\ as well as our 
consideration for the targeted removal of the mapping of 
Descovy[supreg] to RXC 01 ((Anti-HIV Agents) from all three benefit 
year datasets used for model recalibration. For the 2023 benefit year, 
we are proposing to maintain the CSR adjustment factors finalized in 
the 2019-2022 Payment Notices. Overall, we do not estimate that these 
changes will impact issuer burden beyond the current burden for the 
HHS-operated risk adjustment program.
---------------------------------------------------------------------------

    \396\ See 81 FR at 94075.
    \397\ The same concerns were not present for the 2017 enrollee-
level EDGE data because hydroxychloroquine sulfate was not included 
in the RXC crosswalk until 2018.
---------------------------------------------------------------------------

    For the 2023 benefit year, HHS will operate a risk adjustment 
program in every state and the District of Columbia. As described in 
the 2014 Payment Notice, HHS' operation of risk adjustment on behalf of 
states is funded through a risk adjustment user fee. For the 2023 
benefit year, we propose to use the same methodology that we finalized 
in the 2022 Payment Notice to estimate our administrative expenses to 
operate the program. Risk adjustment user fee costs for the 2023 
benefit year are expected to remain steady from the prior 2022 benefit 
year estimates. However, we project a small increase in billable member 
months in the individual and small group markets overall in the 2023 
benefit year based on the enrollment increases observed in the 2020 
benefit year. We estimate that the total cost for HHS to operate the 
risk adjustment program on behalf of states for 2023 will be 
approximately $60 million, and therefore, the proposed risk adjustment 
user fee would be $0.22 PMPM. Because overall risk adjustment costs 
estimated for the 2023 benefit year are similar to 2022 costs, we do 
not expect the proposed risk adjustment user fee for the 2023 benefit 
year to materially impact the transfer amounts collected or paid by 
issuers of risk adjustment covered plans.
    We also propose to generally repeal the ability for states to 
request a reduction in risk adjustment state transfers of up to 50 
percent in all state market risk pools beginning with the 2024 benefit 
year, with an exception for prior participants. We propose to provide 
an exception for states that have previously submitted risk adjustment 
state flexibility requests, so only such states may continue to request 
this flexibility beginning with the 2024 benefit year. We also propose 
to remove as a criterion for state justification and HHS approval of 
these requests the demonstration of state-specific factors that warrant 
an adjustment to more precisely account for relative risk differences 
in the State individual catastrophic, individual non-catastrophic, 
small group, or merged market risk pool. As proposed, we would retain 
as the sole requirement for state justification and criterion for HHS 
approval the demonstration that the requested reduction would have a de 
minimis impact on the necessary premium increase to cover the transfers 
for issuers that would receive reduced transfer payments beginning with 
the 2024 benefit year.
    We anticipate that the proposed changes to risk adjustment state 
flexibility requests would have a minimal impact on states and other 
interested parties. Only one state, Alabama, has requested a reduction 
in risk adjustment state transfers since this flexibility was first 
made available beginning in the 2020 benefit year, and under this 
proposal, Alabama would be considered a prior participant and could 
continue to request such reductions. We do not anticipate any new 
burden or costs as a result of this policy.
    We also propose to collect and extract five new data elements from 
issuers' EDGE servers through issuers' Edge Server Enrollment 
Submission (ESES) files and risk adjustment recalibration enrollment 
files: ZIP code, race, ethnicity, subsidy indicator, and ICHRA 
indicator beginning with the 2023 benefit year. In addition, we propose 
to begin extracting three data elements issuers already report to their 
EDGE servers--plan ID, rating area and subscriber indicator--as part of 
the enrollee-level EDGE data beginning with the 2022 benefit year. The 
proposal to extract plan ID, rating area, and subscriber indicator will 
pose minimal burden on issuers (only the burden associated with running 
of a command) since the creation and storage of the extract--which 
issuers do not receive--is mainly handled by HHS. For the collection of 
the five new data elements we propose to collect and extract beginning 
with the 2023 benefit year, the cumulative additional cost estimate is 
$225,168 for 600 issuers. We estimate that the addition of these five 
new data elements to the risk adjustment data

[[Page 709]]

submission requirements would be $375.28 per issuer. The proposal to 
extract these data elements will pose minimal burden on issuers (only 
the burden associated with running of a command) since the creation and 
storage of the extract--which issuers do not receive--is mainly handled 
by HHS. We expect minimal costs to HHS as a result of these proposals.
    We also propose to amend Sec.  153.730 to clarify that in 
situations where the April 30 deadline for issuers to submit risk 
adjustment data to HHS in states where HHS is operating the risk 
adjustment program falls on a non-business day, the deadline for 
issuers to submit the required data would be the next applicable 
business day. We believe this proposal would not pose additional burden 
since it does not change any of the data submission requirements and 
only clarifies the deadline when April 30 falls on a non-business day.
    We seek comment on estimated costs and transfers and potential 
benefits associated with these provisions.
4. Risk Adjustment Data Validation (Sec. Sec.  153.350 and 153.630)
    In this proposed rule, we propose updates to the HHS-RADV error 
rate calculation methodology beginning with the 2021 benefit year to 
(1) extend the application of Super HCCs from their current application 
only in the sorting step that assigns HCCs to failure rate groups to 
broader application throughout the HHS-RADV error rate calculation 
processes, (2) specify that Super HCCs will be defined separately 
according to the age group model to which an enrollee is subject, and 
(3) constrain to zero any negative failure rate outlier in a failure 
rate group, regardless of whether the outlier issuer has a negative or 
positive error rate. Although we anticipate the proposed changes will 
have a small impact on issuers' HHS-RADV risk adjustment transfer 
adjustments, risk adjustment is a budget neutral program and we expect 
these proposals to refine the HHS-RADV error rate calculation 
methodology will not have an impact on the administrative burden to 
issuers subject to the current HHS-RADV process because HHS is 
responsible for calculating error rates and applying error rates to 
adjust risk scores and state market risk pool transfers. Furthermore, 
we expect these changes will have minimal impacts on administrative 
costs to the federal government as the described changes do not impact 
the underlying HHS-RADV data, the amount of data HHS collects, or the 
SVA, which is conducted by an entity HHS retains.
    We seek comment on these burden estimates.
5. Agents, Brokers, and Web-Brokers (Sec.  155.220)
a. Required QHP Comparative Information on Web-Broker Websites and 
Related Disclaimer
    We propose to amend Sec.  155.220(c)(3)(i)(A) to include at 
proposed new Sec. Sec.  155.220(c)(3)(i)(A)(1) through (c)(3)(i)(A)(5) 
a list of the QHP comparative information web-broker non-Exchange 
websites are required to display consistent with Sec.  155.205(b)(1). 
We also propose to revise the disclaimer requirement in Sec.  
155.220(c)(3)(i)(A) so that web-broker non-Exchange websites would be 
required to prominently display a standardized disclaimer provided by 
HHS stating that enrollment support is available on the Exchange 
website and provide a web link to the Exchange website where enrollment 
support for a QHP is not available using the web-broker's non-Exchange 
website.
    In the preamble of part 2 of the 2022 Payment Notice final rule, we 
announced our intention to enforce the requirement that web-brokers 
display the QHP comparative information described under Sec.  
155.205(b)(1) beginning with the PY 2022 open enrollment period.\398\ 
Specifically, we propose to create proposed new Sec. Sec.  
155.220(c)(3)(i)(A)(1) through (5) to list premium and cost-sharing 
information, the summary of benefits and coverage established under 
section 2715 of the PHS Act, identification of the metal level of the 
QHP as defined by section 1302(d) of the ACA or whether it is a 
catastrophic plan as defined by section 1302(e) of the ACA, the results 
of the enrollee satisfaction survey as described in section 1311(c)(4) 
of the ACA, quality ratings assigned in accordance with section 
1311(c)(3) of the ACA, and the provider directory made available to the 
Exchange in accordance with Sec.  156.230 as the minimum QHP 
comparative information web-broker non-Exchange websites must display 
for all available QHPs. Including this information within Sec.  
155.220, instead of through a cross-reference to Sec.  155.205(b)(1), 
would provide better clarity and ease of reference and establish a list 
of required QHP comparative information consistent with our current 
enforcement approach, which, as discussed above, does not require the 
display of MLR information and transparency of coverage measures.
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    \398\ See Patient Protection and Affordable Care Act; HHS Notice 
of Benefit and Payment Parameters for 2022 and Pharmacy Benefit 
Manager Standards; Final Rule, 86 FR 24140 at 24206 (May 5, 2021).
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    We propose to revise Sec.  155.220(c)(3)(i)(A) to state that web-
broker websites must disclose and display the following QHP information 
provided by the Exchange or directly by QHP issuers consistent with the 
requirements of Sec.  155.205(c), and to the extent that enrollment 
support for a QHP is not available using the web-broker's website, 
prominently display a standardized disclaimer provided by HHS stating 
that enrollment support for the QHP is available on the Exchange 
website, and provide a web link to the Exchange website.
    These proposals should result in very limited new burden for web-
brokers. As we explained in Section III of the preamble, given CMS's 
current enforcement policies relative to these requirements, the QHP 
comparative information we propose to require web-broker websites to 
display is consistent with current requirements. As a result, this 
proposed requirement would not present new burden to web-brokers.
    The proposed new disclaimer would require web-brokers to make minor 
updates to their websites in cases when they do not support enrollment 
in all available QHPs. However, in those cases, they would be 
displaying a standardized disclaimer much like the plan detail 
disclaimer that they have historically been required to display.
    We estimate this proposal will affect approximately 20 web-brokers. 
Given the minor modifications necessary to implement the revised 
disclaimer in this proposal, we estimate a cost of $411 in total labor 
costs for each web-broker, which reflects 5 hours of work by Web 
Developers and Digital Interface Designers (15-1257) per web-broker 
(100 hours across all web-brokers annually) at an average hourly rate 
of $82.20. The cumulative additional cost estimate as a result of this 
proposal is $8,220 for 20 web-brokers in the 2022 benefit year.
    We seek comment on the estimated burden associated with these 
proposals.
b. Prohibition of QHP Advertising on Web-Broker Websites
    Section 155.220(c)(3)(i)(L) prohibits web-broker non-Exchange 
websites from displaying QHP recommendations based on compensation an 
agent, broker, or web-broker receives from QHP issuers. We propose to 
amend Sec.  155.220(c)(3)(i)(L) to make clear that web-broker non-
Exchange websites are also prohibited from displaying QHP 
advertisements, or otherwise providing

[[Page 710]]

favored or preferred placement in the display of QHPs, based on 
compensation agents, brokers, or web-brokers receive from QHP issuers.
    This proposal should impose no new costs on web-brokers so long as 
they are not displaying QHP advertisements on their websites. We 
believe that very few web-brokers are currently doing so. However, for 
those few web-brokers that are displaying QHP advertisements on their 
websites, they would be required to update their websites to remove 
those advertisements and would lose any advertising revenue associated 
with such placements. Since advertisements on websites are inherently 
subject to change, even for those web-brokers that would be required to 
make updates to their websites if this proposal is finalized, the costs 
may be very limited, although we request comment on this assumption and 
acknowledge that there may be loss of advertising revenue. We also 
realize, to the extent advertising revenue is lost, web-brokers may 
seek to recoup the lost revenue from other sources resulting in a 
transfer of costs. For example, web-brokers may seek to increase fees 
received from agents and brokers using their websites or may pursue 
increased commissions from QHP issuers.
    We seek comment on the potential costs, benefits, and transfers 
associated with this proposal.
c. Explanation of Rationale for QHP Recommendations on Web-Broker 
Websites
    We propose to amend Sec.  155.220 to add a proposed new paragraph 
(c)(3)(i)(M) that would require web-broker websites to prominently 
display a clear explanation of the rationale for explicit QHP 
recommendations and the methodology for the default display of QHPs on 
their websites (for example, alphabetically based on plan name, from 
lowest to highest premium, etc.). We believe this proposed new 
requirement would provide consumers with a better understanding of the 
information being presented to them on web-broker websites, thereby 
enabling them to make better informed decisions and shop for and select 
QHPs that best fit their needs.
    We support web-broker websites' use of innovative decision-support 
tools for consumers to help them shop for and select QHPs that best fit 
their needs. However, web-broker websites that explicitly recommend or 
rank QHPs do not always provide an explanation for their 
recommendations or rankings. Similarly, web-broker websites may not 
include an explanation of the methodology used for their default 
displays of QHPs, and it may not otherwise be apparent what 
methodologies are used. The absence of such explanations may cause some 
consumers to misunderstand the bases for the recommendations displayed 
to them on web-broker websites (whether explicit or implicit), or may 
prevent them from assessing the value of the recommendations (for 
example, whether a recommendation is based on the factors most 
important to them). In addition, the lack of explanations for QHP 
recommendations on web-broker websites may obscure that the web-broker 
is recommending QHPs based on compensation the web-broker receives from 
QHP issuers in violation of Sec.  155.220(c)(3)(i)(L). For these 
reasons, we propose to amend Sec.  155.220 to add proposed new 
paragraph (c)(3)(i)(M) that would require web-broker websites to 
prominently display a clear explanation of the rationale for QHP 
recommendations and the methodology for its default display of QHPs.
    This proposal should result in very limited new costs for web-
brokers, since the information it would require they display on their 
websites would only require text-based changes that are relatively easy 
to implement. Furthermore, the extent of those textual updates should 
be relatively minor in most cases. For example, if a web-broker is 
recommending a QHP based on the fact that it has the lowest monthly 
premiums for a consumer, that can likely be communicated in one or two 
sentences of informational text, or possibly even in a single phrase or 
set of short bullet points. Some web-brokers are already providing the 
information that would be required by this proposal, and therefore 
would not have to make any website updates. Other web-broker websites 
do not explicitly recommend QHPs, and therefore the impact of this 
proposal would be limited to providing similar information about the 
methodology for their default display of QHPs (for example, explaining 
QHPs are sorted from lowest to highest premium, etc.), assuming they do 
not already provide that information.
    We estimate this proposal will affect approximately 20 web-brokers. 
Given the minor text-based changes necessary to implement the 
informational text detailing the rationale for QHP recommendations and 
the methodology for a default display of QHPs, we estimate a cost of 
$411 in total labor costs for each web-broker, which reflects 5 hours 
of work by Web Developers and Digital Interface Designers (15-1257) per 
web-broker (100 hours across all web-brokers annually) at an average 
hourly rate of $82.20. The cumulative additional cost estimate as a 
result of this proposal is $8,220 for 20 web-brokers in the 2022 
benefit year.
    We seek comment on the potential costs and benefits associated with 
this proposal.
d. Providing Correct Information to the FFEs and Prohibited Business 
Practices
    These proposed revisions to Sec.  155.220(j)(2) are focused on 
addressing various areas where HHS has thus far identified a need for 
more direct and clear guidance, including ensuring that correct 
consumer information is entered onto Exchange applications. This 
includes contact information, such as the consumer's email address, 
telephone number, and mailing address, as well as information related 
to projected consumer household income. They also set forth prohibited 
business practices, such as using automation when interacting with CMS 
Systems or the DE Pathways without CMS' advance written approval and 
failing to properly identity proof Exchange applicants. These proposed 
changes will clarify HHS' expectations in these areas, and create 
clear, enforceable standards and bases for taking enforcement action 
for violations of these requirements.
    HHS believes these proposals would not impose any burden on any of 
the parties the proposals would impact, including agents, brokers, and 
web-brokers. None of these proposals propose to impose new 
requirements. Rather, these proposals are intended to address common 
problems that HHS has observed, and provide clear, enforceable 
standards intended to protect consumers and support the efficient 
operation of Exchanges by substantially reducing the occurrence of 
those problems.
    We seek comment on any potential costs or benefits associated with 
these proposals.
6. Verification Process Related to Eligibility for Insurance 
Affordability Programs (Sec.  155.320)
    We propose to amend Sec.  155.320(d)(4) to remove the requirement 
that Exchanges that do not reasonably expect to obtain sufficient 
verification data related to enrollment in or eligibility for employer 
sponsored coverage conduct random sampling to verify whether an 
applicant is eligible for or enrolled in an eligible employer sponsored 
plan in favor of a verification process that is based on risk for 
inappropriate APTC/CSRs. We believe this proposal would benefit 
employers, employees, Exchanges using the Federal platform, and State 
Exchanges that operate their own eligibility and enrollment platform,

[[Page 711]]

as this proposal would relieve them from the burden of investing 
resources to conduct and respond to random sampling, as applicable.
    In the 2019 Payment Notice final rule, we discussed a study that 
HHS conducted in 2016 and the burden associated with sampling based in 
part on the alternative process used for the Exchanges.\399\ HHS 
incurred approximately $750,000 in costs to design and operationalize 
this study, and the study indicated that $353,581 of APTC was 
potentially incorrectly granted to individuals in the sampled 
population who inaccurately attested to their enrollment in or 
eligibility for a qualifying eligible employer sponsored plan. We 
placed calls to employers to verify 15,125 cases but were only able to 
verify 1,948 cases. A large number of employers either could not be 
reached or were unable to verify a consumer's information, resulting in 
a verification rate of approximately 13 percent. The sample size 
involved in the 2016 study did not represent a random sample of the 
target population and did not fulfill all regulatory requirements for 
sampling under Sec.  155.320(d)(4)(i).
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    \399\ See https://www.govinfo.gov/content/pkg/FR-2017-11-02/pdf/2017-23599.pdf, p. 51128.
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    Taking additional costs into account--namely, the cost of sending 
notices to employees as required under Sec.  155.320(d)(4)(i)(A), the 
cost of building the infrastructure and implementing the first year of 
operationalizing this process, and the cost of expanding the number of 
cases to a random sample size of approximately 1 million cases--we 
estimate that the overall one-time cost of implementing sampling would 
have been approximately $8 million for the Exchanges using the Federal 
platform, and between $2 million and $7 million for other Exchanges, 
depending on their enrollment volume and existing infrastructure. 
Therefore, we estimate that the average per-Exchange cost of 
implementing sampling that resembles the approach taken by the 
Exchanges using the Federal platform would have been approximately $4.5 
million for State Exchanges that operate their own eligibility and 
enrollment platform, for a total cost of $67.5 million for the 15 State 
Exchanges that operate their own eligibility and enrollment platform 
(operating in 14 states and the District of Columbia). However, we are 
aware that 4 State Exchanges that operate their own eligibility and 
enrollment platform have already incurred costs to implement sampling 
and estimate that they have incurred one-time costs of approximately 
$4.5 million per Exchange with a total of $18 million and will only 
experience savings related to recurring costs. Therefore, the one-time 
savings for Exchanges using the Federal platform and the remaining 
State Exchanges that operate their own eligibility and enrollment 
platform will be approximately $49.5 million.
    We estimate the annual costs to conduct sampling on a random sample 
size of approximately 1 million cases to be approximately $8 million 
for the Exchanges using the Federal platform and $7 million on average 
for each State Exchange that operates its own eligibility and 
enrollment platform. This estimate includes operational activities such 
as noticing, inbound and outbound calls to the Marketplace call center, 
and adjudicating consumer appeals. The total annual cost to conduct 
sampling would have been $105 million for 15 State Exchanges. 
Therefore, the total annual cost for the Exchanges using the Federal 
platform and the 15 State Exchanges that operate their own eligibility 
and enrollment platform would have been $113 million in 2022 and 
onward.
    Eliminating these estimated costs would be offset by the costs of 
designing and implementing an appropriate verification process. We 
estimate that the cost to conduct research for Exchanges using the 
Federal platform to be approximately $295,000 and for the 15 State 
Exchanges that operate their own eligibility and enrollment platform to 
be approximately $4.4 million. In addition to significant cost savings, 
this proposal would provide more flexibility for states to design and 
implement a verification process for employer sponsored coverage that 
is tailored to their unique populations, and would protect the 
integrity of states' respective individual markets. Furthermore, we 
believe that this proposal would reduce burden on employers and 
employees, as compliance with the current random sampling, 
notification, and information gathering processes require significant 
time and resources, which likely would be reduced if this proposal is 
finalized.
    HHS requests comment on the estimated and potential costs and 
impacts of this proposal.
7. Proration of Advance Premium Tax Credit and Premium (Sec. Sec.  
155.240(e), 155.305(f)(5), and 155.340)
    HHS is proposing amendments to part 155, specifically at Sec. Sec.  
155.240(e), 155.305(f)(5), and 155.340 to establish the requirement 
that all Exchanges prorate both premiums and APTCs for enrollees 
enrolled in a particular policy for less than the full coverage month, 
including when the enrollee is enrolled in multiple policies within a 
month, each lasting less than the full coverage month using a specified 
methodology. In line with calculating PTC according to the provisions 
at 26 CFR 1.36B-3, this method of administering APTC would reduce 
instances of payments of APTC in excess of an applicable taxpayer's 
monthly PTC for a month in which an enrollee is enrolled for less than 
a full calendar month and thus would protect the applicable taxpayer 
from incurring income tax liability due to excess APTC.
    This would benefit both issuers and enrollees by preventing APTC 
overpayment and eliminating wasted resources dedicated to resolving 
overpayment issues. While the FFEs and SBE-FPs already prorate APTC and 
premium amounts, State Exchanges do not currently prorate consistently 
the amount of applied APTC administered to issuers in their applicable 
states.
    HHS acknowledges that those State Exchanges that do not currently 
prorate APTC or premium amounts will be financially impacted by the 
proposed requirement to implement this methodology, and this proposal 
will likely require operational systems builds to support this new 
proration requirement.
    Based on historical cost data for SBEs to implement changes to 
their IT systems and operations related to premium processing 
functionality and similar functionality, such as functionality for 
processing consumer failures to reconcile APTC received for a previous 
plan year, HHS estimates that State Exchanges that currently do not 
implement proration of APTC or premium amounts according to the 
proposed methodology could expect to incur one-time implementation 
costs. HHS anticipates that each affected State Based Exchange that 
does not already prorate APTC or premium amounts according to the 
proposed methodology would expect an estimated $1 million one-time 
burden to account for the IT build to support the new calculation and 
reporting systems associated with this requirement.
    HHS estimates that 8 State Exchanges currently prorate premium 
amounts but do not prorate APTC amounts. HHS anticipates that those 
State Exchanges which already prorate premium amounts will have the 
operational and systems capacity to calculate the prorated premium and 
APTC amounts as required in this proposed policy.
    Currently, State Exchanges vary in their approaches to implementing 
the proposed APTC and premium proration. In order to provide the most 
conservative estimate of this proposal's

[[Page 712]]

burden, HHS assumes that 10 State Exchanges, including State Exchanges 
that newly transitioned to being State Exchanges by the time of this 
rulemaking, will incur the highest level of implementation cost 
detailed earlier in this proposed rule ($1 million in one-time 
implementation burden per State Exchange) for a total estimated impact 
of $10,000,000 in the 2024 benefit year across all State Exchanges. HHS 
seeks comment on the estimated costs and benefits described in this 
section.
10. Special Enrollment Periods--Special Enrollment Period Verification 
(Sec.  155.420)
    We are proposing to amend Sec.  155.420 to add new paragraph (g) to 
state that Exchanges may conduct pre-enrollment verification of 
eligibility for special enrollment periods, at the option of the 
Exchange, and that Exchanges may provide an exception to pre-enrollment 
special enrollment period verification for special circumstances. 
Exchanges on the Federal platform would conduct pre-enrollment special 
enrollment period eligibility verification for new consumers who attest 
to losing minimum essential coverage.
    We do not anticipate that revisions to Sec.  155.420 would impose 
regulatory burden or costs on the Exchanges on the Federal platform 
because these Exchanges will decrease the number of special enrollment 
period types that require pre-enrollment verification to only include 
special enrollment periods for new consumers who attest to losing 
minimum essential coverage. The provisions proposed in this rule would 
decrease the scope of pre-enrollment special enrollment period 
verification in all states with Exchanges served by the Federal 
platform. We anticipate that this would result in 194,000 fewer 
individuals having their enrollment delayed or ``pended'' annually 
until eligibility verification is completed, which would result in a 
$5,150,700 decrease in annual ongoing costs to the federal government.
    There may be State Exchanges that also decide to reduce the scope 
of their current pre-enrollment special enrollment period verification, 
which would also decrease annual ongoing costs for State Exchanges. 
State Exchanges that are currently conducting pre-enrollment 
verification of eligibility for more special enrollment period types 
than those that the Exchanges on the Federal platform would be 
verifying under this proposal could experience a decrease in burden and 
costs if they choose to align their approaches with the Exchanges on 
the Federal platform. State Exchanges that are currently conducting 
pre-enrollment verification of eligibility for fewer types of special 
enrollment periods than the proposed special enrollment period that the 
Exchanges on the Federal platform would be verifying under this 
proposal could experience an increase in burden and costs if they 
choose to align with the Exchanges on the Federal platform, but State 
Exchanges will not be required to align with the Exchanges on the 
Federal platform.
    We do not anticipate that this would increase administrative costs 
on QHP issuers. Additionally, our data suggests that SEP documentation 
deters younger, likely healthier individuals from enrolling, but there 
could be an increase in claims costs to QHP issuers since the Exchanges 
on the Federal platform will be requiring document submission prior to 
enrollment for fewer special enrollment period types.
    We seek comment on the potential costs, benefits, and transfers 
associated with this proposal.
11. General Program Integrity and Oversight Requirements (Sec.  
155.1200)
    We propose to add new Sec.  155.1200(e) to permit a State Exchange 
to meet the requirement to conduct an annual independent external 
programmatic audit, as described at Sec.  155.1200(c), by completing 
the annual, required SEIPM program process. As a result, we estimate 
that there would be a general reduction in reporting and contracting 
costs to State Exchanges related to meeting auditing requirements under 
Sec.  155.1200. We anticipate the combined cost in contracting and 
reporting would result in an average annual reduction of approximately 
$90,624.62 for each State Exchange beginning in benefit year 2024. The 
total cost annual reduction across 18 State Exchanges would be 
approximately $1,631,243.16. Any new costs, burdens, and benefits to 
State Exchanges of meeting requirements for the SEIPM program are 
described later in this proposed rule.
    We seek comment on the potential costs, benefits, and transfers 
associated with this provision.
12. State Exchange Improper Payment Measurement Program (Sec. Sec.  
155.1500 Through 155.1540)
    The implementation of the SEIPM program could have the direct 
effect of reducing improper payments. Measuring the error rate of State 
Exchange Premium Tax Credit payments will reveal vulnerable processes 
to be corrected. Recordkeeping costs of $3.0 million annually will 
begin in 2023.
    We seek comment on the estimated costs and benefits and potential 
transfers associated with this provision.
13. FFE and SBE-FP User Fees (Sec.  156.50)
    We are proposing an FFE user fee rate of 2.75 percent of monthly 
premiums for the 2023 benefit year, which is the same as the 2.75 
percent FFE user fee rate finalized in part 3 of the 2022 Payment 
Notice.\400\ We also propose an SBE-FP user fee rate of 2.25 percent 
for the 2023 benefit year, which is the same as the 2.25 percent SBE-FP 
user fee rate finalized in part 3 of the 2022 Payment Notice. 
Therefore, we do not believe that these proposed user fee rates will 
have any additional impact on premiums compared to the 2022 benefit 
year. We also propose to amend Sec.  156.50 to conform the user fee 
regulations with the repeal of the Exchange DE option finalized in part 
3 of the 2022 Payment Notice.\401\ As this proposal does not alter 
existing policy, we do not expect that it will have any additional 
regulatory impact.
---------------------------------------------------------------------------

    \400\ 86 FR 53412 at 53445.
    \401\ 86 FR 53412.
---------------------------------------------------------------------------

    We seek comment on the potential costs, benefits, and transfers 
associated with this provision.
14. State Selection of EHB-Benchmark Plan for Plan Years Beginning on 
or After January 1, 2020 (Sec.  156.111)
    We are proposing to eliminate the requirement at Sec.  156.111(d) 
and (f) to require states to annually notify HHS in a form and manner 
specified by HHS, and by a date determined by HHS, of any state-
required benefits applicable to QHPs in the individual or small group 
market that are considered to be in addition to EHB in accordance with 
Sec.  155.170(a)(3) and any benefits the state has identified as not in 
addition to EHB and not subject to defrayal, describing the basis for 
the state's determination.
    Under this proposal, states would no longer be required to submit 
an annual report that complies with each requirement listed at Sec.  
156.111(f)(1) through (6), nor would HHS identify which benefits are in 
addition to EHB for the applicable PY in the state if a state does not 
submit an annual reporting package.
    The 2021 Payment Notice acknowledged that requiring states to 
annually report to HHS would require that states submit additional 
paperwork to HHS on an annual basis but noted that, as states are 
already required under Sec.  155.170 to identify which state-required 
benefits are in addition to EHB and to defray the cost of those 
benefits,

[[Page 713]]

any such burden experienced by states would be minimal.\402\ The 2021 
Payment Notice also stated that this reporting requirement would be 
complementary to the process the state should already have in place for 
tracking and analyzing state-required benefits. The 2021 Payment Notice 
further explained that states may opt not to report this information 
and instead let HHS make this determination for them. In the 2021 
Payment Notice, we also discussed that any state burden associated with 
this policy would be limited to the completion of the HHS templates, 
validation of that information, and submission of the templates to HHS. 
Repealing the annual reporting requirement would remove the burden 
associated with that policy, detailed in 2021 Payment Notice and 
summarized previously in the Collection of Information Requirements 
section in this proposed rule.
---------------------------------------------------------------------------

    \402\ 85 FR 29164, 29252.
---------------------------------------------------------------------------

    Although this proposal would relieve states of the annual reporting 
requirements and any associated burden with submission and validation 
of the information on the annual reporting templates, it would not pend 
or otherwise impact the defrayal requirements under section 
1311(d)(3)(B) of the ACA, as implemented at Sec.  155.170. Under this 
proposal, states remain responsible for making payments to defray the 
cost of additional required benefits and issuers are still responsible 
for quantifying the cost of these benefits and reporting the cost to 
the state. We also note that the obligation for a state to defray the 
cost of QHP coverage of state-required benefits in addition to EHB is 
an independent statutory requirement from the annual reporting policy 
finalized at Sec.  156.111(d) and (f).
    We seek comment on the potential costs, benefits, and transfers 
associated with this provision.
15. Levels of Coverage (Actuarial Value) (Sec.  156.140, 156.200, 
156.400)
    We are proposing to change the de minimis range for levels of 
coverage at Sec.  156.140(c) to a variation of +2/-2 percentage points 
for all standard bronze plans, gold plans, platinum plans, individual 
market off-Exchange silver plans, and all small group market silver 
plans (on- and off-Exchange), as well as proposing to change the de 
minimis for expanded bronze plans to +5/-2, that are required to comply 
with AV standards for PYs beginning in 2023. In addition, we are 
proposing to change the de minimis under Sec.  156.200 to +2/0 
percentage points for individual market silver QHPs and for the income-
based silver CSR plan variations under Sec.  156.400 to +1/0.
    In the 2017 Market Stabilization rule,\403\ we acknowledged that in 
the short run, expanding the standard de minimis range to +2/-4 would 
generate a transfer of costs from consumers to issuers in the form of 
decreased APTC and increased premiums, but stated our belief that the 
additional flexibility for issuers would have positive effects for 
consumers over the longer term as premiums stabilized, issuer 
participation increased, and coverage options at the silver level and 
above increased, which would attract more young and healthy enrollees 
into such plans. As discussed above, since we finalized the expanded de 
minimis ranges, we have observed decreased enrollment in silver plans 
(from 963,241 enrollees in PY 2018 to 424,345 enrollees in PY 2021), 
despite the number of standard silver plans available on HealthCare.gov 
steadily increasing from 811 silver plans in PY 2018 to 1,386 silver 
plans in PY 2021. Thus, we cannot justify the decreased APTC with 
evidence of increased enrollment of younger and healthier enrollees in 
silver plans.
---------------------------------------------------------------------------

    \403\ Patient Protection and Affordable Care Act; Market 
Stabilization, 82 FR 18346 (April 18, 2017). Available at https://www.govinfo.gov/content/pkg/FR-2017-04-18/pdf/2017-07712.pdf.
---------------------------------------------------------------------------

    Changing the de minimis ranges for standard metal level plans would 
generate a transfer of costs from the government and issuers to 
consumers in the form of increased APTC and decreased premiums, because 
narrowing the de minimis range for silver plans can affect the 
generosity of the SLCSP. The SLCSP is the benchmark plan used to 
determine an individual's PTC. A subsidized enrollee in any county that 
has a SLCSP that is currently below 70 percent AV would see the 
generosity of their current SLCSP increase, resulting in an increase in 
PTC. Not all counties would see the SLCSP change as a result of this 
proposal. In states using HealthCare.gov, approximately 87 percent of 
counties across 23 states have a SLCSP that is below 70 percent AV.
    For this proposal, the CMS Office of the Actuary estimates a 
nationwide increase in PTCs through PY 2032, as shown in Table 26:
[GRAPHIC] [TIFF OMITTED] TP05JA22.043

    This proposal would impact those consumers currently enrolled in 
standard silver plans that are currently in the -4 to -0.01 percent de 
minimis range that would be out of compliance under this proposal, as 
well as consumers currently enrolled in individual market silver QHPs 
that are currently in the -4 to -0.01 percent de minimis range and 
associated income-based CSR silver plan variations currently enrolled 
in the -1 to -0.01 percent de minimis range. Of the plans on 
HealthCare.gov, we estimate that there are approximately 150,000 
enrollees in gold plans below 78 percent AV, and 3,500 enrollees in 
platinum plans below 88 percent AV.\404\ Additionally, we estimate 
there are approximately 248,000 enrollees in HealthCare.gov silver QHPs 
below 70 percent AV, with approximately 4.2 million enrollees in 
corresponding income-based CSR plan variations. Under these proposals, 
those enrollees would need to select a different plan for PY 2023 if 
the issuer chooses to discontinue the plan rather than revise the 
plan's cost sharing. Additionally, these proposals would similarly 
affect enrollees in such plans that are not available on 
HealthCare.gov, such as plans sold on state Exchanges, for which

[[Page 714]]

we do not have data to make an informed estimate.
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    \404\ There are no enrollees in bronze plans below 58% AV.
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    We estimate the premiums for these plans would increase 
approximately 2 percent on average because of benefit changes required 
for plans to meet a +2/0 de minimis threshold. However, for Exchange 
enrollees, we expect this premium increase to be substantially offset 
by the corresponding increase in PTC because of the proposal's impact 
on the SLCSP. Similarly, the proposal to change the de minimis range 
for CSR variants to +1/0 would lead to improved cost-sharing due to the 
higher relative AV compared to the current +1/-1 range, along with 
increased gross premiums that would be substantially offset by 
increased PTC payments. After implementation of the ARP enhanced 
financial subsidies, subsidized enrollees make up the majority of 
HealthCare.gov silver QHP enrollees--only 91,000 of approximately 
248,000 individual market silver QHP enrollees in plans with AV between 
66.00 and 69.99 percent plan AV remain unsubsidized. By comparison, 
enrollment within the corresponding income-based silver CSR variations 
of the above silver QHPs has increased to approximately 4.2 million. We 
expect the increased PTC payments due to the premium increase to 
incentivize healthier subsidy-eligible enrollees to participate in the 
Marketplace, and that the improved risk pool as a result of increased 
healthier enrollees would mitigate the net cost burden of covering a 
decreasing population of unsubsidized enrollees.
    In addition, changing the de minimis range for standard silver 
plans would impact ICHRAs, which use the Lowest Cost Silver Plan (LCSP) 
as the benchmark to determine whether an ICHRA is considered affordable 
to an employee. Under this proposal, as silver plans become more 
generous and premiums increase, an employer would have to contribute 
more to an ICHRA to have it be considered affordable. This change could 
discourage large employer use of ICHRAs because large employers need to 
offer affordable coverage to satisfy the employer shared responsibility 
provisions.\405\ Additionally, if coverage is considered unaffordable 
to the employee, the employee can opt out of the ICHRA and instead 
purchase coverage on the Exchange with APTC, if otherwise eligible; and 
increasing the LCSP premiums could make employer-sponsored coverage 
unaffordable to more employees. We estimate silver plans with an AV 
below 70 percent will see premiums increase approximately 2 percent on 
average due to more generous benefits. We do not believe this will have 
a significant impact on the number of employers willing to offer ICHRAs 
or whether an ICHRA is considered affordable to most employees, but 
invite comment to refute or refine this understanding on these issues 
in particular.
---------------------------------------------------------------------------

    \405\ See section 4980H of the Code; 26 CFR 54.4980H-1--26 CFR 
54.4980H-6.
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    We seek comment on the estimated costs, benefits, and transfers 
associated with this provision.
16. Standardized Options (Sec.  156.201)
    Section 156.201 would require QHP issuers to offer standardized QHP 
options. Though these proposed requirements would necessitate the 
creation of new plans, HHS believes the burden imposed on issuers would 
be minimal because these new plans' benefits, networks, and formularies 
would not differ substantially from the benefits, networks, and 
formularies of plans that issuers currently offer and because HHS is 
specifying the cost sharing parameters, MOOPs, and deductibles for 
these new plans. Additionally, HHS would design these standardized 
options to resemble the most popular QHPs in the individual market FFEs 
and SBE-FPs in PY 2021, making these standardized options comparable to 
plans that the majority of issuers already offer. Furthermore, since 
HHS proposes to require QHP issuers to offer standardized options at 
every product network type, metal level, and throughout every service 
area that they also offer non-standardized QHPs (but not at different 
product network types, metal levels, and service areas that they do not 
also offer non-standardized QHPs), issuers would not be required to 
extend plan offerings beyond their existing service areas.
    Additionally, since HHS does not propose to limit the number of 
non-standardized QHP options that issuers can offer in PY 2023, HHS 
believes the majority of enrollees will remain enrolled in their 
current non-standardized options. Moreover, since HHS does not propose 
to require issuers to offer a higher number of QHPs than what they 
currently offer, issuers would still be able to determine how many QHPs 
they wish to offer. As a result, HHS does not expect the total number 
of plans that issuers will offer to change substantially subsequent to 
the imposition of requirement. Thus, though these new plans would have 
to be submitted for approval, certification, and display, we expect 
that the overall burden for issuers and states alike would not 
substantially increase because we do not expect the number of overall 
plan offerings to substantially increase--due in part to issuers 
discontinuing some old plans.
    As noted earlier in the preamble, HHS is considering resuming the 
differential display of standardized options per the existing authority 
at Sec.  155.205(b)(1). HHS would assume burden for the differential 
display of standardized options on HealthCare.gov, meaning FFE and SBE-
FP issuers would not be subject to this burden. In addition, as noted 
above in the preamble, HHS is considering resuming enforcement of the 
standardized options display requirements for approved web-brokers and 
QHP issuers using a direct enrollment pathway to facilitate enrollment 
through an FFE or SBE-FP--including both the Classic DE and EDE 
Pathways--at Sec. Sec.  155.220(c)(3)(i)(H) and 156.265(b)(3)(iv), 
respectively.
    HHS believes that resuming enforcement of these differential 
display requirements will not require significant modification of these 
entities' platforms and non-Exchange websites. Further, since HHS would 
continue to allow these entities to submit requests to deviate from the 
manner in which standardized options are differentially displayed on 
HealthCare.gov, potential burden for these for these entities would be 
further reduced. HHS also intends to provide access to information on 
standardized options to web-brokers through the Health Insurance 
Marketplace PUFs and QHP Landscape file to further minimize burden. The 
specific burden estimates for these requirements can be found in the 
corresponding ICR sections for Sec. Sec.  155.220 and 156.265.
    We seek comment on the potential costs, benefits, and transfers 
associated with this provision.
17. Network Adequacy (Sec.  156.230)
    Section 156.230(a)(2) currently requires a QHP issuer to maintain a 
network that is sufficient in number and types of providers, including 
providers that specialize in mental health and substance use disorders, 
to ensure that all services will be accessible without unreasonable 
delay. In this proposed rule, HHS proposes for PY 2023 and future PYs 
that all QHPs or QHP candidates that use a provider network must comply 
with network adequacy standards.
    HHS proposes to conduct prospective quantitative network adequacy 
reviews for all FFEs in all FFE states except in states performing plan 
management functions that adhere to a standard as stringent as the 
federal standard, conduct reviews prospectively, and choose to conduct 
their own reviews.

[[Page 715]]

HHS proposes for PY 2023 and future PYs to adopt time and distance 
standards to assess whether FFE QHPs or QHP candidates fulfill network 
standards based on numbers and types of providers and providers' 
geographic locations. Time and distance standards would be calculated 
at the county level using information from the ECP/NA template. HHS 
also proposes to adopt appointment wait time standards to assess 
whether FFE QHPs or QHP candidates fulfill network adequacy standards. 
For PY 2023, issuers would attest to meeting the appointment wait time 
standards. Issuers that are unable to meet the specified standards for 
time and distance or appointment wait times must submit a justification 
to account for such variances.
    HHS proposes that, for plans that use tiered networks to count 
toward the issuer's satisfaction of the network adequacy standards, 
providers must be contracted within the network tier that results in 
the lowest cost-sharing obligation. For plans with two network tiers 
(for example, participating providers and preferred providers), such as 
many PPOs, where cost sharing is lower for preferred providers, only 
preferred providers would be counted towards network adequacy 
standards.
    Finally, HHS proposes to collect information about providers who 
offer telehealth services via the ECP/NA template to inform network 
adequacy and provider access standards for future PYs. As discussed 
previously in the Collection of Information Requirements section, this 
may increase related administrative costs for issuers who do not 
already possess this data, though many issuers already collect and 
submit this information for network adequacy submissions in other 
markets. While we anticipate that increased burden related to 
telehealth data collection would be minimal for many issuers, the 
increased burden could ultimately lead to an increase in premiums for 
consumers. As noted previously, we believe that the potential benefits 
of obtaining telehealth information and using it to inform future 
network adequacy standards are in the best interests of both QHP 
enrollees and QHP issuers. As such, we anticipate that the additional 
burden would be mitigated by the expected benefits.
    We seek comment on the potential costs, benefits, and transfers 
associated with this provision.
18. Essential Community Providers (Sec.  156.235)
    Section 156.235(a)(2)(i) provides that a plan has a sufficient 
number and geographic distribution of ECPs if the issuer demonstrates, 
among other things, that a QHP or QHP candidate provides access to a 
network of providers that includes at least a minimum percentage of 
ECPs, as specified by HHS.
    For PY 2023 and future PYs, HHS proposes to raise the ECP threshold 
applicable to QHPs and QHP candidates from 20 percent to 35 percent. 
For this increased threshold, HHS would consider issuers to have 
satisfied the regulatory threshold requirement if the issuer contracts 
with at least 35 percent of available ECPs in each plan's service area 
to participate in the plan's provider network.
    We note that in PYs 2015-2017, all FFE QHP issuers satisfied the 30 
percent threshold with minimal reliance on ECP write-ins and 
justifications. In PYs 2018 through 2021, when the ECP threshold was 20 
percent, all QHP issuers satisfied the lower threshold with ease and 
very little reliance on ECP write-ins and justifications.
    Consequently, HHS anticipates that issuers can meet the proposed 35 
percent threshold using ECP write-ins and justifications as needed. We 
believe that increasing the ECP threshold would lead to greater ECP 
access for low-income and medically underserved individuals. HHS 
anticipates that costs may not increase since HHS' data analysis shows 
most issuers could easily meet this standard or use the justification 
process. HHS expects that administrative cost changes would likely be 
minimal for most issuers.
    HHS proposes that, for plans that use tiered networks to count 
toward the issuer's satisfaction of ECP standards, providers must be 
contracted within the network tier that results in the lowest cost-
sharing obligation. For plans with two network tiers (for example, 
participating providers and preferred providers), such as many PPOs, 
where cost sharing is lower for preferred providers, only preferred 
providers would be counted towards ECP standards.
    We seek comment on the potential costs, benefits, and transfers 
associated with this provision.
19. Standards for Delegated and Downstream Entities (Sec.  156.340)
    We propose to amend and add language to Sec.  156.340, to extend 
its applicability to QHP issuers on all Exchange models. The proposed 
changes capture the delegated and downstream entity standards that 
would apply to QHP issuers on State Exchanges and State Exchange SHOPs, 
as well as QHP issuers providing coverage on Exchange models that use 
the Federal platform, including, but not limited to, FFEs, FF-SHOPs, 
SBE-FPs, and SBE-FP-SHOPs. HHS also proposes to add a requirement that 
all agreements between QHP issuers and their downstream and delegated 
entities include language stating that the relevant Exchange authority, 
including State Exchanges, may demand and receive a delegated and 
downstream entity's records related to the QHP issuer's obligations in 
accordance with the minimum Federal standards related to Exchanges. 
These proposed amendments are intended to hold QHP issuers in all 
Exchange models responsible for their downstream and delegated 
entities' compliance with applicable Exchange standards, and to make 
their oversight obligations, and the obligations of their downstream 
and delegated entities, explicit. We also propose conforming amendments 
to the title of subpart D of 45 CFR part 156 from ``Standards for 
Qualified Health Plan Issuers on Federally Facilitated Exchanges and 
State-Based Exchanges on the Federal platform'' to ``Standards for 
Qualified Health Plan Issuers on Specific Types of Exchanges''.
    We anticipate these proposals will impose a minimal burden on QHP 
issuers and Exchange authorities impacted by them. HHS expects some QHP 
issuers may need to make changes to existing record retention policies 
and their agreements with delegated and downstream entities. If 
finalized as proposed, the conforming amendments will become applicable 
to all books, contracts, computers, or other electronic systems, 
including medical records and documentation relating to the QHP 
issuer's obligations in accordance with Federal standards under 
paragraph (a) of this section until 10 years from the final date of the 
agreement period, as of the effective date of the final rule. State 
Exchange authorities will retain primary enforcement authority and 
would be responsible for ensuring QHP issuers in State Exchanges and 
State Exchange SHOPs maintain oversight over downstream and delegated 
entities.
    We seek comment on the potential costs, benefits, and transfers 
associated with this provision.
20. Payment for Cost-Sharing Reductions (Sec.  156.430)
    We propose to amend Sec.  156.430 to clarify that the CSR data 
submission process is mandatory only for those issuers that received 
CSR payments from HHS for any part of the benefit year as a result of a 
valid appropriation to make CSR payments, and voluntary for other 
issuers. In the event HHS has not made CSR payments to issuers

[[Page 716]]

because there is no appropriation to do so, HHS will continue to 
provide those issuers that have not received CSR payments from HHS for 
any part of the benefit year the option to submit CSR data, but issuers 
will not be required to do so. We do not expect any of these provisions 
to increase burden on issuers, as this amendment would codify existing 
practices.
    We seek comment on any potential costs, benefits, and transfers 
associated with this provision.
21. Quality Improvement Strategy (Sec.  156.1130)
    We propose that beginning in 2023, a QHP issuer would be required 
to address reducing health and health care disparities as one of their 
QIS topic areas in addition to at least one other topic area outlined 
in section 1311(g)(1) of the ACA, including improving health outcomes 
of plan enrollees, preventing hospital readmissions, improving patient 
safety and reducing medical errors, and promoting wellness and health. 
We are not proposing any changes to regulatory text. We do not estimate 
additional costs or burdens as a result of this proposal.
    We seek comment on any potential costs, benefits, and transfers 
associated with this proposal.
22. Medical Loss Ratio (Sec. Sec.  158.140, 158.150, 158.170)
    We propose to amend Sec.  158.140(b)(2)(iii) to clarify that only 
those provider incentives and bonuses that are tied to clearly defined, 
objectively measurable, and well-documented clinical or quality 
improvement standards that apply to providers may be included in 
incurred claims for MLR reporting and rebate calculation purposes. To 
the extent some issuers currently include in incurred claims payments 
to providers that significantly reduce or eliminate rebates while 
providing no value to consumers, the proposed clarification would 
result in transfers from such issuers to enrollees in the form of 
higher rebates or lower premiums. Although we do not know how many 
issuers currently engage in such reporting practices or the amounts 
improperly included in MLR calculations, we estimate the impact of the 
proposed clarification by assuming that provider incentive and bonus 
payments of 1.06 percent or more of paid claims (the top 5 percent of 
such observations) may represent incentives based on MLR or similar 
metrics. Based on this assumption and the MLR data for 2019, the 
proposed clarification would increase rebates paid by issuers to 
consumers or reduce premiums collected by issuers from consumers by 
approximately $ 12 million per year.
    We also propose to amend Sec.  158.150(a) to specify that only 
expenditures directly related to activities that improve health care 
quality may be included in QIA expenses for MLR reporting and rebate 
calculation purposes. This proposed change would result in transfers 
from issuers that currently include indirect expenses in QIA to 
enrollees in the form of higher rebates or lower premiums. Although we 
do not know how many issuers include indirect expenses in QIA, we 
estimate the impact of the proposed change by assuming that indirect 
expenses inflate QIA by 41.5 percent (the midpoint of the 33 percent- 
to 50 percent range we have observed during MLR examinations) for half 
of the issuers that report QIA expenses (based on the frequency of QIA-
related findings in MLR examinations). Based on these assumptions and 
the MLR data for 2020, the proposed clarification would increase 
rebates paid by issuers to consumers or reduce premiums collected by 
issuers from consumers by approximately $ 49.8 million per year.
    We also propose to make a technical amendment to Sec.  158.170(b) 
to correct an oversight and remove the reference to the percentage of 
premium QIA reporting option described in Sec.  158.221(b)(8), a 
provision that was vacated by the United States District Court for the 
District of Maryland in City of Columbus, et al. v. Cochran,\406\ and 
thus deleted in part 2 of the 2022 Payment Notice final rule. We do not 
anticipate any impact on rebates or premiums as a result of this 
change. We seek comment on any potential costs, benefits, and transfers 
associated with these provisions.
---------------------------------------------------------------------------

    \406\ 523 F. Supp. 3d 731 (D. Md. 2021).
---------------------------------------------------------------------------

D. Regulatory Alternatives Considered

    In developing the policies contained in this proposed rule, we 
considered numerous alternatives to the presented proposals. Below we 
discuss the key regulatory alternatives that we considered.
    As described in prior rulemakings and the 2021 RA Technical Paper, 
we considered a variety of alternatives to the proposed model 
specifications and updated enrollment duration factors for the HHS risk 
adjustment models.\407\ For example, we considered adding a non-linear 
term or HCC counts terms for all enrollees in the adult and child risk 
adjustment models. As detailed in the proposed 2022 Payment Notice and 
the 2021 RA Technical Paper, we found that non-linear model 
specifications often failed to converge, preventing us from testing the 
impact of the non-linear model specifications on the magnitude of 
transfers.\408\ In addition, the non-linear model specifications would 
significantly overhaul the current linear models, increasing the 
administrative burden on issuers and HHS. We also found that the HCC 
counts terms approach posed gaming concerns, which would violate 
principle six of the HHS-operated risk adjustment program by rewarding 
coding proliferation.
---------------------------------------------------------------------------

    \407\ 85 FR 78572 at 78583-78586; See the 2021 HHS-Operated Risk 
Adjustment Technical Paper on Possible Model Changes, available at 
https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
    \408\ Ibid.
---------------------------------------------------------------------------

    In addition to the non-linear and HCC counts model specifications, 
we also considered variations to the interacted HCC counts factors and 
the two-stage weighted model specifications. Specifically, we tested 
various alternative caps for the weights based on the distribution of 
costs, but found the proposed caps resulted in better prediction on 
average. For the prediction weights, we tested various alternative 
forms of weights, including reciprocals of the square root of 
prediction, log of prediction, and residuals from the first-step 
estimation, but the reciprocal of the capped predictions resulted in 
better PRs for low-cost enrollees compared to any of the other weights.
    For the interacted HCC counts factors, we tested several HCCs and 
considered adding and removing certain HCCs from the proposed list in 
Table 3. We chose the list of HCCs in Table 3 because including these 
HCCs most improved prediction for enrollees with the highest costs, 
multiple HCCs, and with these specific HCCs. We also considered various 
alternatives to structure the interacted HCC counts, such as applying 
individual interacted HCC count factors (between 1-10 based on the 
number of HCCs an enrollee has) to each of the selected HCCs included 
in the models, instead of combining all of the selected HCCs into two 
severe and transplant indicator groups. We chose the proposed model 
specification because it would add fewer additional factors to the 
models, which minimizes the increased burden on issuers and HHS without 
sacrificing any significant predictive accuracy.
    For the enrollment duration factors in the adult models, we propose 
to replace the enrollment duration factors with monthly duration 
factors of up to 6 months for enrollees with HCCs. The purpose of this 
proposed change is to

[[Page 717]]

address the underprediction of plan liability for partial-year adult 
enrollees with HCCs. As part of this assessment, we considered whether 
enrollment duration factors by type of partial-year enrollment 
(enrolling through a special enrollment period versus enrolling during 
the annual open enrollment period and dropping enrollment partway 
through the year), by market type (individual versus small group 
market), or by specific HCC (as well as by type of HCC--acute versus 
chronic) may be warranted. As previously noted, varying enrollment 
duration factors by partial-year enrollment type or by market produced 
factors that were generally very similar between partial- and full-year 
enrollees, which indicates they would add little value to the models 
while increasing complexity.\409\ We chose the proposed enrollment 
duration factors, contingent on the presence of at least one HCC, 
because these factors improve predictive accuracy for partial-year 
enrollees and simplify the adult risk adjustment models compared to the 
current models.\410\
---------------------------------------------------------------------------

    \409\ See, for example, 85 FR 78572 at 78585-78586 and Sections 
3.3.1 and 3.3.2 of the 2021 HHS-Operated Risk Adjustment Technical 
Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
    \410\ As detailed above, these new proposed factors would only 
apply to partial-year adult enrollees with up to 6 months of 
enrollment and at least one payment HCC.
---------------------------------------------------------------------------

    Relative to the other considered alternatives, our proposed model 
specification changes would improve the current models' predictive 
accuracy and minimize burden on issuers and HHS by avoiding unnecessary 
complexity.
    With respect to the proposed changes to Sec.  153.320(d), we 
considered repealing risk adjustment state flexibility for the 
individual catastrophic and non-catastrophic market risk pools, while 
retaining risk adjustment state flexibility for the small group market 
risk pool. Consistent with the directive in E.O. 14009 \411\ to 
prioritize protecting and strengthening the ACA and making high-quality 
health care accessible and affordable for all individuals, we 
considered whether this approach is inconsistent with policies 
described in Sections 1 and 3 of E.O. 14009. In prior rulemakings, we 
received comments stating that risk adjustment state flexibility in any 
market may result in risk selection, market destabilization, increased 
premiums, smaller networks, and worse plan options. we believe that 
generally retaining state flexibility could introduce unnecessary risk 
of undermining the stated goals of the risk adjustment program.
---------------------------------------------------------------------------

    \411\ Executive Order 14009; 86 FR 7793 (Feb. 2, 2021).
---------------------------------------------------------------------------

    We also considered whether to adopt an exception for states that 
previously requested reductions under Sec.  153.320(d) to the risk 
adjustment transfers calculated by HHS under the state payment transfer 
formula. In the one state that has requested to reduce transfers under 
this policy, it has stabilized market participation and impacts issuers 
who receive risk adjustment payments by less than 1 percent of 
premiums.\412\ Although allowing state flexibility may undermine the 
efficacy of risk adjustment by not fully compensating higher-risk plans 
for their enrollees, we believe the benefit of maintaining 
participation in markets that might otherwise only have a single issuer 
offering coverage outweighs the potential harm of not fully 
compensating the higher-risk plan for its enrollees when there is a de 
minimis (less than 1 percent) impact on premiums. Additionally, under 
the proposal in this rulemaking, if a prior participant seeks a future 
reduction to risk adjustment transfers in the 2024 benefit year or 
beyond, the state would need to demonstrate that it meets the de 
minimis regulatory criteria, meaning no issuer would need to increase 
its premiums by more than 1 percent as a result of the reduced risk 
adjustment payments.
---------------------------------------------------------------------------

    \412\ See, for example, the 2019, 2020, and 2021 Unified Rate 
Review Public Use Files, available at https://www.cms.gov/CCIIO/Resources/Data-Resources/ratereview.
---------------------------------------------------------------------------

    With regard to the proposed changes to Sec.  155.320, we considered 
taking no action to modify the requirement that when an Exchange does 
not reasonably expect to obtain sufficient verification data related to 
enrollment in or eligibility for employer sponsored coverage, the 
Exchange must select a random sample of applicants and attempt to 
verify their attestation with the employer listed on their Exchange 
application. However, based on HHS' experience conducting sampling, 
this manual verification process requires significant resources for a 
low return on investment, as using this method HHS identified only a 
small population of applicants who received APTC/CSR payments 
inappropriately. We believe the proposed change discussed earlier in 
the preamble to design a process to verify enrollment in or eligibility 
for an employer sponsored plan, informed by a risk assessment, is 
reasonably designed to ensure the accuracy of data, and is based on the 
activities or methods used by an Exchange such as studies, research, 
and analysis of an Exchange's own enrollment data. We also believe the 
proposed change would protect the integrity of the individual market by 
allowing all Exchanges to proactively identify applicants with the 
greatest incentive to forego enrolling in an employer sponsored plan in 
favor of Exchange coverage with APTC/CSRs that they may not be eligible 
to receive, thereby potentially adding high health risk to the 
individual market risk pool that should be covered by the group health 
market, for example.
    We considered several alternatives to specifying in Sec.  155.420 
that Exchanges may conduct pre-enrollment verification of eligibility 
for special enrollment periods, at the option of the Exchange, 
including requiring Exchanges to verify a certain percentage of special 
enrollment period enrollments and designating specific special 
enrollment period types for which eligibility must be verified by the 
Exchange. However, we believed that imposing any requirements for pre-
enrollment special enrollment period verification would increase burden 
on consumers and Exchanges and decrease implementation flexibility to 
decide the best way to conduct special enrollment period verification 
based on Exchange type, population characteristics, and trends.
    HHS considered multiple options for measuring the improper payment 
amounts and rates for State Exchanges to comply with its statutory 
mandate in the PIIA. HHS developed and pilot tested the proposed 
methodology with extensive collaboration from participating Exchanges 
during a multi-year research and demonstration period. HHS considered 
the following alternatives while developing this proposed rule:
1. Conducting No Reviews
    HHS might take no preventive efforts to detect improper payments. 
We would wait passively until third-party investigators, private 
whistleblowers, qui tam relators, disgruntled relatives, or others 
report speculation through Inspector General channels. Advanced 
statistical analysis could estimate the odds of third-party prosecution 
and project the improper payment amount and rate for each State 
Exchange (with wide confidence intervals). This low intervention 
strategy may not fully comply with statutory intent.
2. Placing More Responsibility on State Exchanges To Conduct Reviews
    HHS could require that each State Exchange determine its own 
improper payment rate with broad discretion on

[[Page 718]]

the methodology. This option would maximize regulatory flexibility 
while still complying with PIIA 2019 requirements. However, diverse 
methodology would make the State Exchanges' results difficult to 
compare and of variable validity. In addition, the costs resulting from 
higher error rates are borne by the federal government in the form of 
increased APTC and CSRs, giving State Exchanges' minimal incentive to 
aggressively reduce improper payments.
3. Placing More Responsibility on State Exchanges To Engage Third-Party 
Reviewers
    HHS could require that State Exchanges engage third-party reviewers 
to determine the improper payment rate. As with financial reporting, 
the State Exchange could select among competing vendors to obtain its 
preferred combination of methodology, service, quality, and price. 
However, this approach would require more work and resources from both 
State Exchanges and HHS than the proposed methodology would require. 
The third party would need to obtain personally identifiable 
information from both state and federal data systems. These processes 
suffer from potential record matching and data security issues. In 
addition, competing vendors might offer incompatible methodologies, 
producing non-comparable improper payment rates.
4. Conducting a Random Sample Across All State Exchanges
    HHS could annually sample from the population of all State Exchange 
enrollees, rather than within each State Exchange. Thus, more cases 
would come from larger State Exchanges. This design would increase the 
efficiency and decrease the variance for the national estimate, but it 
would not provide an estimate for each State Exchange. It also would 
not reduce the burden on each State Exchange and may not comply with 
statutory intent.
    With respect to standardized options, we considered a range of 
options for our proposed policy approach at Sec.  156.201. On one end 
of this range, we considered resuming standardized options as reflected 
in the 2017 and 2018 Payment Notices. This approach would have allowed 
issuers to voluntarily offer standardized options and have the 
Exchanges on the Federal platform, web-brokers, and Classic DE and EDE 
Pathways differentially display these plans. We also considered 
gradually limiting the number of non-standardized options per issuer, 
product network type, metal level, and service area over the course of 
several PYs. We also considered preferentially displaying standardized 
options over non-standardized options. We also considered requiring 
issuers to offer exclusively standardized options in FFEs and SBE-FPs. 
We believe the approach we have chosen for standardized options in 
which we propose to require issuers to offer standardized options and 
do not propose to limit the number of non-standardized offerings in PY 
2023 strikes the greatest balance between simplifying the plan 
selection process, combatting discriminatory benefit designs, and 
advancing health equity, all while promoting a smooth transition to the 
introduction of standardized options.
    For our proposal in Sec. Sec.  155.240(e), 155.305(f)(5), and 
155.340 on prorating the calculation and administration of premium and 
APTC, HHS considered an alternative form of implementation in which HHS 
would perform the proration on behalf of each State Exchange which does 
not already implement proration according to the proposed methodology. 
This approach would lessen concern regarding the burden of implementing 
a new proration methodology among State Exchanges. HHS already has the 
structures in place to prorate APTC and premium amounts in accordance 
with the proposed methodology and has already implemented proration in 
the FFEs and SBE-FPs.\413\ Under this alternative, HHS would assume 
responsibility for prorating the amount of APTC due to each State 
Exchange based on the methodology HHS proposes in Sec.  155.340 which 
states that when an enrollee is enrolled in a particular policy for 
less than the full coverage month (including when the enrollee is 
enrolled in multiple policies within a month, each lasting less than 
the full coverage month) the amount of APTC paid to the issuer of the 
policy will be calculated as the product of (1) the APTC applied on the 
policy for one month of coverage divided by the number of days in the 
month, and (2) the number of days for which coverage is provided during 
the applicable month. However, this alternative would require State 
Exchanges to agree to allow HHS to use the data on the monthly SBMI to 
calculate the prorated amount. This would require State Exchanges to 
review payment reports to ensure the correct calculation of APTC and 
premium is reflected on each applicable State Exchanges' 1095-A. HHS 
expects that this alternative would produce additional burden of $4,500 
in contract labor to update each State Exchange's SBMI and would 
necessitate increased data sharing and coordination back and forth 
between HHS and the applicable State Exchanges. In order to streamline 
the process of proration and allow State Exchanges greater control in 
the administration of APTC, HHS determined that it would propose that 
each State Exchange would prorate their own APTC and premium amounts 
for the applicable enrollees in their state. HHS seeks comment on the 
alternative proposals considered.
---------------------------------------------------------------------------

    \413\ Under the SBE-FP agreement, the same method also applies 
in the SBE-FPs, as they rely on the Federal platform, which 
calculates applicable premiums in those Exchanges.
---------------------------------------------------------------------------

    Additionally, for the proposal to prorate APTC amounts with 
amendments to Sec. Sec.  155.240, 155.305(f)(5) and 155.340, we 
considered proposing to implement this requirement for the 2023 benefit 
year. However, after analyzing the potential burden on State Exchanges 
to achieve operational readiness, we concluded that 2023 may not 
provide sufficient time. Therefore, we propose 2024 benefit year 
implementation and request comment on the feasibility of 2023 benefit 
year implementation.

E. Regulatory Flexibility Act

    The Regulatory Flexibility Act, (5 U.S.C. 601, et seq.), requires 
agencies to prepare an initial regulatory flexibility analysis to 
describe the impact of the proposed rule on small entities, unless the 
head of the agency can certify that the rule 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 uses a change in revenues of more than 3 to 5 
percent as its measure of significant economic impact on a substantial 
number of small entities.
    In this proposed rule, we propose standards for the risk adjustment 
and HHS-RADV programs, which are intended to stabilize premiums and 
reduce incentives for issuers to avoid higher-risk enrollees. Because 
we believe that insurance firms offering comprehensive health insurance 
policies generally exceed the size thresholds for ``small entities'' 
established by the SBA, we do not believe that an initial regulatory

[[Page 719]]

flexibility analysis is required for such firms.
    We believe that health insurance issuers and group health plans 
would be classified under the North American Industry Classification 
System (NAICS) 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 NAICS 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.\414\ We believe that few, if 
any, insurance companies underwriting comprehensive health insurance 
policies (in contrast, for example, to travel insurance policies or 
dental discount policies) fall below these size thresholds. Based on 
data from MLR annual report submissions for the 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.\415\ 
This estimate may overstate the actual number of small health insurance 
issuers that may be affected, since over 72 percent of these small 
issuers 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. Only 10 of these 
90 potentially small entities, three of them part of larger holding 
groups, are estimated to experience a change in rebates under the 
proposed amendments to the MLR provisions of this proposed rule in part 
158. Therefore, we do not expect the proposed MLR provisions of this 
rule to affect a substantial number of small entities.
---------------------------------------------------------------------------

    \414\ https://www.sba.gov/document/support--table-size-standards.
    \415\ Available at https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html.
---------------------------------------------------------------------------

    The proposals related to SEIPM at Sec. Sec.  155.1500-155.1540 will 
affect only State Exchanges. As state governments do not constitute 
small entities under the statutory definition, and as all State 
Exchanges have revenues exceeding $5 million, an impact analysis for 
these provisions is not required under the RFA.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule under title XVIII, title XIX, or 
part B of title 42 of the Social Security Act 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 603 
of the RFA. For purposes of section 1102(b) of the Act, we define 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, we have determined that 
This proposed rule would not affect small rural hospitals. Therefore, 
the Secretary has determined that this proposed rule would not have a 
significant impact on the operations of a substantial number of small 
rural hospitals.

F. Unfunded Mandates

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires that agencies assess anticipated costs and benefits and take 
certain other actions before issuing a proposed rule that includes any 
Federal mandate that may result in expenditures in any 1 year by a 
state, local, or Tribal governments, in the aggregate, or by the 
private sector, of $100 million in 1995 dollars, updated annually for 
inflation. In 2021, that threshold is approximately $158 million. 
Although we have not been able to quantify all costs, we expect the 
combined impact on state, local, or Tribal governments and the private 
sector does not meet the UMRA definition of unfunded mandate.

G. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it issues a proposed rule that imposes 
substantial direct costs on state and local governments, preempts state 
law, or otherwise has federalism implications.
    In compliance with the requirement of E.O. 13132 that agencies 
examine closely any policies that may have federalism implications or 
limit the policy making discretion of the states, we have 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, we attempted to balance the states' 
interests in regulating health insurance issuers with the need to 
ensure market stability. By doing so, we 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 or risk adjustment program. 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. Current State Exchanges charge user fees to issuers.
    In our view, while this proposed rule would 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. For example, the repeal of the risk adjustment state 
flexibility policy may have federalism implications, but they are 
mitigated because states have the option to operate their own Exchange 
and risk adjustment program if they believe the HHS risk adjustment 
methodology does not account for state-specific factors unique to the 
state's markets.
    In addition, we believe this proposed regulation has federalism 
implications due to our proposal for Exchanges to design a new risk-
based verification process for enrollment in or eligibility for 
employer sponsored plan coverage that meets minimum value standards, 
that is based on the Exchange's assessment of risk for inappropriate 
APTC/CSR payments. However, the federalism implications are mitigated 
because the proposed requirement provides Exchanges with the 
flexibility to determine the best process to verify employer sponsored 
coverage and may choose not to implement such a risk-based verification 
process.
    As previously noted, the proposals in this rule related to SEIPM 
would impose a minimal unfunded mandate on State Exchanges to supply 
data for the improper payment calculation. Accordingly, E.O. 13132 does 
not apply to this section of the proposed rule. In addition, statute 
requires HHS to determine the amount and rate of improper payments. 
Finally, states have the option to choose an FFE or SBE-FP, each of 
which place different federal burdens on the state. As the SEIPM 
section of the proposed rule should not conflict with state law, HHS 
does not anticipate any preemption of state law. We invite State 
Exchanges to submit comments on this section of the proposed rule if 
they believe it would conflict with state law.

[[Page 720]]

    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on December 15, 2021.

List of Subjects

45 CFR Part 144

    Health care, Health insurance, Reporting and recordkeeping 
requirements.

45 CFR Part 147

    Health care, Health insurance, Reporting and recordkeeping 
requirements.

45 CFR Part 153

    Administrative practice and procedure, Health care, Health 
insurance, Health records, Intergovernmental relations, Organization 
and functions (Government agencies), Reporting and recordkeeping 
requirements.

45 CFR Part 155

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

45 CFR Part 156

    Administrative practice and procedure, Advertising, Advisory 
committees, Brokers, Conflict of interests, Consumer protection, Grant 
programs-health, Grants administration, Health care, Health insurance, 
Health maintenance organization (HMO), Health records, Hospitals, 
Indians, Individuals with disabilities, Loan programs-health, Medicaid, 
Organization and functions (Government agencies), Public assistance 
programs, Reporting and recordkeeping requirements, State and local 
governments, Sunshine Act, Technical assistance, Women, Youth.

45 CFR Part 158

    Administrative practice and procedure, Claims, Health care, Health 
insurance, Penalties, Reporting and recordkeeping requirements.
    For the reasons set forth in the preamble, under the authority at 5 
U.S.C. 301, the Department of Health and Human Services proposes to 
amend 45 CFR subtitle A, subchapter B, as set forth below.

PART 144--REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE

0
1. The authority citation for part 144 continues to read as follows:

    Authority:  42 U.S.C. 300gg through 300gg-63, 300gg-91, 300gg-
92, and 300gg-111 through 300gg-139, as amended.


Sec.  144.103   [Amended]

0
2. Amend Sec.  144.103 in the definition of ``large group market'' by 
removing the phrase ``, unless otherwise provided under State law.''

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

0
3. 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
4. Amend Sec.  147.104 by--
0
a. Revising paragraph (e);
0
b. Redesignating paragraph (i) as paragraph (j); and
0
c. Adding a new paragraph (i).
    The revision and addition read as follows:


Sec.  147.104  Guaranteed availability of coverage.

* * * * *
    (e) Marketing. A health insurance issuer and its officials, 
employees, agents, and representatives must comply with any applicable 
State laws and regulations regarding marketing by health insurance 
issuers and cannot employ marketing practices or benefit designs that 
will have the effect of discouraging the enrollment of individuals with 
significant health needs in health insurance coverage or discriminate 
based on an individual's race, color, national origin, present or 
predicted disability, age, sex, sexual orientation, gender identity, 
expected length of life, degree of medical dependency, quality of life, 
or other health conditions.
* * * * *
    (i) Coverage denials for failure to pay premiums for prior 
coverage. A health insurance issuer that denies coverage to an 
individual or employer due to the individual's or employer's failure to 
pay premium owed under a prior policy, certificate, or contract of 
insurance, including by attributing payment of premium for a new 
policy, certificate, or contract of insurance to the prior policy, 
certificate, or contract of insurance, violates paragraph (a) of this 
section.
* * * * *

PART 153--STANDARDS RELATED TO REINSURANCE, RISK CORRIDORS, AND 
RISK ADJUSTMENT UNDER THE AFFORDABLE CARE ACT

0
5. The authority citation for part 153 continues to read as follows:

    Authority: 42 U.S.C. 18031, 18041, and 18061 through 18063.

0
6. Amend Sec.  153.320 by--
0
a. Revising paragraphs (d) introductory text and (d)(1)(iii);
0
b. Adding paragraph (d)((1)(iv);
0
c. Revising paragraphs (d)(4)(i)(A) and (B); and
0
d. Adding paragraph (d)(5).
    The revisions and additions read as follows:


Sec.  153.320   Federally certified risk adjustment methodology.

* * * * *
    (d) State flexibility to request reductions to transfers. For the 
2020 through 2023 benefit years, States can request to reduce risk 
adjustment transfers in the State's individual catastrophic, individual 
non-catastrophic, small group, or merged markets risk pools by up to 50 
percent in States where HHS operates the risk adjustment program. 
Beginning with the 2024 benefit year, only prior participants, as 
defined in paragraph (d)(5) of this section, may request to reduce risk 
adjustment transfers in the State's individual catastrophic, individual 
non-catastrophic, small group, or merged markets risk pools by up to 50 
percent in States where HHS operates the risk adjustment program.
    (1) * * *
    (iii) For the 2020 through 2023 benefit years, a justification for 
the reduction requested demonstrating the State-specific factors that 
warrant an adjustment to more precisely account for relative risk 
differences in the State individual catastrophic, individual non-
catastrophic, small group, or merged market risk pool, or demonstrating 
the requested reduction would have de minimis impact on the necessary 
premium increase to cover the transfers for issuers that would receive 
reduced transfer payments; or
    (iv) Beginning with the 2024 benefit year, a justification for the 
reduction requested demonstrating the requested reduction would have de 
minimis impact on the necessary premium increase to cover the transfers 
for issuers

[[Page 721]]

that would receive reduced transfer payments.
* * * * *
    (4) * * *
    (i) * * *
    (A) For the 2020 through 2023 benefit years, that State-specific 
rules or other relevant factors warrant an adjustment to more precisely 
account for relative risk differences in the State's individual 
catastrophic, individual non-catastrophic, small group, or merged 
market risk pool and support the percentage reduction to risk 
adjustment transfers requested; or State-specific rules or other 
relevant factors warrant an adjustment to more precisely account for 
relative risk differences in the State's individual catastrophic, 
individual non-catastrophic, small group, or merged market risk pool 
and the requested reduction would have de minimis impact on the 
necessary premium increase to cover the transfers for issuers that 
would receive reduced transfer payments.
    (B) Beginning with the 2024 benefit year that the requested 
reduction would have de minimis impact on the necessary premium 
increase to cover the transfers for issuers that would receive reduced 
transfer payments.
* * * * *
    (5) Exception for prior participants. As used in paragraph (d) of 
this section, prior participants mean States that submitted a State 
reduction request in the State's individual catastrophic, individual 
non-catastrophic, small group, or merged market risk pool in the 2020, 
2021, 2022, or 2023 benefit year.
0
7. Amend Sec.  153.710 by--
0
a. Revising paragraphs (h)(1) introductory text and (h)(1)(iii) and 
(iv);
0
b. Adding paragraph (h)(1)(v); and
0
c. Revising paragraphs (h)(2) and (3).
    The revisions and addition read as follows:


Sec.  153.710   Data requirements.

* * * * *
    (h) * * *
    (1) Notwithstanding any discrepancy report made under paragraph 
(d)(2) of this section, any discrepancy filed under Sec.  
153.630(d)(2), or any request for reconsideration under Sec.  
156.1220(a) of this subchapter with respect to any risk adjustment 
payment or charge, including an assessment of risk adjustment user fees 
and risk adjustment data validation adjustments; reinsurance payment; 
cost-sharing reduction payment or charge; or risk corridors payment or 
charge, unless the dispute has been resolved, an issuer must report, 
for purposes of the risk corridors and MLR programs:
* * * * *
    (iii) A cost-sharing reduction amount equal to the actual amount of 
cost-sharing reductions for the benefit year as calculated under Sec.  
156.430(c) of this subchapter, to the extent not reimbursed to the 
provider furnishing the item or service;
    (iv) For medical loss ratio reporting only, the risk corridors 
payment to be made or charge assessed by HHS under Sec.  153.510; and
    (v) The risk adjustment data validation adjustment calculated by 
HHS in the applicable benefit year's Summary Report of Benefit Year 
Risk Adjustment Data Validation Adjustments to Risk Adjustment 
Transfers.
    (2) An issuer must report during the current MLR and risk corridors 
reporting year any adjustment made or approved by HHS for any risk 
adjustment payment or charge, including an assessment of risk 
adjustment user fees and risk adjustment data validation adjustments; 
any reinsurance payment; any cost-sharing reduction payment or charge; 
or any risk corridors payment or charge before August 15, or the next 
applicable business day, of the current MLR and risk corridors 
reporting year unless instructed otherwise by HHS. An issuer must 
report any adjustment made or approved by HHS for any risk adjustment 
payment or charge, including an assessment of risk adjustment user 
fees; any reinsurance payment; any cost-sharing reduction payment or 
charge; or any risk corridors payment or charge where such adjustment 
has not been accounted for in a prior MLR and Risk Corridor Annual 
Reporting Form, in the MLR and Risk Corridors Annual Reporting Form for 
the following reporting year.
    (3) In cases where HHS reasonably determines that the reporting 
instructions in paragraph (h)(1) or (2) of this section would lead to 
unfair or misleading financial reporting, issuers must correct their 
data submissions in a form and manner to be specified by HHS.
0
8. Revise Sec.  153.730 to read as follows:


Sec.  153.730   Deadline for submission of data.

    A risk adjustment covered plan or a reinsurance-eligible plan in a 
State in which HHS is operating the risk adjustment or reinsurance 
program, as applicable, must submit data to be considered for risk 
adjustment payments and charges and reinsurance payments for the 
applicable benefit year by April 30 of the year following the 
applicable benefit year or, if such date is not a business day, the 
next applicable business day.

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

0
9. 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.


Sec.  155.120   [Amended]

0
10. Amend Sec.  155.120 in paragraph (c)(1)(ii) by removing the phrase 
``age, or sex'' and adding in its place the phrase ``age, sex, sexual 
orientation, or gender identity''.


Sec.  155.206   [Amended]

0
11. Amend Sec.  155.206 in paragraph (i) by removing the phrase ``$100 
for each day for each'' and adding in its place the phrase ``$100 for 
each day, as adjusted annually under 45 CFR part 102, for each''.
0
12. Amend Sec.  155.220 by--
0
a. Revising paragraphs (c)(3)(i)(A) and (L);
0
b. Adding paragraph (c)(3)(i)(M);
0
c. In paragraph (j)(2)(i) by removing the phrase ``age, or sex'' and 
adding in its place the phrase ``age, sex, sexual orientation, or 
gender identity'';
0
d. Revising paragraphs (j)(2)(ii);
0
e. In paragraph (j)(2)(iv), by removing the phrase ``described in Sec.  
155.260(b)(2); and'' and adding in its place the phrase ``described in 
Sec.  155.260(b)(2);''; and
0
f. Adding paragraphs (j)(2)(vi) through (viii).
    The revisions and additions read as follows:


Sec.  155.220   Ability of States to permit agents and brokers and web-
brokers to assist qualified individuals, qualified employers, or 
qualified employees enrolling in QHPs.

* * * * *
    (c) * * *
    (3) * * *
    (i) * * *
    (A) Disclose and display the following QHP information provided by 
the Exchange or directly by QHP issuers consistent with the 
requirements of Sec.  155.205(c), and to the extent that enrollment 
support for a QHP is not available using the web-broker's website, 
prominently display a standardized disclaimer provided by HHS stating 
that enrollment support for the QHP is available on the Exchange 
website, and provide a Web link to the Exchange website:
    (1) Premium and cost-sharing information;
    (2) The summary of benefits and coverage established under section 
2715 of the PHS Act;
    (3) Identification of whether the QHP is a bronze, silver, gold, or 
platinum

[[Page 722]]

level plan as defined by section 1302(d) of the Affordable Care Act, or 
a catastrophic plan as defined by section 1302(e) of the Affordable 
Care Act;
    (4) The results of the enrollee satisfaction survey, as described 
in section 1311(c)(4) of the Affordable Care Act;
    (5) Quality ratings assigned in accordance with section 1311(c)(3) 
of the Affordable Care Act; and
    (6) The provider directory made available to the Exchange in 
accordance with Sec.  156.230 of this subchapter.
* * * * *
    (L) Not display QHP advertisements or recommendations, or otherwise 
provide favored or preferred placement in the display of QHPs, based on 
compensation the agent, broker, or web-broker receives from QHP 
issuers; and
    (M) Prominently display a clear explanation of the rationale for 
QHP recommendations and the methodology for its default display of 
QHPs.
* * * * *
    (j) * * *
    (2) * * *
    (ii) Provide the federally-facilitated Exchanges with correct 
information under section 1411(b) of the Affordable Care Act, 
including, but not limited to:
    (A) Only entering an email address on an application for Exchange 
coverage or an application for advance payments of the premium tax 
credit and cost sharing reductions for QHPs that is secure, not 
disposable, and belongs to the consumer or the consumer's authorized 
representative designated in compliance with Sec.  155.227. A 
consumer's email address may only be entered on an Exchange application 
with the consent of the consumer or the consumer's authorized 
representative. Properly entered email addresses must adhere to the 
following guidelines:
    (1) The email address may not have domains that remove email from 
an inbox after a set period of time;
    (2) The email address must be accessible by the consumer, or the 
consumer's authorized representative designated in compliance with 
Sec.  155.227, and may not be accessible by the agent, broker, or web-
broker assisting the consumer; and
    (3) The email address may not have domains that belong to the 
agent, broker, or web-broker or their business or agency.
    (B) Only entering a telephone number on an application for Exchange 
coverage or an application for advance payments of the premium tax 
credit and cost sharing reductions for QHPs that belongs to the 
consumer or their authorized representative designated in compliance 
with Sec.  155.227. Telephone numbers entered on Exchange applications 
may not be the personal number or business number of the agent, broker, 
or web-broker assisting the consumer, or their business or agency, 
unless the telephone number is actually that of the consumer or their 
authorized representative.
    (C) Only entering a mailing address on an application for Exchange 
coverage or an application for advance payments of the premium tax 
credit and cost sharing reductions for QHPs that belongs to, or is 
primarily accessible by, the consumer or their authorized 
representative designated in compliance with Sec.  155.227, is not for 
the exclusive or convenient use of the agent, broker, or web-broker, 
and is an actual residence or a secure location where the consumer or 
their authorized representative may receive correspondence, such as a 
P.O. Box or homeless shelter. Mailing addresses entered on Exchange 
applications may not be that of the agent, broker, or web-broker 
assisting the consumer, or their business or agency, unless the address 
is the actual residence of the consumer or their authorized 
representative.
    (D) When submitting household income projections used by the 
Exchange to determine a tax filer's eligibility for advance payments of 
the premium tax credit in accordance with Sec.  155.305(f) or cost-
sharing reductions in accordance with Sec.  155.305(g), only entering a 
consumer's household income projection that the consumer or the 
consumer's authorized representative designated in compliance with 
Sec.  155.227 has knowingly authorized and confirmed as accurate. 
Household income projections on Exchange applications must be 
calculated and attested to by the consumer. The agent, broker, or web-
broker assisting the consumer may answer questions posed by the 
consumer related to household income projection, such as helping the 
consumer determine what qualifies as income.
* * * * *
    (vi) Not engage in scripting and other automation of interactions 
with CMS Systems or the Direct Enrollment Pathways, unless approved in 
advance in writing by CMS.
    (vii) Only use an identity that belongs to the consumer when 
identity proofing the consumer's account on HealthCare.gov.
    (viii) When providing information to federally-facilitated 
Exchanges that may result in a determination of eligibility for a 
special enrollment period in accordance with Sec.  155.420, obtain 
authorization from the consumer to submit the request for a 
determination of eligibility for a special enrollment period and make 
the consumer aware of the specific triggering event and special 
enrollment period for which the agent, broker, or web-broker will be 
submitting an eligibility determination request on the consumer's 
behalf.
* * * * *
0
13. Amend Sec.  155.240 by adding paragraph (e)(2) to read as follows:


Sec.  155.240  Payment of premiums.

* * * * *
    (e) * * *
    (2) For plan years 2024 and beyond, in each Exchange, the premium 
for a policy in which an enrollee is enrolled for less than the full 
coverage month, including when the enrollee is enrolled in multiple 
policies within a month, each lasting less than the full coverage 
month, must equal the product of:
    (i) The premium for 1 month of coverage divided by the number of 
days in the month; and
    (ii) The number of days for which coverage is being provided in the 
month described in paragraph (e)(1)(i) of this section.
0
14. Amend Sec.  155.305 by revising paragraph (f)(1)(i) to read as 
follows:


Sec.  155.305  Eligibility standards.

* * * * *
    (f) * * *
    (1) * * *
    (i) He or she is expected to have a household income that will 
qualify the tax filer as an applicable taxpayer according to 26 CFR 
1.36B-2(b) for the benefit year for which coverage is requested; and
* * * * *
0
15. Amend Sec.  155.320 by--
0
a. Revising paragraphs (d)(4) introductory text, (d)(4)(i) introductory 
text, and (d)(4)(i)(A);
0
b. Removing paragraph (d)(4)(i)(D).
0
c. Redesignating paragraph (d)(4)(i)(E) as paragraph (d)(4)(i)(D).
0
d. Removing paragraph (d)(4)(i)(F);
0
e. Redesignating paragraph (d)(4)(i)(G) as paragraph (d)(4)(i)(E) and 
revising it; and
0
f. Removing and reserving paragraph (d)(4)(ii).
    The revisions read as follows:


Sec.  155.320  Verification process related to eligibility for 
insurance affordability programs.

* * * * *
    (d) * * *
    (4) Alternate procedures. For any benefit year for which it does 
not reasonably expect to obtain sufficient

[[Page 723]]

verification data as described in paragraphs (d)(2)(i) through (iii) of 
this section, the Exchange may follow the procedures specified in 
paragraph (d)(4)(i) of this section, or the Exchange may follow the 
procedures specified in paragraph (d)(4)(ii) of this section. For 
purposes of this paragraph (d)(4), the Exchange reasonably expects to 
obtain sufficient verification data for any benefit year when, for the 
benefit year, the Exchange is able to obtain data about enrollment in 
or eligibility for qualifying coverage in an eligible employer 
sponsored plan from at least one electronic data source that is 
available to the Exchange and that has been approved by HHS, based on 
evidence showing that the data source is sufficiently current, 
accurate, and minimizes administrative burden, as described under 
paragraphs (d)(2)(i) of this section.
    (i) Based on the Exchange's assessment of risk for inappropriate 
payment of advance payments of the premium tax credit or cost-sharing 
reductions, implement a verification process that is reasonably 
designed to ensure the accuracy of the data and is based on the 
activities or methods used by an Exchange such as studies, research, 
and analysis of an Exchange's own enrollment data, for enrollment in or 
eligibility for qualifying coverage in an eligible employer sponsored 
plan, as appropriate.
    (A) If, as part of the verification process described under 
paragraph (d)(4)(i) of this section, the Exchange will be contacting 
any employer identified on the application for the applicant and the 
members of his or her family, as defined in 26 CFR 1.36B-1(d), to 
verify whether the applicant is enrolled in an eligible employer 
sponsored plan or is eligible for qualifying coverage in an eligible 
employer sponsored plan for the benefit year for which coverage is 
requested, the Exchange must provide notice to the applicant;
* * * * *
    (E) To carry out the process described in paragraph (d)(4)(iii) of 
this section, the Exchange must only disclose an individual's 
information to an employer to the extent necessary for the employer to 
identify the employee.
* * * * *
0
16. Amend Sec.  155.340 by adding paragraph (i) to read as follows:


Sec.  155.340  Administration of advance payments of the premium tax 
credit and cost-sharing reductions.

* * * * *
    (i) Calculation of advance payments of the premium tax credit when 
policy coverage lasts less than the full coverage month. (1) For plan 
years beginning in 2024 and beyond, when the Exchange determines that 
an individual is eligible for advance payments of the premium tax 
credit and the enrollee is enrolled in a policy for less than the full 
coverage month, including when the enrollee is enrolled in multiple 
policies within a month, each lasting less than the full coverage 
month, the amount of the advance payment of the premium tax credit paid 
to the issuer of the policy must equal the product of--
    (i) The advance payments of the premium tax credit applied to the 
policy for one month of coverage divided by the number of days in the 
month; and
    (ii) The number of days for which coverage is being provided in the 
month under the policy described in paragraph (i)(1)(i) of this 
section.
    (2) [Reserved]
0
17. Amend Sec.  155.420 by adding paragraph (g) to read as follows:


Sec.  155.420  Special enrollment periods.

* * * * *
    (g) Pre-enrollment special enrollment period verification. At the 
option of the Exchange, an Exchange may verify prior to processing a 
qualified individual's plan selection that the qualified individual is 
eligible for a special enrollment period under this section. In special 
circumstances where the Exchange determines that such pre-enrollment 
special enrollment period verification may cause undue burden on 
qualified individuals, the Exchange may provide an exception to the 
pre-enrollment special enrollment period verification process, provided 
it does so in a manner that is not based on a prohibited discriminatory 
basis. Exchanges on the Federal platform will conduct pre-enrollment 
special enrollment verification of eligibility only for special 
enrollment periods under paragraph (d)(1) of this section.
0
18. Amend Sec.  155.1200--
0
a. In paragraph (c) introductory text by removing the phrase ``HHS for 
review'' and adding in its place the phrase, ``HHS for review, unless a 
State Exchange is meeting its programmatic audit requirement for a 
given benefit year under paragraph (e) of this section''; and
0
b. By adding paragraph (e).
    The addition reads as follows.


Sec.  155.1200   General program integrity and oversight requirements.

* * * * *
    (e) State Exchange Improper Payment Measurement (SEIPM) program. 
For a given benefit year, a State Exchange may meet the independent 
external programmatic audit requirement outlined in paragraph (c) of 
this section by completing the required SEIPM program process, 
established through 45 CFR part 155, subpart P.
0
19. Add subpart P to read as follows:
Subpart P--State Exchange Improper Payment Measurement Program
Sec.
155.1500 Purpose and definitions.
155.1505 Program notification and planning process.
155.1510 Data collection.
155.1515 Review process and improper payment rate determination.
155.1520 Error findings decisions.
155.1525 Redetermination of error findings decisions.
155.1530 Appeal of redetermination decision.
155.1535 Corrective action plan.
155.1540 Failure to comply.

Subpart P--State Exchange Improper Payment Measurement Program


Sec.  155.1500  Purpose and definitions.

    (a) Purpose. This subpart sets forth the requirements of the State 
Exchange Improper Payment Measurement program.
    (b) Definitions. As used in this subpart--
    Appeal of redetermination decision (or appeal decision) means the 
HHS appeal decision resulting from a State Exchange's appeal of the 
HHS' redetermination decision.
    Corrective action plan (CAP) means the plan a State Exchange 
develops in order to correct errors resulting in improper payments.
    Error means a finding by HHS that a State Exchange did not 
correctly apply a requirement in subparts D and E of this part 
regarding eligibility for and enrollment in a qualified health plan; 
advance payments of the premium tax credit, including the calculation 
of advance payments of the premium tax credit; redeterminations of 
eligibility determinations during a benefit year; or annual eligibility 
redeterminations, which have a payment impact.
    Error findings decision means the enumeration of errors made by a 
State Exchange, including a determination of how the enumerated errors 
inform improper payment estimation and reporting requirements.
    Redetermination of an error findings decision (or redetermination 
decision) means HHS' decision resulting from a State Exchange's request 
for a redetermination of an error findings decision.
    Review means the process of analyzing and assessing data submitted 
by a State Exchange to HHS in order to determine a State Exchange's

[[Page 724]]

compliance with subparts D and E of this part as it relates to improper 
payments.
    State Exchange Improper Payment Measurement (SEIPM) program means 
the process for determining estimated improper payments and other 
information required under the Payment Integrity Information Act of 
2019, and implementing guidance, for advance payments of the premium 
tax credit, which includes a review of a State Exchange's 
determinations regarding eligibility for and enrollment in a qualified 
health plan; the calculation of advance payments of the premium tax 
credit; redeterminations of eligibility determinations during a benefit 
year; and annual eligibility redeterminations.


Sec.  155.1505   Program notification and planning process.

    (a) Annual program notification. Beginning no earlier than in 2023, 
prior to the start of the measurement year, HHS will annually issue a 
notification to State Exchanges concerning information related to the 
SEIPM program and the program's upcoming measurement cycle, which may 
include but would not be limited to review criteria; key changes from 
prior measurement cycles, where applicable; or other modifications 
regarding specific SEIPM activities.
    (b) Issuance of annual program schedule. Beginning no earlier than 
2023, prior to the start of the measurement year, HHS will annually 
issue a schedule that prescribes the timeline for the data requests in 
accordance with Sec.  155.1510.
    (c) Notification of changes. In response to the annual program 
notification, the State Exchange must provide HHS with operational and 
policy information required to perform the SEIPM review process, as 
well as any operational, policy, or other changes that may impact the 
SEIPM review process within the deadline prescribed in the annual 
program schedule.


Sec.  155.1510   Data collection.

    (a) Requirements. For purposes of the SEIPM program, a State 
Exchange must annually submit the following eligibility and enrollment 
information, in a manner specified by HHS.
    (1) Pre-sampling data.
    (2) Sampled unit data.
    (b) Timing. The State Exchange must submit the data specified in 
paragraph (a) of this section within the timelines specified in the 
annual program schedule described in Sec.  155.1505(c). HHS will 
consider requests for extension when extreme circumstances hinder the 
ability of a State Exchange to submit data in accordance with the 
requirements of this section.
    (c) Compliance. Failure to timely provide the information in 
accordance with paragraph (a) or (b) of this section may result in one 
or more error findings during the review based upon insufficient data 
to support that the State was in compliance with subparts D and E of 
this part as it relates to advance payments of premium tax credits.


Sec.  155.1515   Review process and improper payment rate 
determination.

    (a) Receipt of data. HHS will maintain a record of status of 
receipt for the information that is requested from each State Exchange 
for a minimum of 10 years.
    (b) Review of records. For each sampled record, HHS will review the 
information provided by the State Exchange. The review will determine 
whether any errors were made in a State Exchange's determinations 
regarding eligibility for and enrollment in a qualified health plan; 
advance payments of the premium tax credit, including the calculation 
of advance payments of the premium tax credit; redeterminations of 
eligibility determinations during a benefit year; and annual 
eligibility redeterminations.
    (c) Improper payment rate. HHS will notify each State Exchange of 
HHS' error findings decisions for that State Exchange and HHS' estimate 
of that State Exchange's improper payment rate.


Sec.  155.1520   Error findings decisions.

    (a) Issuance of error findings decisions. Upon completion of the 
review, HHS will issue the error findings decision to the State 
Exchange.
    (b) Content of error findings decision. The error findings 
decisions at a minimum will include:
    (1) The review findings regarding any errors made by the State 
Exchange.
    (2) Information regarding the State Exchange's right to request a 
redetermination of the error findings decision in accordance with Sec.  
155.1525.


Sec.  155.1525   Redetermination of error findings decisions.

    (a) Request for redetermination. A State Exchange may request a 
redetermination of error findings decision within the deadline 
prescribed by the annual program schedule. During the period for a 
State Exchange to request a redetermination of the error findings 
decision, HHS will consider a request for an extension in extreme 
circumstances, which includes but is not limited to situations such as 
natural disasters, interruptions in business operations such as major 
system failures, or other extreme circumstances. At a minimum, the 
request for redetermination must include:
    (1) The error(s) for which the State Exchange is requesting a 
redetermination;
    (2) All data and information that supports the State Exchange's 
request for a redetermination; and
    (3) An explanation of how the data and information pertains to the 
error(s) specified in (a)(1).
    (b) Issuance of redetermination decision. The redetermination of an 
error findings decision will be issued within the deadline prescribed 
by the annual program schedule. A State Exchange will be notified of 
any delays in the issuance in the redetermination of an error findings 
decision.
    (c) Content of redetermination decision. HHS' redetermination of an 
error findings decision, at a minimum, will include:
    (1) HHS' findings regarding the impact of the additional data and 
information provided by the State Exchange on the error(s) for which 
the State Exchange requested a redetermination,
    (2) Information regarding the State Exchange's right to request an 
appeal of the redetermination of the error findings decision in 
accordance with Sec.  155.1530.


Sec.  155.1530   Appeal of redetermination decision.

    (a) Request for appeal. A State Exchange may request an appeal of a 
redetermination decision within the deadline prescribed by the annual 
program schedule. The request for appeal must indicate the specific 
error(s) identified in the redetermination decision for which the State 
Exchange is requesting an appeal.
    (b) On-the-record review. Additional data or information, beyond 
that submitted during the redetermination request, will not be 
considered in rendering the appeal decision.
    (c) Issuance of appeal decision. The appeal decision will be issued 
within the deadline prescribed in the annual program schedule unless 
there is a delay. A State Exchange will be notified of any delays in 
the issuance of the appeal decision.
    (d) Content of appeal decision. HHS' appeal decision will include:
    (1) The findings regarding the error(s) for which an appeal was 
requested. The findings will be limited to those error(s) identified in 
the request for an appeal.
    (2) The final disposition of the appeal request.

[[Page 725]]

    (e) Final report. Upon completion of the review and the closure of 
all appeals, HHS may issue a report containing the error findings and 
the estimated improper payment rate.


Sec.  155.1535  Corrective action plan.

    (a) Corrective action plan. Based on a State Exchange's error rate 
for a given benefit year, HHS, in its reasonable discretion, may 
require the State Exchange to develop and submit a corrective action 
plan to correct errors resulting in improper payments.
    (b) Content of proposed corrective action plan. A State Exchange's 
corrective action plan must be developed in accordance with Appendix C 
to Office of Management and Budget Circular No. A-123.
    (c) Implementation and evaluation of corrective action plan. A 
State Exchange must develop an implementation schedule for its 
corrective action plan, implement the plan in accordance with that 
schedule, and regularly evaluate whether the initiatives are effective 
at reducing or eliminating error causes.
    (d) Failure to submit. If a State Exchange does not submit a 
corrective action plan when required, HHS may take actions consistent 
with Sec.  155.1540(a)(1) and (2).


Sec.  155.1540   Failure to comply.

    (a) Failure to comply. If a State Exchange fails to substantially 
comply with the data collection requirements or the CAP provisions 
contained in this subpart, and HHS finds that such failures undermine 
or prohibit HHS's efficient administration of Exchange improper payment 
measurement activities, HHS may implement measures or procedures in 
relation to the State Exchange that:
    (1) HHS determines are appropriate to secure the State Exchange's 
compliance with the data collection requirements or the CAP provisions 
contained in subpart P, and to detect, prevent or reduce abuses in the 
administration of advance payments of the premium tax credit under 
title I of the ACA; and
    (2) the Secretary has authority to implement under title I of the 
Affordable Care Act or any other Federal law.
    (b) [Reserved]

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

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

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

0
21. Amend Sec.  156.50 by--
0
a. Removing paragraph (c)(3); and
0
b. Revising paragraphs (d)(1) introductory text, (d)(2)(i)(A) and (B), 
(d)(2)(ii), (d)(2)(iii)(B), (d)(3) introductory text, (d)(4) and (6), 
and (d)(7) introductory text.
    The revisions read as follows:


Sec.  156.50   Financial support.

* * * * *
    (d) * * *
    (1) A participating issuer offering a plan through a federally-
facilitated Exchange or State Exchange on the Federal platform may 
qualify for an adjustment of the federally-facilitated Exchange user 
fee specified in paragraph (c)(1) of this section or the State Exchange 
on the Federal platform user fee specified in paragraph (c)(2) of this 
section, to the extent that the participating issuer--
* * * * *
    (2) * * *
    (i) * * *
    (A) Identifying information for the participating issuer and each 
third party administrator that received a copy of the self-
certification referenced in 26 CFR 54.9815-2713A(a)(4) or with respect 
to which the participating issuer seeks an adjustment of the user fee 
specified in paragraph (c)(1) or (2) of this section, as applicable, 
whether or not the participating issuer was the entity that made the 
payments for contraceptive services;
    (B) Identifying information for each self-insured group health plan 
with respect to which a copy of the self-certification referenced in 26 
CFR 54.9815-2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4) was received by 
a third party administrator and with respect to which the participating 
issuer seeks an adjustment of the user fee specified in paragraph 
(c)(1) or (2) of this section, as applicable; and
* * * * *
    (ii) Each third party administrator that intends to seek an 
adjustment on behalf of a participating issuer of the federally-
facilitated Exchange user fee or the State-based Exchange on the 
Federal platform user fee based on payments for contraceptive services, 
must submit to HHS a notification of such intent, in a manner specified 
by HHS, by the 60th calendar day following the date on which the third 
party administrator receives the applicable copy of the self-
certification referenced in 26 CFR 54.9815-2713A(a)(4) or 29 CFR 
2590.715-2713A(a)(4).
    (iii) * * *
    (B) Identifying information for each self-insured group health plan 
with respect to which a copy of the self-certification referenced in 26 
CFR 54.9815-2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4) was received by 
the third party administrator and with respect to which the 
participating issuer seeks an adjustment of the user fee specified in 
paragraph (c)(1) or (2) of this section, as applicable;
* * * * *
    (3) If the requirements set forth in paragraph (d)(2) of this 
section are met, the participating issuer will be provided a reduction 
in its obligation to pay the user fee specified in paragraph (c)(1) or 
(2) of this section, as applicable, equal in value to the sum of the 
following:
* * * * *
    (4) If the amount of the adjustment under paragraph (d)(3) of this 
section is greater than the amount of the participating issuer's 
obligation to pay the user fee specified in paragraph (c)(1) or (2) of 
this section, as applicable, in a particular month, the participating 
issuer will be provided a credit in succeeding months in the amount of 
the excess.
* * * * *
    (6) A participating issuer that receives an adjustment in the user 
fee specified in paragraph (c)(1) or (2) of this section for a 
particular calendar year must maintain for 10 years following that 
year, and make available upon request to HHS, the Office of the 
Inspector General, the Comptroller General, and their designees, 
documentation demonstrating that it timely paid each third party 
administrator with respect to which it received any such adjustment any 
amount required to be paid to the third party administrator under 
paragraph (d)(5) of this section.
    (7) A third party administrator of a plan with respect to which an 
adjustment of the user fee specified in paragraph (c)(1) or (2) of this 
section is received under this section for a particular calendar year 
must maintain for 10 years following that year, and make available upon 
request to HHS, the Office of the Inspector General, the Comptroller 
General, and their designees, all of the following documentation:
* * * * *
0
22. Amend Sec.  156.111 by--
0
a. Revising the section heading;
0
b. Revising paragraph (d) and paragraph (e) introductory text; and
0
c. Removing paragraph (f).
    The revisions read as follows:

[[Page 726]]

Sec.  156.111   State selection of EHB-benchmark plan for plan years 
beginning on or after January 1, 2020.

* * * * *
    (d) A State must notify HHS of the selection of a new EHB-benchmark 
plan by the first Wednesday in May that is 2 years before the effective 
date of the new EHB-benchmark plan.
    (1) If the State does not make a selection by the first Wednesday 
in May that is 2 years before the effective date of the new EHB-
benchmark plan, or its benchmark plan selection does not meet the 
requirements of this section and section 1302 of the ACA, the State's 
EHB-benchmark plan for the applicable plan year will be that State's 
EHB-benchmark plan applicable for the prior year.
    (2) [Reserved]
* * * * *
    (e) A State changing its EHB-benchmark plan under this section must 
submit documents in a format and manner specified by HHS by the first 
Wednesday in May that is 2 years before the effective date of the new 
EHB-benchmark plan. These must include:
* * * * *
0
23. Amend Sec.  156.115 by revising paragraph (b)(2) to read as 
follows:


Sec.  156.115   Provision of EHB.

* * * * *
    (b) * * *
    (2) An issuer may substitute a benefit within the same EHB 
category, unless prohibited by applicable State requirements. 
Substitution of benefits between EHB categories is not permitted.
* * * * *
0
24. Amend Sec.  156.125 by revising paragraph (a) to read as follows:


Sec.  156.125   Prohibition on discrimination.

    (a) An issuer does not provide EHB if its benefit design, or the 
implementation of its benefits design, discriminates based on an 
individual's age, expected length of life, present or predicted 
disability, degree of medical dependency, quality of life, or other 
health conditions. A non-discriminatory benefit design that provides 
EHB is one that is clinically-based, incorporates evidence-based 
guidelines into coverage and programmatic decisions, and relies on 
current and relevant peer-reviewed medical journal article(s), practice 
guidelines, recommendations from reputable governing bodies, or similar 
sources.
* * * * *
0
25. Amend Sec.  156.140 by revising paragraph (c) to read as follows:


Sec.  156.140   Levels of coverage.

* * * * *
    (c) De minimis variation. (1) For plan years beginning on or after 
January 1, 2018 through December 31, 2022, the allowable variation in 
the AV of a health plan that does not result in a material difference 
in the true dollar value of the health plan is -4 percentage points and 
+2 percentage points, except if a health plan under paragraph (b)(1) of 
this section (a bronze health plan) either covers and pays for at least 
one major service, other than preventive services, before the 
deductible or meets the requirements to be a high deductible health 
plan within the meaning of section 223(c)(2) of the Internal Revenue 
Code, in which case the allowable variation in AV for such plan is -4 
percentage points and +5 percentage points.
    (2) For plan years beginning on or after January 1, 2023, the 
allowable variation in the AV of a health plan that does not result in 
a material difference in the true dollar value of the health plan is -2 
percentage points and +2 percentage points, except if a health plan 
under paragraph (b)(1) of this section (a bronze health plan) either 
covers and pays for at least one major service, other than preventive 
services, before the deductible or meets the requirements to be a high 
deductible health plan within the meaning of section 223(c)(2) of the 
Internal Revenue Code, in which case the allowable variation in AV for 
such plan is -2 percentage points and +5 percentage points.
0
26. Amend Sec.  156.200--
0
a. By revising paragraph (b)(3); and
0
b. In paragraph (e) by removing the phrase ``age, or sex'' and adding 
in its place the phrase ``age, sex, sexual orientation, or gender 
identity''.
    The revision read as follows:


Sec.  156.200   QHP issuer participation standards.

* * * * *
    (b) * * *
    (3) Ensure that each QHP complies with benefit design standards, as 
defined in Sec.  156.20, except that individual market silver QHPs must 
have an AV of 70 percent, with a de minimis allowable AV variation of -
0 percentage points and +2 percentage points;
* * * * *
0
27. Add Sec.  156.201 to read as follows:


Sec.  156.201   Standardized options.

    For plan year 2023 and subsequent plan years, a QHP issuer in a 
federally-facilitated Exchange or a State-based Exchange on the Federal 
platform, other than an issuer that is already required to offer 
standardized options under state action taking place on or before 
January 1, 2020, must offer at least one standardized QHP option, 
defined at Sec.  155.20 of this subchapter, at every product network 
type, as the term is described in the definition of ``product'' at 
Sec.  144.103 of this subchapter, metal level, and throughout every 
service area that it also offers non-standardized QHP options, 
including, for silver plans, for the income-based cost-sharing 
reduction plan variations, as provided for at Sec.  156.420(a), but not 
for the zero and limited cost sharing plan variations, as provided for 
at Sec.  156.420(b).
0
28. Amend Sec.  156.230 by--
0
a. Revising paragraphs (a)(1) through (3); and,
0
b. Removing paragraph (f).
    The revisions read as follows:


Sec.  156.230   Network adequacy standards.

    (a) * * *
    (1) Each QHP issuer that uses a provider network must ensure that 
the provider network consisting of in-network providers, and, for plans 
with more than one tier of network, specifically the provider network 
consisting of in-network providers in the tier for which the plan 
imposes the lowest cost-sharing obligation, as available to all 
enrollees, meets the following standards:
    (i) Includes essential community providers in accordance with Sec.  
156.235;
    (ii) Maintains a network that is sufficient in number and types of 
providers, including providers that specialize in mental health and 
substance abuse services, to ensure that all services will be 
accessible without unreasonable delay; and
    (iii) Is consistent with the rules for network plans of section 
2702(c) of the PHS Act.
    (2)(i) Standards. For plan years beginning on or after January 1, 
2023, a QHP issuer on a federally-facilitated Exchange must comply with 
the requirement in paragraph (a)(1)(ii) of this section by:
    (A) Meeting time and distance standards established by the 
federally-facilitated Exchange. Such time and distance standards will 
be developed for consistency with industry standards and published in 
guidance.
    (B) Meeting appointment wait time standards established by the 
federally-facilitated Exchange. Such appointment wait time standards 
will be developed for consistency with industry standards and published 
in guidance.
    (ii) Written justification. If a plan applying for QHP 
certification to be offered through a federally-facilitated

[[Page 727]]

Exchanges does not satisfy the network adequacy standards described in 
paragraphs (a)(2)(i)(A) and (B) of this section, the issuer must 
include as part of its QHP application a justification describing how 
the plan's provider network provides an adequate level of service for 
enrollees and how the plan's provider network will be strengthened and 
brought closer to compliance with the network adequacy standards prior 
to the start of the plan year. The issuer must provide information as 
requested by the FFE to support this justification.
    (3) The federally-facilitated Exchange may grant an exception to 
the requirements in paragraph (a)(2)(i)(A) of this section if the 
Exchange determines that making such health plan available through such 
Exchange is in the interests of qualified individuals in the State or 
States in which such Exchange operates.
* * * * *
0
29. Amend Sec.  156.235 by revising paragraphs (a)(2)(i) and (b)(2)(i) 
to read as follows:


Sec.  156.235   Essential community providers.

    (a) * * *
    (2) * * *
    (i) The network includes as participating providers at least a 
minimum percentage, as specified by HHS, of available essential 
community providers in each plan's service area. Multiple providers at 
a single location will count as a single essential community provider 
toward both the available essential community providers in the plan's 
service area and the issuer's satisfaction of the essential community 
provider participation standard. For plans that use tiered networks, to 
count toward the issuer's satisfaction of the essential community 
provider standards, providers must be contracted within the network 
tier that results in the lowest cost-sharing obligation. For plans with 
two network tiers (for example, participating providers and preferred 
providers), such as many PPOs, where cost sharing is lower for 
preferred providers, only preferred providers will be counted towards 
essential community provider standards; and
* * * * *
    (b) * * *
    (2 * * *
    (i) The number of its providers that are located in Health 
Professional Shortage Areas or five-digit zip codes in which 30 percent 
or more of the population falls below 200 percent of the Federal 
poverty level satisfies a minimum percentage, specified by HHS, of 
available essential community providers in the plan's service area. 
Multiple providers at a single location will count as a single 
essential community provider toward both the available essential 
community providers in the plan's service area and the issuer's 
satisfaction of the essential community provider participation 
standard. For plans that use tiered networks, to count toward the 
issuer's satisfaction of the essential community provider standards, 
providers must be contracted within the network tier that results in 
the lowest cost-sharing obligation. For plans with two network tiers 
(for example, participating providers and preferred providers), such as 
many PPOs, where cost sharing is lower for preferred providers, only 
preferred providers would be counted towards essential community 
provider standards; and
* * * * *

Subpart D--Standards for Qualified Health Plan Issuers for Specific 
Types of Exchanges

0
30. Revise the subpart D heading to read as set forth above.
0
31. Amend Sec.  156.340 by revising paragraphs (a) and (b)(4) and (5) 
to read as follows:


Sec.  156.340  Standards for downstream and delegated entities.

    (a) General requirement. Effective October 1, 2013, notwithstanding 
any relationship(s) that a QHP issuer may have with delegated and 
downstream entities, a QHP issuer maintains responsibility for its 
compliance and the compliance of any of its delegated or downstream 
entities with all applicable Federal standards related to Exchanges. 
The applicable standards depend on the Exchange model type in which the 
QHP is offered, as described in paragraph (a)(1) and (2) of this 
section.
    (1) QHP issuers participating in Exchange models that do not use 
the Federal platform, including State Exchanges and State Exchange 
SHOPs. QHP issuers maintain responsibility for ensuring their 
downstream and delegated entities comply with the Federal standards 
related to Exchanges, including the standards in of subpart C of this 
part with respect to each of its QHPs on an ongoing basis, as well as 
the Exchange processes, procedures, and standards in accordance with 
subparts H and K of part 155 and, in the small group market, Sec. Sec.  
155.705 and 155.706 of this subchapter, unless the standard is 
specifically applicable to a federally-facilitated Exchange or FF-SHOP;
    (2) QHP issuers participating in Exchanges that use the Federal 
platform, including federally-facilitated Exchanges, FF-SHOPs, SBE-FPs, 
and SBE-FP-SHOPs. QHP issuers maintain responsibility for ensuring 
their downstream and delegated entities comply with Federal standards 
related to Exchanges, including the standards in subpart C of part 156 
with respect to each of its QHPs on an ongoing basis, as well as the 
Exchange processes, procedures, and standards in accordance with 
subparts H and K of part 155 of this subchapter and, in the small group 
market, Sec. Sec.  155.705 and 155.706 of this subchapter if applicable 
to the Exchange type in which the QHP issuer is operating. QHP issuers 
are also responsible for their downstream and delegated entities' 
compliance with the standards of Sec.  155.220 of this subchapter with 
respect to assisting with enrollment in QHPs, and to the standards of 
Sec. Sec.  156.705 and 156.715 of this subchapter for maintenance of 
records and compliance reviews if applicable to the Exchange type in 
which the QHP issuer is operating.
    (b) * * *
    (4) Specify that the delegated or downstream entity must permit 
access by the Secretary and the OIG or their designees in connection 
with their right to evaluate through audit, inspection, or other means, 
to the delegated or downstream entity's books, contracts, computers, or 
other electronic systems, including medical records and documentation, 
relating to the QHP issuer's obligations in accordance with Federal 
standards under paragraph (a) of this section until 10 years from the 
final date of the agreement period;
    (5) All agreements between issuers offering QHPs through an 
Exchange and delegated or downstream entities the issuers engage to 
support the issuer's activities on an Exchange must include text under 
which the language stating that the relevant Exchange authority may 
demand and receive the delegated or downstream entity's books, 
contracts, computers, or other electronic systems, including medical 
records and documentation, relating to the QHP issuer's obligations in 
accordance with Federal standards under paragraph (a) of this section 
until 10 years from the final date of the agreement period.
0
32. Amend Sec.  156.400 by revising the definition of ``De minimis 
variation for a silver plan variation'' to read as follows:


Sec.  156.400   Definitions.

* * * * *
    De minimis variation for a silver plan variation means a -0 
percentage point

[[Page 728]]

and +1 percentage point allowable AV variation.
* * * * *
0
33. Amend Sec.  156.430 by revising paragraphs (b)(1), (d) introductory 
text, (e) introductory text, and (e)(1) to read as follows:


Sec.  156.430   Payment for cost-sharing reductions.

* * * * *
    (b) * * *
    (1) When there is an appropriation to make cost-sharing reduction 
payments to QHP issuers, a QHP issuer will receive periodic advance 
payments from HHS to the extent permitted by the appropriation and 
calculated in accordance with Sec.  155.1030(b)(3) of this subchapter.
* * * * *
    (d) Cost-sharing reductions data submissions. HHS will periodically 
provide a submission window for issuers to submit cost-sharing 
reduction data documenting cost-sharing reduction amounts issuers paid, 
as specified in paragraphs (d)(1) and (2) of this section, in a form 
and manner specified by HHS in guidance, calculated in accordance with 
paragraph (c) of this section. When HHS makes cost-sharing reduction 
payments to QHP issuers, HHS will notify QHP issuers that the 
submission of the cost-sharing data is mandatory for those issuers 
having received cost-sharing reduction payments for any part of the 
benefit year and voluntary for other issuers, and HHS will use the data 
to reconcile advance cost-sharing reduction payments to issuers against 
the actual amounts of cost-sharing reductions QHP issuers provided, as 
determined by HHS based on amounts specified in paragraphs (d)(1) and 
(2) of this section, as calculated in accordance with paragraph (c) of 
this section. In the absence of an appropriation to make cost-sharing 
reduction payments to issuers, HHS will notify QHP issuers that the 
submission of the cost-sharing data is voluntary. The cost-sharing data 
that must be submitted in either a voluntary or mandatory submission 
includes:
* * * * *
    (e) Cost-sharing reductions payments and charges. If the actual 
amounts of cost-sharing reductions determined by HHS based on amounts 
described in paragraphs (d)(1) and (2) of this section are--
    (1) More than the amount of advance payments HHS provided, and the 
QHP issuer has timely provided the data of actual amounts of cost-
sharing reductions as required under paragraph (c) of this section, if 
an appropriation is available to make cost-sharing payments to QHP 
issuers, HHS will make a payment to the QHP issuer for the difference; 
or
* * * * *


Sec.  156.1230   [Amended]

0
34. Amend Sec.  156.1230 in paragraph (b)(2) by removing the phrase 
``age, or sex'' and adding in its place the phrase ``age, sex, sexual 
orientation, or gender identity''.

PART 158--ISSUER USE OF PREMIUM REVENUE: REPORTING AND REBATE 
REQUIREMENTS

0
35. The authority citation for part 158 continues to read as follows:

    Authority:  42 U.S.C. 300gg-18.

0
36. Amend Sec.  158.140 by revising paragraph (b)(2)(iii) to read as 
follows:


Sec.  158.140  Reimbursement for clinical services provided to 
enrollees.

* * * * *
    (b) * * *
    (2) * * *
    (iii) The amount of incentive and bonus payments made to providers 
that are tied to clearly defined, objectively measurable, and well-
documented clinical or quality improvement standards that apply to 
providers.
* * * * *
0
37. Amend Sec.  158.150 by revising paragraph (a) to read as follows:


Sec.  158.150  Activities that improve health care quality.

    (a) General requirements. The report required in Sec.  158.110 must 
include expenditures directly related to activities that improve health 
care quality, as such activities are described in this section.
* * * * *
0
38. Amend Sec.  158.170 by revising paragraph (b) introductory text to 
read as follows:


Sec.  158.170  Allocation of expenses.

* * * * *
    (b) Description of the methods used to allocate expenses. The 
report required in Sec.  158.110 must include a detailed description of 
the methods used to allocate expenses, including incurred claims, 
quality improvement expenses, Federal and State taxes and licensing or 
regulatory fees, and other non-claims costs, to each health insurance 
market in each State. A detailed description of each expense element 
must be provided, including how each specific expense meets the 
criteria for the type of expense in which it is categorized, as well as 
the method by which it was aggregated.
* * * * *

    Dated: December 23, 2021.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2021-28317 Filed 12-28-21; 4:15 pm]
BILLING CODE 4120-01-P