[Federal Register Volume 87, Number 88 (Friday, May 6, 2022)]
[Rules and Regulations]
[Pages 27208-27393]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-09438]
[[Page 27207]]
Vol. 87
Friday,
No. 88
May 6, 2022
Part II
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; Final Rule
Federal Register / Vol. 87 , No. 88 / Friday, May 6, 2022 / Rules and
Regulations
[[Page 27208]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Parts 144, 147, 153, 155, 156, and 158
[CMS-9911-F]
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: Final rule.
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SUMMARY: This final rule includes payment parameters and provisions
related to the risk adjustment and risk adjustment data validation
programs, as well as 2023 user fee rates for issuers offering qualified
health plans (QHPs) through Federally-facilitated Exchanges (FFEs) and
State-based Exchanges on the Federal platform (SBE-FPs). This final
rule also includes requirements related to guaranteed availability; the
offering of QHP standardized plan options through Exchanges on the
Federal platform; requirements for agents, brokers, and web-brokers;
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; and re-enrollment. This final rule also
responds to comments on how the Department of Health and Human Services
(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: These regulations are effective July 1, 2022.
FOR FURTHER INFORMATION CONTACT:
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,
Jacqueline Wilson, (301) 492-4286, or Leanne Klock, (410) 786-1045, for
matters related to risk adjustment or risk adjustment data validation.
Aaron Franz, (410) 786-8027, or John Barfield, (301) 492-4433, for
matters related to Federally-facilitated Exchange and State-based
Exchange on the Federal platform user fees.
Nora Simmons, (410) 786-1981, for matters related to advance
payment of the premium tax credit 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.
Becca Bucchieri, (301) 492-4341, Agata Pelka, (301) 492-4400, or
Leigha Basini, (301) 492-4380, for matters related to nondiscrimination
based on sexual orientation and gender identity, essential health
benefit 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 eligibility standards.
Katherine Bentley, (301) 492-5209, or Ariel Kennedy, (301) 492-
4306, for matters related to special enrollment period verification.
Christina Whitefield, (301) 492-4172, for matters related to the
medical loss ratio program.
Nidhi Singh Shah, (301) 492-5110, for matters related to quality
improvement strategy standards for Exchanges.
Dan Brown, (301) 492-5146 for matters related to downstream and
delegated entities.
Nikolas Berkobien, (301) 492-4400, or Leigha Basini, (301) 492-4380
for matters related to standardized plan options.
Erika Melman, (301) 492-4348, Deborah Hunter, (443) 386-3651,
Whitney Allen, (667) 290-8748, or Emily Martin, (301) 492-4423, 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.
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:
Table of Contents
I. Executive Summary
II. Background
A. Legislative and Regulatory Overview
B. Stakeholder Consultation and Input
C. Structure of Final Rule
III. Provisions of the Final 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 (Sec. 156.111)
I. ICRs Regarding Differential Display of Standardized Plan
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)
N. Summary of Annual Burden Estimate for Proposed Requirements
V. 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
[[Page 27209]]
H. Congressional Review Act
Background
In the proposed rule, ``Patient Protection and Affordable Care Act;
HHS Notice of Benefit and Payment Parameters for 2023'' (87 FR 584),
published in the January 5, 2022 edition of the Federal Register (2023
Payment Notice proposed rule), HHS proposed amendments to certain
regulations prohibiting discrimination in health insurance coverage,
including discrimination in the design and implementation of health
plans, under Sec. Sec. 147.104(e), 155.120(c), 155.220(j), 156.125(b),
156.200(e), and 156.1230(b) under title 45 of the Code of Federal
Regulations (CFR). HHS proposed to amend these regulations to
explicitly identify and recognize discrimination on the basis of sexual
orientation and gender identity as prohibited forms of discrimination
based on sex consistent with the Supreme Court's decision in Bostock v.
Clayton County, 140 S. Ct. 1731 (2020), and HHS nondiscrimination
policy that existed prior to the 2020 regulatory amendments HHS made in
conformance with the ``Nondiscrimination in Health and Health Education
Programs or Activities, Delegation of Authority'' final rule (85 FR
37160), published in the June 19, 2020 edition of the Federal
Register.\1\ In connection with discriminatory benefit designs
prohibited under Sec. 156.125, HHS also included in the proposed rule
an example related to gender-affirming care that was intended to
illustrate a health plan design that presumptively discriminates
against enrollees based on gender identity.
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\1\ See also 85 FR 37160, 37218 through 21 (the 2020 final rule
implementing section 1557 of the ACA revised the following CMS
regulations: 45 CFR 147.104, 155.120, 155.220, 156.200, 156.1230).
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Currently, HHS is developing a proposed rule \2\ that also will
address prohibited discrimination based on sex in health coverage under
section 1557 of the Patient Protection and Affordable Care Act (ACA)
\3\ (42 U.S.C. 18116). Section 1557 prohibits discrimination on the
basis of race, color, national origin, sex, age, or disability in 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
its amendments. Because HHS' proposed rule implementing section 1557 of
the ACA will also address issues related to prohibited discrimination
based on sex, HHS is of the view that it would be most prudent to
address the nondiscrimination proposals related to sexual orientation
and gender identity in the 2023 Payment Notice proposed rule at a later
time, to ensure that they are consistent with the policies and
requirements that will be included in the section 1557 rulemaking.
Therefore, HHS will not address in this final rule the
nondiscrimination proposals related to sexual orientation and gender
identity included in the 2023 Payment Notice proposed rule or the
comments submitted in response to those proposals.
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\2\ HHS submitted a draft notice of proposed rulemaking
addressing section 1557 of the Patient Protection and Affordable
Care Act and its implementing regulations to the Office of
Management and Budget on or around March, 22, 2022. See https://www.reginfo.gov/public/do/eoDetails?rrid=234566.
\3\ 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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HHS is committed to robust civil rights protections in health care
for all consumers, including protections to combat discrimination on
the basis of gender identity or sexual orientation.\4\ Moreover, to the
extent that entities subject to the relevant regulations prohibiting
discrimination in health insurance coverage are also covered by section
1557, they are already under the statutory obligation not to
discriminate on the basis of sex.\5\ Consistent with the Supreme
Court's decision in Bostock v. Clayton County, 140 S. Ct. 1731 (2020),
and the HHS Notice of Interpretation and Enforcement of Section 1557 of
the Affordable Care Act and Title IX of the Education Amendments of
1972 (86 FR 27984), published in the May 25, 2021 edition of the
Federal Register, HHS will continue to interpret and enforce section
1557 of the ACA and its protections against sex discrimination to
prohibit discrimination on the basis of sexual orientation and gender
identity in all aspects of health insurance coverage governed by
section 1557.\6\ Thus, notwithstanding that the Department will address
in future rulemaking the proposals related to sexual orientation and
gender identity and the example related to gender-affirming care, HHS
will continue to scrutinize the activities of covered health plans to
root out practices that unlawfully discriminate on the basis of sexual
orientation or gender identity. HHS' interpretation of section 1557
will guide HHS in processing complaints and conducting investigations,
but does not itself determine the outcome in any particular case or set
of facts. In enforcing Section 1557, HHS will comply with the Religious
Freedom Restoration Act, 42 U.S.C. 2000bb et seq., and all other legal
requirements.\7\
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\4\ HHS' proposals related to sexual orientation and gender
identity in the 2023 Payment Notice proposed rule resulted, in part,
from reviews HHS conducted as directed in President Biden's January
20, 2021, Executive Order 13988 (86 FR 7023), which stated the
Administration's policy on preventing and combating discrimination
on the basis of gender identity and sexual orientation and the
President's conclusion that ``[u]nder Bostock's reasoning, laws that
prohibit sex discrimination . . . , along with their respective
implementing regulations--prohibit discrimination on the basis of
gender identity or sexual orientation, so long as the laws do not
contain sufficient indications to the contrary.'' 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 construction of the laws, and to consider whether to suspend,
revise, or rescind any agency actions that are inconsistent with
that policy and construction.
\5\ See 85 FR 37219 (explaining that section 1557 governs
entities established under Title I of the ACA, including Exchanges).
\6\ See also Hammons v. Univ. of Maryland Med. Sys. Corp., No.
20-cv-2009, 2021WL 3190492, at *17 (D. Md. July 28, 2021) (stating
Bostock ``made clear that the position stated in HHS's [Bostock
Notice] was already binding law'').
\7\ 86 FR 27985.
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I. Executive Summary
American Health Benefit Exchanges, or ``Exchanges,'' are entities
established under the ACA 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.
In previous rulemakings, we established provisions and parameters
to implement many ACA requirements and programs. In this final rule, we
amend some of these provisions and parameters, with a focus on
maintaining a stable regulatory environment. These changes are intended
to provide issuers with greater predictability for upcoming plan years
(PYs), while simultaneously enhancing the role of States in these
programs. They will also provide States
[[Page 27210]]
with additional flexibilities, reduce unnecessary regulatory burdens on
stakeholders, empower consumers, ensure program integrity, and improve
affordability.
Risk adjustment continues to be a core program in the individual,
small group, and merged markets both on and off Exchanges. We published
a technical paper, the 2021 HHS-Operated Risk Adjustment Technical
Paper on Possible Model Changes \8\ in October 2021 (2021 RA Technical
Paper), and sought comment on three potential updates to the risk
adjustment models. We are finalizing two of the three proposed updates
to the HHS risk adjustment models beginning with the 2023 benefit year.
Specifically, beginning with the 2023 benefit year, we are finalizing
the removal of the current severity illness factors from the adult
models and the addition of an interacted hierarchical condition
category (HCC) count model specification to the adult and child models.
We also are finalizing the replacement of the current enrollment
duration factors in the adult models with HCC-contingent enrollment
duration factors. We are not finalizing the proposed model
specification change to add a two-stage weighted approach to the adult
and child models. We are finalizing the use of the 2017, 2018, and 2019
enrollee-level External Data Gathering Environment (EDGE) data to
recalibrate the 2023 benefit year risk adjustment models. For 2023, we
are also finalizing the continued application of 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.
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\8\ HHS-Operated Risk Adjustment Technical Paper on Possible
Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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In addition, we are finalizing 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.\9\
We are also finalizing, for the 2024 benefit year and beyond, the
proposal 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 will 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 will 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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\9\ 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 are finalizing the proposal to repeal the ability
of States, other than prior participants, to request a reduction in
risk adjustment State transfers starting with the 2024 benefit year. We
are also finalizing the changes that limit a prior participant's
ability to request a reduction in risk adjustment transfers under Sec.
153.320(d) to only those that meet the de minimis threshold criteria.
In future rulemaking, HHS intends to propose to eliminate the prior
participant exception starting with the 2025 benefit year. For the 2023
benefit year, we are announcing approval of Alabama's request to reduce
risk adjustment State transfers for its individual and small group
markets, but at lower percentages than requested. We approve a 25
percent reduction in Alabama's individual market transfers (including
the catastrophic and non-catastrophic risk pools) and a 10 percent
reduction in Alabama's small group market transfers for the 2023
benefit year.
We are finalizing the 2023 benefit year risk adjustment user fee
for States where HHS operates the risk adjustment program of $0.22 per
member per month (PMPM). We are also finalizing the proposal to collect
and extract five new data elements as part of the enrollee-level EDGE
data beginning with the 2023 benefit year. We are also finalizing the
proposal to extract three data elements issuers already report to their
EDGE servers--plan ID, rating area, and subscriber indicator--as part
of the required risk adjustment data. Plan ID and rating area will be
extracted beginning with the 2021 benefit year, and subscriber
indicator will be extracted beginning with the 2022 benefit year.
Finally, we are finalizing 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
will 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 are finalizing as proposed the refinements to the HHS risk
adjustment data validation (HHS-RADV) error estimation methodology
beginning with the 2021 benefit year to: (1) Extend the application of
Super HCCs \10\ (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 \11\) 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, except when the child and adult
coefficient estimation groups have identical definitions; 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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\10\ As finalized in this rule, beginning with the 2021 benefit
year of HHS-RADV, a Super HCC will be defined as the aggregate de-
duplicated frequencies of EDGE HCCs that share an HCC coefficient
estimation group determined based on the enrollees' risk adjustment
model.
\11\ Regulations and Guidance. (2022). CMS. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance. The January 7, 2022
version of the DIY software is available at 2021 Benefit Year Risk
Adjustment Updated HHS-Developed Risk Adjustment Model Algorithm
``Do It Yourself (DIY)'' Software. (2022). CMS.
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As we do every year in the HHS Notice of Benefit and Payment
Parameters, we are finalizing updated parameters for the individual and
small group markets. For the PY 2023, we are maintaining FFE and SBE-FP
user fees at the current PY 2022 rates, 2.75 and 2.25 percent of total
monthly premiums, respectively. On December 28, 2021, we released the
Premium Adjustment Percentage, Maximum Annual Limitation on Cost
Sharing, Reduced Maximum Annual Limitation on Cost Sharing, and
Required Contribution Percentage for the 2023 Benefit Year guidance
setting forth these parameters for PY 2023.\12\
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\12\ Premium Adjustment Percentage. (2021, December 28). CMS.
https://www.cms.gov/files/document/2023-papi-parameters-guidance-v4-final-12-27-21-508.pdf.
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We are not finalizing the proposal to require all Exchanges to
prorate premiums and advance payments of the premium tax credit (APTC).
After considering the comments received, we are finalizing the policy
to clarify the APTC proration methodology which Exchanges on the
Federal platform will be subject to under HHS' authority to administer
APTC, but we are not finalizing the requirement for State Exchanges to
prorate premium or APTC amounts as described in the proposed rule.
Rather, beginning in PY 2024, State
[[Page 27211]]
Exchanges must report to HHS through existing State Exchange oversight
mechanisms the methodology the State Exchange will use that does not
cause total monthly APTC amounts to exceed an enrollee's monthly PTC
eligibility. This will ensure compliance with HHS and Internal Revenue
Service (IRS) regulations particularly when an 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.
We are finalizing 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 that did not. We also finalize 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 are finalizing 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 also finalize policies to address certain agent, broker, and
web-broker practices. These policies will be added as part of the FFE
standards of conduct codified at Sec. 155.220(j)(2), improving CMS'
ability to enforce existing responsibilities and requirements
applicable to agents, brokers, and web-brokers participating in the
FFEs and SBE-FPs, while also providing more detail about specific
business practices that are prohibited.
We are finalizing a revision to our interpretation of the
guaranteed availability requirement to prohibit 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 are finalizing flexibility under which Exchanges may conduct
risk-based employer sponsored coverage verification in connection with
eligibility determinations for APTC. This policy will help States more
effectively balance the need to prevent improper APTC payments with the
costs of verification.
We are finalizing amendments to implementing regulations to codify
existing MLR policy 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 are also updating the MLR regulations
to 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, we are
finalizing a technical amendment to the MLR provisions 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 rescinded the
provision in a final rule published in the Federal Register on May 5,
2021 (86 FR 24140) (part 2 of the 2022 Payment Notice final rule).
With regard to the EHBs, we are finalizing a permanent annual
deadline in early-May for EHB-benchmark plan applications by States, as
well as the repeal of the ability for States to permit issuers to
substitute benefits between EHB categories. In addition, we are
finalizing changes to the de minimis thresholds for the 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 finalize the proposal to remove the State annual reporting
requirement to report State-required benefits in addition to the EHB to
HHS.
We are finalizing 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.
We will begin implementation of appointment wait time standards in PY
2024. We are also finalizing the requirement for issuers to submit
information about whether providers offer telehealth services. For
plans with tiered networks, we are finalizing that, to count toward the
issuer's satisfaction of the essential community provider (ECP)
standards, providers must be contracted within the network tier that
results in the lowest cost-sharing obligation. This rule finalizes that
the ECP threshold will increase from 20 percent to 35 percent.
We are finalizing the proposed amendments to the current HHS
regulation that establishes standards for QHP issuer downstream and
delegated entities. These changes will 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 solicited 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 finalize the
proposal 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 proposed and are finalizing policies related to
requirements that issuers of QHPs in FFEs and SBE-FPs offer
standardized QHP options through the Exchange beginning in PY 2023.
Finally, we solicited 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 and provide responses to the
public comments received.
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
[[Page 27212]]
issuers in the group and individual markets. The term ``group health
plan'' includes both insured and self-insured group health plans.\13\
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\13\ The term ``group health plan'' is used in title XXVII of
the PHS Act and is distinct from the term ``health plan'' as used in
other provisions of title I of 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''.
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) of the ACA establishes
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.\14\
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\14\ 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.
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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 QHPs offered through Exchanges and (2) assist individuals in
applying for PTC and CSRs for QHPs sold through an Exchange.
Sections 1313 and 1321 of the ACA provide the Secretary with the
authority to oversee the financial integrity of State Exchanges, their
compliance with HHS standards, and the efficient and non-discriminatory
administration of State Exchange activities. Section 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 \15\ 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
[[Page 27213]]
beyond those received by the general public.
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\15\ Office of Management and Budget. (2004). Circular A-25
Revised. https://www.whitehouse.gov/wp-content/uploads/2017/11/Circular-025.pdf.
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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.
Section 1402 of the ACA provides for, among other things,
reductions in cost sharing for EHB for qualified low- and moderate-
income enrollees in silver level QHPs offered through the individual
market Exchanges. This section also provides for reductions in cost
sharing for Indians enrolled in QHPs at any metal level.
Section 1411(c) of the ACA requires the Secretary to submit certain
information provided by applicants under section 1411(b) of the ACA to
other Federal officials for verification, including income and family
size information to the Secretary of the Treasury. Section 1411(d) of
the ACA provides that the Secretary must verify the accuracy of
information provided by applicants under section 1411(b) of the ACA for
which section 1411(c) 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.\16\
In addition, HHS has previously finalized rules unrelated to section
1557 of the ACA to address populations that have historically been
subject to discrimination.
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\16\ 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.\17\ 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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\17\ Public Law 115-97, 131 Stat. 2054 (2017).
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1. Premium Stabilization Programs
The premium stabilization programs refer to the risk adjustment,
risk corridors, and reinsurance programs established by the ACA.\18\
For past rulemaking, we refer readers to the following rules:
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\18\ See 42 U.S.C. 18061, 18062, and 18063.
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In the March 23, 2012 Federal Register (77 FR 17219)
(Premium Stabilization Rule), we implemented the premium stabilization
programs.
In the March 11, 2013 Federal Register (78 FR 15409) (2014
Payment Notice), we finalized 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.
In the October 30, 2013 Federal Register (78 FR 65046), we
finalized the modification to the HHS-operated methodology related to
community rating States.
In the November 6, 2013 Federal Register (78 FR 66653), we
published a correcting amendment to the 2014 Payment Notice final rule
to address how an enrollee's age for the risk score calculation would
be determined under the HHS-operated risk adjustment methodology.
In the March 11, 2014 Federal Register (79 FR 13743) (2015
Payment Notice), we finalized the benefit and payment parameters for
the 2015 benefit year to expand the provisions related to the premium
stabilization programs, set forth certain oversight provisions and
established payment parameters in those programs.
In the May 27, 2014 Federal Register (79 FR 30240), we
announced the 2015 fiscal year sequestration rate for the risk
adjustment program.
In the February 27, 2015 Federal Register (80 FR 10749)
(2016 Payment Notice), we finalized the benefit and payment parameters
for the 2016 benefit year to expand the provisions related to the
premium stabilization programs, set forth certain oversight provisions,
and established the payment parameters in those programs.
In the March 8, 2016 Federal Register (81 FR 12203) (2017
Payment Notice), we finalized the benefit and payment parameters for
the 2017 benefit year to expand the provisions related to the premium
stabilization programs, set forth certain oversight provisions and
established the payment parameters in those programs.
In the December 22, 2016 Federal Register (81 FR 94058)
(2018 Payment Notice), we finalized the benefit and payment parameters
for the 2018 benefit year, added the high-cost risk pool parameters to
the HHS risk adjustment methodology, incorporated prescription drug
factors in the adult models, established enrollment duration factors
for the adult models, and finalized policies related to the collection
and use of enrollee-level EDGE data.
In the April 17, 2018 Federal Register (83 FR 16930) (2019
Payment Notice), we finalized the benefit and payment parameters for
2019 benefit year, created the State flexibility framework permitting
States to request a reduction in risk adjustment State transfers
calculated by HHS, and adopted a new methodology for HHS-RADV
adjustments to transfers.
In the May 11, 2018 Federal Register (83 FR 21925), we
published a correction to the 2019 risk adjustment
[[Page 27214]]
coefficients in the 2019 Payment Notice final rule.
On July 27, 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 EDGE dataset.\19\
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\19\ Updated 2019 Benefit Year Final HHS Risk Adjustment Model
Coefficients. (2018, July 27). CMS. 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
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). The final rule set forth an additional
explanation of the rationale supporting the 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. The 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
the publication of the final rule.\20\
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\20\ Update on the HHS-operated Risk Adjustment Program for the
2017 Benefit Year. (2018, July 27). https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2017-RA-Final-Rule-Resumption-RAOps.pdf.
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In the December 10, 2018 Federal Register (83 FR 63419),
we adopted 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. In the rule, we set forth an additional
explanation of the rationale supporting the 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 April 25, 2019 Federal Register (84 FR 17454) (2020
Payment Notice), we finalized the benefit and payment parameters for
2020 benefit year, as well as the policies related to making the
enrollee-level EDGE data available as a limited data set for research
purposes and expanding the HHS uses of the enrollee-level EDGE data,
approval of the request from Alabama to reduce risk adjustment
transfers by 50 percent in the small group market for the 2020 benefit
year, and updates to HHS-RADV program requirements.
On May 12, 2020, consistent with 153.320(b)(1)(i), we
released 2021 Benefit Year Final HHS Risk Adjustment Model Coefficients
to the CCIIO website.\21\
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\21\ Final 2021 Benefit Year Final HHS Risk Adjustment Model
Coefficients. (2020, May 12). CMS. 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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In the May 14, 2020 Federal Register (85 FR 29164) (2021
Payment Notice), we finalized the benefit and payment parameters for
2021 benefit year, as well as adopted updates to the risk adjustment
models' HCCs to transition to ICD-10 codes, approved the request from
Alabama to reduce risk adjustment transfers by 50 percent in small
group market for the 2021 benefit year, and modified the outlier
identification process under the HHS-RADV program.
In the December 1, 2020 Federal Register (85 FR 76979)
(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)), we adopted the
creation and application of Super HCCs in the sorting step that assigns
HCCs to failure rate groups, finalized a sliding scale adjustment in
HHS-RADV error rate calculation, and added a constraint for negative
error rate outliers with a negative error rate. We 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),
we 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.
In the May 5, 2021 Federal Register (86 FR 24140), we
issued part 2 of the 2022 Payment Notice final rule containing policy
and regulatory revisions related to the risk adjustment program,
including finalization of the benefit and payment parameters for the
2022 benefit year and 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. In addition, this 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.
On July 19, 2021, consistent with Sec. 153.320(b)(1)(i),
we released Updated 2022 Benefit Year Final HHS Risk Adjustment Model
Coefficients on the CCIIO website, announcing some minor revisions to
the 2022 benefit year final risk adjustment adult model
coefficients.\22\
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\22\ Updated 2022 Benefit Year Final HHS Risk Adjustment Model
Coefficients. (2021, July 19). CMS https://www.cms.gov/files/document/updated-2022-benefit-year-final-hhs-risk-adjustment-model-coefficients-clean-version-508.pdf.
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2. Program Integrity
We have finalized program integrity standards related to the
Exchanges and premium stabilization programs 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). We
also refer readers to the 2019 Patient Protection and Affordable Care
Act; Exchange Program Integrity rule published in the December 27, 2019
Federal Register (84 FR 71674).
3. Market Rules
For past rulemaking related to the market rules, we refer readers
to the following rules:
In the April 8, 1997 Federal Register (62 FR 16894), HHS,
with the Department of Labor and Department of the Treasury, published
an interim final rule relating to the HIPAA health insurance reforms.
In the February 27, 2013 Federal Register (78 FR 13406) (2014 Market
Rules), we published the health insurance market rules.
In the May 27, 2014 Federal Register (79 FR 30240) (2015
Market Standards Rule), we published the Exchange and Insurance Market
Standards for 2015 and Beyond.
In the December 22, 2016 Federal Register (81 FR 94058),
we provided additional guidance on guaranteed availability and
guaranteed renewability.
In the April 18, 2017 Federal Register (82 FR 18346)
(Market Stabilization final rule), we further interpreted the
guaranteed availability provision.
In the in the April 17, 2018 Federal Register (83 FR
17058) (2019 Payment Notice final rule), we clarified that certain
exceptions to the special enrollment periods only apply to
[[Page 27215]]
coverage offered outside of the Exchange in the individual market.
In the June 19, 2020 Federal Register (85 FR 37160) (2020
section 1557 final rule), in which HHS discussed section 1557 of the
ACA, HHS removed nondiscrimination protections based on 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 September 27, 2021 Federal Register (86 FR 53412)
(part 3 of the 2022 Payment Notice final rule), which was published by
HHS and the Department of the Treasury, we 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. In the March 27,
2012 Federal Register (77 FR 18309) (Exchange Establishment Rule), we
implemented components of the Exchanges and set forth standards for
eligibility for Exchanges, as well as network adequacy and ECP
certification standards.
In the 2014 Payment Notice and 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.
We published the final rule in the May 14, 2020 Federal Register
(85 FR 29164) (2021 Payment Notice).
In the January 19, 2021 Federal Register (86 FR 6138), we finalized
part 1 of the 2022 Payment Notice final rule that finalized only a
subset of the proposals in the 2022 Payment Notice proposed rule. In
the May 5, 2021 Federal Register (86 FR 24140), we published (part 2 of
the 2022 Payment Notice final rule). In the September 27, 2021 Federal
Register (86 FR 53412) (part 3 of the 2022 Payment Notice final rule),
in conjunction with the Department of the Treasury, we finalized
amendments to certain policies in part 1 of the 2022 Payment Notice
final rule.
In the January 5, 2022 Federal Register (87 FR 584), we published a
proposed rule that outlined proposals to maintain the user fee rate for
issuers offering plans through the FFEs and maintain the user fee rate
for issuers offering plans through the SBE-FPs. We also proposed
various policies to address certain agent, broker, and web broker
practices and conduct. We also proposed updates to the requirement that
all Exchanges conduct special enrollment period verifications.
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.\23\ 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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\23\ Essential Health Benefits Bulletin. (2011, December 16).
CMS. https://www.cms.gov/CCIIO/Resources/Files/Downloads/essential_health_benefits_bulletin.pdf.
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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), an interim final rule that was published in the
September 2, 2020 Federal Register (85 FR 54820), and the May 5, 2021
Federal Register (86 FR 24140).
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 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 regulations at Sec. 156.1130 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 1302 of the ACA provides for the establishment of an EHB
package that includes coverage of EHB and AV requirements. In the
February 25, 2013 Federal Register (78 FR 12834), HHS published the
``Patient Protection and Affordable Care Act; Standards Related to
Essential Health Benefits, Actuarial
[[Page 27216]]
Value, and Accreditation'' final rule, which included nondiscrimination
protections.
In the 2020 section 1557 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 consulted with stakeholders on policies related to the PHS Act
and ACA Federal market reform requirements, including the operation of
Exchanges and the risk adjustment program (including HHS-RADV). For
example, related to risk adjustment, HHS released the 2021 HHS-Operated
Risk Adjustment Technical Paper on Possible Model Changes \24\ and the
HHS-Operated Risk Adjustment Technical Paper on Possible Model Changes:
Summary Results for Transfer Simulations.\25\ We also held a number of
meetings with consumers, providers, employers, health plans, advocacy
groups, and the actuarial community to gather public input. We
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 and written comments we received in response to the
proposed rulemaking as we developed the policies in this final rule.
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\24\ HHS-Operated Risk Adjustment Technical Paper on Possible
Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\25\ HHS-Operated Risk Adjustment Technical Paper on Possible
Model Changes: Summary Results for Transfer Simulations. (2021,
December 28). CMS. https://www.cms.gov/files/document/report-summary-results-transfer-simulations.pdf.
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C. Structure of Final Rule
The regulations outlined in this final rule will be codified in 45
CFR parts 144, 147, 153, 155, 156, and 158.
The changes to 45 CFR part 144 will remove superfluous language
from the definition of a large group market.
The changes to 45 CFR part 147 will ensure that issuers cannot
refuse to effectuate new coverage based on the failure of an individual
or employer to pay premiums owed for prior coverage.
The policies relating to 45 CFR part 153 involve recalibration of
the 2023 benefit year risk adjustment models using the 2017, 2018, and
2019 enrollee-level EDGE data. We also finalize updates to the adult
and child risk adjustment models for 2023 and beyond to better predict
plan liability for certain subpopulations. Specifically, beginning with
the 2023 benefit year, we will 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
will add an interacted HCC count model specification for 2023 and
beyond to the adult and child models. We are not finalizing the
proposal to add a two-stage weighted approach to model recalibrations.
We are finalizing 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
are finalizing 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.\26\ For the 2024 benefit year and
beyond, we will 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 are
finalizing 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 will 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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\26\ The same concern was not present for the 2017 enrollee-
level EDGE data because hydroxychloroquine sulfate was not included
in the RXC crosswalk until 2018.
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We are finalizing the proposal to collect and extract five new data
elements as part of the enrollee-level EDGE data. Beginning with the
2023 benefit year, issuers will be required to populate the ZIP Code
and subsidy indicator fields as part of their EDGE data submissions.
Issuers will also be required to populate the race, ethnicity, and
Individual Coverage Health Reimbursement Arrangement (ICHRA) indicator
fields. For the 2023 and 2024 benefit years, we are adopting a
transitional period for the race, ethnicity, and ICHRA indicator fields
during which time issuers will be required to populate these fields
using available data sources. Then, beginning with the 2025 benefit
year, issuers that do not have an existing source to populate these
fields for particular enrollees will also be required to make a good
faith effort to collect and submit race, ethnicity, and ICHRA indicator
data elements for these enrollees. We are also finalizing the proposal
to extract three data elements--plan ID, rating area, and subscriber
indicator--issuers already report to their EDGE servers as part of the
required risk adjustment data. We are finalizing the extraction of plan
ID and rating area beginning with the 2021 benefit year, and subscriber
indicator will be extracted beginning with the 2022 benefit year.
Additionally, we finalize the proposal to amend 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.
In part 153, we are finalizing policies related to risk adjustment
State flexibility requests. We are finalizing the repeal of the ability
of States to request a reduction in risk adjustment State transfers
starting with the 2024 benefit year, with an exception for prior
participants. We further limit a prior participant's ability to request
a reduction in risk adjustment transfers starting with the 2024 benefit
year to only those that meet the de minimis threshold criteria. In
future rulemaking, HHS intends to propose to eliminate the prior
participant exception starting with the 2025 benefit year. For the 2023
benefit year, we approve Alabama's requests to reduce risk adjustment
State transfers, but at lower percentages, than the State requested. We
approve for the 2023 benefit year a 25 percent reduction in Alabama's
individual market (including the catastrophic and non-
[[Page 27217]]
catastrophic risk pools) transfers and a 10 percent reduction in
Alabama's small group market transfers.
In part 153, we also finalize the risk adjustment user fee for the
2023 benefit year at $0.22 PMPM. We also finalize the proposed update
to 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. We further specify that Super HCCs will be defined
separately according to the model (infant, child, adult) to which an
enrollee is subject, except for where child and adult coefficient
estimation groups have identical definitions. We also finalize the
proposal 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. These refinements to the HHS-RADV error rate
methodology and processes will apply beginning with the 2021 benefit
year. Finally, we adopt the policy 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, we are finalizing the part 153 proposals related to
MLR reporting requirements and how issuers should report certain ACA
program amounts that could be subject to reconsideration. More
specifically, we add references to HHS-RADV adjustments to Sec.
153.710(h) 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.
We finalize changes to 45 CFR part 155 to 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. We are codifying the
proposed APTC proration methodology as the methodology Exchanges on the
Federal platform will continue to use, but we are not finalizing the
requirement for State Exchanges to prorate premium or APTC amounts
using the methodology described in the proposed rule. Rather, we are
finalizing that beginning in PY 2024, State Exchanges will be required
to report to HHS their methodology that ensures the amount of APTC
applied to an enrollee's monthly premium does not exceed their total
monthly APTC.
We are also finalizing 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 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. After
consideration and review of the comments, we will not finalize Sec.
155.220(j)(2)(ii)(A)(1), which would prohibit agents from entering
consumer email addresses with domains that remove email from an inbox
after a set period of time. We encourage agents, brokers, and web-
broker entities to remain aware of, and avoid using, such temporary
email accounts when assisting consumers in obtaining coverage as a best
practice and will likely issue future guidance on the matter.
Otherwise, we are generally finalizing the changes to the remainder of
Sec. 155.220(j)(2)(ii) to clarify the FFE standards of conduct for
agents, brokers, and web-brokers, and what it means to provide the
Exchange with correct information under section 1411(b) of the ACA. We
also finalize the changes to Sec. 155.220(j)(2)(vi) through (viii) to
expand the FFE standards of conduct and codify more detail about
specific business practices that are prohibited.
In 45 CFR part 156, we are finalizing the user fee rates for the
2023 benefit year for all issuers participating on Exchanges that use
the Federal platform. We also finalize technical amendments to Sec.
156.50 to conform with the repeal of the Exchange Direct Enrollment
(DE) option finalized in part 3 of the 2022 Payment Notice (86 FR 53412
at 53424 through 53429 and 53445). Also, we finalize 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 an appropriation to
make CSR payments and voluntary for other issuers.
In part 156, we are also finalizing a refinement to the EHB
nondiscrimination policy to provide that a nondiscriminatory health
plan design that provides EHB is one that is clinically based; a
permanent annual deadline in early May for EHB-benchmark plan
applications by States, a repeal of States' ability to permit issuers
to substitute benefits between EHB categories; changes to the 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 a repeal of the annual
requirement for States to report to HHS State-required benefits in
addition to the EHB.
In part 156, we are also finalizing a requirement that issuers of
QHPs in FFEs and SBE-FPs offer through the Exchange standardized QHP
options beginning in PY 2023. We are also finalizing an update to the
QIS standards to require QHP issuers to address health and health care
disparities as a specific topic area within their QIS beginning in
2023.
The changes to 45 CFR part 158 codify 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 changes to part
158 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, we finalize 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,\27\ and thus deleted in part 2 of the 2022 Payment Notice
final rule.
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\27\ City of Columbus, et al. v. Cochran, 523 F. Supp. 3d 731
(D. Md. 2021).
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III. Provisions of the Final HHS Notice of Benefit and Payment
Parameters for 2023
A. Part 144--Requirements Relating to Health Insurance Coverage
1. Definitions (Sec. 144.103)
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 594), we proposed to remove the phrase
``unless otherwise provided under State law'' from the definition of
large group market at Sec. 144.103. As discussed in the proposed rule,
the phrase has no meaning or application and does not appear in the
[[Page 27218]]
statutory definition of large group market 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.\28\ However, in the 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 section
2791(e) of the PHS Act, 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 proposed to do so in the proposed rule, to align
these definitions and make the regulatory definition for large group
market consistent with the definition under the ACA.
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\28\ 62 FR 16894 and 69 FR 78720.
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We sought comment on this proposal.
After reviewing public comments, we are finalizing this provision
as proposed. The removal of the phrase ``unless otherwise provided
under State law,'' will add clarity to the regulatory definition of
``large group market,'' and align with the current definition under
section 2791(e) of the PHS Act.
We summarize and respond to public comments received on the
definition of large group market below.
Comment: We received two comments related to the definition of a
large group market. One commenter did not see any adverse consequences
to the revision. Another expressed concern that State law definitions
of ``large group'' would be adversely affected by the change in Federal
law because each State passes laws tailored to the market in their
respective State.
Response: As discussed in the proposed rule, we proposed this
change to align the regulation with the underlying statutory definition
of ``large group market,'' which does not include the phrase ``unless
otherwise provided under State law.'' In addition, removing this
language will not affect State law definitions of large group market to
the extent that they do not prevent the application of Federal law.
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
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 594 through 595), we proposed 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 when the
individual or employer owes past-due premiums for coverage from the
same issuer or another issuer in the same controlled group. Under the
current interpretation of the guaranteed availability requirement, to
the extent permitted by applicable State law, an issuer does not
violate the guaranteed availability requirements under Sec. 147.104
when 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.\29\
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\29\ 82 FR 18346, 18349 through 18353.
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On January 28, 2021, President Biden issued Executive Order 14009,
``Strengthening Medicaid and the Affordable Care Act'' (E.O.
14009).\30\ 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. On April 5, 2022,
President Biden issued Executive Order 14070, ``Continuing to
Strengthen Americans' Access to Affordable, Quality Health Coverage''
(E.O. 14070).\31\ Section 2 of E.O. 14070 directs agencies with
responsibilities related to Americans' access to health coverage, in
addition to taking the actions directed pursuant to E.O. 14009, to
review agency actions to identify ways to continue to expand the
availability of affordable health coverage, to improve the quality of
coverage, to strengthen benefits, and to help more Americans enroll in
quality health coverage. Consistent with section 3(iv) of E.O. 14009
and section 2(a) of E.O. 14070, the re-interpretation of the guaranteed
availability requirement is intended to remove an unnecessary barrier
and make it easier for consumers to enroll in coverage.
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\30\ Executive Order 14009 on Strengthening Medicaid and the
Affordable Care Act. (2021, February 2). See 86 FR 7793.
\31\ Executive Order 14070 on Continuing to Strengthen
Americans' Access to Affordable, Quality Health Coverage, April 5,
2022; see 87 FR 20689.
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In the proposed rule (87 FR 594), we proposed to re-designate 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). Based
on our experience, we believe that the currently effective
interpretation of guaranteed availability has the unintended
consequence of creating barriers to health coverage that
disproportionately affect low-income individuals.
After reviewing the public comments, we are finalizing this
provision as proposed. We summarize and respond to public comments
received on the proposed re-interpretation of guaranteed availability
requirements for the group and individual health insurance markets
below.
Comment: Many commenters supported the proposal, stating that the
current interpretation of the guaranteed availability requirement is
inconsistent with the ACA and creates barriers to accessing health care
that disproportionately harm persons with low incomes and those
experiencing economic hardship. Other commenters in favor of the
proposal stated that the current interpretation of the guaranteed
availability requirement is a barrier to enrollment that
disproportionately impacts people of color, especially women of color,
persons with disabilities, lesbian, gay, bisexual, transgender, queer,
and intersex (LGBTQI+) people, and immigrants.
Some commenters stated that non-payment of past-due premiums is
typically not an intentional decision to avoid financial
responsibility, and may be the result of a mistake or catastrophic
events such as financial hardship, environmental disaster,
hospitalization, or lack of awareness of past-due premium debt. Some
commenters expressed concern that the current interpretation of the
guaranteed availability requirement permits issuers to adopt punitive
measures against consumers who, without malice, are unable to satisfy
past-due premium debt.
Some commenters stated that the current interpretation of the
guaranteed availability requirement compounds barriers to enrollment by
requiring consumers with past-due premium debt
[[Page 27219]]
to pay multiple months of premiums on top of a binder payment in order
to effectuate coverage. A commenter noted that there is no evidence
that individuals are attempting to ``game the system'' by enrolling in
coverage and paying premiums only when care is needed. Other commenters
stated that the current interpretation poses a steep barrier to
enrollment for consumers responding to catastrophic life events,
particularly given that the amount of past-due premiums owed to payors
is nominal compared to issuer profits.
Other commenters opposed the proposed policy and stated that more
research is necessary to determine why individuals and employers fail
to pay past-due premiums and questioned whether other coverage options
could be made more accessible.
Response: We believe finalizing the proposed re-interpretation of
the guaranteed availability requirement will alleviate a barrier to
enrollment for individuals struggling to access health coverage, which
disproportionately affects historically marginalized populations and
individuals facing financial hardship. The current interpretation of
this policy disincentivizes enrollment by conditioning coverage on the
repayment of the past-due premium debt, which may deter individuals who
have accrued past-due premium debt from seeking coverage altogether.
Conversely, permitting individuals to enroll in coverage, regardless of
past-due premium debt, will help ensure continuous access to health
care, especially for individuals facing dire economic circumstances. We
agree with commenters that enrollees fail to pay premiums for numerous,
valid reasons that have nothing to do with exploiting grace periods or
special enrollment periods to avoid paying for health coverage.
Additionally, many consumers and small businesses face financial
challenges. As such, we believe it is prudent to remove barriers to
accessing health coverage to ease the enrollment process.
While the exact cause of premium non-payment and past-due premium
accrual may not be clear in all cases, we are of the view that this
should not be a reason to deny individuals coverage. We agree with
commenters suggesting that more research is needed to determine why
individuals and employers fail to pay past-due premiums, and believe
that such research could inform future policies to better support
consumers in staying enrolled in coverage.\32\
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\32\ Cunningham, P.J., Green, T.L., & Braun, R.T. (2018,
February 26). Income Disparities in the Prevalence, Severity, and
Costs of Co-Occurring Chronic and Behavioral Health Conditions.
Medical Care.
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Comment: Some commenters recommended limiting the re-interpretation
of the guaranteed availability requirement to the individual market and
not making it applicable to the group market. One commenter stated that
the proposed change could have significant impacts on issuer management
of enrollment and billing for group market accounts.
Response: Under section 2702 of the PHS Act and Sec. 147.104, the
guaranteed availability requirement applies to both the individual and
group markets. We believe the same principles underlying this policy
should apply equally to both markets, and therefore, decline to adopt
this recommendation.
Comment: Commenters stated that this proposal restricts issuers'
ability to collect past-due premiums or requires them to forgive such
debt. Some commenters expressed concern that finalizing the proposal
will remove a disincentive that guards against enrollees ceasing to pay
premiums during the last 3 months of the plan year, and will leave
issuers without adequate redress when faced with non-payment. Some
commenters stated that permitting individuals with past-due premium
debt to enroll in coverage before repaying past-due premiums will
ultimately result in fewer choices and higher premiums, harming
consumers with low incomes. One commenter requested that HHS specify
other options for issuers besides collections.
In contrast, another commenter noted that issuers have largely
chosen not to use the flexibility provided under the current
interpretation of the guaranteed availability requirement because the
implementation of a policy that attributes payments made for new
coverage to past-due premiums before effectuating new enrollment would
cost more than the past-due premiums the issuer would recoup through
such a policy. Other commenters agreed that issuers have other tools
for recouping unpaid premiums. Some commenters suggested that issuers
should be prohibited from acting to collect past-due premiums.
Response: We disagree that this proposal restricts issuers from
collecting past-due premiums. Issuers are generally not permitted to
forgive the past-due premium debt and have alternative methods to
collect past-due premiums (such as pursuing debt collection). We
believe this mitigates the risk that some enrollees may take advantage
of the guaranteed availability rules. We also believe that the low
adoption among issuers of policies that rely on the current
interpretation of guaranteed availability demonstrates that there are
sufficient avenues for issuers to collect past-due premium debt without
having to condition enrollment into new coverage on the payment of
past-due premium debt. However, we acknowledge that issuers that
implemented a policy of attributing payment made for new coverage to
past-due premiums before effectuating enrollment will need to make
operational changes as a result of this re-interpretation of the
guaranteed availability requirement. Finally, in response to the
commenter's suggestion that issuers should be prohibited from acting to
collect on debt for past-due premiums, we reiterate that an issuer's
forgiveness of premium debt is generally not permissible under our
rules.
b. Nondiscrimination Based on Sexual Orientation and Gender Identity
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 595 through 597), we proposed to amend 45 CFR
147.104(e) to explicitly prohibit discrimination based on sexual
orientation and gender identity. As we explain in the Supplemental
Information section earlier in the preamble, HHS will address this
policy, as well as the public comments submitted in response to this
proposal, in a future rulemaking.
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. 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.\33\ 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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\33\ See also 42 U.S.C. 18041(c)(1).
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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
[[Page 27220]]
sequestration.\34\ 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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\34\ OMB Report to the Congress on the BBEDCA 251A Sequestration
for Fiscal Year 2022. (2021, May 28). White House. 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 amended, and the
underlying authority for the risk adjustment program, the funds that
are sequestered in the fiscal year 2022 from the risk adjustment
program will become available for payment to issuers in the 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 the fiscal year
2030 at a rate of 5.7 percent per fiscal year.\35\
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\35\ CARES Act, S.3548. (2020).
---------------------------------------------------------------------------
We received no comments on the FY2022 sequestration rate for risk
adjustment.
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 diagnosis is
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.\36\ 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 or PLRS) 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.
---------------------------------------------------------------------------
\36\ 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.
---------------------------------------------------------------------------
a. Data for Risk Adjustment Model Recalibration for 2023 Benefit Year
and Beyond
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 598), we proposed to recalibrate the 2023
benefit year risk adjustment models with 2017, 2018, and 2019 enrollee-
level EDGE data. We sought comment on this proposal.
In the proposed rule, we also sought 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 the
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 years models.\37\ Although HHS has not analyzed the 2020
enrollee-level EDGE data yet, we solicited 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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\37\ 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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After reviewing the public comments, we are finalizing, as
proposed, the use of the 2017, 2018, and 2019 enrollee-level EDGE data
to recalibrate the 2023 benefit year risk adjustment models. We were
unable to finalize coefficients in time to publish them in this final
rule. Therefore, consistent with Sec. 153.320(b)(1)(i), we will
publish the final coefficients for the 2023 benefit year in guidance
soon after the publication of this final rule.
Additionally, we appreciate comments on the future use of the 2020
enrollee-level EDGE data due to the COVID-19 PHE. We continue to
consider how to handle 2020 enrollee-level EDGE data for recalibration
of the 2024, 2025, and 2026 benefit year models and will work with
stakeholders as we analyze the data. Changes to the established
policies for recalibration of the risk adjustment models, including
proposals related to the use of 2020 enrollee-level EDGE data for such
purposes, would be pursued through notice-and-comment rulemaking.
We summarize and respond to public comments received on data for
risk adjustment model recalibration for the 2023 benefit year and
beyond below.
Comment: Many commenters supported the use of the 2017, 2018, and
2019 enrollee-level EDGE data to recalibrate the 2023 risk adjustment
models. One commenter noted that the 2017, 2018, and 2019 enrollee-
level EDGE data reflect the most recently available health outcomes and
recent treatment patterns in the enrollee population. Another commenter
supported using the most recent 3 years of EDGE data available in time
for publication of the draft coefficients in the proposed rule in order
to give the industry the earliest opportunity to model premium rates
for the next benefit year.
Response: We are finalizing the use of the 2017, 2018, and 2019
enrollee-level EDGE data to recalibrate the 2023 risk adjustment models
as proposed. The 2017, 2018, and 2019 enrollee-level EDGE data were the
3 most recent consecutive years of enrollee-level EDGE data that were
available at the time we incorporated the data in the draft
recalibrated coefficients published in the proposed rule. As discussed
in the 2022 Payment Notice, the purpose of using the 3 most recent
consecutive years of enrollee-level EDGE data that were available at
the time we incorporated the data in the draft recalibrated
coefficients published in the proposed rule was to respond to
stakeholders' request to provide the draft coefficients in the proposed
rule (86 FR 24152). We believe that this approach promotes stability
and avoids the delays in publication of the coefficients while
continuing to develop blended, or averaged, coefficients from the 3
years of separately solved models for model recalibration.
Comment: We received several comments on the use of 2020 enrollee-
level EDGE data for recalibration of the
[[Page 27221]]
2024, 2025, and 2026 benefit years. Some of these commenters supported
the inclusion of 2020 enrollee-level EDGE data in these future benefit
year model recalibrations, stating that 2020 data would accurately
reflect utilization patterns that can be expected in 2021 and beyond
and that the inclusion of 3 years of enrollee-level EDGE data in
recalibration would dampen the impact of 2020 data. Another commenter
noted that failure to include 2020 data would result in an outdated
picture of medical spending.
One commenter opposed the inclusion of 2020 enrollee-level EDGE
data in model recalibration altogether. Another commenter noted that
not relying on 2020 experience to develop risk adjustment coefficients
is consistent with industry practice, asserting that the majority of
Medicare Advantage and ACA issuers used 2019 data in lieu of 2020 data
for 2022 pricing.
Several commenters requested HHS develop a technical paper on using
2020 enrollee-level EDGE data in future model recalibrations, with
several commenters suggesting that HHS do a comparison of coefficients
with and without the 2020 enrollee-level EDGE data to review relative
changes in coefficients, and evaluate changes for clinical
reasonability and consistency with 2018 and 2019 enrollee-level EDGE
data. One commenter requested that HHS release 2020-related statistics
and solicit further comment on how to best proceed with 2020 data,
including whether to instead use 2017, 2018, and 2019 EGDE data for the
2024 benefit year recalibration of the HHS risk adjustment models.
One commenter recommended either assigning 2020 enrollee-level EDGE
data lower weight if used to recalibrate the models in the 2024, 2025,
and 2026 benefit years, or using four years of enrollee-level EDGE data
in the annual model recalibration until 2020 data is no longer included
in recalibration. Another commenter recommended that HHS evaluate if it
would be better to use 1 or 2 years of data for recalibration of the
models in the 2024, 2025, and 2026 benefit years on a transitional
basis until only post-2020 data would be used.
Response: We appreciate comments on the future use of the 2020
enrollee-level EDGE data for risk adjustment model recalibration and
will consider this feedback as we analyze the 2020 enrollee-level EDGE
data and consider options for its use for recalibration of the risk
adjustment models.
b. Risk Adjustment Model Updates
In the proposed rule (87 FR 598 through 605), we proposed three
modeling updates to the risk adjustment models beginning with the 2023
benefit year. Consistent with the potential model updates discussed in
the 2021 RA Technical Paper, we proposed the following model updates,
which are the same as those proposed but not finalized in the 2022
Payment Notice:\38\ (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 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.
---------------------------------------------------------------------------
\38\ In the 2022 Payment Notice Proposed Rule, we proposed three
model specification changes, see 85 FR 78572 at 78583 through 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 through 24162. See also HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes. (2021, October 26). CMS.
https://www.cms.gov/files/document/2021-ra-technical-paper.pdf and
HHS-Operated Risk Adjustment Technical Paper on Possible Model
Changes: Summary Results for Transfer Simulations. (2021, December
28). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------
After a review of public comments, we are finalizing two of the
three proposed model specification updates. We are not finalizing the
proposed addition of a two-stage weighted model specification to the
adult and child models. We are finalizing, as proposed, removing the
current severity illness factors in the adult models and replacing them
with new severity and transplant indicators that interacted with HCC
count factors in the adult and child models. We are also finalizing, as
proposed, replacing the current enrollment duration factors in the
adult models with HCC-contingent enrollment duration factors in the
adult models. In the following sections, we describe the proposed model
specification changes, as well as summarize and respond to the comments
received on each of these proposals.
i. Two-Stage Weighted Model Specification
We proposed 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 \39\). For a full description of the
proposed two-stage weighted model specification see the proposed rule
(87 FR 599 through 601). We sought comment on the two-stage weighted
model specification proposal.
---------------------------------------------------------------------------
\39\ When we refer to the enrollees without HCCs, we are
referring to enrollees without payment HCCs.
---------------------------------------------------------------------------
After reviewing the public comments, we are not finalizing the
adoption of the two-stage weighted model specification.
We summarize and respond to public comments received on the
proposed two-stage model specification below.
Comment: Several commenters supported the implementation of the
proposed two-stage weighted model specification. Some of these
commenters generally supported all of the proposed model specification
changes, while others specifically noted that the proposed two-stage
model improved prediction for the lowest-risk enrollees.
Conversely, several other commenters opposed the implementation of
the proposed two-stage weighted model specification. Several commenters
were concerned that the proposed two-stage weighted model specification
would have anti-competitive effects, leading to fewer choices for
consumers. These commenters stated that the two-stage weighted model
specification would increase premiums on more generous health insurance
coverage, incentivize issuers to adopt narrow networks and lower-
quality plans, encourage issuers to avoid enrolling consumers with
chronic illnesses, and contribute to the creation and use of
discriminatory benefit designs.
Other commenters did not support a model change that improved risk
predictions for certain subpopulations at the expense of the risk
adjustment program's ability to mitigate adverse selection for high-
cost enrollees. Some commenters stated that the proposed two-stage
weighted model specification ignores current market dynamics in which
plans are already incentivized to attract the healthiest enrollees.
Additionally, some commenters recommended additional analysis of the
two-stage weighted model specification, specifically geographic and
market-specific considerations, before its adoption. One commenter
suggested that if HHS finalizes the two-stage weighted model
specification, HHS should pilot or phase-in the implementation based on
an analysis of localized market conditions.
Response: After consideration of the comments on this proposal, we
are not finalizing the proposed two-stage
[[Page 27222]]
weighted model specification. We pursued the proposed model
specification updates to improve the prediction of certain
subpopulations in response to feedback from stakeholders and internal
analysis where we had observed underprediction in the current models.
As we previously reported in the 2018 Payment Notice, our initial
analysis found that, based on the commercial MarketScan[supreg] data,
the HHS risk adjustment models slightly underpredicted risk for the
lowest-risk enrollees (81 FR 61472 through 61473 and 81 FR 94082
through 94083). Our subsequent analysis of enrollee-level EDGE data
confirmed this preliminary finding.\40\ In addition, stakeholders have
consistently encouraged HHS to adjust the models to address this
underprediction of risk, which affects the PLRSs of plans that enroll
more healthy individuals. HHS has therefore been examining these
issues, considering different options, and soliciting comments on ways
to modify the risk adjustment models to improve prediction for certain
subpopulations, including the lowest-risk enrollees, over several years
(81 FR 61473 and 85 FR 7101 through 7104). Throughout this process, we
consistently emphasized the need to carefully evaluate the impact on
and consider the trade-offs that would need to be made in model
predictive power among subgroups of enrollees.
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\40\ Section 2. HHS-Operated Risk Adjustment Technical Paper on
Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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The proposed two-stage weighted model specification was targeted at
improving model prediction for lowest-risk enrollees. As previously
explained, we believed that by addressing the underprediction of costs
associated with lowest-risk enrollees in the adult and child models, we
could encourage the offering and retention of plans that enroll a
higher proportion of this subpopulation of enrollees.\41\ We also
recognized that issuers offering these types of plans were at greater
risk of exiting the market if transfers calculated under the State
payment transfer formula under-compensated for the true plan liability
of the lowest-risk enrollees. These concerns, along with stakeholder
comments on these issues, prompted the design of the two-stage weighted
model specification two years ago. However, we acknowledged that there
are trade-offs associated with the adoption of the proposed two-stage
weighted model, including that while it would improve prediction for
the lowest-risk enrollees it would worsen model prediction along other
dimensions, such as reduced R-squared values, less accurate prediction
of plan liability by age-sex factor (especially for younger and older
women), as well as a less accurate prediction of costs for certain
HCCs.\42\ Additionally, since developing the proposed two-stage
weighted model specification, there have been key shifts in the
individual market, including increased enrollment and increased
availability of subsidies,\43\ that have made the market more
attractive to issuers. However, these market shifts have also shown the
pressing need to update the adult model enrollment duration factors,
which we are also finalizing as part of this rule.
---------------------------------------------------------------------------
\41\ Section 2.1. HHS-Operated Risk Adjustment Technical Paper
on Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\42\ Section 2.3. HHS-Operated Risk Adjustment Technical Paper
on Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf. See also 87
FR 600 through 601.
\43\ Biden-Harris Administration Announces 14.5 Million
Americans Signed Up for Affordable Health Care During Historic Open
Enrollment Period. (2022, January 27). CMS. https://www.hhs.gov/
about/news/2022/01/27/biden-harris-administration-announces-14-5-
million-americans-signed-affordable-health-care-during-historic-
open-enrollment-
period.html#:~:text=Today%2C%20the%20Biden%2DHarris%20Administration,
people%20who%20have%20newly%20gained.
---------------------------------------------------------------------------
While the interacted HCC count model specification and the
enrollment duration factor updates finalized in this rule do not
improve predictive accuracy for the lowest-risk enrollees as much as
they would have if they were combined with the proposed two-stage
weighted model specification, we believe the finalized model
specifications will still make significant gains in improved predictive
accuracy for our target subpopulations, including the lowest-risk
enrollees, highest-risk enrollees, and partial-year enrollees.\44\ As
demonstrated in Chapter 4 of the 2021 RA Technical Paper, our analysis
found the proposed interacted HCC counts model specification and the
proposed HCC-contingent enrollment duration factors improved prediction
for the lowest-risk enrollees, compared with the current adult models,
even without accounting for the proposed two-stage weighted model
specification.\45\ Using 2018 enrollee-level EDGE data, the proposed
interacted HCC counts model specification combined with the proposed
HCC-contingent enrollment duration factors improves the PR for adult
silver-plan enrollees in risk decile 1 from 0.52 to 0.81.\46\ This
approach of incremental improvements in predictive accuracy aligns with
our commitment to continuously analyze and refine the risk adjustment
models. After consideration of comments and further evaluation of the
trade-offs, we are finalizing the interacted HCC count model
specification and enrollment duration factor updates but are not
finalizing the proposed two-stage weighted model specification.
---------------------------------------------------------------------------
\44\ Figures 4.2, 4.3, and 4.4. HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes. (2021, October 26). CMS.
https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\45\ Ibid.
\46\ Section 4. HHS-Operated Risk Adjustment Technical Paper on
Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------
Since we are not finalizing the proposed two-stage weighted model
specification, we do not intend to pursue or otherwise consider pilot
or phase-in implementation strategies. Similarly, we do not intend to
engage in additional analysis of alternative implementations of the
two-stage weighted model specification, including but not limited to an
analysis of implementation by geographic or market-specific conditions,
at this time.
Comment: One commenter that supported the proposed two-stage
weighted model specification also encouraged HHS to recalibrate the
State payment transfer formula to further ensure that plans do not face
excessive risk adjustment charges when enrolling a high proportion of
young and healthy enrollees. Another commenter supported the
finalization of the two-stage weighted model specification, but noted
that it is unclear to what extent these model changes address
situations in which risk adjustment charges for some issuers exceed the
premium collected for some lower-risk enrollees.
Response: We did not propose and are not finalizing changes to the
State payment transfer formula. However, we intend to continue analysis
of the risk adjustment State payment transfer formula to consider
whether changes are needed to it. For example, in Appendix A of the
2021 RA Technical Paper, we discussed options to potentially update the
risk adjustment State payment transfer formula to improve prediction
for CSR enrollees' plan liability. More specifically, we identified
several potential options to update the risk term and one option to
update the rating term to more precisely account for CSR plan liability
in the State payment transfer formula.\47\ We familiarized stakeholders
with these options and accepted public comments on the considerations
in the 2021 RA Technical Paper. We continue
[[Page 27223]]
to conduct analyses of these options and will propose any changes in
future notice-and-comment rulemaking.
---------------------------------------------------------------------------
\47\ Appendix A. HHS-Operated Risk Adjustment Technical Paper on
Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------
As part of future analyses, we also intend to assess the impact of
the State payment transfer formula on risk adjustment covered plans
with lowest-risk enrollees to the extent that our data allows. However,
in response to commenters' concerns that risk adjustment charges exceed
premiums collected for some of the lowest-risk enrollees, we do not
believe that this concern falls within the scope of the proposed two-
stage weighted model specification, and we reiterate that we do not
believe that adjusting the State payment transfer formula to limit
charges to the level of premiums for enrollees is appropriate (86 FR
24140 at 24186). Also, as previously described, we proposed the two-
stage weighted model specification to address the underprediction of
the lowest risk enrollees, not to address the situation described by
the commenter in which risk adjustment charges may exceed premiums
collected for some enrollees. As described in the most recent ``Summary
Report on Permanent Risk Adjustment Transfers for the 2020 Benefit
Year,'' risk adjustment is working as intended to transfer payments
from plans with lower than average actuarial risk to plans with higher
than average actuarial risk.\48\ Furthermore, we do not believe that
limiting risk adjustment charges to the level of enrollee premiums is
consistent with the framework set forth in section 1343 of the ACA,
which requires the establishment of a risk adjustment program focused
on risk differentials at the plan level, not the enrollee level.\49\
Risk adjustment transfers under the State payment transfer formula are
therefore calculated based on the PLRS and the Statewide average
premium, not based on individual enrollees' premiums.
---------------------------------------------------------------------------
\48\ Summary Report on Permanent Risk Adjustment Transfers for
the 2020 Benefit Year. (2021, June 30). CMS. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2020.pdf.
\49\ Compare 42 U.S.C. 18063 (establishing the permanent risk
adjustment program, which involves an assessment and comparison of
the actuarial risk in each issuer's plans in a State market risk
pool with the average actuarial risk of all plans in the applicable
State market risk pool) and 42 U.S.C. 18061 (establishing the
transitional reinsurance program, which involves an assessment of
actuarial risk of individual enrollees to identify those that
qualify as ``high risk.'')
---------------------------------------------------------------------------
Comment: Some commenters requested that if HHS finalizes the
proposed two-stage weighted model specification, then HHS should
reassess the 14 percent administrative adjustment, which they argue may
already address some of the underprediction seen in predictive ratios.
Response: We did not propose and are not finalizing changes to the
14 percent administrative cost reduction to the Statewide average
premium used in the State payment transfer formula. While HHS is not
finalizing the proposed two-stage weighted model specification, we
reiterate that the proposed two-stage weighted model specification and
administrative cost adjustment to Statewide average premium address
separate considerations. Specifically, the 14 percent administrative
cost reduction is used in the State payment transfer formula to adjust
the Statewide average premium and does not address the predictive
accuracy of the risk adjustment models, as described in the 2021 RA
Technical Paper. As detailed in the 2018 Payment Notice, the purpose of
the administrative cost adjustment to the Statewide average premium is
to exclude fixed administrative costs that are not dependent on
enrollee risk, such as taxes (81 FR 61488 through 61489 and 81 FR 94099
through 94100). In contrast, and as previously described elsewhere,\50\
the proposed two-stage weighted model specification was a targeted
refinement aimed at improving the current adult and child models'
prediction for the lowest-risk enrollees. Therefore, we do not agree
with commenters' assertions that the administrative cost adjustment
addresses the same issue as the two-stage weighted model specification,
specifically the underprediction of costs in the lowest-risk enrollee
subpopulation.
---------------------------------------------------------------------------
\50\ Section 2.2. HHS-Operated Risk Adjustment Technical Paper
on Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf. See also 85
FR 78667 and 86 FR 24283.
---------------------------------------------------------------------------
Comment: Some commenters that opposed the proposed two-stage
weighted model specification were concerned it may be resulting in
overfitting of the models and may not predict future costs accurately.
They also noted that the two-stage weighted model specification is not
a standard procedure for risk adjustment and worsens fit in some areas,
such as the reduced R-squared values,\51\ although the effect is small.
---------------------------------------------------------------------------
\51\ We acknowledge three areas where the two-stage weighed
model specification worsens fit of the risk adjustment models along
other dimensions in Section 2.3 in the HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes. (2021, October 26). CMS.
https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\52\ Kautter, J., Pope, G., Ingber, M. J., Freeman, S. E.,
Patterson, L. J., Cohen, M. A., & Keenan, D. P. (2014). The HHS-HCC
risk adjustment model for individual and small group markets under
the Affordable Care Act. Medicare & Medicaid Research Review, 4(3),
E1-E46. doi:10.5600/mmrr.004.03.a03. Kautter, J., Pope, G., &
Keenan, D. P. (2014). Affordable Care Act risk adjustment: Overview,
context, and challenges. Medicare & Medicaid Research Review, 4(3),
E1-E11. doi:10.5600/mmrr.004.03.a02.
\53\ For information on the use of hierarchies and constraints,
see Sections 2.1, 3.7 and 3.8 of the March 2016 Risk Adjustment
Methodology White Paper. (2016, March 24). https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/RA-March-31-White-Paper-032416.pdf. See also the June 2019 Potential
Updates to HHS-HCCs for the HHS-operated Risk Adjustment Program
Technical Paper (2019, June 17). CMS. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Potential-Updates-to-HHS-HCCs-HHS-operated-Risk-Adjustment-Program.pdf.
---------------------------------------------------------------------------
Response: As previously described, we acknowledged that there are
trade-offs associated with adoption of the proposed two-stage weighted
model, including that it would worsen model prediction along some
dimensions, such as reduced R-squared values. We also recognize that
the two-stage weighted model specification is not a standard procedure
for risk adjustment. After consideration of comments and further
evaluation of the trade-offs, we are not finalizing the proposed two-
stage weighted model specification update to the adult and child
models. In response to commenters' concerns about overfitting, we note
that we do not have concerns with respect to overfitting the models for
a variety of reasons. First, we estimate the models using 3 years of
data and the final model parameters are an average of coefficients
across the 3 years. By using 3 years of data, the potential for one
unusual year to skew the coefficients is limited. Second, for each
model year, the overall sample size is quite large in each adult model,
particularly relative to the number of model predictors used in the
risk adjustment models.\52\ For example, the 2019 recalibration sample
alone has 18.7 million adult enrollees whose data are used to fit adult
models consisting of 181 predictors for the 2023 benefit year.
Additionally, we ensure sample sizes for each coefficient are
reasonable through the application of hierarchies, constraints, and
similar model design choices.\53\ We also note that although the models
perfectly predict past experience, this does not guarantee the models
will perfectly predict when applied to future payment years, as that
will depend, in part, on what happens between the calibration and
payment years. However, this does not reflect overfitting. To the
extent the calibration years are representative of future payment
years, the models are positioned to perform well when used
[[Page 27224]]
for payment.\54\ For all of these reasons, we are not concerned about
the proposed two-stage weighted model specification change resulting in
overfitting of the models; however, as previously described, we are not
finalizing the proposed two-stage weighted model specification.
---------------------------------------------------------------------------
\54\ Section 1.4. HHS-Operated Risk Adjustment Technical Paper
on Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------
ii. Interacted HCC Counts Model Specification
In addition to the two-stage weighted model specification, we
proposed 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 0.1
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.\55\
---------------------------------------------------------------------------
\55\ Section 4.1. HHS-Operated Risk Adjustment Technical Paper
on Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------
Therefore, to address the underprediction of the highest-risk
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.
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 by accounting for the
fact that costs of certain HCCs rise significantly when they occur with
multiple other HCCs.
In developing this interacted HCC counts model specification, we
tested different types of severity and transplant indicators interacted
with HCC counts with the goal of improving prediction for enrollees
with the highest costs and multiple HCCs to counterbalance the
reciprocal prediction weights that relatively underpredicted costs for
these enrollees. For this approach, we assessed the HCCs for enrollees
with extremely high costs, and HCCs that were being underpredicted in
the current risk adjustment models. We found that many of the HCCs that
were flagged as being underpredicted were those HCCs that indicated
severe illness, such as the transplant HCCs, and other HCCs related to
severity of disease; therefore, we proposed dropping the current
severity illness indicators in the adult models and replacing them with
severity and transplant indicators interacted with HCC counts factors
in the adult and child models.
We proposed the inclusion of the factors in Tables 1 and 2 of the
proposed rule as the severity and transplant interaction factors in the
adult and child models starting with the 2023 benefit year. We
separated out severity and transplant HCCs into two sets of interaction
factors, as expressed in Tables 1 and 2 of the proposed rule, because
we found that this approach improved prediction for the highest-risk
enrollees better than an approach that included a single set of
factors.
If an enrollee has at least one severity HCC in Table 3 of the
proposed rule (shown in Table 1 of this rule as the Final HCCs Selected
for the HCC Interacted Counts), the enrollee will receive an interacted
HCC count factor toward their risk score, and the severity HCC count
factor selected would be based on the enrollee's total payment HCC
count.\56\ If an adult or child enrollee has at least one transplant
HCC in Table 1 of this rule, the enrollee will receive an interacted
HCC count factor for both a severity HCC interacted factor and, if the
enrollee has four or more HCCs, a transplant HCC interacted factor
towards their risk score, and both of those count factors would be
based on the enrollee's total payment HCC count.
---------------------------------------------------------------------------
\56\ For additional information on how the interacted HCC counts
model specification works, see Section 4.3 of the HHS-Operated Risk
Adjustment Technical Paper on Possible Model Changes. (2021, October
26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf. See also 87 FR at 601 through 603.
---------------------------------------------------------------------------
To further explain, as seen in Table 2 of this rule, the 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 1 of this rule 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 1 of this rule and
(2) 10 or more payment HCCs in the enrollee's data. For the child
models, the first five factors represent the presence of (1) an HCC in
the severity list in Table 1 of this rule 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 1 and (2) six to seven payment HCCs, and the seventh
factor represents the presence of (1) an HCC in the severity list in
Table 1 and (2) eight or more payment HCCs in the enrollee's data.
[[Page 27225]]
[GRAPHIC] [TIFF OMITTED] TR06MY22.000
[GRAPHIC] [TIFF OMITTED] TR06MY22.001
[[Page 27226]]
As seen in Table 3 of this rule, the transplant-HCC-count-
interaction factors are calculated similarly. However, the transplant
factors are 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 1 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 1 of this rule and (2) a total of four or more
payment HCCs in the enrollee's data. Using only one transplant-HCC-
count-interaction factor stabilized the child model estimates by
increasing the sample size used to estimate the factor
coefficients.\57\
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\57\ For an illustration of how the proposed severity- (or
transplant-) HCC-count-interaction factors would be assigned to an
enrollee, see 87 FR 601 through 602.
[GRAPHIC] [TIFF OMITTED] TR06MY22.002
To implement the severity- and transplant-HCC-count-interaction
factors in the regression model and estimate the value of their factor
coefficients, we proposed 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.
We sought comment on this proposal.
We are finalizing the removal of the current adult model severity
illness factors and adding an interacted HCC count model specification
to the adult and child risk adjustment models starting with the 2023
benefit year, as proposed.
We summarize and respond to public comments received on the
interacted HCC counts model specification updates below.
Comment: Several commenters supported the proposal to add an
interacted HCC counts model specification to the adult and child risk
adjustment models noting that the interacted HCC counts model
specification will improve model prediction and more accurately
quantify risk. Some commenters expressed general agreement with HHS
that the current models may be underpredicting plan liability of the
highest-risk enrollees, but did not otherwise comment on the interacted
HCC count model specification proposals. One commenter suggested that
the proposed refinement will mitigate issuers' concerns about adverse
selection and lead to a more competitive market, while another agreed
that it would address the current models' underestimate of plan
liability for the very highest-risk enrollees.
However, several other commenters opposed the proposed interacted
HCC counts model policy, stating that this change would add undue
complexity to the models and would increase coding and issuer gaming.
Some commenters requested clarification on how the interacted HCC
counts variable would be accommodated in the HHS-RADV process. These
commenters requested that HHS increase program integrity measures and
adopt additional safeguards against upcoding, such as targeted sampling
to test for upcoding in the HHS-RADV process, as an additional measure
to protect against gaming if this model specification change is
finalized. One commenter generally noted they only supported the
interacted HCC counts model specification if the two-stage weighted
model specification was also finalized.
Response: We agree with the commenters that the interacted HCC
counts model specification will improve model prediction, more
accurately quantify risk, and address the underprediction of plan
liability of the highest-risk enrollees that we have observed in the
current adult and child models. The current adult models incorporate a
severe illness adjustment that accounts for combinations of selected
HCCs. However, the total count of an enrollee's HCCs does not currently
independently affect the risk score and, while the current severity
illness indicator helps predict costs accurately among most adult
enrollees with qualifying severe illnesses, it does not fully address
the underprediction for the very highest-risk enrollees. The current
severity of illness indicators also do not extend to the child models.
The proposed interacted HCC counts model specification was targeted at
addressing these concerns and more accurately predicting risks and
capturing costs for the highest-risk enrollees.
We understand that there are concerns about the increased
complexity that the interacted HCC counts model specification may
introduce. However, we see the interacted HCC counts model
specification as an advancement of our current severe illness
indicators, which have been in place since the beginning of the risk
adjustment models, so we believe the interacted HCC counts model
specification change only slightly increases complexity. As described
in our analysis of 2018 enrollee-level EDGE data in the 2021 RA
Technical Paper, the interacted HCC counts model specification, along
with the HCC-contingent enrollment duration factors, significantly
improved prediction for the very highest-risk enrollees, which we
believe outweighs the disadvantages of slightly increasing model
complexity.\58\
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\58\ Section 4.4. HHS-Operated Risk Adjustment Technical Paper
on Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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Additionally, we acknowledge concerns over the potential for
upcoding and issuer gaming and further note that incorporating
safeguards to protect against the potential for gaming was a major
consideration in our investigation of various interacted HCC counts
model specifications. When developing the proposed interacted HCC
counts model specification we were specifically concerned that the
presence of counts across all HCCs, without requiring a
[[Page 27227]]
severe illness or transplant HCC, would further incentivize issuers to
code for more HCCs, thus increasing their payment or reducing their
charge under the State payment transfer formula. This would be
inconsistent with the risk adjustment principle not to encourage coding
proliferation.\59\ However, we believe that implementing the interacted
HCC counts model specification updates, as proposed, which restricts
the incremental risk score adjustment to enrollees with at least one
severe illness or transplant HCC, reduces concerns of issuers inflating
HCC counts to increase their transfers under the State payment transfer
formula. More specifically, our analysis of 2016, 2017, and 2018
enrollee-level EDGE data revealed that severe illness HCCs are
relatively uncommon; less than 2 percent of the adult enrollee-level
EDGE data population across these 3 benefit years had at least one
severe illness HCC, as opposed to about 20 percent of adult enrollees
with any payment HCC. Therefore, opportunities to inflate HCC counts
would be limited to a small fraction of total enrollees.
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\59\ For information on the principles that guide the HHS risk
adjustment models' diagnostic classification system, see Section
1.1.2 of the HHS-Operated Risk Adjustment Technical Paper on
Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf (see, in
particular, Principle 6: The diagnostic classification should not
reward coding proliferation.)
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Although we believe this approach appropriately balances the
different trade-offs by improving prediction for highest-risk enrollees
while mitigating the potential for gaming or upcoding, we generally
intend to monitor implementation of the model specification updates
finalized in this rule. Specifically, we will look for any notable
changes in HCC failure rates for the interacted severity and transplant
HCCs in HHS-RADV beginning with the 2023 benefit year that could be the
result of implementation of the interacted HCC counts model
specification updates.
Lastly, we note the interacted HCC counts model specification
update finalized in this rule is effective beginning with 2023 risk
adjustment. The HHS-RADV process for the 2023 benefit year would not
begin until spring 2024. Therefore, we intend to consider whether
changes are needed beginning with the 2023 benefit year HHS-RADV error
estimation methodology or processes in recognition of the interacted
HCC counts model specification and would propose any such changes in
future notice-and-comment rulemaking. HHS will also consider whether
targeted sampling, or other approaches, in HHS-RADV are necessary to
detect and address upcoding or coding proliferation as a result of the
implementation of the interacted HCC counts model specification.
Comment: Some commenters questioned whether the exclusion of
capitated claims biases the analysis of the proposed interacted HCC
counts model specification change.
Response: As previously explained,\60\ 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 reliable data for
recalibration or analysis.\61\ However, in response to comments
submitted to the 2021 RA Technical Paper and the proposed rule, we
conducted additional analyses to investigate how enrollees with
capitated claims could have impacted our assessment of the
underpredicted subpopulations described in the 2021 RA Technical Paper.
This additional analysis did not show that the exclusion of enrollees
with capitated claims biased the analysis or results in the 2021 RA
Technical Paper.
---------------------------------------------------------------------------
\60\ March 2016 Risk Adjustment Methodology White Paper. (2016,
March 24). https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/RA-March-31-White-Paper-032416.pdf. See
also 87 FR 602 through 603.
\61\ Enrollees with at least one capitated claim in EDGE are
excluded from recalibration, as the risk adjustment models are used
to evaluate enrollees' expenditures, and capitated claims do not
provide meaningful and comparable cost (allowed charges) data in
comparison to non-capitated claims. We are also concerned that
methods for computing and reporting derived amounts from capitated
claims could be inconsistent across issuers and would not provide
reliable or comparable data.
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To conduct this additional analysis, we compared the recalibration
sample, which excluded enrollees with any capitated claims,\62\ with
the capitation sample, which included only enrollees with capitated
claims. Overall, for the 2023 risk adjustment models, the capitation
exclusion resulted in 15-17 percent of enrollees being dropped from the
recalibration sample. As described in the 2021 RA Technical Paper,
where we utilized the recalibration sample to analyze the proposed
model changes, we observed underpredicted plan liability for the
lowest-risk enrollees (enrollees in low-risk deciles and without HCCs)
and underpredicted plan liability for the highest-risk enrollees
(enrollees in the top 0.1 percent decile and with many HCCs).\63\ In
our additional analysis of the capitation sample, we also observed the
same general trends of underprediction of the lowest-risk and highest-
risk enrollees. Further, we evaluated whether the proposed 2023 model
specification changes produced similar improvements in addressing the
underprediction of these subpopulations in the capitation sample as the
recalibration sample and found that the proposed 2023 model
specification changes resulted in similar prediction improvements for
both samples. Therefore, we do not believe that the exclusion of
enrollees with capitated claims biased the analysis or results, and we
do not believe that their inclusion would have meaningfully impacted
our findings.
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\62\ The calibration sample is the same sample used for the
analysis in the 2021 RA Technical Paper, which excludes capitated
enrollees.
\63\ Figures 1.2 and 1.3. HHS-Operated Risk Adjustment Technical
Paper on Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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Comment: Some commenters recommended additional information and
analysis on the proposed interacted HCC counts model change
specification, such as its effect on calculations under the State
payment transfer formula for issuers that tend to attract healthier
enrollees, whether small sample sizes were an issue, and an evaluation
of whether removing the interacted severity HCCs would improve PLRS PRs
more than attaching counts to those HCCs. One of the commenters
suggested that it is difficult to assess the net effect of the
interacted HCC count proposals on risk adjustment State transfers
selection incentives. This commenter further noted they would oppose
the proposal if this proposed change reduced State transfers paid by
issuers with lower than average risk scores.
Response: We provided extensive information on the interacted HCC
counts model specification changes and the estimated impact on State
transfers in rulemakings,\64\ the 2021 RA Technical Paper,\65\ and the
HHS-Operated Risk Adjustment Technical Paper on Possible Model Changes:
Summary Results for Transfer Simulations.\66\ In the transfer
simulation report, we provided summary-level information on the
estimated combined
[[Page 27228]]
impact of the proposed model specification changes on the calculation
of plan-level risk scores and State transfers. Issuers that
participated in the simulation also received detailed issuer-specific
data, including risk score and transfer estimates for the simulated
results.
---------------------------------------------------------------------------
\64\ 85 FR 78583 through 78586 and 87 FR 598 through 605.
\65\ HHS-Operated Risk Adjustment Technical Paper on Possible
Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\66\ HHS-Operated Risk Adjustment Technical Paper on Possible
Model Changes: Summary Results for Transfer Simulations. (December
28, 2021). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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While we acknowledge stakeholders' requests for additional
analysis, such as the effect of the interacted HCC counts model
specification updates on transfer calculations for issuers who tend to
attract healthier enrollees, operational and technological limitations
within both HHS and the issuer community limited capacity to conduct
additional simulations. Despite these limitations in being able to
conduct additional simulations, we were able to produce and share
evidence and detailed analyses in support of the proposed interacted
HCC counts model specification.\67\ For example, as described in the
2021 RA Technical Paper, the interacted HCC counts model specification
improved prediction for the highest-risk enrollees.\68\
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\67\ Figures 4.2, 4.3, and 4.4 in the HHS-Operated Risk
Adjustment Technical Paper on Possible Model Changes demonstrate the
improvements in PRs of the interacted HCC counts and HCC-contingent
EDFs. HHS-Operated Risk Adjustment Technical Paper on Possible Model
Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\68\ Section 4.4. HHS-Operated Risk Adjustment Technical Paper
on Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------
We also acknowledge the request to evaluate the impact of removing
the current severity and transplant indicators against the proposed
interacted HCC counts model specification. However, we do not believe
this approach warrants further evaluation because we did not propose to
entirely remove the indicators without replacing them. Additionally,
the current severity illness indicators improve the current adult
models' prediction of high-risk enrollees, so we do not believe we
should consider completely removing the severity illness terms from the
models. We reiterate that the proposed interacted HCC counts model
specification further improves the adult and child models' predictive
power beyond the adult models' current severity illness indicators.
Therefore, we do not believe that we should further consider removing
the severity illness indicators and not replacing them.
We recognized that one potential concern with this model
specification change was that the severity- and transplant-HCC-count-
interaction factor coefficients might be based on small sample sizes.
Therefore, 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 individually 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+ 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 are comparable to the sample sizes
used for individual HCCs in the adult and child risk adjustment models.
iii. Changes to the Adult Model Enrollment Duration Factors \69\
---------------------------------------------------------------------------
\69\ 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 through 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. Therefore, we proposed to continue to apply
enrollment duration factors to the adult models only.
---------------------------------------------------------------------------
In the proposed rule, we proposed to change the enrollment duration
factors in the adult risk adjustment models to improve prediction for
partial-year adult enrollees with and without HCCs (87 FR 603 through
604). Although the values 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 in the 2018 Payment Notice
(81 FR 94071 through 94074).
As described in prior rules and the 2021 RA Technical Paper, we
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.\70\ \71\
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\70\ 85 FR 29164 at 29188 through 29190.; 86 FR 24140 at 24151
through 24162; and the HHS-Operated Risk Adjustment Technical Paper
on Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\71\ When we refer to the enrollees with and without HCCs, we
are referring to enrollees without payment HCCs.
---------------------------------------------------------------------------
Therefore, beginning with the 2023 benefit year, we proposed 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. We explained that under this
proposal 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.
We solicited comments on the proposed changes to the enrollment
duration factors for the adult models.
After reviewing the public comments, we are finalizing the proposal
to replace the current enrollment duration factors in the adult models
with HCC-contingent enrollment duration factors as proposed. As such,
beginning with the 2023 benefit year, there will no longer be
enrollment duration factors for adult enrollees without HCCs starting
with the 2023 benefit year, nor will there be enrollment duration
factors for adult enrollees with HCCs and more than 6 months of
enrollment.
We summarize and respond to public comments received on proposed
changes to the adult model enrollment duration factors below.
Comment: Most commenters supported the proposed changes to the
enrollment duration factors for the adult models. Many of these
commenters asserted that the proposed changes would improve model
prediction. One commenter noted that the HCC-contingent enrollment
duration factors would solve the majority of model prediction issues
even in the absence of
[[Page 27229]]
the adoption of the proposed two-stage weighted model and interacted
HCC counts model specification updates. Several commenters also stated
that the proposed HCC-contingent enrollment duration factors would
reduce issuers' incentives for risk selection.
Response: We are finalizing the replacement of the current monthly
enrollment duration factors of up to 11 months for all enrollees in the
adult models with new monthly enrollment duration factors of up to 6
months that would apply only to enrollees in the adult models with
HCCs. As previously explained, our analysis of the current adult model
enrollment duration factors found that plan liability was
underpredicted for partial-year adult enrollees with HCCs and
overpredicted for partial-year adult enrollees without HCCs.\72\ This
targeted refinement was developed in response to this finding and will
improve prediction for partial-year adult enrollees with and without
HCCs. Additionally, HHS agrees that the enrollment duration factor
changes will reduce issuers' incentives for risk selection by improving
model prediction.
---------------------------------------------------------------------------
\72\ HHS-Operated Risk Adjustment Technical Paper on Possible
Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------
Comment: Several commenters focused on the intersection of special
enrollment periods (SEP) and these proposed changes. Some commenters
suggested that the proposed enrollment duration factor updates would
mitigate the impact of the recent access to SEPs enhanced during the
2020 and 2021 benefit years due to the COVID-19 PHE and ARP,\73\ which
changed the SEP enrollee pool and increased opportunities for adverse
selection. One of these commenters noted the importance of predictive
accuracy for 1 to 6-month enrollees as Exchanges on the Federal
platform and State Exchanges expand plan selection options during SEP
enrollments. Another commenter noted HHS' analysis of the proposed HCC-
contingent duration factors is not representative of the current SEP
landscape and recommended additional analysis before the proposed
enrollment duration factor updates are implemented.
---------------------------------------------------------------------------
\73\ See, for example, HHS Announces Marketplace Special
Enrollment Period for COVID-19 Public Health Emergency. (2021,
January 28). CMS. https://www.hhs.gov/about/news/2021/01/28/hhs-announces-marketplace-special-enrollment-period-for-covid-19-public-health-emergency.html.
---------------------------------------------------------------------------
Response: We appreciate the comments on the intersection of SEP
opportunities and the proposed updates to the adult model enrollment
duration factors. We agree with commenters that the proposed updates
would mitigate the impact of the recent SEPs enhanced during the 2020
and 2021 benefit years due to the COVID-19 PHE and ARP on potential
opportunities for adverse selection, but note that these updates to the
enrollment duration factors will not be implemented until the 2023
benefit year. We also agree with the commenter on the importance of
predictive accuracy for partial-year enrollees and believe that these
changes will improve the current models' predictive accuracy for
partial-year adult enrollees with and without HCCs.
As noted above, we are finalizing the changes to the adult model
enrollment duration factors as proposed and will implement the new
factors beginning with the 2023 benefit year adult models. To develop
the 2023 benefit year risk adjustment models, we used the 2017, 2018,
and 2019 enrollee-level EDGE data, as these datasets were the 3 most
recent consecutive years of enrollee-level EDGE data that were
available at the time we incorporated the data in the draft
recalibrated coefficients published in the proposed rule. Therefore, we
believe that the data years that we used to develop the HCC-contingent
enrollment duration factors are the most appropriate data years
available at this time for purposes of analyzing the proposal to adopt
these changes beginning with the 2023 benefit year and that further
analysis is not required at this time. As discussed elsewhere in this
rule, we are still assessing whether to use the 2020 enrollee-level
EDGE for model recalibration in the future, and we do not have 2021
benefit year enrollee-level EDGE yet.\74\ As such, we have not yet been
able to analyze the impact of the most recent SEP changes. However, HHS
remains committed to ongoing analysis of these issues and intends to
study the impact of the new factors once implemented.
---------------------------------------------------------------------------
\74\ See 45 CFR 153.730. Since April 30, 2022, falls on a
weekend, CMS will exercise enforcement discretion to shift the
deadline for submission of final 2021 benefit year risk adjustment
data to May 2, 2022.
---------------------------------------------------------------------------
Comment: A few commenters expressed concerns that the proposed HCC-
contingent enrollment duration factors would negatively impact the
small group market or that the changes would not align with small group
market enrollment renewal patterns (for example, non-calendar year
coverage). One commenter that opposed the adoption of the proposed
changes stated that eliminating enrollment duration factors for non-HCC
enrollees would disincentivize issuers from taking on new small group
employers in the fourth quarter. Other commenters that supported the
proposed enrollment duration factors changes noted general concerns
that the proposed updates to the enrollment duration factors may
negatively impact the small group market.
Response: We explored partial-year enrollment patterns between the
individual \75\ and small group markets as part of the consideration of
updates to the enrollment duration factors for the risk adjustment
adult models. In the 2021 Payment Notice (85 FR 29189), we shared our
preliminary analysis of the 2017 enrollee-level EDGE dataset found
separate enrollment duration factors by market in the adult models
could be warranted; therefore, we continued to study these issues as
additional enrollee-level EDGE data became available. Our analysis of
partial-year enrollment using the 2018 enrollee-level EDGE dataset,
which occurred alongside our development of the proposed HCC-contingent
enrollment duration factors in the proposed 2022 Payment Notice, did
not find a meaningful distinction in relative costs between markets on
average once the proposed enrollment duration factors of up to 6 months
for adult enrollees with HCCs were implemented.\76\ Even though reasons
for and patterns of partial-year enrollment differ by market, we
concluded that the patterns most relevant for predicting cost (for
example, how enrollment duration relates to cost conditional on the
presence of HCCs) were the same for both markets.\77\ Therefore, we
determined it would not be necessary to introduce market-specific
factors if the proposed HCC-contingent enrollment duration factors were
adopted in place of the existing enrollment duration factors. We also
explained that if the HCC-contingent factors were to vary by market,
the factors for both markets would generally be very similar, which
would add little value to the models while adding additional
complexity.\78\ Therefore, we proposed the adoption of
[[Page 27230]]
the same HCC-contingent factors for both markets.
---------------------------------------------------------------------------
\75\ Section 3. HHS-Operated Risk Adjustment Technical Paper on
Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf. In the
enrollee-level EDGE dataset, merged market enrollees are assigned to
the individual or small group market indicator based on their plan.
\76\ Section 3.3.2. HHS-Operated Risk Adjustment Technical Paper
on Possible Model Changes (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf. See also 86
FR 24161.
\77\ Ibid.
\78\ Section 3.3.2. HHS-Operated Risk Adjustment Technical Paper
on Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------
In response to comments, we again considered whether the HCC-
contingent enrollment duration factors could have negative impacts on
small group market issuers, such as on those that offer non-calendar
year coverage and take on new business later in the year. Our continued
consideration of these issues did not find evidence of such negative
impacts.\79\ More specifically, while we recognize there are likely
some cases where a partial-year enrollee only receives risk adjustment
ineligible services, our analysis found no evidence that it is
associated with meaningful underpayment in either the individual or
small group market. In other words, on average, costs are sufficiently
low for partial-year enrollees with no HCCs that even a risk score
based only on demographic factors would generally overpredict plan
liability.\80\ Commenters did not provide data or other information in
support of the general assertions or concerns about potential impacts
on the small group market and have not otherwise refuted the
conclusions drawn from our analysis of available enrollee-level EDGE
data. Therefore, we continue to believe it is appropriate to finalize
and apply the proposed changes to the adult model enrollment duration
factors to both the individual and small group (including merged)
markets and to not pursue factors that vary by market. For the reasons
outlined above, we also believe that the presumed negative impact on
new business in the small group market would be limited, and the
guaranteed availability provisions, which require health insurance
issuers offering non-grandfathered coverage in the individual or small
group market to accept every individual and employer in the State that
applies for such coverage unless an exception applies, further protects
against issuers declining to take on new small group employers.
---------------------------------------------------------------------------
\79\ Section 3.4. HHS-Operated Risk Adjustment Technical Paper
on Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\80\ Ibid.
---------------------------------------------------------------------------
Comment: One commenter stated that they were against limiting
enrollment duration factors to up to 6-month enrollees and would
support the proposed changes if the upper limit for the factors was
extended to 9 months. The commenter noted this change to the upper
limit would better account for renewal patterns in the small group
market.
Response: While we considered other enrollment duration factor
structures, we proposed and are finalizing a 6-month limit to the
enrollment duration factors because we found that the monthly average
cost variation by the 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 prediction for the
adult models.\81\ Specifically, we found that these coefficients would
have been close to 0 (and in some cases negative), which means they
would not have contributed much to the overall risk score for enrollees
or would have had to be constrained to 0 in the risk adjustment adult
models. Given this analysis and in an effort to limit the number of
factors in the models, we are finalizing the HCC-contingent enrollment
duration factors for up to 6 months as proposed.
---------------------------------------------------------------------------
\81\ Section 3.2. HHS-Operated Risk Adjustment Technical Paper
on Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------
Additionally, as explained above, we continue to believe it is
appropriate to finalize and apply the proposed changes to the adult
model enrollment duration factors to the small group market and to not
pursue factors that vary by market.
iv. Combined Impact of the Model Changes
As discussed in detail above, after reviewing the public comments
on the proposed risk adjustment model changes, we are finalizing the
addition of the interacted HCC counts factors in the adult and child
models, the removal of the current adult model severity illness
factors, and the replacement of the existing enrollment duration
factors with the HCC-contingent enrollment duration factors in the
adult models, as proposed. Our analysis of the proposed interacted HCC
counts factors combined with the proposed HCC-contingent enrollment
duration factors in the adult models significantly improves predictions
across most deciles and HCC counts for the very highest-risk enrollees,
as well as the lowest-risk enrollees without HCCs.\82\ However, we are
not finalizing the proposal to add a two-stage weighted model
specification to model recalibrations.
---------------------------------------------------------------------------
\82\ Figure 4.2. HHS-Operated Risk Adjustment Technical Paper on
Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------
We summarized and responded to public comments received on proposed
model specifications updates in the above sections.
c. Pricing Adjustment for the Hepatitis C Drugs
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 605), for the 2023 benefit year, we proposed
to continue applying a market pricing adjustment to the plan liability
associated with Hepatitis C drugs in the risk adjustment models.\83\
---------------------------------------------------------------------------
\83\ 84 FR 17463 through 17466.
---------------------------------------------------------------------------
We sought comment on this proposal.
After reviewing the public comments, we are finalizing this
proposal 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 summarize and respond to public comments received on the pricing
adjustment for Hepatitis C drugs below.
Comment: Most commenters supported the Hepatitis C pricing
adjustment. One commenter noted that the pricing adjustment ensures HHS
is applying the most accurate data, while protecting against issuers
that might seek to influence provider prescribing patterns to the
issuers' benefit. Another commenter noted that without the Hepatitis C
pricing adjustment, issuers would be incentivized to focus on only a
subset of enrollees needing treatment if they can trigger an increase
in an enrollee's risk score that is higher than the actual plan
liability of the drug claim.
Conversely, a few commenters expressed concerns about the Hepatitis
C drugs pricing adjustment. These commenters asserted that the
professional independence and ethical standards of providers would
prevent them from prescribing drugs that they did not believe were
medically necessary and appropriate, reducing the potential for issuers
to game the model. These commenters were concerned about
undercompensating issuers for enrollees with serious chronic
conditions, which would incentivize issuers to avoid these enrollees.
They encouraged HHS to evaluate the models continually to ensure they
fully capture the cost of the current standard of care for conditions
in the models. Additionally, one commenter cautioned against reducing
the coefficient more than the expected decrease, which the commenter
explained would incentivize issuers to reduce the availability of the
treatment. This commenter also recommended that HHS clarify the data
source and approach it is using to constrain the Hepatitis C RXC
[[Page 27231]]
coefficient. Finally, one commenter expressed concern that constraining
the Hepatitis C RXC coefficient would undermine recent progress to
treat Hepatitis C infections.
Response: We continue to believe that the Hepatitis C pricing
adjustment is appropriate at this time, will help avoid perverse
incentives, and will lead to Hepatitis C RXC coefficients that better
reflect anticipated actual 2023 benefit year plan liability associated
with Hepatitis C drugs. Specifically, the purpose of the Hepatitis C
pricing adjustment is to address 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 that present a risk of creating
perverse incentives by overcompensating issuers. We reassessed the
pricing adjustment for the Hepatitis C RXC for the 2023 benefit year
model recalibration and found that the data used for the 2023 benefit
year risk adjustment model recalibration (that is, 2017, 2018, and 2019
enrollee-level EDGE data) still does not account for the significant
pricing changes that we have observed for the Hepatitis C drugs due to
the introduction of newer and cheaper Hepatitis C drugs. Therefore, the
data that will be used to recalibrate the models needs to be adjusted
because it does not precisely reflect the average cost of Hepatitis C
treatments expected in the 2023 benefit year.
In making this determination, we consulted our clinical and
actuarial experts, and analyzed the most recent enrollee-level EDGE
data available to further assess the changing costs associated with
Hepatitis C enrollees. Due to the high cost of these drugs reflected in
the 2017, 2018, and 2019 enrollee-level EDGE data, without a pricing
adjustment to plan liability, issuers would be overcompensated for the
Hepatitis C RXC in the 2023 benefit year, and they could be
incentivized to encourage overprescribing practices and game risk
adjustment such that the issuer's risk adjustment payment is increased
or risk adjustment charge is decreased. We also recognize concerns that
applying a pricing adjustment that would reduce the coefficient for the
Hepatitis C RXC by more than the expected decrease in costs could
incentivize issuers to reduce the availability of the treatment.
However, we believe that the Hepatitis C pricing adjustment accurately
captures the costs of Hepatitis C drugs for the applicable risk
adjustment benefit year using the most recently available data,
balances the need to deter gaming practices with the need to ensure
that issuers are adequately compensated, and does not undermine recent
progress in the treatment of Hepatitis C.
Additionally, we recognize the important role that the ethical
standards of providers play in preventing overprescribing of drugs that
they do not believe are medically necessary and appropriate, but we
believe that the Hepatitis C pricing adjustment is the most effective
way to protect against perverse incentives that could affect
prescribing patterns. Furthermore, while we appreciate commenters'
concerns about undercompensating issuers for enrollees with serious
chronic conditions, HHS is adopting several proposals in this
rulemaking to address the adult and child models' underprediction for
enrollees with many HCCs.\84\ Specifically, we finalized the interacted
HCC counts and HCC-contingent enrollment duration factors model
specifications to improve model prediction for the higher risk
enrollees and ensure that issuers are being accurately compensated for
these enrollees.\85\ We intend to continue to reassess this pricing
adjustment as part of future benefit years' model recalibrations using
additional years of available enrollee-level EDGE data.
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\84\ Figure 1.3. HHS-Operated Risk Adjustment Technical Paper on
Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\85\ The Interacted HCC Counts and HCC-contingent enrollment
duration factors also improve the models' predictive accuracy for
the lower risk deciles. See, for example, Figure 4.2. HHS-Operated
Risk Adjustment Technical Paper on Possible Model Changes. (2021,
October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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d. Risk Adjustment RXC Mapping for Recalibration
i. Inclusion and Exclusion Criteria for Drugs in RXC Mapping and
Recalibration
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 605), we provided an overview of the
inclusion and exclusion criteria HHS uses to identify drugs for mapping
to RXCs in the adult risk adjustment models, reviewed 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 outlined the criteria that warrant consideration
for changes to the incorporation (or exclusion) of particular drugs
from the RXC mappings in future benefit year recalibrations. We also
proposed 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 information on 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).\86\ 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.\87\ As explained in the proposed rule, we had
been using the most recent RXC mappings (RXCUIs that map to RXCs) that
were available when we first processed the enrollee-level EDGE data for
a benefit year for recalibration of the adult risk adjustment
models.\88\ 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 \89\ and the Q2 2019 mapping document
for 2018 for recalibration of the adult risk adjustment models' RXC
factors.
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\86\ See, for example, 81 FR 94074 through 94080.
\87\ 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. (2017, September 18).
CMS. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Draft-RxC-Crosswalk-Memo-9-18-17.pdf.
\88\ RXCUIs differ by chemical (drug ingredient), strength, and
dose form, but not by manufacturer or package size. This means that
RXCUIs describe the same drugs year-over-year, even as the
underlying NDCs and HCPCs change due to changes in labelers, which
is why it is possible to apply different mappings to different
years. For further information, see RxNorm Overview. (2022, January
3). NIH. https://www.nlm.nih.gov/research/umls/rxnorm/overview.html.
\89\ 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.
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As noted in the 2022 Payment Notice (86 FR 26164), we also
continuously
[[Page 27232]]
assess the availability of drugs in the market and the associated
mapping of those drugs to RXCs in the adult risk adjustment models.
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 the pharmacological
properties and prescribing patterns are consistent with treatment of a
particular condition (also evaluated through clinical expert review),
and (4) stakeholder feedback.\90\ As a result of this ongoing
assessment, we 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 ``Do It Yourself'' (DIY) software and EDGE
reference data, to ensure drugs are appropriately mapped to RXCs. 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,\91\ 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).\92\
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\90\ 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. (2017, September 18).
CMS. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Draft-RxC-Crosswalk-Memo-9-18-17.pdf.
\91\ The January 7, 2022 version of the DIY software is
available at 2021 Benefit Year Risk Adjustment Updated HHS-Developed
Risk Adjustment Model Algorithm ``Do It Yourself (DIY)'' Software.
(2022). CMS.
\92\ Available at Distributed Data Collection. REGTAP.
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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 the proposed rule, we proposed 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 proposed to recalibrate the adult risk adjustment models using each
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 year
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 appropriately mapped to RXCs.
We proposed 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 proposed 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 proposed 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 generally hold those mappings
constant when using the 2018 and 2019 enrollee-level EDGE data years in
future benefit year model recalibrations (except under the extenuating
circumstances that are described in the next section that can result in
targeted changes to RXC mappings)--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.\93\ The purpose of maintaining a
specific version of the same RXC mapping document for future
recalibrations 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 are likely to be
applied to that data year in the final DIY software release before it
is used for recalibration.
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\93\ 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.
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For purposes of the 2023 benefit year recalibration, we proposed 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 proposed this approach
for the 2017 benefit year enrollee-level EDGE data because the RXCs
were still under development in 2017, and were not included in the
adult risk adjustment models until 2018; \94\ therefore, no RXC
mappings existed for the 2017 benefit year. Thus, we proposed to use
the Q2 2018 RXC mapping document for the 2017 benefit year enrollee-
level EDGE data for 2023 model recalibration, consistent with the
mapping used for processing the 2017 data for recalibration of the 2021
and 2022 adult models. We sought comment on this proposal.
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\94\ See 81 FR 94075.
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We summarize and respond to public comments received on the
proposals related to the RXC mapping document used for the annual
recalibration of the adult models, along with the comments and
responses on the other risk adjustment RXC mapping proposals.
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
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
[[Page 27233]]
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.\95\
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 \96\); (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 proposed rule (87 FR 608
through 609), we illustrated cases where we believe extenuating
circumstances existed and how we evaluated whether to make targeted
changes to RXC mappings due to those extenuating circumstances as part
of the annual recalibration process for the 2023 benefit year adult
models. In particular, we considered the cases of RXCUI to RXC mapping
of Descovy[supreg] and hydroxychloroquine sulfate. For Descovy[supreg],
we did not propose to make an exception to remove Descovy[supreg] from
mapping to RXC 01 in 2017, 2018 or 2019 benefit year enrollee-level
EDGE datasets used for the 2023 benefit year recalibration of the adult
models. For hydroxychloroquine sulfate, we proposed 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 the one used for the 2022 benefit year risk
adjustment model recalibration and would instead 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 explained that 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.\97\
For a full discussion of these examples, see the HHS Notice of Benefit
and Payment Parameters for 2023 proposed rule (87 FR 608 through 609).
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\95\ For example, in reviewing drugs removed in Q1 2020, the
average effect of the removal of a single therapeutic drug
ingredient was an approximate decrease of 0.14 percent in total
pharmacy claims spending among RXC drugs. In reviewing drugs removed
in Q1 2021, the average effect of the removal of a single non-
hydroxychloroquine therapeutic drug ingredient was an approximate
decrease of 0.68 percent in total pharmacy claims spending among RXC
drugs.
\96\ See, for example, 86 FR 24180.
\97\ 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. See
85 FR 78582 through 78583.
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After reviewing the public comments on the various risk adjustment
RXC proposals, we are finalizing using the Q4 RXC mapping document for
each benefit year of recalibration data, as proposed. Additionally, as
proposed, we will remove hydroxychloroquine sulfate in the 2023 benefit
year model recalibration and will not 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 summarize and respond to public comments received on all of the
risk adjustment recalibration RXC mapping proposals below.
Comment: Several commenters supported our RXC mapping proposal to
recalibrate the 2023 benefit year models and future model years using
the final, Q4 RXC Crosswalk associated with the applicable EDGE data
year, with the exception of the 2017 enrollee-level EDGE data year, for
which we would use the most recent RXC mapping document that was
available when we first processed the 2017 enrollee-level EDGE data (Q2
2018). Those supporting comments noted that the changes improve the
risk adjustment models and will align condition identification
experienced in the data year with concurrent relevance of particular
drugs for each RXC. These commenters appreciated the increased
transparency into the approach HHS takes to RXC mapping noting it would
allow stakeholders to plan for downstream implications of changes to
RXC mapping.
A few commenters requested that HHS provide a technical paper on
the impact of the different approaches outlined in the RXC mapping
proposal. One commenter requested that HHS provide a technical paper
with analysis on the impact of the different approaches for identifying
the RXC mapping document to use for the annual recalibration of the
adult models, but stated that in lieu of that analysis, the commenter
would support the adoption of the alternative approach to use the
latest RXC mapping available at the time of recalibration as it would
most closely aligns costs between recalibration data and current
benefit year data.
Response: We appreciate the support for the proposal to recalibrate
the adult risk adjustment model using the final, Q4 RXC Crosswalk
associated with the applicable EDGE data year. Recalibrating the adult
risk adjustment models using the final, Q4 RXC mapping document that
was applicable for each benefit year of data that is included in the
applicable benefit year's model recalibration will ensure that we are
capturing the utilization and costs observed for the underlying drugs
in use in that year for the condition. We are finalizing, as proposed,
implementation of this approach beginning with the 2023 benefit year
recalibration of the adult models, with an exception for the 2017
enrollee-level EDGE data year, for which we will 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 will generally
hold these mappings constant when using the 2018 and 2019 enrollee-
level EDGE data years in future benefit year model recalibrations
(except under the extenuating circumstances that are described
previously in this section that can result in targeted changes to RXC
mappings)--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.
We also agree that this approach will improve issuers' ability to
plan for downstream implications of changes to RXC mapping as it will
provide 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. We believe that the benefits of limiting
the volatility of some coefficients from year-to-year, ensuring that we
are capturing the utilization and costs observed for the underlying
drugs in use during the data year, and improving issuers' ability to
plan for downstream implications of changes to RXC mapping outweigh the
benefits of the alternative approach of using the latest RXC mapping
available at the time of recalibration. Based on the detailed
[[Page 27234]]
comments received in response to the proposals for identifying the
version of the RXC mapping document used for the annual recalibration
of the adult models, we do not believe that additional analysis or a
technical paper of the approaches to identifying the RXC mapping
document for recalibration purposes is needed at this time.
Comment: Several commenters inquired about the timing of RXC
Crosswalk changes that occur outside of the model recalibration
process. Some requested notification of RXC Crosswalk changes for drugs
that could have large impacts on risk adjustment transfers in the
spring prior to the applicable benefit year. Others requested HHS
finalize and announce the RXC Crosswalk changes that occur outside of
the model recalibration process for an applicable benefit year no later
than the December preceding the applicable benefit year, examine
opportunities to identify and release such changes ahead of applicable
State Exchange pricing deadlines, and communicate the final mappings
prior to the end of the applicable benefit year. For changes to the RXC
mappings that occur during the risk adjustment benefit year, one
commenter suggested that HHS consider the relative benefit of removing
an RXC at a late stage (that is, the fourth quarter of data submission)
relative to potential impact on market stability and financial outcomes
for issuers. Another commenter asserted that the timely inclusion of
new drugs in the model will help ensure the incentives created by risk
adjustment do not contribute to delays in the coverage of new
treatments and recommended HHS monitor trends in drug coverage on risk
adjustment plans to ensure that specific RXC mapping updates are not
negatively impacting patient access to needed medications.
Response: We acknowledge commenters' desire to receive RXC
Crosswalk updates as early as possible in order to fit rating
timetables and reduce uncertainty. We clarify that, as part of our
regular Crosswalk review process, we make regular changes that do not
typically meaningfully impact coefficients and we release this
information at its earliest availability through DIY software updates
posted on the CCIIO website and EDGE global reference updates published
through REGTAP.\98\ However, we have found that there may be a
relatively small number of drugs that require additional consideration
given changes that can occur between the data year and the applicable
benefit year of risk adjustment. As such, we continue to believe that
it is appropriate to update the risk adjustment mapping of RXCUIs to
RXCs, along with the list of NDCs and HCPCS that Crosswalk to each
RXCUI, throughout a benefit year of risk adjustment, while also
retaining the flexibility to make targeted removals of drugs from the
RXC Crosswalk and mapping document during the annual recalibration
process.
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\98\ CMS Registration for Technical Assistance Portal (REGTAP),
available at https://regtap.cms.gov/index.php.
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Based on our experience since the incorporation of RXCs into adult
risk adjustment models in the 2018 benefit year, the removal of an
RXCUI from the RXC mappings (and the associated removal of the NDCs and
HCPCS associated with that RXCUI) has not typically been material to
recalibration because most drug removals are not associated with
utilization and cost levels that would have a meaningful impact on
model coefficients. However, in extenuating circumstances where HHS
believes there will be a significant impact, we will consider whether
targeted RXC mapping changes for recalibration are necessary or
appropriate, using the criteria outlined above.
As far as our regular crosswalk review process, we acknowledge
commenter concerns over the relative benefit of late stage changes to
RXC mappings relative to potential impact on market stability and
financial outcomes for issuers, but we continue to believe that it is
appropriate to update the risk adjustment mapping of RXCUIs to RXCs
throughout a benefit year of risk adjustment. We also note that we
rarely remove entire RXC categories from the risk adjustment models.
Since the RXCs were introduced in 2018, only two RXC categories have
been removed altogether and that type of structural change to the RXC
factors was pursued through notice-and-comment rulemaking (83 FR
16941).
Comment: Some commenters requested clarification on how drugs with
multiple indications are treated in considering changes to RXC mapping
changes that occur outside the annual recalibration process and more
clear criteria for these types of drug changes.
Response: We provided an explanation of the criteria used to
develop the RXCUI to RXC Crosswalk in the 2017 Creation of the 2018
Benefit Year HHS-Operated Risk Adjustment Adult Models Draft
Prescription Drug (RXCUIs) to HHS Drug Classes (RXCs) Crosswalk
Memorandum.\99\ In short, drugs with multiple indications are evaluated
by clinical experts to determine if they have reliable specificity to
the RXC-associated diagnoses. New drugs with multiple indications that
are all associated with diagnoses in the drug-diagnosis pairs that a
particular RXC represents are included in that RXC. Drugs associated
with the drug-diagnosis pairs of multiple RXCs, or with diagnoses both
paired and unpaired with an RXC, can be evaluated against existing
drugs with the same active ingredients. Alternatively, these drugs need
clinical evidence that the RXC-associated diagnosis is the primary
intended clinical application. In the absence of evidence, such drugs
with multiple indications would not be mapped to an RXC.
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\99\ Creation of the 2018 Benefit Year HHS-Operated Risk
Adjustment Adult Models Draft Prescription Drug (RXCUIs) to HHS Drug
Classes (RXCs) Crosswalk. (2017, September 18). CMS. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Draft-RxC-Crosswalk-Memo-9-18-17.pdf.
---------------------------------------------------------------------------
Comment: Some commenters requested a separate RXC for pre-exposure
prophylaxis (PrEP).
[[Page 27235]]
Response: We did not propose and are not finalizing the addition of
PrEP as an RXC to the adult risk adjustment models. As explained in the
2021 Payment Notice (85 FR 29187), we chose not to propose
incorporating PrEP as an RXC because, as a general principle, RXCs are
incorporated into the HHS risk adjustment adult models to impute a
missing diagnosis or indicate severity of a diagnosis.\100\ Since the
use of PrEP is currently recommended as a preventive service for
persons who are not infected with HIV and are at high risk of HIV
infection, the use of PrEP does not adequately represent risk due to an
active condition, and would be inconsistent with this principle to add
it as an RXC at this time. However, we incorporate 100 percent of the
PrEP costs for enrollees without HIV diagnosis or treatment in the
simulation of plan liability for purposes of recalibrating the adult
and child models. We further note that enrollees in risk adjustment
covered plans that use PrEP drugs in combination with another HIV
treatment drug that maps to RXC 01 will still receive credit for RXC 01
in the 2023 benefit year of risk adjustment. We will continue to
explore these issues and the potential inclusion of PrEP as an RXC in
future benefit years, as may be appropriate.
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\100\ See 81 FR 94058 at 94075. See also March 31, 2016, HHS-
Operated Risk Adjustment Methodology Meeting Questions & Answers.
(2016, June 8). CMS. https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/RA-OnsiteQA-060816.pdf.
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Comment: One commenter supported the targeted removal of
hydroxychloroquine sulfate from the data used for recalibration and
supported our decision not to effectuate a targeted removal of
Descovy[supreg], one commenter supported the removal of the mapping of
hydroxychloroquine sulfate to an RXC, and one commenter generally
asserted that Descovy[supreg] should not be mapped to RXC 01.
Response: We appreciate comments on our discussion of the treatment
of hydroxychloroquine sulfate and Descovy[supreg]. For the 2023 benefit
year, we are finalizing, as proposed, the removal of 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 recalibration of the adult risk adjustment models for the
2023 benefit year.\101\ In addition, we included Descovy[supreg] in the
mapping to RXC 01 (Anti-HIV Agents) for 2023 benefit year risk
adjustment model recalibration, as the benefits of maintaining this
mapping outweigh the benefits of removing it.
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\101\ The same concern was not present for the 2017 enrollee-
level EDGE dataset--the other data year that will be used for the
2023 benefit year adult model recalibration--because
hydroxychloroquine sulfate was not included in the RXC Crosswalk
until 2018.
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e. List of Factors to be Employed in the Risk Adjustment Models
Consistent with our approach in previous benefit years, we will
release the final 2023 benefit year coefficients in guidance after
publication of the final rule, as we were unable to finalize them in
time to publish in this final rule.\102\
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\102\ See 45 CFR 153.320(b)(1)(i).
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f. Cost-Sharing Reduction Adjustments
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 623), we proposed to continue including an
adjustment for the receipt of CSRs in the risk adjustment models in all
50 States and the District of Columbia. We explained that while we
continue to study and explore ways to update the CSR adjustments to
improve prediction for CSR enrollees,\103\ for the 2023 benefit year,
to maintain stability and certainty for issuers, we proposed to
maintain the CSR adjustment factors finalized in the 2019, 2020, 2021,
and 2022 Payment Notices.\104\ See Table 4. We also proposed to
continue to use a CSR adjustment factor of 1.12 for all Massachusetts
wrap-around plans in the risk adjustment PLRS calculation, as all of
Massachusetts' cost-sharing plan variations have AVs above 94
percent.\105\
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\103\ See Appendix A. HHS-Operated Risk Adjustment Technical
Paper on Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\104\ See 83 FR 16930 at 16953; 84 FR 17454 at 17478 through
17479; 85 FR 29164 at 29190; and 86 FR 24140 at 24181.
\105\ See 81 FR 12203 at 12228.
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We sought comment on these proposals.
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After reviewing the public comments, we are finalizing the CSR
adjustment factors as proposed. We summarize and respond to public
comments received on cost-sharing reduction adjustments below.
Comment: One commenter supported the use of CSR adjustment factor
of 1.12 for all Massachusetts wrap-around plans. Another commenter
noted that HHS should continue to evaluate the purpose and
appropriateness of the current CSR adjustment factors in light of
continued non-funding of CSR subsidies and the potential socioeconomic
health equity issues associated with the lower-than-anticipated induced
utilization level identified in the 2021 RA Technical Paper. Another
commenter recommended that HHS use a CSR-specific adult model that uses
CSR enrollees' paid claims.
Response: We are finalizing the CSR adjustment factors as proposed.
For the 2023 benefit year, we are maintaining the CSR adjustment
factors finalized in the 2019, 2020, 2021, and 2022 Payment Notices to
maintain stability and certainty for issuers. We did not propose and
are not finalizing the addition of a CSR-specific adult model that uses
CSR enrollees' paid claims. We agree continued study of the current CSR
adjustment factors is warranted. We intend to consider different
options for potential changes to the CSR factors for future benefit
years, including those outlined in the 2021 RA Technical Paper.\106\ We
would pursue any changes to the CSR adjustment factors in future
notice-and-comment rulemaking.
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\106\ See Section A.3. HHS-Operated Risk Adjustment Technical
Paper on Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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g. Model Performance Statistics
Each benefit year, to evaluate risk adjustment model performance,
we examined 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 HHS risk adjustment models, the R-squared statistic and
the PRs are in the range of published estimates for concurrent risk
adjustment models.\107\ Because we blend the coefficients from
separately solved models based on the 2017, 2018, and 2019 benefit
years' enrollee-level EDGE data, we publish the R-squared statistic for
each model separately to verify their statistical validity. We will
publish the final 2023 benefit year R-squared statistics with the final
2023 benefit year risk adjustment coefficients in guidance.
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\107\ See Hileman, G. & Spenser S. (2016). Accuracy of Claims-
Based Risk Scoring Models. Society of Actuaries.
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We did not receive any comments in response to the model
performance statistics discussion.
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.\108\ We
explained that under this approach, we will no longer republish these
formulas in future annual HHS notices of benefit and payment parameters
unless changes are being proposed. We did not propose any changes to
the formula in this rule and therefore are not republishing the
formulas in this rule. We will 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.\109\
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\108\ See 86 FR 24183 through 24186.
\109\ For an illustration and further details on the State
payment transfer formula, see 86 FR 24183 through 24186.
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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.\110\
We did not propose any changes to the high-cost risk pool parameters
for the 2023 benefit year; therefore, we will maintain the $1 million
threshold and 60 percent coinsurance rate.
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\110\ See 84 FR 17466 through 17468.
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We did not receive any comments in response to the overview of the
HHS risk adjustment methodology applicable to the 2023 benefit year.
4. Risk Adjustment State Flexibility Requests (Sec. 153.320(d))
We proposed to repeal the ability of States to request a reduction
in risk adjustment State transfers under Sec. 153.320(d) starting with
the 2024 benefit year, with an exception for States that have requested
such reductions in prior benefit years.\111\ We also published and
sought 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.
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\111\ 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. See 84 FR
17484 through 17485 and 85 FR 29193 through 29194. 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. See 86 FR 24187 through
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.\112\ 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. The State
asserted that its 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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\112\ 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 other than 2020 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
[[Page 27237]]
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 sought 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 were posted under the ``State
Flexibility Requests'' heading at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/index.html.
After reviewing the public comments and Alabama's supporting
documentation, we are approving a 25 percent reduction in Alabama's
individual market transfers and a 10 percent reduction in Alabama's
small group market transfers for the 2023 benefit year.
We summarize and respond to the public comments on Alabama's
requests for reduced risk adjustment transfers for the 2023 benefit
year below.
Comment: A few commenters supported Alabama's requests to reduce
risk adjustment transfers in its individual and small group markets for
the 2023 benefit year, stating the State is best suited to decide
whether an adjustment is needed within the market to maintain
competition and program integrity. Some of these commenters reiterated
the State's arguments that 2020 data for the small group market may be
unreliable due to the COVID-19 PHE. One commenter recommended that HHS
not use 2020 data as the sole basis for the determination and analysis
of the State's individual and small group market reduction requests.
Another commenter suggested that HHS should use other metrics besides
the de minimis threshold, such as the market share of issuers, to
assess the State flexibility requests.
However, other commenters opposed Alabama's 2023 reduction
requests, stating that the requested reductions would diminish the
effectiveness of the HHS-operated risk adjustment program. One
commenter who opposed the State's requests stated that there was no
mathematical reason why the presence of one large issuer would preclude
HHS-operated risk adjustment from functioning appropriately in Alabama.
Many commenters opposed to Alabama's requests expressed more general
concern with the transfer reduction request for the individual market
than the small group market, stating that the approval of the request
in the individual market would result in increased adverse selection.
Some commenters also asserted that the State did not meet its
burden to substantiate the requests under the criteria established in
Sec. 153.320(d). One of these commenters provided detailed data
suggesting the requested individual market transfer reduction would
increase premiums for one impacted Alabama issuer by an amount greater
than the de minimis threshold for the 2023 benefit year. This commenter
noted based on their experience from the 2022 benefit year (the first
year for which the State requested and HHS approved a 50 percent
reduction in risk adjustment transfers in the individual market), their
analysis showed a 50 percent reduction in the Alabama individual market
for the 2023 benefit year is likely to lead to an approximately 2
percent increase in their premiums.\113\
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\113\ BCBSAL Comment Letter. (2022, January 27). CMS. https://www.regulations.gov/comment/CMS-2021-0196-0195.
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Response: We continue to believe and recognize that risk adjustment
is critical to the proper functioning of the individual and small group
(including merged) markets, and we acknowledge commenters' concerns
that approving requested reductions in risk adjustment transfers could
impact the effectiveness of the risk adjustment program. Therefore, our
assessment of the relative benefits of allowing States to request a
reduction in risk adjustment transfers has been and continues to be on-
going, especially when a State always retains the option to operate its
own risk adjustment program if the State believes that the HHS-operated
risk adjustment program does not capture its State specific dynamics.
As discussed in detail below, we are finalizing amendments to Sec.
153.320(d) and the framework for State reduction requests \114\
applicable beginning with the 2024 benefit year; that is, beginning
with the 2024 benefit year, only prior participants can make such
requests and the requests will only be reviewed and approved under the
de minimis threshold framework and criteria. In addition, in future
rulemaking, we intend to propose to eliminate the prior participant
exception and fully repeal the State flexibility framework beginning
with the 2025 benefit year.
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\114\ As detailed further later, we are finalizing, as proposed,
the removal of 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's individual,
small group or merged market. We are also finalizing the amendments
that limit this flexibility to prior participants beginning with the
2024 benefit year.
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However, current regulation allows States to request to reduce risk
adjustment State transfers, and if the State's reduction request meets
the applicable standards under Sec. 153.320(d)(1)(i), HHS will approve
the requests, subject to Sec. 153.320(d)(4)(ii). Therefore, HHS'
review of and the approval process for the State flexibility requests
submitted by Alabama for the 2023 benefit year are guided by the
applicable framework and criteria established in regulation under Sec.
153.320(d)(4), which provides that HHS will approve State reduction
requests if HHS determines, based on a review of the State's
submission, along with relevant public comments and other relevant
factors, including the premium impact of the reduction, that (A) the
State-specific factors warrant an adjustment to risk adjustment
transfers and support the percentage reduction requested, or (B) the
State-specific factors warrant an adjustment to risk adjustment
transfers and the requested reduction would have a de minimis impact on
transfers for issuers that would receive reduced transfer payments.
Because Alabama's individual and small group market reduction requests
included analysis of the premium impacts of the proposed reduction
under the de minimis framework, HHS' review falls under the criteria
established under Sec. 153.320(d)(4)(i)(B); that is, HHS will approve
the State's reduction request if HHS determines that State-specific
rules 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. Therefore, so long as this policy remains in place,
it would not be appropriate to use other metrics besides the de minimis
threshold, such as the market share of issuers, to review Alabama's
2023 benefit year reduction requests. Additionally, we do not believe
that approving Alabama's 2023 benefit year requests will undermine the
efficiency of risk adjustment in the State. We believe the minimal
impact on transfers, which is further mitigated by the approval of
lower amounts than requested, is outweighed by the benefit of
continuing to support the State's efforts to regulate its market risk
pools
[[Page 27238]]
and leverage the flexibility currently available under Sec.
153.320(d).\115\
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\115\ As detailed elsewhere in this rule, we are finalizing the
amendments to the State flexibility to request transfer reduction
framework, including the creation of the prior participant
exception, as proposed, and intend to propose to fully repeal the
framework in a future rulemaking.
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For the individual market, the State provided information in
support of its 50 percent reduction request, including information on
the unique State-specific market dynamics that it identified as
warranting an adjustment to HHS calculated transfers and its analysis
that the reduction requested would have a de minimis impact on
necessary premium increases. HHS also received public comments in
opposition to Alabama's individual market request for the 2023 benefit
year. Specifically, an issuer in Alabama shared its data analysis
showing a 50 percent reduction would require it to increase its
premiums by more than 1 percent.\116\ In the comment, the issuer stated
that a 50 percent reduction would lead to an approximately 2 percent
increase in individual market premiums, which would fail to meet the de
minimis threshold established for State requests and HHS approval of
such requests under Sec. 153.320(d)(1)(iii) and (d)(4)(i)(B),
respectively.\117\ However, consistent with Sec. 153.320(d)(4)(ii),
HHS may approve a reduction amount that is lower than the amount
requested in circumstances where the supporting evidence and analysis
do not fully support the requested reduction amount.\118\ When
exercising this flexibility, HHS may assess other relevant factors,
including the premium impact of the transfer reduction for the
applicable State market risk pool.
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\116\ BCBSAL Comment Letter. (2022, January 28). CMS. https://www.regulations.gov/comment/CMS-2021-0196-0195.
\117\ As explained in the 2019 Payment Notice, to satisfy the de
minimis threshold applicable to these requests, the State request
must demonstrate the requested reduction in risk adjustment payments
would be so small for issuers who would receive risk adjustment
payments, that the reduction would have a de minimis effect on the
necessary premium increase to cover the affected issuer's or
issuers' reduced payments. See 83 FR 16955 through 16960.
\118\ See 45 CFR 153.320(d)(4)(ii).
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Following our consideration of the State's submission and public
comments, HHS determined that Alabama provided sufficient information
on the unique State-specific market dynamics that it identified as
warranting an adjustment to the HHS calculated transfers for the
State's individual market, but the supporting evidence and analysis did
not fully support the requested reduction amount. Therefore, HHS
assessed other relevant factors, including the premium impact of the
reduction, as well as relevant factors (for example, detailed
stakeholder analysis of the estimated impact of the reduction on price
positions \119\). This included consideration and comparison of the
data and supporting information submitted by the State and commenters,
as well as plan selection and premium data for Alabama. Based on that
assessment, HHS has determined that it would be appropriate to approve
a reduction amount that is lower than the amount requested, consistent
with Sec. 153.320(d)(4)(ii). More specifically, we began our review of
the State's individual market reduction request with consideration of
available 2020 data \120\ and the State's submitted analysis. We also
considered detailed stakeholder comments that provided tangible
evidence of changing price and market share positions, using 2021 and
2022 data, that raised significant questions about the impact a 50
percent reduction in individual market transfers would have on
premiums. These comments estimated a 50 percent reduction in individual
market transfers would lead to an approximately 2 percent premium
increase based on the stakeholder's experience and the impact of the
approval of the State's request to reduce 2022 benefit year individual
market transfers by 50 percent. Using open enrollment plan selection
and premium data for the individual market in Alabama from the same
benefit years as the commenter (2021 and 2022),\121\ HHS found the
commenter's assumptions regarding the approximately 2 percent increase
in premiums to be reasonable. Specifically, HHS' analysis supports the
commenters' assertions that a 50 percent reduction in 2023 benefit year
individual market transfers would lead to a greater than de minimis
increase in necessary premiums to cover the reduced payments. HHS is
therefore exercising the flexibility under Sec. 153.320(d)(4)(ii) to
approve Alabama's requested reduction to individual market transfers,
but at an amount lower than requested. To ensure the transfer reduction
meets the de minimis threshold and does not increase premiums by more
than 1 percent, we are approving a 25 percent reduction to 2023 benefit
year risk adjustment transfers in Alabama's individual market
(including the catastrophic and non-catastrophic risk pools).
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\119\ Commenter's analysis available at BCBSAL Comment Letter.
(2022, January 28). CMS. https://www.regulations.gov/comment/CMS-2021-0196-0195. Issuer specific BY 2021 and 2022 EDGE enrollment and
premium data are not publicly available. However, plan-level QHP
rates are available in the Health Insurance Exchange Public Use
Files. (2021, 2022). CMS. https://www.cms.gov/CCIIO/Resources/Data-Resources/marketplace-puf.
\120\ Similar to our approach in considering Alabama's reduction
requests in previous years, we considered the most recent data
available (for example, for the 2022 benefit year, we considered
2019 data as part of the analysis). This included consideration of
available EDGE premium and enrollment plan-level data and risk
adjustment transfer data.
\121\ Commenter's analysis available at BCBSAL Comment Letter.
(2022, January 28). CMS. https://www.regulations.gov/comment/CMS-2021-0196-0195. BY 2021 and 2022 open enrollment plan selection and
premium data are not publicly available. However, plan-level QHP
rates are available in the Health Insurance Exchange Public Use
Files. (2021, 2022). CMS. https://www.cms.gov/CCIIO/Resources/Data-Resources/marketplace-puf.
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For the small group market, the State's reduction request
acknowledges 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 using other prior
years of data 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. HHS also received comments expressing general
opposition to the State's small group market request for the 2023
benefit year.
Following our consideration of the State's submission and public
comments, HHS determined that Alabama provided sufficient information
on the unique State-specific market dynamics that it identified as
warranting an adjustment to the HHS calculated transfers for the
State's small group market, but the supporting evidence and analysis
did not fully support the requested reduction amount. Therefore, HHS
assessed other relevant factors, including the premium impact of the
transfer reduction for the applicable State market risk pool. This
included comparison of the data and supporting information submitted by
the State and commenters, as well as EDGE premium and enrollment plan-
level data for Alabama's small group market.\122\ It also included
consideration of the acknowledgement by Alabama in its request that a
50 percent reduction in 2023 benefit year small group market transfers
would exceed the applicable de minimis threshold.
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\122\ HHS does not have the same open enrollment plan selection
and premium data on the small group market in Alabama as it does for
the individual market in Alabama; therefore, EDGE premium and
enrollment plan-level data was used for the small group market
assessment.
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[[Page 27239]]
Based on our review of the unredacted supporting evidence submitted
by the State, 2020 benefit year risk adjustment transfer data,\123\ and
2020 benefit year EDGE premium and enrollment data available to
HHS,\124\ we determined it would be appropriate to approve a reduction
amount for the small group market that is lower than the amount
requested, consistent with Sec. 153.320(d)(4)(ii). Using the most
recent 2020 plan-level data available to HHS,\125\ HHS estimated
transfer calculations as a percent of premiums, which indicated that
the risk adjustment payment recipient would have to increase premiums
by approximately 5 percent to cover a 50 percent reduction in
transfers.\126\ Based on this calculation, HHS concluded that a 10
percent reduction in risk adjustment transfers would lead to a de
minimis (less than 1 percent) premium increase in the small group
market and therefore approves a 10 percent reduction in transfers in
Alabama's small group market for the 2023 benefit year, exercising our
flexibility under Sec. 153.320(d)(4)(ii) to approve an amount lower
than requested.
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\123\ Issuer specific BY 2020 risk adjustment transfers can be
found in Summary Report on Permanent Risk Adjustment Transfers for
the 2020 Benefit Year. (2021, June 30). CMS. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2020.pdf.
\124\ For BY 2020, issuer specific EDGE premium data have not
been made public.
\125\ Issuer specific BY 2020 risk adjustment transfers can be
found in Summary Report on Permanent Risk Adjustment Transfers for
the 2020 Benefit Year. (2021, June 30). CMS. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2020.pdf. For BY 2020, the issuer specific
EDGE premium and enrollment data used for this analysis have not
been made public. However, plan-level QHP rates are available in the
Health Insurance Exchange Public Use Files. (2020). CMS.
\126\ Alabama's request acknowledged that reducing the risk
transfer by 50 percent in the small group market will result in a
more than de minimis impact of approximately 4 percent of premium.
HHS' analysis indicated that the impact would be approximately 5
percent of premium for the small group market risk payment
recipient. HHS and Alabama's estimates slightly differ because we
used different data sources in our analysis. HHS used 2020 benefit
year data, including risk adjustment transfers and total premiums,
to calculate the impact, while Alabama used 2020 benefit year data
from the NAIC's Supplemental Health Care Exhibit for 2020. HHS
believes our EDGE data most accurately reflects the risk adjustment
transfer and premium data necessary to calculate the impact of the
reduced transfers. Therefore, we based our approval of a 10 percent
reduction in Alabama's small group risk adjustment State transfers
based on the analysis showing that a 50 percent reduction would have
an approximately 5 percent premium impact on the small group market
payment recipient(s).
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HHS disagrees with assertions that we should not consider 2020 data
when considering the 2023 benefit year State flexibility reduction
requests. As described in HHS' ``Summary Report on Permanent Risk
Adjustment Transfers for the 2020 Benefit Year,'' risk adjustment State
transfers as a percent of premiums remained relatively steady in 2020
compared to the 2019 benefit year, and the amount of paid claims
remained strongly correlated with risk adjustment State payments and
charges.\127\ Therefore, to assess Alabama's 2023 benefit risk
adjustment reduction requests, we considered 2020 data, similar to our
approach in considering Alabama's risk adjustment reduction requests in
previous years in which we use the most recent data available (for
example, for the 2022 benefit year, we considered 2019 data as part of
the analysis). Therefore, HHS followed the established precedent for
review of these requests. We also considered other data years as part
of our analysis of the State's individual market request in response to
the detailed comments and analysis using other data years submitted by
an impacted stakeholder that called into question whether the requested
transfer reduction amount for that market would meet the de minimis
threshold. Other relevant factors HHS considered were the limited
experience with reduction requests in the individual market,\128\ the
larger magnitude of risk adjustment transfers under the State payment
transfer formula in the individual market compared to the small group
market,\129\ as well as the increased opportunities for adverse
selection in the individual market.\130\ In addition, the State's
individual market request included an analysis that estimated the
transfer impact of its requested reduction would meet the de minimis
threshold, while its request for the small group market acknowledged
the requested reduction to transfers would exceed the de minimis
threshold.
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\127\ Summary Report on Permanent Risk Adjustment Transfers for
the 2020 Benefit Year. (2021, June 30). CMS. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2020.pdf.
\128\ The 2022 benefit year was the first year Alabama
requested, and HHS approved, a reduction request for the individual
market under the State flexibility framework. See, for example, 86
FR 24187 through 24189. In contrast, Alabama requested, and HHS
approved, reductions to small group market transfers for several
years, beginning with the 2020 benefit year and continuing through
the approval, in this rule, of an amount lower than requested for
the 2023 benefit year.
\129\ Summary Report on Permanent Risk Adjustment Transfers for
the 2020 Benefit Year. (2021, June 30). CMS. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2020.pdf.
\130\ In the small group market, employers select the plans
offered to their employees and often pay a significant portion of
employees' premiums to encourage enrollment. Depending on the
participation rules and market dynamics in a particular State, risk
selection can be significantly less in a State's small group market
compared to the individual market.
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b. Repeal of Risk Adjustment State Flexibility To Request a Reduction
in Risk Adjustment State Transfers (Sec. 153.320(d))
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 625), we proposed numerous amendments to
Sec. 153.320(d) to 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).
Following our consideration of the State flexibility framework
consistent with the instructions in E.O. 14009 \131\ and prior comments
we received on this policy, as well as the general low level of
interest States have expressed in the policy, we proposed, 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 that
previously requested this flexibility in prior benefit years, namely,
Alabama.
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\131\ E.O. 14009; 86 FR 7793 (2021, February 2).
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For prior participant reduction requests for the 2024 benefit year
and beyond, we also proposed to remove the option for the State to
demonstrate that State-specific 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. Instead, we proposed prior participants would
be required to demonstrate their requests satisfy the de minimis impact
standard. Under this standard, the requesting State is required to show
that the requested transfer reduction would not cause premiums in the
relevant market risk pool to increase by more than 1 percent. We
proposed conforming amendments to the HHS approval framework under
Sec. 153.320(d)(4)(i) and clarified that HHS would retain the
flexibility under Sec. 153.320(d)(4)(ii) to approve a lower reduction
amount than requested if the State's supporting evidence and analysis
do not fully support the requested amount. We also clarified 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,
[[Page 27240]]
not to automatically apply previously approved transfer reductions to
future benefit years. Instead, a prior participant would 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).
We sought comment on this proposal.
After reviewing the public comments, we are finalizing as proposed
the amendments to Sec. 153.320(d) that repeal the State flexibility
framework for States to request reductions in risk adjustment State
transfer payments for the 2024 benefit year and beyond, with an
exception for prior participants. We are also finalizing that beginning
with the 2024 benefit year, States submitting reduction requests must
demonstrate that the requested reduction satisfies the de minimis
standard--that is, the premium increase necessary to cover the affected
issuer's or issuers' reduced payments does not exceed 1 percent in the
relevant State market risk pool.\132\ We are finalizing the conforming
amendments to the HHS approval framework in Sec. 153.320(d)(4)(i) to
reflect the changes to the applicable criteria (that is, only retaining
the de minimis criterion) beginning with the 2024 benefit year, as well
as the proposed definition of ``prior participant'' in Sec.
153.320(d)(5). In future rulemaking, HHS intends to propose to
eliminate the prior participant exception beginning with the 2025
benefit year.
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\132\ 83 FR 16957.
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We summarize and respond to public comments received on repeal of
risk adjustment State flexibility to request a reduction in risk
adjustment State transfers Sec. 153.320(d) below.
Comment: Several commenters supported the proposal to repeal the
ability for States to request a reduction in risk adjustment State
transfers in both the individual and small group markets due to
concerns that the reduction in transfers would contribute to adverse
selection, increase premiums, and reduce plan options. Commenters
stated that reducing the risk adjustment State transfers incentivizes
issuers to avoid enrolling chronically ill consumers in the individual
market and companies whose workers have above-average costs in the
small group market. Commenters supporting the repeal also noted that
States can run their own risk adjustment programs if they do not think
the HHS-operated risk adjustment program works for their State. Many of
the commenters supporting the repeal also opposed the proposal to make
an exception for prior participating States and requested that HHS
instead repeal this policy in its entirety.
Conversely, several commenters opposed the proposal to repeal the
ability for States to request a reduction in risk adjustment State
transfers because they support the ability for States to make their own
decisions about how best to address the unique circumstances of their
insurance markets. Some of these commenters also noted that HHS has the
ability to review and reject these requests, indicating that there are
appropriate guardrails in place such that States should continue to be
offered this flexibility. Additionally, some of these commenters
generally opposed the proposed repeal, and in particular opposed
limiting the ability to request reductions to prior participants,
noting that other States may develop the same market dynamics as the
one prior participating State and should have the same ability to
request reductions. One of the commenters opposed to the repeal noted
concerns with the ability for States to run their own risk adjustment
programs, due to the costs to implement such a program within a State.
Response: We are finalizing, as proposed, the repeal of 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
prior participants.\133\ As detailed in the proposed rule, our further
consideration of prior stakeholder feedback, along with consideration
of the proposals in light of E.O. 14009,\134\ and the very low level of
interest from States since the policy was adopted, resulted in an
evaluation of whether the policy should be continued and if so, in what
manner. After reviewing public comments in response to the proposed
amendments to Sec. 153.320(d), including the proposed creation of the
prior participant exception, and further consideration of the State
flexibility framework under E.O. 14009, we are finalizing this policy
as proposed with the intention to propose in future rulemaking to
repeal the exception for prior participants beginning with the 2025
benefit year to provide impacted stakeholders additional time to
prepare for this change and the potential elimination of this
flexibility.
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\133\ This includes finalizing, as proposed, the definition in
Sec. 153.320(d)(5) for prior participants.
\134\ 86 FR 7793 (Feb. 2, 2021).
---------------------------------------------------------------------------
For the 2024 benefit year and beyond, we are also finalizing, as
proposed, the removal of the option for States 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
market risk pool as the justification for the State's request and the
criteria for HHS approval under Sec. 153.320(d)(4)(i). This retains
the de minimis standard as the only option for prior participants to
justify the reduction and for HHS to approve a request and is designed
to 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.
Therefore, the only State to have requested risk adjustment transfer
reductions from benefit year 2020 to benefit year 2023, Alabama, will
be the only State permitted to request reductions in benefit year 2024.
However, the de minimis standard will be the only option for Alabama to
justify the reduction and for HHS review and approval of the requests.
We recognize other States may develop the same or similar market
dynamics in future benefit years. However, currently, only one State
has sought to exercise the flexibility under Sec. 153.320(d) to tailor
HHS risk adjustment, which is calibrated using a national dataset,
pointing to these unique market dynamics. We therefore believe it is
appropriate to provide a transition for this prior participant State,
starting with the policies and amendments finalized in this rule that
apply beginning with the 2024 benefit year. However, we are concerned
about the potential long-term impact of allowing reductions to risk
adjustment transfers in any State market risk pool, including the
potential negative impacts on the program's ability to mitigate adverse
selection and support stability in the individual and small group
(including merged) markets. We therefore intend to propose a full
repeal of the State flexibility framework (for all States) beginning in
the 2025 benefit year in a future rulemaking.
We agree with commenters who noted that States are best able to
make their own decisions about how to address the unique circumstances
of their insurance markets and remain the primary regulators of their
insurance markets. At the same time, however, States have had a low
level of interest in this flexibility. Since the 2020 benefit year, all
States had the opportunity to submit reduction requests under Sec.
153.320(d), and yet only one State has done so. Similarly,
[[Page 27241]]
since the 2014 benefit year, all States have had the opportunity to
operate the risk adjustment program and, to date, only one State has
done so--Massachusetts operated a State-based risk adjustment program
from the 2014 through 2016 benefit years. Despite a broad range of
market conditions across the 50 States and the District of Columbia,
only two States have expressed interest in tailoring risk adjustment to
address the unique circumstances of their insurance markets, which
suggests that States generally do not want to operate their own risk
adjustment program and demonstrates that the HHS-operated risk
adjustment can work across a broad range of market conditions to
mitigate adverse selection in the individual and small group (including
merged) markets. Additionally, many commenters had concerns about the
potential negative impacts of the transfer reductions on the State's
insurance markets. Although, we note these outcomes have not entirely
come to bear in Alabama, as new entrants have entered Alabama's
individual market and QHP offerings have increased per county in
benefit year 2022 \135\, other potential negative impacts include
reduced plan quality and increased risk selection in the market. We
reiterate that a strong risk adjustment program is necessary to support
stability and address adverse selection in the individual and small
group markets, and under E.O. 14009, we have concerns that this policy
could undermine these goals in the long-term and therefore intend to
propose a full repeal of the State flexibility framework under Sec.
153.320(d) in a future rulemaking. Finally, we appreciate there are a
number of different factors States consider when weighing whether to
operate a State-based risk adjustment program, including but not
limited to the costs associated with establishing and maintaining such
a program. HHS remains committed to working with States and other
stakeholders to encourage new market participants, mitigate adverse
selection, and promote stable insurance markets through strong risk
adjustment programs.
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\135\ Plan Year 2022 Qualified Health Plan Choice and Premiums
in HealthCare.gov States. (2021, October 15), CMS. https://www.cms.gov/CCIIO/Resources/Data-Resources/Downloads/2022QHPPremiumsChoiceReport.pdf.
---------------------------------------------------------------------------
5. Risk Adjustment Issuer Data Requirements (Sec. Sec. 153.610,
153.700, and 153.710)
In the proposed rule, we proposed that issuers collect and make
available for HHS' extraction from issuers' EDGE servers five new data
elements--ZIP Code,\136\ race, ethnicity, an ICHRA indicator, and a
subsidy indicator \137\--as part of the required risk adjustment data
that issuers make accessible to HHS in States where HHS operates the
risk adjustment program,\138\ beginning with the 2023 benefit year. We
also proposed that we would extract these five new data elements
beginning with the 2023 benefit year. Additionally, beginning with the
2022 benefit year, we proposed HHS would extract from issuers' EDGE
servers the following three data elements that issuers already make
accessible to HHS as part of the required risk adjustment data--plan
ID, rating area, and subscriber indicator. We proposed 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 proposed to expand
and clarify the scope of permissible HHS uses for the data and the
reports extracted from issuer EDGE servers (including summary reports
and ad hoc query reports). Related to these proposals, we also
considered the burden associated with the collection and extraction of
these data elements, and solicited comments on 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, associated burdens, and
accompanying comment solicitation.\139\
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\136\ ZIP Code\TM\ is a trademark of the United States Postal
Service.
\137\ The subsidy indicator is intended to indicate whether a
particular enrollee is (or is not) receiving APTC.
\138\ HHS has been operating the risk adjustment program in all
50 states and the District of Columbia since the 2017 benefit year.
\139\ For a full discussion of the background of the HHS-
operated risk adjustment program and the required risk adjustment
data, as well as the proposals, see the proposed rule (87 FR 627
through 632).
---------------------------------------------------------------------------
a. Collection and Extraction of New Data Elements and Extraction of
Current Data Elements
We proposed, beginning with the 2023 benefit year, 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, specifically: (1) ZIP Code,
(2) race, (3) ethnicity, (4) subsidy indicator, and (5) ICHRA
indicator. For race and ethnicity data, we proposed 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),\140\ which is collected at a granular level that would
allow HHS to analyze more subpopulations than our current data allows,
thereby allowing us to better identify and consider policies to address
discrimination in health care and health disparities.141 142
In addition to collecting and extracting these new data elements, we
also proposed, beginning with the 2022 benefit year, to extract plan
ID, rating area, and subscriber indicator from issuers' EDGE
servers.\143\
---------------------------------------------------------------------------
\140\ HHS Implementation Guidance on Data Collection Standards
for Race, Ethnicity, Sex, Primary Language, and Disability Status.
(2011, October 30), CMS. https://aspe.hhs.gov/reports/hhs-implementation-guidance-data-collection-standards-race-ethnicity-sex-primary-language-disability-0.
\141\ As detailed later, we recognize issuers may not have race
or ethnicity data for certain enrollees since enrollees are
generally not required to provide race and ethnicity data, and we
intend to include an option that could be used by issuers in these
situations.
\142\ See 87 FR 628 through 630.
\143\ Ibid.
---------------------------------------------------------------------------
We sought comments on these proposals.
After reviewing the public comments, we are finalizing the proposal
to collect and extract ZIP Code, race, ethnicity, an ICHRA indicator,
and a subsidy indicator as part of the risk adjustment data issuers of
risk adjustment covered plans are required to make accessible to HHS on
their EDGE servers in States where HHS operates the risk adjustment
program, beginning with the 2023 benefit year. Specifically, we are
finalizing that starting with the 2023 benefit year, issuers will be
required to populate the ZIP Code and subsidy indicator fields as part
of their EDGE data submissions. The ZIP Code field will be formatted at
the five-digit level, and the subsidy indicator will indicate whether a
particular enrollee is (or is not) receiving APTC. We are also
finalizing that starting with the 2023 benefit year, issuers will be
required to report race, ethnicity, and ICHRA indicator information as
part of their EDGE data submissions. The ICHRA indicator will indicate
whether a particular enrollee's health care coverage involves (or does
not involve) an ICHRA. Regarding formatting for race and ethnicity
data, we are finalizing the collection of these data elements to be
consistent with the 2011 HHS Data Standards,\144\ which are the
standards
[[Page 27242]]
used by the FFE to collect these data through the Exchange
application.\145\
---------------------------------------------------------------------------
\144\ HHS Implementation Guidance on Data Collection Standards
for Race, Ethnicity, Sex, Primary Language, and Disability Status.
(2011, October 30) CMS. https://aspe.hhs.gov/reports/hhs-implementation-guidance-data-collection-standards-race-ethnicity-sex-primary-language-disability-0.
\145\ As detailed later, we recognize issuers may not have race
and/or ethnicity data for certain enrollees since enrollees are
generally not required to provide race and ethnicity data and intend
to include a version of ``unknown'' reporting option that could be
used by issuers in these situations.
---------------------------------------------------------------------------
For the 2023 and 2024 benefit years, we are adopting a transitional
period during which issuers are required to populate the fields for
race and ethnicity using only data they already collect or have
accessible regarding their enrollees. For example, for the 2023 and
2024 benefit years, for race and ethnicity data, issuers will be deemed
in compliance if they submit these data elements using data they
already have or collect through existing means, including, for example,
through enrollee data captured and reported to the issuer by the FFE,
SBE-FPs, and State Exchanges at the time of enrollment. Then, beginning
with the 2025 benefit year, the transitional approach will end, and
issuers will be required to populate the fields using available sources
and, in the absence of such an existing source for particular
enrollees, to make a good faith effort to ensure collection and
submission of the race and ethnicity data for these enrollees.
We are also finalizing, with slight modification to the
transitional approach, collection of the ICHRA indicator. For the 2023
and 2024 benefit year, similar to the transitional approach for race
and ethnicity data, issuers are required to populate the field for the
ICHRA indicator using only data they already collect or have accessible
regarding their enrollees.\146\ Then, beginning with the 2025 benefit
year, the transitional approach will end, and issuers will be required
to populate the field using available sources (for example, information
from Exchanges and small employers, and requesting information directly
from enrollees) and, in the absence of an existing source for
particular enrollees, to make a good faith effort to ensure collection
and submission of the ICHRA indicator for these enrollees.
---------------------------------------------------------------------------
\146\ In the proposed rule, we proposed a transitional approach
whereby the ICHRA indicator would be optional for the 2023 and 2024
benefit years. See 87 FR at 631. We are finalizing the adoption of a
transitional approach for the ICHRA indicator; however, as detailed
further later, after consideration of comments, for simplicity and
to mitigate burdens, we are adopting the same approach for assessing
compliance during the transition for populating the race, ethnicity
and ICHRA indicator data fields.
---------------------------------------------------------------------------
HHS will provide additional details on what constitutes a good
faith effort to ensure collection and submission of the race,
ethnicity, and ICHRA indicator data elements in the future. For
example, HHS intends to monitor and leverage ongoing work to outline
industry-wide standards for collecting health plan demographic data,
such as the work by the NAIC's Special Committee on Race & Insurance.
As part of this NAIC Committee's efforts to examine and determine which
practices or barriers exist in the insurance sector that potentially
disadvantage people of color or historically underrepresented groups,
it will consider enhanced data reporting and record keeping
requirements across product lines to identify race and other
sociodemographic factors of insureds, including consideration of legal
and privacy concerns.\147\ We also intend to seek input from issuers
and other stakeholders as we develop this good faith standard and
determine the most feasible methods for issuers to ensure collection
and submission of these data elements.\148\
---------------------------------------------------------------------------
\147\ For a full explanation of the work of the NAIC Special
(EX) Committee on Race and Insurance, see https://content.naic.org/cmte_ex_race_and_insurance.htm.
\148\ If the burden estimate for collection of the race,
ethnicity, and/or ICHRA indicator data elements changes beginning
with the 2025 benefit year, the information collection under OMB
control number 0938-1155 would be revised accordingly and
stakeholders would be provided the opportunity to comment through
that process.
---------------------------------------------------------------------------
Beginning with the 2023 benefit year, HHS will provide additional
operational and technical guidance on how issuers should submit these
new data elements to HHS through issuer EDGE servers via the applicable
benefit year's EDGE Server Business Rules and the EDGE Server Interface
Control Document, as may be necessary.\149\ For example, even though
the submission of race and ethnicity data to issuer EDGE servers must
conform to the 2011 HHS Data Standards, we intend to provide further
instruction to issuers on how to appropriately map information issuers
collect to the race and ethnicity EDGE data fields. In addition, we
recognize that enrollees are not required to submit race and ethnicity
information to the FFE through the eligibility application process, and
that SBE-FPs and State Exchanges similarly permit enrollees to decline
to provide this information. We anticipate similar practices and
flexibility for enrollees to decline to provide this information also
currently exists for enrollees seeking coverage off-Exchanges, and that
such flexibility will continue to exist in the future for consumers
enrolling in coverage on and off-Exchange. As such, we intend to
include an option that will allow issuers to indicate that race or
ethnicity information is not known in these situations.
---------------------------------------------------------------------------
\149\ 45 CFR 153.610(a), 153.700(a), and 153.710.
---------------------------------------------------------------------------
Additionally, we are finalizing, as proposed, 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 generally 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 data quality checks and ensure the
response rate is adequate to support any analytical conclusions. These
data quality and reliability checks would generally be consistent with
other data standard checks that HHS performs related to data collected
through issuers' EDGE servers.
We are also finalizing the proposals to extract the three data
elements issuers already report to their EDGE servers--plan ID, rating
area, and subscriber indicator--with a modification to the
applicability date for extraction of two of these data elements. As
detailed further later, we will begin extraction of plan ID and rating
area as part of the enrollee-level EDGE data and reports extracted from
issuers' EDGE servers beginning with the 2021 benefit year and will
begin extraction of subscriber indicator beginning with the 2022
benefit year. Table 5 provides a summary of the EDGE data collection
requirements being finalized in this rule.
[[Page 27243]]
[GRAPHIC] [TIFF OMITTED] TR06MY22.004
We summarize and respond to public comments received on the
proposed collection and extraction of five new data elements and the
extraction of three current data elements, along with the other risk
adjustment issuer data requirements proposals, in the risk adjustment
issuer data requirement proposals comments and responses section of
this rule.
---------------------------------------------------------------------------
\150\ Since the 2014 benefit year, issuers have been required to
submit plan ID, rating area, and subscriber indicator to their EDGE
servers to support HHS' calculation of risk adjustment transfers (81
FR 94101).
---------------------------------------------------------------------------
b. Limited Data Set
In conjunction with the collection and extraction of the new and
current data element proposals, we proposed 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.\151\
However, we proposed to include race, ethnicity, ICHRA indicator,
subsidy indicator, and subscriber indicator in the limited data set
once they are available.\152\
---------------------------------------------------------------------------
\151\ See 87 FR 630. See also 84 FR 17487.
\152\ See 87 FR 630.
---------------------------------------------------------------------------
We sought comments on this proposal.
After reviewing the public comments, we are finalizing the proposal
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, and to include race, ethnicity, ICHRA indicator,
subsidy indicator, and subscriber indicator in the limited data set
once they become available. As explained earlier in this rule, race,
ethnicity, ICHRA indicator, and subsidy indicator will become available
beginning with the 2023 benefit year, and subscriber indicator will
become available beginning with the 2022 benefit year.
We summarize and respond to public comments received on the
enrollee-level EDGE limited data set proposals, along with the other
risk adjustment issuer data requirements proposals, below.
c. Expansion of Permissible Uses of EDGE Data
We also proposed 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.\153\ This proposed expansion would apply to
data that HHS already collects and extracts, as well as the 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 this final
rule. Specifically, HHS proposed 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 (84
FR 17488)--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. We also noted that the
enrollee-level EDGE data, including the data elements proposed for
collection and extraction, may be subject to disclosure as otherwise
required by law.\154\
---------------------------------------------------------------------------
\153\ See 87 FR 630 through 631.
\154\ See, for example, 2 U.S.C. 601(d).
---------------------------------------------------------------------------
We sought comment on the proposed expansion of the permissible uses
of the data and reports HHS extracts from issuers' EDGE servers.
After reviewing the public comments, we are finalizing, as
proposed, the expansion of the permitted uses of the data and reports
HHS extracts from issuers' EDGE servers.
We summarize and respond to public comments received on the
proposed expansion of the permissible uses of EDGE data, along with the
other risk adjustment issuer data requirement proposals, below.
d. Burden for Collecting and Extracting Additional Data Elements
As stated above, we included information in the proposed rule (87
FR 631 through 632) on the burdens related
[[Page 27244]]
to the proposals to collect and extract additional data elements.
We summarize and respond to public comments received on the burden
for collecting and extracting additional data elements, along with the
other risk adjustment issuer data requirement proposal below.
e. Encouraging the Use of Z Codes
In the proposed rule (87 FR 631), we sought 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 SDOH.\155\ We solicited 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 SDOH.
---------------------------------------------------------------------------
\155\ See Using Z Codes: The Social Determinants of Health; Data
Journey to Better Outcomes. (2021). CMS. https://www.cms.gov/files/document/zcodes-infographic.pdf. See also Utilization of Z Codes for
Social Determinants of Health Among Medicare Fee-for-Service
Beneficiaries. (2019). CMS. https://www.cms.gov/files/document/z-codes-data-highlight.pdf.
---------------------------------------------------------------------------
We summarize and respond to the public comments related to
encouraging the use of z codes or additional data elements to support
the operation of the HHS-operated risk adjustment program below.
f. Risk Adjustment Issuer Data Requirement Proposals Comments and
Responses
After reviewing the public comments submitted, we are finalizing,
with slight modification, the collection and extraction of the five new
data elements (ZIP Code, race, ethnicity, ICHRA indicator, and subsidy
indicator) beginning with the 2023 benefit year. Additionally, we are
finalizing the extraction of plan ID and rating area beginning with the
2021 benefit year, and the extraction of the subscriber indicator
beginning with the 2022 benefit year. We are also finalizing, as
proposed, the expansion of 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, as well as coverage offered by non-Federal
governmental plans.\156\ Lastly, we are finalizing the proposal to
exclude plan ID, ZIP Code, and rating area from the limited data set
HHS makes available to requestors for research purposes, but to include
race, ethnicity, ICHRA indicator, subsidy indicator, and subscriber
indicator in that limited data set once available.
---------------------------------------------------------------------------
\156\ Non-federal governmental plans are subject to many PHS Act
federal market reform requirements. See, for example, 42 U.S.C.
300gg-21(a)(1)(A). See also 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, for example, 42
U.S.C. 300gg-22(b)(1)(B) and 45 CFR 150.301, et seq.
---------------------------------------------------------------------------
We summarize and respond to public comments received on all of the
risk adjustment issuer data requirement proposals (Sec. Sec. 153.610,
153.700, and 153.710) below.
Comment: Many commenters supported the proposal to collect and
extract the five new data elements--ZIP Code, race, ethnicity, an ICHRA
indicator, and a subsidy indicator. Many of these commenters stated
that they believe collecting ZIP Code, race, ethnicity, an ICHRA
indicator, and a subsidy indicator would assist in identifying health
equity issues by allowing for improved tracking of the SDOH and
discrimination in health care.
However, several commenters opposed the proposal to collect and
extract the five new data elements due to general concerns related to
release of information that issuers consider proprietary and enrollees'
personally identifiable information (PII). Some of these commenters
stated that collecting and extracting these additional data elements
would increase the potential risk of a data security breach. Most of
these commenters expressed concerns that the extraction of plan ID and
rating area, and the collection and extraction of ZIP Code, may enable
outside entities to identify issuers and individual members based on
identifiers such as State and rating area, particularly when there is a
small number of issuers in a State. Some of these commenters expressed
concern about the security of enrollees' PII, explaining that the EDGE
servers were initially designed so that HHS would receive only
aggregate, summary-level data to address privacy concerns regarding
transmitting and storing enrollees' personal information, and that in
subsequent rulemaking HHS established the policy to receive enrollee-
level data, which raised privacy concerns; therefore, collecting and
extracting the proposed additional data elements also raises privacy
concerns. One commenter recommended that HHS maintain the existing risk
adjustment data collection approach and not collect and extract
additional EDGE data elements, stating that the existing distributed
data approach is implemented in a manner that alleviates privacy
concerns by allowing health plans to control their data assets, which
allows private health information to be retained by issuers without
additional risk of transmitting and storing large amounts of sensitive
data in a central database. This commenter also noted that the existing
distributed data approach minimizes the risk of data security breaches.
Response: We are finalizing, with slight modification, the
collection and extraction of ZIP Code, race, ethnicity, an ICHRA
indicator, and a subsidy indicator beginning with the 2023 benefit
year. We believe that the collection and extraction of these five new
data elements will allow HHS to better analyze and assess risk patterns
in the individual, small group, and merged markets in relation to
geographic details (including ZIP Code) and demographic data (including
ZIP Code, race, ethnicity, subsidy indicator, and ICHRA indicator).
Specifically, collection and extraction of these data elements will
allow HHS to analyze data at a more granular level than our current
data allow and assess risk patterns and the impact of risk adjustment
policies based on geographic, income, and other demographic
differences. HHS will also be able to consider whether there are cost
differentials for certain conditions based on demographic factors like
race, ethnicity, or subsidy indicator.
We also agree with commenters that these new data elements will
allow HHS to better identify and analyze health equity issues within
the individual, small group, and merged market programs. As explained
in the proposed rule, HHS' ongoing efforts to continuously improve HHS
programs include considering ways to improve our analytical capacity to
assess equity impacts of these programs. This includes improving our
ability to identify potential refinements to the HHS risk adjustment
methodology and consider demographic and geographic data when
considering policy and operational changes to improve other HHS
individual, small group, and merged market programs.\157\ For example,
we believe that collecting and extracting these data elements may help
HHS assess the costs and use of benefits by various subpopulations
related to our individual, small group, and merged
[[Page 27245]]
market programs, and may allow HHS to better determine whether new
policies, regulations, or guidance may be necessary or appropriate to
advance equity within these programs. We note that any changes to the
risk adjustment methodology or other policies based on HHS' analysis of
these data elements would generally be set forth through notice-and-
comment rulemaking.
---------------------------------------------------------------------------
\157\ As detailed later, we are finalizing the proposed
expansion of permitted uses of the enrollee-level EDGE data to
include other HHS Federal health-related programs outside of the
commercial individual and small group (including merged) markets, as
well as coverage offered by non-Federal governmental plans.
---------------------------------------------------------------------------
In response to commenters' concerns that collecting and extracting
additional data elements would mean transmitting and storing enrollees'
PII and that there would be increased risk of data security breaches,
we note that we did not propose and are not finalizing any changes to
the existing distributed data collection model applicable to the HHS-
operated risk adjustment program. As noted by some commenters, HHS set
up the distributed data environment to address privacy and security
concerns regarding transmitting and storing enrollees' PII. In the
proposed 2014 Payment Notice (77 FR 73118), we explained that using a
distributed data collection model means that HHS does not directly
collect data from issuers,\158\ which limits transmission of data
containing PII.\159\ Instead, HHS accesses enrollment, claims, and
encounter data on issuers' secure distributed data environments,\160\
called EDGE servers.\161\ Under this model, each issuer submits to its
EDGE server the required data in HHS-specified electronic formats and
must make these data accessible to HHS for use in the HHS-operated risk
adjustment program.\162\ This general framework remains unchanged. As
is current procedure, issuers of risk adjustment covered plans will
continue to provide HHS access to the applicable required risk
adjustment data elements through the distributed data environment (that
is, the issuer's EDGE server) in the HHS-specified electronic formats
by the applicable deadline.\163\ This includes providing HHS access to
install, update, and operate common software and specific reference
tables,\164\ and executing commands provided by HHS to generate the
EDGE reports within the designated timeframes. In addition, issuers
will continue to retain control over their data assets subject to the
requirements of the risk adjustment program operated under sections
1343 and 1321(c) of the ACA.\165\
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\158\ 77 FR 73162, 73182 through 73183. This policy was
finalized in the 2014 Payment Notice final rule. See 78 FR 15497
through 15500.
\159\ See 78 FR 15500. We explained that data are particularly
vulnerable during transmission, and that the distributed data
collection model eliminates this risk.
\160\ 77 FR 73162.
\161\ 81 FR 94101.
\162\ 78 FR 15497.
\163\ See 45 CFR 153.610(a). See also 45 CFR 153.700, et. seq.
\164\ See, for example, 78 FR 15497 through 15498.
\165\ See 42 U.S.C. 18063 and 18041(c).
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Furthermore, HHS remains committed to protecting the privacy and
security of enrollee health information and will continue to require
issuers to use masked enrollee identification numbers.\166\
Specifically, consistent with the requirement first established in the
2014 Payment Notice, issuers must establish a unique masked enrollee
identification number for each enrollee that cannot include PII. As we
explained in the 2018 Payment Notice (78 FR 15500), use of masked
enrollee-level data safeguards enrollee privacy and security because
masked enrollee-level data does not include PII.\167\ The policies
finalized in this rule also do not alter this approach or the existing
privacy protections for enrollee PII or individual claim-level
information, such as masked enrollee IDs and masked claims IDs.\168\ We
also note that the final policy adopted in this rule to exclude plan
ID, rating area, and ZIP Code from the limited data set is part of our
commitment to protect enrollee PII and strategy to mitigate the risk
that entities that receive the limited data set could identify
individual members, particularly in areas with a small number of
issuers. Therefore, we generally disagree that the collection and
extraction of these new data elements will increase risk of disclosure
of enrollee PII.
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\166\ See 45 CFR 153.720. See also 78 FR 15509 and 81 FR 94101.
\167\ See 45 CFR 153.720(b).
\168\ In addition to use of masked enrollee IDs and masked
claims IDs, another existing protection for enrollee PII is the
exclusion of enrollee date of birth from the data issuers must make
accessible to HHS on their EDGE servers.
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We also appreciate the sensitivities related to protecting issuers'
proprietary information and note that HHS has also taken several steps
to protect information that issuers may consider to be proprietary.
First, as noted above, the adoption and continued use of the
distributed data collection model ensures each issuer retains control
of their respective data. Second, only a limited data set of certain
masked enrollee-level EDGE data elements is made available and this
limited data set is available only to qualified researchers if they
meet the requirements for access to such file(s), including entering
into a data use agreement that establishes the permitted uses or
disclosures of the information and prohibits the recipient from
identifying the information.169 170 Among other
requirements, the data use agreement requires qualified researchers to
explain the specific research purpose for which the data will be used
and generally prohibits disclosure of the data.\171\ We also strictly
adhere to all requirements and CMS guidelines related to providing the
limited data set to qualified researchers.\172\ Third, the policy
adopted in this final rule that excludes plan ID, rating area, and ZIP
Code from the limited data set further mitigates the risk of disclosure
of information that issuers may consider to be proprietary. These are
the data elements that could present an increased risk that entities
that receive the limited data set file could identify issuers based on
identifiers such as State and rating area, particularly in areas with a
small number of issuers.
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\169\ See Data Use Agreement. CMS. https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS-R-0235L.pdf. See also 84 FR 17486
through 17490.
\170\ Data Use Agreement. CMS. https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS-R-0235L.pdf.
\171\ Ibid. at paragraphs 3, 7.
\172\ Further details on limited data set files available at
Limited Data Set (LDS) Files. (2021, December 1). CMS. https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/Data-Disclosures-Data-Agreements/DUA_-_NewLDS.
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For these reasons, we believe the policies finalized in this rule
appropriately balance the different competing interests. More
specifically, there are sufficient mitigation strategies in place such
that the collection and extraction of these additional data elements
presents no significant additional risk of disclosure of information
that issuers may consider to be proprietary and it will improve HHS'
ability to assess health equity impacts of HHS commercial individual
and small group (including merged) market programs, including the HHS-
operated risk adjustment program, as well as other HHS Federal health-
related programs outside these commercial markets and coverage offered
by non-Federal Governmental plans.
Comment: Several commenters noted the limitation of ZIP Code as a
geographic identifier, asserting that ZIP Codes are not able to
specifically identify a county or a State in certain situations. They
also noted that ZIP Codes can change from year-to-year because ZIP
Codes are established by the United States Postal Service to address
mail delivery needs, not geographic boundaries. One commenter explained
that census tract data would be a more accurate data element for
geographic analysis than use of ZIP Codes because it can be used with
the
[[Page 27246]]
Social Vulnerability Index (SVI) to obtain measures for SDOH, race, and
ethnicity at the population level. This commenter also noted, however,
that census tract data is not currently used by issuers and thus may
not be readily available. In contrast, some commenters agreed it would
be relatively easy for issuers to submit ZIP Code, as issuers readily
have access to this data element.
Response: We are finalizing, as proposed, the collection and
extraction of ZIP Code for several reasons. First, ZIP Code is a widely
understood unit of geography. Second, while we recognize there are some
advantages for using census tract data to conduct certain assessments
and analysis of risk patterns based on geographic differences, we are
concerned that issuers do not currently collect census tract data and
we believe it would be more burdensome for issuers to collect and
extract this data element than ZIP Code. In contrast, we believe that
issuers already have access to enrollees' ZIP Code information. Third,
while ZIP Codes can change over time, the majority of changes to ZIP
Code occur at the level of the nine-digit ZIP+4 Code, while five-digit
area codes generally remain stable from year to year. Therefore, to
balance the desire to collect more granular geographic data with easing
the burdens on issuers associated with collection of new data elements,
we are finalizing the collection and extraction of the five-digit ZIP
Code beginning with the 2023 benefit year.
Comment: Some commenters requested that HHS clarify which ZIP Code
issuers would be required to report to their EDGE servers, for example,
whether issuers should collect the ZIP Code associated with an
enrollee's mailing address or rating area.
Response: Issuers will be required to report the enrollee's mailing
address ZIP Code as reported by the enrollee. This means that small
group market issuers will be required to report the employee ZIP Code
and not employer ZIP Code. Consistent with prior practice, additional
technical instructions related to how issuers must submit these new
data elements, including ZIP Code, will be made available to issuers
through the applicable benefit year's EDGE Server Business Rules and
the EDGE Server Interface Control Document.
Comment: Some commenters expressed concern that there is no
industry standard for collecting the race and ethnicity data elements
and recommended that these data elements not be collected until such a
standard is established. These commenters also explained that this lack
of an industry standard means that the race and ethnicity data elements
collected may not be accurate, and that there is no way to ensure that
these data elements are accurate. Some of these commenters also noted
that some state laws limit the manner by which issuers or SBE-FPs and
State Exchanges can collect the race and ethnicity data elements, which
may prevent issuers from collecting and submitting these data to HHS,
but they did not offer citations or otherwise identify specific State
laws.
Response: We are finalizing the proposal to collect and extract
race and ethnicity data beginning with the 2023 benefit year and are
also finalizing the accompanying proposal to require issuers to report
race and ethnicity data in accordance with the 2011 HHS Data Standards
beginning with the 2023 benefit year. While not an industry standard,
the 2011 HHS Data Standards were developed under section 4302 of the
ACA, which requires the Secretary of HHS to establish data collection
standards for race, ethnicity, sex, primary language, and disability
status. The 2011 HHS Data Standards \173\ were promulgated to create a
set of uniform data collection standards for inclusion in surveys
conducted or sponsored by HHS. They are also the standards used by HHS,
as the FFE administrator, to collect these data through the Exchange
application. Therefore, we believe that the 2011 HHS Data Standards are
an appropriate standard to guide the collection of race and ethnicity
data by issuers of risk adjustment covered plans.
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\173\ HHS Implementation Guidance on Data Collection Standards
for Race, Ethnicity, Sex, Primary Language, and Disability Status.
(2011, October 30). HHS. https://aspe.hhs.gov/reports/hhs-implementation-guidance-data-collection-standards-race-ethnicity-sex-primary-language-disability-0.
---------------------------------------------------------------------------
We also believe that by using the 2011 HHS Data Standards, we will
be supporting the creation of a uniform industry standard that can help
improve the accuracy and consistency of the data over time. As
explained earlier, we are finalizing the proposal to structure the race
and ethnicity data elements similar to current collections, where
possible. Since the 2011 HHS Data Standards are consistent with how
these data elements are captured in the current FFE online eligibility
application, we believe that it is most appropriate to require data
submission that conforms with the 2011 HHS Data Standards. However, we
recognize that issuers may currently collect or have race and ethnicity
data that does not conform to the 2011 HHS Data Standards. To address
these situations, we intend to provide further instruction to issuers
in guidance on how to appropriately map information they may currently
collect or have to the race and ethnicity data fields for EDGE data
submission.
We are also finalizing, as proposed, that we will provide a value
for the race or ethnicity data elements that allows issuers to indicate
that race or ethnicity are not known for a specific enrollee. This
option will be available to issuers during the transitional approach.
After the transitional approach ends (beginning in the 2025 benefit
year), this option will similarly be available to issuers who comply
with the good faith standard but are unable to populate the race or
ethnicity EDGE data field for one or more enrollees.
We also note that although there may be State laws that limit the
reporting and collecting of race and ethnicity data elements, the risk
adjustment issuer data requirements, including but not limited to the
proposals finalized in this rule related to collection and extraction
of race and ethnicity data, are rooted in section 1343 of the ACA.
Consistent with section 1321(c)(1) of the ACA, the Secretary is
responsible for operating the risk adjustment program in any State that
fails to do so. Since the 2017 benefit year, HHS has operated risk
adjustment in all 50 States and the District of Columbia. 45 CFR
153.610(a) requires issuers of risk adjustment covered plans to submit
and make accessible all required risk adjustment data in accordance
with the data collection approach established by HHS in States where
the Department operates the program. Specifically, HHS requires issuers
of risk adjustment covered plans to submit specified data elements to
their EDGE servers to support the calculation of risk adjustment
transfers.\174\ We also previously finalized policies related to the
extraction and use of enrollee-level EDGE data (81 FR 94101 and 84 FR
17488). This rulemaking expands on those requirements and policies,
including by expanding the list of data fields issuers must submit to
their EDGE servers as part of the required risk adjustment data
beginning in the 2023 benefit year.
---------------------------------------------------------------------------
\174\ 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
Supporting Statement For Paperwork Reduction Act Submissions. OMB.
https://omb.report/icr/201712-0938-015/doc/79644301.pdf. The
previous version is available at Standards Related to Reinsurance,
Risk Corridors, and Risk Adjustment (CMS-10401). HHS. https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201712-0938-01.
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[[Page 27247]]
As detailed in the proposed rule (87 FR 628 through 629), we
believe that collecting and extracting these new data elements serves a
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 accordable for all individuals. Collecting and
extracting race and ethnicity data will allow HHS to further assess and
analyze actuarial risk, and risk patterns in the individual, small
group and merged markets more than current data allows. HHS will also
be able to analyze more subpopulations than our current data allows,
thereby allowing consideration of more areas of health equity, as well
as to better address discrimination in health care and health
disparities, through pursuit of new risk adjustment policies. This
policy is also narrowly tailored and represents the minimum data
anticipated at this time to allow HHS to engage in this additional,
more granular analysis. We also reiterate that HHS will conduct quality
checks of the newly collected data elements and ensure that the
response rate is adequate to support any analytical conclusions that
could inform policy decisions.
Further, to the extent that race and ethnicity data could be
considered protected health information (PHI),\175\ the HIPAA Privacy
Rule \176\ generally permits health plans and covered health care
providers to disclose PHI without obtaining authorization from the
individual where such disclosures are required by law, such as when
Federal or State statutes or regulations require the disclosure.\177\
Additionally, as industry standards and State laws applicable to the
collection and use of race and ethnicity data elements evolve, HHS will
consider whether any changes to the risk adjustment program's approach
for collection of these data elements would be appropriate.
---------------------------------------------------------------------------
\175\ 45 CFR 164.103 (definition of ``Protected health
information'').
\176\ 45 CFR 164.512(a).
\177\ 45 CFR 164.512(a), 164.103 (definition of ``Required by
law''). See 65 FR 82462, 82485 (December 28, 2000) for a discussion
of 45 CFR 164.512(a) in the context of other mandatory Federal or
state laws.
---------------------------------------------------------------------------
Comment: Some commenters questioned the need for HHS to collect and
extract race and ethnicity data as part of the risk adjustment data
submissions when the FFE already collects these data.
Response: We acknowledged in the proposed rule (87 FR 631) that
these data elements may also be collected by HHS from FFE or SBE-FP
enrollees through the eligibility application process and by some State
Exchanges from State Exchange enrollees. We further explained how this
new risk adjustment data collection requirement would provide HHS with
more uniform and comprehensive information. More specifically, the race
and ethnicity data collected would represent all enrollees in risk
adjustment covered plans in States where HHS operates the risk
adjustment program, including coverage offered inside and outside of
Exchanges--rather than just reflecting enrollees in coverage offered
through Exchanges. Additionally, this new data collection provides HHS
the ability to extract and aggregate race and ethnicity 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.\178\
---------------------------------------------------------------------------
\178\ For information on the challenges associated with linking
the extracted enrollee-level EDGE data to other sources, see 87 FR
631 through 632.
---------------------------------------------------------------------------
Comment: Some commenters inquired whether issuers would be
penalized if enrollees decline to provide race and ethnicity
information, pointing to the fact that Exchange enrollees can decline
to share these details on their application. One commenter requested
that HHS consider approaching collection of race and ethnicity the same
way HHS proposed collection of the ICHRA indicator, with an optional
data field for the 2023 and 2024 benefit years, so that issuers can
develop processes for collection, validation, and submission of these
data elements.
Response: We are finalizing the proposal to collect and extract
race and ethnicity data beginning with the 2023 benefit year. More
specifically, issuers will be required to use the information they
already have or ensure collection of race and ethnicity information to
submit to their EDGE servers consistent with the 2011 HHS Data
Standards.
Similar to how we have approached other new data collection
requirements in the past, we agree with the commenter and are adopting
a transitional approach for the 2023 and 2024 benefit years for the
race and ethnicity data fields.\179\ During this time, issuers are
required to populate race and ethnicity data using data the issuers
already have or collect. As such, an issuer will be required to report
the race and ethnicity data in situations where a particular enrollee
has provided these data to the issuer or if the issuer otherwise has
these data for that particular enrollee. For example, QHP issuers may
already receive race and ethnicity data elements from the applicable
FFE, SBE-FP, or State Exchange at the time of enrollment, and reporting
these data as collected through that process would be compliant with
standards applicable during the 2023 and 2024 benefit years. We intend
to provide further instruction to issuers in guidance on how to
appropriately map information issuers have or collect to the race and
ethnicity data fields for EDGE data submission.
---------------------------------------------------------------------------
\179\ After consideration of comments, for simplicity and to
minimize burden, we are adopting the same transitional approach for
the ICHRA indicator for the 2023 and 2024 benefit years. For the
2023 and 2024 benefit year, issuers are required to populate the
field for the ICHRA indicator using only data they already collect
or have accessible regarding their enrollees. Then, beginning with
the 2025 benefit year, the transitional approach will end, and
issuers will be required to populate the field using available
sources and, in the absence of an existing source for particular
enrollees, to make a good faith effort to ensure collection and
submission of the ICHRA indicator for these enrollees. The
transition provides issuers with additional time to develop
processes for collection, validation, and submission of these data
elements.
---------------------------------------------------------------------------
Beginning with the 2025 benefit year, issuers will be required to
populate the field using available sources and, in the absence of an
existing source to populate these data elements for particular
enrollees, they will be required to make a good faith effort to ensure
collection of race and ethnicity data. HHS will provide additional
details on what constitutes a good faith effort to ensure collection of
the race and ethnicity data elements in the future. We intend to seek
input from issuers and other stakeholders as we develop this good faith
standard and determine the most feasible methods for issuers to ensure
collection and submission of these data elements.\180\
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\180\ If the burden estimate for collection of the race,
ethnicity, and/or ICHRA indicator data elements changes beginning
with the 2025 benefit year, the information collection under OMB
control number 0938-1155 would be revised accordingly and
stakeholders would be provided the opportunity to comment through
that process.
---------------------------------------------------------------------------
Finally, we recognize that enrollees are not required to submit
race and ethnicity information to the FFE through the eligibility
application process, and that SBE-FPs and State Exchanges, and off-
Exchange issuers, may similarly permit enrollees to decline to provide
this information. As such, we will include an option for issuers to
indicate that race or ethnicity are not known for a specific enrollee
when submitting data to their EDGE servers. For example, an issuer that
meets the good faith standard and reports this option in its 2025
benefit year EDGE data for a particular enrollee in these situations
will be compliant with the applicable standard, and we would not
penalize an issuer in such situations, as enrollees may decline to
provide this information.
[[Page 27248]]
Comment: Several commenters expressed concern that collecting and
extracting the race, ethnicity, or ICHRA data elements would impose
additional administrative burden, require costly IT system builds, and
mandate other operational updates to develop and test the submission of
these data elements to issuer EDGE servers.
Response: We acknowledge concerns that the new data collection,
particularly the data on race, ethnicity, and ICHRA indicator, could
impose additional administrative burden and may require operational
changes to develop, test, and validate submission of these data
elements. As further detailed in the Information Collection section of
this rule, we are updating our estimates of the burden and costs
associated with this new data collection. Currently, all issuers that
submit data to their EDGE servers \181\ have automated the creation of
data files that are submitted to their EDGE servers for the existing
required data elements, and each issuer will need to update their file
creation process to include the five new data elements, which will
require a one-time administrative cost. In addition to adding this one-
time cost, we also update the estimate to reflect that collection and
submission of all five of the new data elements will require 5 hours of
work by a management analyst (one hour of work per new data element
collected) on an annual basis. We also will revise the information
collection under OMB control number 0938-1155 to reflect these
additional costs.
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\181\ Issuers that elect a risk adjustment default charge are
not required to submit EDGE data. See 45 CFR 153.740(b) and 81 FR at
12237 -12238. See also, for example, Summary Report on Permanent
Risk Adjustment Transfers for the 2020 Benefit Year at 36 (2021,
June 30). CMS. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2020.pdf.
---------------------------------------------------------------------------
This estimate recognizes that information to populate the ICHRA
indicator data field is not routinely collected by all issuers at this
time, though most issuers currently collect race, ethnicity, ZIP Code,
and a subsidy indicator information in some manner.\182\ Because we are
adopting a transitional approach under which issuers will be required
to populate the race, ethnicity, and ICHRA indicator data fields using
data they already have or collect for the 2023 and 2024 benefit years,
issuers are not required to make any changes to the manner in which
they currently collect the race, ethnicity, and ICHRA data elements for
the 2023 and 2024 benefit year submissions. This transition period
allows additional time for issuers to develop processes for collection
and validation of the data required for the new data fields. After
consideration of comments, including those related to the burden
estimates, we are finalizing the collection and extraction of the five
new data elements, with the modifications discussed in this section. We
continue to believe that the benefits of collecting and extracting
these data elements, including race, ethnicity, and the ICHRA
indicator, outweigh the burdens and costs associated with the new
requirement.
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\182\ The estimated burden associated with collection of the
race, ethnicity, ZIP Code, and the subsidy indicator data is the
additional effort and expense for issuers to compile and submit
these additional data elements to their EDGE servers and to retain
them as part of their risk adjustment records. If the burden
estimate for collection of the race, ethnicity, or ICHRA indicator
data elements changes beginning with the 2025 benefit year (after
the transitional approach ends), the information collection under
OMB control number 0938-1155 would be revised accordingly and
stakeholders would be provided the opportunity to comment through
that process.
---------------------------------------------------------------------------
Comment: Several commenters expressed support for the collection
and extraction of the ICHRA indicator. One of these commenters
explained that collecting and extracting ICHRA indicator would allow
HHS to better understand the types of employers offering ICHRAs and the
characteristics of the employees enrolling in coverage using ICHRAs.
Conversely, several commenters stated that the ICHRA indicator was
not readily available to issuers, and thus issuers would be unable to
collect and submit information to populate the ICHRA indicator data
field. Specifically, these commenters stated that requiring collection
of information to populate the ICHRA indicator data field would require
issuers to collect this data element directly from employers, as the
FFE, SBE-FPs, and State Exchanges do not currently collect this data
outside of SEP enrollments. These commenters also noted that collecting
this data element from employers would be administratively burdensome.
One commenter requested further guidance on how issuers would be
expected to collect and report this data element.
Response: We agree that collecting and extracting ICHRA indicator
data will allow HHS to better understand the characteristics of the
employees enrolling in coverage using ICHRAs and will allow HHS to
conduct analyses to examine whether there are any unique actuarial
characteristics of the ICHRA population, (such as the health status of
enrollees with ICHRAs), and to investigate what impact (if any) ICHRA
enrollment is having on State individual (or merged) market risk pools.
After considering public comments, we are finalizing this policy with
slight modification to the transitional approach.
In the proposed rule (87 FR 631), we acknowledged that the ICHRA
indicator may be collected by HHS from FFE or SBE-FP enrollees through
the eligibility application process and that our intention would be to
structure these data elements for EDGE data submissions similar to
current collections, where possible. As noted above, the ICHRA
indicator data element is intended to indicate whether a particular
enrollee's health care coverage involves (or does not involve) an
ICHRA. Issuers will be permitted to populate the ICHRA indicator with
information from FFE or SBE-FP enrollees or enrollees through State
Exchanges, or from other sources for collecting this information from
these enrollees.
Currently, the FFE collects information about ICHRA availability
from all applicants to determine whether they are eligible for a SEP,
as individuals and their dependents who become newly eligible for an
ICHRA may be eligible for a SEP. The FFE will also collect information
about ICHRA affordability from applicants seeking financial assistance
who attest to having ICHRA offers, as the details of the offer impact
APTC eligibility. However, recognizing that issuers may not currently
routinely collect or otherwise have access to the information for all
of their enrollees needed to populate the ICHRA indicator, we are
finalizing the adoption of a transitional approach for the 2023 and
2024 benefit years.\183\ Under this transitional approach, similar to
the race and ethnicity data fields, issuers will be required to
populate the ICHRA indicator using information the issuer currently has
access to or otherwise collects that could be used to populate the
ICHRA indicator. For example, where an FFE enrollee is using a SEP,
information about ICHRA availability is collected by the FFE, and the
FFE may make these data available to issuers. In addition, an issuer
may currently have or collect information that could be used to
populate the ICHRA indicator in situations where the issuer is being
paid directly by the employer through the ICHRA for the individual
market
[[Page 27249]]
coverage.\184\ Then, beginning with the 2025 benefit year, the
transition period will end, and issuers will be required to populate
the ICHRA indicator data field using available sources (for example,
with information from Exchanges, small employers, or by requesting
information directly from enrollees) and, in the absence of such an
existing source for particular enrollees, to make a good faith effort
to ensure collection and submission of the ICHRA indicator for these
enrollees. HHS will provide additional details on what constitutes a
good faith effort to ensure collection of this data element in the
future.\185\
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\183\ In the proposed rule, we proposed a transitional approach
whereby the ICHRA indicator would be optional for the 2023 and 2024
benefit years. See 87 FR at 631. After consideration of comments,
for simplicity and to mitigate burdens, we are adopting the same
approach for assessing compliance during the transition for
populating the race, ethnicity and ICHRA indicator data fields.
\184\ Employers have flexibility to reimburse employees enrolled
in ICHRAs for covered medical expenses they incur (including
premiums for individual health insurance coverage) or to make the
payment on behalf of the enrollee (including premiums for individual
health insurance coverage).
\185\ If the burden estimate for collection of ICHRA indicator
changes beginning with the 2025 benefit year (after the transitional
approach sends), the information collection under OMB control number
0938-1155 would be revised accordingly and stakeholders would be
provided the opportunity to comment through that process.
---------------------------------------------------------------------------
As we typically do with other EDGE data elements, we will provide
technical guidance to instruct issuers on the format and manner for
submission of this data element via the applicable benefit year's EDGE
Server Business Rules and the EDGE Server Interface Control
Document.\186\ We believe that providing a transitional period for the
2023 and 2024 benefit years balances the need to provide additional
time for issuers to develop and test available options for collection,
validation, and population and submission of the ICHRA indicator, with
HHS' efforts to better analyze the ICHRA population, the employers that
offer ICHRAs, as well as to investigate the impact of ICHRAs on the
individual (and merged) market single risk pools and the HHS-operated
risk adjustment program. HHS intends to seek input from issuers and
other stakeholders to inform development of the good faith standard and
determine the most feasible method for issuers to collect the
information used to populate this data field.\187\
---------------------------------------------------------------------------
\186\ 45 CFR 153.610(a), 153.700(a), and 153.710.
\187\ If the burden estimate for collection of ICHRA indicator
changes beginning with the 2025 benefit year (after the transitional
approach ends), the information collection under OMB control number
0938-1155 would be revised accordingly and stakeholders would be
provided the opportunity to comment through the information
collection process.
---------------------------------------------------------------------------
Comment: Many commenters supported the proposal to extract the
three data elements issuers already submit to their EDGE servers--plan
ID, rating area, and subscriber indicator--noting that extraction of
these data elements would further HHS' ability to analyze and consider
policy changes to the risk adjustment methodology. Two commenters
supported the proposal because they believe extracting these data
elements would allow HHS to assess and consider a plan-based approach
to risk adjustment. One commenter suggested that HHS consider
extracting plan ID and rating area earlier, beginning with the 2020 or
2021 benefit year enrollee-level EDGE data extractions and reports.
This commenter noted that issuers already collect these data elements,
and that waiting until the 2022 benefit year to extract these data and
then using these data to further analyze risk patterns would delay any
future modifications to improve the risk adjustment methodology until
the 2026 benefit year at the earliest.
However, several commenters expressed concern that the extraction
of plan ID, rating area, and subscriber indicator data would pose a
risk to information that issuers consider proprietary and enrollee
privacy, and that plan ID and rating area data are unnecessary for risk
adjustment purposes since the risk adjustment program analyzes risk at
the enrollee-level.
Response: We are finalizing the extraction of plan ID, rating area,
and subscriber indicator with slight modification to the applicability
date for extraction of two of these data elements. We will extract plan
ID and rating area beginning with the 2021 benefit year, and will
extract subscriber indicator beginning with the 2022 benefit year. HHS
is committed to continuously considering ways to improve HHS programs,
including ways to better assess risk patterns in the individual or
small group (including merged) market programs, and believes that
extracting plan ID and rating area as soon as feasible will improve
HHS' ability to assess risk patterns and the impact of risk adjustment
policies at a plan level. We are finalizing an earlier applicability
date for extraction of plan ID and rating area because we share the
commenter's concern that waiting until the 2022 benefit year could
result in a significant delay in the pursuit of future modifications to
improve the risk adjustment methodology and program requirements.
Additionally, taking into consideration that issuers already submit
plan ID and rating area data elements to their EDGE servers, extracting
these data sooner would result in little to no additional issuer
burden. Extracting plan ID and rating area will also improve HHS'
ability to estimate the transfers impact of potential future policies
using the enrollee-level EDGE data while minimizing additional burden
to issuers with respect to analysis of such potential future policies.
While we acknowledge commenters' concerns that the extraction of
plan ID, rating area, and subscriber indicator could pose a risk to
information that issuers may consider to be proprietary and enrollee
privacy, we believe that there are sufficient mitigation strategies in
place such that the collection and extraction of these additional data
elements presents no significant additional risk of disclosure of
information that issuers consider to be proprietary or to enrollee
privacy. For example, as discussed above in response to comments
regarding privacy and security concerns related to the collection of
new data elements, the adoption and continued use of the distributed
data collection model ensures that each issuer retains control of their
respective data. Additionally, HHS releases only a limited data set of
select masked enrollee-level EDGE data elements only to qualified
researchers and only if they meet the requirements for access to such
file, including entering into a data use agreement that establishes the
permitted uses or disclosures of the information and prohibits the
recipient from identifying the information. Finally, the policy adopted
in this final rule that excludes plan ID, rating area, and ZIP Code
from the limited data set further mitigates the risk of disclosure of
information that issuers may consider to be proprietary and enrollee
PII.
In response to commenters' assertion that plan ID and rating area
are unnecessary for risk adjustment purposes since the risk adjustment
program analyzes risk at the enrollee-level, we note that, since the
2014 benefit year, issuers have been required to submit plan ID, rating
area, and subscriber indicator to their EDGE servers to support HHS'
calculation of risk adjustment transfers (81 FR 94101). Furthermore,
while the risk adjustment models are recalibrated on enrollee-level
EDGE data, HHS uses available plan-level data, summary reports, and
enrollee-level EDGE data to evaluate and analyze the performance of the
risk adjustment program and inform future policy changes for the
program. As explained in the proposed rule (87 FR 628), we will use
rating area and plan ID to further assess risk patterns and the impact
of risk adjustment policies. For example, the extraction of rating area
will provide HHS more granular data to assess risk patterns and impact
based on geographic differences. We therefore disagree that plan ID and
rating area are
[[Page 27250]]
unnecessary for risk adjustment purposes.
Comment: Several commenters supported the proposed exclusion of
plan ID, ZIP Code, and rating area from the limited data set. These
commenters explained that excluding these data elements from the
limited data set would mitigate concerns related to increased exposure
of enrollees' PII, data security, and release of information issuers
consider proprietary. One commenter also recommended that HHS consider
excluding subscriber indicator from the limited data set, also noting
concerns surrounding exposure of enrollees' PII.
Other commenters opposed the proposed exclusion of plan ID, ZIP
Code, and rating area from the limited data set because exclusion of
these data elements would limit qualified researchers' abilities to
gain insight that could better inform policy and would also
significantly restrict the actuarial use of the limited data set. One
commenter recommended including a geographic variable in the limited
data set in lieu of ZIP Code, plan ID, and rating area that would
indicate placement on the urban-rural continuum. Another commenter
recommended that HHS adopt a data use standard that would, for example,
only include geographical data (such as plan ID, ZIP Code, and rating
area) when there is more than one issuer with at least 5 percent of the
enrollment in the rating area to mitigate the concerns with release of
information issuers consider proprietary. Another commenter suggested
that HHS evaluate whether there is a way to include ZIP Code in the
limited data set, as this data element is particularly useful in
community-based health equity research.
Response: We recognize and agree with commenters' that including
plan ID, ZIP Code, and rating area would enhance the usefulness of the
limited data set. However, we are finalizing the exclusion of these
data elements from the limited data set to address stakeholder concerns
related to providing geographic information, which they believe could
result in the identification of certain issuers and the release of data
these issuers perceive as competitive and proprietary. Specifically, we
also recognize and agree with the concerns that including plan-level
data, like plan ID (which represents the HIOS ID, State, product ID,
standard component ID, and variant ID) and rating area in the limited
data set could increase the risk of disclosure of information that
issuers may consider to be proprietary and the risk that outside
entities that receive the data for research may be able to identify
issuers using State and rating area, particularly when there is a small
number of issuers in a State.
We considered whether we could implement a formal data use standard
that would only include geographical data based on the number of
issuers in a rating area and on a threshold percentage of enrollment in
that rating area. However, in considering this option, we recognize
that the appropriate threshold percentage may vary based on market
conditions, which could make it difficult to establish and maintain a
non-arbitrary threshold. In addition, we would want to solicit comments
on the establishment of any such threshold. Therefore, since we did not
propose any such threshold, we are not finalizing one at this time.
However, we will continue to consider if we can develop a standard for
including geographical data in the limited data set based on certain
characteristics in a rating area (for example, number of issuers) and
would outline such a proposed threshold in future notice-and-comment
rulemaking.
We similarly considered whether we could include a geographic
variable to indicate placement on the rural-urban continuum. However,
in collecting and extracting plan ID, rating area, and ZIP Code, we
recognize that we may not have the appropriate data elements to
accurately determine where on the rural-urban continuum an enrollee
should be placed because areas are often defined as rural or urban
based on county data, which we believe we may not be able to accurately
identify using only plan ID, ZIP Code, and rating area.\188\ In
addition, ``rural'' and ``urban'' are not defined consistently. For
example, the Federal government uses two main definitions for
``rural,'' and generally determines which geographic regions are
considered urban based on the regions that meet the rural
classification.\189\ For these reasons, if we were to consider
including any such geographic variable in the limited data set based on
collection and extraction of plan ID, ZIP Code, and rating area, we
would want to solicit comments before implementing such an approach.
Since we did not propose including any such variable, we are not
finalizing one at this time. However, we will continue to consider if
we would be able to develop a geographic variable to indicate enrollee
placement on the rural-urban continuum and would propose any such
policy in future notice-and-comment rulemaking.
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\188\ See, for example, 2010 Standards for Delineating
Metropolitan and Micropolitan Statistical Areas, 75 FR 37246 at
37246 (2010 June 28).
\189\ See, for example, Defining Rural Population. (2020, June
25). HHS. https://www.hhs.gov/guidance/document/defining-rural-population. The two main definitions for ``rural'' used across the
Federal government are developed by the U.S. Census Bureau and OMB.
In addition, the Federal Office of Rural Health and Policy takes
components from both of these main definitions when determining how
to classify a geographic region.
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Although one commenter noted that inclusion of ZIP Code in the
limited data set would be particularly useful for community-based
health equity research, we believe that including ZIP Code, similar to
plan ID and rating area, presents the risk that outside entities that
receive the data for research may be able to identify issuers when
there is a small number of issuers in a State. At this time, we believe
that the risk of potential release of information that issuers may
consider to be proprietary and the risk of identification of individual
issuers by outside entities outweighs the additional benefits qualified
researchers would gain from access to the ZIP Code data, as well as
plan ID and rating area data. As such, we believe excluding ZIP Code,
plan ID, and rating area from the limited data set but including race,
ethnicity, ICHRA indicator, subsidy indicator, and subscriber indicator
as they become available \190\ represents the appropriate balance
between these concerns and providing a limited data set that is useful
to qualified researchers.
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\190\ The subscriber indicator data field will be included in
the limited data set beginning with the 2022 benefit year because it
will be extracted beginning with the 2022 benefit year. The race,
ethnicity, ICHRA indicator, and subsidy indicator data fields will
be included in the limited data set beginning with the 2023 benefit
year because they will be extracted beginning with the 2023 benefit
year.
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As detailed above, we also note that HHS has taken several steps to
protect information that issuers may consider to be proprietary. With
respect to the limited data set, we strictly adhere to all the
requirements and CMS guidelines related to providing the limited data
set to qualified researchers. This includes a requirement that, prior
to receiving the limited data set file, qualified researchers must
enter into a data use agreement that establishes the permitted uses or
disclosures of the information and prohibits the recipient from
identifying the information.\191\ The data use agreement also requires
qualified
[[Page 27251]]
researchers to explain the specific research purpose for which the data
will be used and generally prohibits disclosure of the data.
---------------------------------------------------------------------------
\191\ See Data Use Agreement. CMS. https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS-R-0235L.pdf. Further details on
LDS files available at Limited Data Set (LDS) Files. (2021, December
1). CMS. https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/Data-Disclosures-Data-Agreements/DUA_-_NewLDS.
---------------------------------------------------------------------------
We also note that the limited data set includes masked enrollee-
level data, and that inclusion of subscriber indicator in the limited
data set would not create risk to enrollee privacy or security because
it is intended to identify only whether a masked enrollee is the
subscriber or dependent on a plan. Further, the limited data set file
is subject to Federal laws and regulations in addition to CMS
guidelines, and does not contain specific direct identifiers as set
forth in the HIPAA Privacy Rule.\192\ Specifically, a limited data set
must exclude certain direct identifiers of the individual or relatives,
employers, or household members of the individual, including, but not
limited to, names, telephone numbers, social security numbers, medical
record numbers, account numbers, health plan beneficiary numbers,
biometric identifiers like finger and voice prints, and postal address
information (not including town or city, State, and ZIP Code).\193\ We
note that race, ethnicity, ICHRA indicator, subsidy indicator, and
subscriber indicator are not direct identifiers that must be excluded
from a limited data set and would not add to the risk of enrollees
being identified. In addition, consistent with how we created the
limited data set in prior years, HHS will continue to exclude data from
the limited data set that could lead to identification of certain
enrollees.\194\
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\192\ See 45 CFR 164.514(e)(1) and (2).
\193\ For the complete list of direct identifiers that are
excluded from the limited data set, see 45 CFR 164.514(e)(2)(i)-
(xvi).
\194\ See, for example, Creation of the 2019 Benefit Year
Enrollee-Level EDGE Limited Data Sets: Methods, Decisions and Notes
on Data Use. (2021, August 25). CMS. https://www.cms.gov/files/document/2019-data-use-guide.pdf.
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Comment: Several commenters supported expanding the permissible
uses of the enrollee-level EDGE data as it would help inform HHS policy
analysis and assessment of equity in health coverage and care, identify
and address health disparities, and allow HHS to better understand the
full impact of its policies, including changes to risk adjustment
methodologies.
However, several commenters opposed the proposed expansion of the
permissible uses of enrollee-level EDGE data beyond the uses
established in the 2020 Payment Notice. Some of these commenters
expressed concern that issuers submit data to their EDGE servers with
the belief that the data's primary purpose would be for risk adjustment
purposes or for development of the AV Calculator. These commenters
noted that because of this belief, data collected through the EDGE
servers may not be appropriate, reliable, or sufficiently quality
checked for the proposed expanded uses.
Some of these commenters stated specific concerns with data quality
and reliability of the race, ethnicity, and ICHRA indicator data. These
commenters also explained that they believed race, ethnicity, and ICHRA
indicator data were out of scope and not necessary for the purposes of
operating the risk adjustment program. Several commenters noted that
the proposal to expand the permissible uses of EDGE data would be
inconsistent with the intended use of the distributed data environment
to administer the HHS-operated risk adjustment program. One commenter
requested that HHS adopt a requirement prohibiting use of EDGE data for
purposes other than for recalibration of the risk adjustment model and
development of the AV Calculator.
Response: In the 2014 Payment Notice (78 FR 15497 through 15500),
we established the distributed data collection approach and other
requirements related to data collection and reporting for purposes of
the HHS-operated risk adjustment program. We also explained that we
intended for issuers to provide HHS only those data that we believed
were reasonably necessary for the risk adjustment program.\195\ We
disagree that expanding the permissible uses of data collected through
the EDGE servers is inconsistent with the intent to establish the
distributed data collection approach for collecting risk adjustment
data. We also do not agree that the collection of the race, ethnicity,
and ICHRA indicator data elements are out of scope; instead, we believe
they are reasonably necessary for risk adjustment purposes. As
explained in the proposed rule, the collection and extraction of these
data elements, in combination with the other extracted data elements,
will further HHS' ability to consider more areas of health equity when
assessing risk patterns, better address discrimination in health care
and health disparities, and identify ways to address health equity
issues with regard to the HHS-operated risk adjustment program. More
specifically, the additional data elements will allow HHS to conduct
analysis at a more granular level than our current data allow, further
assess risk patterns and the impact of the risk adjustment policies
based on geographic, income, or other demographic differences, and
investigate, by sub-population, whether there are cost differentials
for certain conditions based on demographic differences (such as race,
ethnicity, or subsidy indicator). For example, HHS believes that
analysis of the race and ethnicity data elements will help HHS better
monitor trends in the health insurance markets and identify potential
refinements to the HHS risk adjustment methodology, including ways to
address health equity issues and ensure that risk adjustment is not
designed in a manner that furthers health inequities. Collection of the
ICHRA indicator will allow HHS to investigate whether there are any
unique characteristics of the ICHRA population and if ICHRA enrollment
is impacting State individual (or merged) market risk pools. This
analysis will help inform potential refinements to the risk adjustment
methodology and policies for future benefit years. Therefore, the
primary purpose and use for the data remains the risk adjustment
program. We further note that HHS continuously evaluates the risk
adjustment program and the data elements that we believe are reasonably
necessary for risk adjustment purposes. For example, we have previously
updated EDGE server data collection requirements to include two new
data elements: (1) Regarding pharmacy claims, the number of days'
supply for prescription drugs, and (2) an in/out-of-network claims
indicator.\196\ The proposal to collect and extract the race,
ethnicity, and ICHRA indicator data elements followed a similar
process.
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\195\ 78 FR 15500.
\196\ 81 FR 94101.
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After consideration of public comments, we are finalizing, as
proposed, the expansion of the permitted uses of enrollee-level data to
allow for more comprehensive study and analysis of potential changes of
other HHS Federal health-related programs alongside HHS commercial
market programs. In the 2018 Payment Notice (81 FR 94101), we noted
that data collected through the EDGE servers will be most useful for
risk adjustment purposes. However, we explained that we believed these
data would also provide valuable information to validate the AV
Calculator and to calibrate other HHS programs in the individual and
small group (including merged) markets and finalized our policy to use
the data provided to HHS through the EDGE servers for these additional
purposes.\197\ Similarly, we believe these data will be valuable in
assessing policy and
[[Page 27252]]
operational issues that are not in connection with programs centered
around the individual or small group (including merged) commercial
health insurance markets. For example, these data will allow HHS to
assess the impact of potential policy changes to PHS Act requirements
enforced by HHS that are applicable market-wide \198\ and those that
are applicable to non-Federal governmental plans.\199\ In addition,
many PHS Act provisions added by the No Surprises Act \200\ apply to
group health plans and health insurance issuers offering group or
individual health insurance coverage, as well as to providers and
facilities, rather than being centered around only non-grandfathered
individual and small group health insurance coverage. As we consider
policy changes related to implementing the new PHS Act requirements
added by the No Surprises Act, we will be able to consult the enrollee-
level EDGE data.
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\197\ Ibid.
\198\ See, for example, 42 U.S.C. 300gg--300gg-28.
\199\ Non-Federal governmental plans are subject to many PHS Act
Federal market reform requirements. See, for example, 42 U.S.C.
300gg-21(a)(1)(A). See also 42 U.S.C. 300bb-1, et. seq. HHS is
generally responsible for enforcement of PHS Act provisions
applicable to non-Federal governmental plans. See, for example, 42
U.S.C. 300gg-22(b)(1)(B) and 45 CFR 150.301, et. seq.
\200\ The Consolidated Appropriations Act, 2021 (CAA) was
enacted on December 27, 2020 and includes Title I (No Surprises Act)
in Division BB.
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We also acknowledge stakeholders' concerns about the reliability
and quality of these newly collected data elements. As detailed
elsewhere in this rule, we will ensure that data quality and
reliability checks are consistent with other data standard checks that
HHS performs. Additionally, we will ensure that the response rate with
respect to the submission of race, ethnicity, and ICHRA indicator data
is adequate to support any analytical conclusions that could inform
policy decisions.
Comment: Most commenters generally supported HHS pursuing efforts
to improve more consistent collection and use of z codes by providers,
with several of these commenters stating that using z codes in the HHS-
operated risk adjustment program may incentivize more consistent use of
z codes by providers. Some commenters also provided specific policies
for HHS to consider to encourage increased and consistent use of z
codes, including focusing on increased outreach to providers to improve
provider awareness of coding guidelines for z codes, working to develop
a uniform data collection approach and standardized definitions to
support consistent z code use, developing electronic health records
certification standards for capturing z codes, and incorporating
reporting metrics for z codes into value-based programs.
Some commenters explained that because z codes are immature as a
clinical tool and can be subjective in nature, HHS should first focus
on steps to ensure z codes accurately reflect SDOH before pursuing
other policies. One commenter stated that using z codes in the HHS-
operated risk adjustment program without substantial preparation could
widen existing gaps in recognized coding standards, and HHS should
instead focus on promoting consistent and comprehensive diagnostic
reporting using these recognized coding standards. Similarly, one
commenter recommended that HHS increase awareness to encourage more
consistent use of z codes by providers and revise z codes to ensure
proper documentation of significant socioeconomic barriers to health
before considering incorporating z codes into the risk adjustment
program. Other commenters explained that requiring providers to use z
codes would create additional administrative burden and thus providers
should not be penalized for not using z codes.
Response: Given that we only solicited comments on how to encourage
the use of z codes and did not propose specific policies in this area,
we are not finalizing any specific policies related to the collection
and extraction of z codes at this time. We appreciate the feedback and
will continue to review and consider the public comments related to the
collection and extraction of z codes to support the operation of the
HHS-operated risk adjustment program.
Comment: Several commenters suggested that HHS consider collecting
and extracting sexual orientation, gender identity, and additional
diagnosis codes related to obesity to support the operation of the HHS-
operated risk adjustment program. One of these commenters also
suggested HHS collect and extract data related to nutritional
deficiencies and excess alcohol use. Another commenter suggested HHS
collect and extract disability and veteran status, as self-reported by
enrollees.
Response: We appreciate these comments but did not propose and are
not finalizing the collection or extraction of the additional data
elements suggested by these commenters at this time. We may consider
the additional data elements presented by these commenters for future
benefit years and generally note that we would want to research whether
there are existing data sources for the information as part of the
consideration of whether to propose changes the risk adjustment data
collection requirements as suggested. We also note that the more severe
manifestations of nutritional deficiencies (for example, HCC 023
Protein-Calorie Malnutrition) and excess alcohol use (HCC 083 Alcohol
Use with Psychotic Complications and HCC 084 Alcohol Use Disorder,
Moderate/Severe, or Alcohol Use with Specified Non-Psychotic
Complications) are among the current payment HCCs in the risk
adjustment models.\201\
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\201\ There are also less severe manifestations of alcohol use
disorder and nutritional deficiencies, but it was determined they
did not meet the criteria for inclusion in the HHS risk adjustment
models.
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6. Risk Adjustment User Fee for 2023 Benefit Year (Sec. 153.610(f))
HHS proposed a risk adjustment user fee for the 2023 benefit year
of $0.22 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.\202\ As
described in the 2014 Payment Notice, HHS' operation of risk adjustment
on behalf of States is funded through a risk adjustment user fee.\203\
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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\202\ For the 2023 benefit year, HHS will be operating the risk
adjustment program in every state and the District of Columbia.
\203\ 78 FR 15409 at 15416 through 15417.
---------------------------------------------------------------------------
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.
For the 2023 benefit year, HHS proposed to use the same methodology
to estimate our administrative expenses to operate the risk adjustment
program as used for the 2022 benefit year. To calculate the user fee,
we divided HHS' projected total costs for administering
[[Page 27253]]
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.
We estimated 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. We projected 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 between the 2019 and 2020 benefit years (prior to
implementation of the ARP in 2021). As such, we proposed the 2023
benefit year risk adjustment user fee rate as $0.22 PMPM. We sought
comment on the proposed risk adjustment user fee for the 2023 benefit
year.
After consideration of comments, we are finalizing the 2023 benefit
year risk adjustment user fee as proposed.
We summarize and respond to public comments received on the 2023
risk adjustment user fee below.
Comment: We received several comments in support of the 2023 risk
adjustment user fee rate.
Response: We appreciate the support and are finalizing, as
proposed, a risk adjustment user fee rate for the 2023 benefit year of
$0.22 PMPM.
7. Compliance With Risk Adjustment Standards; High-Cost Risk Pool
Funds--Audits of Issuers of Risk Adjustment Covered Plans (Sec.
153.620(c))
In the proposed rule (87 FR 633), HHS proposed 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 \204\ 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 proposed 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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\204\ The high-cost risk pool calculations under the HHS risk
adjustment methodology involve 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 94080 through 94082.
---------------------------------------------------------------------------
Notwithstanding any reduction to a national high-cost risk pool's
charges for a given benefit year, this 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 high-cost risk
pool charges and payments would continue to be calculated in accordance
with the established policies, terms and factors.205 206
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\205\ See 81 FR 94058, 94081. See also 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 did
not propose changes to the high-cost risk pool parameters for the
2023 benefit year and therefore will maintain the $1 million
threshold and 60 percent coinsurance rate.
\206\ For a visual illustration of the high-cost risk pool terms
and factors, see 86 FR 24184 through 24185.
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We also clarified 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 proposed 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 sought comment on these proposals.
After review of the comments received, we are finalizing these
policies as proposed.
We summarize and respond to public comments received on these
proposals below.
Comment: Commenters expressed general support for these proposals.
Response: After consideration of the relevant comments, we are
finalizing, as proposed, the policies related to disbursement of high-
cost risk pool funds recouped as a result of audits of risk adjustment
covered plans under Sec. 153.620(c), actionable high-cost risk pool-
related discrepancies filed pursuant to Sec. 153.710(d), and
successful high-cost risk pool administrative appeals filed pursuant to
Sec. 156.1220.
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.\207\
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\207\ HHS has operated the risk adjustment program in all 50
states and the District of Columbia since the 2017 benefit year.
---------------------------------------------------------------------------
In the proposed rule, we proposed 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 (87 FR 634 through 639).
We continue to 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.
We received some comments on HHS-RADV generally that were unrelated
to any proposal in the proposed rule. As these comments are outside of
the scope of this rulemaking, we will not address them at this time. We
further describe the proposed refinements, as well as summarize and
respond to comments on the proposals, in the sections that follow.
[[Page 27254]]
a. Coefficient Estimation Groups in Error Estimation
First, we proposed to modify our process for grouping coefficient
estimation groups in error estimation. In the 2020 HHS-RADV Amendments
Rule (85 FR 76984 through 76989), 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 PLRS values and HHS-RADV error
estimation. To address these rare situations,\208\ we proposed 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 throughout
HHS-RADV error estimation, rather than just at the sorting step that
assigns HCCs to failure rate groups, beginning with the 2021 benefit
year of HHS-RADV. 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 would be calculated under
the State payment transfer formula.
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\208\ 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.
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We also explained in the proposed rule that this update to the
Super HCC policy would necessitate a change to the policy finalized in
the 2021 Payment Notice (85 FR 29196 through 29198), 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.\209\
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\209\ 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.
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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, 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, we proposed to generally maintain the outlier identification
approach adopted in the 2021 Payment Notice and proposed 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 (85 FR 29196 through
29198), we also proposed 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 clarified 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.
We sought comment on these proposals 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.
After reviewing the public comments, we are finalizing the proposal
to extend the application of Super HCCs to apply coefficient estimation
groups throughout the HHS-RADV error rate calculation methodology as
proposed. Additionally, as proposed, we are finalizing the policy 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. However,
we will 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. Issuers
with fewer than 30 de-duplicated EDGE Super HCCs in a failure rate
group may still be considered an outlier in other failure rate groups
in which they have 30 or more de-duplicated EDGE Super HCCs.
We summarize and respond to public comments received on the
coefficient estimation groups in error estimation proposal below.
Comment: Several commenters supported the proposal to extend the
application of Super HCCs to apply coefficient estimation groups
throughout the error rate calculation process. A few of these
commenters asserted that this change better aligns the error rate
calculation with the intent of the HHS-RADV program and will enhance
the integrity of HHS-RADV. Another commenter asserted this change will
contribute to market stability and improve predictability.
Response: We are finalizing this methodological change and the
accompanying policies as proposed. HHS agrees that these changes will
contribute to market stability and improve issuers' ability to predict
HHS-RADV adjustments. More specifically, extending the application of
Super HCCs to apply coefficient estimation groups through the error
rate calculation process better ensures that an issuer only needs to
validate one HCC in a coefficient estimation group to avoid further
impacting an adjustment to an enrollee's risk score in HHS-RADV and
aligns the HHS-RADV methodology with the enrollee risk score
calculation under the State payment transfer formula.
Comment: One commenter requested more information about the
prevalence of enrollees that have multiple diagnoses in a Super HCC
Group.
Response: As described in the proposed rule, the majority of HCCs
in a Super HCC are in the same hierarchy, but in rare instances an
individual enrollee may be recorded as having multiple conditions in a
coefficient estimation group for HHS-RADV. Specifically, only 0.07
percent of enrollees sampled for HHS-RADV in 2018 had multiple HCCs
recorded on EDGE that shared a coefficient estimation group but did not
share an HCC hierarchy.
b. Defining Super HCCs Separately for Adults, Children, and Infants
In conjunction with the proposal to modify the application of
coefficient estimation groups in section III.C.8.a. of this final rule,
we also proposed 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 finalized
in the 2020 HHS-RADV
[[Page 27255]]
Amendments Rule (85 FR 76987), coefficient estimation group logic from
the adult models is applied to all enrollees, including those subject
to the child and infant models. For a full description of the current
and proposed Super HCC policies see the proposed rule (87 FR 635
through 639). In the proposed rule, we proposed 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. These definitions are described in the relevant rows in
the applicable benefit year's DIY software adult variable logic, child
variable logic and infant variable logic. For example, for 2021 HHS-
RADV, in the 2021 Benefit Year DIY Software,\210\ the adult coefficient
group definitions are in the ``HCC group'' rows in Table 6: Additional
Adult Variables, the child coefficient group definitions are in the
``HCC group'' rows in Table 7: Additional Child Variables, and the
infant coefficient group definitions are in 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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\210\ The January 7, 2022 version of the DIY software is
available at 2021 Benefit Year Risk Adjustment Updated HHS-Developed
Risk Adjustment Model Algorithm ``Do It Yourself (DIY)'' Software.
(2022). CMS.
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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 proposed to apply this change beginning
with the 2021 benefit year of HHS-RADV.
We sought comment on these proposals and whether Super HCCs should
continue to be defined for all enrollees based on only the adult
models, should be defined for adult enrollees based on the adult models
and for child and infant enrollees based on the child models, or should
be defined for each age group according to the age group risk
adjustment model to which they are subject, as proposed.
After reviewing the public comments, we are finalizing the proposal
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 proposed.
We summarize and respond to public comments received on defining
Super HCCs separately for adults, children, and infants below.
Comment: Several commenters supported the proposal to define Super
HCCs for each age group according to the age group risk adjustment
model to which they are subject as this change better aligns the error
rate calculation with the intent of the HHS-RADV program and will
enhance the integrity of HHS-RADV. A few commenters opposed defining
Super HCCs separately for adults, children and infants and expressed
concerns with the volatility of the HHS-RADV methodology. One of these
commenters stated that this change would add more complexity to
predicting failure rate groups without providing significant benefit.
Another commenter opposed to this proposal stated that an increase in
the number of factors used in sorting, compounded by relatively small
sample sizes, would lead to greater volatility and higher premiums and
that separating child conditions from adult conditions when defining
Super HCCs would create more volatility for conditions that are
potentially more similar to each other than conditions that are grouped
together in other Super HCCs.
Response: We appreciate the support for these proposals and are
finalizing the changes to define Super HCCs for each age group
according to the age group risk adjustment model to which they are
subject beginning with the 2021 benefit year of HHS-RADV, as proposed.
When we established the current Super HCC grouping policy, we
acknowledged the possibility of defining Super HCCs based on each model
separately; however, we proposed and finalized Super HCCs based on only
the adult models for a number of different reasons. These included
concerns that using the child and infant models separately could lead
to less stable failure rate group assignments year-over-year due to
some infant model Super HCCs with very small sample sizes and
recognition of the fact that the adult models' HCC coefficient
estimation groups would be applicable to the vast majority of enrollees
(including most children, considering the strong overlap between the
structure of the adult and child models). We also believed that the use
of the HCC coefficient estimation groups present in the adult models
sufficiently balanced the representativeness and accuracy of HCC
failure rate estimates across the entire population in aggregate.
However, in recognition of the differences in each age group
model's definitions and due to the updates to HCC hierarchies used in
the risk adjustment models beginning with the 2021 benefit year, we
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. Based on the results of the further analysis, we do not
believe that defining Super HCCs separately for adults, children and
infants, except for where child and adult coefficient estimation groups
have identical definitions, will increase volatility. Rather, as
described in the proposed rule, our simulated analysis found evidence
that this methodological change would increase model stability. The
analysis found that 93.2 percent of factors would remain in the same
failure rate group across subsequent benefit years, which contrasts
with the 91.4 percent of factors that we would expect to remain stable
between subsequent years if Super HCCs were only based on the
definitions in the adult models. This minor improvement to stability in
failure rate groupings may reduce uncertainties issuers face when
modeling pricing, and thus is unlikely to have a negative impact on
premiums, contrary to the concerns voiced by the commenter that the
proposed refinement to the definition of Super HCCs will lead to
greater volatility and higher premiums increase. Moreover, under the
policy we are finalizing in this rule, beginning with the 2021 benefit
year of HHS-RADV, Super HCCs will only be defined separately in cases
where the child and adult coefficient estimation groups do not have
identical definitions. This limits the number of cases in which the
child and adult models diverge, thereby further limiting the volatility
in the HHS-RADV methodology. Therefore, we generally disagree that the
adoption of this methodological update and accompanying policies would
add more complexity without providing significant benefit. Instead, we
believe this is an appropriate refinement to the HHS-RADV methodology
and error estimation process based on our experience operating the
program and analysis of additional years of available data.
c. Negative Failure Rate Constraint
In the 2020 HHS-RADV Amendments Rule (85 FR 76994 through 76998),
we finalized a policy to constrain outlier issuers' error rate
calculations to zero in
[[Page 27256]]
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 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.
In the proposed rule, we proposed 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. To address cases where a
positive error rate outlier issuer has a negative failure rate in one
failure rate group and a positive failure rate in another failure rate
group, we proposed 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 proposed to adopt this policy
beginning with the 2021 benefit year HHS-RADV.
We sought comment on this proposal.
After reviewing the public comments, we are finalizing the negative
failure rate constraint policy, as proposed.
We summarize and respond to public comments received on the
negative failure rate constraint policy below.
Comment: All commenters supported this proposal 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. Some of these commenters
asserted that this modification of the negative failure rate constraint
better aligns the error rate calculation with the intent of the HHS-
RADV program and will enhance the integrity of HHS-RADV.
Response: We appreciate these comments and are finalizing the
negative failure rate constraint policy as proposed and will apply it
beginning with the 2021 benefit year of HHS-RADV. Although our
experience to date leads us to believe that this scenario is unlikely
to occur often, we agree this refinement is consistent with the intent
of the HHS-RADV program and will enhance the integrity of HHS-RADV by
further reducing potential incentives for issuers to use HHS-RADV to
identify more HCCs than were reported to their EDGE servers for an
applicable benefit year.
Comment: One commenter who supported the proposed policy stated
that this change will address instability caused by negative error
rates. This commenter also suggested it would help issuers understand
the implications of the policy if HHS provided data to demonstrate the
impact of extending the negative failure rate constraint from negative
error rate outlier issuers to all outlier issuers, regardless of
whether the outlier issuer has a negative or positive error rate.
Response: As explained in the proposed rule (87 FR 638), we believe
this is an appropriate modification of the policy adopted in the 2020
HHS-RADV Amendments Rule 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. It is rare, but possible, for a positive
error rate outlier to have a negative failure rate in one failure rate
group and a positive failure rate in another failure rate group.
Specifically, across 2017, 2018 and 2019 HHS-RADV, there was only one
instance in which an issuer had a negative failure rate in a failure
rate group for which that issuer was an outlier, but had a total error
rate that was positive. Despite the relative rarity of these cases, we
continue to believe that this is an appropriate modification of the
policy adopted in the 2020 HHS-RADV Amendments Rule. Therefore, to
address these types of cases in future years of HHS-RADV, we are
finalizing, as proposed, the amendment to the application of the
negative failure rate constraint policy. Beginning with the 2021
benefit year of HHS-RADV, for the purposes of calculating the GAF, we
will 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.
9. Disbursement of Recouped High-Cost Risk Pool Funds--Discrepancies of
Issuers of Risk Adjustment Covered Plans (Sec. 153.710(d))
HHS proposed 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 proposed to use the high-cost risk pool funds recouped based on an
actionable 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, we also proposed 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 also
clarified 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 funds as a result of an
actionable discrepancy in the next MLR reporting cycle consistent with
Sec. 153.710(h). We sought comment on these proposals.
After consideration of the relevant comments, we are finalizing
these policies as proposed.
We summarize and respond to public comments received on these
proposals below.
Comment: We received several comments expressing general support
for these proposals.
Response: We are finalizing, as proposed, the policies related to
disbursement of high-cost risk pool funds recouped as a result of
audits of risk adjustment covered plans under Sec. 153.620(c),
actionable high-cost risk pool-related discrepancies filed pursuant to
Sec. 153.710(d), and successful high-cost risk pool administrative
appeals filed pursuant to Sec. 156.1220.
10. Medical Loss Ratio Reporting Requirements (Sec. 153.710(h))
In the proposed rule (87 FR 639), we explained that HHS established
a framework in prior rulemakings to guide
[[Page 27257]]
issuer treatment of certain payments and charges that could be subject
to reconsideration for purposes of risk corridors and MLR
reporting.\211\ For example, because risk adjustment transfer amounts
are factors in an issuer's MLR calculations, a delay in 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 final risk adjustment
transfer amounts could occur due to audits, actionable discrepancies,
or successful appeals. Therefore, we clarified in Sec. 153.710(h)
\212\ how issuers should report certain ACA program amounts that could
be subject to reconsideration for risk corridors and MLR reporting
purposes.
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\211\ See 45 CFR 153.710(h).
\212\ These instructions were previously codified in 45 CFR
153.710(g) and recently redesignated to 45 CFR 153.710(h). See 79 FR
13789 through 13790 and 86 FR 24194 through 24195.
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In the proposed rule, we proposed 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.\213\ We also proposed to add a reference to
HHS-RADV discrepancies under Sec. 153.630(d)(2) to the introductory
sentence in Sec. 153.710(h)(1).
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\213\ For example, the 2022 benefit year HHS-RADV Summary Report
for non-exiting issuers will be published in summer of 2024 and
those issuers would be expected to report those amounts in their
2023 MLR Reports (filed by July 31, 2024).
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We also proposed 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.
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.\214\
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\214\ See, for example, Treatment of Risk Corridors Recovery
Payments in the Medical Loss Ratio and Rebate Calculations. (2020,
December 30). CMS. https://www.cms.gov/files/document/mlr-guidance-rc-recoveries-and-mlr-final.pdf.
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Finally, we proposed 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 (85 FR 786 through 78605 and
86 FR 24194 through 24195) 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).
We sought comments on these proposals.
After reviewing the public comments, we are finalizing the proposed
amendments to Sec. 153.710(h) 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). For greater
clarity, the regulation text we adopt in this final rule at Sec.
153.710(h)(2) contains a non-substantive change to also include a
reference to HHS-RADV adjustments in the second sentence to align with
the addition of the same reference in the first sentence.\215\ We are
also finalizing the technical correction to Sec. 153.710(h)(3) to
point to the correct sections that contain the relevant reporting
instructions.
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\215\ This editorial revision in no way changes or otherwise
affects the requirements under the proposed text and more clearly
and consistently captures 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.
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We summarize and respond to public comments received on proposed
medical loss ratio (MLR) reporting requirements (Sec. 153.710(h)) and
policies below.
Comment: One commenter supported the proposal to amend Sec.
153.710(h) 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). We received two comments on the MLR
reporting cycle and its interaction with the risk adjustment payment
and charge timing, including a suggestion that HHS consider changing
the deadline for reporting during the current MLR reporting year any
adjustment (including HHS-RADV adjustments) made or approved by HHS
before August 15, or the next applicable business day, to June 30 to
avoid creating the need for issuers to refile MLR reports after the
July 31 deadline to account for these adjustments.
Response: We appreciate these comments and are finalizing the
amendments, as proposed, to address and explicitly capture a reference
to HHS-RADV adjustments. The changes to the regulation make clear and
codify HHS' expectation that issuers report HHS-RADV adjustments as
part of their MLR reports in the same manner as they report and with
the same deadlines associated with the risk adjustment payment and
charge amounts (including high-cost risk pool payments and charges)
that were established in the 2017 Payment Notice (81 FR 12236).
As for the MLR reporting cycle, we continue to believe that the
August 15 date provides the necessary flexibility to account for
adjustments to issuers' MLR reports as a result of risk adjustment
payment and charge amounts, including HHS-RADV adjustments. Therefore,
we did not propose, and are not finalizing, changes to the existing
reporting deadlines in Sec. 153.710(h) as applied to HHS-RADV
adjustments or other payments and charges that could be
[[Page 27258]]
subject to reconsideration for purposes of risk corridors and MLR
reporting.
11. Deadline for Submission of Data (Sec. 153.730)
A risk adjustment covered plan must submit data that is necessary
for HHS to calculate risk adjustment payments and charges to HHS in
States where HHS is operating the risk adjustment
program.216 217 In the 2014 Payment Notice (78 FR 15434),
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.
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\216\ 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.
\217\ 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.
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In the proposed rule (87 FR 639 through 640), we did not propose to
change this deadline but proposed 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 exercises enforcement
discretion to extend the deadline to the next applicable business
day.\218\ Recognizing there will be future benefit years when April 30
does not fall on a business day, HHS proposed 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 sought comments on this proposal.
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\218\ See 81 FR 12204 at 12234 n.20; see also Evaluation of EDGE
Data Submissions for 2016 Benefit Year. (2016, December 23). CMS.
https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/EDGE-2016-Q_Q-Guidance_20161222v1.pdf.
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After consideration of the comment received, we are finalizing the
amendment to Sec. 153.730 as proposed.
Comment: One commenter supported this proposal because this
amendment would clarify expectations for when reporting must be
completed.
Response: We are finalizing the amendment to Sec. 153.730 to
clarify that when the April 30 following the applicable benefit year
deadline for issuers to submit the required risk adjustment data falls
on a non-business day, the deadline for issuers to submit the required
risk adjustment.
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))
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 640), we proposed to amend 45 CFR 155.120(c)
such that its nondiscrimination protections would explicitly prohibit
discrimination based on sexual orientation and gender identity. As
explained in the Supplementary Information section earlier in the
preamble, HHS will address this policy, as well as the public comments
submitted in response to this proposal, in future rulemaking.
2. Civil Money Penalties for Violations of Applicable Exchange
Standards by Consumer Assistance Entities in Federally-Facilitated
Exchanges (Sec. 155.206)
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 640 through 641), we proposed to make a
technical correction to 45 CFR 155.206(i) to add language that would
cross-reference 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).\219\ 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.\220\ Additionally, a reference to Sec. 155.206 and any
accompanying adjusted CMP amounts have not been included in HHS' annual
inflation update rulemakings.\221\ Therefore, we proposed 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'' to correct this
oversight. The associated CMP table in 45 CFR 102.3 is updated
annually, and Sec. 155.206(i) was added in the recent annual
update.\222\ To date, no CMPs have been imposed under this authority,
but any that are imposed 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.
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\219\ 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)
(codified as amended at 28 U.S.C.A. Sec. 2461 note 2(a)).
\220\ See Department of Health and Human Services; Adjustment of
Civil Monetary Penalties for Inflation; Interim Final Rule, 81 FR
61538 (2016, September 6).
\221\ See, for example, the Department of Health and Human
Services; Annual Civil Monetary Penalties Inflation Adjustment;
Final Rule, 85 FR 2869 (2020, January 17). See also 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 (2021, November 15).
\222\ See the Department of Health and Human Services; Annual
Civil Monetary Penalties Inflation Adjustment, 87 FR 15100 (2022,
March 17).
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We did not receive any comments in response to the proposed
amendments to Sec. 155.206(i) or the accompanying policies detailed in
the related preamble discussion. For the reasons stated in the proposed
rule, we are finalizing the proposed amendments to Sec. 155.206(i).
3. 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
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 641 through 643), we proposed 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)(6),\223\ 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 proposed 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.
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\223\ While the citation in the preamble in the proposed rule
referred to amendments to add new Sec. 155.220(c)(3)(i)(A)(1)
through (c)(3)(i)(A)(5), the discussion of the proposal and the
proposed regulations made clear that the proposal would add new
Sec. 155.220(c)(3)(i)(A)(1) through (c)(3)(i)(A)(6). See, for
example, 87 FR 641- 642 and 721-722.
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We proposed to codify new Sec. Sec. 155.220(c)(3)(i)(A)(1) through
(6) 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
[[Page 27259]]
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.
In addition, we proposed to modify the language in Sec.
155.220(c)(3)(i)(A) that served as the basis for the current plan
detail disclaimer requirement \224\ 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
proposed to revise Sec. 155.220(c)(3)(i)(A) to state that web-broker
websites must disclose and display the 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. This disclaimer would state
that enrollment support for the QHP is available on the Exchange
website, and provide a web link to the Exchange website. This proposal
to modify the disclaimer requirement in Sec. 155.220(c)(3)(i)(A) would
ensure that consumers still receive information on those QHPs for which
a web-broker website does not provide enrollment support and directions
to where they can obtain enrollment support.
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\224\ The current 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 Section 5.3.2.
Federally-Facilitated Exchanges (FFEs) and Federally-Facilitated
Small Business Health Options Program (FF-SHOP) Enrollment Manual
(pp.53). (2021, August 18). https://www.cms.gov/files/document/ffeffshop-enrollment-manual-2021.pdf.
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We sought comments on these proposals. After reviewing the public
comments, and for the reasons discussed in this final rule and the
proposed rule, we are finalizing these requirements as proposed.
We summarize and respond to public comments received on the
proposals related to required QHP comparative information on web-broker
websites and the associated disclaimer.
Comment: Most commenters supported the proposals to require web-
broker websites to display QHP comparative information and the
associated disclaimer. Numerous commenters stated the proposals would
ensure that consumers who use web-broker websites have access to
standardized comparative information on QHPs so they can review,
understand, and compare all available options and select the one that
best fits their needs. Some commenters indicated these proposals would
increase transparency on web-broker websites and reduce the risk that
consumers are influenced based on the financial interests of web-
brokers or by providing a favorable display of QHP information for QHPs
for which the web-broker receives compensation for enrollments.
Response: We appreciate the support for the proposals related to
required QHP comparative information on web-broker websites and the
associated disclaimer. We agree that these proposals will increase
transparency and better enable consumers using web-broker websites to
compare and understand the QHP options available to them.
Comment: Some commenters stated that the proposals were a positive
step, but that HHS should do more to support consumers' ability to
compare plans, such as requiring web-broker websites to display all
plans neutrally and refrain from segregating some QHPs at the bottom of
their website pages.
Response: HHS is committed to continuing to consider ways to expand
support for consumers using non-Exchange websites. However, we did not
propose a requirement for the neutral display of plans in the proposed
rule and note that a neutral display requirement generally is
inconsistent with HHS' proposal under Sec. 155.205(b)(1) to require
web-broker websites to differentially display HHS-designed standardized
plan options beginning with the PY 2023 open enrollment period in a
manner consistent with how standardized plan options are displayed on
HealthCare.gov, unless HHS approves a deviation.
We also recognize that some web-broker websites historically have
displayed limited comparative information for some QHPs at the end of a
list or the bottom of a website page. HHS disagrees, however, that
requirements stricter than those we finalize in this rule are necessary
to address these practices. Current HHS rules prohibit web-broker
websites from displaying QHP recommendations based on compensation
\225\ an agent, broker, or web-broker receives from QHP issuers.\226\
\227\ Additionally, in the August 17, 2021 Web-broker website Display
Bulletin,\228\ we reminded web-brokers that, consistent with the
prohibition in Sec. 155.220(c)(3)(i)(L), their websites must refrain
from filtering the display of QHPs in a manner that favors QHPs for
which the web-broker receives compensation from issuers for
enrollments. Based on our observations and experience, web-brokers that
in past years displayed limited comparative information on certain QHPs
at the bottom of their website pages did so because the web-broker did
not have an appointment or other financial relationship with the QHPs'
issuers. With the adoption of the amendments and policies in this rule,
which we believe will further limit the behavior and practices
identified by the commenter, we are of the view that adopting more
stringent or different guidelines is not necessary at this time.
Rather, the combination of the existing requirements and the changes
finalized in this rule, place sufficient limitations to prevent web-
broker websites from inappropriately segregating some QHPs at the
bottom of their non-Exchange website pages.
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\225\ The term ``compensation'' includes commissions, fees or
other incentives as established in the relevant contract between an
issuer and the web-broker.
\226\ See 45 CFR 155.220(c)(3)(i)(L). See also 84 FR 17515
through 17521 and 17552 through 17553.
\227\ As detailed in this rule, we are also finalizing the
proposals to further expand upon and clarify the prohibition on web-
broker non-Exchange websites from displaying QHP recommendations
based on compensation received from QHP issuers in 45 CFR
155.220(c)(3)(i)(L).
\228\ Web-broker website Display Bulletin. (2021, August 17).
CMS. https://www.cms.gov/files/document/web-broker-website-display-bulletinfinal08172021.pdf.
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Comment: Two commenters requested that we provide flexibility in
terms of how the new standardized disclaimer under Sec.
155.220(c)(3)(i)(A) must be displayed. Specifically, they expressed a
preference for web-brokers to be permitted to display the disclaimer in
a manner that would not require the disclaimer to be repeated next to
each QHP for which it applied, so long as the website design otherwise
clearly indicated to consumers for which QHPs the disclaimer applied
(for example, by displaying a visual cue beside each QHP for which the
disclaimer applied that references the text of the disclaimer in a
single location elsewhere on the website page).
Response: We are finalizing as proposed the amendments to Sec.
155.220(c)(3)(i)(A), to require a web-broker's non-Exchange website, to
the extent that enrollment support for a QHP is not available using its
non-
[[Page 27260]]
Exchange 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 link to the Exchange
website. Historically, one of the criteria to satisfy the prominent
display requirement for the plan detail disclaimer required that it be
provided separately for each QHP where plan information is not
displayed, and the text we provided informed consumers that the web-
broker's website is not able to display all required plan information
about the specific QHP(s) where the disclaimer appeared.\229\ However,
we recognize that our historical approach governing the prominent
display of the plan detail disclaimer and the accompanying text does
not translate well to the new disclaimer requirement in Sec.
155.220(c)(3)(i)(A) finalized in this rule that shifts the focus to
informing consumers about any limitations on enrollment support.
Therefore, we generally agree with these commenters and intend to
provide some flexibility in terms of how we will interpret and apply
the requirement to prominently display the new standardized enrollment
support disclaimer under Sec. 155.220(c)(3)(i)(A). Our goal in
implementing and enforcing this new requirement will be to ensure
consumers are clearly informed about any enrollment limitations on a
web-broker's non-Exchange website and similarly have clear instructions
for accessing HealthCare.gov if they wish to enroll in those QHPs. We
note our intent to generally apply the standards for prominent display
of this new standardized disclaimer as have been described and applied
previously in relation to the prominent display of other required
disclaimers on web-broker websites.\230\ For example, we will consider
this new disclaimer to be prominently displayed if it is displayed in
close proximity to where QHP plan information appears, so that it is
noticeable to the consumer. As such, the new enrollment support
disclaimer must be written in a font size no smaller than the majority
of text on the website page, be noticeable in the context of the
website by (for example) using a font color that contrasts with the
background of the website page, using the exact language provided by
HHS, and including a functioning link to HealthCare.gov. We also
clarify that we will consider the display of the new enrollment support
standardized disclaimer where the enrollment button (or other similar
mechanisms) would otherwise appear for a particular QHP on the web-
broker's non-Exchange website to comply with the criterion that the
disclaimer is noticeable to consumers. We further clarify that we would
similarly consider a web-broker website in compliance with this
criterion if a visual cue is displayed where the enrollment button (or
another similar mechanism) would otherwise appear for a particular QHP
that clearly directs the consumer to the required standardized
disclaimer on the same website page or otherwise displays the required
standardized disclaimer (for example, in a pop-up bubble that appears
while hovering over the visual cue on the website). In both
circumstances, to be considered fully compliant with the prominent
display framework, the enrollment support disclaimer must also be
noticeable using a font color with appropriate contrasts in the context
of the website page or pop-up bubble, be written in a font size that is
no smaller than the majority of the surrounding text, use the exact
language provided by HHS, and include a functioning link to
HealthCare.gov. We will provide additional operational and technical
guidance on the display of the enrollment support disclaimer in advance
of the start of the plan year 2023 open enrollment period to allow time
for implementation. We will also take appropriate steps to similarly
finalize the exact language for the new disclaimer so it can be
implemented in advance of the start of the next open enrollment period.
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\229\ Federally-Facilitated Exchange (FFE) and Federally-
Facilitated Small Business Health Options Program (FF-SHOP)
Enrollment Manual (pp. 53-54). (2021, August 18). https://www.regtap.info/uploads/library/ENR_FFEFFSHOPEnrollmentManual2021_5CR_090921.pdf.
\230\ Ibid. Also see Guidance for Web-brokers on Displaying
Mandatory Standardized Disclaimers. (2015, April 24). CMS. https://www.cms.gov/cciio/Programs-and-Initiatives/Health-Insurance-Marketplaces/Downloads/Guidance-web-brokers-displaying-disclaimers.pdf.
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Comment: One commenter suggested we establish a safe harbor such
that web-brokers are not held responsible for the accuracy of QHP
comparative information obtained from Exchange public use files or the
Marketplace API and displayed on their websites.
Response: Although we recognize that the Exchange public use files
and Marketplace API data may contain errors, we did not propose and
decline to adopt the suggested safe harbor at this time. First, we note
that typically when we have discovered incorrect QHP comparative
information on web-broker websites, it has not been due to incorrect
Exchange data. Instead, in these circumstances, the errors have been
attributable to faulty processes adopted by web-brokers to ingest and
display QHP comparative information, whether the data is sourced from
the Exchange or directly from QHP issuers. Second, HHS has processes in
place for addressing Exchange data corrections, which includes making
necessary updates to the Exchange public use files to reflect the
corrections.\231\ Web-brokers are expected to update the QHP
comparative information on their websites when such Exchange data
errors are corrected, which in cases when web-brokers are using the
Marketplace API will occur automatically. We also notify web-brokers
when updates are made to the Exchange public use files so web-brokers
that do not use the API may make updates to their systems as needed.
However, we also clarify that we would not otherwise hold web-brokers
responsible in circumstances where the incorrect QHP comparative
information is the result of data errors in the Marketplace public use
files or Marketplace API. Consistent with the standard in Sec.
155.220(j)(3), HHS would consider the circumstances for why a web-
broker website fails to provide correct information if the web-broker
otherwise acted in good faith.
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\231\ Health Insurance Exchange Public Use Files (Exchange PUFs)
General Information. (2022). CMS. https://www.cms.gov/files/document/exchange-pufs-geninfofacts-py22.pdf.
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Comment: One commenter requested clarification that requiring web-
broker websites to display all available QHPs does not constitute a
web-broker endorsing QHP issuers with which it is not appointed.
Response: The amendments to Sec. 155.220(c)(3)(i)(A) that we are
finalizing in this rule do not modify or otherwise change the long-
standing requirement in Sec. 155.220(c)(3)(i)(B) for web-broker non-
Exchange websites to provide consumers the ability to view all QHPs
offered through the Exchange.\232\ Instead, the revisions to Sec.
155.220(c)(3)(i)(A) that we finalize in this rule identify the required
minimum QHP comparative information that must be displayed on web-
broker non-Exchange websites for all available QHPs in the applicable
consumer's area. In response to the comment, we further acknowledge
that requiring web-broker websites to display all available QHPs
regardless of appointment status with QHP issuers should not be
perceived as
[[Page 27261]]
an endorsement of QHP issuers with which the web-broker is not
appointed.
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\232\ This requirement was previously codified at Sec.
155.220(c)(3)(ii) and first established in regulations that were
effective in 2012. See 77 FR 18309 at 18334 through 18336 and 18449.
It is designed to ensure that web-broker websites provide consumers
with access to the same information they would have if they used the
Exchange website. See 77 FR 18335-18336.
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Comment: One commenter requested that we clarify whether Sec.
155.220(c)(3)(i)(A)(6) requires web-broker websites to host static
files or whether they are permitted to provide links to issuers'
websites in instances where information is subject to change and may be
best presented dynamically (for example, in the case of provider
directories).
Response: We clarify that, as finalized, Sec.
155.220(c)(3)(i)(A)(6) requires web-broker non-Exchange websites that
assist consumers with Exchange enrollments to include the provider
directory made available to the Exchange under Sec. 156.230 as part of
the required minimum QHP comparative information. We further clarify
that web-broker websites that provide a link to the appropriate
provider directory web pages on the applicable QHP issuer's website
would satisfy this requirement. The provider directory field in the
Exchange public use files consists of links to the applicable QHP
issuers' provider directory website pages. Finally, we remind web-
brokers and other stakeholders, that web-broker websites may obtain the
required QHP comparative information from the Exchange (that is, from
the Exchange public use files or Marketplace API) or directly from QHP
issuers, as reflected in the introductory clause at Sec.
155.220(c)(3)(i)(A).
Comment: Two commenters opposed these proposals. One commenter
stated that these proposals will add little value for consumers; harm
the consumer experience when using web-broker websites; and make it
more difficult for web-brokers to serve their consumers. This commenter
suggested that the goal of these changes may be to drive consumers to
use HealthCare.gov. Another commenter expressed concern that these
proposals encroach on State authority to regulate the business of
insurance and mentioned a possible, unspecified conflict with existing
State regulations.
Response: We respectfully disagree that these changes will harm
consumers. We believe that these changes will instead make it easier
for consumers to compare QHPs when using web-broker websites and
identify the best option for their unique circumstances. For example,
if web-broker websites are not required to provide basic QHP
comparative information for all available QHPs, such as premium and
cost-sharing information, there is no reasonable way for consumers
using those websites to compare all available options other than
navigating to multiple websites. Therefore, we also believe these
changes will make it easier, rather than more difficult, for web-
brokers to assist their customers. This also is not an attempt to drive
consumers away from non-Exchange websites. The existing web-broker plan
detail disclaimer requirement mandates that consumers are provided a
functional link to HealthCare.gov. The maintenance of such a
requirement for the new disclaimer that must appear when the web-broker
website does not support enrollment in a QHP is an appropriate and
necessary exercise of HHS' authority to establish requirements
governing web-broker participation in FFEs and SBE-FPs. We remain
committed to the FFE direct enrollment program and believe consumers
should have access to multiple options to enroll in coverage. In
addition, we emphasize that these changes largely codify existing
policies for the interim approach in place beginning with the PY 2022
open enrollment period pending future rulemaking on these issues. They
also represent an appropriate evolution of our enforcement approach
regarding the required display of QHP comparative information on web-
broker websites under Sec. 155.220(c)(3)(i)(A). While we released more
limited QHP details in the early years of Exchanges, that is no longer
the case. QHP plan information has been more readily accessible for
some time, both through public use files and the Marketplace API. In
addition, enrollment through direct enrollment channels (including web-
broker websites) has continued to grow year after year.\233\ Therefore,
we continued to consider these issues over the years and continue to
believe the approach finalized in this rule is in the best interests of
Exchange consumers using web-broker websites because it will aid them
in comparing QHP options without having to navigate to multiple
websites.
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\233\ See, for example, CMS Releases Final Snapshot for the 2021
Federal Exchange Open Enrollment Period. (2021, January 12).
CMS.https://www.cms.gov/newsroom/press-releases/cms-releases-final-snapshot-2021-federal-exchange-open-enrollment-period.
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With respect to the commenter that expressed concern about
encroachment on State regulatory authority or alleged conflict with
State regulations, we note that the requirement to display QHP
comparative plan information and use an appropriate disclaimer has been
part of the framework governing the use of web-broker websites since
the inception of the Exchanges.\234\ We are not aware of any potential
conflicts with existing State regulations and generally welcome
information from State regulators or other stakeholders about any
specific suspected conflicts. We also remain committed to working
collaboratively with States with respect to issues related to agent and
broker participation in the FFEs and SBE-FPs, including with respect to
any issues that may cause confusion for web-brokers as to what is
expected of them with respect to website display requirements
applicable in FFE and SBE-FP States.
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\234\ We note at the time this regulatory provision was codified
at Sec. 155.220(c)(3)(i). See 78 FR 54134 and 54135.
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b. Prohibition of QHP Advertising on Web-Broker websites
Section 155.220(c)(3)(i)(L) currently prohibits web-broker non-
Exchange websites from displaying QHP recommendations based on
compensation \235\ an agent, broker, or web-broker receives from QHP
issuers. In the proposed rule (87 FR 643), we proposed to amend Sec.
155.220(c)(3)(i)(L) to provide 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.
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\235\ The term ``compensation'' includes commissions, fees or
other incentives as established in the relevant contract between an
issuer and the web-broker. See 84 FR 17515.
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We are finalizing the proposal to amend Sec. 155.220(c)(3)(i)(L)
to ensure that QHP advertisements are not mistakenly understood as QHP
recommendations that the web broker deems to be in the best interest of
the consumer. As we discuss in greater detail in the responses to the
comments in this section, the intent of this amendment is to ensure
that consumers are able to make informed decisions about the best
option for their specific circumstances, and are not influenced by
favorable placement based on advertising or compensation from issuers
to agents, brokers, or web-brokers. However, this amendment is not
intended to stifle innovative developments, such as filtering, that can
help inform customers of the options that best fit their needs.
We sought comment on the proposed amendments to Sec.
155.220(c)(3)(i)(L) and the prohibition on QHP advertising on web-
broker websites, which we summarize and respond to below.
Comment: Most commenters supported the proposals related to
[[Page 27262]]
Sec. 155.220(c)(3)(i)(L) and the prohibition on QHP advertising on
web-broker websites, or otherwise providing favored or preferred
placement in the display of QHPs based on compensation agents, brokers,
or web-brokers receive from QHP issuers. One commenter asserted that
the display of QHPs on web-broker websites should be based on factors
that will help consumers choose the best option for their needs and
allowing preferred placement of QHPs based on compensation from issuers
does not place consumer interests first. Another commenter noted that
agents, brokers, and web-brokers have not been required to provide
unbiased information to consumers, and this proposal would help improve
transparency for consumers. One commenter stated that this proposal
will improve the shopping experience on web-broker websites by
increasing the likelihood that consumers select plans that are the best
fit for them based on costs, benefits, provider networks, and drug
formularies instead of advertising paid for by issuers. Another
commenter stated web-broker websites should not direct a consumer
toward a plan unless the direction is based on that consumer's needs.
One commenter indicated they were supportive of the proposals to ensure
consumers using web-broker websites are not provided biased information
in a way that benefits the advertiser rather than the consumer. Many
other commenters shared similar sentiments as those described above.
Response: We appreciate comments in support of the proposed
amendments to Sec. 155.220(c)(3)(i)(L) and the prohibition on QHP
advertising on web-broker websites. We agree that the display of QHPs
on web-broker websites should be based on factors that assist consumers
in making informed decisions about the best option for their specific
circumstances, and should not be influenced by favorable placement
based on advertising or compensation from issuers to agents, brokers,
or web-brokers. After consideration of comments, we are finalizing as
proposed the amendments to Sec. 155.220(c)(3)(i)(L) and the
prohibition on QHP advertising on web-broker websites.
At the same time, we remain committed to the development and use of
innovative consumer-assistance tools by web-brokers to help consumers
select QHPs that best fit their needs. As such, we also clarify that
web-brokers will continue to be able to offer filtering capabilities or
decision support tools that the consumer can use to navigate or refine
the display of QHPs consistent with existing CMS guidelines.\236\ For
example, a web-broker can offer consumers additional sort functionality
to alter the order of the QHPs listed, as long as the web-broker
website still provides consumers the ability to view all QHPs offered
through the Exchange regardless of how the consumer chooses to sort the
QHPs (for example, from lowest to highest premium or deductible). A
web-broker may also allow the consumer to apply filters (for example,
metal level, provider network type, issuer) to the full list of
available QHPs to refine the consumer's search. If a consumer selects a
certain filter (for example, bronze metal level), the web-broker
website must display all QHPs offered through the relevant Exchange
that satisfy that filter's description. The use of any filters or tools
must comply with other applicable requirements; for example, the use of
filters or other tools to refine the display of QHPs cannot result in
the favorable placement of those QHPs for which a web-broker receives
compensation for enrollments in relation to all other available QHPs
consistent with Sec. 155.220(c)(3)(i)(L) and applicable guidance on
permissible filtering of QHPs on web-broker websites. We believe that
the framework for the display of QHP information captured in Sec.
155.220(c)(3)(i), as amended by this rule, coupled with the flexibility
to develop innovative consumer assistance tools to filter or refine the
list of available QHPs strikes the right balance to protect and support
consumers enrolling in Exchange coverage through web-broker websites.
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\236\ Web-broker website Display Bulletin. (2021, August 17).
CMS. https://www.cms.gov/files/document/webbroker-website-display-bulletinfinal08172021.pdf.
---------------------------------------------------------------------------
In response to commenters stating web-broker websites have not been
required to provide unbiased information, we note a variety of
requirements have been in place for some time that require web-broker
websites to provide consumers information about QHPs in an unbiased
fashion. For example, Sec. 155.220(c)(3)(i)(B) requires web-broker
websites to provide consumers the ability to view all QHPs offered
through the Exchange without respect to compensation arrangements web-
brokers have with QHP issuers. Similarly, Sec. 155.220(c)(3)(i)(A) has
required web-broker websites to provide certain QHP comparative
information for all available QHPs or a standardized disclaimer with a
link directing consumers to the Exchange in cases when the comparative
information is not provided; we note that we are also taking additional
steps in this rule to ensure consumers using web-broker websites have
access to the same information for all available QHPs as they would if
they used the Exchange website. In addition, Sec. 155.220(c)(3)(i)(L)
already prohibited web-broker websites from displaying QHP
recommendations based on compensation agents, brokers, or web-brokers
receive from QHP issuers and will be further enhanced by the changes to
Sec. 155.220(c)(3)(i)(L) finalized in this rule that will further
protect consumers by prohibiting QHP advertising and preferred
placement of QHPs on web-broker websites based on compensation from QHP
issuers.
Comment: One commenter did not oppose the proposal if it is limited
to advertising or preferred placement based on compensation from
issuers on web-broker website pages for enrollment through the Exchange
(that is, if the prohibition does not apply to web-broker website pages
marketing non-QHPs and QHPs for enrollment outside the Exchange).
Another commenter requested clarification that the proposal was not
intended to prohibit advertising on website pages marketing other non-
QHP product types, and that the proposal was instead intended only to
apply the prohibition to web-broker website pages supporting enrollment
in QHPs through the Exchange.
Response: We clarify the amendment to Sec. 155.220(c)(3)(i)(L) and
the prohibition on QHP advertising only applies to web-broker website
pages displaying or marketing QHPs for enrollment through the Exchange.
In other words, this framework would extend to web-broker websites and
pages for which enrollment would occur through a direct enrollment
pathway (including both the Classic and Enhanced direct enrollment
pathways). It would not, however, extend to other web-broker website
pages, such as those marketing products--whether QHPs or non-QHPs--for
enrollment outside the Exchange. We did not propose to extend it in
this manner because the framework in Sec. 155.220 is part of the
procedures the Secretary established under section 1312(e) of the ACA
under which agents and brokers (including web-brokers) can enroll
consumers in QHPs offered through Exchanges.
Comment: One commenter recommended that the proposed prohibition on
QHP advertising and preferred placement on web-broker websites not be
interpreted to prohibit the display of additional QHP information
beyond the required QHP comparative information for a subset of QHPs.
The commenter explained that
[[Page 27263]]
some web-brokers have arrangements with issuers to display information
about plan designs or features that include the display of information
not available in Exchange public use files or the Marketplace API, and
that the display of this additional information can highlight
distinctions between plans and help consumers select plans that best
meet their needs.
Response: We did not propose and are not finalizing a general
prohibition on web-broker websites displaying QHP information beyond
what is provided by the Exchange (for example, made available in the
Exchange public use files or through the Marketplace API) or directly
from QHP issuers. Similarly, we confirm that the requirement to display
minimum required QHP comparative information captured in Sec.
155.220(c)(3)(i)(A)(1) through (6) as finalized in this rule does not
prohibit the display of additional QHP information the web-broker
obtains directly from QHP issuers. We further note and confirm that the
regulatory text at Sec. 155.220(c)(3)(i)(A) envisions that QHP
information would be provided to web-brokers by Exchanges and QHP
issuers. At the same time, however, web-brokers that elect to display
such additional information must ensure compliance with other
applicable requirements. For example, the display of additional
information received from an issuer for its QHPs cannot result in the
favorable placement of those QHPs in relation to all other available
QHPs consistent with Sec. 155.220(c)(3)(i)(L) and applicable guidance
on permissible filtering of QHPs on web-broker websites.\237\
Similarly, any payments received from QHP issuers to display additional
information on web-broker websites cannot result in favored or
preferred placement in the display of QHPs on the web-broker's website.
---------------------------------------------------------------------------
\237\ Ibid.
---------------------------------------------------------------------------
Comment: One commenter supported the proposal only in the context
of consumer-facing web-broker websites, and requested different
treatment of agent/broker-facing web-broker websites.\238\ The
commenter expressed concern that if the proposal applied to agent/
broker-facing web-broker websites, it could inadvertently jeopardize
innovation by web-brokers related to educating agents and brokers about
a large number of QHP offerings, in particular those offered by new
market entrants, and differences in the design of those QHPs' benefits,
networks, and other plan features. Similarly, the commenter further
explained that web-brokers often host issuer direct enrollment websites
\239\ based on compensation from issuers and in doing so often provide
additional features or integrations associated with those issuer
partnerships that are available to agents and brokers using their web-
broker websites (for example, better premium payment integration, the
ability to enroll in the issuers' plans outside the Exchange), and was
concerned the proposed amendments to Sec. 155.220(c)(3)(i)(L) would
disincentivize the development of these additional features.\240\
Lastly, the commenter requested clarification that visual cues
associated with the display of particular issuers' QHPs on a web-
broker's website (for example, to indicate the availability of
additional functionality such as payment integration) are not
prohibited by this proposal.
---------------------------------------------------------------------------
\238\ Consumer-facing web-broker websites are those used
independently by consumers without the assistance of an agent or
broker. Agent/broker-facing web-broker websites are used by agents
or brokers assisting consumers; in this case, the consumers agents
or brokers are assisting may never view the web-broker websites that
are being used by the agents or brokers assisting them. Generally,
Exchange rules governing web-broker websites do not distinguish
between consumer-facing and agent/broker-facing web-broker websites.
However, this commenter requested that we create such a distinction.
\239\ Web-brokers may function as QHP issuer direct enrollment
technology providers. See Sec. 155.20.
\240\ In this case, we believe the commenter is intending to
convey that a QHP issuer relying on a web-broker as a QHP issuer
direct enrollment technology provider would be less likely to engage
the web-broker to provide these additional features (whether only on
its issuer-specific direct enrollment website or through the web-
broker's own website) if it could not also pay the web-broker to
advertise the availability of its QHPs and these additional features
to agents and brokers using its web-broker website.
---------------------------------------------------------------------------
Response: We appreciate that some web-brokers may wish to have
additional flexibility and provide additional resources to their agent
and broker partners. The amendments to Sec. 155.220(c)(3)(i)(L) and
the prohibition of QHP advertising on web-broker websites, which we are
finalizing as proposed, apply to web-broker websites used to enroll
consumers in Exchange coverage whether or not the web-broker websites
are consumer-facing (that is, intended to be used by consumers
independently) or agent/broker-facing (that is, intended to be used by
agents or brokers assisting consumers). They are intended to prohibit
these activities to the extent they constitute advertising, preferred
placement, favorable display, or other types of promotion of particular
QHPs based on payment from the issuers offering those QHPs. These
changes build on the existing prohibition on the display of QHP
recommendations based on the compensation received by the agent,
broker, or web-broker from QHP issuers.
As finalized, Sec. 155.220(c)(3)(i)(L) does not prohibit web-
brokers from educating agents and brokers generally about the
availability and nature of new plan designs or plan features, or the
existence of QHPs offered by issuers that have newly entered a market.
Web-brokers may educate agents and brokers by offering filtering
capabilities that enable agents and brokers to quickly identify
particular QHPs with certain characteristics and corresponding training
on the existence and purpose of those filtering capabilities.
Similarly, Sec. 155.220(c)(3)(i)(L) does not apply to additional
features web-brokers may make available to QHP issuers that engage them
to develop or maintain an issuer-specific direct enrollment website
through which individual consumers--or persons assisting consumers such
as agents and brokers--may view information on and complete enrollment
in the issuers' QHPs,\241\ so long as the means through which web-
brokers inform agents and brokers of such features do not constitute
advertising, preferred placement, favorable display, or other types of
promotion of particular QHPs based on compensation from the issuers
offering those QHPs. For example, Sec. 155.220(c)(3)(i)(L) is not
intended to prohibit a web-broker from informing its agent or broker
clients of the availability of particular features on its web-broker
website that may only be available for particular issuers' QHPs,\242\
such as enhanced payment integration or the ability to enroll in an
issuer's plans outside the Exchange, because it is possible to provide
that information without it being presented as advertising, preferred
placement, favorable display, or other types or means of promotion of
particular QHPs. Lastly, in response to comments, we clarify that
visual cues (such as an icon)
[[Page 27264]]
associated with the display of particular issuers' QHPs (for example,
to indicate the availability of additional functionality such as
payment integration) are also not prohibited. However, we reiterate
that any related compensation or payment received by such web-brokers
from QHP issuers to display additional information must not result in
the favorable placement of those QHPs in relation to all other
available QHPs consistent with Sec. 155.220(c)(3)(i)(L) and our
guidance on permissible filtering of QHPs on web-broker websites.
---------------------------------------------------------------------------
\241\ Here, and elsewhere, when we refer to a web-broker's
website without indicating it is an issuer-specific website hosted
by a web-broker acting as a QHP issuer direct enrollment technology
provider, we are referring to the web-broker's own non-Exchange
website subject to the requirements of Sec. 155.220(c) and other
applicable rules governing such web-brokers and their non-Exchange
websites subject to the requirements of Sec. 155.220(c).
\242\ As described earlier in this rule, web-broker websites may
not support enrollment in all available QHPs. Web-broker websites
may provide additional comparative information about some QHPs that
they have obtained directly from QHP issuers (for example,
comparative information not available in the Exchange public use
files or Marketplace API). Similarly, web-broker websites may
provide additional features that may only be available for
particular issuers' QHPs, such as enhanced payment integration or
the ability to enroll in an issuer's plans outside the Exchange.
---------------------------------------------------------------------------
Comment: One commenter expressed concern that the proposal could
limit the ability of web-broker websites to offer tools, such as
filtering capabilities, that enhance the user experience. The commenter
requested we clarify that functionality that allows plan filtering
based on user preferences (presumably consumer or agent/broker users)
is not prohibited, even if the result of a particular user's filtering
choices is to favor the display of plans for which the web-broker
receives compensation for enrollments.
Response: We agree that it is important that web-brokers continue
to have the flexibility to offer certain permissible filtering tools to
assist Exchange consumers shopping for QHPs on web-broker non-Exchange
websites. As noted earlier, we remain committed to supporting the
development and use of innovative consumer-assistance tools by web-
brokers to help consumers select QHPs that best fit their needs, but
reiterate that such tools must comply with other applicable
requirements. This includes, but is not limited to, the existing
prohibition on the display of QHPs based on the compensation received
by the agent, broker, or web-broker, as well as the amendment to Sec.
155.220(c)(3)(i)(L) and the prohibition of QHP advertising on web-
broker websites we are finalizing in this rule. When used in this
context, ``advertisements'' include any form of marketing or promotion
of QHPs based on payment from QHP issuers. Consistent with existing CMS
guidance on permissible filters,\243\ this would not prohibit a web-
broker non-Exchange website from offering consumers filtering
capabilities that, when applied neutrally, happen to result in the
favorable display of QHPs offered by issuers from whom the web-broker
receives compensation for enrollment in those QHPs. For example, HHS
would not deem a web-broker website out of compliance with applicable
requirements, as finalized in this rule, if a neutral filter selected
by the consumer orders all available QHPs from lowest to highest
premium and the lowest premium QHPs happen to be ones for which the
web-broker received compensation or payment from QHP issuers. In such
circumstances, the web-broker website would need to include the
required minimum QHP comparative information (including premium) for
all available QHPs and the default listing of QHPs on the web-broker
website would need to provide that information for all QHPs offered on
the Exchange by all QHP issuers, unless the consumer or agent/broker
using the web-broker's non-Exchange website actively removes that
default filter. Similarly, if an otherwise neutral filter is available
for a consumer that, if selected, produces a list favoring a particular
issuer's QHPs (for example, a filter that limits the display of QHPs to
those offered by specific issuers actively selected by the consumer),
making that filter available is not prohibited so long as the web-
broker website complies with other applicable requirements. This would
include the use of a default listing of QHPs that includes the required
minimum QHP comparative information for all QHPs offered on the
Exchange unless the consumer actively removes the default filter.
---------------------------------------------------------------------------
\243\ Web-broker Website Display Bulletin. (2021, August 17).
CMS. https://www.cms.gov/files/document/webbroker-website-display-bulletinfinal08172021.pdf.
---------------------------------------------------------------------------
Comment: One commenter expressed concern that the proposal would
prohibit web-brokers from listing QHPs offered by issuers with which it
is appointed and from whom it receives compensation for enrollments
favorably as compared to those offered by issuers with which it is not
appointed (that is, listing all of the former before all of the
latter).
Response: In the 2020 Payment Notice (84 FR 17454), we codified the
existing prohibition on the display of QHP recommendations based on
compensation the agent, broker, or web-broker receives from QHP
issuers. In addition, as explained above, we have transitioned from the
use of enforcement discretion that permitted web-brokers to only
display issuer marketing name, plan marketing name, product network
type, and metal level for some QHPs, beginning with the PY 2022 open
enrollment period. As part of this transition, we also previously
clarified that with web-broker websites displaying standardized QHP
comparative information for all available QHPs beginning with the PY
2022 open enrollment period, to comply with the current standard in
Sec. 155.220(c)(3)(i)(L) that prohibits the display of QHP
recommendations based on compensation an agent, broker, or web-broker
receives from QHP issuers, web-broker websites must refrain from
filtering the display of QHPs in a manner that favors QHPs for which
the web-broker receives compensation from issuers for enrollments. In
other words, consistent with currently applicable requirements, web-
brokers must not display some QHPs at the bottom of their website pages
simply because they are not appointed with the issuers that offer those
QHPs. We did not propose to change the prohibition on the display of
QHPs based on the compensation received by an agent, broker, or web-
broker from QHP issuers for enrollment in QHPs. Instead, we proposed
and are finalizing the extension of the prohibition under Sec.
155.220(c)(3)(i)(L) to also prohibit advertising of QHPs on web-broker
websites. As outlined above, to comply with the new framework and
applicable requirements, web-broker websites cannot more favorably
display QHPs for which the agent, broker, or web-broker receives
compensation from issuers for enrollment in QHPs and also cannot more
favorably display QHPs for which the agent, broker, or web-broker
receives payment for advertising purposes. This includes a prohibition
on the favorable display based on which QHPs are offered by issuers
with whom the agent, broker, or web-broker has an appointment.\244\
---------------------------------------------------------------------------
\244\ See the previous preamble regarding the new standardized
disclaimer under Sec. 155.220(c)(3)(i)(A), as amended, for details
on how information about which QHPs the web-broker website does not
support enrollment in should be shared with consumers. Not having an
appointment with a particular issuer is the primary reason why web-
broker websites would not support enrollment in particular QHPs.
---------------------------------------------------------------------------
Comment: Two commenters were opposed to this proposal. One
commenter asserted that prohibiting QHP advertising on web-broker
websites lessens the incentive for web-brokers to become direct
enrollment entities and continue to innovate. Instead, the commenter
suggested we allow QHP advertising, but require that advertisements be
identified as such. Another commenter conveyed concern about this
proposal encroaching on State authority to regulate the business of
insurance and mentioned a nonspecific possible conflict with existing
State regulations.
Response: We appreciate the concern that prohibiting QHP
advertising on web-broker websites may reduce incentives to become a
direct enrollment entity, but do not believe that risk outweighs the
benefit to consumers of the prohibition. We
[[Page 27265]]
considered the option of allowing some form of QHP advertising so long
as the advertisements were clearly identified as advertisements.
However, as described in the proposed rule (87 FR 643), even if QHP
advertisements are clearly identified, we believe it is not in the
interest of consumers to allow them on web-broker websites that
facilitate enrollment in Exchange coverage.
With respect to commenters that expressed concern with encroachment
on State regulatory authority or alleged conflict with State
regulations, we note that the requirement at Sec. 155.220(c)(3)(i)(L)
prohibiting web-broker websites from displaying QHP recommendations
based on compensation an agent, broker, or web-broker receives from QHP
issuers is not new.\245\ For additional information in response to this
comment, please see the response to the same comment on the prior
proposal in III.D.3.(a).
---------------------------------------------------------------------------
\245\ See 84 FR 17563.
---------------------------------------------------------------------------
c. Explanation of Rationale for QHP Recommendations on Web-Broker
Websites
In the proposed rule (87 FR 643), we proposed to amend Sec.
155.220 to add a 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 a plan name, from lowest to highest premium, etc.).
We are finalizing this requirement because we believe it will
provide consumers with a better understanding of the information being
presented to them on web-broker websites and enable them to make better
informed decisions and select QHPs that best fit their needs. We
believe that a clear explanation for the bases of the recommendations
displayed to them on web-broker websites (whether explicit or
implicit), will help consumers assess the value of the recommendations
(for example, whether a recommendation is based on the factors most
important to them).
We sought comment on this proposal, which we summarize and respond
to below.
Comment: Most commenters supported this proposal and the addition
of Sec. 155.220(c)(3)(i)(M). Several commenters stated that requiring
web-broker websites to disclose the basis for their plan
recommendations and display of plans increases transparency. Numerous
other commenters who supported these changes stated these changes would
help consumers be better informed. One commenter indicated this would
enhance decision support tools for consumers and increase the chance
they find the plan that best meets their needs.
Response: We agree that this proposal and the addition of Sec.
155.220(c)(3)(i)(M) will increase transparency and ensure consumers are
better informed and more likely to choose the plan that is best for
them.
Comment: Several commenters requested web-broker websites be
afforded flexibility in terms of the content and placement of the
required explanations. In particular, some commenters requested that
the required explanations not be so detailed that they are difficult
for consumers to understand and may dissuade some consumers from
completing the enrollment process.
Response: We appreciate the desire for flexibility and do not
intend to be prescriptive in terms of the content or placement of the
required explanations of the rationale for QHP recommendations or the
methodology for the default display of QHPs. We understand there are
currently many variations in the design and content of web-broker
websites and it would be difficult to develop a one-size-fits all
standardized approach with respect to the content or placement of the
explanations. In addition, there will necessarily be variations in the
rationales for the plan recommendations and methodologies for the
default display of plans used by different web-broker websites and they
may also frequently change. For those reasons, we intend to allow web-
broker websites significant flexibility in terms of the content and
placement of the required explanations as long as the explanations are
prominently displayed, clearly articulated, and provide consumers
reasonable insight into the rationale for the QHP recommendations and
the methodology for the default display of QHPs. We expect explanations
to be short and easy for consumers to understand. Generally, we believe
that a single phrase or a few sentences will suffice (for example, ``we
recommend this plan because it has the lowest monthly premium and
includes your preferred providers in-network''; ``plans are displayed
alphabetically''; ``plans are displayed from lowest to highest
premium''). To be considered prominently displayed, web-broker websites
must adhere to the same general requirements that apply to disclaimers
that must be prominently displayed on web-broker websites.\246\ For
example, the explanations must be written in a font size no smaller
than the majority of text on the website page and be noticeable in the
context of the website by (for example) using a font color that
contrasts with the background of the website page.
---------------------------------------------------------------------------
\246\ See, for example, Federally-Facilitated Exchange (FFE) and
Federally-Facilitated Small Business Health Options Program (FF-
SHOP) Enrollment Manual (pp. 53-54). (2021, August 18). https://www.regtap.info/uploads/library/ENR_FFEFFSHOPEnrollmentManual2021_5CR_090921.pdf. Also see Guidance
for Web-brokers on Displaying Mandatory Standardized Disclaimers.
(2015, April 24). CMS. https://www.cms.gov/cciio/Programs-and-Initiatives/Health-Insurance-Marketplaces/Downloads/Guidance-web-brokers-displaying-disclaimers.pdf.
---------------------------------------------------------------------------
Comment: Several commenters expressed concerns that the complex
algorithms web-broker websites may have developed to produce their plan
recommendations or default plan displays are likely too complicated to
explain in a consumer-friendly manner. Some other commenters worried
that requiring these explanations may require the disclosure of
closely-held proprietary information.
Response: As explained previously, the intent of Sec.
155.220(c)(3)(i)(M) is not to require lengthy or complicated
explanations, but to provide consumers basic insight into the key
factors underlying the information web-broker websites are presenting
to consumers (or agents/brokers assisting consumers). We understand
that in some cases web-broker websites may have adopted very complex
algorithms for plan recommendations or default display of plans, and we
do not intend that the intricate details underlying those proprietary
models be described or disclosed. However, we expect in all cases there
are core principles or criteria that form the foundation for QHP
recommendations or default display methodologies and we do expect those
to be disclosed to assist the consumer with making informed choices. We
continuously review web-broker websites and will consider future
updates and clarifications to this policy based on lessons learned and
our experience implementing this new standard for web-broker websites.
d. Federally-Facilitated Exchange Standards of Conduct (Sec.
155.220(j))
In the proposed rule (87 FR 644), we proposed to amend Sec.
155.220(j)(2)(i) such that its nondiscrimination protections would
explicitly prohibit discrimination based on sexual orientation and
gender identity. As we explain in the SUPPLEMENTARY INFORMATION section
earlier in the
[[Page 27266]]
preamble, HHS will address this policy, as well as the public comments
submitted in response to this proposal, in future rulemaking.
i. Providing Correct Information to the FFEs
In the proposed rule (87 FR 644), we proposed to add new Sec.
155.220(j)(2)(ii)(A) through (D) to codify additional details regarding
the requirement that agents, brokers, and web-brokers provide correct
information to FFEs and SBE-FPs. More specifically, we proposed to
capture specific examples of what it means to provide correct
information to the FFEs and SBE-FPs for 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 Exchanges rely. We also proposed 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 listed in new Sec. 155.220(j)(2)(ii)(A)
through (D) are not exhaustive, but are simply illustrative of areas
where HHS has identified a need for more direct and clear guidance. We
refer readers to the proposed rule (87 FR 644 through 647) for
additional information and background on these proposals.
We are generally finalizing as proposed Sec. 155.220(j)(2)(ii)(A)
through (D), except that we are not finalizing the proposal to add
Sec. 155.220(j)(2)(ii)(A)(1) that would have prohibited agents,
brokers, and web-brokers from entering consumer email addresses with
`disposable' domains that expire after a set period of time.\247\ \248\
We considered that agents, brokers, and web-brokers do not control the
type of email domains consumers choose to use, own, or have access to.
We also considered that there are available alternatives that HHS could
use to systematically block the entry of disposable email addresses
that expire after a set period of time.
---------------------------------------------------------------------------
\247\ Gibbs, M. (2006) Disposable email addresses foil marketing
plan, Real but temporary email addresses to get you through the
verification process. NetworkWorld. https://www.networkworld.com/article/2301492/disposable-email-addresses-foil-marketing-plans.html.
\248\ We also removed the reference to this standard (that is,
the phrase ``that is secure, not disposable'' was removed) in the
introductory language in Sec. 155.220(j)(2)(ii)(A). In addition, we
are capturing the email address guidelines proposed to be added at
new Sec. 155.220(j)(2)(ii)(A)(2) and (3) in new Sec.
155.220(j)(2)(ii)(A)(1) through (2) instead. We also make a non-
substantive change to eliminate duplicate references to information
``on an Exchange application'' in Sec. 155.220(j)(2)(ii)(A) through
(D).
---------------------------------------------------------------------------
We are finalizing the other provisions we proposed to under new
Sec. 155.220(j)(2)(ii)(A), which 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 belongs to the consumer or the consumer's authorized
representative. The regulation text also clarifies that email addresses
may only be entered on applications submitted to an Exchange with the
consent of the consumer or the consumer's authorized representative,
and that properly entered email addresses are required to adhere to
certain guidelines. The guidelines we are finalizing in this rule,
which were proposed to be added at new Sec. 155.220(j)(2)(ii)(A)(2)
and (3), will be captured in new Sec. 155.220(j)(2)(ii)(A)(1) through
(2), which are renumbered consistent with our decision to not finalize
Sec. 155.220(j)(2)(ii)(A)(1). We are otherwise finalizing these two
guidelines for email addresses as proposed.
We are also finalizing the proposal to add new Sec.
155.220(j)(2)(ii)(B), which provides 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 reiterate that a telephone number
belongs to the consumer if they, or their authorized representative,
are accessible at the number and have access to the number. We are also
finalizing the addition of text to Sec. 155.220(j)(2)(ii)(B) to
provide that telephone numbers entered on applications submitted to an
Exchange 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.
We are finalizing the proposal to add new Sec.
155.220(j)(2)(ii)(C), which requires that an agent, broker, or web-
broker may only enter a mailing address on an application for Exchange
coverage or application for 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. We
reiterate that consumer mailing addresses entered on applications
submitted to an Exchange 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. We are also finalizing that mailing addresses entered
on applications submitted to an Exchange 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.
Fourth, to minimize consumer harm stemming from the APTC
reconciliation process on the tax return, as well as to protect
Exchange operations from inaccurate APTC and CSR determinations, we are
finalizing Sec. 155.220(j)(2)(ii)(D), which requires that, when
submitting household income projections used by 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 of their household
income. Failure to provide correct information on household income can
harm consumers by creating liability during the APTC reconciliation
process on the tax return or delaying the issuance of a tax refund, as
well as preventing the efficient operation of the Exchange. CSRs are
similarly tied to a consumer's household income reducing 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 QHP issuers and prevent the efficient operation of the
Exchange. We reiterate that good-faith income projections, versus an
income projection designed to achieve the lowest monthly rate, would
better protect the consumer from the unexpected cost and burden of
repaying large amounts of APTC.
Finally, for greater clarity, the regulation text we adopt in this
final rule at Sec. 155.220(j)(2)(ii)(A) through (D) contains a non-
substantive change to each proposed paragraph (A) through (D) to
eliminate duplicate references to information ``on an Exchange
application'' or ``entered on an Exchange application.'' These
editorial revisions in no way change or otherwise
[[Page 27267]]
affect the requirements under the proposed versions of the text and
more clearly and consistently indicate that the applications that are
the subject of these provisions are applications submitted to Exchanges
for coverage under a QHP, with or without APTC and CSR.
We sought comment on these proposals. After reviewing the public
comments, and as stated above, we will not finalize Sec.
155.220(j)(2)(ii)(A)(1) concerning disallowing agents, brokers, and
web-brokers entry of temporary email addresses on consumers' behalf
because agents, brokers, and web-brokers do not control the type of
email domains consumers choose to use, own, or have access to. However,
we are finalizing the other sections as proposed.\249\ While we are not
finalizing Sec. 155.220(j)(2)(ii)(A)(1), we strongly encourage agents,
brokers, and web-brokers to avoid using such temporary email addresses
in applications as a best practice.
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\249\ Consistent with the decision to not finalize Sec.
155.220(j)(2)(ii)(A)(1), the phrase ``that is secure, not
disposable'' was removed from the introductory language in Sec.
155.220(j)(2)(ii)(A). In addition, the email address guidelines
proposed to be added at new Sec. 155.220(j)(2)(ii)(A)(2) and (3)
will instead be captured in new Sec. 155.220(j)(2)(ii)(A)(1)
through (2). These guidelines are otherwise being finalized as
proposed.
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We summarize and respond to public comments received on the
proposals related to the standard in Sec. 155.220(j)(2)(ii) that
agents, brokers, and web-brokers provide correct consumer information
to the FFEs below.
Comment: A number of commenters supportive of the proposal
generally requested that HHS dedicate funds to compliance, monitoring,
and enforcement efforts in order to address agent, broker, and web-
broker compliance with relevant Exchange standards of conduct. While
the majority of comments pertaining to monitoring and enforcement were
general in nature, several commenters indicated they supported
continuing to clarify standards of agent, broker, and web-broker
conduct. One commenter also recommended that Exchange user fees could
be used to fund future oversight initiatives.
Response: We are finalizing, as proposed, the amendments to Sec.
155.220(j)(2)(ii) and the accompanying policies related to the
provision of correct consumer information by agents, brokers, and web-
brokers to the FFEs. These finalized amendments and policies also apply
to agents, brokers, and web-brokers assisting with enrollments in SBE-
FPs.\250\ The amendments to Sec. 155.220(j)(2)(ii) provide clear,
concise, and direct guidance to agents, brokers, and web-brokers
assisting consumers with enrollment in QHPs sold on the FFEs and SBE-
FPs about the standards of conduct and behavior expected of them. We
also generally note that we intend to include these new, clarifying
standards as part of existing monitoring and oversight of agents,
brokers, and web-brokers assisting consumers with enrollments through
FFEs and SBE-FPs. We appreciate the recommendations provided. They will
be taken into consideration for future rulemaking and policy
development. However, we are not finalizing the amendment to Sec.
155.220(j)(2)(ii)(A)(1) because agents, brokers, and web-brokers do not
control the type of email domains consumers choose to use, own, or
access.
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\250\ See 45 CFR 155.220(l).
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Comment: Many commenters supportive of the proposal requested that
HHS add regulatory text to require agents, brokers, and web-brokers to
check consumers' eligibility for Medicare and Medicaid in addition to
their eligibility for private insurance through the FFEs.
Response: We agree with the commenters that consumers eligible for
Medicare and Medicaid should be informed about those options. Indeed,
in order to enroll a consumer in QHP coverage on the Exchange, agents,
brokers, and web-brokers must use the Exchange's Single Streamlined
Application, which first verifies Medicare and Medicaid eligibility,
where applicable. If a web-broker's website is used to complete the
application, the application and website must, among other
requirements, request the minimum amount of information to verify
eligibility for the programs and benefits included in the Single
Streamlined Application as enumerated in Sec. 155.405(a), which,
again, would include a requirement to collect information necessary to
verify Medicare and Medicaid eligibility, as applicable.\251\ HHS also
provides training to agents, brokers, and web-broker entities
participating in the FFEs and SBE-FPs on how to help connect Medicare-
eligible consumers to Medicare and potentially Medicaid-eligible
consumers with Medicaid enrollment resources.\252\ HHS is finalizing
the amendment to Sec. 155.220(j)(2)(ii)(D) to require agents, brokers,
and web-brokers only to enter a household income projection for a
consumer that the consumer, or the consumer's authorized
representative, has authorized and confirmed as an accurate estimate.
However, we did not propose and are not finalizing regulatory text to
mandate agents, brokers, and web-brokers assisting with enrollments in
FFEs and SBE-FPs to check a consumer's eligibility for Medicare and
Medicaid.
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\251\ See 45 CFR 155.220(c)(1) and (c)(3)(ii)(B).
\252\ See Returning Agents' and Brokers' Guide to Plan Year 2022
Marketplace Registration and Training. (2021). CMS. https://www.cms.gov/files/document/plan-year-2022returning-agents-and-brokers-guide-marketplace-registration-and-training.pdf and New
Agents' Guide to Training. (2021). CMS. https://www.cms.gov/files/document/plan-year-2022new-agents-and-brokers-guide-marketplace-registration-and-training.pdf.
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Comment: Some commenters who were neutral on the proposal stated
that HHS already has the established infrastructure which allows for
agents, brokers, and web-brokers to be penalized for their misconduct,
and additional standards of conduct, including submitting an
attestation to the accuracy of the information, relying on consumers to
provide accurate household income projections, and clarifying
parameters around consumer contact information, create an extra burden
on compliant agents, brokers, and web-brokers.
Response: With the exception of Sec. 155.220(j)(2)(ii)(A)(1), we
are generally finalizing, as proposed,\253\ the amendments to Sec.
155.220(j)(2)(ii) and the accompanying policies related to the FFE
standard of conduct that agents, brokers, and web-brokers provide
correct consumer information to the FFEs. HHS does not agree that these
revisions will create an extra burden on compliant agents, brokers, and
web-brokers because the revisions only further elucidate what was
already required under HHS' rules. The proposals we finalize do not
create new obligations or standards of conduct, and should not cause an
appreciable increase in the burden on agents, brokers, and web-brokers
that already comply with the FFE standards of conduct. Rather, they
provide clarity and additional examples consistent with existing
guidance on how to provide correct consumer information on applications
submitted to the FFEs or SBE-FPs. As detailed in the proposed rule,
these amendments and
[[Page 27268]]
clarifications were developed in response to common errors HHS
identified on applications submitted by agents, brokers, and web-
brokers to the FFE, and will help supplement existing guidance to
facilitate the submission of accurate information to the FFEs. The
supplementary guidance clarifies how to come into compliance with the
existing requirements in Sec. 155.220(j)(2)(ii), which HHS believes
will make the process of enrolling consumers more straightforward, due
to clearer expectations concerning existing standards from the agency
and a reduction in errors filling out the application. Moreover, it
protects consumers and enhances the efficient operation of the
Exchange.
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\253\ Consistent with the decision to not finalize Sec.
155.220(j)(2)(ii)(A)(1), the phrase ``that is secure, not
disposable'' was removed from the introductory language in Sec.
155.220(j)(2)(ii)(A). In addition, the email address guidelines
proposed to be added at new Sec. 155.220(j)(2)(ii)(A)(2) and (3)
will instead be captured in new Sec. 155.220(j)(2)(ii)(A)(1)
through (2). We also make a non-substantive change to eliminate
duplicate references to information ``on an Exchange application''
in Sec. 155.220(j)(2)(ii)(A) through (D). These guidelines are
otherwise being finalized as proposed.
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ii. Prohibited Business Practices
In the proposed rule (87 FR 647), we proposed to amend Sec.
155.220(j)(2) to add several 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
(81 FR 12203), these additional standards are also intended to protect
against agent, broker, and web-broker conduct that is harmful to
consumers or frustrates the efficient operation of the Exchange.
Specifically, we proposed to codify standards related to the use of
scripting and other automation interactions with our 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 proposed 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. We described these proposals, as well as
summarize and respond to the comments on each, in the sections that
follow.
iii. Prohibited Automated Interactions With CMS Systems
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.\254\ 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),'' \255\ 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 the regulation. Therefore, we proposed to amend Sec. 155.220(j)(2)
to add the 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 (87 FR 647). The codification of the
requirements and limitations in the 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.
CMS Systems to which CMS-registered agents, brokers, and web-broker may
have access include HealthCare.gov, and the CMS Enterprise Portal.
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\254\ 45 CFR 155.220(d).
\255\ Agent Broker General Agreement for Individual Market
Federally-Facilitated Exchanges and State-Based Exchanges on the
Federal Platform. (2019). HHS. https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/ab_py2020_im_general_agreement_final_1.pdf.
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HHS proposed this standard of conduct because it has observed
instances where unauthorized automated browser-based interactions with
Exchange systems have led to unauthorized enrollments or unauthorized
application changes. 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. Allowing automation would
also create significant traffic in the system, which could result in an
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. We sought comments on these concerns and
this proposal.
We also sought comments on the appropriate uses of automation that
may contribute to the efficient operation of the FFEs and SBE-FPs, and
the DE Pathways.
We received one comment generally supportive of the proposal
because it would codify HHS' enforcement authority and align the
regulation with requirements applicable to agents, brokers, and web-
brokers in agreements with the FFE and SBE-FPs.
After considering the responsive comments, we are finalizing the
addition of the new Sec. 155.220(j)(2)(vi) as proposed.
iv. Identity Proofing
HealthCare.gov utilizes identity proofing to verify the identity of
a consumer when a new Exchange account is created. We proposed to amend
Sec. 155.220(j)(2) to add the 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 (87 FR 648 through 649).
We are finalizing this amendment to Sec. 155.220(j)(2) because we
have observed situations, despite the current identity proofing
process,\256\ in which agents have used the same identity information
to complete the identity proofing process for multiple consumer
Exchange accounts, which can harm consumers and prevent the efficient
operation of the Exchange. Such behavior also undermines the purpose of
identity proofing consumers and is often associated with unauthorized
enrollments, identity theft, and fraud.
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\256\ 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. Under the existing process, 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.
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We sought comment on this proposal.
We received one comment responsive to and supportive of the
proposed amendment to add new Sec. 155.220(j)(2)(vii) clarifying that
agents, brokers, and web-brokers must use a consumer's correct
information for RIDP
[[Page 27269]]
process and only for the RIDP process for that consumer.
After considering the responsive comment, we are finalizing the
addition of a new Sec. 155.220(j)(2)(vii) as proposed.
v. Providing Information to Federally-Facilitated Exchanges in
Connection With Special Enrollment Periods
Section 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 proposed to amend Sec. 155.220(j)(2) to add the
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 (87 FR 648). Under this 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
proposed this requirement to address circumstances HHS has observed
during 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 the proposed new Sec.
155.220(j)(2)(viii) is to ensure the validity and integrity of the SEP
process, avoid Exchange destabilization, and 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 sought comment on these proposals.
We received one comment responsive to and generally supportive of
the proposal that when providing information to the Exchange related to
an SEP enrollment, agents, brokers, and web-brokers must obtain
authorization from the consumer to submit the request for an
eligibility determination, make the consumer aware of the specific
triggering event, and of the specific SEP for which the agent, broker,
or web-broker is submitting the eligibility determination request on
the consumer's behalf.
After considering the responsive comment, we are finalizing the
addition of a new Sec. 155.220(j)(2)(viii) as proposed.
4. Premium Calculation (Sec. 155.240(e))
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 648), we proposed 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. 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 final rule where we proposed
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 sought comment on these proposals.
We received public comments on the proposed amendments to the
premium calculation at Sec. 155.240(e). After considering of the
comments received, we are not finalizing any amendments to Sec.
155.240.
Comments related to the proposed amendments at Sec. 155.240(e) are
addressed in section III.D.9 of the preamble, regarding the
Administration of Advance Payments of the Premium Tax Credit and Cost
Sharing (Sec. 155.340), where we present a unified summary of comments
on the proposal to clarify that an Exchange is required to prorate the
calculation of premiums for individual market policies and the
calculation of APTC. We are codifying the proposed APTC proration
methodology as the methodology Exchanges on the Federal platform (FFE
and SBE-FP) will continue to use, but we are not finalizing the
requirement for State Exchanges to use the FFE's methodology to prorate
premium or APTC amounts. Additional information on the policy we are
finalizing is also provided in section III.D.9. of the preamble of this
final rule.
5. Eligibility Standards (Sec. 155.305)
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 648), we proposed 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 that 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 noted 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.
We are finalizing the proposal as proposed.
Comment: Two commenters provided general support for this technical
amendment and no commenters opposed it.
Response: We thank the comments for their general support of this
technical amendment and believe this change aligns with current
practice and will ensure greater consistency going forward.
6. Eligibility for Advance Payments of the Premium Tax Credit (Sec.
155.305(f)(5))
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 648), we proposed to amend Sec.
155.305(f)(5) to require that Exchanges must calculate APTC in
accordance with 26 CFR 1.36B-3, which defines the calculation of the
PTC amount, and subject to the prorating methodology at proposed Sec.
155.340(i). We further discussed these proposals in the Administration
of Advance Payments of the Premium Tax Credit and Cost-Sharing
Reductions (Sec. 155.340) section of the proposed rule. We sought
comment on this proposal.
[[Page 27270]]
We received public comments on the proposed amendments to Sec.
155.305(f)(5). In the following comments and responses, we discuss
comments specific to the proposal for this section. We are codifying
the proposed APTC proration methodology as the methodology Exchanges on
the Federal platform (FFE and SBE-FP) will continue to use, but we are
not finalizing the requirement for State Exchanges to use the FFE's
methodology to prorate premium or APTC amounts. For a unified summary
of all comments on the proposal (to clarify that an Exchange is
required to prorate the calculation of premiums for individual market
policies and the calculation of APTC and for more information on the
policy we are finalizing), we refer readers to the section III.D.9 of
the preamble on Administration of Advance Payments of the Premium Tax
Credit and Cost Sharing (Sec. 155.340).
Comment: A few commenters noted that the proposed regulatory
amendment to part Sec. 155.305(f)(5) did not appear in the
corresponding section of the Regulatory Text section of the proposed
rule.
Response: HHS appreciates the comments identifying this technical
error. The proposed regulatory amendment at Sec. 155.305(f)(5) was
inadvertently omitted from the published proposed regulation text. HHS
is correcting this technical error by including amendments to Sec.
155.305(f)(5) in the Regulatory Text section of this final rule as
described in the preamble to the proposed rule, and consistent with the
policy adopted in this final rule, as described in the section III.D.9
of the preamble on Administration of Advance Payments of the Premium
Tax Credit and Cost Sharing (Sec. 155.340).
7. 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,
in the proposed rule (87 FR 649 through 651), we proposed 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.
Specifically, we proposed 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. We refer to the proposed rule (87 FR
649), where we provided additional background and rationale for the
proposals.
First, we proposed 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 and 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 proposed 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 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 proposed 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.
Third, we proposed to remove 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
continue to believe that 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 the 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 proposed 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.\257\ 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 the preamble.
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\257\ In the proposed rule, we neglected to delete a reference
to Sec. 155.320(d)(4)(ii) in the regulation text. We are deleting
that reference in the regulation text in this final rule, consistent
with the proposal.
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We are finalizing these proposals as proposed. Specifically, we
require that any risk-based verification process be reasonably designed
to ensure the accuracy of the data and be based on the activities or
methods used by an Exchange such as studies, research, and analysis of
an Exchange's enrollment data. We expect 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. 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 are
allowed APTC/CSRs.
Given that the 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
[[Page 27271]]
an Exchange's assessment of risk and unique populations, we noted in
the proposed rule that we believe that there are various ways in which
a risk-based approach can be 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 does
not 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.
Because we found that the risk for improper APTC payment is low in
Exchanges using the Federal eligibility and enrollment platform, these
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? ''. We would also accept attestations related to
employer sponsored coverage because we currently lack 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, we
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. We 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. We noted that
additional data source access, such as the NDNH, would improve accuracy
and reduce the administrative burden to consumers for the income
verification step during the eligibility process.
Finally, under this proposal, we clarified 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 us. 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 proposing this policy was to ensure that only applicants
eligible for APTC/CSRs benefit from 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 continue to believe
that 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 continue to
believe that the new policy we proposed 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.
We sought comment on these proposals.
After reviewing the public comments, we are finalizing these
proposals as proposed, with some non-substantive revisions for clarity.
These include removing the reference to paragraph (d)(4)(ii) in
paragraph (d)(4), as this paragraph has been removed and is no longer
necessary, and streamlining language under paragraph (d)(4)(i)(A) to
make it clearer that Exchanges must notice employers, if employer
notification is part of an Exchange's risk-based approach.
We summarize and respond to public comments received on the
verification process related to eligibility for insurance affordability
programs--employer sponsored plan verification (Sec. 155.320) below.
Comment: The majority of commenters supported HHS' proposal to
provide all Exchanges with the flexibility to tailor their employer
sponsored coverage verification procedures based on the Exchange's own
assessment of the risk for inappropriate payments of APTC/CSRs in their
enrolled populations. The commenters agreed with HHS' prior study
findings that the current sampling process outlined in paragraph
(d)(4)(i) requires significant Exchange resources with little return on
investment given the low volume and risk of consumers with offers of
employer sponsored coverage who inappropriately enroll in Exchanges
with APTC/CSRs and stated that HHS' study results were consistent with
State Exchanges' own observations. Commenters also agreed with HHS that
an employer sponsored coverage verification approach should provide
State Exchanges with enough flexibility and more opportunities to use
verification processes that are evidence-based, while imposing the
least amount of burden on consumers, States, employers, and taxpayers.
Commenters also noted that increased flexibility to use a risk-based
approach allows all Exchanges to focus and expend resources on
expanding coverage. Finally, commenters stated that they appreciated
how the proposed risk-based approach provides State Exchanges with the
freedom to review their own data and determine the most appropriate
verification approach for
[[Page 27272]]
employer sponsored coverage that accurately reflects the risk for
inappropriate APTC/CSR payments within their unique populations.
Response: HHS agrees that the current random sampling process
required under Sec. 155.320(d)(4)(i) is not only burdensome for
States, employers, consumers, and taxpayers, but it also does not
provide enough flexibility to all Exchanges to develop a process for
employer sponsored coverage verification that more accurately reflects
their respective enrolled Exchange populations. As discussed in the
proposed rule (87 FR 649), HHS shares the same concerns regarding the
feasibility and effectiveness of sampling and agrees that a
verification process should be evidence-based and informed by certain
risk-factors for inappropriate payment of APTC/CSRs. HHS also agrees
that additional flexibilities are important to help States better serve
their populations and to allow for Exchange staff time and resources to
be better spent on activities that help promote and retain enrollment
in Exchanges.
Comment: A few commenters supported the proposed changes, but also
recommended that HHS revise paragraph (d)(4)(i) to state that all
Exchanges can accept an applicant's attestation when an Exchange
determines that the risk for improper APTC/CSR payment is low and does
not have access to an available, approved data source to verify whether
an applicant has an offer of or is enrolled in coverage offered through
an employer. Some of these commenters further questioned what
additional information or value a State's own study or risk assessment
would bring if HHS already conducted studies on the risk for
inappropriate APTC/CSR payments and as discussed in the preamble of the
proposed rule that, as part of their risk-based approach, Exchanges
using the Federal eligibility and enrollment platform would accept
attestations in absence of an approved data source, and requested that
HHS clarify who is responsible for conducting the risk assessment, how
it should be conducted, and how State Exchanges can meet this
assessment requirement.
Response: HHS reiterates and reminds State Exchanges that it is
their responsibility to conduct their own risk-assessments for
inappropriate APTC/CSRs payments; while HHS determined based on its
study that the Exchanges that use the Federal platform will use an
attestation-based approach to employer sponsored coverage verification,
State Exchanges cannot rely on the findings of the studies that HHS
conducted to serve as the basis for their risk-based approaches for
employer sponsored coverage verification as this study pertained to
Exchanges that use the Federal eligibility and enrollment platform.
Similarly, the risk-based approach and subsequent verification
processes for employer sponsored coverage verification must be based on
an Exchange's own data analysis and research, and State Exchanges may
not solely rely on previously published literature, research, and/or
the studies conducted by HHS as justification for their risk-based
approach. Furthermore, State Exchanges have the sole responsibility and
flexibility to determine the manner of assessment that is suitable for
their respective populations and markets, and should propose their
assessment approach to HHS for review. However, the process that is
appropriate for some State Exchanges may not be to solely accept
attestation for all applicants. Therefore, HHS disagrees with
commenters that changes to paragraph (d)(4)(i) to explicitly state that
all Exchanges may accept attestation when an Exchange does not have
access to an available data source are necessary.
Comment: A few commenters stressed the importance of and urged HHS
to explore other relevant, reliable third-party data sources that could
be used to verify offers of or enrollment in employer sponsored
coverage, such as whether HHS could gain access to firm-level data
about employer sponsored insurance through the annual ACA reports that
are filed with the IRS or access to the NDNH to help Exchanges
determine whether certain companies offer coverage to their employees.
Response: We agree with the importance of relevant and reliable
third-party data sources to verify offers of or enrollment in employer
sponsored coverage such as the NDNH. As part of the 2019 study
discussed in the preamble to the proposed rule and this final rule, HHS
explored the feasibility of using the NDNH, or other data sources such
as reporting from IRS, the Department of Labor (DOL), or State
quarterly wage data to verify eligibility for employer sponsored
coverage. However, HHS determined that either available data sources
were insufficient and did not provide the necessary information to
satisfy the requirement, or, in the case of the NDNH, legislative
changes would be required to give Exchanges permission to access and
use the data source for verification of employer sponsored coverage.
For example, HHS found that these data sources, such as IRS Forms
1095-B and 1095-C, DOL, and State wage quarterly data, are subject to
significant time lags and that HHS would not have access to reliable,
up-to-date information regarding employment when needed the most,
immediately before and after the annual individual market Exchange open
enrollment period. Finally, HHS also considered using data available to
Exchanges using the Federal eligibility and enrollment platform to
automatically verify the loss of minimum essential coverage for
verification of special enrollment period eligibility (see preamble
discussion at Sec. 155.420 in section III.D.10. of the final rule).
However, not all employers participate in the database to verify loss
of minimum essential coverage nor does it provide information on
whether an applicant has an offer of employer sponsored coverage so it
would not be a reliable verification source for verifying employer
sponsored coverage.
Additionally, Exchanges are not among the entities Congress
authorized to access NDNH data.\258\ HHS explored the feasibility of
creating a new database that Exchanges could leverage with employer
contact information and information on the coverage offered, but
because HHS currently lacks the statutory authority to require
employers to share contact information or information about coverage
offered for this purpose, employer participation in such a database
would be purely voluntary, and therefore, may not be sufficiently
effective. Granting HHS and Exchanges the authority to pursue either of
these options would require an act of Congress.
---------------------------------------------------------------------------
\258\ See 42 U.S.C. 653(j) (identifying the entities that are
authorized to access NDNH data and the permissible purposes for
which those entities may use NDNH data).
---------------------------------------------------------------------------
Comment: Two commenters that were neutral in their support of the
proposed changes, stressed that Exchanges should be prohibited from
implementing risk-based approaches that are discriminatory in nature,
specifically that Exchanges cannot target consumers solely based on
income status, as a targeted, income-based verification process for
employer sponsored coverage would have disproportionate, adverse
impacts on applicants of color and other underserved groups. One
commenter further recommended that HHS modify the language under
paragraph (d)(4) to prevent States from needlessly imposing procedural
burdens on consumers seeking to enroll in coverage offered through
Exchanges.
Response: HHS agrees with commenters that an Exchange's risk-based
approach to verify whether an applicant is enrolled in or has been
[[Page 27273]]
offered coverage through an employer must not be discriminatory in
nature, especially towards applicants who have household income levels
within a certain percentage of the Federal Poverty Level (FPL), as
applicants of color or other underserved groups are more likely to be
targeted by such practices. As such, HHS reminds States and Exchanges
that per 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, nor should an Exchange and/or a
State's risk-based approach place any additional, unnecessary
procedural burdens or barriers to enrollment for consumers seeking to
enroll in Exchange coverage.
Comment: Two commenters opposed HHS' proposal that Exchanges use a
risk-based approach to determine the best process to verify whether an
applicant has an offer of or is enrolled in coverage through an
employer. One commenter stated that HHS should continue to verify
offers of or enrollment in employer sponsored coverage and that
Exchanges using the Federal eligibility and enrollment platform should
not rely solely on consumer attestations as the ACA states that these
applicants are not eligible to receive APTC/CSRs; this is similar to
how Exchanges verify other eligibility criteria like annual household
income, or enrollment in other qualifying coverage such as Medicare,
Medicaid, CHIP, or, if applicable, the Basic Health Program (BHP).
Another commenter opposed the proposal and stated that, in addition to
many individuals with offers of or enrollment in coverage offered
through an employer benefitting from APTC/CSRs inappropriately, HHS
should consider the tax consequences for individuals and liability
concerns for applicable large employers (ALE) that receive IRS 226-J
letters because one or more of their employees received APTC through an
Exchange. The commenter further noted that the process of penalty
enforcement is arduous and costly for the IRS and affected ALEs and
that more effective employer sponsored coverage verification could
significantly reduce the volume of enforcement actions that are
ultimately resolved in the favor of the ALE and that HHS should work
with the IRS to improve the verification process at the national level
and not pursue the risk-based approach.
Response: As discussed in the preamble, HHS has confirmed via two
separate research studies conducted multiple years apart that the risk
of an applicant choosing to forego enrolling in employer sponsored
coverage that is affordable and meets minimum value standards to enroll
in an Exchange QHP with APTC/CSR remains low. Also, HHS has determined
that reliable and accurate data sources exist for the other eligibility
criteria that commenters flagged, such as IRS data for annual household
income, Medicare enrollment data that is provided to CMS via the Social
Security Administration, and State Medicaid Agency data to verify
Medicaid/CHIP enrollment. As HHS has noted, the same quality and
caliber of data on employer sponsored coverage do not exist due to the
various limitations discussed earlier in the preamble.
Furthermore, HHS understands the concerns raised by the commenter
regarding the process of assessing employer shared responsibility
payments (ESRP), and that more robust real-time verification of
consumers' access to employer sponsored coverage may result in some
employers avoiding the ESRP process. However, as noted in an earlier
response in this section of the preamble, options for obtaining the
necessary data are limited. In the absence of Congressional action to
provide access to the NDNH or to create a new database with mandatory
employer reporting, HHS remains committed to working with IRS to use
the information currently available to ensure our processes are fair to
both consumers and employers.
8. Annual Eligibility Redetermination (Sec. 155.335)
We solicited 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 on additional criteria or mechanisms
HHS could consider to ensure the Exchange hierarchy for re-enrollment
aligns with plan generosity and consumer needs, with consideration for
the potential impact of the proposed amendments to the actuarial value
de minimis guidelines. 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. Please see
the proposed rule preamble (87 FR 651 through 652) for a complete
description of the comment solicitation.
We will consider proposing amendments to the re-enrollment
hierarchy at Sec. 155.335(j) in future rulemaking.
We summarize and respond to public comments received on annual
eligibility redetermination (Sec. 155.335) below.
Comment: Some commenters opposed the proposal to revise the re-
enrollment hierarchy and explicitly expressed that HHS should retain
the current re-enrollment hierarchy. These commenters stated that
consumers choose to enroll in plans for a number of reasons and that
the Exchange cannot accurately predict the factors most valuable to
consumers; thus, revising the re-enrollment hierarchy could lead to
consumer confusion and dissatisfaction. A few commenters noted that the
discretion to select the most appropriate plans for consumers should be
left to the issuers. Two commenters expressed concern about enrollees
being auto enrolled without their knowledge or explicit approval.
A few commenters encouraged HHS to focus on enhancing the consumer
shopping experience and decision support tools to improve initial plan
selection and alert consumers of plans that better meet their needs
instead of altering the re-enrollment hierarchy in the Exchanges. A
couple of commenters explained that improving consumer education can
help ensure consumers understand all aspects of cost-sharing and how
they impact coverage, which will help consumers make an initial plan
selection that best meets their needs. One commenter suggested that HHS
could rebrand the concept of metal levels to make actuarial values more
accessible to consumers.
Response: HHS understands the importance of ensuring a revised re-
enrollment hierarchy does not result in consumer confusion or harm and
will take these comments into account in considering whether to revise
the current re-enrollment hierarchy as part of future rulemaking.
Comment: Commenters submitted comments regarding the incorporation
of consumer cost into the re-enrollment hierarchy. Several commenters
encouraged HHS to take net premium and/or total OOPC into account for
the re-enrollment hierarchy. Some commenters cited research in Covered
California's market which showed that 30 percent of households whose
coverage was automatically renewed were certain to be better off in a
different plan. Furthermore, these commenters referenced that, on
average, families in California were charged an extra $466 a year in
annual premiums, as a result of remaining with a plan that
[[Page 27274]]
no longer served their interests. For this reason, a number of
commenters expressed that re-enrollment should prioritize consumer
affordability rather than continuity of issuer and product line,
stating that the vast majority of consumers who do not make active
selections during the OEP care more about cost than issuer or provider
network. One commenter cautioned that net premium itself is not always
a reliable factor to determine the best plan for a consumer. Another
commenter recommended that the plan's net premium, MOOP, deductible,
and annual OOPC be considered only when 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. A few commenters stated that including OOPC
and plan generosity into re-enrollment rules will be particularly
beneficial for when enrollees are eligible for cost-sharing reductions
and are not enrolled in a silver plan. One commenter explicitly
requested that if an enrollee is shifted to a different metal level
plan, then that enrollee should remain enrolled in a plan offered by
the same issuer to prevent potential adverse consequences of an
enrollee losing access to medications or experiencing increased drug
costs. However, two commenters expressed that incorporating OOPC into
the hierarchy would likely lead to increased enrollment in plans with
lower OOPC for prescription drugs. Two other commenters explained the
critical importance of auto re-enrollment policies for immigrants and
racial and ethnic minorities who face barriers, such as lack of in
language outreach and notices, and are disproportionately impacted by
cost increases due to lower wealth and discretionary income.
Response: HHS will take comments regarding the incorporation of
consumer costs into the re-enrollment hierarchy into account in future
rulemaking.
Comment: We received multiple comments with specific
recommendations regarding how the priority of the current hierarchy
could be modified. Multiple commenters raised concerns with Sec.
155.335(j)(1)(i) which ensures the enrollee's coverage will be renewed
in the same plan as their current QHP, unless the current QHP is not
available through the Exchange. Commenters explained that the current
policy does not provide flexibility for enrollees to be re-enrolled
into a different plan even if market conditions increase costs. For
this reason, some commenters recommended that Sec. 155.335(j)(1)(i) be
amended to allow the enrollee's coverage to be renewed into a different
plan if there is no change in the issuer, product, service area,
provider network, and prescription drug formulary, and the new plan is
more generous and has lower net premiums. These commenters urged the
Exchange to provide accessible notices and reasonable opportunities for
the consumer to return to their former plan or drop coverage.
Furthermore, a few commenters recommended that enrollees should be
eligible for a 60-day special enrollment period after the close of the
annual individual market Exchange Open Enrollment Period or at the
start of the plan year to allow enrollees whose was coverage was
shifted to choose a different plan. This commenter stated that if the
de minimis guidelines proposed in this rule at Sec. Sec. 156.135 and
156.140 are finalized HHS should not alter the hierarchy for within-
metal level changes.
Some commenters raised concerns with Sec. 155.335(j)(1)(ii)
through (iv) and (j)(2)(iii), which outline the re-enrollment rules
when an enrollee's current QHP is no longer available, since consumers
may be re-enrolled in a plan with far higher costs if the issuer and
provider networks types are prioritized. These commenters expressed
that the vast majority of enrollees who do not make active selections
during the open enrollment period care more about cost than the issuer
or provider network. All of these commenters recommended that HHS
prioritize keeping the consumer's net premium and approximate actuarial
value (AV) at levels as close as possible to the enrollee's current
QHP. One commenter recommended HHS should perform targeted outreach to
consumers who have been auto re-enrolled and whose premium has
increased and should extend the open enrollment period, outlined in
Sec. 155.410, to January 31 and require coverage to begin February 1.
Response: HHS will take comments on factors to consider
prioritizing in the re-enrollment hierarchy into account in future
rulemaking. HHS understands the importance of comments that urged the
Exchange to provide accessible notices and reasonable opportunities for
enrollees to select a QHP that is different from their auto
reenrollment option. Currently, 45 CFR 156.1255 and its implementing
guidance outline the information a QHP issuer must provide in renewal
and re-enrollment notices to qualified individuals. Additionally, a
qualified individual is eligible under Sec. 155.420(d)(1)(i) for a
special enrollment period (SEP) to enroll in or change from one QHP to
another if the qualified individual loses minimal essential coverage.
If the enrollee's current plan is no longer available for renewal, HHS
would consider this a loss of minimum essential coverage that would
trigger a SEP.
Comment: Several commenters recommended provider network
considerations be incorporated into any revised re-enrollment
hierarchy. Commenters explained that a revised hierarchy that does not
incorporate provider networks could result in enrollees losing access
to their providers, increased out-of-network costs, and/or being placed
in narrower network plans. Furthermore, two commenters cautioned that
not including provider network considerations in the re-enrollment
hierarchy could have negative consequences for racial and ethnic
minority groups and those living with disabilities who rely on
providers with certain cultural backgrounds or longtime key providers.
Two commenters recommended that HHS use provider network as the
foremost criterion.
Response: HHS will take these comments regarding incorporating
provider networks in the re-enrollment hierarchy into account in future
rulemaking.
Comment: A few commenters recommended that SBEs, SBE-FPs, or States
performing plan management functions should have the flexibility to
determine the appropriate criteria for re-enrollment determinations
with respect to their unique markets. One commenter explained that
incorporating new criteria and mechanisms into re-enrollment
determinations could impose significant operational and financial
burdens on SBEs. Another commenter stated that a substantial number of
enrollees actively select their auto re-enrollment option which could
indicate enrollees trust their State or issuer. One commenter proposed
HHS should work with States to design safe and appropriate flexibility
for issuers to facilitate plan changes after open enrollment, but only
when the change would lower premiums and/or OOPC for members with
everything else (network, benefits, deductibles, MOOPs) being the same
or better for consumers. This commenter raised the concern that the
examples HHS provided in the comment solicitation could conflict with
State law requirements.
Response: HHS will take these comments regarding State flexibility
into account in future rulemaking.
Comment: A few commenters urged HHS to conduct stakeholder
engagement and provide transparency on the re-
[[Page 27275]]
enrollment process to all stakeholders. Two commenters requested
additional clarification on the proposed changes to the re-enrollment
hierarchy for the Exchanges while one commenter requested that HHS
provide further transparency into the alternate enrollment process. One
commenter recommended that HHS conduct further stakeholder feedback and
consumer testing prior to finalizing any revisions to the re-enrollment
hierarchy.
Response: HHS will take these considerations into account in future
rulemaking, including how to incorporate transparency and stakeholder
feedback into a revised re-enrollment hierarchy.
9. Administration of Advance Payments of the Premium Tax Credit and
Cost-Sharing Reductions (Sec. 155.340)
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 648 through 653), we proposed 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. The proposed APTC proration methodology was 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 on that policy during the applicable month.
HHS proposed to require all Exchanges, including the Exchanges on the
Federal platform (FFE and SBE-FP) and State Exchanges that operate
their own eligibility and enrollment platforms, to implement this
proposed proration methodology beginning with PY 2024. Please see the
proposed rule preamble (87 FR 648 through 649 and 652 through 653) for
a complete description of the proposed policy.
After considering the comments received, under HHS' authority to
administer APTC, we are codifying the proposed APTC proration
methodology as the methodology Exchanges on the Federal platform will
continue to use, but we are not finalizing the requirement for State
Exchanges to use the proposed methodology to prorate premium or APTC
amounts. Rather, we will formalize additional efforts under existing
Exchange program integrity and oversight authorities to ensure that,
beginning with PY 2024, State Exchanges will implement an APTC
methodology consistent with the requirement we are finalizing at Sec.
155.305(f)(5) at 155.340(i), described later in this section, that will
not cause the amount of APTC applied to an enrollee's monthly premium
to exceed their total monthly PTC amount as defined in 26 CFR 1.36B-3.
We note that all the Exchanges on the Federal platform (FFE and SBE-FP)
would implement HHS' codified methodology because all Exchanges on the
Federal platform rely on the Federal platform to perform the proration
calculations, and the Federal platform is not designed to implement
different methodologies by State. We believe that this final policy
will ensure Exchange compliance with IRS rules and equal treatment for
enrollees across Exchanges, while minimizing the burden for State
Exchanges and granting State Exchanges flexibility in how to comply
with these APTC calculation requirements 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. We will require State
Exchanges to prospectively report their PY 2024 methodology in the year
prior to implementation (in 2023) and will allow State Exchanges the
option to report their PY 2023 methodology in 2022. Any State that
begins operating a State Exchange for PY 2024, or for subsequent plan
years, will also be required to comply with this timeline by
prospectively reporting the methodology for the following plan year
during their first reporting cycle.
To support this policy, we are finalizing a series of conforming
amendments to parts Sec. Sec. 155.305(f)(5) and 155.340. We are not
amending as proposed Sec. 155.240(e), which establishes the
methodology the Exchanges on the Federal platform (FFE and SBE-FP) use
to prorate premiums, to add new paragraph Sec. 155.240(e)(2), which
would have established a methodology for State Exchanges using their
own platform to prorate premiums. However, we are amending Sec.
155.305(f)(5), which currently provides that Exchanges must calculate
APTC in accordance with 26 CFR 1.36B-3, by adding that Exchanges must
also calculate APTC in accordance with new paragraph Sec. 155.340(i)
where we describe the requirements for calculating APTC when policy
coverage lasts less than the full coverage month. In new paragraph
Sec. 155.340(i)(1), we establish that Exchanges on the Federal
platform will be required to use the APTC proration methodology
described at Sec. 155.340(i)(1)(i) and (ii), and at new paragraph
Sec. 155.340(i)(2) we establish that State Exchanges will be required
to calculate APTC in accordance with a methodology that does not cause
the amount of APTC applied to an enrollee's monthly premium to exceed
their expected total monthly PTC amount when an 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, and to report the methodology to HHS
in accordance with the requirements of 155.1200(b)(2).
Most of the comments on proposed amendments to the administration
of APTC (Sec. 155.340) were presented in combination with comments on
the other proposed amendments that made up the proposal to require
premium and APTC proration (Sec. Sec. 155.240(e), 155.305(f)(5)). We
summarize and respond to public comments received on all three sections
in a unified summary below.
Comment: Several commenters expressed their support for the
proposal to require that all Exchanges prorate both premium amounts and
APTC amounts and noted that the proposal would ensure accurate and
consistent calculation of APTC which would support consumer protection.
One commenter observed that the proposal would lower the operational
burden for issuers participating across multiple types of Exchanges.
One commenter stated that the proposed policy would encourage enrollees
to enroll in a new QHP if enrollment was terminated mid-month.
However, the majority of commenters opposed the proposal and
criticized the proposed APTC proration methodology, and its potential
impact on enrollees. Several commenters asserted that the proposed
methodology is not necessary to ensure that the calculation of APTC
does not cause excess APTC because calculating APTC in the same way as
PTC; that is, using the calculations defined at 26 CFR 1.36B-3(d) will
not result in excess APTC. Several commenters included examples of how
the proposed proration methodology would result in less generous
amounts of APTC for enrollees, and asserted that the proposed
methodology would reduce plan affordability, in contrast to the stated
goals of HHS and the Administration. Others stated that the requirement
to prorate premiums is not supported by the PTC regulation.
Response: We are not finalizing the policy as proposed. We will
codify the method of APTC proration as proposed
[[Page 27276]]
for the Exchanges using the Federal platform, but we will grant
flexibility to State Exchanges to use a methodology that does not cause
the amount of APTC applied to an enrollee's monthly premium to exceed
their expected total monthly PTC amount when an 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. We will require State Exchanges to
report their methodology to HHS in accordance with the requirements of
Sec. 155.1200(b)(2).
PTC is calculated for each month of the tax year retrospectively,
and therefore can account for the changes in an applicable enrollee's
premium month to month before the final amount is calculated at the
time of tax filing. However, Exchanges administer APTC prospectively to
issuers by advancing premium assistance to issuers based on enrollees'
eligibility determinations and elections, which may also change month-
to-month (and before final reconciliation occurs), putting affected
enrollees at risk of repaying the excess APTC.
The proposal sought to align the manner in which HHS administers
APTC with the IRS' PTC calculation for all Exchanges, by establishing a
consistent methodology for administering APTC in instances when there
is a change in the applicable enrollee's coverage mid-month, which the
PTC regulation accounts for at 26 CFR 1.36B 3(d)(1)(i) by
retrospectively calculating the monthly enrollment premiums to ensure
that PTC does not exceed that amount. We believe the ability to account
for mid-month coverage changes is most important when an enrollee is
enrolled in two policies in the same coverage month. The examples
included by commenters take into consideration only mid-month
terminations, but do not consider mid-month terminations followed by
mid-month enrollments into a new plan. In such instances when there are
multiple policies in a single policy month, HHS data on APTC payment
reflects that some State Exchanges are not prorating or otherwise
accounting for a potential over-payment of APTC.
Under 26 CFR 1.36B-3(d), PTC eligibility for a partial month of
coverage is calculated as the lesser of the premiums for the month
(reduced by any amount of such premiums refunded), or the adjusted
monthly premium for the applicable second lowest cost silver plan
(SLCSP) reduced by the taxpayer's monthly contribution amount.
HHS remains concerned that when an enrollee is enrolled in more
than one policy during a single coverage month, and the Exchange
applies APTC to each of those policies based on the eligibility
requirements under 26 CFR 1.36B-2 without prorating both policies or
conducting a reconciliation between them, the calculation will in some
cases cause the total monthly APTC to exceed the amount that would be
calculated under 26 CFR 1.36B-3(d). HHS data indicate that when
Exchanges do not link the two policies to account for the excess APTC,
the Exchanges tend to apply the maximum eligible APTC amounts, capped
at the prorated premium amount, for both policies. When added together
the total applied APTC often exceeds the maximum expected PTC amount
for which the enrollee will be eligible for that month.
However, if the Exchange applied the proration methodology used by
the Exchanges on the Federal platform (that is, FFE and SBE-FPs) which
is the product of (1) the APTC applied on the 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 for that policy during the
applicable month, the calculation would not cause the total APTC for
the month to exceed the PTC allowed for the month.
Further, we acknowledge the concern raised by commenters that under
the proposed policy, prorating the APTC amounts applied to enrollee's
monthly premium could result in a lower total amount of APTC than if
the non-prorated amounts of APTC capped at the reduced premium were
applied to an enrollee's monthly premium. We appreciate the perspective
on affordability, and agree that the non-prorated amount of APTC would
likely be more generous than the prorated amount if a mid-month
termination was not followed by enrollment in another plan. However,
since many mid-month terminations are followed by enrollment in a new
plan, we remain concerned that applying both plans' non-prorated APTC
amounts could exceed the maximum expected monthly PTC amount for which
the enrollee taxpayer will be eligible. When an enrollee is enrolled in
more than one plan during one coverage month and has APTC from both
policies applied to their premium, the generosity of non-prorated APTC
amounts described by commenters has the potential to result in APTC
over-payments and to trigger a costly tax liability which could
surprise the enrollee later. Income tax liability due to excess APTC
could pose a significant financial burden to applicable enrollees,
particularly low-income enrollees. Further, if this partial month of
coverage triggered a higher applied APTC, it has the potential to
confuse enrollees about their true monthly member responsibility for
their new plan, creating confusion about the affordability of health
care coverage offered by an Exchange. Therefore, we determined that the
benefit of avoiding potential, unexpected tax liability and of reducing
potential confusion outweighs the cost to enrollees of potentially
lower APTC payments for those enrolled in two policies for partial
months within one coverage month.
We acknowledge that proration based on the number of coverage days,
like the methodology currently used by Exchanges on the Federal
platform, is not the only approach to address the issue of excess APTC.
For example, a monthly calculation linking two partial month policies
for an applicable taxpayer to account for changes in APTC could also
align with the current PTC regulation at 26 CFR 1.36B-3(d). However, in
practice, HHS has noticed that State Exchanges often do not prorate or
link the two mid-month policies, which leads to APTC payments that
exceed an enrollee's expected monthly PTC amount.
However, in an effort to preserve State Exchange flexibility and to
be responsive to the concerns regarding the proposed methodology, we
are modifying the finalized policy to require only that State Exchanges
use a methodology that ensures that their calculation of APTC does not
cause the amount of APTC applied to an enrollee's monthly premium to
exceed their expected monthly PTC amount when an 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, and to report the methodology to HHS
in accordance with the requirements of Sec. 155.1200(b)(2).
Comment: A few commenters who supported the proposal expressed
hesitancy regarding the State Exchanges' ability to implement the
proposed methodology and requested maximum flexibility for the State
Exchanges in their implementation of the policy and the timing of
implementation. Additionally, many opposing commenters, specifically
several State Exchanges, noted that the proposal would impose
significant implementation burden on States Exchanges. These commenters
expressed concern that the estimated implementation cost would be
extremely burdensome to State
[[Page 27277]]
Exchanges, and the complex, resource-intensive IT and administrative
systems builds would require them to divert large portions of their
budget away from other priority operations such as Medicaid unwinding
related to the PHE among other projects. In addition, several
commenters explained that State Exchanges are already implementing
their own successful methods of ensuring that their calculation of APTC
does not cause excess APTC, some of which already include prorating
premiums, and that these State Exchanges should not be required to
cease their effective methods, in favor of the proposed proration
methodology. One commenter asserted that HHS does not have the
authority to require Exchanges to implement the proposed proration
methodology for premium and APTC amounts. Several of these commenters
remarked that State Exchanges have the best insight into their Exchange
populations and HHS should defer to their authority on how to approach
the issue of APTC over-payment in their jurisdiction without limiting
their flexibility.
Response: We maintain that regulating the administration of APTC is
within HHS' statutory authority, as defined in section 1412 of the ACA,
which grants authority to the Secretary of HHS to establish a program
for APTC, and in HHS regulation under Sec. 155.340, which establishes
HHS' requirements regarding administration of the APTC. However, in
light of comments regarding the need for more State Exchange
flexibility, as noted earlier, we are not finalizing the policy as
proposed.
We appreciate the competing priorities of State Exchanges and the
potential costs of implementing the proposed policy. In the proposed
rule, we acknowledged that implementing the proposed methodology would
require implementation and operational costs and time on the part of
most State Exchanges. We estimated a one-time implementation cost of
approximately $1 million dollars for each State Exchange, and we
address specific comments on the estimated cost of implementation
further in the comment and response section of the Regulatory Impact
Analysis in this final rule. In an effort to be responsive to State
Exchange concerns, we are finalizing the method of APTC proration as
proposed for the Exchanges using the Federal platform, but HHS will
require only that, beginning with PY 2024, State Exchanges use a
methodology that ensures that the calculation of APTC does not cause
APTC applied to an enrollee's monthly premium to exceed the enrollee's
expected monthly PTC amount when 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, and to report the methodology to HHS in
accordance with the requirements of Sec. 155.1200(b)(2). We estimate
that State Exchanges will be required to prospectively submit their
planned PY 2024 methodology for the first time through the State-based
Marketplace Annual Reporting Tool (SMART) tool in the summer of 2023
and will provide the option for State Exchanges to submit their
methodology for PY 2023 through the SMART tool in the summer of 2022.
HHS believes that finalizing this modification will provide the State
Exchanges flexibility and sufficient time to implement a new
methodology, if necessary, and to report the methodology to HHS.
HHS will be available to work with State Exchanges and address
questions as they prepare to report on their methods to ensure that
APTC calculations do not cause excess APTC for enrollees.
Comment: Several commenters opposing the proposal asserted that
there is no need to issue regulations on the issue of APTC over-
payment. Some of these commenters noted that the topic of APTC over-
payment and the potential resulting income tax liability is not being
reported as a problem by States Exchanges, consumers, or consumer
advocacy groups. A few commenters noted that if this type of over-
payment does occur, it is rare, and affects very few enrollees.
Further, some of these commenters stated that if State Exchanges were
over-paying APTC and exceeding premium amounts for partial-month
coverage, enforcing compliance with the existing PTC rule would
sufficiently address the issue.
Response: We remain concerned about the issue of APTC over-payments
among State Exchanges, as described in the previous response. Recent
APTC payment data indicates that APTC over-payments due to mid-month
coverage changes cost the Federal government approximately $0.5 million
to $1 million annually. While the issue of APTC over-payment may not
impact very many enrollees annually, we believe that these over-
payments are a legitimate source of consumer harm and may trigger a
Federal income tax liability for the applicable enrollee. However, we
agree that the reference at Sec. 155.305(f)(5) to current PTC
regulations at 26 CFR 1.36B-3(d) sets a clear enough standard to hold
all Exchanges sufficiently accountable to making correct payments of
APTC. In an effort to ensure compliance with the existing IRS PTC
rules, we are finalizing the requirement that State Exchanges use a
methodology that ensures that their calculation of APTC does not cause
the amount of APTC applied to an enrollee's monthly premium to exceed
their expected monthly PTC amount when an 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, and to report the methodology to HHS
in accordance with the requirements of Sec. 155.1200(b)(2).
10. Special Enrollment Periods--Special Enrollment Period Verification
(Sec. 155.420)
In 2017, the 2017 Market Stabilization final rule preamble (82 FR
18346, 18355 through 18358) explained that HHS would implement pre-
enrollment verification of eligibility for certain special enrollment
periods in all Exchanges on the Federal platform. HHS also clarified
its intention to not establish a regulatory requirement that all
Exchanges conduct special enrollment period verifications to allow
State Exchanges additional time and flexibility to adopt policies that
fit the needs of their State (82 FR 18355 through 18358). 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.
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 653), we proposed 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 in
special circumstances, which could include natural disasters or public
health emergencies that impact consumers or the Exchange. We further
proposed that Exchanges' pre-enrollment verification process must be
implemented in a manner that is not based on a prohibited
discriminatory basis. This is 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
[[Page 27278]]
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 (82 FR 18355 through
18360), 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.
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 also proposed that the Exchanges on the Federal platform
would conduct pre-enrollment verification of eligibility for only one
type of special enrollment period--the special enrollment period for
new consumers who attest to losing minimum essential coverage.\259\ 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.
---------------------------------------------------------------------------
\259\ See 45 CFR 155.420(d)(1)(i).
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We sought comment on these proposals.
After reviewing the public comments, we are finalizing this
provision as proposed, except that we have added a specific reference
to Sec. 155.120(c) to the new regulation text at Sec. 155.420(g) to
clarify the precise nondiscrimination standards that are applicable to
an Exchange's process for granting exceptions to pre-enrollment
verification for special enrollment periods.
We summarize and respond to public comments received on the special
enrollment period verification proposal.
Comment: The majority of commenters supported HHS' proposal. Many
commenters agreed that this policy helps minimize barriers to
enrollment while still maintaining program integrity. Most also agreed
that this policy will advance health equity by alleviating barriers to
enrollment for historically disadvantaged and marginalized communities.
Several commenters mentioned that pre-enrollment special enrollment
period verification can be especially burdensome for low-income
individuals, since they are more likely to have inadequate internet
access at home and are more likely to use a primary language other than
English. Commenters also noted additional groups that would benefit
from this policy: Immigrants, Native Americans, and those living in
rural areas who may not have high-quality internet access.
Several commenters agreed that special enrollment period
verification requirements can cause gaps in coverage and stated that
reducing these barriers will encourage continuous coverage. Commenters
mentioned that it can be difficult to verify life events, such as
proving a change in household size when someone becomes a tax
dependent. One commenter noted that pre-enrollment verification is not
only time consuming for consumers, but also for brokers who could be
using that time to help more clients enroll in coverage. Many
commenters agreed that this proposal will encourage younger and
healthier consumers who are eligible for a special enrollment period to
enroll and that this will be good for the risk pool. Several commenters
highlighted that concerns from issuers about scaling back pre-
enrollment verification for special enrollment periods harming market
stability have not been proven.
Response: We appreciate the comments highlighting that this policy
will have a positive impact on consumers from historically
disadvantaged and marginalized communities. We agree that this policy
will decrease consumer burden and barriers to enrollment for eligible
consumers, while still supporting program integrity. We also agree that
this policy will increase enrollments among younger and healthier
consumers and that this will have a positive impact on the risk pool.
Comment: Several commenters mentioned that, as written, this
proposal would still pose a barrier for consumers, particularly those
who face disproportionately high rates of being uninsured, such as
immigrants and Black and African American consumers. Some commenters
explained accessing documents from past employers to prove loss of
minimum essential coverage can be challenging, especially for
immigrants or those who are more likely to have unstable employment or
work in the informal economy. One commenter also raised concern that
losing coverage can place significant stress on a household and
consumers may not have the bandwidth to complete a pre-enrollment
verification process for a special enrollment period. Several
commenters recommended that HHS further act to reduce consumer burden
and barriers to enrollment by eliminating pre-enrollment verification
for all special enrollment period types. A few commenters advocated for
self-attestation in lieu of document verification and mentioned that
many other Federal programs rely on self-attestation.
Response: We appreciate commenters' concerns related to health
equity and consumer burden. We believe that by scaling back pre-
enrollment verification for special enrollment periods, this policy
will decrease consumer burden and barriers to enrolling through a
special enrollment period. At this time, we believe that pre-enrollment
verification for special enrollment periods is appropriate for the most
commonly used special enrollment period type in order to support
program integrity. HHS works to reduce consumer burden imposed by pre-
enrollment verification for special enrollment periods based on loss of
minimum essential coverage while still supporting program integrity by
using available data to automatically verify loss of minimum essential
coverage for a large portion of consumers requesting a loss of minimum
essential coverage
[[Page 27279]]
special enrollment period, which requires no additional consumer action
and does not delay enrollment. We will continue to evaluate whether
additional changes are appropriate.
Comment: Some commenters supported the clarified flexibility for
State Exchanges. Commenters stated that this change will enable State
Exchanges to implement pre-enrollment special enrollment period
verification processes that are tailored to their respective Exchanges
and consumer populations. One commenter also appreciated that Exchanges
may provide an exception to pre-enrollment special enrollment period
verification for special circumstances. A couple of commenters
highlighted that the new paragraph (g) language is redundant since
State Exchanges already have flexibility to exercise discretion under
current rules.
Many commenters expressed concern that State Exchanges may conduct
pre-enrollment verification for additional special enrollment period
types--outside of loss of minimum essential coverage--which could cause
barriers to enrollment in those States, particularly for younger and
Black and African American consumers. Due to this concern, these
commenters recommended that HHS should not permit State Exchanges to
have broader pre-enrollment verification of eligibility for special
enrollment periods than the FFEs.
One commenter urged HHS to monitor how State Exchanges implement
pre-enrollment verification for special enrollment periods to ensure
their processes are not discriminatory. Another commenter suggested
that HHS prohibit State Exchanges from implementing pre-enrollment
verification that differs from that of the FFEs, unless the State
Exchange can prove that pre-enrollment verification for special
enrollment periods will not have a disproportionate impact on
communities of color in their State.
Response: We agree that the new paragraph (g) allows State
Exchanges to continue to implement pre-enrollment verification
processes for special enrollment periods that are tailored to their
respective populations and needs. We also agree that clarifying that
Exchanges may provide an exception for pre-enrollment special
enrollment period verification for special circumstances will enable
Exchanges to be flexible so that eligible consumers can easily enroll
in coverage when they may need it most, such as during the current
COVID-19 PHE unwinding period. HHS is committed to equity in health
care and plans to monitor use of SEP pre-enrollment verification in
State Exchanges to ensure that they are following the non-
discrimination standards under Sec. 155.120(c).
Comment: Several commenters, particularly issuers, opposed this
proposal due to concerns that scaling back pre-enrollment verification
for special enrollment periods would lead to an increase in fraud and
abuse that would negatively impact market stability and premium costs.
A few of these commenters mentioned concerns about consumers
temporarily relocating to a State for medical care, which could lead to
increased costs in areas with renowned medical centers. Commenters
stated that HHS should encourage year-long continuous coverage. One
commenter cautioned that this policy, combined with other recent policy
changes such as a longer open enrollment period and the special
enrollment period for individuals with incomes under 150 percent of the
Federal poverty level, will harm market stability.
Several commenters stated that before the 2017 Market Stabilization
final rule (82 FR 18346), the market was unstable and costs were higher
due to fraud and abuse in consumers' use of special enrollment periods
as consumers would wait to enroll until they needed care. One commenter
noted that data from a 2018 CMS report showed that most consumers with
special enrollment period verification issues submitted the necessary
documents to resolve their issue.\260\ In addition, the report revealed
that fewer consumers enrolled through an exceptional circumstance SEP
(suggesting less abuse), and that the average age of special enrollment
period enrollees was younger than that of open enrollment period
enrollees.
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\260\ The Exchanges Trends Report (2018, July 2). CMS. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Marketplaces/Downloads/2018-07-02-Trends-Report-3.pdf.
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Commenters also stated that risk adjustment data suggests that
consumers with chronic conditions are abusing special enrollment
periods and are waiting to enroll until they need care. One commenter
highlighted that the loss ratios after risk adjustment for special
enrollment period enrollments, relative to open enrollment period
enrollments, has increased for some of their plans since 2019. They
stated that this is likely due to Exchanges relaxing pre-enrollment
verification for special enrollment periods during the PHE.
Response: We disagree that this policy will destabilize the market
and cause large increases in premium costs. We believe that while pre-
enrollment special enrollment period verification can decrease the risk
of 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. By
verifying eligibility for the most commonly used special enrollment
period type and removing verification for other special enrollment
periods, we believe that the Exchanges on the Federal platform will
successfully mitigate the negative impacts of special enrollment period
verification without substantially sacrificing program integrity or
market stability.
We acknowledge the data from the 2018 CMS report regarding special
enrollment period verification. While most SEP verification issues have
been resolved, current HHS data shows that younger 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 as younger consumers are often
healthier. We believe that improving access for younger and healthier
eligible consumers will be good for the risk pool and offset the effect
of potential increased adverse selection. Current HHS data also shows
that Black and African American consumers submit acceptable
documentation at much lower rates than White consumers. This suggests
that pre-enrollment verification may be a barrier to enrollment for
eligible Black and African American consumers. This policy change may
improve health equity, and access to affordable, quality coverage for
all.
Comment: Many commenters who opposed this proposal, agreed that
document verification for special enrollment periods can be a barrier
to enrollment for some eligible consumers. Therefore, they expressed
support for more automation of special enrollment period verification.
One commenter also encouraged HHS to evaluate why some consumers submit
acceptable documents at lower rates and recommended redesigning the
document collection process accordingly.
Response: We acknowledge these concerns and will continue to
conduct automated, pre-enrollment verification when possible for the
loss of minimum essential coverage SEP type. We note that automated
verification is not always possible. However, we continue to believe
that the approach we are adopting balances the priorities of reducing
consumer burden with supporting program integrity. HHS
[[Page 27280]]
continues to evaluate document submission rates and consumer outcomes
to inform process and policy improvements for successful SEP
verification.
11. General Program Integrity and Oversight Requirements (Sec.
155.1200)
The Payment Integrity Information Act of 2019 (PIIA) \261\ 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 Payment Integrity
Information Act of 2019 (PIIA),\262\ 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.
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\261\ Public Law 116-117 (2020, March 2).
\262\ Public Law 116-117 (2020, March 2).
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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. 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.
We proposed 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, under the
proposal, 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 had
also proposed to amend Sec. 155.1200(c) to cross-reference proposed
Sec. 155.1200(e) to ensure the coordination of these two requirements.
Please see the proposed rule preamble for a complete description of the
proposed policy and the SEIPM program.\263\
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\263\ 87 FR 654 through 660.
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We sought comment on these proposals.
After reviewing the public comments, we are not finalizing this
proposed provision at this time as it is interrelated with the SEIPM
program proposal, which will not be finalized at this time through this
final rule. HHS will continue to engage with the State Exchanges as we
continue to develop the SEIPM program, which we plan to codify in
future rulemaking. Please refer to section 12 for further details.
We summarize and respond to public comments received on general
program integrity and oversight requirements (Sec. 155.1200) below.
Comment: Several commenters generally opposed the amendment to the
programmatic audit requirement to permit a State Exchange to meet the
requirement under Sec. 155.1200(c) by completing the SEIPM program
process, as proposed under subpart P. Commenters noted that the
proposed change is duplicative because the existing programmatic audit
requirement under Sec. 155.1200(d) already addresses eligibility and
enrollment compliance. One commenter explained that imposing a new
audit requirement under SEIPM creates additional burden that is not
offset by the amendment to the programmatic audit requirement under
Sec. 155.1200(e). Another commenter stated that while HHS is
permitting a State Exchange to meet the programmatic audit requirement
under Sec. 155.1200(c) by completing the SEIPM program process, State
Exchanges will need to spend substantial time and resources to prepare
for SEIPM. Commenters noted that State Exchanges are already subject to
extensive oversight under Sec. Sec. 155.1200 and 155.1210 and
requested HHS clarify how the SEIPM will impact the SMART for Plan
Years 2023-2025. Another commenter requested that HHS grant
programmatic audit relief while State Exchanges prepare to comply with
the SEIPM program and also consider how the existing programmatic audit
requirement may be able to meet SEIPM goals. A few commenters requested
that HHS consider alternative approaches to the implementation of the
proposed SEIPM program, such as enhancing the current programmatic
audit requirement under Sec. 155.1200 to review for improper payments
or maintain the programmatic audit requirement intact, as it permits
flexibility and does not add undue burden. One commenter recommended
that HHS use onsite audits to reduce burden on the State Exchanges
resulting from the SEIPM program.
Response: HHS will continue to evaluate how to minimize duplicative
requirements and reduce burden on State Exchanges as we work toward
implementation of the proposed SEIPM program. After considering the
comments received, we are not finalizing this provision at this time,
as it is interrelated with the SEIPM program proposal, which will not
be finalized through this final rule. We clarify that the existing
oversight and audit requirements under 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, and updated through PIIA. The maintenance of records
requirement under Sec. 155.1210 requires that State Exchanges keep
eligibility and enrollment records, but it does not establish
requirements specific to improper payments. The independent external
programmatic audits required under 155.1200(c) do not review, estimate,
or report the amounts or rates of improper payments and do not allow
for standardized comparison or analysis across State Exchanges. In
order to comply with the PIIA, HHS will continue to develop the SEIPM
program and plans to engage in future rulemaking to codify the SEIPM
program.
Regarding the SMART, we clarify that State Exchanges will continue
to report on Exchange compliance through the annual SMART process, as
required under Sec. 155.1200(b)(2).
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.\264\ At that
time, we also announced that we would undertake rulemaking before
implementing the improper payment measurement methodology.
---------------------------------------------------------------------------
\264\ Presentation and materials provided to the then
operational State Exchanges as part of `All States' meeting held on
February 21, 2019.
---------------------------------------------------------------------------
In line with our prior announcement,\265\ and as mentioned in
section 11 of the preamble, HHS proposed regulations governing HHS'
SEIPM program.
---------------------------------------------------------------------------
\265\ Ibid.
---------------------------------------------------------------------------
As noted in the HHS Notice of Benefit and Payment Parameters for
2023 proposed rule (87 FR 584, 655), current regulations found at 45
CFR 155.1200 and 155.1210 require that a State
[[Page 27281]]
Exchange have financial and operational safeguards in place to avoid
making inaccurate eligibility determinations, including those related
to APTC, CSR, and enrollments. The regulations at Sec. 155.1200(c)
require State Exchanges to hire an independent qualified auditing
entity and submit the external audit results to HHS. The 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 proposed to update
programmatic auditing requirements such that the completion of the
annual SEIPM program would satisfy the current auditing requirements
prescribed in Sec. 155.1200(c). Therefore, we proposed 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. Please see
the proposed rule preamble (87 FR 654 through 655) for a complete
description of the proposed policy.
After reviewing and considering the public comments, we will not
finalize the SEIPM proposals at this time due to commenters' concerns
surrounding the proposed implementation timeline and other burdens that
would be imposed by the proposed SEIPM program.
We summarize and respond to public comments received on the State
Exchange Improper Payment Measurement Program (Sec. Sec. 155.1500
through 1540) below.
Comment: Several commenters addressed the implementation timeline
for the SEIPM program. One commenter expressed concerns with the
relatively short implementation time frame and questioned whether it
was operationally, fiscally, and technologically feasible for State
Exchanges to comply with the program's requirement by the proposed PY
2023 effective date. A few commenters characterized the timeline for
SEIPM implementation as inadequate. One commenter recommended several
years of implementation in a pilot before HHS publishes error rates to
ensure the data accurately reflect errors. One commenter characterized
the implementation timeline as administratively and financially
burdensome and unrealistic because State Exchanges would need to
implement new processes and possibly technology changes by the end of
2022 to meet the proposed 2024 reporting requirements. One commenter
proposed an effective date of plan year 2024 rather than 2023. One
commenter requested extending the deadline for SEIPM.
Response: Given the additional burden that was placed upon State
Exchange resources during the PHE, we agree that additional time should
be provided for implementation and consequently we are not finalizing
the provision at this time to allow for a longer implementation
timeline. We also generally agree with the commenter who stated that
additional piloting is needed. Because piloting efforts have also been
hindered by the PHE, HHS will consider more robust piloting options in
which the State Exchanges can participate prior to HHS publishing
estimates of improper payment rates.
Comment: Several commenters supported the need for review of
eligibility determinations that result in improper payments of APTC and
encouraged HHS to collect more detailed documentation of eligibility
denials.
Response: We thank the commenters for their support of the SEIPM
program and we will consider this feedback as we continue to develop
the program. We address the commenters' specific suggestions in the
data collection section below.
Comment: One commenter indicated that it was neutral as to the
establishment of the SEIPM program. The commenter noted that there are
obvious potential benefits to the Federal oversight model instead of
the programmatic audit model currently in use by State Exchanges, and
the commenter also noted that it is currently too early to fully assess
whether the tradeoffs regarding the cost and work related to the audit
model will be more or less than the cost and work to meet the reporting
requirements of the proposed Federal oversight model.
Response: We thank the commenter for sharing its view of the SEIPM
program.
Comment: Many commenters expressed opposition regarding the SEIPM
proposal noting it is duplicative because the existing SMART and
programmatic audit requirements under Sec. 155.1200 address
eligibility and enrollment compliance.
Response: We address these comments under section 11 of the
preamble.
Comment: A few commenters stated that the SEIPM program is
duplicative because consumers already reconcile APTC on their tax
returns.
Response: We appreciate the commenters' observation, but note that
the APTC reconciliation process on the tax return only addresses the
APTC calculation and not the accuracy of the eligibility determination.
The IRS uses the annual enrollment data and monthly reconciliation data
provided by HHS to calculate the PTC and to verify reconciliation of
APTC made to the QHP issuers on enrollees' individual tax returns.
However, the IRS does not address other issues related to the APTC
calculation, particularly in examining the eligibility and enrollment
processes including the verification of citizenship, social security
number, residency, minimum essential coverage, special enrollment
period circumstance, income, family size, and data matching issues
related to document authenticity. Examination of these areas would be
necessary to identify any underlying issues that could lead to improper
payments, and therefore may need to be addressed through corrective
action as stipulated under the PIIA.
Comment: A few commenters stated that the data HHS is proposing to
collect are already available to HHS through the Federal Data Services
Hub (FDSH), the State-based Marketplace Inbound (SBMI), or enrollment
and disenrollment reports, making the additional SEIPM collection
effort burdensome and duplicative.
Response: We appreciate the feedback regarding the potential
duplication of Federal requirements and increased burden. As we
continue to develop the SEIPM program, we intend to work
collaboratively with State Exchanges to continue to evaluate how to
best minimize duplicate requirements and reduce burden on the State
Exchanges, as well as how HHS can use data submitted by State Exchanges
under existing Federal requirements to help streamline SEIPM processes.
We note that as of this writing, HHS does not collect data regarding
verification and eligibility determination, enrollment reconciliation,
or plan management from the State Exchanges to determine whether they
comply with existing regulations. While the FDSH does provide applicant
verification information, it does not provide evidence that the State
Exchange used FDSH data to conduct verifications or whether
verification inconsistencies were resolved properly. Moreover, the FDSH
does not provide the information needed to determine whether a State
Exchange evaluated the verified information properly to determine an
applicant's eligibility for enrollment in a QHP and receipt of APTC. We
recognize that the State-Based Marketplace Inbound (SBMI) data provides
the policies and payments for an applicant, however, that data cannot
[[Page 27282]]
be matched to a specific application submission, which prevents HHS
from using the data to verify that eligibility determinations and
associated APTC payments were made correctly. Further, the SBMI data
does not include the reconciliation that occurs with the State Exchange
and its issuers to provide evidence that the State Exchange resolved
any data discrepancies with the issuers that may result in incorrect
APTC payments being made. Additionally, the SBMI data does not indicate
whether policies were certified as QHPs. HHS currently uses this data
to understand the sampling of policies from each State Exchange and to
determine an appropriate sample that would be selected to reflect the
State Exchange's applicant population. We will continue to evaluate
this and other data that HHS currently collects and will use it to the
maximum extent feasible as we continue to develop the SEIPM program.
Comment: A few commenters expressed concern that the proposed rule
does not provide enough information to assess the SEIPM program
proposal or to evaluate the tradeoffs related to the current Federal
programmatic audit requirements under Sec. 155.1200(c) compared to the
proposed audit processes under the SEIPM program.
Response: Although commenters did not specify what additional
information would have been helpful in assessing the program, HHS
believes that this concern is related to potential duplication of
effort and whether current requirements under Sec. 155.1200(d) are
consistent with SEIPM requirements. Though we are not finalizing this
proposed provision, we will consider these comments as we continue to
develop the SEIPM program.
Comment: One commenter requested that the SEIPM program not collect
data from the State Exchanges during the annual individual market
Exchange Open Enrollment Period (OEP) timeframe, which is from the end
of October (final preparation for annual OEP) to the end of January
(distribution of Forms 1095-A).
Response: We will consider this feedback as we continue to develop
the SEIPM program. As we continue to develop the program, we aim to
coordinate with State Exchanges to offer maximum flexibility to account
for State's enhanced workloads during the OEP.
Comment: One commenter noted that despite the provision allowing
completion of the SEIPM requirements to satisfy the existing
independent external programmatic audit requirement under Sec.
155.1200(c), State Exchanges would have to spend time and resources to
prepare for and procure a separate audit when participating in the
SEIPM program.
Response: We appreciate the feedback around potential duplication
of Federal requirements and increased burden. We address these concerns
in section 11 of the preamble.
Comment: One commenter suggested that HHS convene an HHS and State
Exchanges working group to identify approaches to the specific areas
that HHS wants to address through current Federal audit requirements.
Response: We appreciate the commenter's suggestion and value the
feedback we have received from the State Exchanges during the SEIPM
pilot process. We have been engaging in discussions regarding the SEIPM
with the State Exchanges since 2019 and we continue to meet with State
Exchanges individually to gather feedback on the SEIPM approach. We
will continue these efforts as we move forward in the development of
the SEIPM program.
Comment: One commenter recommended that the SEIPM program operate
as a minimum threshold for State Exchanges to meet the proposed SEIPM
requirements and to allow flexibility for any individual State Exchange
to create more stringent auditing criteria above and beyond what is
required in the proposed SEIPM program. The commenter suggested
allowing State Exchanges to meet their independent external
programmatic audit requirements by complying with the SEIPM program. In
cases where the State Exchange has more stringent auditing criteria
than the SEIPM program, the commenter suggested that the State Exchange
should be able to maintain its criteria.
Response: We understand that the State Exchanges may expand on the
Federal regulations to create more stringent policies and procedures.
In addition to evaluating compliance with Federal requirements during
the planned SEIPM review process, our goal is to also measure
compliance with State Exchange specific policies and procedures to the
extent that State Exchange specific policies and procedures do not
conflict with Federal requirements. As we continue to develop the SEIPM
program, we will collaborate with each State Exchange to modify the
review criteria so that each State Exchange is evaluated against their
own policies and procedures.
Comment: One commenter encouraged HHS to take a risk-based approach
that focused on reviews of a specific area or areas that have a higher
risk of over-payments. The commenter suggested HHS use a more proactive
approach that used test scenarios to demonstrate APTC accuracy.
Response: We appreciate the feedback and recognize that certain
State Exchange system functions may have more risk than others in
implementing Federal regulations. We appreciate the recommendation to
use test scenarios and have begun to do so, in some instances, as we
engage with State Exchanges on SEIPM pilot and preparatory activities.
We will consider this comment as we continue to develop the SEIPM
program.
Comment: One commenter recommended modifying the SEIPM's scope to
focus on APTC in addition to the SEIPM process replacing the annual
programmatic audit requirement.
Response: As we continue to develop the SEIPM program, we plan for
the SEIPM review process to focus on identifying, measuring,
estimating, and reporting errors made in determining eligibility for
APTC greater than $0 that resulted in improper payments. We plan for
this to include the examination of eligibility and enrollment
processes, which consists of verifications of citizenship, social
security number, residency, minimum essential coverage, special
enrollment period circumstance, income, family size, and data matching
issues related to document authenticity. Examination of these areas
would be necessary to identify any underlying issues that could lead to
improper payments, and therefore would need to be addressed through
corrective action, as stipulated under the PIIA.
Comment: One commenter suggested that HHS observe trends that
emerge during SEIPM implementation and propose Corrective Action Plan
parameters in future rulemaking, and then release the first improper
payment report in November 2025, at the earliest.
Response: We appreciate the comments offering support to defer the
CAP parameters. We plan to engage in future rulemaking to codify the
SEIPM program and will solicit comments regarding the CAP at that time.
a. Purpose and Definitions (Sec. 155.1500)
We proposed 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 proposed the purpose of subpart P as
setting forth the requirements of the SEIPM program for State
Exchanges.
At paragraph (b), we proposed to codify the definitions
that are specific to the SEIPM program and key to
[[Page 27283]]
understanding the process requirements.
We proposed 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 proposed the definition of ``Corrective action plan
(CAP)'' to mean the plan a State Exchange develops to correct errors
resulting in improper payments.
We proposed 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 QHP; APTC, including the calculation of APTC; redeterminations of
eligibility determinations during a benefit year; or annual eligibility
redeterminations.
We proposed 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 proposed 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 proposed 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 proposed the definition of ``State Exchange improper
payment measurement (SEIPM) program'' to mean the process for
determining 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.
After reviewing the public comments, we are not finalizing this
provision at this time. We summarize and respond to public comments
received on purpose and definitions (Sec. 155.1500) below.
Comment: One commenter recommended that HHS also define the
following terms: (1) Annual Program Schedule, (2) Measurement Cycle,
(3) Measurement Year, and (4) Reporting Year. The commenter also
recommended clarifying the meaning of two statistical terms: (1) Pre-
sampling Data and (2) Sampled Unit Data.
Response: HHS agrees that the defining these additional terms would
provide greater clarity to State Exchanges regarding SEIPM program
requirements. We will consider defining these terms in future
rulemaking.
b. Program Notification and Planning Process (Sec. 155.1505)
We proposed to add new Sec. 155.1505 to outline the annual program
notification requirements related to the SEIPM program.
At paragraph (a), we proposed 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 proposed notification would
occur during the benefit year (that is, the year under review for which
data would be collected), which immediately precedes the proposed
measurement year (that is, the year in which the measurement will be
completed). The proposed 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 proposed the requirements associated
with HHS' responsibility to notify the State Exchanges prior to the
proposed measurement year regarding SEIPM schedules, which will include
relevant timelines. For example, among other things, the proposed SEIPM
annual program schedule would detail the time period during which HHS
would provide the proposed SEIPM data request form to State Exchanges
with instructions regarding how to complete each part of the form. The
proposed SEIPM annual program schedule would also provide the deadlines
prescribed for State Exchanges to complete each part of the form.
At paragraph (c), we proposed 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 proposed 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. Please see the proposed rule preamble (87 FR 656) for a
complete description of the proposed policy.
We did not receive any comments in response to the proposals on the
program notification and planning process.
As previously stated, we are not finalizing this provision at this
time.
c. Data Collection (Sec. 155.1510)
We proposed to add new Sec. 155.1510 to address the data
collection requirements to support the SEIPM process.
At paragraph (a)(1), we proposed the requirement that the
State Exchange annually provide pre-sampling data to HHS by the
deadline provided in the annual program schedule. The proposed pre-
sampling data request would provide HHS with essential information
about the composition of the State Exchange's application population to
appropriately stratify and sample the population.
Please see the proposed rule preamble for a complete description of
the sampling methodology for this proposal (87 FR 656).
At paragraph (a)(2) we proposed annual requirement that
the State Exchange provide sampled unit data to HHS. To meet this
requirement under the proposal, 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 proposed sampled unit data request would include
the list of sampled units and the associated information specific to
each unit. The information required under the proposal 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 proposed the State Exchange submit
the pre-sampling and sampled unit data specified in paragraph (a) to be
submitted to HHS in a manner and within a deadline
[[Page 27284]]
specified in the annual program schedule. We also proposed language
regarding requests for extension which may be submitted by State
Exchanges. Given the importance of the time frames associated with the
measurement process, through this proposal, we did not anticipate
granting extensions in most situations. Rather, the approval of
extension requests was envisioned to be reserved for extreme
circumstances that would directly impact operations of the particular
State Exchange. Such situations might include natural disasters,
interruptions in business operations such as major system failures, or
other extenuating circumstances.
At paragraph (c), we proposed 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). Under the proposal, as a result of not
timely providing required data, we may have cited errors due to lack of
documentation to support the State's eligibility or payment decisions.
After reviewing the public comments, we are not finalizing this
provision at this time.
We summarize and respond to public comments received on data
collection (Sec. 155.1510) below.
Comment: A few commenters pointed out that there may be differences
between State Exchanges in terms of database structures, data fields,
and reporting. A few commenters stated that implementing the SEIPM data
requirements will create a financial and operational burden as it will
require them to change their information technology systems, and they
will need to employ new staff or forgo other activities such as
standing up other programs.
Response: We appreciate these comments and will take them into
consideration as we continue to develop the SEIPM program. However, we
emphasize that it was not the intention of the proposed SEIPM program
to drive changes to a State Exchange's information technology systems.
One goal of HHS is to reduce burden by requesting State Exchanges to
populate the information elements of the data request form by using
existing data elements from their current IT system. Still, we
recognize there is a cost burden related to the employment of staff
resources required to conduct data analysis, perform data mapping
activities, and extract data to support submission requirements. We
will consider these costs in future rulemaking to codify the SEIPM
program.
Comment: A few commenters noted a desire for flexibility in the
data fields they provide to HHS. One commenter appreciated that under
the pilot program, State Exchanges were allowed flexibility in what
data fields could be provided.
Response: We recognize that State Exchange systems and business
processes may vary in the way that data is used and stored. For this
reason, we are conducting information review sessions with State
Exchanges to address State Exchange-specific needs. There are many
complex elements that must be met for any applicant who is deemed
eligible for APTC. Because of the complexity and breadth of those
elements, a very structured review methodology is required. To meet
that need, certain data fields have been identified that are required
for the purposes of conducting a review of this nature. The data
request form was designed to aid in the matching of information fields
that are needed by HHS with the States' data in order to conduct the
required measurement in a consistent manner across all State Exchanges.
The ongoing review sessions will allow opportunities to identify the
most efficient means for collecting the information that is ultimately
deemed necessary. We will continue to engage with State Exchanges
through such sessions as we continue to develop the SEIPM program.
Comment: A few commenters suggested changes to the program sample
size. One commenter recommended that the sample size be from 100-1,000
tax households to account for the variation in State Exchange
populations. One commenter suggested that HHS choose a different method
for sampling and auditing eligibility and enrollment data to instead
allow a State Exchange to pull data records for a ``reasonable'' sample
size, which it did not further define, and work with an HHS auditor for
data review.
Response: We appreciate and thank commenters for their suggestions
regarding sample size. We clarify that the PIIA and OMB Circular A-123,
Appendix C require HHS to produce a statistically valid point estimate
of the improper payment rate aggregated across all State Exchanges.
This requires determining the sample size that is necessary for meeting
the targeted margin of error to estimate a total improper payment rate
across all State Exchanges and determining the sample sizes for the
individual State Exchanges under that parameter. To reduce State
burden, we plan to assess various stratification variables which may
optimize the sample size and will continue to assess the benefits and
deficiencies of various other sampling methodologies.
Comment: A few commenters suggested that HHS require State
Exchanges to collect additional information such as data on erroneous
coverage denials and incorrect financial assistance allocations.
Response: We appreciate the commenters' suggestions to expand the
scope of CMS data collection to include erroneous coverage denials and
incorrect financial assistance allocations. The focus of the planned
SEIPM program, however, is to identify, measure, estimate, and report
on erroneous determinations of eligibility for APTC payments in an
amount greater than $0 that result in improper payments. We continue to
assess and identify improvements to the planned SEIPM review process
with a focus on the statutory and regulatory requirements and
compliance with OMB guidance.
Comment: A few commenters suggested requiring State Exchanges to
disaggregate eligibility and enrollment data by race and ethnicity. One
commenter also suggested disaggregating data by primary language, sex,
sexual orientation, gender identity, and disabilities. One commenter
suggested disaggregating data by applicants who indicate their primary
language is other than English.
Response: We will consider the commenters' suggestions as we
continue to develop the SEIPM program. We also respectfully remind
commenters that the focus of the planned SEIPM program is to identify,
measure, estimate, and report on erroneous determinations of
eligibility for APTC payments in an amount greater than $0 that result
in improper payments. As we continue to develop the SEIPM program, we
plan to audit State Exchanges in compliance with the PIIA and OMB
guidance to estimate improper payments.
Comment: One commenter suggested that HHS explicitly require any
protected health information (PHI) or personally identifying
information (PII) shared with HHS or contractors be transmitted using a
secure file transfer mechanism such as Secure File Transfer Protocol
(SFTP).
Response: HHS will consider how to establish a secure file transfer
mechanism between the State Exchanges and HHS to support the exchange
of files that may contain PII and PHI data.
[[Page 27285]]
Comment: A few commenters noted that they had worked in pilots of
the SEIPM program with CMS and that the process was difficult either
because the program based its effort to standardize audits across State
Exchanges on the FFE data model or because the program required manual
review of records.
Response: We recognize that State Exchange systems and business
processes may vary in the way that data is used and stored. For this
reason, we are conducting information review sessions with State
Exchanges to address State Exchange-specific needs. The data request
form was designed to aid in the matching of information fields that are
needed by HHS in order to conduct the required measurement in a
consistent manner across all State Exchanges. The information review
sessions allow opportunities to identify the most efficient means for
collecting this information from each State Exchange. We will continue
to engage with State Exchanges through such sessions as we continue to
develop the SEIPM program. HHS developed a review modules document
(RMD) to establish the baseline set of review criteria that will be
applied across all State Exchanges. Each review criterion is based on
specific Federal regulations or on a State Exchange's own policies that
may expand on how a regulation is implemented in their State Exchange.
In support of the review criteria in the RMD, CMS developed the data
request form detailed above. We note that CMS developed the data
request form to define a set of generalized data elements that are not
specific to the FFE data model. These data elements should be common to
all State Exchanges as they would be needed to execute general Federal
regulation requirements established for the enrollment and eligibility
process.
Comment: One commenter noted that there are not clear standards for
the data that would satisfy an SEIPM audit. The commenter noted that
the State Exchanges may not have the requested data available where
self-attestation is accepted.
Response: We recognize the need for clear standards for data to
satisfy an SEIPM review. As we continue to develop the SEIPM program,
we will continue with our current communications with State Exchanges
to address State Exchange-specific needs and to convey planned
standards and data requirements that can be found in the corresponding
PRA package, including the pre-sampling and sampled unit data request.
State Exchanges that have voluntarily chosen to participate in the
current engagement process will continue to benefit from receiving
guidance regarding planned standards and data requirements. HHS
encourages all State Exchanges to voluntarily engage with HHS to better
understand the planned data collection requirements. During these
engagement sessions, HHS can better understand the unique business
rules and environment the State Exchange is operating within and make
appropriate modifications to the review criteria and data that is
requested to evaluate the State Exchange against those criteria. In
addition, HHS recognizes that utilization of self-attestation may limit
the availability of certain data and is taking this into account as we
continue to develop the SEIPM program. Finally, we note that additional
detail regarding the proposed SEIPM data request form is provided above
in the preamble to the data collection process.
d. Review Process and Improper Payment Rate Determination (Sec.
155.1515)
We proposed to add new Sec. 155.1515 to address the review process
and the determination of the improper payment rate.
At paragraph (a), we proposed 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 proposed 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 proposed 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 proposed 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.
We did not receive any comments in response to the proposals on the
review process and improper payment rate determination.
As previously stated, we are not finalizing this provision at this
time.
e. Error Findings Decisions (Sec. 155.1520)
We proposed 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 proposed 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
under the proposal, 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, we proposed that, should these types of events
warrant the 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 would still issue an error
findings decision to the State Exchange indicating that no errors were
identified. As proposed, 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 proposed language regarding the
specific information that would be included in error findings
decisions. We proposed 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.
After reviewing the public comments, we are not finalizing this
provision at this time.
Comment: One commenter expressed concern that each State Exchange's
error findings decision would not be made easily accessible to the
public and requested that HHS post each State Exchange's error findings
decision on the HHS website to ensure transparency.
Response: We thank the commenter for the recommendation to make
each State Exchange's error findings decisions easily accessible to the
public by posting each State Exchange's error findings decision on the
HHS website to ensure transparency. We will take the recommendation
into consideration as we continue to develop the SEIPM program.
f. Redetermination of Error Findings Decisions (Sec. 155.1525)
We proposed 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.
[[Page 27286]]
At paragraph (a), we proposed 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.
As proposed, 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, as proposed, 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 the publication of the
improper payment rate.
At paragraph (a)(1), we proposed language requiring that
the State Exchange identify the specific error(s) for which the State
Exchange would be requesting a redetermination. As proposed, this
identification may pertain to a single individual's application or to a
type of error affecting a class of applications. As proposed, a
redetermination would constitute a review of the initial decision and
not a de novo investigation. Thus, we proposed that the State Exchange
would base its request on documentation and other information already
submitted to HHS (for example, we proposed that if the application
lacked income information, the State Exchange may not retrospectively
seek this documentation and add it to the record). As proposed, any
issues unrelated to an error identified by HHS in the initial error
findings decision would not be addressed.
At paragraph (a)(2), we proposed language that the State
Exchange must include all data and information that support the State
Exchange's request for a redetermination. Note that, as proposed, while
State Exchanges can 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. In the proposal, we explained that
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 proposed 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)
specified in paragraph (a)(1). In the proposal, we stated that the
State Exchange should clearly articulate how the data and information
is related to HHS' findings, and how it impacts HHS findings. We
proposed that if a State Exchange did 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 proposed language regarding the
issuance of redetermination decision. As proposed, the redetermination
of an error findings decision would be issued within the deadline
prescribed in the annual program schedule. The goal of this proposal
was 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. Thus, we
also proposed that if circumstances like natural disasters or other
extenuating circumstance resulted in HHS needing additional time to
render the redetermination decisions, a State Exchange would be
notified of the delay.
At paragraph (c), we proposed language conveying the
minimum content requirements for HHS' redetermination decision.
At paragraph (c)(1), we proposed 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 proposed 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.
After reviewing the public comments, we are not finalizing this
provision at this time.
We summarize and respond to public comments received on
redetermination of error findings decisions (Sec. 155.1525) below.
Comment: A few commenters expressed concern that HHS would consider
only the initial data submitted in response to the data request form
when a State Exchange requests redetermination of an error findings
decision. These commenters requested that HHS allow State Exchanges to
introduce new information that could help clarify the process used by a
State Exchange and possibly negate the need for an error findings
decision.
Response: We will take this feedback into consideration as we
continue to evaluate any adjustments that may be needed to the
redetermination process as State Exchanges participate in the pilot
program, prior to SEIPM implementation.
g. Appeal of Redetermination Decision (Sec. 155.1530)
We proposed to add a 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 proposed 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
proposed 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.
At paragraph (b), we proposed 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. As proposed, no
additional new data or information submitted in support of the request
for appeal would be considered.
At paragraph (c), we proposed language that the appeal
decision would be issued within the deadline prescribed in the annual
program schedule unless there is a delay, and that the State Exchange
will be notified in the event of any delay in the appeal entity's
ability to reach a decision.
At paragraph (d), we proposed the content of the appeal
decision.
At paragraph (d)(1), we proposed that the appeal decision
would include the findings on the error for which an appeal was
requested and that those findings would be limited to the errors that
were identified in the request for appeal.
At paragraph (d)(2), we proposed that the appeal decision
would include the final disposition of the appeal request.
At paragraph (e), we proposed that upon completion of the
review and the closure of all appeals, HHS may issue to
[[Page 27287]]
each individual State Exchange, a report containing the error findings
and the estimated improper payment rate for their respective program.
As proposed, that report would not be made public. Additionally,
through the proposal, it was described that the estimated improper
payment rates for each State Exchange would be used to estimate an
aggregate improper payment rate across all State Exchanges and that the
aggregate rate would be published in the agency's Annual Financial
Report.
After reviewing the public comments, we are not finalizing this
provision at this time.
We summarize and respond to public comments received on the appeal
of the redetermination decision (Sec. 155.1530) below.
Comment: One commenter requested that HHS provide more detail
regarding the effects of a fully adjudicated error and specifically
asks whether an enrollee would be retroactively impacted by a fully
adjudicated error or whether the IRS would require changes through Form
1095-A reporting.
Response: At this time, HHS has not determined to what extent, if
at all, fully adjudicated error findings decisions may impact an
enrollee. HHS, in collaboration with IRS, the Department of the
Treasury, and other agencies as required, will make this decision based
on further research and evaluation of how recoveries could be
implemented, including the authority to pursue any such recoveries.
Further, any decision relating to the recovery will be communicated
through future rulemaking. HHS is not aware of any intended changes in
Form 1095-A reporting to support the planned SEIPM program.
Comment: One commenter expressed concern that publishing aggregate
error rates across all State Exchanges rather than publishing error
rates for each State Exchange could negatively reflect on higher-
performing State Exchanges. The commenter also stated that SEIPM design
flaws could result in a higher assessed rate of improper payments.
Response: We appreciate the comment. As we continue to develop the
SEIPM program, HHS will consider methodologies for identifying errors
with the goal of determining an accurate estimate of improper payments
that meet OMB criteria. With regard to SEIPM design flaws, HHS is
continuing to engage State Exchanges in order to test the planned SEIPM
data collection, sampling, and review processes to determine if any
adjustments are needed.
h. Corrective Action Plan (Sec. 155.1535)
Under the proposed rule, we proposed to add a new Sec. 155.1535 to
address the scenario in which a State Exchange's improper payment rate
for a given benefit year, in HHS' reasonable discretion, necessitates a
CAP to correct the causes of any payment errors. With regard to the CAP
process, we proposed the minimum set of requirements with the intent to
define full CAP parameters 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.
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.
At paragraph (a), we proposed that, depending on a State
Exchange's error rate for a given benefit year, we would require the
State Exchange to develop and submit a CAP to HHS to correct errors
resulting in improper payments.
At paragraph (b), we proposed 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.
At paragraph (c), we proposed 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.
At paragraph (d), we proposed 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.
After reviewing the public comments, we are not finalizing this
provision at this time.
We summarize and respond to public comments received on the
corrective action plan (Sec. 155.1535) below.
Comment: A few commenters supported the proposal to implement CAP
under Sec. 155.1535. One commenter supported deferring the CAP
parameters to future rulemaking to observe trends that emerge from the
SEIPM implementation. One commenter requested that all State Exchange
CAPs be made public. Another commenter stated that State Exchanges are
already subject to CAPs to remedy eligibility and enrollment errors.
Response: We appreciate the comments offering support to defer the
CAP parameters to future rulemaking. Based on the public comments
received, we are not finalizing this provision at this time.
i. Failure To Comply (Sec. 155.1540)
We proposed to add a new Sec. 155.1540 that would address failures
to comply with SEIPM requirements. At paragraph (a), we proposed that
if a State Exchange fails to substantially comply with the SEIPM
collection requirements or CAP provisions and HHS determines such
failures undermine or prohibit HHS' efficient administration of
improper payment measurement activities of the State Exchange, HHS
would have the discretion to address failures of compliance with audit
data submission and CAP requirements contained in subpart P under
paragraph (a)(1), and consistent with authorities HHS possesses under
title I of the ACA or any other Federal law as proposed under paragraph
(a)(2).
HHS considered exercising its authority under Sec. 1313(a)(5) of
the ACA 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 State Exchange personnel capable of displaying requested data
directly to HHS personnel or contractors.\266\ 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 sought comment on these measures and invited
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 APTC.
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\266\ 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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Please see the proposed rule preamble (87 FR 658 through 659) for a
complete description of the proposed policy. After reviewing the public
comments, we are not finalizing this provision at this time.
[[Page 27288]]
We summarize and respond to public comments received on failure to
comply (Sec. 155.1540) below.
Comment: One commenter expressed support for the failure to comply
with provisions that allow HHS to require a State Exchange to revise
their corrective action plan and implementation plan where there is a
compliance failure to curtail flawed eligibility processes and ensure
CAP compliance in a timely fashion.
Response: We clarify that the purpose of this proposed provision
was to incentivize compliance with the planned data collection and CAP
requirements. As we continue to develop the SEIPM program, we do not
anticipate broad or willful noncompliance with planned requirements.
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 health insurance issuers offering a QHP
through an FFE or SBE-FP 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 an 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
Based on estimated costs, enrollment, and premiums for the 2023
benefit year, in the HHS Notice of Benefit and Payment Parameters
proposed rule (87 FR 584, 660), we proposed a 2023 benefit year user
fee rate for all issuers offering a plan through an FFE of 2.75 percent
of monthly premiums charged by the issuer for each policy under the
plan where enrollment is through an FFE. This is the same user fee rate
that we established for the 2022 benefit year (86 FR 53412). We stated
that we believe the proposed 2023 user fee rate would not result in a
substantial increase to consumer premiums from prior years, and would
also ensure adequate funding for Federal Exchange operations. We refer
readers to the proposed rule (87 FR 660) for further discussion of this
proposal and a description of the cost, premium, and enrollment
projections that went into calculating the proposed 2023 FFE user fee
rates.
As we explained in the proposed rule (87 FR 660), activities
performed by the Federal government that do not provide issuers
offering a plan 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 offering a plan
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).
b. SBE-FP User Fee Rates for the 2023 Benefit Year
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 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, in the
proposed rule (87 FR 661), we proposed 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 sought comment
on these proposed user fee rates. We refer readers to the proposed rule
(87 FR 660 through 661) for a complete description of the proposal and
calculation methodology.
After reviewing the public comments, for the reasons discussed in
this rule and the proposed rule, we are finalizing for the 2023 benefit
year, as proposed, a user fee rate for all issuers offering QHPs
through an FFE of 2.75 percent of the monthly premium charged by the
issuer for each policy under the plan where enrollment is through an
FFE, and a user fee rate for all issuers offering QHPs through an SBE-
FP of 2.25 percent of the monthly premium charged by the issuer for
each policy under plans offered through an SBE-FP.
We summarize and respond to public comments received on FFE and
SBE-FP user fee rates for the 2023 benefit year (Sec. 156.50).
Comment: Several commenters supported the proposed user fee rates
and appreciated the rates being held constant with 2022. One supporting
commenter stated that avoiding an increase in user fees may help to
[[Page 27289]]
incentivize additional issuers to participate in the Exchanges,
providing consumers with additional choice. Another commenter noted
that maintaining the user fee level has the benefit of steady
administrative costs to issuers, which translates to stable premiums
for consumers.
Other commenters disagreed with the proposed user fee rates, asking
HHS to either increase or decrease the user fee rates. One commenter
encouraged HHS to lower user fee rates based on decreasing technology
costs. Another suggested decreasing the user fee rates noting that
higher rates raise premiums and are unnecessary due to user fee
collections that could have carried over from prior years. Other
commenters requested that HHS increase the user fee rates in order to
improve Exchange functions, and requested that HHS increase funding for
Navigators, HealthCare.gov, appeals, investments in technology,
investments in language services, investments in disability
accessibility, and access to back-end data with approval from clients.
Response: We appreciate the support for the proposed user fee rates
of 2.75 percent of monthly premiums charged by FFE issuers and 2.25
percent of monthly premiums charged by SBE-FP issuers and are
finalizing the user fee rates as proposed. We will continue to examine
cost estimates for the special benefits provided to issuers offering
QHPs on the FFEs and SBE-FPs for future benefit years, and will
continue to establish the user fee rates that are reasonable and
necessary to fully fund user fee eligible Exchange operation costs.
As we discussed in the proposal to maintain the user fee rates for
the 2023 benefit year (87 FR 660), we developed the user fee rates
based upon estimated costs, enrollment, and premiums. We specifically
noted that the user fee rates incorporate our estimates of premium and
enrollment changes for the 2023 benefit year, and are not solely a
reflection of the total expenses estimated to operate and maintain the
Federal platform and FFE operations. Finally, we noted that technology
upgrades and maintenance efforts will continue to be evaluated annually
and funded at levels appropriate to ensure a smooth enrollee
experience. We do not believe that a decrease in user fee rates is
appropriate as HHS remains committed to providing a seamless enrollment
experience for Federal platform consumers and applying resources to
cost-effective, high-impact enrollment activities that offer the
highest return on investment. While we did not anticipate any new
services or contracts to require the expenditure of additional FFE user
fees for the 2023 benefit year, we believe that we have estimated
adequate funding for these services in the 2023 benefit year user fees.
As for commenters requesting increased funding for language
services and disability accessibility, we note that under Sec.
155.205(c)(2)(i)(A), HHS currently provides telephonic interpreter
services in at least 150 languages at no cost to applicants and
enrollees. Translation services are provided telephonically and for
written communications at no cost to the consumer. HHS additionally
notes that under Sec. 155.205(c)(1), information must be provided to
applicants and enrollees in plain language and in a manner that is
accessible and timely to individuals living with disabilities including
accessible websites and the provision of auxiliary aids and services at
no cost to the individual in accordance with the Americans with
Disabilities Act and section 504 of the Rehabilitation Act. We have
included the costs of these services in the estimates used in setting
the 2023 benefit year user fees.
For the request that we increase funding for Navigators,
HealthCare.gov, and access to back-end data, we anticipate spending on
the management of a Navigator program and consumer assistance tools
will be similar to what was estimated for the 2022 benefit year, as we
believe that was an adequate level of funding for these activities, and
thus we do not believe it is necessary to increase user fees for these
purposes. As discussed in the proposed rule (87 FR 660), for the 2023
benefit year, we anticipate that spending on consumer outreach and
education, eligibility determinations, and enrollment process
activities will increase above the 2022 benefit year level.
Comment: Some commenters believed that changes should be made to
how user fees are charged. Specifically, several commenters requested
that HHS explore a PMPM user fee structure.
Response: HHS did not propose any changes to the user fee
structure, as such the user fee rates will continue to be set as a
percent of the premium. However, HHS will continue to engage with
stakeholders regarding how the FFE and SBE-FP user fee policies can
best support consumer access to affordable, quality health insurance
coverage through the Exchanges that use the Federal platform.
Comment: Some commenters requested additional transparency into
user fees; specifically, one commenter requested a report reflecting
how much of the user fee is used for the Navigator program. Other
commenters requested additional information about how funds generated
by the user fees are allocated across Exchange functions, as well as
greater transparency regarding the cost of the Federal platform, call
center, other programs associated with running the Exchanges,
individual State usage of Federal resources, allocated costs, and how
State user fees compare with each State's applicable costs. To further
transparency of the development of the SBE-FP user fee rates, one
commenter urged HHS to provide the enumeration and specific calculation
of costs associated with FFE infrastructure and services provided to
each State.
Response: HHS provided additional information in the proposed rule
(87 FR 660 through 661) to show how we expect costs to grow under
certain categories. We are limited by two main constraints when it
comes to projecting costs. First, we are projecting contracts and costs
into the future. Second, we are projecting revenues against these
costs, which are based on estimated enrollments and premiums.
Additionally, HHS is not permitted to publicly provide information that
is confidential due to trade secrets associated with contracting. As
such, we believe that providing a range of premium and enrollment
projections in setting the 2023 benefit year FFE and SBE-FP user fee
rates is sufficient to project revenues for user fee rate setting
purposes. 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 2023 FFE and
SBE-FP user fee rates. The assumption that the enhanced PTC 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. We expected 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 waivers. We projected that 2023 benefit year premiums will
generally increase at the rate of medical inflation after expiration of
the enhanced PTC
[[Page 27290]]
subsidies in section 9661 of the ARP. After considering the range of
costs, premium and enrollment projections, we proposed a 2023 user fee
rate that will not result in a substantial increase in consumer
premiums from prior years, and that also ensures adequate funding for
Federal Exchange operations.
As for transparency in the Navigator program, the Navigator program
makes the most recent awards public.\267\ We anticipate spending on
consumer assistance tools, management of a Navigator program,
regulation of agents and brokers, and certification of QHPs will be
similar to what was estimated for the 2022 benefit year, as we believe
that was an adequate level of funding for these activities.
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\267\ CMS Navigator Cooperative Agreement Awardees. (2021). CMS.
https://www.cms.gov/files/document/2021-navigator-grant-recipients.pdf.
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FFE and SBE-FP user fee costs are not allocated to or provided to
each State. User fees cover activities performed by the Federal
government that provide issuers offering a plan in an FFE or SBE-FP
with a special benefit. As stated, these services are generally IT,
eligibility, enrollment, and QHP certification services that are more
efficiently conducted in a consolidated manner across the Federal
platform, rather than by State, so that the services, service delivery,
and infrastructure can be the same for all issuers in the FFEs and SBE-
FPs. For example, all FFE and SBE-FP issuers send their 834 enrollment
transactions to the Federal platform database, which are processed
consistently regardless of State. Contracts are acquired to provide
services for the Federal platform. The services do not differ by State,
and therefore, we do not calculate costs on a State-by-State basis.
As we explained in the proposed rule (87 FR 660 through 661), to
calculate the SBE-FP rates for the 2023 benefit year, we used the same
assumptions on contract costs, enrollment, and premiums as we use to
develop 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 benefits provided to issuers in SBE-FPs by
the Federal government include the use of the Federal Exchange
information technology and call center infrastructure 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.
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.
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 (86 FR
53412, 53424 through 53429, 53445),\268\ in the HHS Notice of Payment
and Benefit Parameters for 2023 proposed rule (87 FR 584, 661), we
proposed 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 part 3 of the 2022 Payment Notice (86 FR 53429), 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. As such, in the proposed rule (87 FR 661), we
proposed to make conforming changes to Sec. Sec. 156.50(c) and (d) to
remove all references to the Exchange DE option and 155.221(j).
Specifically, we proposed 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 sought comment on these
proposed technical amendments.
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\268\ 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 53427.
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We received one comment offering general support for these
technical amendments. After consideration of this comment, for the
reasons set forth in this rule and in the proposed rule, we are
finalizing, as proposed, the amendments to Sec. 156.50(c) and (d) to
remove all references to the Exchange DE option and Sec. 155.221(j);
specifically, we are removing Sec. 156.50(c)(3), and amending
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.
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.
Accordingly, in the HHS Notice of Benefit and Payment Parameters
for 2023 proposed rule (87 FR 584, 661), we proposed that the first
Wednesday in May that is 2 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 proposed
corresponding edits to Sec. 156.111(d) and (e) to reflect the proposed
deadline. We stated in the proposed rule that 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.
We refer readers to the proposed rule (87 FR 661) for further
background and information regarding this proposal. We invited comments
on this approach, including whether there are any unforeseen
consequences to establishing this perpetual deadline.
After reviewing the public comments, for the reasons set forth in
this rule and in the proposed rule, we are finalizing the proposal with
minor edits to the language for clarity. Specifically, in the proposed
rule, we proposed 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-
[[Page 27291]]
benchmark plan selection for that PY, and we gave the example that the
deadline for PY 2025 would be May 3, 2023, and the deadline for PY 2026
would be May 4, 2024. To more clearly reflect the examples provided in
the proposed rule, we are finalizing minor edits to the proposed
regulation text to establish the permanent deadline for States to
submit the required documents for the State's EHB-benchmark plan
selection as the first Wednesday in May ``of the year'' that is 2 years
before the effective date of the new EHB-benchmark plan. Moving
forward, we will not be proposing deadlines for the process in annual
Notices of Benefit and Payment Parameters. We summarize and respond to
public comments received on States' EHB-benchmark plan options below.
Comment: All commenters expressed support for the proposed
deadline. Some noted that the set deadline would make the process more
predictable for both States and stakeholders involved with EHB-
benchmark development. Others noted that the proposed timeline should
give States and HHS sufficient time to solicit comments and opinions on
proposed benchmarks while also enabling issuers to determine how they
will provide EHB consistent with the new EHB-benchmark plan.
Response: We agree with commenters that the permanent deadline will
provide more predictability to the EHB-benchmark plan selection process
for all parties involved. Since we finalized the 2019 Payment Notice,
we have set an early-May deadline for the submission of EHB-benchmark
plans by States for each year from PY 2021-2024.\269\ We believe that
requiring these submissions in the first week of May of the year 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 plan submissions. It
also provides us 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-benchmark plan changes.
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\269\ For PY 2021, the deadline was May 6, 2019 (see 84 FR
17534); for PY 2022, it was May 8, 2020 (84 FR 17534); for PY 2023,
it was May 7, 2021 (85 FR 29226); for PY 2024 it is May 6, 2022 (86
FR 24232).
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Comment: We also received several comments that were outside the
scope of the proposal. One commenter noted that most States currently
have no established process for updating their EHB-benchmark plans and
could add benefits to address unmet health care needs in their States
without exceeding generosity limits. They urged HHS to identify best
practices in EHB-benchmark plan selection and provide additional
guidance and training for States to update their EHB-benchmark plans.
Several commenters urged HHS to strengthen the transparency of the
public comment process for EHB-benchmark plan selection to ensure that
stakeholders and other interested parties have ample opportunity to
provide meaningful input. A commenter suggested that HHS should require
States to adopt standards for public commenting that mirror those
specified by HHS for States requesting demonstration projects through
section 1115 of the Act. One commenter expressed support for the
flexibility provided to States under the EHB-benchmark plan selection
policy. Another commenter cautioned HHS to remain vigilant that any
changes in a State's EHB-benchmark plan do not result in a decreased
availability of EHB. The commenter requested that HHS collect and
report data on States that utilize flexibility under the policy to
allow consumers, advocates, and other stakeholders to better identify
and understand any trends with regard to EHB-benchmark plans.
Response: Although these comments are outside the scope of HHS'
proposal regarding the deadline for EHB-benchmark plan submissions, we
note that HHS is committed to ensuring access to EHB while providing
States with flexibility under the EHB-benchmark plan selection policy.
We will consider these comments and requests for future guidance or
proposals. However, as they are out-of-scope with regard to this
specific proposal, we decline to comment further on them at this time.
b. Annual Reporting of State-Required Benefits
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 662), we proposed 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 proposed 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.'' As we explained in the proposed rule, 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 commenters on the
annual reporting requirement in the 2021 and 2022 Payment Notices.
Although some commenters agreed 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. We refer readers to the proposed
rule (87 FR 661 through 662) for further information and background
regarding this proposal. We solicited comment on this proposal,
including on whether we should retain the reporting requirement or make
it voluntary.
After considering the public comments, for the reasons set forth in
this rule and in the proposed rule, we are finalizing, as proposed,
repeal of the annual reporting requirement at Sec. 156.111(d) and (f),
including revising the section heading to Sec. 156.111 to instead
read, ``State selection of EHB-benchmark plan for PYs beginning on or
after January 1, 2020.'' Thus, States will no longer be required 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'' or any benefits the State has identified as not in
addition to EHB and not subject to defrayal. We note that we will
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 and will 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 also note
that, although this policy will relieve States of the annual reporting
requirements, it will not pend or otherwise impact the defrayal
requirements under section 1311(d)(3)(B) of the ACA, as implemented at
Sec. 155.170.
We summarize and respond to public comments on the proposal to
eliminate the annual reporting of State-required benefits.
Comment: The majority of commenters supported the repeal of the
annual reporting policy at Sec. 156.111(d) and (f), reiterating many
of the same
[[Page 27292]]
objections and concerns raised by commenters on the initial proposal
for this policy in the 2021 Payment Notice and echoed by States and
stakeholders since the finalization of the policy. Many commenters
stated that the annual reporting policy is unnecessary and overly
burdensome as the requirements already in regulation at Sec. 155.170
are sufficient at instructing States and issuers on how to comply with
the defrayal requirement. Many commenters supporting repeal of the
policy also noted the policy was an unjustified new administrative
burden and duplicative of State efforts, as many States already engage
in in-depth processes with their State legislatures to evaluate State
defrayal obligations, make actuarially sound analyses regarding State
benefit requirements, and subsequently make defrayal payments if
necessary in compliance with Sec. 155.170. These commenters stated
that the reporting requirement would unnecessarily burden both State
and Federal officials, requiring State officials to either procure
consultants or divert existing staff from other work to comply with an
entirely new reporting process.
One commenter expressed that States are the primary regulators of
the individual and small group markets, and therefore, maintain the
authority to mandate benefits in those markets and monitor issuer
compliance, which is at odds with the duplicative oversight required
through the annual reporting requirement.
Many commenters stated that HHS already has the requisite authority
to investigate States that the agency believes are not in compliance
with the defrayal requirement. Such commenters emphasized that there is
therefore no demonstrated need to require States to report all State
mandates on an annual basis to show compliance and that this is
particularly true for States that do not have any State-required
benefits that are in addition to EHB. Other commenters supporting
repeal of the policy stated HHS had not demonstrated evidence of
widespread State noncompliance with defrayal requirements to warrant
the policy and expressed concern regarding ambiguity around how HHS
would enforce the annual reporting policy.
Some commenters expressed support for repealing the annual
reporting policy because they believe it was designed to discourage
States from expanding upon EHB in their State to improve benefit
coverage, which one commenter explained is concerning as enhanced EHB
benefits are particularly beneficial for people with chronic conditions
and disabilities, who are disproportionately women, LGBTQI+ people, and
people of color. As an example, one commenter explained that Colorado's
enhanced EHB-benchmark plan effective beginning in plan year 2023
includes coverage of an annual mental wellness exam, services related
to substance use disorder, and comprehensive gender-affirming care.
Commenters objecting to the repeal of the annual reporting policy
expressed that the policy was justified to protect Federal expenditures
as only a small number of States have actually identified State-
required benefits that are in addition to EHB and have transparent
processes in place to identify and defray costs as required by section
1311(d)(3)(B) of the ACA. Commenters objecting to repeal further
explained that the policy would have supported transparency and
increased understanding of the costs of State-required benefits and
promoted uniformity in the application of the ACA. Commenters also
stated that the policy would have promoted accountability and helped to
ensure that benefit packages remain affordable. Some commenters noted
that requiring States to report in this manner would have made issuer
compliance with defrayal requirements easier to manage and others
explained it would have promoted a more consistent understanding of new
benefit mandates that a State enacts to better inform policymaking. One
commenter noted that absent State reporting, it is unclear how the
defrayal requirement may be enforced.
Commenters objecting to the repeal of the annual reporting policy
also challenged claims that the policy was overly burdensome. Such
commenters noted that States should already have determined the status
and cost of State-required benefits and that, therefore, the reporting
requirement should not place a burden on States of conducting new
analyses. Commenters further noted that the minimal administrative
burden on States would decrease further after the initial reporting
cycle.
Response: We continue to believe that repealing the annual
reporting policy at Sec. 156.111(d) and (f) is warranted and would not
weaken State compliance with the defrayal requirement. Therefore, we
are finalizing the repeal of the policy, as proposed, including
revising the section heading to Sec. 156.111 to instead read, ``State
selection of EHB-benchmark plan for PYs beginning on or after January
1, 2020.''
We understand the frustration expressed by States that already may
appropriately identify which State-required benefits are in addition to
EHB and provide defrayal, for which reporting this information to HHS
on an annual basis would have added burden without increasing
compliance. However, we acknowledge the concerns of many commenters
that emphasized the importance of the annual reporting policy to
address inconsistent State compliance and application of the defrayal
requirements at Sec. 155.170. Although we continue to share concerns
that some States may not be properly identifying all State-required
benefits that are in addition to EHB, we also believe alternative
approaches to the annual reporting policy--such as expanded technical
assistance and issuing clarifying guidance--can achieve improved State
adherence with Sec. 155.170 without imposing a requirement on States
to submit detailed annual reports on State-required benefits.
We acknowledge that the information States would have submitted
through annual reporting would have supported increased oversight over
whether States are appropriately identifying which State benefit
requirements are in addition to EHB and promoted increased transparency
for stakeholders. We further acknowledge that receipt of such reports
by HHS would have been helpful for identifying noncompliant States,
although this would not have been accomplished without also requiring
already compliant States to submit reports. However, after carefully
considering the comments, we believe that a more targeted approach
where HHS provides written guidance on how to assess State-required
benefits, paired with continued individualized technical assistance and
outreach to States better balances the goal of increased State
compliance with the competing priority of preserving State resources
and reaffirming State authority as the entity responsible for
identifying which State-required benefits are in addition to EHB.
We reiterate that the obligation for a State to defray the cost of
QHP coverage of State-required benefits in addition to EHB is a
statutory requirement independent from the annual reporting policy we
are now repealing at Sec. 156.111(d) and (f). Therefore, even with the
repeal of the annual reporting policy, States remain responsible for
identifying which State-required benefits are in addition to EHB and
require defrayal, making payments to defray the cost of additional
required benefits to either the issuer or the enrollee, and note that
issuers are still responsible for quantifying the cost of these
benefits and reporting the cost to the State. With regard to future HHS
enforcement of the defrayal policy in
[[Page 27293]]
instances where we have State compliance concerns, we intend to work
closely with any such State to monitor compliance and address any areas
of confusion through continued outreach and technical assistance.
Even though defrayal is a statutory requirement, we understand the
critique that it can function as a restriction on States in mandating
coverage of benefits in addition to EHB by requiring States to absorb
new State expenditures. We are very supportive of States making
improvements to the scope of EHB in their markets within the limits
imposed by the generosity and typicality standards at Sec.
156.111(b)(2) and encourage State utilization of any of the three
methods available to States for selecting a new EHB-benchmark plan at
Sec. 156.111, a process Colorado used to select a new EHB-benchmark
plan that will be effective for the 2023 plan year and many other
States utilized in years past. We note as a reminder that the act of
selecting a new EHB-benchmark plan does not alone create new State
mandates, but it also does not relieve the State of its obligation to
continue defraying the cost of QHPs covering any State-mandated
benefits that are in addition to EHB. The annual reporting policy would
not have changed that standard, nor does repeal of the annual reporting
policy.
Although we are finalizing the repeal of the annual reporting
policy, we maintain that it would have imposed a minimal burden on
States as the information that States would have been required to
report to HHS should already be readily accessible to States, as every
State should already be identifying which State-required benefits are
in addition to EHB and should be defraying any such costs. However,
even if the State burden from the annual reporting policy would have
been minimal, we still believe it is appropriate to repeal the annual
reporting policy and instead take a more targeted approach of engaging
with individual States on questions of compliance with the defrayal
requirement. We believe this modified approach will yield similar
results to the annual reporting policy without requiring all States,
including compliant States, to expend additional time and resources
submitting a report with this detailed information.
Comment: The majority of all commenters--both those supporting and
those objecting to repeal of the annual reporting policy--encouraged
HHS to issue additional technical assistance and guidance clarifying
the defrayal policy. Commenters supporting repeal expressed gratitude
for the existing technical assistance HHS provides. Such commenters
further agreed it would be helpful for HHS to issue additional written
guidance paired with additional outreach regarding how HHS analyzes and
expects States to analyze whether a State mandate is in addition to
EHB, especially given how often questions regarding defrayal arise in
States.
Commenters objecting to the repeal of the annual reporting policy
stated that if the policy is ultimately rescinded, HHS should still
take the alternative, but a less effective step, of publishing
technical guidance. Such commenters urged HHS to include guidance on
the standards, including required actuarial analyses, to determine if a
benefit exceeds EHB and, if so, the cost of the mandated benefit, to
ensure States and issuers have a consistent understanding of whether a
State-mandated benefit will actually increase health care costs. Other
commenters acknowledged that there are other ways to achieve the
oversight goals of the annual reporting policy if the reporting
requirement is removed, such as providing additional written guidance
or performing targeted audits of States. Other commenters stated that,
although technical assistance and outreach are important, the periodic
reporting that would have been required under the annual reporting
policy would have had a valuable sentinel effect that cannot be
duplicated through simple outreach and assistance.
Response: We agree that engaging in technical assistance with
States to help ensure State understanding of when a State-benefit
requirement is in addition to EHB and requires defrayal will bolster
State compliance with defrayal requirements in the absence of the
annual reporting policy. We also reaffirm our intent to provide
additional written guidance 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 that a more targeted approach where HHS provides written
guidance on how to assess State-required benefits, paired with
continued individualized technical assistance and outreach to States
will still effectively promote State compliance with the defrayal
requirement. It will enable us to instead concentrate HHS efforts on
providing better, more tailored technical assistance to States rather
than reviewing detailed reports for compliance across all States, even
those that are already compliant. Although we acknowledge that the
annual reporting policy may have ultimately had a sentinel effect on
State adherence to the defrayal policy, we also believe continued ad
hoc monitoring of States will yield similar compliance results without
requiring all States to report each year. We believe our future
technical assistance and guidance will ultimately facilitate an
environment where States are more confident that their analysis of
State-required benefits aligns with Sec. 155.170 and will be
instructive for States that need to subsequently make any necessary
adjustments to State policy to comply with the defrayal policy.
Comment: Many commenters that supported issuing additional
technical assistance provided policy recommendations with regard to the
content of such guidance that are not within the scope of HHS' proposal
regarding annual reporting of State-required benefits, such as
requesting that HHS interpret the defrayal policy to be more lenient
for States (for example, interpreting more State mandates to fall
within the ``benefit delivery method'' exception that would not require
defrayal or otherwise allowing States to change their benefit
requirements to keep up with medical advancements without being
required to defray). Other commenters urged HHS to include additional
guidance on the defrayal requirements for habilitative services. One
commenter urged HHS to require that State calculations for defrayal
also be performed by a member of the American Academy of Actuaries.
Response: Although such comments are out-of-scope, we will consider
such recommendations as we continue to develop guidance and conduct
outreach. We encourage States to reach out to CMS with specific
defrayal questions in the interim.
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.
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 662 through 663), we proposed to withdraw
this flexibility by amending Sec. 156.115 to no longer allow States to
permit issuers to substitute benefits between EHB categories.
In addition, in the event we did not finalize the proposal to
eliminate the State option for between-category
[[Page 27294]]
substitution, we proposed to establish a static, permanent annual
deadline for States to notify HHS that they wish to permit issuers to
substitute benefits between EHB categories.
We sought comment on these proposals. We refer readers to the
proposed rule for further discussion of these proposals and our
rationale (87 FR 662 through 663).
After reviewing the public comments, for the reasons set forth in
this rule and in the proposed rule, we are finalizing, as proposed, an
amendment to Sec. 156.115 to no longer allow States to permit issuers
to substitute benefits between EHB categories. We are therefore not
establishing a static, permanent annual deadline for States to notify
HHS that they wish to permit issuers to substitute benefits between EHB
categories.
We summarize and respond to public comments regarding the proposal
to eliminate substitution of benefits between EHB categories.
Comment: The majority of the commenters supported the proposal to
amend Sec. 156.115 to no longer allow States to permit issuers to
substitute benefits between EHB categories. Many of the commenters
opposed the between-category substitution when it was proposed in the
2019 Payment Notice. Some of these commenters noted that Congress
expressly included each EHB category in the ACA to ensure a
comprehensive and appropriate range of benefits to meet patients' needs
across their lifespan. They added that Congress selected those benefits
because they were not often covered by private insurance prior to the
ACA and recognized that they were not interchangeable. A few commenters
expressed concerns that substitution of benefits between EHB categories
would result in issuers creating narrowed plans that would not ensure
access to and would increase out-of-pocket costs for the items and
services consumers need to manage their health conditions, particularly
for consumers with chronic conditions and disabilities. They added that
between-category substitution could lead to adverse selection and
discrimination by allowing issuers to cut benefits needed by people
with significant health needs and substituting them with benefits meant
to attract healthier enrollees.
One commenter noted that the argument that benefit substitution
will allow consumers to find a plan that is better tailored to their
needs is based on the false assumption that consumers can accurately
predict their health needs. The commenter noted that this rationale
undercuts the purpose of health insurance: To ensure access to
affordable and comprehensive coverage even when one enters a period of
unanticipated, increased health care need.
Commenters noted that if a State were to permit issuers to
substitute benefits between EHB categories, it would make it difficult
for regulators to ensure that issuers are actually covering the EHBs
they are required to provide and confusing for consumers who expect to
have coverage for all EHBs in ACA plans. Many commenters noted that any
potential benefit of flexibility to States in selecting EHB-benchmark
plans does not justify the policy given the potential harm to
consumers.
Response: We agree with commenters that the negative effects on
consumers of allowing States to permit issuers to substitute benefits
between EHB categories outweigh any flexibility it could have afforded
to States and issuers. For example, we agree with commenters that
allowing States to permit issuers to substitute benefits between EHB
categories could negatively affect access to and increase out-of-pocket
costs for the items and services consumers need to manage their health
conditions, and could lead to adverse selection and discrimination by
allowing issuers to substitute benefits needed by people with
significant health needs with benefits meant to attract healthier
enrollees. In addition, we agree that allowing such substitution would
make it difficult for regulators to ensure that issuers are actually
covering the EHBs they are required to provide and could be confusing
for consumers.
As we stated in the proposed rule (87 FR 662), to date, no State
has ever notified HHS that it would permit issuers to substitute
benefits between EHB categories. 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, as we explained in the proposed rule (87 FR 662), HHS is of the
view that it may only create potential harm for consumers with chronic
conditions and disabilities and that whatever theoretical flexibility
this policy could have afforded to States is not justified given the
potential negative effects on consumers.
Comment: One commenter opposed eliminating the option for States to
permit issuers to substitute benefits across categories and stated that
theoretical harm from allowing substitution of benefits between EHB
categories and the fact that this option has not been used are not
sufficient justifications for withdrawing the policy. The commenter
noted that States' use of other flexibilities to make changes to their
EHB-benchmark plans is an indication of their continued interest in
exploring flexibilities and that States may have been too overwhelmed
with the COVID-19 PHE to avail themselves of this particular
flexibility. They requested that HHS leave the flexibility in place.
Response: We do not agree with the commenters that opposed
eliminating the option for States to permit issuers to substitute
benefits across categories. HHS is of the view that whatever untapped
theoretical flexibility this policy could have afforded to States is
not justified given the potential negative effects on consumers,
including increased out-of-pocket costs for consumers with chronic
conditions and disabilities and adverse selection and discrimination of
consumers with significant health needs. We note that States continue
to be able to use existing flexibilities to make changes to their EHB-
benchmark plans.
Comment: Several of the supportive commenters included additional
points that were outside the scope of the proposal. Many commenters
urged HHS to prohibit substitution within EHB categories. They noted
that the potential harm to consumers with chronic conditions and
disabilities that may arise from substitution between EHB categories
may also arise from substitution within EHB categories. Commenters
noted that benefit components are not interchangeable within EHB
categories that list multiple components, such as the ``mental health
and substance use disorder services including behavioral health
treatment,'' the ``preventive and wellness services and chronic disease
management,'' and the ``rehabilitative and habilitative services and
devices'' categories.
One commenter expressed concerns that the flexibility to adopt
benchmark plans from other States and replace EHB categories with
categories of benefits from another State's less generous benchmark
plan could lead to a ``race to the bottom'' and erode EHB benefits. The
commenter noted the effect could be even more damaging if a State chose
the least generous coverage categories from various EHB-benchmark plans
around the country to aggregate as their new EHB-benchmark plan. One
commenter requested that CMS collect and publish data on State EHB-
benchmark plan substitution so that interested parties can better
assess the coverage of specific services.
Response: Although these comments are outside the scope of the
proposal, we will consider these comments and suggestions and also note
that benefit
[[Page 27295]]
designs that are discriminatory or intended to discourage enrollment by
certain populations or individuals with significant health needs are
prohibited under 45 CFR 156.125(b). In addition, we note that States
may collect data on EHB benefit substitution. However, as the comments
are outside the scope of this specific proposal, we decline to comment
further on them at this time.
5. Prohibition on Discrimination (Sec. 156.125)
Section 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. In the
proposed rule (87 FR 584, 671), we proposed to amend Sec. 156.200(e)
to explicitly prohibit different forms of discrimination based on sex--
specifically, discrimination based on sexual orientation and gender
identity. As explained in the Supplementary Information section earlier
in this preamble, HHS will address this policy, as well as the public
comments submitted in response to this proposal, in a future
rulemaking.
6. Refine EHB Nondiscrimination Policy for Health Plan Designs (Sec.
156.125)
We proposed to refine HHS' EHB nondiscrimination policy under Sec.
156.125 and proposed a regulatory framework for entities that are
required to comply with the EHB nondiscrimination policy.
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.\270\ Section 156.125(b) requires
that issuers must also comply with Sec. 156.200(e), which provides
that a QHP issuer must not, with respect to its QHP, discriminate on
the basis of race, color, national origin, disability, age, or
sex.\271\ Section 156.110(d) states that an EHB-benchmark plan may not
include a discriminatory benefit design that contravenes Sec. 156.125.
In the 2016 Payment Notice (80 FR 10750, 10822), we provided examples
of potentially discriminatory practices,\272\ and in the 2017 Payment
Notice (81 FR 12244), we noted that we would consider providing further
guidance regarding discriminatory benefit designs in the future.
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\270\ 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.
\271\ 45 CFR 156.200(e) states that a QHP issuer may not
discriminate based on ``race, color, national origin, disability,
age, or sex.''
\272\ 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. 80 FR 10750,
10822.
---------------------------------------------------------------------------
In the proposed rule, we first proposed to revise Sec. 156.125(a)
to provide that a nondiscriminatory 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.
Second, we proposed examples of health plan designs and practices
that HHS would deem to be presumptively discriminatory. HHS identified
these examples as presumptively discriminatory practices based on
whether the issuer's benefit design or coverage decisions were
adequately supported by appropriate clinical evidence relevant to each
circumstance. Through these examples, HHS sought to further clarify its
EHB nondiscrimination policy to better ensure that unlawful
discrimination does not impede consumers' ability to access benefits
for medically necessary treatment.
Third, we proposed to further refine our EHB nondiscrimination
policy by describing and identifying examples of guidelines and
resources (such as medical journals) that HHS would deem appropriate to
counter a claim that an issuer's benefit design or its implementation
of the design is discriminatory. We proposed that unscientific \273\
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. We stated that we did not intend to
limit 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 proposed that HHS 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. Notwithstanding, we also proposed that
articles that are not peer-reviewed or that are written primarily for a
lay audience would be insufficient to dispute a claim that an issuer's
benefit design is discriminatory. We proposed that we would not
consider sufficient a peer-reviewed journal article that has not been
accepted for publication in a reputable medical publication.
---------------------------------------------------------------------------
\273\ Merriam-Webster.com Dictionary, s.v. ``unscientific,''
Retrieved November 5, 2021, from 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 further sought comment on the types of clinically-based
justifications and the level of clinical evidence that should be
acceptable. Specifically, we sought comment on whether we should
further define the types of acceptable clinical evidence.
We stated in the proposed rule that presumptively discriminatory
practice examples may point to a State's EHB-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. We stated that a
benefit design that is discriminatory and inconsistent with Sec.
156.125 must be cured regardless of how it originated. For example, if
a State EHB-benchmark plan has a discriminatory benefit design, we
explained that a 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
discriminatory design. Similarly, if a State-mandated benefit has a
discriminatory benefit design, the State may attempt to remedy this by
revising the mandate or issuing guidance. Regardless, we stated that
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 sought comment on whether there are any
unforeseen barriers in the ability to remedy inconsistencies with this
refined EHB nondiscrimination policy.
We also stated in the proposed rule that, in ensuring that benefit
designs are not discriminatory, issuers should also consider the method
in which EHBs are delivered and not inadvertently discriminate based on
the service delivery model. Accessibility to EHB delivered virtually
has significantly
[[Page 27296]]
increased during the COVID-19 PHE as enrollees had limited options for
in-person health care visits. We noted that some issuers have designed
health plans that deliver services virtually with no copay, compared to
in-person health care services with a copay. We stated that this type
of health plan design could inadvertently incentivize enrollees to
access EHB using a certain delivery method. We further stated that
although this approach may not amount to a discriminatory practice
under 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 noted that we intend to monitor the issue and
remind issuers that while we encouraged expanded use of EHB virtually,
it should be done in a nondiscriminatory manner.
In relation to the proposed refinements of the nondiscrimination
standard under Sec. 156.125, we proposed that the policy would become
effective 60 days after the publication of the final rule in the
Federal Register. We sought comments regarding whether the proposed
effective date would be sufficient to allow issuers to come into
compliance with our proposed refinements to our EHB nondiscrimination
policy.
In addition, we recognized 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
generally, but a parallel provision applies to EHB furnished by
Medicaid Alternative Benefit Plans.\274\ We sought comment on the
examples of presumptively discriminatory benefit designs.
---------------------------------------------------------------------------
\274\ See 42 CFR 440.347(e).
---------------------------------------------------------------------------
After reviewing the public comments, we are finalizing the proposed
revisions to Sec. 156.125(a) to provide that a nondiscriminatory
health plan design that provides EHB is one that is clinically based,
but we do not finalize the proposed regulation text that would have
provided that a nondiscriminatory health plan design that provides EHB
is one that incorporates evidence-based guidelines into coverage and
programmatic decisions, and relies on a current and relevant peer-
reviewed medical journal article(s), practice guidelines,
recommendations from reputable governing bodies, or similar sources. We
also do not finalize our proposal to further refine our EHB
nondiscrimination policy by describing and identifying examples of
guidelines and resources (such as medical journals) that HHS would deem
appropriate to counter a claim that an issuer's benefit design or its
implementation of the design is discriminatory. Rather, under Sec.
156.125(a), we finalize only that 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; and that a non-discriminatory
benefit design that provides EHB is one that is clinically based. As we
explain in further detail in the comment responses later in this
section, we credit commenter concerns that information relevant to
whether a benefit design is unlawfully discriminatory could appear in
reputable publications or come from sources that are not peer-reviewed
medical journals or those that are otherwise dissimilar to the sources
and information HHS discussed in the proposed rule's preamble
discussion on Sec. 156.125(a). Although we do not finalize the
proposal to specifically define the evidence and sources that would be
sufficient to counter a claim that a plan's benefit design is
discriminatory, this should not be construed to mean that HHS will deem
unscientific \275\ evidence, disreputable sources, or other bases or
justifications that lack the support of relevant, clinically-based
evidence as sufficient to dispute a claim that an issuer's benefit
design is discriminatory.
---------------------------------------------------------------------------
\275\ Merriam-Webster.com Dictionary, s.v. ``unscientific,''
Retrieved November 5, 2021, from 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 are also providing final versions of the examples of
presumptively discriminatory benefit designs outlined in the proposed
rule, except that we do not address the example related to gender-
affirming care. For the reasons explained in the Supplementary
Information section earlier in the preamble, HHS will address the
gender-affirming care example, including the public comments that
addressed this example, in future rulemaking.
For the final examples included in this final rule, we have revised
the examples in response to commenter questions and concerns to clarify
key points in relation to HHS' refined EHB nondiscrimination policy.
First, we clarify that the requirement Sec. 156.125 and HHS' refined
EHB nondiscrimination policy apply only to services that are covered as
EHB under a plan and do not require a plan to cover services that the
plan does not already cover as EHB. Second, we clarify that neither
Sec. 156.125 nor the examples reflecting HHS' refined EHB
nondiscrimination policy require health care professionals to perform
services outside of their normal specialty area or scope of practice.
Lastly, we do not finalize the proposed applicability date of HHS'
refined EHB nondiscrimination policy. Instead, to allow issuers
sufficient time to come into compliance with our refined
nondiscrimination policy and to better align with the ability of plans
to make uniform modifications of coverage at the time of renewal, we
are finalizing that the refined EHB nondiscrimination policy will be
applicable starting on the earlier of January 1, 2023 (the start of PY
2023) or upon renewal of any plan subject to the EHB requirements. We
have added text to Sec. 156.125(a) to reflect this applicability date.
General Comments on the Proposal To Refine EHB Nondiscrimination Policy
for Health Plan Designs (Sec. 156.125)
Comment: Many commenters broadly supported the proposals to refine
the EHB nondiscrimination policy, implement a clinical evidence
framework, and provide discriminatory benefit design examples in an
effort to reduce discriminatory benefit designs and safeguard consumers
who depend on nondiscrimination protections. Such commenters recognized
the need for such safeguards and stated that many aspects of health
plan design may be arbitrary, not clinically based, and have
discriminatory impacts. These commenters noted that these proposals
would reduce the incidents of discriminatory benefit design, which
still occur despite the ACA's nondiscrimination protections. One
commenter provided feedback that, by implementing consistent
requirements under Sec. 156.125, the proposal ensures that enrollees
can fairly access covered benefits.
Response: We agree with commenters that despite current EHB
nondiscrimination protections, enrollees may be harmed by
discriminatory health plan designs. We also agree with commenters that
requiring nondiscriminatory benefit designs to be clinically based will
help ensure that plan limitations on benefits covered as EHB will not
discriminate on the bases prohibited under Sec. 156.125.
[[Page 27297]]
Specifically, Sec. 156.125(a) prohibits plans from discriminating in
their benefit design, or the implementation of its benefit design,
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. Further, Sec. 156.125(c) requires that an
issuer providing EHB must comply with the requirements of Sec.
156.200(e). Section 156.200(e) currently prohibits discrimination on
the basis of race, color, national origin, disability, age, and sex.
Thus, any limitation on coverage of an EHB in a plan (that is subject
to EHB standards) based on an individual's age, expected length of
life, present or predicted disability, degree of medical dependency,
quality of life, other health conditions, race, color, national origin,
disability, age, or sex, must be based on clinical evidence. We believe
that the clinical evidence standard that we are finalizing at Sec.
156.125 in this rule will reduce incidents of discriminatory benefit
design of EHBs by ensuring that any plan design limiting coverage of an
EHB on a protected basis in Sec. 156.125 is clinically based, better
safeguarding all consumers' access to medically necessary care.
We emphasize that issuers of EHB-compliant plans may continue to
utilize reasonable medical management techniques in accordance with
Sec. 156.125(c). Further, our refined EHB nondiscrimination policy
does not require issuers subject to Sec. 156.125 to cover services
under a health plan that are not already covered by the plan as EHB;
and it does not create a general requirement that a health plan cover
any and all medically necessary services.
Even when not intended, health plan designs that limit coverage of
EHBs on the basis of characteristics protected from discrimination in
Sec. 156.125 can lead to negative health outcomes when such
limitations lack clinical justification. We believe the refinements to
our EHB nondiscrimination policy will improve issuer compliance with
the nondiscrimination standards at Sec. 156.125 and help ensure that
enrollees can fairly and more easily access benefits covered as EHB,
ultimately promoting improved health outcomes.
Comments on the Impact on Issuers and States
Comment: One commenter expressed concern that the proposal would
require States to update their EHB-benchmark plans to remove
unjustifiable discriminatory benefit designs, like age limitations and
limitations based on health conditions. Some commenters requested that
HHS clarify whether issuers modifying existing plan designs to conform
with nondiscriminatory benefit design requirements would meet uniform
modification exceptions to uniformly modify the benefits in their
plans.
Response: As we stated in the proposed rule, a plan's benefit
design that is discriminatory and inconsistent with Sec. 156.125 must
be cured regardless of how it originated. The nondiscrimination
requirements at Sec. 156.125, including the clinical evidence standard
we are finalizing, apply to an issuer's benefit design or
implementation of a benefit design for all benefits the issuer covers
as EHB. Because some current EHB-benchmark plans continue to be based
on plan year 2014 plans, some of the EHB-benchmark plan designs may not
comply with current Federal requirements such as nondiscrimination
requirements at Sec. 156.125. Therefore, when designing plans that are
substantially equal to the EHB-benchmark plan, issuers may need to
further conform plan benefits, including coverage and limitations, to
comply with current Federal requirements, such as the nondiscrimination
requirement of Sec. 156.125. This requirement is not new. Plans
subject to the EHB requirement have always been required to comply with
the nondiscrimination requirements in Sec. 156.125 regardless of the
presence of any noncompliant discriminatory language in the relevant
EHB-benchmark plan.
Under the guaranteed renewability provision at 45 CFR 147.106, a
health insurance issuer offering non-grandfathered health insurance
coverage in the individual, small group, or large group market is
required to renew or continue in force the coverage at the option of
the plan sponsor or the individual, unless the issuer discontinues all
coverage, the product is discontinued, or the issuer's action is
otherwise excepted from this requirement. One such exception is for the
modification of coverage made uniformly and solely pursuant to
applicable Federal or State requirements, as described at Sec.
147.106(e)(2). This allows an issuer to, at the time of renewal, modify
its plans uniformly if the modification is made within a reasonable
time period after the imposition or modification of a Federal or State
requirement and the modification is directly related to the imposition
or modification of the Federal or State requirement. An issuer revising
its benefit design to conform with these nondiscrimination requirements
could constitute a modification under a Federal requirement; thus,
issuers may exercise the exception at Sec. 147.106(e)(2) to uniformly
modify their plans in accordance with guaranteed renewability
requirements. As explained later in this section, we are finalizing
that the refined EHB nondiscrimination policy at Sec. 156.125 will be
applicable on the earlier of PY 2023 or upon renewal of any plan
subject to the EHB requirements and, therefore, this policy should not
conflict with uniform modification requirements.
To address State EHB-benchmark plan compliance with the non-
discrimination standards, we further stated in the proposed rule that,
if a state EHB-benchmark plan has a discriminatory benefit design, the
State may issue guidance to issuers in the State explaining that plans
providing benefits that are substantially equal to the EHB-benchmark
must not replicate that discriminatory benefit design. We clarify that
we will not consider State EHB-benchmark plan designs to be out of
compliance with Sec. 156.110(d) or Sec. 156.111(b)(2)(v) if the State
provides such guidance or otherwise directs issuers to comply with
these refined nondiscrimination standards, notwithstanding any aspects
of the EHB-benchmark plan that are not consistent with these refined
nondiscrimination standards. Under this approach, States are not
required at this time to go through the formal process at Sec. 156.111
to update their EHB-benchmark plans solely for the purpose of removing
any such discriminatory benefit designs. But States that do elect to
update their EHB-benchmark plans at any point going forward will be
expected to ensure their new EHB-benchmark plans are compliant with
Federal discrimination law and policy.
Comment: Several commenters asserted that the proposed rule
violates the Administrative Procedure Act (APA). Some commenters
expressed concern that the lack of a cost-benefit analysis in the
proposed rule could be a violation of the APA, noting HHS did not cite
how many plans already cover the procedures specified in the examples
in a nondiscriminatory manner, how the refined EHB policy will impact
utilization, and any premium impact. Other commenters asserted that the
proposed changes to Sec. 156.125 are overly broad. Some of these
commenters expressed concerns that the proposed rule may impede States'
ability to regulate and put forth benefit packages that are affordable
and best meet the needs of their residents and recommended that HHS
should
[[Page 27298]]
alternatively continue to work with States and issuers to develop
sufficient coverage for enrollees while applying protections against
discrimination. Other commenters expressed concern that issuers may see
increased utilization of benefits and therefore higher costs. Some
commenters recommended that HHS should conduct and publish the results
of a detailed cost study demonstrating premium impacts for consumers
prior to finalizing the proposal.
Response: We do not agree with commenters that our proposals under
Sec. 156.125 violate the APA. Additionally, the revisions we are
finalizing in this rule do not impose an unreasonable burden on States,
are not overly broad, and do not impede States' ability to regulate or
put forth benefit packages that are affordable and meet the needs of
consumers. The revisions to Sec. 156.125 clarify existing Federal
regulation regarding the prohibition on discriminatory benefit designs
for plans subject to the requirement to provide EHB.
Specifically, this final rule affirms the existing requirement that
an issuer provides EHB when its benefit design or implementation of its
benefit design does not discriminate on bases prohibited under Sec.
156.125. This final rule further clarifies that a plan design that
includes limitations on EHB on a basis prohibited under Sec. 156.125
must be clinically based in order to be considered nondiscriminatory.
We reiterate that these nondiscrimination requirements at Sec. 156.125
apply to any benefit design or implementation of a benefit design to
the extent that the issuer covers benefits as EHB. This does not
substantively alter or broaden the regulatory requirements under this
section, as issuers of non-grandfathered individual and small group
health insurance are already prohibited from offering plans with
discriminatory benefit designs under Sec. 156.125 in the provision of
EHB.
We explained in the proposed rule the potential that there would be
administrative burden on States and issuers when coming into compliance
with the proposal to require clinical evidence to support EHB
limitations that may otherwise be considered discriminatory under Sec.
156.125. However, we clarify that States are not required at this time
to formally update their EHB-benchmark plans through Sec. 156.111
solely for the purpose of removing any such discriminatory benefit
designs. Therefore, any such administrative burden on the part of
States would be limited to instances where, at the State's discretion,
the State updates its EHB-benchmark plans to remove discriminatory
benefit designs or otherwise issues guidance to issuers on how to
comply with Sec. 156.125 in spite of any discriminatory limits that
may be present in the State's EHB-benchmark plan. The examples in the
final rule of presumptively discriminatory plan designs do not
substantively change the existing regulatory EHB nondiscrimination
requirements, but provide further guidance for plans to design benefit
limitations that follow those requirements. Accordingly, we are unable
to isolate and identify the burdens of providing those additional
examples as a tool to guide issuers' efforts to comply with the
existing requirements.
We disagree with commenters that suggest that the proposals we are
finalizing in this rule will result in increased utilization and higher
costs due to an unintended adverse impact on issuers' ability to
administer packages that are safe and clinically effective. We stated
in the proposed rule that, based on our experience with States updating
benefits \276\ covered as EHB in their EHB-benchmark plans under Sec.
156.111, any actions necessary to come into compliance with the
requirement to justify potentially discriminatory benefit limitations
with clinical evidence will cause only a minimal increase in premiums.
Thus, we do not find credible those assertions that the policy
finalized in this rule will have a significant cumulative effect on
issuers' ability to administer packages of benefits that are
affordable.
---------------------------------------------------------------------------
\276\ See, for example, Colorado 2023 EHB- Benchmark Plan
Actuarial Report. CMS. https://www.cms.gov/CCIIO/Resources/Data-Resources/ehb Suite of Gender-affirming care benefits to treat
gender dysphoria resulted cost estimate was 0.04 percent of the
total allowed claims assuming utilization would be for adults.
---------------------------------------------------------------------------
We acknowledge that States are generally the primary enforcers of
EHB requirements and HHS will continue to provide technical assistance
to assist States as applicable. HHS will also consider whether
additional guidance is necessary as we monitor issuer compliance with
EHB nondiscrimination requirements and States' oversight and
enforcement activities.
Comments on the Requirement That Health Plan Designs Be Supported by
Clinical Evidence
Comment: Many commenters were broadly supportive of including a
clinical evidence standard at Sec. 156.125, but disagreed with or had
recommendations regarding the appropriate scope of such a standard. For
example, many commenters noted that the clinical evidence required
under Sec. 156.125 should not be limited to evidence provided by
doctors of medicine and that HHS should allow evidence provided by
other qualified, licensed health professionals, including nurses. Such
commenters also urged HHS to include the relevant ``standard of care''
within the list of appropriate clinical evidence to rely upon as
standards of care are the leading guide for treatment. Other commenters
urged HHS to clarify that the list of reputable sources is only
illustrative and recommended that HHS add more peer-reviewed journals
to the sources list in the preamble. One commenter noted the concern of
overlapping or potentially inconsistent standards as issuers already
use clinical evidence in plan designs.
Other commenters strongly supported the incorporation of evidence-
based guidelines and recommendations from appropriate governing bodies
into coverage decisions, but recommend that HHS not further define the
acceptable types of clinical evidence. Some commenters recommended that
the opinion of recognized, disease-specific experts be included as
additional appropriate evidence sources.
Response: In light of the myriad comments we received regarding the
appropriate scope of clinical evidence to include at Sec. 156.125, we
have reconsidered whether the proposed clinical evidence standard
appropriately reflects the breadth and types of clinical evidence that
issuers may rely upon to demonstrate that a plan design limitation is
not discriminatory under Sec. 156.125. We are therefore finalizing
Sec. 156.125 only to require that a nondiscriminatory benefit design
that provides EHB be one that is clinically based. We are declining to
finalize that a nondiscriminatory benefit design that provides EHB must
incorporate evidence-based guidelines into coverage and programmatic
decisions, and rely on current and relevant peer-reviewed medical
journal articles, practice guidelines, recommendations from reputable
governing bodies, or similar sources, or the related examples of
acceptable sources included in the preamble of the proposed rule. We
believe that requiring plan designs providing EHB to be clinically
based, without these additional requirements, is sufficient to protect
consumers from discriminatory benefit designs. We will reassess whether
refining this standard in future rulemaking is warranted as we continue
to monitor issuer compliance with the nondiscrimination standards at
Sec. 156.125.
[[Page 27299]]
We did not propose a requirement that clinically-based benefit
designs be supported by evidence provided by individuals with specific
credentials or areas of expertise, and we do not finalize any such
requirement in this final rule. The presence or absence of any specific
degree by the individual(s) that develops resources for clinical
evidence is not by itself sufficient to satisfy or preclude compliance
under this rule, nor is inclusion of particular types of expert.
When designing nondiscriminatory plan designs and ensuring that any
limitations on EHB on a basis prohibited under Sec. 156.125 are
clinically indicated, we encourage issuers to seek current and relevant
clinical evidence, rather than utilizing standards that tend to overlap
or are potentially inconsistent with the scope of the plan design.
However, we also acknowledge that limitations in medical research may
restrict availability of such clinical evidence. Since we are not
finalizing our proposal to specify sources of acceptable clinical
information an issuer may use to show that a coverage limitation or a
benefit design is not discriminatory, we also decline to include any
specific ``standard of care'' within a list of appropriate clinical
evidence that issuers may rely upon. HHS is of the view that the
requirements of this rule and the guidance provided are sufficient to
enable issuers to set coverage limitations that comply with the EHB
requirements. We will continue to assess issuer compliance under this
rule and will consider if future rulemaking is warranted.
We also clarify that HHS would not consider a plan design subject
to Sec. 156.125 to be discriminatory when the plan design limits
coverage of an EHB on a basis that is prohibited under the regulation,
but the limitation is a direct result of the issuer's compliance with
other applicable Federal coverage requirements. For example, Federal
law requires issuers of plans that must meet EHB standards to cover all
evidence-based items or services that have in effect a rating of A or B
in the current recommendations of the United States Preventive Services
Task Force (USPSTF).277 278 However, evidence-based items
and services with A or B ratings in effect by USPSTF often contain age
limits. We would not consider a plan design subject to Sec. 156.125 to
be discriminatory when the plan design limits an EHB on a prohibited
basis under Sec. 156.125 but such limitation is due to compliance with
an otherwise applicable Federal requirement. As explained in greater
detail later in this final rule in relation to the finalized example of
discrimination based on age, this policy is not meant to conflict with
or supersede the policy at Sec. 156.115(d), which prohibits coverage
of, among other things, routine non-pediatric dental services and eye
exam services as EHB.
---------------------------------------------------------------------------
\277\ 45 CFR 156.115(a)(4).
\278\ U.S. Preventative Services Task Force (n.d.) USPSTF A & B
Recommendations. https://www.uspreventiveservicestaskforce.org/uspstf/recommendation-topics/uspstf-a-and-b-recommendations.
---------------------------------------------------------------------------
Comment: Many commenters supported the proposal to require clinical
evidence for health plan designs. Some commenters who supported the
proposal cautioned HHS that clinical evidence used to defend plan
designs may itself be discriminatory due to embedded systemic racism
and bias in medical research.
Response: We recognize that embedded systemic racism and bias are
pervasive and limit many aspects of medical research. HHS is committed
to reducing the effects of such racism and bias on consumers and
consumer health outcomes, which is why we are finalizing that a
nondiscriminatory plan design that provides EHB is one that is
clinically based, without specifying that the plan design must rely on
current and relevant peer-reviewed medical journal article(s), practice
guidelines, recommendations from reputable governing bodies, or similar
sources. Overall, we are working to advance health equity by designing,
implementing, and operationalizing policies and programs that promote
and support health coverage that provides fair access to covered health
care services for all person who purchase (or would purchase) the plan,
eliminating avoidable differences in health outcomes experienced by
people who are disadvantaged or underserved, and providing access to
the care and support that enrollees need to thrive.
Finalizing this proposal is another step towards achieving that
goal, but we recognize that this policy, by itself, is insufficient to
address broader concerns that the existing clinical evidence on which
issuers may design nondiscriminatory benefit limitations cannot be
cured of the effects of embedded systemic racism, bias, and limits in
available medical research. We expect issuers to work cooperatively
with States to design nondiscriminatory plans and expect States to
evaluate the clinical evidence for plan designs while conducting form
reviews and issuing guidance.
Comment: Some commenters expressed concern that clinical evidence
may be used by issuers as justification to perpetuate discriminatory
plan designs and urged HHS to clarify that lack of clinical evidence
does not provide the license to deny access to new innovations or
therapies that are difficult to research. They noted that some services
and treatments that may be beneficial may not be conducive to
conventional methodologies for developing a clinical evidence-base,
such as some treatments for rare diseases.
Response: The policy finalized in this final rule at Sec.
156.125(a) provides mandatory guidelines to issuers to support their
design and implementation of benefit packages that conform to EHB
nondiscrimination requirements. Under Sec. 156.115, plans subject to
the requirement to provide EHB must provide benefits that are
substantially equal to the EHB-benchmark plan, including covered
benefits; limitations on coverage, including benefit amount, duration,
and scope; and prescription drug benefits. Thus, issuers cannot omit
coverage of an EHB by asserting a lack of clinical evidence to support
a discriminatory limitation on that EHB. However, separate from the
policy finalized in this rule, issuers continue to have the ability to
substitute benefits provided in the EHB-benchmark plan under Sec.
156.115(b). In fact, utilizing the flexibility available under Sec.
156.115(b) to substitute benefits may be a way for issuers to cover new
and innovative benefits.
Comment: Some commenters expressed concern that the new proposed
policy will unintentionally limit plan designs that strive to address
health disparities. They noted that HHS should clarify that actions
taken to reduce health disparities would not violate EHB
nondiscrimination requirements. They expressed concern that limitations
in clinical evidence may hinder innovative plan designs and issuers'
ability to respond to a public health emergency.
Response: We disagree with commenters that assert this policy will
inhibit efforts to advance health equity or efforts to address public
health emergencies. We also do not find credible any assertion that the
pursuit of sound clinical evidence in coverage decisions will in any
way hinder the creation of innovative plan designs. We believe that
requiring issuers to ensure their plan designs are clinically based is
essential to achieving health equity and reducing health disparities.
[[Page 27300]]
Comment: One commenter expressed concern that relying on clinical
guidelines exclusively to determine discriminatory design may lead to
issuers using clinical evidence or research as a shield to escape valid
claims of discriminatory benefit. The commenter noted that if issuers
begin to counter enrollee's arguments with clinical evidence, it may be
hard to evaluate the validity of their sources as there is often a lack
of transparency about the data or underlying assumptions in research.
The commenter suggested that HHS should continue to employ other tools
such as outlier analyses to reveal problematic plan design and consider
approaches to compliance borrowed from mental health parity
enforcement, such as disclosure requirements.
Response: We appreciate these recommendations and are exploring
ways to improve our nondiscrimination reviews and develop new tools to
detect discriminatory practices. In addition, we note that previously
awarded State grants have focused on enhancing policy filing review
processes to enhance enforcement of nondiscrimination (among several
others).
Comments on Unforeseen Barriers and Remedying Inconsistencies With the
EHB Nondiscrimination Policy
Comment: Some commenters expressed concern that the proposed
changes may preempt State benefit mandates, which could create
inconsistencies and impact health care affordability and accessibility.
One commenter expressed concerns that State legislatures may enact
mandates that are limited to a specific sub-population, as they often
balance expanding coverage with the potential additional cost to those
purchasing health insurance and their defrayal obligations pursuant to
Sec. 155.170. As such, this commenter noted that it is not appropriate
for HHS to designate benefits being offered in accordance with State
law as presumptively discriminatory. The commenter further stated that
HHS should clarify that benefits offered in accordance with a duly
enacted State law would not be considered presumptively discriminatory
and that HHS finalize a process by which a health insurer could rebut
any allegations that a benefit design is discriminatory. Another
commenter urged HHS to provide additional compliance resources to allow
plans and States to assess both what State mandates may not be allowed
under this proposal, and how plans and States can work together to
ensure consistent benefit coverage. Some commenters expressed concern
that it is premature and inappropriate for HHS to include the examples
given in the proposed rule without further analysis of how the examples
relate to existing State and Federal nondiscrimination policies.
Response: We disagree with the premise that it is inappropriate to
apply this policy to issuer plan designs that are the result of State-
required benefits. We also clarify that Sec. 156.125 would only apply
to State-required benefits that are considered EHB. For example,
benefits required by a State mandate enacted on or after January 1,
2012, are generally not considered EHB pursuant to Sec. 155.170.
Therefore, an issuer covering a State-required benefit that is not EHB
would not be required to modify the benefit in its plan design to
comply with the nondiscrimination standards under Sec. 156.125. A
State-required benefit enacted on or before December 31, 2011, is
considered EHB, and issuers covering that State-required benefit would
therefore be required to comply with the nondiscrimination standards in
Sec. 156.125 when including that State-required benefit in their plan
designs.
If a State-mandated benefit that is considered EHB is
discriminatory under this policy, the State may attempt to remedy this
through various ways, including revising the mandate, issuing guidance
as described earlier in this section of the preamble, or otherwise
furthering issuer compliance such as by amending form filing checklists
or providing technical assistance to issuers. Regardless, issuers
subject to Sec. 156.125 would need to modify any discriminatory
benefit designs for benefits the issuer is covering as EHB or be
prepared to justify their approach with clinical evidence when
designing plans that meet EHB nondiscrimination requirements. We would
expect an issuer to be able to rebut a presumption of discriminatory
plan design by demonstrating that such plan designs are clinically
based.\279\ This policy does not disallow any benefit mandates required
under State law, but does require issuers to comply with the non-
discrimination provisions if benefits mandated by the State are EHB.
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\279\ See proposed example of Age Limits for Infertility which
provides a rationale when plans include age limitation due to
variations in clinical effectiveness of treatment for infertility,
defined as not being able to achieve pregnancy after 1 year of
having regular, unprotected intercourse, or after 6 months if the
woman is older than 35 years. Infertility and Fertility. (2017,
January 31). NIH. https://www.nichd.nih.gov/health/topics/infertility.
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The preceding clarifications should address the concerns raised by
commenters regarding how this policy impacts State mandates and
potential defrayal implications. As noted in relation to the policy we
are finalizing to repeal the annual reporting requirement for State
benefit requirements at Sec. 156.111, we intend to provide additional
guidance regarding the defrayal of State-required benefits in the
future. We encourage States to reach out to HHS when regulatory
concerns arise in this area in the interim. We further note that, under
defrayal regulations at Sec. 155.170, State mandates imposed for
purposes of coming into compliance with Federal requirements are not
`in addition to EHB' and do not require defrayal.
Comments on Telehealth Oversight
Comment: Many commenters supported oversight to ensure that
telehealth is not being utilized in a discriminatory fashion. They
noted that telehealth utilization is often preferred for clinical
reasons or to increase convenience. One commenter recommended that HHS
continue to monitor this issue closely and ensure that the decision for
an in-person or virtual visit is made between the health care provider
and the patient, based on medical necessity and convenience, and not
based on preferential plan structuring. Another commenter noted that
telehealth is best utilized when it is provided within the context of
the medical home and utilized as a component of, and coordinated with,
longitudinal care. Some commenters noted that some issuers have
arbitrarily terminated coverage of telehealth services which they noted
is not based on any clinical rationale. Further, some commenters stated
that the arbitrary and inconsistent coverage impedes care coordination
and transition care planning, and adds to the stress on the patient,
their family, and the treatment team. Some commenters provided consumer
survey information related to patients' concerns that telehealth
coverage may be denied as an available option upon the expiration of
the COVID-19 PHE. They urged HHS to not define plan designs that
incentivize the use of virtual services as discriminatory.
Response: We are aware that States have primary oversight of
telehealth practices and coverage. We encourage the commenters to work
with States to help ensure consistent coverage considering the
increased availability of telehealth services experienced during the
COVID-19 PHE. As we noted in the proposed rule, we do not currently
believe that the practice of health plans
[[Page 27301]]
covering services delivered virtually with no copay while requiring a
copay for in-person health care services amounts to be a discriminatory
practice under Sec. 156.125. However, we intend to monitor telehealth
utilization as it pertains to the delivery of benefits and how the
utilization of telehealth may impact nondiscriminatory access to EHB.
General Comments Relating to Examples of Presumptively Discriminatory
Benefit Designs
As noted earlier, we made some clarifying changes to the examples
of presumptively discriminatory benefit designs after considering
public comments, and the final examples follow later in this section of
this preamble. Our explanations and rationale for the changes are noted
in this response to comments section.
Comment: Several commenters supportive of the examples of
presumptively discriminatory plan designs asked HHS to include
additional specific examples or provided their own examples of what
they believed to be presumptively discriminatory plan designs.
Response: We acknowledge and appreciate the additional examples
from the commenters. As discussed in the proposed rule, we provided
examples that illustrate presumptively discriminatory practices that
HHS believes amount to prohibited discrimination under Sec. 156.125.
However, it is not the intent of HHS to imply that any of the services
or specific benefits noted in the examples are always EHB, as that can
vary among States. We also do not plan at this time to add additional
examples. The examples provided are non-exhaustive and provide adequate
guidance for setting coverage limitations that comply with existing
regulatory requirements prohibiting discriminatory benefit design. We
emphasize that it is not the intent of HHS to list every possible
instance of presumptively discriminatory plan design and that the
absence of a specific plan design practice within these examples does
not mean it does not constitute a presumptively discriminatory
practice. Rather, the refined policy provides guidance to issuers on
the kind of evidence that we would find acceptable to justify
limitations to benefits, to the extent they are EHB.
Comments on the Example Illustrating a Discriminatory Benefit Design
Based on Age
Comment: One commenter supporting the age limitation example
asserted that labeling certain benefits as ``pediatric'' should be
considered age discrimination as this labeling could potentially
exclude coverage for adults with chronic health conditions.
Response: As finalized at Sec. 156.125, plan designs may include
age limitations on coverage for EHB so long as those limitations are
supported by or consistent with relevant clinical guidelines or
standards. We also recognize that in defining the EHB package at
section 1302(b) of the ACA, Congress included pediatric services among
the items and services that must be covered as EHB. As such, in
implementing this section, we recognize that the statute explicitly
requires certain medically necessary services to be covered as EHBs,
such as those services required under the preventive services and
pediatric service category. Therefore, plan designs may be limited to
pediatric enrollees without running afoul of discriminatory benefit
design concerns when such limitations are permitted under Federal law.
Further, the policy is not meant to conflict with or supersede the
policy at Sec. 156.115(d), which prohibits coverage of, among other
things, routine non-pediatric dental services and eye exam services as
EHB. However, to the extent an issuer's plan provides coverage of an
EHB other than oral and vision care only for pediatric enrollees and no
applicable Federal requirement only requires covering such EHB for that
limited age group, the issuer will be held to the clinically based
standard finalized at Sec. 156.125. HHS will continue to monitor
issuer compliance with EHB nondiscrimination requirements to discern
whether additional assistance, policy changes, or rulemaking is
necessary.
Finalized Examples: Discrimination Based on Age
We are finalizing these examples as proposed, but with minor
clarifications to the conclusion of each example to clarify that these
examples apply and are presumptively discriminatory to the extent
issuers cover benefits as EHB.
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.\280\ 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.'' \281\
---------------------------------------------------------------------------
\280\ National Institute on Deafness and Other Communication
Disorders FAQ on Hearing Aids (2017). NIH. https://www.nidcd.nih.gov/health/hearing-aids#hearingaid_01.
\281\ 21 CFR 801.420(a)(1). Please note that this provision is
subject to a pending rulemaking. See 86 FR 58150.
---------------------------------------------------------------------------
b. Circumstance: 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 a 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 is for ``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.\282\
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\282\ Blazer, D.G., Domnitz, S., & Liverman, C.T. (2016).
Hearing Health Care for Adults: Priorities for Improving Access and
Affordability. National Academies of Sciences, Engineering, and
Medicine. National Academies Press (US). https://doi.org/10.17226/23446.
---------------------------------------------------------------------------
d. Conclusion: Age limits are presumptively discriminatory under
Sec. 156.125 when applied to EHB and there is no clinical basis for
the age limitation. A plan subject to Sec. 156.125 that covers
medically necessary hearing aids as an EHB, but limits such coverage
based on age is presumptively discriminatory under Sec. 156.125 unless
the limitation is clinically based. For example, it would be
presumptively discriminatory for an issuer subject to Sec. 156.125 to
cover medically necessary hearing aids as EHB under its plan, but limit
such coverage to a subset of individuals, such as enrollees who are 6
years of age or younger, since hearing aids may be medically necessary
for enrollees over the age of 6.\283\ The
[[Page 27302]]
policy reflected in this example does not apply to benefits that are
not covered by a plan as EHB. For example, pursuant to Sec. 155.170, a
health benefit an issuer covers under a plan pursuant to a State
mandate adopted on or after January 1, 2012, other than for purposes of
compliance with Federal requirements, is not considered EHB and would
not be subject to the policy reflected in this example.
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\283\ In the 2016 Payment Notice proposed rule, 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.
---------------------------------------------------------------------------
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.'' \284\
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\284\ Autism Spectrum Disorder. (2013). American Psychiatric
Association. https://www.psychiatry.org/File%20Library/Psychiatrists/Practice/DSM/APA_DSM-5-Autism-Spectrum-Disorder.pdf.
---------------------------------------------------------------------------
b. Circumstance: We noted that some States have mandated coverage
for the diagnosis and treatment for of 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' EHB-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.\285\ Under the DSM-5 criteria, individuals with ASD must show
symptoms from early childhood, but may not be fully recognized until
later in life.\286\ We noted 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.\287\
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\285\ Autism Spectrum Disorder (ASD). (2020, June 29). CDC.
https://www.cdc.gov/ncbddd/autism/hcp-dsm.html.
\286\ American Psychiatric Association. Diagnostic and
statistical manual of mental disorders. 5th ed. Arlington, VA:
American Psychiatric Association; 2013.
\287\ Key Findings: CDC Releases First Estimates of the Number
of Adults Living with Autism Spectrum Disorder in the United States.
(2020, April 27). CDC. https://www.cdc.gov/ncbddd/autism/features/adults-living-with-autism-spectrum-disorder.html.
---------------------------------------------------------------------------
d. Conclusion: Age limits are presumptively discriminatory under
Sec. 156.125 when applied to services that are covered as EHB and
there is no clinical basis for the age limitation. A plan subject to
Sec. 156.125 that covers diagnoses and treatment of ASD as an EHB, but
limits such coverage in its plan benefit design based on age is
presumptively discriminatory under Sec. 156.125 unless the limitation
is clinically based. This example does not apply to benefits that are
not EHB. For example, pursuant to Sec. 155.170, a benefit required by
State action taking place on or after January 1, 2012, other than for
purposes of compliance with federal requirements, is not considered
EHB, and this example would not apply.
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 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).\288\
---------------------------------------------------------------------------
\288\ Infertility Statistics. (2021, December 20). CDC. https://www.cdc.gov/nchs/fastats/infertility.htm.
---------------------------------------------------------------------------
b. Circumstance: We noted 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 noted 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.\289\ However, we also noted that the mean
age for individuals experiencing their first childbirth has increased
in recent years.\290\ 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.
---------------------------------------------------------------------------
\289\ Having a Baby After Age 35: How Aging Affects Fertility
and Pregnancy. (2020). American College of Obstetricians and
Gynecologists. https://www.acog.org/womens-health/faqs/having-a-baby-after-age-35-how-aging-affects-fertility-and-pregnancy.
\290\ Mean Age of Mothers is on the Rise: United States, 2000-
2014. (2016, January 14). CDC. https://www.cdc.gov/nchs/products/databriefs/db232.htm.
---------------------------------------------------------------------------
d. Conclusion: Age limits are presumptively discriminatory under
Sec. 156.125 when applied to EHB services and there is no clinical
basis for the age limitation. A plan subject to Sec. 156.125 that
covers treatment of infertility as an EHB but limits such coverage in
its plan benefit design based on age is presumptively discriminatory
under Sec. 156.125 unless the limitation is clinically based. An
issuer could rebut the presumption that the plan's age limit on the
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. This example does not apply to
benefits that are not EHB. For example, pursuant to Sec. 155.170, a
benefit required by State action taking place on or after January 1,
2012, other than for purposes of compliance with federal requirements,
is not considered EHB and this example would not apply.\291\
---------------------------------------------------------------------------
\291\ Key Statistics from the National Survey of Family Growth.
(2017, June 20). CDC. https://www.cdc.gov/nchs/nsfg/key_statistics/i.htm.
---------------------------------------------------------------------------
Comments on the Example Illustrating a Discriminatory Benefit Design
Based on Health Conditions
We did not receive substantive comments related to the example,
Limitations on Foot Care Coverage Based on Diagnosis (Whether Diabetes
or Another Underlying Medical Condition).
Finalized Example: 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.\292\ Although basic foot care
is part of an individual's personal self-care, a health care provider
in
[[Page 27303]]
certain situations may perform routine foot care for a patient to the
degree that is medically necessary to prevent the perpetuation of
chronic conditions.
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\292\ Routine Foot Care. Medicare Benefit Policy Manual (pp.
265). CMS. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf.
---------------------------------------------------------------------------
b. Circumstance: We noted 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
billion for direct medical costs.\293\ 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.\294\
---------------------------------------------------------------------------
\293\ Statistics About Diabetes. (2022, February 4). American
Diabetes Association. https://www.diabetes.org/resources/statistics/statistics-about-diabetes.
\294\ Hicks, C.W., Selvarajah, S., Mathioudakis, N., Sherman,
R.E., Hines, K.F., Black, J.H., 3rd, & Abularrage, C.J. (2016).
Burden of Infected Diabetic Foot Ulcers on Hospital Admissions and
Costs. Annals of vascular surgery, 33, 149-158. https://doi.org/10.1016/j.avsg.2015.11.025.
---------------------------------------------------------------------------
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.\295\
---------------------------------------------------------------------------
\295\ Foot Care Coverage Guidelines. (2010). CMS. https://wayback.archive-it.org/2744/20191012061156/https:/www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/SE1113.pdf.
---------------------------------------------------------------------------
d. Conclusion: Benefit designs that restrict coverage on the basis
of health condition are presumptively discriminatory under Sec.
156.125 when applied to EHB services and there is no clinical basis for
the limitation. A plan subject to Sec. 156.125 that covers routine
foot care as EHB in its health plan but limits such coverage on the
basis of health condition to only apply to individuals diagnosed with
diabetes despite clinical evidence demonstrating that routine foot care
may also be medically necessary for treatment of other conditions, such
as metabolic, neurologic, or peripheral vascular disease, is presumed
to be discriminatory under Sec. 156.125. This example does not apply
to benefits that are not EHB. For example, pursuant to Sec. 155.170, a
benefit required by State action taking place on or after January 1,
2012, other than for purposes of compliance with federal requirements,
is not considered EHB and this example would not apply.
Comments on the Example Illustrating a Discriminatory Benefit Design
Based on Adverse Tiering of Prescription Drugs
After reviewing the public comments for the Adverse Tiering example
(87 FR 667 through 668), we are finalizing this proposed example in our
EHB nondiscrimination policy for health plan benefit designs under
Sec. 156.125 as proposed with some minor clarifications. We clarify
that this example applies to benefits that are EHB. This example does
not apply to benefits that are not EHB; for example, under Sec.
155.170, coverage of a specific drug that a State mandated on or after
January 1, 2012 be covered does generally not qualify as EHB and this
example does not apply.
Comment: Many commenters supported the example related to
discrimination in accessing prescription drugs for chronic health
conditions and adverse tiering, as the further emphasis on the existing
prohibition against adverse tiering would only further expand access to
care and improve health outcomes. One commenter noted that the
prohibition of adverse tiering under Sec. 156.125 is consistent with
Medicare Part D and emerging State practices. Commenters agreed with
the application of Sec. 156.125 to adverse tiering because using cost
as the primary factor in formulary decisions can cause tangible patient
harm including nonadherence and negative health outcomes.
Response: We agree with commenters that the inclusion of the
Adverse Tiering example clarifies our existing position that adverse
tiering, which occurs when an issuer assigns all or the majority of
drugs for certain medical conditions to a high-cost prescription drug
tier to discourage enrollment by people with those medical conditions,
is presumptively discriminatory under Sec. 156.125. Allowing this
practice would allow issuers to discourage enrollment for entire
segments of the population with a particular medical condition by
placing all or the majority of drugs for that medical condition on a
high-cost tier.
To be clear, and as reiterated below, in finalizing this example,
we are not prohibiting issuers from considering drug cost in setting
drug formularies. On the contrary, we believe that it is prudent for a
plan to consider a drug's cost in determining on which tier to place a
particular drug. For example, if there are two effective drugs
available to treat a particular condition, and one drug is less
expensive than the other, it may be appropriate for the issuer to place
the less expensive drug on a lower tier to incentivize usage of the
less expensive drug. However, under this example, it is presumptively
discriminatory for an issuer to place both of these drugs on a high-
cost prescription drug tier in order to actively discourage enrollment
by those with that condition in the plan. HHS or the State, in
determining whether the issuer has rebutted this presumption that a
formulary that places all drugs for a particular condition on a high-
cost tier is discriminatory, will look at the totality of the
circumstances, including whether the issuer demonstrated 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 pharmacy benefit manager (PBM) weighed
both cost and clinical guidelines in setting tiers).
Thus, we urge issuers and PBMs to pay close attention to any
instance where all or the majority of drugs to treat a particular
condition are placed on the highest-cost tiers. As we noted in the
proposed rule, 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 a
specialty tier that has the highest cost sharing. We acknowledge that
cost is often an important factor in how issuers and PBMs that service
issuers 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.
We believe finalizing this example is consistent with the
requirement finalized in this rule at Sec. 156.125 to justify
limitations on EHBs with clinical guidelines. As explained in the
proposed rule and in more detail below, this example and the existing
pharmacy and therapeutics (P&T) committee requirements at Sec.
156.122(a)(3) operate together to require issuers to base their drug
formulary tier decisions on clinically indicated evidence.
Comment: Some commenters recommended that HHS allow individual plan
P&T committees to determine formularies, as P&T committee
recommendations are flexible in the face of constant change in the
clinical evidence and other industry considerations. These commenters
stated that formulary plan designs developed through the P&T committee
process should not be deemed
[[Page 27304]]
discriminatory simply because the formularies place higher cost drugs
in higher drug tiers. They noted that the proposed EHB policy would not
only undermine the role of the P&T committee, but would also impact the
ability of issuers to develop cost-effective formulary plan designs and
may compel plans to include at least some high-cost specialty drugs in
lower tiers, contrary to clinical evidence. In addition, they asserted
that the proposed EHB policy would encourage manufacturers of these
drugs to impose higher drug prices, which will drive up premiums.
Response: We acknowledge the importance of P&T committees in
setting clinically indicated, non-discriminatory drug formularies;
since 2017, we have required plans subject to the requirement to
provide EHB to utilize P&T committees that meet the standards at Sec.
156.122(a)(3). Based in part on those standards, we expect that P&T
committees for issuers of such plans provide recommendations consistent
with the most current and relevant clinical evidence for their
respective service area.
Formulary plan designs are not discriminatory simply because
formularies place higher cost drugs in higher drug tiers. Under this
finalized example, formularies are presumptively discriminatory when
all or a majority of drugs for a particular condition are placed on a
high-cost prescription drug tier to discourage enrollment by those with
that condition. As we noted in the proposed rule, HHS or the State may
determine that an issuer can rebut this presumption by a totality of
the circumstances, including by showing that neutral principles were
applied consistently across the entire formulary in assigning all or a
majority of drugs for a particular condition on a high-cost
prescription drug tier. These principles harmonize with the existing
requirements for P&T committees at Sec. 156.122(a)(3)(iii) in
establishing and managing an EHB-compliant formulary drug list. In this
way, this example places even greater importance on the independent
nature and clinically-based endeavors of P&T committees. Further, we do
not agree that a P&T committee's input would likely compel plans to
include at least some high-cost specialty drugs in lower tiers. We do
not agree with commenters who asserted that this example will encourage
manufacturers of these drugs to impose higher drug prices, which will
drive up premiums. We believe this example will contribute to
controlling the costs of drugs by ensuring that issuers do not
inappropriately place additional drugs on higher cost drug tiers.
Comment: Some commenters suggested that HHS needs to promulgate
clear parameters of what is considered discriminatory, including a tool
for QHP issuers to perform their own verification that their
formularies meet the new non-discrimination requirements in advance of
their plan submission. One commenter urged HHS to monitor issuers for
compliance with nondiscrimination requirements, and to assist States
with oversight and enforcement. One commenter recommended HHS should
review issuers' internal coverage guidelines for discriminatory benefit
designs as part of the QHP certification process.
Response: We believe that this final rule provides issuers clear
guidance regarding the EHB nondiscrimination policy and encourage
issuers to utilize tools that are appropriate for their own practices
to aid with meeting EHB nondiscrimination requirements. For example,
HHS currently uses and makes available a non-discrimination cost
sharing review tool to identify and analyze outlier plans seeking
certification as QHPs on the FFEs, as a means to identify potentially
discriminatory benefit designs and strives to enhance such techniques.
In the proposed rule, we stated that we will continue to monitor issuer
compliance with EHB nondiscrimination requirements and States'
oversight and enforcement activities to discern whether additional
guidance, policy changes, or rulemaking are necessary. HHS will also
consider whether additional guidance is necessary as we monitor issuer
compliance with EHB nondiscrimination requirements and States'
oversight and enforcement activities.
Finalized Example: Discrimination Based on Health Conditions
5. Access to Prescription Drugs for Chronic Health Conditions (Adverse
Tiering)
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 that issuers make
about their formulary structure, including decisions made on the basis
of cost. 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.\296\
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\296\ Jacobs, D.B., & Sommers, B.D. (2015). Using drugs to
discriminate--adverse selection in the insurance marketplace. The
New England journal of medicine, 372(5), 399-402. https://doi.org/10.1056/NEJMp1411376.
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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, the 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.\297\ 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).
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\297\ Boersma, P., Black, L.I., & Ward, B.W. (2020). Prevalence
of Multiple Chronic Conditions Among US Adults, 2018. Preventing
chronic disease, 17, E106. https://doi.org/10.5888/pcd17.200130.
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d. Conclusion: It is presumptively discriminatory under Sec.
156.125 for an issuer providing EHB to place all drugs for a particular
condition on a high-cost tier to discourage enrollment by those with
that condition. To rebut the presumption that a formulary that places
all drugs for a particular condition on a high-cost tier is
discriminatory, HHS or the State will consider the totality of the
circumstances, including whether the issuer has demonstrated 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).
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 could be found to discriminate against
individuals who have those chronic high-cost conditions under the Sec.
156.125(a) standard. We clarified that
[[Page 27305]]
such instances of adverse tiering are presumptively discriminatory and
that issuers and PBMs assigning tiers to drugs should weigh the 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 2016 Payment Notice and 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 are not based on clinically
indicated, reasonable medical management practices.298 299
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.
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\51\ Letter to Issuers on Federally-facilitated and State
Partnership Exchanges (pp.15). (2013, April 5). CMS. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/2014_letter_to_issuers_04052013.pdf.
\299\ 2015 Letter to Issuers in the Federally facilitated
Marketplaces (pp.29). (2014, March 14). CMS. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2015-final-issuer-letter-3-14-2014.pdf.
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Comments on Implementing the Refined EHB Nondiscrimination Policy 60
Days After Final Rule Publication
Comment: One commenter supported the proposed effective date of 60
days after the publication of the final rule, given the negative
effects that discriminatory benefit designs can have on enrollees with
chronic conditions, especially during a public health emergency.
Another commenter supported the 60-day effective date, noting that
since the proposed clinical standards framework is consistent with HHS'
earlier rulemaking and plan compliance reviews, it should not unduly
burden issuers to review and update their plans for compliance.
Many commenters objected to the proposed implementation timeframe
as too immediate. Commenters requested that HHS extend the effective
date until one year after the publication of this final rule to allow
time for review of benefits coverage and making necessary adjustments.
Other commenters recommended implementation of the policy no earlier
than the 2024 plan year, while two other commenters recommended that
the policy become effective at the beginning of a plan year so that
formularies do not change in the middle of a plan year. Commenters
explained that issuers will need to work with States to assess this
requirement and administrative changes while reviewing existing
networks and any new benefits. Commenters also noted they need adequate
implementation time to prevent duplicative health plan designs and
potential inconsistent standards as many health plans already use
clinical evidence-based guidelines.
Response: We recognize that issuers subject to Sec. 156.125
requirements may choose to carefully review the refined EHB
nondiscrimination final rule. We recognize that such reviews may take
time and that issuers may experience added burden to the extent that
issuers make additional changes to their EHB plan designs in response
to those reviews. While we expect that issuers are already compliant
with current Sec. 156.125 requirements, we recognize that in reviewing
and implementing the refined EHB nondiscrimination policy, issuers may
still have to make changes to benefits covered as EHB to ensure
compliance, which may not always be done mid-plan year. Therefore, the
refined EHB nondiscrimination policy will be applicable starting on the
earlier of PY 2023 or upon renewal of any plan subject to the EHB
requirements. We encourage issuers to promptly update their practices
to more immediately reduce the impact of presumptively discriminatory
practices, consistent with applicable State and Federal requirements.
HHS intends to work collaboratively to address compliance issues with
issuers that are acting in good faith to comply with the refined EHB
nondiscrimination policy.
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. In the HHS Notice of Benefit and Payment
Parameters for 2023 proposed rule (87 FR 584, 668), we noted that these
parameters were not included in the proposed rule, as HHS did not
propose to change the methodology for these parameters for the 2023
benefit year, and therefore, HHS published these parameters in guidance
on December 28, 2021 (Premium Adjustment Percentage, Maximum Annual
Limitation on Cost Sharing, Reduced Maximum Annual Limitation on Cost
Sharing, and Required Contribution Percentage for the 2023 Benefit
Year).\300\
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\300\ Letter for Premium Adjustment Percentage, Maximum Annual
Limitation on Cost Sharing, Reduced Maximum Annual Limitation on
Cost Sharing, and Required Contribution Percentage for the 2023
Benefit Year (2021, December 28). CMS. https://www.cms.gov/files/document/2023-papi-parameters-guidance-v4-final-12-27-21-508.pdf.
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8. Levels of Coverage (Actuarial Value) (Sec. Sec. 156.140, 156.200,
156.400)
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 668), HHS proposed 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,\301\ for which HHS proposed a de minimis range of +5/-2. Under
Sec. 156.200, HHS proposed, as a condition of QHP certification, to
limit the de minimis range to +2/0 percentage points for individual
market silver QHPs; HHS also proposed 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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\301\ 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.
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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 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.
[[Page 27306]]
We sought comments on this proposal. We refer readers to the
proposed rule (87 FR 668 through 671) for further discussion of these
proposals and our rationale.
After reviewing the public comments, for the reasons set forth in
this rule and in the proposed rule, we are finalizing the proposed
changes to the de minimis ranges at Sec. Sec. 156.140(c), 156.200, and
156.400 as proposed.
First, beginning in PY 2023, we are finalizing that all individual
and small group market plans subject to the AV requirements under the
EHB package will be subject to a de minimis range of +2/-2 percentage
points, except for expanded bronze plans, for which we finalize a de
minimis range of +5/-2 percentage points.
As we explained in the proposed rule (87 FR 668), since we
finalized these de minimis ranges in the 2018 Payment Notice (81 FR
94058, 94142) and the 2017 Market Stabilization final rule (82 FR
18346, 18368), 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 expect more bronze plans
to have an AV of at least 64 percent in future PYs.
[GRAPHIC] [TIFF OMITTED] TR06MY22.005
During PYs 2018 through 2021, as the percentage of bronze plans
within the upper limit of the +5/-4 percentage point range increased,
the percentage of silver plans offered on HealthCare.gov within the
lower end of the current +2/-4 percentage point range remained
consistent, with less than a third of silver plans having an AV between
66 and 68 percent.
[GRAPHIC] [TIFF OMITTED] TR06MY22.006
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] TR06MY22.007
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 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, with
current de minimis ranges, 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 the expanded bronze plan and the base silver plan
is also apparent.
[[Page 27307]]
[GRAPHIC] [TIFF OMITTED] TR06MY22.008
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 high
deductible health plans (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 are changing the de minimis range for standard silver plans as
proposed.
Additionally, as shown in Tables 10 and 11, we stated that 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] TR06MY22.009
[GRAPHIC] [TIFF OMITTED] TR06MY22.010
Because of this shift, and for consistency across the metal levels,
which would help reduce potential consumer confusion, we believed it is
appropriate, 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 change above, starting with PYs
beginning in 2023, we are changing 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 final rule (82 FR 18369), we stated that
States are the primary enforcers of AV requirements and can apply
stricter AV standards that are consistent with Federal law. 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 sections
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 final
rule, a State cannot apply an AV range that exceeds +2/-2 percentage
points, except for under the expanded bronze range originally provided
for in Sec. 156.140(c).
In addition to the changes applicable to non-grandfathered
individual and small group market health insurance coverage market-
wide, we are also amending 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 are finalizing this narrower de minimis range for
individual market silver QHPs to maximize PTC and APTC for subsidized
enrollees. We believe that narrowing the
[[Page 27308]]
de minimis range of individual market silver QHPs will influence the
generosity of the SLCSP, the benchmark plan used to determine an
individual's PTC. We note that a subsidized enrollee who has an SLCSP
that is currently below 70 percent AV will 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 8, 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 ten to one.
In addition, as we stated in the proposed rule (87 FR 670), after
the 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. We believe the amendment we are finalizing to the de
minimis range for individual market silver QHPs will reduce the cost of
insurance coverage for an increasing population of subsidized
enrollees. It will 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 Exchanges.
Thus, we believe increasing PTC for all subsidized enrollees
justifies a narrower de minimis range on individual market silver QHPs
that have fewer enrollments each year.
Finally, we are changing the de minimis variation for individual
market income-based silver CSR plan variations from +1/-1 to +1/0 with
a revision to the definition of ``De minimis variation for a silver
plan variation'' at Sec. 156.400. Similar to the +2/0 de minimis
change for individual market silver QHPs, we believe the change to the
de minimis variation for individual market income-based silver CSR plan
variations will 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
will be an expected increase to the premium for the CSR plan variations
as a result of the increased generosity, it will be substantially
offset by increases to the APTC and PTC.
We summarize and respond to public comments received on levels of
coverage (actuarial value) (Sec. Sec. 156.140, 156.200, 156.400).
Comment: Many commenters expressed general support for the proposed
changes to the de minimis ranges, agreeing with the rationale from the
proposed rule that narrowing the de minimis ranges would increase PTC
and APTC, and make coverage more affordable for subsidized enrollees.
Many other commenters did not support the proposal and expressed
satisfaction with the current de minimis ranges, asserting that not
every enrollee would be eligible for the increased subsidies that would
offset any premium increases due to the narrowed de minimis ranges.
These commenters noted that the expanded PTC under section 9661 of the
ARP is set to expire after PY 2022.
Response: We agree with commenters that the proposed de minimis
changes would increase PTC and APTC to make coverage more affordable
for subsidized enrollees. As we noted in the proposed rule, 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,
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.
We recognize that this change will increase premiums for enrollees
in the individual and small group market. We estimated that the
premiums would increase approximately 2 percent on average because of
this change, which accounts for changes after the expiration of the
expanded PTC under section 9661 of the ARP. We received no comments
that addressed the accuracy of this estimate or its effects as a whole.
While we recognize that not every enrollee in plans subject to the AV
requirement is eligible for APTC and lives in an area with a SLCSP that
is currently below 70 percent AV, we believe that the benefit of
increased PTC and APTC for the majority of enrollees in the Exchanges
outweighs the effects of wider de minimis ranges and the burden of
premium increases.
Comment: Some commenters requested clarification on the
applicability of uniform-modification-of-coverage rules should the
narrower de minimis ranges be finalized. One such commenter requested
clarification that plans within the current de minimis ranges, but
outside of the proposed narrower ranges for PY 2023, will be allowed to
renew within the same metal level of coverage under the Federal
uniform-modification-of-coverage rules. These commenters generally
contended that discontinued plans not subject to those rules would
cause disruption for enrollees.
Response: Under the guaranteed renewability provision at 45 CFR
147.106(e), a health insurance issuer offering health insurance
coverage in the individual, small group, or large group market is
required to renew or continue in force the coverage at the option of
the plan sponsor or the individual, unless the issuer discontinues all
coverage, the product is discontinued, or the issuer's action is
otherwise excepted from this requirement. One such exception that
applies to individual and small group coverage is the modification of
coverage at the time of renewal made consistent with State law,
effective uniformly and solely pursuant to applicable Federal or State
requirements, as described at Sec. 147.106(e)(1)-(2). This allows an
issuer to modify its plans uniformly if the modification is made within
a reasonable time period after the imposition or modification of a
Federal or State requirement and the modification is directly related
to the imposition or modification of the Federal or State requirement.
As finalizing these changes to the de minimis ranges constitutes a
modification of a Federal requirement, issuers that, consistent with
State law, uniformly modify their plans solely to bring the plans' AV
levels into the narrower de minimis ranges to maintain the same metal
level will be considered to have modified their plans consistent with
the Federal uniform-modification-of-coverage rules outlined in 45 CFR
147.106(e). Such changes would not cause any product, or any plan
within a product, to be a different product or plan, as explained in
the definitions of product and plan in 45 CFR 144.103.
Comment: Many commenters opposed the proposed +2/0 de minimis range
for individual market silver QHPs and +2/-2 de minimis range for other
silver plans and recommended keeping the +2/-2 de minimis range
consistent across the individual market. These commenters cited
concerns about the effects of non-uniform de minimis ranges for silver
plans across the individual market, asserting that applying different
de minimis ranges on- and off-Exchange could destabilize the individual
market. They further believe that the different de minimis ranges could
adversely impact
[[Page 27309]]
consumers who choose to buy health coverage off-Exchange.
Response: We strive to maintain consistency for the de minimis
ranges as much as possible. A consistent de minimis range allows for
the most reliable determination of the differences between metal levels
of coverage which, overall, improves the consumer shopping experience.
We diverge from that goal only to the extent necessary to achieve
compelling policy interests. For example, we previously regulated by
this guideline in the 2017 Market Stabilization final rule, changing
the de minimis ranges to +2/-4 from the original +2/-2 allowable AV
variation finalized in the Final 2018 Payment Notice, in an attempt to
achieve the compelling policy interest of improving plan variability
and choice. In this rule, we believe it is appropriate to adopt
separate de minimis ranges for individual market silver QHPs to achieve
the compelling policy interest of addressing the rising costs of health
insurance premiums by influencing the generosity of the SLCSP to
increase the amounts of PTC and APTC.
Comment: Many commenters urged that we not finalize changes to de
minimis ranges for small group market plans, asserting that the
proposed rule's rationale for changing the de minimis ranges applies
only to changes to individual market plans. These commenters pointed
out that HHS did not describe similar shifts in enrollments in small
group QHPs offered on HealthCare.gov that are towards the upper end of
the expanded bronze de minimis range as done with enrollment in
individual market QHPs offered on HealthCare.gov, and that enrollees in
small group market plans would experience premium increases as a result
of the proposal, without the benefit of increased PTC or APTC. Further,
these commenters stated that, because small group enrollees purchase
their coverage through employers, they are not involved with plan
comparison in the same way as individual market enrollees and HHS'
justification for maintaining the integrity between metal levels is
inapplicable to the small group market. These commenters also asserted
that sponsors of small group market plans prefer the variety of plan
choices under a wider de minimis range, and explained that these
employers would experience disruption to existing plans or decide to
drop coverage entirely.
Response: We recognize the concern raised by commenters that the
proposed de minimis changes will lead to increased premiums for small
group market enrollees without any subsidies to offset the cost. We are
of the view that the burden of small premium increases in the small
group market does not outweigh the benefits of ensuring that all
purchasers of health coverage, including small group employers and
their employees, can discern the material differences in benefits
provided under competing health insurance plans. In response to the
assertion that sponsors of small group market plans prefer the variety
of plan choices that wider de minimis ranges allow for, and that these
employers would experience disruption to existing plans or decide to
drop coverage entirely, we believe that the benefits of improved plan
comparability outweigh the advantages of wider de minimis ranges.
We do not have sufficient data to confidently describe enrollment
trends in small group market QHPs. However, enrollment trends were not
the basis for proposing to change the de minimis range for small group
market plans. As we explained in the proposed rule (87 FR 669 through
670), the rationale for making equivalent changes to the de minimis
ranges across the individual and small group markets is to maintain
consistency across the metal levels, as an effort to reduce potential
consumer confusion. Maintaining consistency for the metal level de
minimis ranges allows for the greatest degree of confidence that
consumers can recognize and understand the differences between metal
levels. We diverge from the standard +2/-2 de minimis range for
expanded bronze plans (+5/-2) for the reasons described in the preamble
of the proposed rule, and for individual market silver QHPs offered
both on-Exchange and off-Exchange (+2/0) and income-based silver CSR
plan variations (+1/0) only to further the compelling policy interests
described elsewhere in this section.
Comment: Many commenters supported the proposed de minimis ranges
by citing the expected improvement in consumers' ability to
meaningfully compare plans and make informed decisions related to their
health coverage. These commenters stated that the current de minimis
ranges are too permissive and blur the distinction between the metal
levels of coverage envisioned by the ACA, which makes the plan
comparison process difficult for consumers. They noted that the
proposed de minimis ranges would narrow the allowable variation in plan
generosity per metal level and should improve the plan comparison
process for consumers, leading to more informed decisions on effective
health coverage. The commenters also stated that the proposed de
minimis ranges could lead to higher enrollment, as consumers would
better understand the difference between metal level QHPs and more
efficiently choose their health coverage. Additionally, one of the
commenters noted that narrowing the allowable levels of coverage would
positively impact plan marketing and display practices across issuers
and keep consistent thresholds across competitors. They particularly
noted that the narrow de minimis ranges would end the ``race to the
bottom'' of underbidding high generosity competitor plans by offering
plans with lower generosity that still display under the same metal
level of coverage within marketing.
Opposing commenters expressed a preference for the current de
minimis ranges, asserting that the proposed ranges are too disruptive
to the current market of plan offerings and could lead to more
difficulty for consumers during plan selection. According to these
commenters, consumer feedback indicates a preference for consistently
similar plan offerings year-over-year. These commenters also generally
asserted that the proposed ranges would cause fluctuations in available
plan offerings, and could lead to consumers choosing coverage that is
not in their best interests. These commenters also noted that the
proposal may eliminate popular plan options at lower bound levels of
coverage and that the gap in the allowable de minimis range could lead
to limited plan design flexibility. Some commenters raised concerns
about the effect of the proposed de minimis ranges on future plan
designs as well, stating that narrowing the ranges for plans on and off
the Exchanges would reduce issuers' ability to create plan designs that
meet the specific needs of enrollees. These commenters further
contended that popular plan designs would become non-compliant, with
one State Exchange commenting that a standardized gold plan design,
currently at 76 percent AV and accounting for 51 percent of the
Exchange's gold metal level enrollment, would be non-compliant under
this proposal. Some commenters also expressed general concerns about
market disruption and requested a delay of any changes to the de
minimis ranges to at least PY 2024.
Response: We agree with commenters that this policy will improve
comparability, ensuring that consumers can more meaningfully
distinguish between plans in different metal levels of coverage, and
ensure consistency across metal levels. Increased recognition by
consumers of the fundamental differences between the benefits offered
under different health
[[Page 27310]]
plans means that consumers will be less likely to choose a health plan
ill-fitted to their circumstances, which may discourage consumers from
using and maintaining their coverage in the future.
Furthermore, we believe that the implementation of the proposed de
minimis ranges can lead to higher enrollment in plans. Requiring that
plans offer the levels of coverage described at section 1302(d) of the
ACA promotes consumers' ability to more easily recognize, understand,
and compare plan offerings. As commenters noted, there is a general
consensus of a connection between the ease of consumer plan selection
and their enrollment decisions. These narrower de minimis ranges will
allow consumers to better differentiate between plan offerings and
reduce consumer confusion, which we believe will motivate increased
overall enrollment.
In response to comments that the new de minimis ranges may
eliminate popular plan options at lower bound levels of coverage and
could lead to limited plan design flexibility, we are of the view that
the burdens to issuers of conforming their plan offerings to the new de
minimis ranges will be offset by the positive impacts on the consumer
plan selection process. We reiterate our note from the proposed rule
that we have no evidence that the expanded variation in allowable
levels of coverage under current rules actually improved the consumer
experience, including a consumer's ability to choose the plan that best
meets their needs. As we stated previously, we believe the revised de
minimis ranges we are finalizing in this rule will improve
comparability, ensuring that consumers can more meaningfully
distinguish between plans in different metal levels of coverage.
Although initial compliance with the new de minimis ranges may
require additional effort from stakeholders, we still believe that this
change is necessary to respond to observed changes in consumer plan
selection behavior. We note that any initial disruption to issuer plans
in the -4 to -2 percentage point de minimis range will be limited to a
one-time cost-sharing adjustment to conform with up to a 2-percentage
point change in the AV (except for individual market silver QHPs, which
would have up to a 4-percentage point change). Issuers will be
permitted to make these changes to existing plans consistent with the
uniform modification provisions under the guaranteed renewability
statute and regulation. Furthermore, while we believe issuers can
operationalize these changes in time for plan year 2023, we recognize
that this one-time cost-sharing adjustment may create substantial
burden for issuers. This is a burden we do not impose lightly; in
addition to increasing PTC and APTC for eligible enrollees, these
changes to the de minimis ranges are necessary to assure consumers that
a plan's generosity conforms to the appropriate metal level and to
prevent overlap in plan generosity across metal levels.
Comment: Some commenters stated that plans within States requiring
the individual and small group insurance markets to be merged into a
single risk pool under Sec. 156.80 would be disrupted by the proposal
to establish different de minimis ranges for individual market silver
QHPs and for other individual and small group plans.
Response: Vermont, which previously had merged its individual and
small group markets transitioned to separate individual and small group
market risk pools beginning January 1, 2022.\302\ While both
Massachusetts and the District of Columbia have State-specific factors
that combine certain aspects of their individual and small group plans,
we do not consider their individual and small group markets to be
merged into a single risk pool under Sec. 156.80.\303\ For example,
Massachusetts permits issuers in its small group market to update their
index rates once every quarter, allowing small group market rating to
operate separately from individual market rating in a manner that does
not reflect a merged single risk pool. Similarly, the District of
Columbia permits issuers to use different premium rating factors for
its individual and small group markets in a manner that does not
reflect a merged single risk pool. As such, there are currently no
States with individual and small group markets that meet the Federal
definition of a merged market under Sec. 156.80. Therefore, we do not
agree with commenters that there will be disruption to existing plans
in merged markets in 2023. However, we recognize that if a State
chooses to merge risk pools in future plan years, plans in that State
could not utilize separate de minimis ranges for individual and small
group market silver QHPs, and would need to conform all individual
market silver QHPs to a +2/0 de minimis range, and income-based silver
CSR plan variations to a +1/0 de minimis range.
---------------------------------------------------------------------------
\302\ Information on state specific rating variation is
available at Market Rating Reforms. (2021, December 10). CMS.
https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/state-rating. Also see Green Mountain Care Board
Reduces Rate Requests for Individual and Family Plans for 2022.
(2021, August 5). Green Mountain Care Board. https://gmcboard.vermont.gov/sites/gmcb/files/documents/GMCB%20Press%20Release%20-%202022%20BCBSVT%20and%20MVP%20Individual%20Decisions.pdf.
\303\ Massachusetts is considered to have a merged market for
purposes of the HHS-operated risk adjustment program. See https://regtap.cms.gov/uploads/library/RA_MergedMarketsFAQ_021522_5CR_021522.pdf.
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9. QHP Issuer Participation Standards (Sec. 156.200)
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. In the HHS Notice of Benefit and Payment
Parameters for 2023 proposed rule (87 FR 584, 671), we proposed to
amend 45 CFR 156.200(e) such that its nondiscrimination protections
would explicitly prohibit discrimination based on sexual orientation
and gender identity. As explained in the Supplemental Information
section earlier in this preamble, HHS will address this proposed
policy, as well as the public comments submitted in response to this
proposal, in future rulemaking.
10. Standardized Plan Options (Sec. 156.201)
In the 2023 Payment Notice proposed rule (87 FR 584, 671 through
680), HHS proposed a requirement that issuers offering QHPs through
FFEs and SBE-FPs, for PY 2023 and beyond, must offer through the
Exchange standardized QHP options designed by HHS 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. We did not propose to limit the
number of non-standardized plan options that issuers can offer but
noted that we were considering whether it would be appropriate to do so
in a future plan year. Furthermore, we did not propose to subject
issuers in State Exchanges to this requirement to avoid duplicative
standardized plan option requirements on State Exchange issuers and
because we are of the view that State Exchanges are best positioned to
design and implement standardized plan option requirements for their
State. We also proposed that FFE and SBE-FP issuers that are already
required to offer standardized plan options under State action taking
place on or before January 1, 2020, such as issuers in the State of
Oregon,\304\ be exempt from the standardized plan option requirements
in the proposal.
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\304\ See Or. Admin. R. 836-053-0009.
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HHS proposed the following standardized plan options: one bronze
plan, one bronze plan that meets the
[[Page 27311]]
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
did not propose standardized plan options for the Indian CSR plan
variations as provided for at Sec. 156.420(b) since the cost sharing
parameters for these plans are already largely specified.
HHS proposed two sets of standardized plan options to accommodate
different States' cost sharing laws. HHS proposed that the first set
apply to all FFE and SBE-FP issuers excluding issuers in Delaware and
Louisiana, and that the second set apply to issuers in Delaware and
Louisiana.
HHS also noted that it was considering exercising the existing
authority under Sec. 155.205(b)(1) to differentially display
standardized plan options on HealthCare.gov. Similarly, HHS noted that
it was considering resuming enforcement of the existing standardized
plan 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 Direct Enrollment
(DE) and enhanced direct enrollment (EDE) Pathways--at Sec. Sec.
155.220(c)(3)(i)(H) and 156.265(b)(3)(iv), respectively. HHS noted that
if it did exercise these existing authorities, these entities would be
required to differentially display standardized plan options beginning
with the PY 2023 open enrollment period in accordance with the
requirements under Sec. 155.205(b)(1) in a manner consistent with how
standardized plan options are displayed on HealthCare.gov, unless HHS
approves a deviation. We also noted that any requests from web-brokers
and QHP issuers seeking approval for an alternate differentiation
format would be reviewed based on whether the same or a similar level
of differentiation and clarity is being provided under the requested
deviation as is provided on HealthCare.gov.
We proposed this approach for several reasons. To begin, the 2019
Payment Notice final rule eliminated standardized plan options with the
intention of maximizing innovation and variety at a time when the
individual market was considered to be at risk of destabilization. In
the proposed rule, we explained that we believe that current market
conditions differ significantly from the market conditions that defined
the individual market when standardized plan 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 plan options
were discontinued in the 2019 Payment Notice final rule.
We explained in the proposed rule that with increased enrollment,
increased issuer participation, decreased single issuer counties, and
increased plan options available to consumers, HHS is of the view that
resuming standardized plan options at this time could play a
constructive role in enhancing the consumer experience, increasing
consumer understanding, simplifying the plan selection process,
combatting discriminatory benefit designs that disproportionately
impact disadvantaged populations, and advancing health equity. We also
explained that we 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 did not propose to require issuers in State Exchanges to offer
standardized plan options for several reasons, including that eight
State Exchanges already require or will require issuers to offer
standardized plan options by PY 2023. In addition, imposing duplicative
standardized plan option requirements on issuers in State Exchanges
that already have existing State standardized plan option requirements
runs counter to our goals of enhancing the consumer experience,
increasing consumer understanding, simplifying the plan selection
process, combatting discriminatory benefit designs, and advancing
health equity. We also explained that we believe that State Exchanges
are uniquely positioned to best understand the nature of their
respective markets as well as the consumers in these markets. As such,
we explained in the proposed rule that we believe that State Exchanges
are best positioned to design standardized plan options suitable for
their respective markets.
We further explained in the proposed rule that we 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 explained that we do not wish to
impede these innovative policies so long as they comply with existing
legal requirements. However, because we proposed to impose this
requirement in the FFEs, and because the SBE-FPs use the same platform
as the FFEs, we proposed to apply these requirements equally on FFEs
and SBE-FPs. We explained that 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.
In the proposed rule, we explained that we proposed to exempt FFE
and SBE-FP issuers that are subject to State standardized plan option
requirements from these standardized plan option requirements since we
do not wish to impose duplicative requirements that could conflict with
these existing State standardized plan option requirements and the QHP
plan designs applicable in such States. Regardless, we proposed to
differentially display these existing State standardized plan options
on the Federal platform in the same manner as the standardized plan
options in this rule to ensure a consistent experience for all
consumers utilizing the Federal platform.
In the proposed rule, we explained that we designed two sets of
standardized plan options to accommodate applicable State cost sharing
laws in different sets of FFE and SBE-FP States. We also explained that
we designed these standardized plan options to be similar to the most
popular QHPs in FFEs and SBE-FPs in PY 2021 in terms of cost sharing
parameters, MOOPs, and deductibles in order to ensure these plans are
similar to plans that most consumers are already currently enrolled in,
thereby reducing the risk of disruption for consumers and issuers
alike.
In the proposed rule, we explained that we believe that resuming
the differential display of standardized plan options on HealthCare.gov
per the existing authority at Sec. 155.205(b)(1) would further
streamline the plan selection and enrollment process for Exchange
consumers, aid consumers in distinguishing standardized plan options
from non-standardized plan options, and enhance consumer understanding
of the benefits of standardized plan options, such as having more pre-
deductible coverage. We also explained that we believe that resuming
enforcement of the existing standardized plan options display
requirements applicable to approved web-brokers and QHP issuers using a
[[Page 27312]]
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, and that doing so will
ensure a consistent consumer experience whether consumers are selecting
plans on or off the Exchanges.
We refer readers to the proposed rule (87 FR 671 through 680) for a
complete description of the proposals and rationale.
After considering comments received, for the reasons set forth in
this rule and in the proposed rule, HHS finalizes the policies as
proposed. Specifically, HHS finalizes the requirement for PY 2023 and
beyond that issuers offering QHPs through FFEs and SBE-FPs must offer
through the Exchange standardized QHP options designed by HHS at every
product network type (as described in the definition of ``product'' at
Sec. 144.103), at every metal level, and throughout every service area
that they offer non-standardized QHP options in the individual market.
We note that we added the phrase ``at every'' to the metal level
component of the above requirement for additional clarification and to
minimize the risk of misunderstanding these requirements. We also
clarify that these requirements are applicable to the FFE and SBE-FP
issuers offering QHPs in the individual market but not the small group
market.
Similar to its stance in the proposed rule, HHS will not 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. We also finalize, as
proposed, that issuers in State Exchanges be exempt from the
requirement to offer standardized plan options. Similarly, we finalize,
as proposed, that issuers of QHPs in FFEs and SBE-FPs that are already
required to offer standardized plan options under State action taking
place on or before January 1, 2020, such as issuers in the State of
Oregon,\305\ are exempt from these requirements.
---------------------------------------------------------------------------
\305\ See Or. Admin. R. 836-053-0009.
---------------------------------------------------------------------------
HHS finalizes the following standardized plan options, as proposed:
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. HHS did not propose
standardized plan options for the Indian CSR plan variations as
provided for at Sec. 156.420(b), and therefore is not finalizing
standardized plan options for these plan variations.
HHS also finalizes two sets of standardized plan options to
accommodate different States' cost sharing laws, as proposed.
Specifically, the first set of standardized plan options will apply to
all FFE and SBE-FP issuers, except issuers in Delaware and Louisiana.
We add as a point of clarification that this first set of standardized
plan options will also not apply to issuers in Oregon, since Oregon
enacted standardized plan options requirements before January 1, 2020
and issuers in Oregon are thus exempt from these requirements. The
second set of standardized plan options will apply only to issuers in
Delaware and Louisiana in order to accommodate these two States'
specialty tier prescription drug cost sharing laws.
In the first set of standardized plan options finalized in this
rule (see Table 12), applicable to all FFE and SBE-FP issuers, except
issuers in Delaware, Louisiana, and Oregon, 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
copay for the mental health/substance use disorder in-network
outpatient office visit sub-classification is equal to the least
restrictive level for copays for medical/surgical benefits in the in-
network, outpatient office visit sub-classification (and copays apply
to substantially all medical/surgical benefits in this sub-
classification), to ensure issuers can 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.\306\
---------------------------------------------------------------------------
\306\ In general, MHPAEA and its implementing regulations apply
to group health plans and health insurance issuers in the group and
individual markets, and require 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.
---------------------------------------------------------------------------
The second set of standardized plan options finalized in this final
rule (see Table 13), applicable only to issuers in Delaware and
Louisiana, has copays of $150 or less for the specialty drug tiers of
standardized plan options at all metal levels. This copay limitation
for specialty drug tiers is the key feature that distinguishes the
second set of standardized plan options from the first.
The two sets of standardized plan options finalized in this rule
were designed to reflect the benefit categories in the actuarial value
calculator (AVC), along with the addition of the ``Urgent Care''
benefit category. The cost sharing values for ``Mental/Behavioral
Health Inpatient Services'' and ``Substance Abuse Disorder Inpatient
Services'' benefits were not included in the proposed rule. However, we
clarify that the ``Mental/Behavioral Health Inpatient Services'' and
``Substance Abuse Disorder Inpatient Services'' cost sharing values are
populated based on the ``Inpatient Hospital Services (for example,
Hospital Stay)'' cost sharing values since this benefit correlates to
admission in a hospital or mental health facility. We further clarify
that for the ``Inpatient Hospital Services'' benefit category in Tables
12 and 13, the ``(Including Mental Health and Substance Use Disorder)''
portion of the benefit category name was mistakenly excluded in the
proposed rule. We therefore amended the name of this benefit category
to more closely align with the corresponding benefit category in the
AVC.
We also clarify that the AVs for several of the plans in each set
differ slightly from the AVs of the corresponding plans in the proposed
rule, due to a miscalculation with the AVC. We clarify that when a
prescription drug formulary tier has copay after deductible as the form
of cost sharing, both the ``Subject to Deductible? '' and ``Copay only
applies after deductible?'' boxes must be selected in the AVC for that
particular tier, or an incorrect AV will be calculated.
In both sets of standardized plan options, expanded bronze,
standard silver, the silver 73 CSR variant, and the silver 87 CSR
variant were affected by this miscalculation. After resolving this
miscalculation, in the first set of standardized plan options, the AV
for expanded bronze changed from 64.06 percent to 64.18 percent; the AV
for standard silver changed from 70.04 percent to 70.06 percent; the AV
for the silver 73 CSR variant changed from 73.10 percent to 73.11
percent; and the AV for the silver 87 CSR variant changed from 87.04
percent to 87.05 percent. In the second set of standardized plan
options, the AV for expanded bronze changed from 64.07 percent to 64.18
percent; the AV for standard silver changed from 70.05 percent to 70.06
percent; the AV for the silver 73 CSR variant changed from
[[Page 27313]]
73.01 percent to 73.03 percent; and the AV for the silver 87 variant
changed from 87.05 percent to 87.06 percent. The AVs for other metal
levels were not affected by this miscalculation since these plans did
not have copay after deductible as the cost sharing type for any
benefits.
We also note that one asterisk (*) was mistakenly excluded in the
plan designs in the proposed rule. Specifically, in the second set of
standardized plan options, the gold plan's specialty drug tier should
be exempt from the deductible and should thus have an asterisk next to
its cost sharing amount. All other cost sharing parameters in both of
the below sets of standardized plan options remain unchanged from the
original plans in the proposed rule.
HHS also finalizes, as proposed, that we will exercise our existing
authority under Sec. 155.205(b)(1) to resume the differential display
of standardized plan option plans on HealthCare.gov beginning with the
PY 2023 open enrollment period.\307\ Similarly, also beginning with the
PY 2023 open enrollment period, HHS finalizes, as proposed, that we
will resume enforcement of the existing standardized plan options
display requirements under Sec. Sec. 155.220(c)(3)(i)(H) and
156.265(b)(3)(iv) for approved web-brokers and QHP issuers using a
direct enrollment pathway to facilitate enrollment through an FFE or
SBE-FP--including those using the Classic DE and EDE Pathways--meaning
that these entities are required to differentially display standardized
plan options in a manner consistent with how standardized plan options
are displayed on HealthCare.gov, unless HHS approves a deviation.
---------------------------------------------------------------------------
\307\ The PY 2023 OEP is scheduled from November 1, 2022 to
January 15, 2023. See 45 CFR 155.410(e)(3).
---------------------------------------------------------------------------
HHS also finalizes, as proposed, that any requests from web-brokers
or QHP issuers that seek approval for an alternate differentiation
format will be reviewed based on whether the same or similar level of
differentiation and clarity would be provided under the requested
deviation as is provided on HealthCare.gov. We also 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--only needs to differentially display those standardized plan
options it offers.\308\ To minimize the burden of complying with these
display requirements, HHS will provide access to information on
standardized plan options to web-brokers and QHP issuers through the
Health Insurance Exchange Public Use Files (PUFs) and QHP Landscape
file.
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\308\ See 81 FR 94118.
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[[Page 27314]]
[GRAPHIC] [TIFF OMITTED] TR06MY22.011
[[Page 27315]]
[GRAPHIC] [TIFF OMITTED] TR06MY22.012
We summarize and respond to public comments received on the
proposals related to the standardized plan options.\309\ We also offer
several points of clarification.
---------------------------------------------------------------------------
\309\ In connection with HHS' proposal to require FFE and SBE-FP
issuers to offer standardized plan options, HHS sought comment on:
(1) Requiring FFE and SBE-FP issuers to offer standardized plan
options at every product network type, metal level, and throughout
every service area that they offer non-standardized plan options;
(2) not limiting the number of non-standardized plan 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 plan 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 plan 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 plan options; (9) exempting FFE
and SBE-FP issuers that are subject to existing state standardized
plan options requirements under state action taking place on or
before January 1, 2020 from being required to offer the standardized
plan options in this proposal; (10) the methodology used to design
these standardized plan options; (11) if the proposed standardized
plan 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 plan 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 PY 2023 and
beyond; and (15) having two sets of standardized plan options (that
is, a separate set for Delaware and Louisiana). See 87 FR 671
through 680.
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[[Page 27316]]
Comment: Many commenters supported requiring issuers offering QHPs
through FFEs and SBE-FPs to offer standardized plan options at every
product network type, at every metal level, and throughout every
service area that they offer non-standardized plan options, explaining
that standardized plan options could play an important role in
simplifying the plan selection process. These commenters explained this
approach will enable consumers to more easily compare plans by
standardizing cost sharing parameters, thereby allowing individuals to
focus on other factors crucial to their health, such as premiums,
networks, quality, and customer satisfaction.
Many commenters also explained that requiring issuers to offer
standardized plan options could improve affordability by requiring pre-
deductible coverage of key services. These commenters explained that
lowering cost barriers to services and supplies that address health
conditions that disproportionately affect historically underserved
communities aligns with broader Federal efforts intended to reduce
health disparities. These commenters also explained that consumers
frequently choose plans based only on premiums--without a clear
understanding of additional out-of-pocket costs they might experience.
These commenters thus explained that requiring issuers to offer
standardized plan options with enhanced pre-deductible coverage could
reduce the risk of consumers experiencing unexpected financial costs
for receiving care.
Several commenters explained that the effectiveness of plan
standardization in improving access to care and enhancing affordability
is evinced by the experience of the nine States that have already
adopted standardized plan option requirements in their respective State
Exchanges. These commenters explained that several of these State
Exchanges have required issuers to offer standardized plan options
since their inception in 2014. These commenters also explained that
standardized plan option requirements have played an important role in
achieving some of the lowest rates of premium growth in the country in
these State Exchanges.
Response: We agree that consumers will benefit from tools that
further streamline the decision-making process, especially given that
there has been a proliferation of plan offerings on the Exchanges in
the last several years. We also agree that standardized plan options
can play an important role in that simplification by allowing consumers
to compare offerings based on other meaningful features, such as
premiums, networks, formularies, and quality ratings. We believe that
employing standardized plan option requirements while simultaneously
narrowing the AV de minimis ranges will allow consumers to more easily
and more meaningfully differentiate between choices and select a plan
that meets their unique needs.
We believe the approach to standardized plan options finalized in
this rule strikes an appropriate balance between simplifying the plan
selection process, making it easier for consumers to more meaningfully
compare available plan options, combatting potentially discriminatory
benefit designs, reducing health disparities, and advancing health
equity, while simultaneously preserving a sufficient range of consumer
choice, minimizing the degree of disruption arising from the
implementation of these requirements, and continuing to foster
competition in the Exchanges.
We also agree that implementing the standardized plan option
requirements finalized in this rule will improve access to care,
enhance affordability, and advance health equity. The standardized plan
options finalized in this rule include several important plan design
features that we believe will provide additional consumer protections
and mitigate health disparities, aligning with several of HHS' top
priorities. Several of these design features include enhanced pre-
deductible coverage for many EHB services, greater consumer certainty
from having copays instead of coinsurance as the form of cost sharing
for as many benefits as possible, and having copays for all
prescription drug tiers, including for the specialty drug tier.
Comment: Several commenters disagreed that HHS is legally obligated
to resume standardized plan options, explaining that the City of
Columbus, et al. v. Cochran ruling simply stated that the prior
administration provided insufficient justification for discontinuing
standardized plan options, but not that doing so was unlawful. These
commenters noted that instead of resuming standardized plan options,
HHS should issue a new rule with a more thorough explanation than what
was provided in the 2019 Payment Notice final rule explaining why
standardized plan options should remain discontinued.
Response: As we discussed in the proposed rule, we first introduced
standardized plan options in the 2017 Payment Notice. We then
discontinued standardized plan options 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.\310\ The court specifically vacated the portion of the
2019 Payment Notice that ceased HHS' practice of designating some plans
in the FFEs as ``standardized plan options,'' a policy that the 2019
Payment Notice (83 FR 16930, 16974 through 16975) described as seeking
to maximize innovation by issuers in designing and offering a wide
range of plans to consumers. As such, we announced our intent to engage
in rulemaking under which we would propose to resume standardized plan
options in time for PY 2023.\311\ More recently, President Biden's
Executive Order on Promoting Competition in the American Economy
directed HHS to implement standardized plan options to facilitate the
plan selection process for consumers on the Exchanges.\312\
---------------------------------------------------------------------------
\310\ 523 F. Supp. 3d 731 (D. Md. 2021).
\311\ 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 plan 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.
\312\ Executive Order 14036 on Promoting Competition in the
American Economy. (2021, July 9). 86 FR 36987.
---------------------------------------------------------------------------
Although we agree with commenters that the City of Columbus ruling
did not require HHS to resume standardized plan options, it did cause
HHS to reevaluate its prior decision to discontinue the designation of
standardized plan options in the 2019 Payment Notice. As we explained
in the proposed rule (87 FR 672), we believe that the conditions that
currently define the individual market differ significantly from the
conditions that defined the market when standardized plan options were
discontinued in 2019, when the market was considered to be at risk of
destabilization. We believe that the risk of market destabilization has
subsided, as is demonstrated by the proliferation of plan offerings,
increased issuer participation in the Exchanges, and record high
enrollment. We believe that resuming standardized plan options at this
time can play a constructive role in enhancing the consumer experience,
increasing consumer understanding, and simplifying the decision-making
process for consumers on the Exchanges
[[Page 27317]]
despite the fact that the City of Columbus ruling does not legally
obligate HHS to do so.
Comment: Several commenters who opposed these standardized plan
option requirements noted that the current degree of standardization
enabled by plan AV, different metal tiers of coverage, and mandatory
coverage of EHB is sufficient to allow for easier plan comparison.
Response: We disagree that the current degree of standardization
enabled by AV, different metal tiers of coverage, and mandatory
coverage of EHB is adequate to enable sufficiently easy plan
comparison, especially given the proliferation of plan offerings in
recent years. As discussed later in the Choice Architecture and
Preventing Plan Choice Overload Comment Solicitation, the proliferation
of plan offerings available to consumers increases the risk of choice
overload, coverage disruption, and suboptimal plan selection. We
believe that given this proliferation of plan offerings, additional
standardization is needed, and that consumers will benefit from
additional tools that facilitate decision-making, including from the
standardized plan option requirements finalized in this rule.
Comment: Some commenters stated that HHS should not require issuers
to offer standardized plan options since consumer uptake of
standardized plan options was low in previous years.
Response: We believe it is appropriate to require FFE and SBE-FP
issuers to offer standardized plan options despite the comparatively
low uptake of these plans in PY 2017 and PY 2018 for several reasons.
As previously discussed, there has been a considerable proliferation of
plan offerings available to consumers on the Exchanges over the last
several years, and we believe that requiring issuers to offer these
standardized plan options will play an important role in mitigating the
risk of plan choice overload associated with the proliferation of plan
offerings.
We also believe that these standardized plan options contain
several plan design features, such as enhanced pre-deductible coverage,
copays for as many benefit categories as possible, and copays for all
tiers of prescription drug coverage, that provide important consumer
protections. We believe these design attributes can play a significant
role in decreasing barriers to access for several important health
services, reducing the risk of unexpected costs and the associated
financial harm, mitigating the risk of health disparities, combatting
potentially discriminatory benefit designs, and advancing health
equity. Altogether, we believe the advantages of standardized plan
options outweigh the fact that consumer uptake of these options was
comparatively low in previous plan years.
Comment: Many commenters opposed to requiring issuers to offer
standardized plan options generally noted that these requirements would
impede innovative plan designs that are tailored to meet the unique
needs of enrollees. These commenters explained that when issuers
develop plan offerings, they conduct extensive research to develop
innovative plans that meet the needs of the populations and communities
within their service areas. These commenters also expressed concerns
that standardized plan options would not be able to keep pace with the
innovation in the market.
Response: We disagree that requiring issuers to offer these
standardized plan options will impede innovative plan designs tailored
to meet the unique needs of enrollees. After considering comments
received in response to the proposed rule, and based on our experience
with reviewing plan cost-sharing structures during QHP certification,
we are not of the view that non-standardized plans have sufficiently
innovated with cost-sharing structures to justify not requiring issuers
to offer standardized plans. We believe these standardized plan options
requirements will increase enrollment and improve health outcomes
without impeding issuers' ability to innovate in plan designs in their
non-standardized offerings. We also note that we will continue to
investigate whether there are lessons that we can draw from non-
standardized plan options in terms of innovative plan designs that can
apply to standardized plan options in future plan years.
Comment: Many commenters opposed to requiring standardized plan
options stated that these requirements would unnecessarily constrain
consumer choice. These commenters pointed out that some consumers
choose less generous plans while others choose more generous plans,
suggesting that there is not a one-size-fits-all plan design capable of
satisfying all enrollees' unique health needs.
Response: We disagree that requiring issuers to offer standardized
plan options would unnecessarily constrain consumer choice. First, the
standardized plan options finalized in this rule reflect the most
popular plan design attributes that consumers are already accustomed
to. Second, as discussed elsewhere in this section, there has been a
proliferation of plan choices available to consumers on the Exchanges.
This proliferation significantly complicates the plan selection
process, and increases the risk of choice overload, coverage
disruption, and suboptimal plan selection. Contrary to the claim that
these standardized plan option requirements will constrain consumer
choice, we believe they will facilitate consumer choice by allowing
consumers to more meaningfully compare between plans. Finally, if
consumers believe that their unique health needs are not met with the
standardized plan options finalized in this rule, they retain the
ability to choose from non-standardized plan options.
Comment: Several commenters stated that requiring issuers to offer
standardized plans at every product network type, at every metal level,
and throughout every service area in which they offer non-standard
plans could increase the total number of plan offerings on Exchanges
that rely on the Federal platform, exacerbating consumer confusion and
increasing the risk of choice overload.
To circumvent this problem, some of these commenters recommended
that HHS simply not require issuers to offer standardized plans, while
others recommended requiring issuers to offer standardized plan options
while also simultaneously limiting the number of non-standardized plan
options that issuers can offer. The commenters who supported limiting
the number of non-standardized plan options issuers can offer cited the
increased number of plans that HHS described in the proposed rule as
evidence that the number of plan choices on the Exchanges has increased
to a point where it is difficult for consumers to make informed
decisions, which can result in decreased enrollment. Several of the
commenters who supported limiting the number of non-standardized plan
options issuers can offer also cited the success of State Exchanges
that limit the number of plan offerings in order to facilitate consumer
decision-making.
Response: We are aware that these standardized plan option
requirements could potentially increase the total number of plan
offerings on the Exchanges. We also agree that the number of plan
offerings on the Exchanges has increased to a point that is detrimental
to consumers. That said, we chose to require issuers to offer
standardized plan options while not also simultaneously limiting the
number of non-standardized plan options issuers can offer in order to
strike the greatest balance between simplifying the plan selection
process and not causing
[[Page 27318]]
an excessive amount of disruption in too condensed a timeframe.
Considering that the QHP certification cycle for PY 2023 will have
begun by the time this rule has been published, we do not believe it
feasible to limit the number of non-standardized plan options that
issuers can offer without causing significant disruption to issuers'
portfolios of plan offerings, which would also increase the risk of
enrollment disruption.
In addition, we believe it would be important to first conduct
extensive stakeholder engagement in order to determine whether limiting
the number of non-standardized plan options that issuers can offer
would be appropriate before proposing adoption of such an approach. We
anticipate initiating this stakeholder engagement in the coming months
and applying the lessons learned from this stakeholder engagement to
our approach to standardized plan options in the 2024 Payment Notice.
Furthermore, we encourage issuers to modify their existing non-
standardized plan offerings--in accordance with uniform modification
requirements at 45 CFR 147.106(e)--to conform with the cost-sharing
parameters of the standardized plan options finalized in this rule, if
possible and so desired. This would significantly reduce the number of
total new plan offerings on the Exchanges, which would also reduce the
risk of choice overload, while allowing issuers to easily crosswalk
enrollees from their current non-standardized plan offering to the
standardized plan option equivalent.
Comment: Some commenters explained that requiring issuers to offer
standardized plan options would increase issuer burden by increasing
the total number of plan offerings in their portfolios. Several of
these commenters stated that this increased burden could discourage
issuers from entering new markets, thus reducing competition.
Response: We believe that requiring issuers to offer the
standardized plan options finalized in this rule will not significantly
increase issuer burden. As previously discussed, we encourage issuers
to modify their existing non-standardized offerings to conform with the
cost sharing parameters for the standardized plan options finalized in
this rule so they do not have to offer both their non-standardized plan
offerings and standardized plan option equivalents side by side in
order to minimize issuer burden, if so desired. We also believe that
issuers will be able to utilize the same provider networks and
formularies for these standardized plan options as they do for their
current non-standardized offerings, which we believe will further
minimize issuer burden. Given these considerations, we do not expect
these requirements to impose an excessive amount of issuer burden that
will discourage issuers from entering new markets, and we therefore do
not expect these requirements to reduce competition in this regard.
Comment: Several commenters recommended that HHS narrow the scope
of the proposed rule and require issuers to offer only one standardized
plan option at the silver metal level if it requires issuers to offer
them at all. These commenters generally noted that HHS should only
expand standardized plan options gradually, if at all, to minimize
disruptions.
Response: We disagree that we should narrow the scope of the rule
and require issuers to offer only one standardized plan option at the
silver metal level, and that we should only expand standardized plan
options gradually to minimize disruption. We believe that our approach
of requiring issuers to offer standardized plan options at every
product network type, at every metal level, and throughout every
service area (but not at product network types, metal levels, or
service areas where issuers do not offer non-standardized plan options)
while also not limiting the number of non-standardized plan options
that issuers can offer strikes an appropriate balance between
simplifying the plan selection process while also minimizing the risk
of disruption.
Comment: Many commenters explained that resuming the meaningful
difference standard (previously codified at 45 CFR 156.298) would be an
effective and targeted method to prevent duplicative plan offerings
while simultaneously ensuring that issuers continue to have the
flexibility necessary to innovate. Several of these commenters
supported resuming the meaningful difference standard in conjunction
with requiring issuers to offer standardized plan options, while
several of these commenters supported resuming the meaningful
difference standard in place of the standardized plan option
requirements finalized in this rule. Many of the commenters who
supported resuming the meaningful difference standard recommended that
HHS adopt a more stringent approach than that previously taken,
explaining that the standard in its previous iteration failed to
prevent duplicative plan offerings.
Several commenters cited States' role in regulating individual
market health insurance plans, requesting that HHS coordinate with
State regulators in the event of HHS implementing a meaningful
difference standard.
Response: Although we do agree that resuming the meaningful
difference standard in conjunction with the standardized plan option
requirements finalized in this rule could be an effective and targeted
method to prevent duplicative plan offerings, we do not believe it is
appropriate to resume the meaningful difference standard for PY 2023.
We believe that additional research is needed to build upon and refine
the previous version of the meaningful difference standard. We also
believe that resuming the meaningful difference standard for PY 2023
would not grant issuers and States sufficient time to modify their
portfolio of plan offerings prior to the PY 2023 QHP certification
cycle.
Comment: Several commenters requested that HHS clarify if issuers
are required to offer these standardized plan options off-Exchange.
Response: We clarify that issuers are generally required to offer
standardized plan options off-Exchange pursuant to guaranteed
availability requirements at 45 CFR 147.104. That said, issuers are not
required to actively market these plans off-Exchange.
Comment: Several commenters requested that HHS clarify if issuers
are required to offer the standardized plan options finalized in this
rule in the small group market.
Response: We clarify that FFE and SBE-FP issuers are only required
to offer the standardized plan options finalized in this rule in the
individual market, but not the small group market.
Comment: Several commenters requested that HHS clarify whether
issuers are required to offer standardized plan options for family
plans, and if so, if HHS has designed standardized plan options for
family plans.
Response: HHS affirms that issuers are required to offer
standardized plan options for family plans. HHS also clarifies that
issuers are able to offer standardized plan options as family plans by
applying a family (other than self-only) MOOP and a family (other than
self-only) deductible that is double the self-only MOOP and the self-
only deductible, respectively, provided for in the standardized plan
options finalized in this rule. We note that this approach is
consistent with the approach taken in the 2017 Payment Notice (81 FR
12204, 12292).
Comment: Several commenters supported exempting FFE and SBE-FP
issuers that are already subject to State standardized plan option
requirements
[[Page 27319]]
from the standardized plan option requirements finalized in this rule.
Response: We agree that it is appropriate to exempt FFE and SBE-FP
issuers that are already required to offer standardized plan options
under State action taking place on or before January 1, 2020 from the
standardized plan option requirements finalized in this rule. We
believe imposing duplicative Federal standards on these issuers would
yield no benefit to consumers or issuers and that it would
unnecessarily increase issuer burden. We further believe that FFE and
SBE-FP States that have enacted standardized plan option requirements
and implemented specific plan designs are positioned to best understand
the unique needs and conditions in their respective markets.
Comment: Several commenters requested that HHS clarify whether the
requirement for FFE and SBE-FP issuers to offer standardized plan
options applies to issuers in States that are transitioning to a State
Exchange model type in a future plan year.
Response: We clarify that all FFE and SBE-FP issuers are subject to
these requirements, even if they anticipate that their State will
transition from having an FFE or SBE-FP to a State Exchange in a future
plan year (such as issuers in the State of Virginia). We reiterate that
the only FFE and SBE-FP issuers exempt from the requirement to offer
standardized plan options at every product network type, at every metal
level, and throughout every service area they offer non-standardized
plan options are those that are already subject to State requirements
enacted prior to January 1, 2020, such as issuers in the State of
Oregon.
Comment: Several commenters recommended applying these standardized
plan options requirements to State Exchange issuers that are not
already required to offer standardized plan options per existing State
requirements, while many were opposed to this approach, citing that
State Exchanges are most familiar with the nuances and demands of their
respective markets and should therefore be allowed to determine if
issuers should be required to offer standardized plan options in these
markets.
Response: We do not believe it is appropriate to apply the
standardized plan option requirements finalized in this rule to State
Exchange issuers, including issuers that are not already required to
offer standardized plan options per existing State requirements,
because we believe State Exchanges are best positioned to understand
both the nuances of their respective markets and consumer needs within
those markets. We also believe that State Exchanges are best positioned
to determine whether standardized plan options would be beneficial to
consumers in their respective States. However, because the SBE-FPs use
the same platform as the FFEs, we are finalizing 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.
Comment: Several commenters requested that HHS clarify whether
pediatric dental benefits can be included in standardized plan options.
Response: We affirm that pediatric dental benefits can be included
in these standardized plan options if so desired, but note that the
cost sharing parameters for these benefits are not standardized.
Comment: Several commenters requested that HHS clarify if
telehealth services can be offered at a lower cost sharing amount than
in-person services.
Response: Telehealth services cannot be offered at a lower cost
sharing amount than in-person services, primarily due to limitations in
the AVC. We intend to consider whether this flexibility should be
afforded for future plan years.
Comment: Several commenters asked HHS to clarify how they should
assign cost sharing to benefits not included in the AVC or the
standardized plan options finalized in this rule.
Response: We note that when offering the standardized plan options
finalized in this rule, issuers only have to match the cost sharing
parameters for the benefits specified in the plan designs for the
standardized plan options finalized in this rule. Issuers retain the
ability to determine the cost sharing for benefits not included in the
standardized plan options finalized in this rule, subject to State and
Federal law.
Comment: Many commenters made recommendations regarding specific
features of the plan designs. Several commenters disagreed with the
methodology used in designing these standardized plan options, stating
that designing standardized plan options to reflect popular plan design
features (in the form of enrollee-weighted medians) would fail to meet
the unique health needs of consumers. Commenters also stated that
health care markets vary dramatically between States, as do the most
popular plan design features in each of these markets, and therefore,
that these plan designs would not resonate with consumers in every
State.
Response: We designed the standardized plan options in this
proposal by mirroring the most popular plan design features of QHPs
offered through the FFEs and SBE-FPs in PY 2021 (in the form of
enrollee-weighted medians), meaning that these plan designs are similar
to those that millions of consumers are already currently enrolled in.
Furthermore, though we do agree that there are some differences between
the health care markets of different States, as well as between the
most popular plan design features in these States, there are many
similarities between different States and plan design features, as
well.
For example, in the FFEs and SBE-FPs in PY 2021, 90 percent of non-
CSR silver plan enrollees had plans with copays exempt from the
deductible as the form of cost sharing for primary care visits. The
30th percentile copay amount for this benefit category was $30 per
visit, while the 70th percentile was $40 per visit. Thus, the range
between the 30th and 70th percentiles for copay amounts for primary
care visits for non-CSR silver plan enrollees in all FFEs and SBE-FPs
in PY 2021 was only $10, meaning the standardized plan options
finalized in this rule have design features that are largely compatible
with plan design features that millions of enrollees are already
accustomed to. The fact that there is little variation in many of the
most frequently utilized benefit categories across FFEs and SBE-FPs
supports the decision to employ an enrollee-weighted median methodology
in designing these plans.
To ensure these standardized plan options are able to meet the
unique health needs of all consumers, we reiterate that we intend to
conduct extensive stakeholder engagement (including with State
regulators, issuers, provider groups, health advocacy groups, and
consumer groups) over the next year. We anticipate incorporating the
feedback we receive during this stakeholder engagement when designing
standardized plan options for future plan years so that we can design
plans that meet the unique health needs of all consumers. In the
meantime, we believe the fact that consumers can still select from an
unlimited number of non-standardized plan options in PY 2023 means that
all consumers can select plans that meet their unique health needs.
Comment: Several commenters expressed concern with having one set
of standardized plan options apply to all FFE and SBE-FP States. These
commenters stated that a uniform national set of plan designs is
unlikely to be attractive to consumers since health care markets vary
dramatically between States, as do the most popular
[[Page 27320]]
plan design features in these States. These commenters also stated that
having State-specific plan designs could help mitigate the degree of
disruption to local markets and increase consumer uptake of
standardized plan options. These commenters also requested
clarification on how these standardized plan options would interact
with State cost sharing laws.
Response: We designed two sets of standardized plan options to
apply to different sets of States in order to more precisely tailor
these plan designs to the unique market conditions in different States
and to comply with the unique cost sharing laws in these different
States. We also conducted extensive stakeholder engagement with more
than 30 State departments of insurance to ensure that these plan
designs comply with unique cost sharing laws. We also solicited
comments on potentially relevant State cost sharing laws that could
affect plan designs in the proposed rule. We also note that we intend
to assess the feasibility and utility of designing State-specific
standardized plan options to further mitigate the risk of disruption
and to increase consumer uptake of these plans in future plan years.
Comment: Several commenters requested clarification regarding how
these standardized plan options interact with State-mandated benefits.
Response: Nothing in the design of these standardized plan options
supersedes the obligation to cover State-mandated benefits, as
applicable. Similar to other benefits not included in these
standardized plan options, issuers retain the ability to set the cost
sharing parameters for these benefits, subject to State and Federal
law.
Comment: Several commenters requested that HHS confirm that the
standardized plan options finalized in this rule are compliant with
MHPAEA and its implementing regulations.
Response: We affirm that the cost sharing parameters for these plan
designs are designed so that issuers can design standardized plan
options that are compliant with the MHPAEA and its implementing
regulations. For example, copays for mental health or substance use
disorder benefits in the outpatient, in-network office visit sub-
classification in each plan design are equal to the least restrictive
level for copays that apply to substantially all medical and surgical
benefits in that sub-classification. Since standardized plan options do
not include standardized treatment limitations on any of these
benefits, issuers will be responsible for ensuring that the plan
features they design outside of these standardized cost sharing
parameters are compliant with MHPAEA and its implementing regulations.
Comment: Several commenters suggested that HHS incorporate VBID
principles into future iterations of standardized plan options,
explaining that doing so could further reduce barriers to necessary
services and promote health equity among consumers. Similarly, many
commenters supported including low deductibles and pre-deductible
coverage for as many benefits as possible in plan designs, explaining
that doing so would improve accessibility to important services. Some
commenters requested that HHS modify the plan designs to include more
pre-deductible coverage for particular benefits, including for
preventive services beyond those mandated by Federal requirements,
maternity care, laboratory and radiologic services, and some or all
tiers of prescription drug coverage. Several commenters added that by
improving the affordability of basic services that underserved
populations typically lack access to, standardized plan options could
also help address health disparities.
Response: We affirm that VBID principles were incorporated into
these plan designs by exempting particular services from the
deductible, decreasing barriers to access for particular services and
prescriptions drug tiers, and having copays as the form of cost sharing
instead of coinsurance rates for particular benefit categories. We also
intend to explore the utility of incorporating additional VBID
principles into future iterations of standardized plan options.
We attempted to exempt as many benefits as possible from the
deductible while also maintaining the lowest deductible possible,
designing a plan that has an AV within the permissible de minimis range
of the metal level AVs, and ensuring the competitiveness of these
plans' premiums by having AVs near the floor of these de minimis
ranges. Given these constraints, we are not able to exempt other
benefits, such as laboratory and radiologic services, from the
deductible without also raising the deductible or increasing the AV and
therefore the expected premiums of these plans. We are also unable to
decrease the deductibles for these plans without offsetting the change
to AV by subjecting additional benefits to the deductible or increasing
these plans' AV or premiums.
Comment: Several commenters requested that HHS clarify the specific
types of specialist visits that are exempt from the deductible in these
standardized plan options and if there are any limits on the number of
visits exempt from the deductible. One commenter requested that HHS
clarify that deductible exemptions apply to the full range of pediatric
preventive services, including those provided by a pediatric
specialist.
Response: We clarify that we defer to issuers in how they classify
which benefits belong to which benefit category, including how issuers
classify ``specialist visits'' and therefore which specialist visits
are exempt from the deductible per the cost sharing parameters in these
plan designs. We also clarify that there are no visit limits for any of
the benefit categories, including specialist visits, for any metal
level in either of the two sets of standardized plan options finalized
in this rule. We also reiterate that nothing in the design of these
standardized plan 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 plan
option.
Comment: Several commenters recommended including separate medical
and drug deductibles in the plan designs to allow those who rely on
prescription drugs to manage a particular health condition to more
quickly meet their drug deductible.
Response: We chose integrated medical and drug MOOPs and
deductibles for these plan designs because this was the most popular
plan design feature in the FFEs and SBE-FPs in PY 2021. Since the
majority of enrollees have a plan with this design feature, and since
we wish to minimize the risk of disruption, we included this feature in
these standardized plan options. We also note that we intend to
consider the utility of splitting medical and drug MOOPs and
deductibles in future iterations of standardized plan options for
future plan years.
Comment: Several commenters requested that HHS clarify how
deductibles and cost sharing should be applied to the specific benefit
categories included in the standardized plan options finalized in this
rule.
Response: We clarify that in both sets of the standardized plan
options above in Tables 12 and 13, if a cost sharing amount for a
particular metal level is accompanied by a (*), this benefit category's
cost sharing is exempt from the deductible.
Comment: Many commenters supported including copays instead of
coinsurance for as many benefits as
[[Page 27321]]
possible. These commenters explained that coinsurance
disproportionately burdens persons with chronic illness and
disabilities and that by improving affordability for basic services
that underserved populations typically lack access to, these plan
designs would help address health disparities. Some commenters further
explained that copays are more transparent than coinsurance and that
copays make it easier to predict out-of-pocket costs.
Several commenters recommended applying copays to more benefit
categories, including for the emergency room, hospital inpatient,
imaging, and lab work benefit categories. Several other commenters
recommended eliminating coinsurance from the plan designs altogether.
Several other commenters expressed concern that copays were too high
for certain services.
Response: We affirm that we applied copays instead of coinsurance
rates for as many benefits as possible in order to enhance consumer
certainty and decrease barriers that obstruct access to these services.
We agree this design feature will play an important role in improving
affordability and transparency for important services, and that this
design feature will also address health disparities. That said, since
we designed these standardized plan options to reflect the most popular
design features of QHPs in the FFEs and SBE-FPs in PY 2021, and since
the majority or plurality of consumers did not have copays for
particular benefit categories (such as for hospital inpatient), we
chose coinsurance rates for these particular benefit categories. For
this reason, we are unable to eliminate coinsurance from the plan
designs altogether. We also note that we are unable to decrease copays
for certain services without concurrently offsetting these changes with
increases to deductibles, MOOPs, or subjecting additional benefits to
the deductible.
Comment: Many commenters supported including copays as opposed to
coinsurance specifically for prescription drugs, including for the non-
preferred and specialty tiers, explaining that doing so would alleviate
the burden for persons with chronic illnesses and disabilities.
Commenters who supported the use of copays rather than coinsurance for
prescription drugs explained that high cost sharing on prescription
drugs negatively affects medication adherence, leading to increased
health care costs overall. Several commenters requested that HHS exempt
all drugs from the deductible, lower copays for the different drug
tiers, and cap all specialty drug copays at $150 (as was done in the
second set of standardized plan options).
Conversely, some commenters were opposed to both incorporating
copays instead of coinsurance for all tiers of prescription drugs as
well as exempting non-preferred and specialty tier prescription drugs
from the deductible. These commenters expressed concern that these plan
design features would increase the risk of adverse selection and could
therefore contribute to an increase in premiums that would undermine
access to affordable health coverage. These commenters also explained
that these plan designs are more generous than existing plan offerings,
demonstrating that plan designs with these features are not sustainable
within current market conditions. One commenter requested that HHS
clarify whether the plan designs allow prescription drugs associated
with preventive services to be covered with zero cost sharing.
Response: We agree that having copays for all prescription drug
tiers (including the non-preferred brand and specialty tiers) will
enhance predictability, increase medication adherence, and decrease
overall health care costs. We note that we were unable to exempt all
drugs from the deductible and lower the cost sharing for all tiers due
to constraints with AV. Exempting additional tiers from the deductible
and lowering the cost sharing amounts for these tiers would require
subjecting other medical benefits to the deductible, increasing the
cost sharing for other medical benefit categories, or increasing the
AV, and therefore increasing the premiums of these plans. We also note
that we decided not to apply the $150 copay cap to both sets of
standardized plan options because only Delaware and Louisiana had State
cost sharing laws that necessitated this design feature.
We understand that these design features may increase the risk of
adverse selection, but we believe this risk is sufficiently mitigated
by the fact that all FFE and SBE-FP issuers are required to offer these
plans at every product network type, at every metal level, and
throughout every service area they offer non-standardized plan options.
Therefore, we believe this risk to be distributed evenly among issuers.
Furthermore, we reiterate that we designed these plans to have AVs near
the floor of the de minimis range for each AV metal level to ensure
these plans' premiums are competitive.
HHS reiterates once more that nothing in the design of these
standardized plan 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 plan
option. We clarify that these plan designs allow prescription drugs
associated with preventive services to be covered with zero cost
sharing.
Comment: Several commenters expressed concern with the plan design
including only four tiers of prescription drug cost sharing, stating
that this plan design feature would be difficult for issuers to
implement and disruptive for consumers. These commenters explained that
having six tiers of formulary cost sharing is becoming increasingly
common among commercial issuers and that this design feature is
permitted under Medicare Part D. These commenters therefore recommended
that HHS include six tiers of prescription drug cost sharing in the
plan designs to allow issuers the flexibility to develop formularies in
a way that is most effective in promoting affordability. Conversely,
several commenters supported including only four tiers of prescription
drug cost sharing in the plan designs, explaining that doing so would
offer more affordable, predictable, understandable prescription drug
coverage.
Response: We agree that including only four tiers of prescription
drug cost sharing in these plan designs offers more affordable,
predictable, and understandable drug coverage, and that this design
feature will play an important role in facilitating the consumer
decision-making process by allowing consumers to more easily compare
formularies between plans. That said, we intend to explore the
feasibility and utility of including more than four tiers of
prescription drug cost sharing in future iterations of standardized
plan options in future plan years.
Comment: Several commenters requested that HHS clarify if
standardized plan options are permitted to have more than one tier of
provider networks.
Response: We clarify that we designed the standardized plan options
finalized in this rule to have only one cost sharing tier such that no
standardized plan option may have a tiered provider network. This
approach aligns with the goals of simplifying the consumer decision-
making process and making health insurance more understandable for
consumers on the Exchanges. Furthermore, considering that the vast
majority of plans offered through the Exchanges (nearly 90 percent) do
not have tiered provider networks, we believe this plan design feature
reflects
[[Page 27322]]
current market realities and minimizes the risk of disruption for both
issuers and enrollees.
Comment: Several commenters requested that HHS include health
savings account (HSA)-eligible HDHPs in these sets of standardized plan
options.
Response: We have not included HSA-eligible HDHPs in these sets of
standardized plan options because enrollees still have the opportunity
to enroll in non-standardized HSA-eligible HDHPs, if they so desire.
Comment: Many commenters supported differentially displaying
standardized plan options on HealthCare.gov. Most of these commenters
also supported extending standardized plan options differential display
requirements to web-brokers and issuers' direct enrollment websites.
Citing the overwhelming number of plan offerings available for
consumers, these commenters urged HHS to improve and simplify the
shopping experience by allowing consumers to easily identify
standardized plan options. Many of these commenters noted that
differentially displaying standardized plan options assumes even
greater importance if issuers are permitted to offer an unlimited
number of non-standardized plan options. These commenters also noted
that extending these display requirements to web-brokers' and issuers'
direct enrollment websites would promote consistent messaging across
platforms. Several commenters also explained that several State
Exchanges have had success in differentially displaying standardized
plan options and that HHS should draw from this experience.
In contrast, many commenters opposed differentially displaying
standardized plan options, explaining that doing so could direct
consumers to more expensive plans that may not be best suited for their
needs. Several of these commenters urged HHS to give web-brokers and
issuers that utilize alternative enrollment pathways--including Classic
DE and EDE--flexibility in how to display standardized plan offerings
to consumers utilizing their platforms due to concerns over technical
and platform limitations.
Response: We agree that differentially displaying standardized plan
options on HealthCare.gov and direct enrollment websites will improve
and simplify the shopping experience by allowing consumers to more
easily identify the standardized plan options. We also disagree that
differentially displaying standardized plan options could direct
consumers to more expensive plans that may not be best suited for their
needs. We first note that we designed these standardized plan options
to have AVs near the floor of the AV de minimis range for each metal
level to ensure the competitiveness of these plans' premiums. We also
note that we designed these plans to reflect the most popular plan
design features throughout the FFEs and SBE-FPs in PY 2021 and we
therefore do not believe these plans' premiums will differ
significantly from the premiums of non-standardized plan options.
Further, since we are differentially and not preferentially
displaying these standardized plan options, we believe that we can
structure choice architecture in a way that allows consumers to
meaningfully evaluate other non-standardized plan options and select
these plans, if they so desire. A comment summary regarding specific
recommendations for the differential display of standardized plan
options is discussed in the Comment Solicitation on Choice Architecture
and Preventing Choice Overload section later in this rule.
We also note that we will continue to provide web-brokers and
issuers that utilize alternative enrollment pathways--including Classic
DE and EDE--the ability to request to deviate from how standardized
plan options are differentially displayed on HealthCare.gov due to
concerns over technical and platform limitations. We will provide
additional technical guidance on how to submit this request to deviate
in the future.
Comment: Several commenters expressed concern about the timing of
the implementation of these requirements. These commenters explained
that complying with these requirements would impose a significant
burden on issuers as they try to meet filing deadlines for PY 2023,
with several commenters requesting that HHS delay the implementation of
these requirements until the plan year 2024, if they are implemented at
all.
Response: We are finalizing our proposal to require issuers to
offer standardized plan options for PY 2023 and beyond, as proposed. We
first announced in part 2 of the 2022 Payment Notice final rule (86 FR
24140, 24265) our intent to resume standardized plan options and to
propose specific plan designs in the 2023 Payment Notice. We also
sought comment on the best method to resume standardized plan options
in part 3 of the 2022 Payment Notice proposed rule (86 FR 35156, 35162
through 25163). We then affirmed our intent to resume standardized plan
options in PY 2023 and explained our rationale for doing so in part 3
of the 2022 Payment Notice final rule (86 FR 53412, 53419 through
23420). We believe these announcements provided ample notice of our
intent to propose standardized plan option requirements in the 2023
Payment Notice proposed rule such that States, issuers, and other
affected stakeholders should have sufficient time to prepare for
compliance with the requirements we finalize in this rule.
Additionally, since the cost sharing parameters for the EHBs
covered under these plans are already specified, issuers will be able
to utilize existing networks and formularies they already utilize in
connection with other plans in their portfolios, and since issuers are
not required to offer standardized plan options at product network
types, metal levels, or services areas in which they do not already
offer non-standardized plan options, we do not anticipate that issuers
will be unable to meet the filing deadlines.
11. Network Adequacy (Sec. 156.230)
We proposed 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 engaged and received
feedback from numerous stakeholders representing diverse perspectives
in developing the proposed policies. We are finalizing the following
provisions as proposed, with two exceptions: (1) We are not finalizing
the proposal on network tiering; (2) for appointment wait time
standards, we are finalizing and delaying implementation until PY 2024.
We are also finalizing the following updates to Sec. 156.230:
Substituting the phrase ``substance use disorder'' in place of
``substance abuse''; and retaining paragraph (f), which was deleted in
error.
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
[[Page 27323]]
Care Act; Establishment of Exchanges and Qualified Health Plans;
Exchange Standards for Employers final rule (77 FR 18309) and codified
at Sec. 156.230. HHS seeks to ensure that quantitative, prospective
network adequacy reviews occur for QHPs offered through the FFEs so
that enrollees have reasonable, timely access to health care providers.
The FFEs conducted network adequacy reviews of time and distance
standards for QHPs for PYs 2015-2017. The 2017 Market Stabilization
final rule (82 FR 18346) 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 (83 FR 16930.) 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.\313\ 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.
---------------------------------------------------------------------------
\313\ 523 F. Supp. 3d 731 (D. Md. 2021).
---------------------------------------------------------------------------
As such, we announced in Parts 2 and 3 of the 2022 Payment Notice
final rules (86 FR 24140; 86 FR 53412) our intent to undertake
rulemaking to establish network adequacy standards, beginning in this
rulemaking for PY 2023.
b. FFE Network Adequacy Reviews
In the 2023 Payment Notice proposed rule (87 FR 584), HHS proposed
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 beginning with the QHP certification cycle for
PY 2023. HHS proposed not to evaluate QHP network adequacy in FFE
States performing plan management functions that elect to perform their
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 before QHP certification. States
performing plan management functions are States served by an FFE where
the State has agreed to assume primary responsibility for reviewing
issuer-submitted QHP certification material and making certification
recommendations to HHS.
We are finalizing this policy as proposed.
We summarize and respond to public comments received on this
proposal below.
Comment: Many commenters expressed strong support for HHS' proposal
to conduct network adequacy reviews of the provider networks of QHPs
offered through the FFEs. Key reasons for this support included
ensuring consistency of network adequacy standards and reviews across
States; providing a minimum set of network adequacy standards that
States can meet or exceed; and addressing various issues related to
consumer access.
Response: We concur that conducting robust network adequacy reviews
of QHPs on the FFEs will have numerous benefits, including
strengthening QHP enrollees' access to a variety of health care
providers.
Comment: Some commenters stated that HHS should defer to States'
reviews as they believe States are the most appropriate regulators of
network adequacy. These commenters expressed that States understand and
can tailor network adequacy reviews based on unique market conditions
and that HHS network adequacy reviews could be duplicative and
burdensome.
Response: We understand that some States, issuers, and other
stakeholders believe that States are best positioned to regulate
network adequacy. Given that States have unique knowledge and
experience that are beneficial to assessing QHPs' provider networks,
HHS will continue to partner with and learn from States as we conduct
network adequacy reviews and pursue future network adequacy rulemaking.
In recognition of this viewpoint, and as proposed, HHS will allow
States performing plan management functions to choose to conduct their
reviews, as long as they adhere to standards as stringent as HHS'
standards and conduct prospective reviews. For all other FFEs, HHS will
conduct network adequacy reviews to assure that QHP enrollees across
States have reasonable access to a variety of health care providers to
meet their needs.
Comment: Some commenters urged HHS to allow States performing plan
management functions to conduct their network adequacy reviews if they
have an approach that is ``comparable to'' Federal network adequacy
standards, rather than ``as stringent as'' Federal standards.
Response: HHS believes it is important for States performing plan
management functions to conduct network adequacy reviews that are at
least as stringent as Federal reviews for two main reasons. First, HHS
seeks to ensure QHP enrollees in all FFEs have a minimum standard of
consumer protections regarding reasonable access to providers. We
believe the Federal standards set a strong floor from which States
performing plan management functions can implement even more robust
standards if desired. If HHS were to allow States performing plan
management to conduct network adequacy reviews that are comparable to
Federal reviews, rather than as stringent, this could lead to reviews
of a smaller provider specialty list or reviews that have less
stringent parameters, for example. Second, whether a network adequacy
review is ``comparable'' is a less concrete determination than whether
it is ``as stringent.''
HHS is defining ``as stringent as'' to mean that the reviews
include assessing compliance with time and distance standards and
appointment wait time standards using the same specialty list and
parameters. Time and distance reviews must be based on quantitative
data collected from the issuer (not attestation) and supported by a
justification requirement if an issuer does not meet one or more of the
standards. We believe assessing quantitative data for time and distance
reviews, rather than using qualitative measures, gives a fuller and
more accurate picture of how a QHP assures reasonable access to
providers. Assessing time and distance using quantitative data also
allows us to make comparisons year-over-year and across issuers. We are
codifying in Sec. 156.230 that time and distance reviews must be based
on quantitative issuer-submitted data.
Appointment wait time reviews, which will begin in PY 2024, must be
based on methods as stringent as HHS' methods (as a minimum standard)
and supported by a justification requirement if an issuer does not meet
one or more of the standards. HHS will propose the method for assessing
compliance with appointment wait time standards in future rulemaking.
States can implement network adequacy standards and reviews that are
more stringent than HHS' standards, described here. For example, we
consider shorter time and distance or appointment wait time
[[Page 27324]]
standards to be more stringent than longer ones.
We also acknowledge that State-specific challenges (for example,
provider supply shortages, topographic barriers, etc.) may necessitate
justification allowances, such as mitigating measures (for example, in-
network cost sharing for out-of-network providers) that ensure access
to a provider specialty type that would otherwise be unavailable to
enrollees, while the States partner with issuers and providers to reach
a more permanent solution. We believe the justification process for
network adequacy will sufficiently accommodate such challenges and
allowances.
Comment: Several commenters requested that HHS closely assess the
network adequacy reviews of States performing plan management that
elect to perform their reviews to ensure they review and enforce
standards at least as stringent as HHS' standards.
Response: We will closely partner with these States to ensure they
understand HHS' standards, that the States have adequate State
authority to conduct such reviews, and that their reviews will
appropriately assess network adequacy for QHPs in their State before
plan confirmation to support timely QHP certification.
Comment: Some commenters expressed concern that the additional
contracting required to achieve the new network adequacy standards
could increase costs to consumers, while other commenters believe that
the standards are unlikely to raise consumer costs.
Response: We acknowledge that commenters shared mixed feedback
about whether the new network adequacy standards would raise consumer
costs. We do not anticipate that the updated network adequacy
requirements will substantially raise costs to consumers. We
acknowledge that there may be some additional burden for QHP issuers
and States to comply with the new network adequacy requirements. We
will work to minimize the burden to the extent feasible by increasing
transparency of the network adequacy review process, offering technical
assistance resources and consultations, and collaborating with issuers
and States to address questions and issues that arise during the PY
2023 network adequacy review process. We believe the benefits to
consumer protection resulting from strengthened network adequacy
standards strike a reasonable balance with the potential for increased
issuer burden and cost, given the strategies described above that HHS
will undertake to mitigate the burden.
Comment: Some commenters expressed concern regarding the
implementation timeline for network adequacy reviews and requested that
reviews be delayed until PY 2024 due to the time needed by issuers and
States to prepare for the reviews and given the continued impacts of
the COVID-19 pandemic on the health care system.
Response: We understand the desire expressed by some commenters to
delay the implementation of network adequacy reviews given the time
needed to collect information from providers on appointment wait times
in the COVID-19 context. We acknowledge these concerns and, as
discussed in the Appointment Wait Times section of this preamble, we
will finalize the appointment wait time standards, but delay their
implementation until PY 2024. We believe it is reasonable to implement
the other finalized elements of the network adequacy proposal in PY
2023 for reasons described in the Time and Distance and Telehealth
sections of this preamble.
Comment: Some commenters requested that HHS further align Federal
network adequacy standards with the National Committee for Quality
Assurance (NCQA) accreditation standards.
Response: We have reviewed the NCQA standards regarding network
adequacy. We believe it is appropriate to align with NCQA in its use of
business days to measure appointment wait time standards, which will be
finalized in the final PY 2023 Letter to Issuers. We will also finalize
that the appointment wait time standard for the behavioral health
category will align with NCQA's standards; NCQA does not have
quantitative parameters for the other categories we are finalizing for
appointment wait times. NCQA does not currently have quantitative
standards for time and distance so we cannot consider alignment.
Comment: One commenter requested HHS retain the provision in the
network adequacy regulation text that clarifies that QHPs do not have
to use provider networks.
Response: HHS will retain this provision that clarifies that QHPs
do not have to use provider networks. In the proposed rule, the
deletion was an error, and we appreciate the commenter bringing it to
our attention.
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 the 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 (77 FR 18309), 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 assure that all services will be
accessible to enrollees without unreasonable delay. In the 2016 Payment
Notice final rule (80 FR 10749), 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.
In section c, parts ii, ii, and iv of this preamble, we proposed 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 proposed
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 were 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
to evaluate Medicare Advantage plans. 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 proposed reviewing additional specialties for time and
distance,
[[Page 27325]]
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 populations. The additional specialties proposed
are emergency medicine, outpatient clinical behavioral health,
pediatric primary care, and urgent care.
HHS proposed that time and distance standards be calculated at the
county level and vary by county designation. We 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 14 and 15. To count towards meeting
the time and distance standards, individual and facility providers
listed in Tables 14 and 15 must be appropriately licensed, accredited,
or certified to provide services in their State, as applicable, and
must have in-person services available.
[GRAPHIC] [TIFF OMITTED] TR06MY22.013
[[Page 27326]]
[GRAPHIC] [TIFF OMITTED] TR06MY22.014
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 proposed
to 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 proposed to codify the network
adequacy justification process in regulation at Sec.
156.230(a)(2)(ii).
HHS sought 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 sought comment on the parameters that should apply with
respect to behavioral health providers to ensure adequate access to
these services. HHS also sought 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.
We are finalizing this policy as proposed.
We summarize and respond to public comments received on this policy
below.
Comment: Many commenters, across a range of stakeholder types,
supported the proposed quantitative time and distance standards. Key
reasons for this support included appreciation for instituting a
quantitative assessment of consumer access; concurrence with the
inclusion of a variety of individual and facility provider types,
including QHP-specific additions to the Medicare Advantage provider
specialty list; and varying time and distance standards by county type
since provider availability can be influenced by local population
density.
Response: HHS agrees that stringent quantitative time and distance
standards for the expanded provider specialty lists that vary by county
designation will help strengthen QHP enrollees' access to a variety of
providers to meet their health care needs.
Comment: There was mixed feedback on the inclusion of emergency
medicine physicians: Some commenters stated that the addition would be
duplicative of required facility types and No Surprises Act
protections, while others agreed with HHS' contention that including
emergency medicine physicians would provide proactive consumer
protections and increase enrollee access to in-network providers.
Response: HHS understands that some stakeholders have differing
opinions about the inclusion of emergency medicine physicians on the
provider specialty list for time and distance reviews. We believe that
the anticipated benefits to consumer access and protections outweigh
the concerns about duplication, and we will include emergency medicine
physicians as proposed.
Comment: Numerous commenters requested that HHS consider additional
provider specialties (for example, anesthesiologists, audiologists, and
providers offering gender-affirming care, among others) for inclusion
in future time and distance standards.
Many commenters specifically requested additions to or refinement
of the Outpatient Clinical Behavioral Health category, such as separate
categories for mental health and substance use disorder services, and
delineating between pediatric and adult behavioral health providers.
Some commenters requested refining certain provider specialty types,
including allowing OB/GYNs to count as primary care providers; aligning
OB/GYN parameters with the parameters for specialists rather than for
primary care; considering how safety-net family planning and sexual
health services are delivered by a range of non-OB/GYN providers;
dividing requirements for oncology providers into separate categories
for medical and surgical oncology; allowing mid-level practitioners to
count as specialty care providers for time and distance standards; and
allowing family medicine physicians to count towards pediatric primary
care.
Response: HHS is finalizing the individual and facility provider
specialty lists for time and distance as proposed. We believe the
current specialty list builds on and strengthens the specialty list
that HHS used for assessing time and distance when we previously did so
in PYs 2015-2017, which will help increase access to a variety of
provider types and strengthen consumer protections. HHS appreciates the
feedback suggesting additions to and refinement of the provider
specialty list for time and distance standards. Prior to considering
the adoption of these suggestions in future rulemaking, HHS will need
to conduct further assessment and research as they may also have
unintended consequences.
We appreciate the suggestion from commenters that OB/GYNs count
towards time and distance standards for primary care providers. We
believe there could be potential unintended consequences if we were to
allow OB/GYNs to count as primary care providers for time and distance
standards. For example, since OB/GYNs most commonly care for female
patients, including OB/GYNs as primary care providers for time and
distance standards could hamper access to
[[Page 27327]]
primary care for male patients. We will further assess this suggestion
and its potential implications and will consider this for future
rulemaking.
For PY 2023, while we will not have separate adult and pediatric
standards for Outpatient Clinical Behavioral Health, we have unique
specialty codes in the Essential Community Provider/Network Adequacy
(ECP/NA) template that distinguish the two age categories (adult and
pediatric) for some behavioral health specialty types, allowing for
data collection and analysis, and consideration of further refinement
in the future.
Though we do not have a time and distance standard specifically for
gender-affirming care and surgery providers, the provider specialty
list does include many providers who offer services that may be useful
for individuals seeking gender-affirming care, like endocrinologists,
urologists, and behavioral health clinicians.
Comment: Some commenters expressed concerns that Federal time and
distance standards cannot adequately account for geographic variations,
like provider supply and population density. One commenter expressed
concerns that many issuers in their state might fail the new standards,
that the network adequacy standards could disincentivize new issuers
from entering the market, and that counties would be left without
available Exchange health insurance options. Several commenters shared
suggestions for less stringent time and distance reviews, like broader
qualitative standards, or separate time and distance standards for
rural areas, geographies with provider shortages, and narrower
networks.
Response: We understand that some stakeholders have concerns about
HHS assessing QHPs for compliance with quantitative time and distance
standards. We believe that quantitative time and distance standards,
when varied by county type, provide a useful assessment of whether QHPs
provide reasonable access to care, and when combined with appointment
wait time standards, will offer a more comprehensive evaluation of the
adequacy of QHPs' networks. HHS believes that less stringent time and
distance standards (like qualitative standards or separate standards
for rural areas, geographies with provider shortages, and narrower
networks) would not sufficiently assure reasonable access to providers.
Where QHPs cannot comply with these standards due to provider
shortages and other factors that affect issuers of given service areas
similarly (like topographic challenges, such as a lake in the middle of
a county), issuers can include such explanations in their
justifications. HHS will take such considerations into account in
determining whether the justification is sufficient to satisfy this QHP
certification standard.
HHS is aware of the potential risks related to implementing time
and distance standards, such as standards being too stringent, not
accounting for geographic variations, and leading to fewer QHPs. We
believe these risks can be managed with increased transparency, updates
to network adequacy QHP application documents, and coordination and
partnership with States and issuers. We have made several changes to
increase transparency, which we anticipate will make it easier for
issuers to understand and comply with network adequacy standards. The
ECP/NA template will include the Taxonomy Codes tab that shows which
taxonomy codes crosswalk into which individual provider and facility
specialty types. The Instructions and FAQs will provide more detail on
the network adequacy review process and what issuers need to submit to
HHS to demonstrate satisfaction of network adequacy standards. The
Network Adequacy Justification Form is a streamlined tool that will
enable issuers to show HHS how they are making progress toward
compliance with network adequacy standards. Coordination with States
will allow for a two-way exchange of information so HHS can better
understand local patterns of care and how they may relate to Federal
network adequacy standards. This information helps us give issuers as
much credit for their networks as possible.
Comment: Other commenters expressed that due to the differences
between QHPs and Medicare Advantage plans--in terms of consumers,
provider reimbursements, and contracting dynamics--network adequacy
standards applying to Medicare Advantage plans may not be appropriate
to apply to QHPs.
Response: HHS acknowledges that QHPs and Medicare Advantage plans
serve different enrollee populations. HHS has tailored the provider
specialty list accordingly to better align with the provider access
needs of QHP enrollees. HHS has added the following provider
specialties for time and distance: Emergency medicine, outpatient
clinical behavioral health, pediatric primary care, and urgent care.
Details on why each of these specialties was added are included in the
proposed rule (87 FR 584, 681). When HHS conducted Federal network
adequacy reviews during PYs 2015-2017, our time and distance standards
for network adequacy were also foundationally based on Medicare
Advantage standards. Based on that prior experience, our research on
network adequacy standards, and the public comments received on this
rule supporting this approach, we believe it is reasonable to resume
using time and distance network adequacy standards that are based on
Medicare Advantage standards.
Comment: Some commenters expressed that time and distance metrics
are not appropriate for SADPs and that a network breadth measure might
be more appropriate. However, while some commenters noted that time and
distance standards are not appropriate for SADPs, most commenters
supported the inclusion of dental providers.
Response: Based on prior rates of SADPs' compliance with time and
distance standards and our assessment of the availability of dental
providers against the time and distance parameters finalized in the
2023 Letter to Issuers, HHS anticipates most SADPs and medical QHPs
with embedded dental benefits will be able to meet the standards for
dental providers. If a plan is still working to come into compliance
with network adequacy standards, they will be able to use the
justification process as needed. Consequently, as proposed, HHS will
include dental as a specialty for which compliance with time and
distance standards is assessed.
Comment: Several commenters stated that facility-based providers,
such as physical, occupational, speech, and behavioral health
therapists, should not be included in the individual provider specialty
list for time and distance since some issuers may contract at the
facility level for those services.
Response: For rehabilitation and behavioral health therapists, we
understand that some issuers contract at the facility level rather than
with individual providers. We have decided to include these providers
on the individual provider list because many of these providers offer
services in varied locations and may not be contracted with a single
facility.
Comment: Several commenters made requests related to the
justification process for issuers that do not meet network adequacy
standards, including requests for greater clarity on the process;
requested that HHS adopt a justification process that mirrors Medicare
Advantage's approach to justifications; and requested that HHS ensure
that justifications are not used in
[[Page 27328]]
lieu of issuers contracting with additional providers.
Response: Issuers with network adequacy deficiencies will receive a
partially pre-populated Network Adequacy Justification Form via the
Plan Management (PM) Community and will need to submit the completed
form to the PM Community by the required deadline. The justification
process will require issuers that do not yet meet network adequacy
standards detail: The reasons that one or more standards were not met;
the mitigating measures the issuer is taking to ensure enrollee access
to respective provider specialty types; information regarding enrollee
complaints regarding network adequacy; and the issuer's efforts to
recruit additional providers. HHS will use any updated provider data
submitted on its ECP/NA template and the completed Network Adequacy
Justification Form submitted as part of the certification process to
assess whether the issuer meets the regulatory requirement, prior to
making the certification decision.
HHS reviewed the Medicare Advantage exception process and made the
QHP network adequacy justification process align where it made sense to
do so. HHS has made some distinctions, like using a partially pre-
populated Excel form with information on all needed corrections, rather
than issuers having to complete a separate justification request for
each county/specialty/network combination for which deficiencies are
required. The justification process for QHP network adequacy is
designed to help an issuer demonstrate its progress toward greater
compliance with the standards. HHS will partner with issuers and States
to ensure that the justification process is not used in place of
contracting with additional providers.
Comment: Some commenters also requested that HHS clarify what
provider and facility types count towards certain provider specialty
categories, including dental providers and urgent care. Several
commenters requested greater transparency regarding how compliance with
time and distance standards would be calculated.
Response: In response to requests for additional clarity, further
details on which provider specialty types count towards each time and
distance category; and how compliance with time and distance standards
are calculated, such information will be made available through
materials such as the QHP Application Instructions, the ECP/NA
template, Frequently Asked Questions and the final PY 2023 Letter to
Issuers.
Comment: Several commenters expressed concern about county type
designations. They requested that HHS develop parameters for updating
county type designations; requested that HHS ensure that county type
designations can accurately reflect counties with both rural and
metropolitan areas; and encouraged HHS to monitor the functionality of
county type designations across various types of States, to ensure
meaningful provider availability.
Some commenters shared other suggestions regarding potential
additions to time and distance standards, including requiring issuers
to contract with all ECPs in the service area when provider shortages
prevent the issuer from meeting time and distance standards. A
commenter also suggested HHS consider possible interventions like
provider incentives or transportation programs to assist areas
experiencing provider shortages. One commenter requested that HHS
systematically test network adequacy data submission and require
issuers to provide additional information, like out-of-network claims
data, to enhance HHS' understanding of how consumers are experiencing
QHP networks in practice.
Response: HHS thanks commenters for their feedback regarding county
type designations and possible additions to the time and distance
requirements. HHS will need to further research these suggestions and
their implications before considering them for future rulemaking.
Comment: A commenter encouraged HHS to require issuers to make
telehealth psychiatry services available when Advanced Practice
Registered Nurses (APRNs) are counted towards the Outpatient Clinical
Behavioral Health category regardless of whether they are psychiatric
APRNs.
Response: In the ECP/NA template, HHS will detail which taxonomy
codes will crosswalk into each individual provider and facility
specialty type. For Outpatient Clinical Behavioral Health, only
psychiatric APRNs would count towards this provider type; other APRNs
are not included.
iii. Appointment Wait Times
For the certification cycle for PYs beginning in 2023, HHS proposed
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 proposed 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.
HHS proposed that 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 16 must be
appropriately licensed, accredited, or certified to practice in their
State, as applicable, and must have in-person services available.
[GRAPHIC] [TIFF OMITTED] TR06MY22.015
[[Page 27329]]
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 proposed 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, 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 proposed
to codify the network adequacy justification process in regulation at
Sec. 156.230.
HHS sought 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 sought 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.
We are finalizing this policy as proposed and delaying the
implementation of network adequacy reviews for appointment wait time
standards until PY 2024.
We summarize and respond to public comments received on this policy
below.
Comment: Many commenters from a variety of stakeholders supported
the proposal to institute appointment wait time standards to assess the
adequacy of provider networks. Other commenters suggested additions to
and refinement of the list of categories for appointment wait time
standards. Some commenters requested that the Primary Care (Routine)
category apply to routine dental services, such as cleanings. Several
commenters requested that HHS create separate appointment wait time
standards for different levels of urgency, such as routine, urgent, and
emergent, as well as discharge follow-up. One commenter requested that
HHS apply appointment wait time standards to all individual providers
and facility types. Other commenters suggested separate appointment
wait time categories for substance use disorder treatment services,
oncology specialties, urgent care, family planning providers, and
sexual health care providers. One commenter encouraged HHS to partner
with patient groups to further refine appointment wait time standards.
Response: HHS agrees that implementing quantitative appointment
wait time standards for network adequacy has multiple benefits,
including helping ensure that QHP enrollees have timely access to care.
We appreciate the feedback suggesting additions to and refinement of
the list of categories for appointment wait time standards. HHS may
pursue additional strategies to evaluate the appropriateness of
appointment wait time standards for a variety of provider types. HHS
also may engage with consumer groups on this topic as suggested in
public comment for future policymaking. HHS will further assess these
suggestions and consider them for future rulemaking.
Comment: Many commenters encouraged HHS to conduct additional
oversight of provider networks throughout the year (outside of QHP
certification), using strategies such as direct testing and monitoring
of appointment wait times, to ensure enrollees have reasonable access
to providers. One commenter requested that HHS consider providing
funding for one entity in each State to conduct ongoing monitoring of
appointment wait times.
Response: HHS is investigating approaches to monitor network
adequacy outside of the QHP certification process. We appreciate
commenters' suggestions on possible methods for additional oversight
and will assess further prior to future rulemaking.
Comment: Some commenters suggested that appointment wait time
standards be calculated using business days instead of calendar days to
align with NCQA standards, some State network adequacy standards, and
common business practices.
Response: Draft parameters for appointment wait time standards were
detailed in the draft PY 2023 Letter to Issuers.\314\ HHS agrees that
aligning appointment standards with NCQA and some State network
adequacy standards by using business days instead of calendar days will
help minimize the burden and is reasonable given that many providers
operate using business days. This change will be finalized in the final
PY 2023 Letter to Issuers.
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\314\ 2023 Letter to Issuers in the Federally-facilitated
Exchanges. CMS. (2022, January 7). https://www.cms.gov/files/document/2023-draft-letter-issuers-508.pdf.
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Comment: Some commenters opposed the implementation of the proposed
appointment wait time standards, stating that the standards may be too
dynamic, non-standardized, and beyond the control of issuers (and
sometimes providers, particularly given the context of the COVID-19
pandemic). Some commenters expressed concern that the data collection
required for the appointment wait time standards would be burdensome
for issuers and providers, and they suggested possibly delaying the
implementation of such standards to PY 2024 or beyond.
Response: HHS acknowledges that some stakeholders have concerns
about the appointment wait time standards and the timeline for their
implementation, including that appointment wait time requirements are
not standardized, can be challenging for issuers to improve, and that
data collection would be too burdensome. In recognition of those
concerns, we have made several accommodations to the implementation of
this new provision to ease the transition to this new standard. As
noted above, HHS is finalizing appointment wait time standards, but
delaying their implementation until PY 2024. HHS will also align the
appointment wait time standards with appointment wait time standards
used by NCQA and some States by using business days instead of calendar
days.
Regarding concerns that appointment wait time requirements are not
standardized, specific draft parameters for appointment wait times are
described in the draft PY 2023 Letter to Issuers \315\ and will be
finalized in the final PY 2023 Letter to Issuers. The ECP/NA template
\316\ shows which provider types crosswalk into which appointment wait
time categories. We believe that the appointment wait time parameters
are reasonable based on
[[Page 27330]]
existing industry standards, such as those from NCQA and some States.
---------------------------------------------------------------------------
\315\ 2023 Letter to Issuers in the Federally-facilitated
Exchanges. CMS. (2022, January 7). https://www.cms.gov/files/document/2023-draft-letter-issuers-508.pdf.
\316\ Draft ECP/NA template: Essential Community Providers and
Network Adequacy. CMS. https://www.qhpcertification.cms.gov/s/ECP%20and%20Network%20Adequacy.
---------------------------------------------------------------------------
Issuers that do not yet meet the appointment wait time standards,
once implemented in PY 2024, can use the justification process to
update HHS on the progress of their contracting efforts for the
respective plan year. HHS will review such justifications to determine
whether the variance(s) described 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. HHS understands that some issuers may not already
collect appointment wait time data, which is one of the reasons we are
delaying the implementation of this requirement until PY 2024. Issuers
that are unable to meet the specified standards would be able to submit
a justification to account for variances.
Comment: Some commenters requested that SADPs either be exempt from
compliance with appointment wait time standards or held to a lower
compliance threshold than the threshold to which medical QHPs are held.
Response: We appreciate the feedback suggesting that SADPs be
exempt from appointment wait time standards or held to a lower
compliance threshold. We do not agree that SADPs should be exempt from
compliance with appointment wait time standards or have a lower
threshold applied than for medical QHPs. HHS believes it is important
that timely access to care is ensured, regardless of plan type.
Additionally, medical QHPs that have embedded dental benefits will be
held to the same appointment wait standards for dental providers as
SADPs. The compliance threshold is detailed in the draft PY 2023 Letter
to Issuers \317\ and will be finalized in the final PY 2023 Letter to
Issuers.
---------------------------------------------------------------------------
\317\ 2023 Letter to Issuers in the Federally-facilitated
Exchanges. CMS. (2022, January 7). https://www.cms.gov/files/document/2023-draft-letter-issuers-508.pdf.
---------------------------------------------------------------------------
Comment: One commenter requested that HHS consider removing the
requirement that providers have in-person services available to count
towards these standards since some behavioral health providers only
offer services via telehealth.
Response: We are aware that some providers only offer services via
telehealth. We acknowledge the growing importance of telehealth, and we
want to ensure that telehealth services do not displace the
availability of in-person care. Consequently, we are finalizing that,
to count towards the standards, providers must have in-person services
available. Providers that do not have in-person services available will
not be counted when assessing appointment wait times.
Comment: A commenter requested that appointment wait time standards
should be overridden by provider assessment of when it would be
appropriate for the enrollee to access care.
Response: We appreciate the suggestion that appointment wait time
standards should be overridden by provider assessment of when it would
be appropriate for the enrollee to access care. We will further assess
this idea prior to considering it for future rulemaking.
Comment: A commenter requested that HHS allow issuers the
opportunity to conduct outreach to providers and reassess appointment
wait time measurement when they are not meeting the appointment wait
time standards before any enforcement action would occur.
Response: We acknowledge the commenter's concern that issuers might
be subject to enforcement action for not meeting appointment wait time
standards without having the opportunity to come into compliance. HHS
will work in partnership with issuers who are not yet meeting network
adequacy standards and support their efforts to come into compliance as
part of issuer compliance monitoring and workplans.
Comment: Some commenters requested more clarity, such as what
provider types are included in the behavioral health category for
appointment wait time standards, and how appointment wait time
standards apply to dental providers. Commenters also inquired as to
whether the standards apply to appointments for existing patients, new
patients, or both. Some commenters requested additional insight
regarding methodological ambiguities related to the appointment wait
time standards, including what period of time the standards will be
based on, how the parameters of appointment wait time are defined, how
to account for seasonality, and how to best validate this data.
Response: The provider types that filter into the Behavioral Health
category for appointment wait time standards will be detailed in the
Taxonomy Codes tab of the ECP/NA template.\318\ For clarification on
how appointment wait time standards apply to dental providers, all
dental providers--general dentists and specialists--would be included
in the Specialty Care category. Appointment wait time standards apply
to both new and existing patients. In response to all other requests
for additional clarity on the appointment wait time standards,
including information on methodology, we will provide further
information in the QHP Application Instructions, the ECP/NA template,
Frequently Asked Questions, and the final PY 2023 Letter to Issuers.
---------------------------------------------------------------------------
\318\ Draft ECP/NA template: Essential Community Providers and
Network Adequacy. CMS. https://www.qhpcertification.cms.gov/s/ECP%20and%20Network%20Adequacy.
---------------------------------------------------------------------------
In the proposed rule, HHS solicited comments on other ideas to
strengthen network adequacy policy in future years and other aspects of
QHP certification that impact health equity.
Comment: Several commenters suggested other ideas to strengthen and
expand network adequacy policy in future years. Many commenters shared
requests related to access to providers with certain competencies,
skills, or specializations. Several commenters requested HHS consider
standards that ensure a network provides an adequate supply of
culturally and linguistically competent providers, and they requested
that HHS have QHPs collect and display languages spoken by providers
and their staff. Some commenters requested that HHS require that QHPs
ensure access to providers who serve enrollees with rare, complex, or
chronic health conditions, and providers who are culturally competent
to serve LGBTQ+ individuals.
We received several comments requesting that we consider a
requirement for QHPs to track the number of providers accepting new
patients throughout the year, and one request to have QHPs collect
information on provider hours of operation. Some commenters requested
that HHS collect and share data on provider demographics and report
provider accessibility by public transit.
Some commenters suggested provider-enrollee ratios as an additional
network adequacy standard to consider for future rulemaking. Several
commenters were in favor of HHS developing unique standards for
pediatric specialty providers and implementing enrollee ratios by
specialty, geographic accessibility, and population density. Some
commenters also requested that HHS define minimum appropriate provider
standards to meet the needs of children with special health care needs
as well as of diverse cultural, ethnic, and
[[Page 27331]]
linguistic backgrounds. One commenter suggested HHS consider requiring
issuers to report on the number of psychiatric providers and outpatient
clinical behavioral health providers who have billed for services
within a certain timeframe. Other commenters requested HHS measure the
availability of integrated behavioral health in primary care.
Commenters encouraged the consideration of requiring issuers to
report data by race and ethnicity on the population living in
geographic areas that do not have access to providers within travel
time and distance standards. Another commenter requested that HHS
include auxiliary aids and services for people with disabilities, as
well as data on the accessibility of all providers and facilities, in
future network adequacy standards. One commenter requested that quality
rating system measures be tied to network adequacy standards. Another
commenter requested that provider non-discrimination policies be
included in future rulemaking.
Response: HHS appreciates the suggestions on potential ways to
enhance and grow network adequacy standards in the future. We will
further assess these ideas prior to considering them for future
rulemaking.
Comment: HHS also received numerous comments regarding suggestions
for future rulemaking related to consumer protections. Many commenters
requested further clarity on how QHPs can ensure enrollees can access
care when not available in-network for their specific needs, which
would include covering out-of-network providers at in-network cost
sharing rates if a qualified provider is not available within the
network or at the lowest cost-sharing tier. Some commenters also
requested a clear complaint process for enrollees to report network
adequacy issues. HHS received a comment requesting that QHP issuers be
required to pay for interpretation services and auxiliary aids for
contracted providers. Another commenter requested that HHS detail the
actions that are taken when QHPs fail to meet network adequacy
standards. Some comments received requested HHS consider the
implications of MHPAEA on network adequacy standards.
Response: HHS appreciates the suggestions on potential ways to
strengthen consumer protection through enhanced network adequacy
standards in the future. We will further assess these ideas prior to
considering them for future rulemaking.
Comment: HHS received some suggestions related to provider
availability, such as requirements for issuers to provide reasonable
notice of terminations of a provider's in-network status and allowing
the ability for enrollees to change plans when provider availability in
a network changes significantly.
Response: We acknowledge the suggestions related to provider
availability, such as requirements for the issuer to provide reasonable
notice of provider terminations. These recommendations also implicate
provisions enacted in sections 113 and 116 of the No Surprises
Act.\319\ These provisions of No Surprises Act establish continuity of
care protections \320\ in instances when terminations of certain
contractual relationships result in changes in provider or facility
network status and establish standards intended to protect
participants, beneficiaries, and enrollees, such as a protocol for
responding to requests about a provider's network participation status.
HHS, along with the Departments of Labor and the Treasury, intends to
issue future rulemaking or guidance to further implement those
provisions, and will take these comments into account in developing
such materials.
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\319\ The Consolidated Appropriations Act, 2021 (CAA) was
enacted on December 27, 2020 and includes Title I (No Surprises Act)
in Division BB.
\320\ Section 9818 of the Code, section 718 of ERISA, and
sections 2799A-3 and 2799B-8 of the PHS Act, as added by section 113
of division BB of the Consolidated Appropriations Act, 2021 (CAA)
establish continuity of care protections in instances when
terminations of certain contractual relationships result in changes
in provider or facility network status. The Departments of HHS,
Labor and Treasury have announced that until rulemaking is completed
to fully implement these provisions, plans, issuers, providers, and
facilities are expected to implement the requirements using a good
faith, reasonable interpretation of the statute. See FAQs about
Affordable Care Act and Consolidated Appropriations Act, 2021
Implementation Part 49, https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/FAQs-Part-49.pdf.
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Comment: Some commenters shared feedback regarding the network
breadth pilot, including both concern and support. HHS received some
comments expressing that the network breadth pilot should not be
continued in its current State. One commenter shared that the network
breadth pilot is made more useful to consumers by using the actual
percent participation value, prohibiting issuers from marketing plans
based on the breadth categories, and allowing issuers to submit network
adequacy data on machine-readable files. Some comments suggested that
the network breadth methodology and labels be clarified as they can be
confusing to consumers. HHS received one comment asking that the
methodology be modified so that providers are not excluded based on
taxonomies in the National Plan & Provider Enumeration System (NPPES)
and that special types of PCPs are more appropriately documented. Some
comments expressed support for the continuation of the network breadth
pilot with its current labels.
Response: Although these comments were not within the scope of HHS'
proposals on network adequacy presented in the proposed rule, HHS
appreciates the comments received regarding the network breadth pilot.
We will consider the above suggestions for future rulemaking after
further assessment.
iv. Tiered Networks
HHS proposed 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 the use of PPO network providers would
result in higher cost-sharing obligations for the 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 proposed 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 sought 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.
After considering commenter concerns that the policy could unduly
restrict plan network designs and innovation, we have decided not to
finalize this policy. While we continue to believe this proposal has
potential consumer protection benefits and would promote greater cost-
sharing affordability, further research is warranted to evaluate the
potential
[[Page 27332]]
benefits and drawbacks of requiring providers to be contracted within
the network tier that results in the lowest cost-sharing obligation in
order for those providers to be counted towards satisfaction of the
network adequacy standards.
We summarize and respond to public comments received on this policy
below.
Comment: HHS received numerous comments in support of the proposal
that for plans that use tiered networks, to count towards network
adequacy standards, providers must be contracted within the network
tier that results in the lowest cost-sharing obligation. However,
several commenters broadly opposed or cautioned against the lowest
cost-sharing tier requirement, citing concerns that it would restrict
the success of network innovation strategies, such as value-based
steering and contracting arrangements, or encourage issuers to remove
the lowest cost-sharing tier entirely.
Response: We agree with commenters who supported the proposal as we
concur that the proposal could help ensure that network adequacy
standards provide reasonable access to care and help enhance health
equity by enabling enrollees to access care at the lowest cost-sharing
rate. Notwithstanding, we understand commenters' concerns that
finalization of this policy could inadvertently restrict innovation and
the issuers' ability to design and implement plan networks across all
Exchange plans, which may result in decreased cost sharing for
enrollees and decreases in overall health care costs. While we believe
this proposal has potential benefits to consumer protection and
affordability for cost sharing, we believe further research on the
potential benefits and drawbacks is warranted prior to finalizing such
a proposal.
Comment: One commenter suggested that a lower-cost virtual primary
care option should not be considered a ``lowest tier.''
Response: While we are not finalizing this proposal regarding
network tiering, we will consider this suggestion for future
rulemaking.
Comment: Another commenter expressed that the network tiering
requirement would not be appropriate for SADPs as tiered networks are
uncommon for this plan type.
Response: We acknowledge that network tiers may be less common
among SADPs. While we are not finalizing this proposal, we do not agree
that any future network tiering requirements should not apply to
SADPs--they simply would not be relevant for the particular QHPs
(medical or SADPs) that do not use network tiers.
v. Telehealth Services
HHS proposed 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 proposed 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 the 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.
HHS sought comment on this proposal, including comments on how HHS
might incorporate telehealth availability into network adequacy
standards in future PYs. We specifically sought 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 for meeting time and distance standards.
We are finalizing this policy as proposed.
We summarize and respond to public comments received on this policy
below.
Comment: Commenters expressed widespread support regarding the
proposal to require issuers to identify which of their in-network
providers offer telehealth services. Commenters also suggested
additional telehealth information to consider collecting, like the
availability of tele-mental health services and audio-only services, as
well as tracking prescription digital therapeutics.
Response: HHS appreciates the comments received in support of the
requirement for QHPs to report whether their in-network providers offer
telehealth services. We agree that this data collection will be
relevant to HHS' analysis of whether a QHP meets network adequacy
standards and will help inform the future development of telehealth
standards. We appreciate the suggestions regarding additional
telehealth-related information that HHS could collect and will consider
this for future rulemaking.
Comment: Some commenters requested that HHS either not require
issuers to report telehealth service availability or delay the
implementation of this requirement. These commenters expressed concern
that collecting and reporting telehealth capability would be overly
burdensome for issuers and premature given the evolving nature of
telehealth. One commenter suggested that telehealth data collection be
delayed until a Federal database of provider telehealth availability is
created. Several commenters requested that HHS minimize the burden
related to telehealth data collection as much as possible, including
one who suggested that State-level efforts might be able to be
repurposed to gather this information. Some commenters stated that
telehealth data collection and reporting is not appropriate for SADPs
since telehealth is a newer modality for dental providers and the data
collection and reporting may not lead to helpful insights at this time.
One commenter suggested that HHS should incentivize QHPs to increase
telehealth availability among their contracted providers as a benefit
design rather than through network adequacy requirements.
Response: We understand some commenters are concerned about the
implementation of telehealth data collection, including the timeline,
due to the increased burden for issuers and that telehealth services
are still evolving. HHS acknowledges that some commenters believe
telehealth data collection is not appropriate for SADPs at this time
due to the newness of tele-dentistry. We recognize that some QHPs may
not have data available on whether their contracted providers offer
telehealth and that for those QHPs, this data collection may result in
an increased burden. Simultaneously, we understand that some QHPs may
already have this information available through sources like provider
surveys or claims data. While telehealth services continue to evolve
for many specialties, including dental providers, we believe that
collecting telehealth availability data at this point in time will
provide key insights that can influence future policy development, and
that these benefits outweigh the associated potential burden for some
QHPs. We will work to minimize the burden where possible, like by
providing technical assistance to issuers and allowing issuers
flexibility with what methods they use to collect telehealth data.
Comment: Many commenters expressed that more research is needed to
understand whether and how to count telehealth providers towards
network adequacy standards. Numerous
[[Page 27333]]
commenters identified additional considerations for incorporating
telehealth into network adequacy standards, such as inequities for
rural and low-income providers, health plan location, broadband access,
and variation in types and requirements of telehealth between providers
and States. These commenters also emphasized that the appropriateness
of telehealth should be a decision made between the patient and
provider and that telehealth should not expand at the expense of
available in-person care.
Several commenters shared suggestions with HHS regarding possible
additional requirements related to telehealth services. Some commenters
requested that we consider offering a telehealth credit for network
adequacy standards, similar to Medicare Advantage. Some commenters
stated telehealth standards and policies should ensure access to
culturally, linguistically competent providers who can serve consumers
with disabilities and should also increase access in low-income and
geographically remote regions. One commenter encouraged HHS to adopt a
separate national network adequacy standard for telehealth providers.
Some commenters requested that HHS ensure telehealth information is
reported promptly and that telehealth information is included in
provider directories. One commenter suggested that HHS consider
requiring QHPs to contract with telehealth services in areas where
there are shortages of in-person providers.
Response: We concur with the recommendations from commenters that
more research is needed before HHS could consider incorporating the
availability of telehealth services into network adequacy policy for
QHPs, such as a telehealth credit like Medicare Advantage. We also
agree that telehealth services should be made available in addition to,
rather than instead of, in-person care. HHS appreciates the suggestions
received regarding additional requirements for telehealth services and
other telehealth-related information that HHS could collect from QHPs.
We will consider this information for future rulemaking. We thank
commenters for their ideas about other ways to collect telehealth data,
like a partnership with States, through a Federal database on
telehealth or encouraging telehealth services through other means. We
will consider these ideas for future rulemaking.
vi. Solicitation of Comments--Unintended Impacts of Stronger Network
Adequacy Standards
HHS is of the view that the network adequacy standards we included
in the proposed 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.
We sought comment 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.
We summarize and respond to the comments received below.
Comment: Numerous commenters expressed diverse viewpoints regarding
potential unintended impacts of stronger network adequacy standards.
Several commenters expressed their belief that stronger network
adequacy standards would not impact contracting negotiations between
issuers and providers. Two commenters shared concerns that the proposed
network adequacy standards could disproportionately harm smaller QHP
issuers and reduce market competition. A commenter expressed
apprehension that appointment wait time standards could be codified in
provider contracting agreements and particularly harm providers that
are in highest demand. Another commenter stated that the stronger
network adequacy standards could help mitigate declining provider
reimbursement rates. One commenter encouraged consideration of a
requirement for issuers to offer at least one QHP Statewide for each
metal level at which they offer coverage to mitigate the risk of
network adequacy standards disincentivizing QHP issuers from offering
plans in rural counties. HHS received another comment asking us to
consider potential cost implications of including specialized cancer
providers in network adequacy requirements.
Some commenters requested that HHS not enact prohibitions against
all-or-nothing contract clauses or steerage prohibitions, sharing
concerns that such policies could limit enrollee access to providers.
Another commenter encouraged HHS to consider regulation to eliminate
all-or-nothing contract clauses, while a separate commenter expressed
that they did not anticipate prohibition of all-or-nothing contract
clauses would sufficiently protect plans from unintended consequences
of network adequacy standards. One commenter suggested that any future
regulation regarding restrictions on contracting terms should only be
applied to provider types that would benefit from the network adequacy
standards. One commenter shared that they had experienced regional
struggles with all-or-nothing contract clauses in the context of QHPs
and offered a further discussion on what they learned.
Response: HHS understands that stakeholders have a variety of
opinions regarding the impact of stronger network adequacy standards,
as well as all-or-nothing contracting clauses. We appreciate the
feedback received and will consider it in future rulemaking.
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 was not 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 considered
whether there is a need for greater alignment in FFE and State Exchange
network adequacy standards.
HHS sought comment on whether a more coordinated, national approach
to network adequacy rules across all Exchanges that is suited to
address contemporary conditions in the health care markets is needed.
For example, we sought 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
[[Page 27334]]
network adequacy across the Exchanges. Moreover, we sought 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 sought 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.
We summarize and respond to the comments received below.
Comment: Commenters had mixed feedback on whether HHS should
regulate network adequacy for all Exchanges, including setting
standards and conducting reviews for QHPs in State Exchanges. Many
commenters requested that regulators of State Exchanges be allowed to
continue using their network adequacy standards and conducting their
reviews. Some commenters suggested that HHS direct State network
adequacy reviews, rather than conducting separate Federal reviews, to
avoid duplication since some States have mandates to review network
adequacy. Some commenters emphasized the importance of having only one
applicable set of network adequacy standards per State. One commenter
suggested that Federal network adequacy standards are not needed, as
they stated was evidenced by high consumer satisfaction and consumer
selection of narrow network plans. Many commenters requested that HHS
extend Federal network adequacy standards to State Exchanges in future
rulemaking. Several commenters suggested that State alignment with
Federal standards would be ideal, and that Federal standards should
offer a strong floor that all States must meet.
Response: We appreciate the comments received and understand that
there are diverse opinions regarding the appropriate regulator for
network adequacy standards in State Exchanges. HHS will monitor
existing network adequacy standards in State Exchanges relative to the
Federal standards finalized in this rule and will consider whether
application to State Exchanges in future PYs is warranted.
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 the inclusion of ECPs in QHP provider networks and provides an
alternate standard for issuers that provide a majority of their covered
professional 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 proposed
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, of
available ECPs in the plan's service area. HHS proposed 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, in addition to satisfying the contract offering requirements
described in Sec. 156.235(a)(2)(ii) that require a plan to offer a
contract to at least one ECP in each of the available ECP categories in
each county in the plan's service area and offer a contract to all
available Indian health care providers in the plan's service area. 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.
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. 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 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 proposed 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 the 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 proposed to codify the network tiering
requirement for satisfying the ECP standard in regulation at Sec.
156.235.
Additionally, for PY 2023 and beyond, HHS proposed that issuers
could comply with the requirement at Sec. 156.235(a)(2)(ii)(B) to
offer 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 also considered 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
[[Page 27335]]
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 solicited 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 sought 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 sought 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 sought comment on
these proposals, including from ECPs and issuers serving low-income and
medically underserved populations. HHS also sought comment on ideas for
further strengthening ECP policy.
After reviewing the public comments, we are finalizing all
provisions as proposed. Additionally, in response to comments we
solicited on whether and how to clarify the ``Other ECP Providers''
requirement, we have amended the regulatory text at Sec.
156.235(a)(2)(ii)(B) to clearly define the ``Other ECP Providers''
category, as follows:
At least one ECP in each of the six (6) ECP categories in each
county in the service area, where an ECP in that category is available
and provides medical or dental services that are covered by the issuer
plan type. The ECP categories are Federally Qualified Health Centers,
Ryan White Program Providers, Family Planning Providers, Indian Health
Care Providers, Inpatient Hospitals, and Other ECP Providers. The Other
ECP Providers category includes the following types of providers:
Substance Use Disorder Treatment Centers, Community Mental Health
Centers, Rural Health Clinics, Black Lung Clinics, Hemophilia Treatment
Centers, Sexually Transmitted Disease Clinics, and Tuberculosis
Clinics.
We summarize and respond to public comments received on essential
community providers (Sec. 156.235) below.
Comment: The majority of commenters supported increasing the
required ECP participation standard from 20 percent to 35 percent of
available ECPs in the plan's service area that are included within the
applicable plan year HHS ECP list, citing expanded access to health
care for vulnerable populations and improved health equity. Several of
these commenters indicated that HHS should require QHPs to demonstrate
that they can meet the 35 percent participation threshold in all ECP
categories, or in specific categories such as Substance Use Disorder
Treatment Centers, Ryan White providers, hospitals, and each
subcategory of ``Other ECP Providers''; while other commenters
suggested that HHS implement an ``any willing provider'' standard.
Response: We are finalizing the required ECP participation standard
at 35 percent as proposed. Many commenters, including providers,
provider associations, and consumer advocacy groups, supported the
proposal to raise the ECP participation standard from 20 percent to 35
percent. In response to suggestions that HHS require QHPs to contract
with 35 percent of the ECPs as applied to each of the specific
categories of ECPs, HHS continues to require QHPs to contract with at
least one ECP within each of the six ECP categories in each county in
the issuer's service area and believes the current approach better
ensures geographic distribution of such ECPs in each of the six ECP
categories across the issuer's service area than applying the 35
percent threshold to each of the six ECP categories would achieve.
Regarding commenters' recommendations that HHS apply a 35 percent
threshold standard to each of the six ECP categories and/or implement
an ``any willing provider'' standard, HHS recognizes that issuer
network participation negotiations are a tool that issuers use to
manage costs, which are generally reflected in lower premium rates.
Reducing issuers' ability to limit the scope of their networks could
eliminate that cost management tool and potentially cause premiums to
increase substantially; therefore, we do not support these
recommendations at this time.
Comment: While agreeing with the proposed increase to 35 percent,
numerous commenters cautioned against a one-size-fits-all approach to
ensure there are enough ECPs in all networks. Some commenters stated
that a fixed percentage for all QHPs may not be sufficient to achieve
the desired goal due to geographic areas varying in demographic
composition, including the difficulty of meeting the 35 percent
participation standard in rural areas. Some commenters stated that this
standard could deter issuers from entering service areas with few ECPs.
Response: In response to concerns raised about potential
difficulties meeting the increased standard in rural areas and other
geographic areas that vary in demographic composition that can lead to
the presence of few ECPs, section 1311(c)(1)(C) of the Affordable Care
Act requires that a QHP's network include ECPs, where available, that
serve predominantly low income and medically-underserved populations.
We reflect this in our regulations by permitting issuers that cannot
meet the contracting standards to satisfy the QHP certification
standard by submitting a justification. Therefore, the standard does
not penalize issuers that cannot meet the ECP standard because of a
lack of certain types of ECPs within a service area.
Comment: Several commenters opposed the increase of the required
ECP provider participation standard from 20 percent to 35 percent of
available ECPs in the plan's service area included within the
applicable plan year HHS ECP list. These commenters expressed concern
about the increased administrative burden and cost that the raised
threshold would place on issuers and providers. A few commenters
pointed out unintended negative consequences that could arise from the
increased standard, including price increases for consumers. Some
commenters recommended delaying any threshold increase until the 2024
plan year or implementing a more moderate increase for the 2023 plan
year, from 20 to 25 percent, to account for this increased burden.
Response: Regarding commenters' concerns about the increase of the
ECP threshold to 35 percent, we do not anticipate the majority of
issuers having difficulty meeting the increased standard. For the plan
year 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 contracting
percentage across all FFE issuers was 55 percent and 54 percent,
respectively. Given that during the 2015-2017 plan years, all issuers
satisfied the 30 percent standard when permitted to supplement their
QHP applications with ECP write-ins and justifications, CMS anticipates
that any issuers falling shy of the 35 percent threshold for the 2023
plan year could satisfy the standard by relying on these same methods
of compliance. Given issuers' success with meeting the
[[Page 27336]]
30 percent standard in previous plan years, HHS believes that the 35
percent standard will provide both issuers and providers with
sufficient flexibility to negotiate contract terms that do not lead to
increased prices for consumers. Accordingly, as we do not anticipate
that compliance with this increased threshold will be too large a
burden for issuers to meet for plan year 2023, we decline to delay
implementation.
Comment: The majority of commenters supported the proposal to
require QHPs with tiered networks to meet the ECP threshold in the
lowest cost-sharing tier. One commenter noted that plans' preferred
tiers often have providers that agree to accept more favorable rates
and provide additional services such as coordinating care. The
commenter stated that such plans should not be placed at a disadvantage
for placing ECPs on a second general tier with providers that do not
offer additional services.
Response: We are finalizing this provision as proposed. We intend
to monitor consumer complaints regarding any potential disadvantages
that could result from this requirement; however, we anticipate the
benefit of the lowest cost-sharing tier requirement for low-income,
medically underserved consumers, such as ensuring that these consumers
can access an ECP provider offering essential health benefits through
more affordable cost-sharing, to outweigh any disadvantages incurred by
plans due to their choice of tiering structure.
Comment: In response to HHS' solicitation for comments on
clarifying which providers may fit the category of ``Other ECP
Providers'' in the regulatory text, two commenters recommended that HHS
define the ECP category of ``Other ECP Providers'' in the regulatory
text. Numerous commenters supported the addition of ``Substance Use
Disorder Treatment Centers'' to the ``Other ECP Providers'' ECP
category, including provider associations and advocacy groups. One
commenter opposed the addition of Substance Use Disorder Treatment
Centers to the ``Other ECP Providers'' ECP category, citing variability
in the quality, oversight and services provided at such centers;
another commenter noted HHS should explore how it will define
``substance use treatment centers'' and allow stakeholders additional
time to comment prior to adding to the ``Other ECP Providers'' ECP
category.
Response: In response to these comments recommending that we
clarify the meaning of the ECP category of ``Other ECP Providers,'' we
are amending Sec. 156.235(a)(2)(ii)(B), as referenced in the preamble.
The provider types that we have included in the ECP category of ``Other
ECP Providers'' reflect, for the most part, those that have been listed
within this ECP category in the Letter to Issuers in previous years and
with whom many issuers have already been including in their provider
networks. The only new provider type that we are adding to this ECP
category of ``Other ECP Providers'' is Substance Use Disorder Treatment
Centers. We are adding Substance Use Disorder Treatment Centers to the
ECP category of ``Other ECP Providers'' as proposed. HHS will rely on
the Substance Use Treatment Locator (https://findtreatment.gov/) made
available by the Substance Abuse and Mental Health Services
Administration (SAMHSA) to identify such treatment centers providing
quality care to the consumers that they serve. This addition of
Substance Use Disorder Treatment Centers effectively gives issuers an
additional provider type by which they can satisfy the contract
offering requirement for the ECP category of ``Other ECP Providers'' in
each county in their service area. In some counties or service areas,
depending on which types of ECPs are available, HHS acknowledges that
this addition could decrease the chance that an issuer would choose to
contract with another provider type grouped under the ``Other ECP
Providers'' ECP category, but it is our opinion that adding this new
category outweighs that potential effect because it is critically
important to ensure access to SUD treatment to all consumers who
require such treatment. Additionally, we note that issuers may increase
access to a variety of providers by contracting with more than one
available ECP per ECP category, including ``Other ECP Providers,'' in
each county in their service area if they choose to do so.
Comment: Several commenters suggested that we disaggregate
hemophilia treatment centers and behavioral health providers from the
``Other ECP Providers'' category and create new ECP categories for
freestanding birth centers and for providers that are essential to
specialized cancers such as brain tumors.
Response: In previous years, we have considered such
recommendations to disaggregate provider types included in the ``Other
ECP Providers'' ECP category and creating a separate ECP category for
each, in addition to creating a separate ECP category for freestanding
birth centers; however, because our analysis of the available ECPs in
each of these ECP subcategories continues to indicate that there are
too few ECPs within each of these provider types appearing on our ECP
list to afford issuers sufficient flexibility in their contracting, we
will not be disaggregating these subcategories of providers or creating
new ECP categories at this time. While we may revisit this
consideration in the future, we encourage QHP issuers to include in
their networks these additional providers to best meet the needs of the
populations they serve.
Comment: Two commenters recommended that HHS should improve the
overall accuracy of the HHS ECP List.
Response: HHS has recently launched a monthly provider outreach
initiative that automatically notifies providers on the HHS ECP List
that they should revisit the online ECP petition to verify the accuracy
of their data if they have not refreshed their provider data in over 12
months. Additionally, HHS has recently programmed additional validation
checks within its online ECP petition to better ensure that only
qualified providers can petition for inclusion on the HHS ECP List.
Furthermore, HHS, through its operating divisions HRSA, SAMHSA, and
along with other entities, continues to verify the operating status and
qualifications of providers for inclusion on the HHS ECP List to help
ensure that the number and types of providers to which issuers are held
to contracting to satisfy the ECP standard reflect an accurate universe
of qualified ECPs that are available within the issuer's respective
service area.
Comment: One commenter suggested that HHS should require QHPs to
comply with ECP standards throughout the coverage year and report any
material change in their ECP contracts to ensure that at no time their
network falls below the ECP participation standard. Several commenters
suggested HRSA's HIV/AIDS Bureau monitor and enforce contracting
requirements for Ryan White HIV/AIDS Program Providers.
Response: We appreciate commenters' suggestions on how to better
monitor issuers' compliance with the ECP standard throughout the plan
year and will consider different methods of enforcing compliance with
the ECP standard in future plan years.
Comment: One commenter suggested that HHS include regulatory
language specifying that good faith contract terms must include all of
the services the plan covers and that the provider offers and include
reimbursement at generally applicable payment rates; another suggested
that HHS require QHPs to contract with ECPs at a reimbursement level no
lower than the established rate
[[Page 27337]]
at which they are compensated under Medicaid or Medicare to ensure that
ECPs have a financial incentive to participate. Another commenter
requested that HHS include in guidance that health systems contract
with ECPs separately.
Response: Comments on good faith contract terms and reimbursement
rates are out of the scope of this rule. However, we expect issuers to
comply with existing regulatory provisions \321\ and sub-regulatory
guidance \322\ that may apply to these topics.
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\321\ 45 CFR 156.235(d) and (e).
\322\ 2018 Letter to Issuers in the Federally-facilitated
Marketplaces (2017, February 17). CMS. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-2018-Letter-to-Issuers-in-the-Federally-facilitated-marketplaces-and-February-17-Addendum.pdf.
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Comment: One commenter recommended that HHS eliminate QHP issuers'
option to submit a narrative justification that describes why they
could not meet the standard but still have a network that is sufficient
to meet the needs of low-income and underserved enrollees.
Response: We appreciate the commenter's recommendation to eliminate
the option for issuers to submit a narrative justification to satisfy
the ECP standard. More information on changes to the ECP justification
process for the plan year 2023, including the format of the
justification and how and where it will be submitted, will be made
available through forthcoming materials, including the QHP Application
Instructions, the ECP/NA template, the ECP Tools, Frequently Asked
Questions, and the Final Plan Year 2023 Letter to Issuers.
Comment: Several commenters recommended that HHS should include
information on which ECPs have telemedicine services available on the
HHS ECP List. One State expressed support for ECPs offering telehealth
services because consumers seeking care in their first language could
benefit from telehealth services provided by ECPs. Several commenters
urged that HHS monitor the use of telehealth services to ensure that
they do not undermine access to care protections. Commenters cautioned
that allowing issuers to meet the ECP participation standard with
telehealth services in lieu of in-person care could improve health care
access in some areas while jeopardizing care quality and exacerbating
health inequities in other areas.
Response: We appreciate commenters' recommendations for integrating
telehealth services into the ECP list. We acknowledge concerns that
telehealth should not be used as a substitute for in-person care. We
will consider these recommendations for adding telehealth services
information to the ECP list in future rulemaking.
13. Standards for Downstream and Delegated Entities (Sec. 156.340)
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 686), we proposed 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. We proposed 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. We refer readers to
the proposed rule for a more detailed discussion of the proposal and
its supporting rationale (87 FR 686 through 687).
After reviewing the public comments, and based on the rationale
provided in the proposed rule and in this rule, we are finalizing the
amendments to Sec. 156.340, as proposed, to clarify and strengthen
requirements holding 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 are also finalizing
the proposal 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.''
We summarize and respond to public comments received on standards
for QHP issuer downstream and delegated entities (Sec. 156.340).
Comment: The commenters expressed support for the proposed
amendments to Sec. 156.340 and lauded its clarification and its
strengthening of oversight standards for QHP issuers toward their
downstream and delegated entities with regard to relevant Exchange
regulations. One commenter stated that they supported the changes
proposed because they clarify that QHP issuers and their downstream and
delegated entities remain responsible for complying with all Federal
requirements, including QHP certification standards, Exchange processes
and procedures, the maintenance of records, and enrollment rules for
agents, brokers, and web-brokers. Another commenter stated the
increased requirements for QHP issuers to hold their downstream and
delegated entities accountable, including the increased record-keeping
requirements, are essential to hold QHP issuers accountable for meeting
applicable federally-defined performance standards and without that
accountability, issuers could evade those standards by delegating
duties to other entities which could avoid accountability by ``neither
maintaining records, nor reporting data showing compliance''.
Response: We appreciate the support for the proposed amendments to
Sec. 156.340 and the accompanying clarification of the standards
applicable to QHP issuers and their downstream and delegated entities
in all Exchange models. These comments articulate the reasons behind
the decision to make the amendments and clarifications to the 156.340.
Moreover, these supportive commenters describe the scenario the changes
are intended to prevent or mitigate: Evasion by issuers of applicable
Exchange requirements by the delegation of duties to entities otherwise
capable of avoiding accountability. By codifying a regulatory
requirement that holds QHP issuers in all Exchange models responsible
for compliance with Exchange requirements by their downstream and
delegated entities, the appropriate Exchange authority can ensure
compliance with applicable requirements and hold issuers accountable
for their actions and the actions of their downstream and delegated
entities in situations of non-compliance.
Comment: Several commenters were not supportive of the proposal and
objected to the language as it pertains to the record retention
requirement in the new paragraph (b)(5) as overly broad. These
commenters expressed concern that the proposed new record retention
requirement in Sec. 156.340(b)(5) appeared to give HHS access to
``virtually all data and information,'' including consumer data
maintained by the downstream and delegated entities, and that it would
[[Page 27338]]
enable HHS to go on a ``fishing expedition'' for information unrelated
to Exchange activity. One commenter suggested the proposed requirement
in new paragraph (b)(5) would place ``undue burden'' on downstream and
delegated entities and also echoed the perception that it provides HHS
with ``unyielding authority'' to request information from them, but did
not otherwise quantify or further define these concerns. Some
commenters also requested additional guidance about the types of
information downstream and delegated entities would have to provide,
and generally requested modification of the regulatory language in new
paragraph (b)(5) to be more specific and limited in scope. Several
commenters made general requests that the documents and systems to
which the relevant authority may request access pursuant to the
downstream and delegated entity's Exchange activities be limited
without providing examples. One commenter requested an exception to
permit downstream and delegated entities to challenge requests that
would be ``commercially impracticable.'' The commenter also requested
the language in paragraph (b)(5) be limited to requests and information
that are of such vital importance to Exchange operations that the
Exchange could not operate without the disclosure. The commenter did
not include data or information to support these assertions, describe
what constituted ``commercially impracticable'' requests, or provide
examples of what would constitute an instance that might be of such
vital importance to Exchange operations.
Response: We respectfully disagree with the comments suggesting the
language required in Exchange agreements between QHP issuers and
downstream and delegated entities by new paragraph (b)(5) expands HHS'
authority to demand information, making it unlimited in scope and
imposing new risk and undue burden on both QHP issuers and their
downstream and delegated entities. The amendments to Sec.
156.340(b)(5) make clear and explicit in regulation downstream and
delegated entity obligations to maintain Exchange-related records and
comply with the relevant Exchange authority's demand to receive the
entity's books, contracts, computers or other electronic systems
relating to the QHP issuer's obligations in accordance with applicable
Federal Exchange standards. Because the provision applies to all types
of Exchange, including State Exchanges, HHS is not inclined to be
overly prescriptive with regard to provision of more specific guidance.
More descriptive details will be provided by the relevant Exchange
authority. With regard to information that could be requested by HHS,
as administrator of the FFE, more specificity is provided in Sec.
156.715, which describes the records and information requested of FFE
and SBE-FP issuers during compliance reviews. By way of a further
illustrative example, documents that are typically requested as part of
compliance reviews under Sec. 156.715 include, but are not limited to;
issuers' contracts with all downstream and delegated entities for
Exchange-specific language, records of agent and broker registration
and training, and records of the handling of complaints concerning
affiliated agents, brokers, and web-brokers. While we generally
anticipate requesting similar information from downstream and delegated
entities under Sec. 156.340(b)(5), we emphasize that the exact
information, data, records, books, contracts, computers, and electronic
systems that could be requested as part of a review under Sec.
156.340(b)(5) will vary depending on the facts and circumstances at
hand. We also affirm that, like the existing authority in Sec.
156.340(b)(4), the authority captured in Sec. 156.340(b)(5) is
specific to Exchange operations.
We also disagree that the record retention requirement in new
paragraph (b)(5) is overly broad or that it would allow HHS to request
or access information unrelated to Exchange activity. This regulatory
provision is narrowly drafted and codifies the relevant Exchange
authority's--that is, the State Exchange, the FFE, or the SBE-FP--right
to access records that are related to the QHP issuer's participation in
the relevant Exchange to confirm compliance with applicable Federal
Exchange standards. As such, under Sec. 156.340(b)(5), the relevant
Exchange authority can demand and receive information on consumers
enrolled in the Exchange from a downstream or delegated entity of a QHP
issuer participating on its Exchange to ensure or otherwise confirm
compliance with applicable Federal Exchange standards. Additionally,
HHS has authority to access the records of downstream and delegated
entities of QHP issuers participating in FFEs and Exchanges using the
Federal platform under the existing requirements in Sec.
156.340(b)(4).\323\ Affirming HHS' authority to access this
information, as the relevant Exchange authority for FFEs, while
codifying similar rights for State Exchanges when they are the relevant
Exchange authority, in new paragraph (b)(5) does not represent an
expansion of HHS authority or access to records. To that end, by
affirming the relevant Exchange authority's right to access information
for purposes of ensuring all entities participating in or supporting
another entity's participation in the Exchange are compliant with
applicable Federal Exchange standards, HHS declines to incorporate
language in the regulation that would limit this authority to
situations concerning issues of vital importance to the Exchange. We
did not propose such a limitation and further note that the
establishment of such a restriction would require further notice with
comment rulemaking to define the phrase and identify parameters for
what could constitute issuers of ``vital importance'' to the Exchange.
The suggested limitation could also create unnecessary barriers to the
relevant Exchange authority accessing information relevant to Exchange
operations and compliance of regulated entities with applicable Federal
Exchange standards. Finally, we note the adoption of a 10-year standard
in Sec. 156.340(b)(5) aligns with other Exchange record retention
requirements. Therefore, it too, does not represent an expansion of
record retention obligations for QHP issuers participating in Exchanges
or their downstream and delegated entities pertaining to Exchange
related records, data, information, or systems. We also did not propose
and decline to adopt in this rule an exception or carve-out. The
adoption of these amendments is intended to make clear the obligations
and responsibilities of all QHP issuers participating in all Exchanges
models, and all of their downstream and delegated entities with no
exceptions. However, as the relevant Exchange authority for the FFEs,
we welcome an open dialogue with QHP issuers and their downstream and
delegated entities about the burdens and time associated with complying
with any particular request for records under Sec. 156.340(b)(5). We
encourage State Exchanges to similarly be open to such conversations.
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\323\ As noted above, the existing text at Sec. 156.340(b)(4)
requires downstream and delegated entities of QHP issuers
participating in FFEs or SBE-FPs to provide HHS access to the
entity's books, contracts, computers, or other electronic systems,
including medical records and documentation, relating to the QHP
issuer's obligations with applicable Exchange standards.
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Comment: Additionally, several commenters expressed concern about
the impact the changes could have on agreements and contract
negotiations
[[Page 27339]]
between issuers and potential and existing downstream or delegated
entities. One commenter suggested the language required by new
paragraph (b)(5) could bring contract negotiations to a ``stalemate''
or considerably slow them down, because it requires both downstream and
delegated entities and QHP issuers submit to the Exchange's authority
to ``request any information they desire under the pretext of Federal
standards.'' The commenter did not provide further information or
evidence to support the claim that the Federal standards have been used
as a pretext to demand information unrelated to Exchange activity.\324\
Another commenter suggested the language in new paragraph (b)(5) would
increase downstream and delegated entities' responsibility and risk,
potentially causing them to raise their rates, but did not specify what
additional responsibility or risk the downstream and delegated entities
would assume. That commenter also recommended that responses to
inquiries pursuant to paragraph (b)(4) and new paragraph (b)(5) from
the relevant Exchange authority come directly from the downstream or
delegated entity, when applicable, and not flow through the QHP issuer.
The commenter did not provide the rationale for this recommendation.
---------------------------------------------------------------------------
\324\ As noted above, we disagree with this assertion. Affirming
HHS' authority to access this information, as the relevant Exchange
authority for FFEs, in new paragraph (b)(5) while codifying similar
rights for State Exchanges when they are the relevant Exchange
authority does not represent an expansion of HHS authority or access
to records or otherwise allow HHS to request or access information
unrelated to Exchange activity.
---------------------------------------------------------------------------
Two commenters also expressed concern with respect to the proposed
applicability date and the timing for implementation of any necessary
change(s) to contract language. They indicated contracts will have to
be modified, and 60 days from rule publication is not sufficient to
come into compliance with the requirement. Additionally, a commenter
requested a burden estimate for modification of contracts, pursuant to
the comment, summarized above, that the inclusion of the contract
language constitutes a significant change that would impose an ``undue
burden'' on QHP issuers and downstream and delegated entities. The
commenters did not provide an explanation for why the contract
modifications required more time, or describe the nature of the ``undue
burden'' beyond the suggestion of HHS overreach due to language that it
asserted was not sufficiently narrow or specific. No data or
information beyond these general assertions was presented to
substantiate the request for a new implementation date.
One commenter indicated that while it agreed QHP issuers should
retain full oversight over downstream and delegated entities, it
objected to what it characterized as the imposition of required
contract terms by new paragraph (b)(5), on the grounds that each
organization should be free to contract in a manner governed by their
own risk tolerance. The commenter offered several alternative options,
including ``required written delegation agreements with performance
report expectations for content and frequency'' and ``documented and
recorded annual audits of each delegated entity's performance, which
the issuer properly distributes for review and approval by the issuer's
governing body.'' However, the commenter did not provide an explanation
as to why these recommendations were preferable to inclusion of the
issuer's oversight obligations in its agreements with downstream and
delegated entities. A different commenter expressed support for
clarifying that the general obligations and requirements regarding
downstream and delegated entities of QHP issuers are applicable across
all Exchanges types, but requested an explanation as to the reason for
the clarification. The commenter noted that if the reason for requiring
explicit contract language in agreements between QHP issuers and their
downstream and delegated entities is to align with MA requirements,
such alignment would be inappropriate, given the ``significant
differences'' between the two programs. The commenter further explained
that the Federal government has financial obligations to MA programs
and assumes some of the enrollees' risk with regard to claims, whereas
the QHP issuers on the Exchanges assume all risk with regard to
enrollees' claims.
Response: As explained above and in the proposed rule, the proposed
amendments to Sec. 156.340 were drafted so QHP issuers on all Exchange
types are subject to the same minimum downstream and delegated entity
standards. HHS is finalizing these amendments as proposed to 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. HHS appreciates the comments about the burdens
associated with implementation of the amendments; however, we are
finalizing the implementation date and burden estimates as proposed and
without changes, as we disagree that there is a significant or
``undue'' burden associated with these amendments. No evidence has been
provided substantiating any added burden is placed on the downstream
and delegated entities or on the QHP issuers, and while HHS appreciates
the entities' desire to contract with respect to their own risk
tolerance, the requirement that issuers maintain oversight and
accountability for their downstream and delegated entities' actions is
not a new requirement. The alternative methods proposed by the
commenter, such as required written delegation agreements with
performance report expectations for content and frequency, would likely
be more onerous and inflexible for both the issuer and its downstream
or delegated entity than modification of existing contracts to include
language describing risk the issuer has already assumed by engaging the
downstream or delegated entity's assistance with Exchange related
activities, because the suggested alternatives would also require
drafting entirely new documents, follow-up, and evaluation of
performance metrics. In addition, the commenters did not provide any
evidence or information to support their general assertions about the
``undue burden'' and additional time needed to modify contracts. As
explained in the proposed rule, we anticipate the amendments to Sec.
156.340 will impose minimal burden on QHP issuers and Exchange
authorities. We recognize that some QHP issuers may need to make
changes to existing record retention policies and their agreements with
delegated and downstream entities. But since issuers participating in
FFEs and SBE-FPs were already subject to the existing downstream and
delegated entity standards in Sec. 156.340, and to HHS' existing
authority to request records under Sec. 156.715, and commenters did
not provide analysis or other information to substantiate the request
for a new implementation date, that record requests should flow through
the downstream or delegated entity and not the issuer, or support the
claims of ``undue burden,'' HHS will finalize the amendments to Sec.
156.340 as proposed.
We recognize there are differences between the Medicare Advantage
program and the Exchanges. For example, the populations served are
different. Also, as noted in the comment
[[Page 27340]]
submitted, HHS subsidizes premiums for qualified individuals enrolled
in Exchange coverage, but it is not responsible for or at risk for
claims incurred by Exchange enrollee the way it does for Medicare
Advantage coverage. Notwithstanding these differences, there are also
similarities and the use of downstream and delegated entities by the
regulated entity is one example of a similarity. As such, our intention
is to learn from and leverage the experience from the Medicare
Advantage program, where appropriate. As explained when we first
established the QHP issuer downstream and delegated entity standards in
Sec. 156.340, we believe the most legally effective way to ensure that
a QHP issuer retains the necessary control and oversight over its
downstream or delegated entities is to require that all agreements
governing the relationships among a QHP issuer and its delegated and
downstream entities contain provisions specifically describing each of
the downstream and delegated entity's obligations.\325\ We looked to
the existing standards for entities that contract with Medicare
Advantage organizations at 42 CFR 422.504(i)(3)-(4) as a guide because
it was a framework familiar to HHS, regulated entities, other
stakeholders, as well as the general public. It also met the goals of
protecting consumers from harm and holding QHP issuers and their
downstream and delegated entities accountable for compliance with
applicable Federal Exchange requirements.
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\325\ See 78 FR 37056. Also see 78 FR 54120.
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In this final rule, we clarify and extend the requirements in Sec.
156.340 to 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.
14. Payment for Cost-Sharing Reductions--Clarification of CSR Payment
and Data Collection Processes (Sec. 156.430)
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 687 through 688), we proposed 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.\326\ As a result, CSR payments ceased as of October 12, 2017.
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 proposed to amend Sec. 156.430 to state
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.
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\326\ Payments to Issuers for Cost-Sharing Reductions (CSRs).
(2017, October 12). HHS. https://www.hhs.gov/sites/default/files/csr-payment-memo.pdf.
---------------------------------------------------------------------------
To do this, we proposed several modifications to Sec. 156.430.
First, we proposed 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 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 proposed 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
proposed 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 proposed 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 it would be
voluntary for issuers that did not receive CSR 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 proposed 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 proposed 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 noted that, regardless of whether HHS makes CSR payments,
issuers are required to provide CSRs to enrollees as specified at Sec.
155.1030. We sought comment on these proposals.
After reviewing the public comments, we are finalizing, as
proposed, that CSR 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.
We summarize and respond to public comments received on payment for
cost-sharing reductions--clarification of CSR payment and data
collection processes (Sec. 156.430) below.
Comment: One commenter supported the proposals.
Response: We appreciate the support and are finalizing, as
proposed, that CSR data submission is mandatory for those issuers that
receive CSR payments from
[[Page 27341]]
HHS for any part of the benefit year and voluntary for other issuers.
Comment: Another commenter requested additional clarification on
how the proposals would impact the existing CSR reconciliation data
submission process and schedule before HHS implements any changes.
Response: These amendments are not intended to change the existing
CSR data submission process or schedule. In October 2017, the Attorney
General declared that the government could not make CSR payments in the
absence of an appropriation, and that because there was no
appropriation, CSR payments must stop.\327\ HHS then announced that CSR
payments would be discontinued until an appropriation exists.\328\ HHS
has not made advance CSR payments for any period since October 2017 due
to a lack of an appropriation. Also, in the absence of an
appropriation, HHS cannot make CSR reconciliation payments for any past
period. Because of this, since the 2018 benefit year, HHS has made the
CSR data submission process optional. To this effect, HHS has
periodically provided issuers an annual optional window to submit CSR
data and restatements in light of ongoing litigation. Under the
amendments finalized in this rule, the CSR data submission process
would continue in the same manner as it has been operated since the
2018 benefit year CSR data submission, and these amendments are merely
aligning our regulations with existing operations. If HHS makes CSR
payments to QHP issuers in the future, HHS will notify QHP issuers that
a CSR data submission will be mandatory for any issuers receiving CSR
payments for any part of the benefit year.
---------------------------------------------------------------------------
\327\ Ibid.
\328\ Ibid.
---------------------------------------------------------------------------
Additionally, these amendments do not impact the CSR data
submission schedule. Consistent with past benefit years, the timing of
the CSR data submission process will continue to be announced annually
in guidance.
15. 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 five health care topic areas identified 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 (80 FR
10750), HHS established a phase-in approach for QIS implementation
standards and reporting requirements to provide QHP issuers time to
understand the populations enrolling in a QHP offered through the
Exchange and to build quality performance data on their respective QHP
enrollees.\329\ 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.\330\
---------------------------------------------------------------------------
\329\ 80 FR 10750, 10844 (2015, February 27).
\330\ Ibid.
---------------------------------------------------------------------------
In line with this approach and under the same authorities, in the
HHS Notice of Benefit and Payment Parameters for 2023 proposed rule (87
FR 584, 688), HHS proposed 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 proposed 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 proposed this expansion of
the QIS standards, which aligns with health equity efforts across
Federal government policies and programs; however, we did not propose
amendments to the regulatory text outlined in Sec. 156.1130.
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 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.331 332 333 334 335 336 337 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.\338\
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\331\ Lindenauer, P.K., Lagu, T., Rothberg, M.B., Avrunin, J.,
Pekow, P.S., Wang, Y., Krumholz, H., & Hines, H. (2013). Income
Inequality and 30-Day Outcomes After Acute Myocardial Infarction,
Heart Failure, and Pneumonia: Retrospective Cohort Study. British
Medical Journal.
\332\ Trivedi, A.N., Nsa, W., Hausmann, L.R.M., Lee, J., Ma, A.,
Bratzler, D., Mor, M., Baus, K., Larbi, F., & Fine, M. (2014).
Quality and Equity of Care in U.S. Hospitals. New England Journal of
Medicine. 371(24):2298-2308.
\333\ Polyakova, M., Udalova, V., Kocks, G., Genadek, K.,
Finlay, K., & Finkelstein, A.N. (2021). Racial Disparities In Excess
All-Cause Mortality During The Early COVID-19 Pandemic Varied
Substantially Across States. Health affairs (Project Hope), 40(2),
307-316. https://doi.org/10.1377/hlthaff.2020.02142.
\334\ Rural Communities: Age, Income, and Health Status. Rural
Health Research Recap. (2018). Rural Health Research Gateway.
https://www.ruralhealthresearch.org/recaps/5.
\335\ 2020 Update on the Action Plan to Reduce Racial and Ethnic
Health Disparities. (2020). HHS Office of Minority Health. https://www.minorityhealth.hhs.gov/assets/PDF/Update_HHS_Disparities_Dept-FY2020.pdf.
\336\ Sexual Orientation Disparities in Risk Factors for Adverse
COVID-19-Related Outcomes, by Race/Ethnicity. (2021, February 5).
CDC. www.cdc.gov/mmwr/volumes/70/wr/mm7005a1.htm.
\337\ Poteat, T.C., Reisner, S.L., Miller, M., & Wirtz, A.L.
(2020). COVID-19 Vulnerability of Transgender Women With and Without
HIV Infection in the Eastern and Southern U.S. medRxiv: The preprint
server for health sciences, 2020.07.21.20159327. https://doi.org/10.1101/2020.07.21.20159327.
\338\ Guth, M., Garfield, R., & Rudowitz, R. (2020). The Effects
of Medicaid Expansion Under the ACA: Studies from January 2014 to
January 2020. Kaiser Family Foundation. https://www.kff.org/medicaid/report/the-effects-of-medicaid-expansion-under-the-aca-updated-findings-from-a-literature-review/.
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We are specifically committed to achieving equity in health care
outcomes for QHP enrollees by supporting QHP issuer 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 final
rule, we are using the definition of ``equity'' established in
Executive Order 13985, issued on January 20, 2021, as
[[Page 27342]]
``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.'' \339\ 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, we are strengthening
efforts across all programs to address disparities and advance health
equity. In addition, this is a topic area that QHP issuers across the
Exchanges have increasingly been focusing on in their QIS submissions.
---------------------------------------------------------------------------
\339\ 86 FR 7009 (2021, January 25).
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A CMS evaluation of QHP issuer QIS submissions in the FFEs in PY
2020 found that an estimated 60 percent of QIS submissions addressed
health care disparities. Building on the phase-in approach established
in the 2016 Payment Notice and our experiences evaluating QIS
submissions over the years and during the COVID-19 PHE, we proposed to
update the QIS standards. We proposed 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. However, we did not propose
amendments to the regulatory text outlined in Sec. 156.1130. We sought
comment on this proposal.
We summarize and respond to public comments received on the quality
improvement strategy (Sec. 156.1130) proposal. After reviewing
commenter responses, we are finalizing as proposed.
Comment: Many commenters supported the proposal to expand QIS
standards to require issuers to address health and health care
disparities in addition to one other topic area identified in section
1311(g)(1) of the ACA as part of their QIS beginning in 2023.
Specifically, commenters expressed strong support for the increased
focus on health and health care disparities within the QIS standards
and achieving equity in health outcomes for QHP enrollees, as well as
driving accountability for advancing health equity.
Response: We appreciate commenters' support to expand QIS standards
to require QHP issuers address health and health care disparities which
aligns with health equity efforts across Federal government policies
and programs. QHP issuers in all Exchange model types will be required
to address health and health care disparities in addition to one other
topic area identified in section 1311(g)(1) of the ACA as part of their
QIS beginning in 2023. This new guideline will apply for the first time
to the QIS submissions QHP issuers provide to Exchanges in the 2023
calendar year, which would describe the issuer's strategy for
addressing health and health care disparities for the 2024 Plan Year,
beginning on January 1, 2024.
Comment: Several commenters stated that although the proposed QIS
policy ties effective performance on reducing health and health care
inequities to financial reward, the current proposal does not go far
enough to advance health equity. Some commenters urged CMS to require
more public transparency and accountability about the process of
selecting, implementing, evaluating, and reporting the outcomes of QIS
interventions to ensure QHPs prioritize health equity work. These
commenters noted that currently there are no public reporting
requirements for QIS activities (for example no list of QIS topics
selected, no public report on progress or successful outcomes).
Response: We appreciate the comments on the proposals to expand QIS
standards to address health and health care disparities and clarify
that the QIS statutory provisions do not tie performance within a QIS
to a financial reward for issuers. Instead, section 1311(g)(1) of the
ACA defines a QIS as a payment structure developed by issuers that
provides increased reimbursement or other market-based incentives for
improving health outcomes of plan enrollees (for example, through
provider incentives such as increased reimbursement or bonus payments,
or through enrollee financial incentives such as a monetary reduction
of enrollee premiums and other out-of-pocket costs). Thus, consistent
with the requirement in section 1311(c)(1)(E) of the ACA, QHP issuers
must implement a QIS and they are required to incorporate market-based
incentives within their respective QIS programs. We also acknowledge
commenters' requests for greater public transparency and interest in
greater accountability regarding the process QHP issuers undertake to
select, implement, evaluate, and report the outcomes of disparity-
related QIS programs. Unlike other Exchange quality programs, section
1311(c)(1)(E) and (g) of the ACA do not provide for the public
reporting of data on QHP issuer QIS programs.\340\ Instead, the QIS
requirements focus on collection of information by Exchanges from
issuers within QIS forms to demonstrate compliance with the QHP
certification requirements in section 1311(c)(1)(E) of the ACA. The
collection of this information also facilitates the Exchange's
understanding of its QHP issuers' payment structure frameworks that
provide increased reimbursement or other market-based incentives for
the implementation of activities related to the topics specified in
section 1311(g) of the ACA. We recognize issuers use proprietary
information in their QIS submissions they may not want published, and
that their strategies may contain confidential information about their
enrollee populations. Additionally, QIS requirements provide issuers
flexibility in meeting this certification requirement by allowing
diverse, qualitative, non-standardized information that would not be
easily and clearly shared publicly.
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\340\ Compare, for example, the statutory provisions that
established the Quality Rating System and Enrollee Satisfaction
Survey, which require Exchanges to publish information on their
respective websites. See sections 1311(c)(3) and (c)(4) of the ACA.
Also see 45 CFR 155.1400 and 155.1405.
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We further note that the policy adopted in this final rule seeks to
align the QIS with other Federal quality standards related to data
collection efforts and disclosure of information focused on quality
improvement and advancing health equity, which includes balancing the
desire to encourage transparency with the need to safeguard
confidential and proprietary information. Some types of confidential
and proprietary information include the tools, resources, and data sets
issuers use in describing their quality improvement strategies within
their QIS forms. For example, an issuer may have concerns disseminating
a patient data collection tool they consider propriety that is
described within their QIS to a wider audience. Furthermore, some
issuers choose to report on their internal quality improvement progress
using measures that are included within other performance programs, and
that may not be fully validated at the time they submit their QIS
during the applicable benefit year's QHP Application Period. Finally,
some issuers use internally developed measures they consider
proprietary that are not intended for public reporting. At the same
time, however, we understand the interest in the public reporting of
QIS information, and HHS will continue to consider if there are ways or
subsets of QIS information could be publicly released.
[[Page 27343]]
Comment: Several commenters noted that QHPs should have to seek
input from underserved enrollees or stakeholders who represent
underserved communities to guide their QIS activity selection.
Response: We appreciate the feedback related to QHP issuers seeking
input from underserved enrollees or stakeholders who represent
underserved communities to guide their QIS activity selection and to
shape which activities they prioritize when addressing health or health
care equity. HHS agrees that such feedback would help guide issuer
development of QIS programs that target the needs of their specific
populations, including those in underserved communities. HHS will
consider including language further encouraging these outreach
activities in the 2024 Plan Year Technical Guidance, which will inform
submissions in the 2023 calendar year. However, we did not propose and
decline to adopt a requirement mandating such outreach in this final
rule.
Comment: A few commenters noted that QHP issuers may face barriers
when collecting race, ethnicity, language and other data on certain
sub-populations, including consumers in underserved communities.
Commenters expressed that these barriers may be due to a lack of
standardization across State and Federal data collection requirements.
Commenters also recommended HHS consider approaches to standardize data
collection that includes collection of information that may be used to
develop tailored quality improvement strategies. Two commenters urged
HHS to address data collection barriers and delay finalizing the QIS
proposal until issuers have more robust data to identify disparities.
The commenters noted that when race and ethnicity or social determinant
of health (SDOH) data is collected, relatively few individuals
voluntarily provide this information to their health plans due to
concerns about how the data will be used, and that the data available
to issuers to identify health care disparities is limited and may vary
by issuer due to State laws limiting the data issuers can collect. One
commenter recommended that, for QIS standards, HHS should define
disparities more broadly, beyond race, ethnicity, and language, which
may not apply to every health plan, and reiterated that HHS should use
a broad definition that encompasses other factors such as LGBTQI+
status, location (rural/urban), and physical and mental disabilities.
Response: We recognize QHP issuers may experience barriers or other
challenges when collecting certain data and that State and Federal data
collection requirements for race, ethnicity, language, and other data
on certain populations are currently not standardized. There are many
reasons why the data collection requirements may not be standardized,
including different statutory authorities and mandated data elements.
The proposals being finalized in this rule are limited and specific to
the QIS requirements under section 1311(c)(1)(E) of the ACA applicable
to QHP issuers participating in Exchanges. The QIS statutory provisions
do not provide HHS authority to standardize State and Federal data
collection requirements or remove barriers that may exist with respect
to collection of race, ethnicity, language and other data on certain
sub-populations, including consumers in underserved communities.
However, the QIS statute and the HHS implementing regulations provide a
mechanism to encourage QHP issuers participating in Exchanges to focus
more efforts on addressing health and health disparities. Section
1311(g)(1) of the ACA explicitly identifies the implementation of
activities to reduce health and health care disparities, including
through the use of language services, community outreach, and cultural
competency trainings, as one of the topic areas for QHP issuer QIS
programs. Issuers operating in States that have laws that limit the
collection of certain data may have to rely on other data sources or
indirect estimation (for example, geographic assignment, Bayesian
indirect surname and geocoding) to incorporate activities to reduce
health and health care disparities in their QIS programs. Similarly,
issuers who do not have access to this type of data through existing
data sources (for example, if enrollees decline to provide this
information) will also have to identify other resources that can be
used for this purpose. We are also aware of and intend to continue to
monitor the development of industry standards, as well as State law
activity, applicable to the collection and use of race and ethnicity
data elements. As industry standards and state laws applicable to the
collection and use of race and ethnicity data elements evolve, HHS will
consider whether any changes to the QIS program requirements would be
appropriate.
Flexibility is one of the key foundational principles of the QIS,
and we intend to continue to offer flexibility to encourage issuer
innovation and to promote a culture of continuous quality improvement.
This will include taking into consideration steps issuers take to
expand their data collection efforts to support QIS activities that
address health and health care disparities (along with the other QIS
topics identified in section 1311(g)(1) of the ACA). With respect to
the new QIS guideline finalized in this rule, as noted above, we
anticipate that indirect estimation (for example, geographic
assignment, Bayesian indirect surname and geocoding) may be used by
issuers until such time in which issuers are able to directly collect
data, such as race, ethnicity, and language, to analyze and address
potential health and health care disparities. For example, NCQA
introduced race and ethnicity stratifications for select Healthcare
Effectiveness Data and Information Set (HEDIS[supreg]) measures,\341\
which allows an organization to report the stratification using their
own directly collected member data as well as report directly collected
data supplemented with indirect race and ethnicity data. QHP issuers
would be permitted to take a similar approach for the development of
their QIS programs and the incorporation of activities to reduce health
and health care disparities. For this reason, we do not believe it is
necessary to delay finalization of the QIS proposal until HHS has
addressed data collection barriers or until issuers have more robust
data to identify disparities.
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\341\ More information about NCQA's approach and timeline for
stratification of select HEDIS measures can be found here: Data,
Measurement and Equity. National Committee for Quality Assurance.
https://www.ncqa.org/about-ncqa/health-equity/data-and-measurement/.
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Additionally, we emphasize that the requirement adopted in this
final rule that requires QHP issuers to address health and health care
disparities as a specific topic area within their QIS beginning in 2023
is not limited to implementing strategies that solely focus on race and
ethnicity health and health care disparities. Nor does it mandate the
collection and submission of individual enrollee's race and ethnicity
data to HHS. QHP issuers will have flexibility in how they elect to
address and define health and health care disparities in their QIS. For
example, QHP issuers could focus on enrollee populations that belong to
a racial or ethnic minority group, live with a disability, identify as
a member of the LGBTQI+ community, have limited English proficiency,
live in a rural area, or earn near or below the poverty level, which
they have identified may be associated with worse health outcomes.
Additionally, we affirm that QIS initiatives to address health and
health care disparities may
[[Page 27344]]
include a broad range of activities such as language services,
community outreach, cultural competency trainings, social needs-
sensitive self-management recommendations, and increased collection and
use of demographic and disparities-related data that will be used to
develop QIS program activities designed to identify and reduce
disparities.
Comment: One commenter requested that CMS delay the implementation
of the proposed expansion of the QIS standards until January 1, 2024,
at the earliest, as this would align with the NCQA changes and the
introduction of race and ethnicity stratification reporting
requirements for certain select HEDIS[supreg] measures, which are
lagging. The commenter stated that many health plans base their QIS on
their HEDIS[supreg] measurements, and noted that aligning applicability
of the QIS update with the NQCA change would ease administrative burden
and ensure continuity for health plans. Another commenter noted that
given the diversity of QIS requirements across Federal and State-based
Exchanges, HHS should create a standardized approach to advancing
equity and incorporating reducing health and health care disparities
into existing QIS requirements by adding stratification by race/
ethnicity for any associated quality measures.
Response: We clarify that we are finalizing the proposal to require
QHP issuers to address health and health care disparities in addition
to one other topic identified in section 1311(g)(1) of the ACA in the
QIS submissions they provide to Exchanges beginning in the 2023
calendar year, which would apply to the 2024 Plan Year. As such,
issuers will be required to describe their strategy for addressing
health and health care disparities beginning on January 1, 2024. This
aligns with the NCQA introduction and implementation of race and
ethnicity stratification for select HEDIS[supreg] measures for the 2022
Measurement Year, that will be collected in the 2023 calendar year. We
appreciate and share the commenter's commitment to advancing health
equity by requiring QHP issuers to address potential disparities in
their quality improvement strategies, but we also recognize the
limitations issuers may face when collecting certain data in support of
conducting their QIS activities. We further clarify and affirm that QHP
issuers across all Exchange types must adhere to the same minimum QIS
Federal standards established by HHS, but State Exchanges (both State
Exchanges and SBE-FPs) have the flexibility to change certain details,
such as the timeframe and format for submission of QIS information by
their respective issuers, and they can establish standards that go
beyond Federal QIS requirements.\342\ However, they cannot reduce a QHP
issuer's QIS obligations below the minimum QIS Federal standards
established by HHS.
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\342\ See 45 CFR 156.1130 and 80 FR 10844 through 10848. Also
see, for example, Section 4.2, QIS Technical Guidance and User Guide
for the 2022 Plan Year (2021) CMS. https://www.cms.gov/files/document/qis-technical-guidance-and-user-guide-2022-plan-year.pdf.
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We understand the request from some commenters to create a
standardized approach to advance health equity which includes
stratification of race and ethnicity data in relation to QIS
requirements. We generally support and strive for standardized and
coordinated approaches across HHS to advance health equity. We also
support flexibility to ensure that QHP issuers can develop various
strategies across their populations and across their provider
contracts. Although we have established Federal minimum standards for
QHP issuers to follow and address in their quality improvement
strategies, the QIS program is intended to provide QHP issuers with
flexibility in the design and implementation of their respective QIS
initiatives and activities. For example, QHP issuers have flexibility
in how they elect to address health and health care disparities in
their QIS, such that their data collection efforts do not need to be
limited to race and ethnicity information. In addition, and based on
public comment, HHS believes that imposing specific performance
measures on QHP issuers would limit their ability to target their
strategies to their specific populations and possibly limit innovation.
We further recognize that State laws may impact the ability to collect
certain data, which could limit the ability to develop standardized
collection standards. Finally, as we noted previously, the QIS
statutory provisions do not provide HHS authority to standardize State
and Federal data collection requirements or remove barriers that may
exist with respect to collection of race, ethnicity, language and other
data on certain sub-populations, including consumers in underserved
communities.
Comment: One commenter encouraged HHS to revise its proposal and
allow issuers to embed a health equity strategy into their selected QIS
topics instead of requiring QHP issuers to establish a separate QIS
focused on addressing disparities. The commenter also urged HHS to
provide detailed criteria to help issuers develop meaningful projects
that fulfill the intent of addressing the health care needs of
underserved populations, while also allowing issuers flexibilities to
establish goals and metrics for success that accommodate the more
limited data and longer timeframes to successfully address disparities,
and in particular, the limitations for collecting data related to race
and ethnicity. The commenter also requested HHS evaluate potential
requirements to address disparities for populations other than the
underserved communities and work to create QIS requirements that align
with a more global population health approach to addressing
disparities.
Response: We agree QHP issuers should advance equity as a
foundational aspect of quality rather than consider equity as a siloed
aspect of performance, and we encourage QHP issuers to incorporate
health equity into each of their quality improvement strategies. We
further clarify that under the QIS guideline, as proposed and as
finalized, QHP issuers have flexibility in the design and
implementation of their respective QIS initiatives and activities. This
includes the flexibility to establish two separate QIS initiatives--one
that focuses only on addressing health and health care disparities and
a second one that focuses only on wellness and health promotion (or
another topic identified in section 1311(g)(1) of the ACA)--or the
flexibility to establish one QIS initiative that focuses on addressing
health and health care disparities in addition to wellness and health
promotion (or another topic identified in section 1311(g)(1) of the
ACA). Both approaches would be complaint with the new QIS guideline
finalized in this rule. In other words, QHP issuers will not need to
develop de novo strategies or create and submit multiple QIS programs,
but can address health and health care disparities within an existing
QIS. If an issuer elects this approach, they should select ``reduce
health and health care disparities'' as a topic area in addition to at
least one other topic area when submitting its plan year 2024 QIS
submission in the 2023 calendar year. We intend to address this, and
other operational details related to this new guideline, as part of the
Plan Year 2024 QIS Technical Guidance. We did not propose and generally
decline to adopt detailed criteria to direct QHP issuer QIS programs
that address health and health care disparities.
As detailed above, QHP issuers have flexibility in how they elect
to address health and health care disparities in their QIS, such that
their data collection efforts do not need to be limited to race
[[Page 27345]]
and ethnicity information. For example, QHP issuers could focus on
enrollee populations that belong to a racial or ethnic minority group,
or those that live with a disability, identify as a member of the
LGBTQI+ community, have limited English proficiency, live in a rural
area, or earn near or below the poverty level, which may be associated
with worse health outcomes. QHP issuers also have broad flexibility in
terms of the goals they have identified, the activities they've
employed to advance their QIS, and the measures they use. Within their
QIS, issuers must report their initial baseline assessment results, and
then must subsequently report their progress in relation to the
baseline results they've provided. Since the QIS program promotes
continuous quality improvement, issuers are asked to analyze their
progress using their baseline data, but at this time they are not
penalized for not meeting their progress targets or milestones.
Additionally, QIS initiatives to address health and health care
disparities may include a broad range of activities such as language
services, community outreach, cultural competency trainings, social
needs-sensitive self-management recommendations, and increased
demographic and disparities-related data collection.
16. Disbursement of Recouped High-Cost Risk Pool Funds--Administrative
Appeals of Issuers of Risk Adjustment Covered Plans (Sec. 156.1220)
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 689), we proposed 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 proposed 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).
In the proposed rule, we also clarified 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 administrative appeal,
issuers whose charge amounts are reduced would report the high-cost
risk pool charges paid for that benefit year net of recouped funds as a
result of an administrative appeal in the next MLR reporting cycle
consistent with 45 CFR 153.710(h). This same framework would also apply
to high-cost risk pool funds recouped as a result of audits under Sec.
153.620(c)(5)(ii) and actionable discrepancies under Sec. 153.710(d).
We sought comment on this proposal.
After consideration of relevant comments, we are finalizing these
policies, as proposed. We respond to the comments received on these
policies.
Comment: Several commenters expressed general support for these
proposals.
Response: After consideration of relevant comments, we are
finalizing, as proposed, the policies related to disbursement of high-
cost risk pool funds recouped as a result of audits of risk adjustment
covered plans under Sec. 153.620(c), actionable high-cost risk pool-
related discrepancies filed pursuant to Sec. 153.710(d), and
successful high-cost risk pool administrative appeals filed pursuant to
Sec. 156.1220.
17. Direct Enrollment With the QHP Issuer in a Manner Considered To Be
Through the Exchange (Sec. 156.1230)
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 689), we proposed to amend Sec. 156.1230
such that its nondiscrimination protections would explicitly prohibit
discrimination based on sexual orientation and gender identity. As we
explain in the Supplemental Information section earlier in the
preamble, HHS will address this policy, as well as public comments
submitted in response to the proposal, in a future rulemaking.
18. 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 build Exchanges that 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 that 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.\343\
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\343\ Taylor EA, Carman KG, Lopez A, Muchow AN, Roshan P, &
Eibner C. (2016) Consumer Decision-making in the Health Care
Marketplace. RAND Corporation. https://www.rand.org/pubs/research_reports/RR1567.html.
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Earlier in this section E of the preamble, we finalized the
provision to require FFE and SBE-FP issuers to offer the standardized
plan options finalized in this rule. Standardized plan options offer
one solution to the problem of choice overload through standardizing
cost-sharing structures and increasing plan comparability by allowing
consumers to focus on plan premiums, provider networks, formularies,
and quality ratings.\344\ In light of the proliferation of seemingly
similar plans offered through the Exchanges over the last several
years, HHS solicited comment regarding 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.
---------------------------------------------------------------------------
\344\ Facilitating Consumer Choice: Standardized Plans in Health
Insurance Marketplaces. (2021, December 28). Office of the Assistant
Secretary for Planning and Evaluation. https://aspe.hhs.gov/sites/default/files/documents/222751d8ae7f56738f2f4128d819846b/Standardized-Plans-in-Health-Insurance-Marketplaces.pdf.
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HHS' 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,
[[Page 27346]]
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 during the open enrollment period for PY 2022,
there was 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, several rating areas have more than
50 silver plans, excluding CSR variations, available to consumers--a
number we believe makes 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 during the
open enrollment period for PY 2022, consumers were 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 plan years
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 remains 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.\345\ These conclusions are
supported by the comments received during both this rulemaking and
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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\345\ Zhou, C. & Zhang, Y. (2012). ``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: 2259-
2265.
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HHS' 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.'' \346\
Thus, in order to streamline and optimize the plan selection process
for consumers on the Exchanges, HHS expressed interest in exploring
possible methods of improving choice architecture and solicited
comments on doing so. Several provisions finalized within this rule
complement this goal, including the standardized plan options provision
at Sec. 156.201 and the provisions that modify the applicable AV de
minimis ranges at Sec. Sec. 156.140, 156.200, and 156.400.
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\346\ 80 FR 75488, 75542 (2015, December 2).
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Specifically, the standardized plan options provision at Sec.
156.201 requires FFE and SBE-FP issuers to offer plans with
standardized cost sharing parameters at every product network type, at
every metal level, and throughout every service area that they offer
non-standardized plan options. Though this provision does not limit the
number of non-standardized plan options for PY 2023, HHS stated that it
intends to consider and propose future rulemaking, as appropriate, to
determine whether to limit the number of non-standardized plan options
that FFE and SBE-FP issuers may offer through the Exchanges in PYs
beginning on or after January 1, 2024.
Additionally, the provisions at Sec. Sec. 156.140, 156.200, and
156.400 finalized modifications to the applicable AV de minimis ranges.
HHS modified 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 finalized a de
minimis range of +5/-2. Under Sec. 156.200, HHS finalized, 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
finalized under Sec. 156.400 to specify de minimis ranges of +1/0
percentage points for income-based silver CSR plan variations. HHS
explained that it anticipates that these provisions would have the
effect of decreasing the number of plan offerings due to more
restricted AV de minimis ranges.
HHS also solicited comment on resuming the meaningful difference
standard (previously codified at 45 CFR 156.298) and the best approach
for doing so. 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 number of plans
offered through the Exchanges has increased sharply over the last
several years, HHS explained that it continues to believe 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 acknowledged 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 plan options exclusively, and exclude
plans that have not demonstrated the administrative capability, prices,
networks or product designs that improve consumer value. HHS explained
that it 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 and solicited
comments accordingly.
Altogether, we sought 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 sought 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 sought comments on other evidence-based approaches to
improve choice architecture within the Exchanges.
We summarize public comments on these topics below, but note that
comments related to standardized plan
[[Page 27347]]
options, changes to the AV de minimis ranges, and the meaningful
difference standard are summarized and addressed in more detail earlier
in their respective sections in the preamble: Sec. Sec. 156.201,
156.140, 156.200, and 156.400. We also acknowledge and appreciate
comments on improving choice architecture within the Exchanges and on
the benefits and potential drawbacks of adopting an active purchaser
model and will take these comments into account as part of future
research and decision-making processes.
Comment: In response to a comment solicitation regarding how HHS
might address choice overload in the Exchanges, many commenters
supported improving choice architecture on HealthCare.gov to enhance
the consumer shopping experience, in addition to requiring issuers to
offer standardized plan options. Many commenters suggested that HHS
provide educational resources and accessibility support for consumers,
such as interactive graphics and videos explaining relevant health care
and insurance terminology. These commenters noted that modifying choice
architecture on HealthCare.gov to make it more intuitive and
educational could greatly benefit consumers with low health literacy.
Similarly, some commenters stated that Exchanges should prioritize
decision support tools that direct consumers to consider total out-of-
pocket costs instead of premiums. These commenters suggested using more
plain language, utilizing hover text to define key terms and
distinguishing features, improving accessibility for consumers with
vision impairments, and developing tutorials. One commenter urged HHS
to engage with issuers and stakeholders to identify tools and features
that would be most meaningful for consumers. This commenter also
suggested seeking consumer feedback to better identify, test, and
launch changes to the HealthCare.gov shopping and plan selection user
interface.
Response: HHS shares commenters' position that it is extremely
important to make plan information accessible and actionable for all
consumers, including those with visual, auditory or speech
disabilities, those for whom English is a second language, or those who
otherwise may have challenges with incorporating important but complex
health insurance plan benefit design information into their decision-
making process. HHS appreciates these comments and recommendations on
additional educational resources to maximize consumers' ability to
select the best plan for themselves and their families, and we note
that we will take these recommendations into consideration as we
continue to work towards this goal.
Comment: Many commenters also advocated for improving choice
architecture and decision-support tools as an alternative to requiring
standardized plan options or limiting plan offerings. These choice
architecture suggestions included mandating decision-support tools,
having shoppers ``opt-out'' rather than ``opt-in'' to provide their
expected health care service utilization, actively redirecting
consumers to plans with higher AVs and lower total costs, displaying
estimated out-of-pocket costs, and highlighting patient-friendly cost
sharing parameters such as fixed-dollar copayments and pre-deductible
services on plan cards.
One commenter urged HHS to include pop-up alerts and to require
consumers to click to confirm that they would like to enroll in plans
with higher costs and lower actuarial values. These commenters also
suggested improving the functionality of features such as filters and
sort options by providers, facilities, formularies, quality ratings,
and networks. One commenter encouraged HHS to collect consumer
preferences and anticipated health care service utilization prior to
displaying plans in order to ensure that plans are initially filtered
and sorted for consumers. This commenter further recommended that HHS
display the highest metal level plans first if the net premiums are $0
for multiple metal levels within a product.
Some commenters suggested that HHS employ choice architecture
improvements to direct eligible shoppers to CSR plan variations so they
can utilize the savings available to them. Specifically, these
commenters suggested that an out-of-pocket cost sort option could help
customers understand the concept of total costs and show CSR-eligible
consumers that the most generous CSR plan variations are guaranteed to
have lower total out-of-pocket costs than those of plans at higher
metal levels. Similarly, some commenters recommended preferentially
displaying silver cost-sharing reduction variants while continuing to
display plans from low to high total cost.
Finally, one commenter stated that HHS should reform the choice
architecture on the Exchanges. This commenter explained that both
Federal and State Exchanges should be required to implement decision-
support tools that direct consumers to contemplate total costs instead
of just premiums. This commenter added that Exchanges should be
required to actively redirect consumers to plans that provide the
lowest cost for the highest actuarial value, such as a bronze to a
silver plan with cost sharing reductions. This commenter cited several
examples of State Exchanges that have implemented similar changes.
Response: HHS appreciates the variety and detail of comments on
methods of enhancing choice architecture to further streamline
consumers' decision-making process and empower individuals to select
the best plan for themselves and their families. We note that we will
take these comments into consideration as we continue to explore
advancements in choice architecture on HealthCare.gov.
Comment: A few commenters supported HHS adopting an active
purchaser model in future years. Several commenters supported it as
part of a larger strategy that they stated should also include both
standardized plan options and a meaningful difference standard. Some of
these commenters also stated that the State of California's use of this
approach illustrates the benefits of limiting the number of plan
offerings, lowering costs for consumers, setting standards for plan
quality, and fostering robust competition among plans seeking entry
into the Exchange.
However, multiple commenters opposed HHS adopting an active
purchaser model for the Federal Exchanges, mainly due to concerns that
doing so would put too much control over plan offerings in the hands of
the Exchange, as opposed to allowing issuers the flexibility to design
plans based on consumer preferences and needs. These commenters were
also concerned that an active purchaser model could reduce the number
of issuers willing to participate in Exchanges on the Federal platform
by requiring issuers who are not selected for a given year to pause
their individual market operations and later expend time and resources
to apply in a future year.
Response: As noted in the proposed rule, HHS acknowledges that a
number of State Exchanges have successfully employed an active
purchaser model and that we intend to consider whether such a model
would be appropriate in future PYs to further streamline the plan
selection process for consumers on the Exchanges. HHS appreciates
comments considering the advantages and disadvantages of such a model,
and we will take this feedback into consideration as part of future
decision-making processes.
[[Page 27348]]
F. Part 158--Issuer Use of Premium Revenue: Reporting and Rebate
Requirements
1. Reimbursement for Clinical Services Provided to Enrollees (Sec.
158.140)
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 691), we proposed to amend Sec.
158.140(b)(2)(iii) to clarify that only 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 are finalizing this proposal as
proposed.
Section 2718(a) of the PHS Act requires health insurance issuers
offering group or individual health insurance coverage (including a
grandfathered health plan) to separately report the percentage of total
premium revenue (after certain adjustments) expended on reimbursement
for clinical services provided to enrollees for activities that improve
health care quality, as well as all other non-claim (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. Section 158.140 sets forth the
MLR reporting requirements related to reimbursement for clinical
services provided to enrollees, including a requirement in Sec.
158.140(b)(2)(iii) that issuers must include the amount of incentive
and bonus payments made to providers with incurred claims. Due to the
lack of clarity and specificity in the regulations, some issuers
include an overly broad variety of incentive and bonus payments made to
providers. The inclusion of many types of provider incentives and
bonuses in incurred claims is appropriate and consistent with the
purpose of the statute, but only to the extent that such bonuses
incentivize providers to deliver objectively measurable higher-quality
care and value for enrollees.
In the course of conducting MLR examinations pursuant to Sec. Sec.
158.401 and 158.402, we 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. 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.
We summarize and respond to public comments received on the
proposal to clarify the inclusion of provider incentives and bonuses in
incurred claims (Sec. 158.140) below.
Comment: The overwhelming majority of commenters supported the
proposed clarification and accompanying regulatory amendment.
Commenters stated that this regulatory provision needs to be clarified
and tightened to ensure the faithful execution of the MLR requirements.
Commenters further stated that the proposed clarification is necessary
to prevent issuers from evading compliance by inappropriately using the
MLR standard itself to trigger ``incentive'' or ``bonus'' payments and
to prevent issuers from inflating their MLRs by including any such
payments that are not based on quality or performance metrics.
Response: We appreciate the supportive comments and agree that it
is important to look beyond the labels used (for example, provider
``incentive'' or ``bonus'' payments) to confirm that the provider
payments meet the applicable standards for inclusion in incurred claims
for MLR reporting purposes. After considering public comments, we are
finalizing the amendment to Sec. 158.140(b)(2)(iii), as proposed, to
explicitly clarify in regulation that to be included in incurred claims
``incentive'' or ``bonus'' payments to providers must be tied to
clearly-defined, objectively measurable, and well-documented clinical
or quality improvement standards that apply to providers. Any provider
payment that is based on the financial condition or actions of the
issuer may not be reported as incurred claims. For example, we
generally believe that payment arrangements between issuers and
providers that result in there being no scenario in which an MLR rebate
would ever be paid to consumers or that are tied to the financial
condition or actions of the issuer would violate both the letter and
the spirit of the law. It is inappropriate to include such provider
payments--even if labeled as ``incentive'' or ``bonus'' payments--as
incurred claims in issuers' MLR calculations. This includes
arrangements where the MLR standard itself is used as the threshold to
determine whether such a payment is due, or because some other metric,
such as issuer profit or surplus, is used, or if the arrangement is
otherwise designed to substantially avoid compliance with the MLR
rebate requirements.
Comment: One commenter that supported the proposal recommended that
HHS also clarify that provider incentives and bonuses are not required
to be excluded from incurred claims solely because they incorporate
shared savings elements or cost efficiency requirements in addition to
clinical quality requirements. This commenter further recommended a
safe harbor for provider incentives that do not exceed a specified cap
(such as 20 percent), make the incentive contingent on meeting
objective clinical measurements, and require disclosure to any
beneficiary that requests it.
Response: We confirm that under the proposal, the fact that a
provider incentive or bonus program has a shared saving or other cost
efficiency element does not disqualify the entire incentive or bonus
from being classified as incurred claims, as long as the incentive or
bonus is tied to clearly-defined, objectively measurable, and well-
documented clinical or quality improvement standards that apply to
providers. We do not believe that a safe harbor proposed by the
commenter is necessary and decline to adopt one at this time.
Comment: Several commenters requested that HHS distinguish
alternative payment models such as Accountable Care Organization (ACO)
initiatives, arrangements where the issuer shares savings with
providers, and value-based contracting (VBC) from the types of
arrangements that were the cause for concern, and requested that HHS
allow all bonuses and incentives paid under such alternative payment
models to be reported as incurred claims. These commenters expressed
concern that the proposal would inhibit issuers' ability to pursue such
cost containment strategies and suggested that the proposal is
inconsistent with HHS' support of value-based payment models. Some of
these commenters asserted that purely financial savings that reduce the
total cost of care are an appropriate basis for provider bonuses or
incentives. Other commenters suggested that such alternative payment
models reduce utilization needs and lead to better health outcomes, or
at least lower costs while continuing to provide quality care.
Response: HHS continues to support innovative alternative payment
models that deliver efficient and high-quality care. We further note
that the MLR statute and HHS implementing
[[Page 27349]]
regulations in 45 CFR part 158 do not prohibit issuers from adopting a
wide range of value-based payment models, including ones that may not
be tied to clinical or quality standards. The clarification and
accompanying amendment to Sec. 158.140(b)(2)(iii), which we are
finalizing as proposed, is instead limited in applicability to the
treatment and reporting of these amounts for MLR purposes. As explained
in the proposed rule (87 FR 691), in the course of conducting MLR
audits, we uncovered several instances where provider payments labeled
as ``incentive'' or ``bonus'' that were triggered based on the
financial condition or actions of the issuer \347\ were included in the
issuer's incurred claims. This violates the spirit of the statute by
artificially inflating the issuer's MLR and depriving consumers of the
rebates they would otherwise be owed under section 2718(b) of the PHS
Act. It is also inconsistent with the requirements that dictate
separate reporting and treatment of the percentage of total premium
review (after certain adjustments) expended on reimbursement for
clinical services and activities that improve health care quality, and
on all other non-claims (administrative) costs.\348\ In order to
increase compliance and improve program integrity, we are finalizing as
proposed, the regulatory amendment to codify the agency's existing
policy and interpretation of the statute regarding the treatment of
provider ``incentives'' and ``bonuses'' that are not tied to clinical
or quality standards for MLR reporting and rebate purposes. This will
further ensure that consumers receive value for their premium payments
and the rebates they are owed under the statute.
---------------------------------------------------------------------------
\347\ This included arrangements under which payments were made
to providers any time the issuer's MLR fell below a specified
threshold, such as the applicable standard established in section
2718(b)(1)(A)(i) and (ii) of the PHS Act. Other arrangements of this
nature used a metric tied to when the issuer's profitability
exceeded a specified threshold. Payments were sometimes made to
clinical providers or hospitals and other times were made to non-
clinical parent holding companies.
\348\ See section 2718(a) of the PHS Act and 45 CFR 158.110, et
seq.
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We agree with the commenter who suggested that value-based payment
models can reduce utilization and lead to better outcomes, or lower
costs, without compromising the quality of care. Issuers employing such
models or arrangements should be able to demonstrate this through the
use and documentation of appropriate clinical or quality metrics and
thus such incentive or bonus payments would be eligible for inclusion
in incurred claims. Further, we are not aware of any CMS value-based
payment initiatives (such as Medicare shared savings initiatives and
alternative payment models) that do not include clinical or quality
standard requirements and generally disagree the adoption of the
amendment to Sec. 158.140(b)(2)(iii) is inconsistent HHS' support of
innovative, value-based payment models.
Comment: One commenter expressed concern that the proposed
clarification could potentially place (unspecified) burdens on
physicians to earn the incentive and bonus money.
Response: While we acknowledge the comment, as the commenter did
not provide any specifics regarding potential burdens, the substance of
the commenter's concern is not clear. We note that this provision will
not impact every provider incentive and bonus arrangement since, for
example, it is unlikely to impact the majority of issuers that exceed
MLR standards or existing arrangements, the majority of which are tied
to clearly-defined, objectively measurable, and well-documented
clinical or quality improvement standards applicable to providers. In
addition, as discussed above, this provision does not prohibit issuers
from adopting value-based payment models that may not be tied to
clinical or quality standards. Nor does this provision require issuers
to add clinical or quality documentation requirements on providers to
existing value-based payment models.\349\ Rather, the amendment to
Sec. 158.140(b)(2)(iii), which we are finalizing as proposed, is
limited in applicability to the treatment and reporting of these
amounts for MLR purposes. As explained above, the inclusion of provider
incentives and bonuses in incurred claims when the incentives and
bonuses fail to incorporate clinical or quality standards could create
incentives to inappropriately reduce or even withhold medical care and
would reduce the value consumers receive for their premium dollars.
---------------------------------------------------------------------------
\349\ We further note that to the extent the issuer elects to
impose documentation requirements on its providers under a value-
based payment model or other arrangements, those types of
requirements would fall outside of the MLR calculation and rebate
framework under section 2718 of the PHS Act and the implementing
regulations at 45 CFR part 158.
---------------------------------------------------------------------------
Comment: One commenter recommended that we adopt a narrow exception
to the reporting requirement under Sec. 158.140(b)(2)(iii) for issuer
payments to providers at risk of becoming insolvent due to
extraordinary circumstances, such as the COVID pandemic, subject to
prior approval of the applicable State regulator. According to this
commenter, such payments in extraordinary circumstances may be
necessary to enable providers to continue providing medical care and to
ensure that issuers were able to comply with network adequacy
requirements.
Response: We understand and commend issuers that made cash payments
to help prevent at-risk providers from becoming insolvent due to the
COVID pandemic in order to ensure that consumers had access to medical
care. However, we did not propose and are not finalizing the exception
suggested by the commenter. We intend to further consider the treatment
of such payments in extraordinary circumstances under the MLR framework
codified in 45 CFR part 158, and would address any policies in this
regard in future guidance or rulemaking, as applicable.
Comment: One commenter urged HHS to exercise greater oversight of
insurance companies that own or are owned by companies that also own
networks of providers and other health care services. The commenter
described a number of reporting or business practices made possible by
vertical integration in health care that have the potential to erode
the PHS Act MLR protections. According to the commenter, these include
issuers channeling more health care dollars to their own provider
groups, encouraging enrollment in an HDHP and contributing to an HSA
offered by an affiliate, and reporting as QIA the expenses for
utilization management programs that may not actually benefit enrollees
or improve their health. Another commenter agreed that the examples of
provider incentives described in the proposed rule are troubling but
recommended that the more appropriate remedy is stronger enforcement
rather than clarifying the regulations.
Response: We understand the commenter's concern regarding issuers
that are integrated with health care providers and agree with the
suggestions and will continue to focus our oversight and enforcement on
ensuring issuer compliance with MLR reporting requirements for all of
the different types of provider arrangements or payment models issuers
may employ. As part of this effort, we intend to consider the impact of
vertical integration on the reporting and treatment of provider
payments under the MLR framework codified in 45 CFR part 158, including
the impact on rebates owed to consumers. However, we note that our
ability to identify non-
[[Page 27350]]
compliant reporting of provider incentives and bonuses for targeted
enforcement is limited as the MLR rules require issuers to aggregate by
State and market the amounts they incurred for any such incentives and
bonuses. Additionally, the MLR reporting requirements require issuers
to report only the amounts incurred for provider incentives and bonuses
and do not require them to describe or provide details about the
incentive or bonus program itself. Thus, the level of detail that is
available does not support easily identifying errant practices. In
addition, we believe that clarification of the requirements in
regulation is necessary and appropriate to increase awareness and
ensure broad and uniform compliance. We also emphasize our intention to
combine this regulatory clarification with heightened oversight and
monitoring of compliance with MLR reporting and rebate requirements
with respect to these types of arrangements to ensure consumers receive
value for their premium payments, consistent with the statute.
Comment: A few commenters requested that the clarification be
prospective to give issuers sufficient time to come into compliance.
Response: As explained above and in the proposed rule, the
clarification and amendment to Sec. 158.140(b)(2)(iii), which we are
finalizing as proposed, codifies the Department's existing policy and
interpretation of the statute. Including provider ``incentive'' or
``bonus'' payments that are not based on clearly defined, objectively
measurable, and well-documented clinical or quality improvement
standards in incurred claims artificially inflates the issuer's MLR and
deprives consumers of the rebates they would otherwise be owed. This
practice is also inconsistent with the statutory requirements that
dictate separate reporting and treatment of the percentage of total
premium review (after certain adjustments) expended on reimbursement
for clinical services and activities that improve health care quality,
and on all other non-claims (administrative) costs. We further note
that the MLR requirements established under section 2718 of the PHS Act
have generally been effective since 2011. Finally, as noted above, the
adoption of this regulatory amendment does not require issuers to
modify existing arrangements with providers. Instead, it is limited in
applicability to the treatment and reporting of these amounts for MLR
purposes. The next annual MLR report is not due until July 31,
2022.\350\ For all of these reasons, we disagree that additional time
is needed or should be provided for issuers to come into compliance.
---------------------------------------------------------------------------
\350\ See 45 CFR 158.110(b).
---------------------------------------------------------------------------
After consideration of the comments received on this proposal, we
are finalizing the regulatory amendment to Sec. 158.140(b)(2)(iii) as
proposed.
2. Activities That Improve Health Care Quality (Sec. 158.150)
In the HHS Notice of Benefit and Payment Parameters for 2023
proposed rule (87 FR 584, 691 through 692), we proposed 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. In order to
ensure reporting consistency among issuers and ensure that QIA expenses
included in the MLR numerator represent the actual value provided for
consumers' premium dollars, consistent with the purpose of section 2718
of the PHS Act, we are finalizing the proposal 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.
As discussed in the proposed rule (87 FR 691 through 692), section
2718(a) of the PHS Act requires health insurance issuers offering group
or individual health insurance coverage (including a grandfathered
health plan) to 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, as well as 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. For example, some
issuers allocate to QIA fixed costs--such as office space or IT
infrastructure--that would, for the most part, exist even if the issuer
did not engage in any QIA. Some issuers include in QIA expenses amounts
exceeding the cost of providing the actual QIA service. 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. 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 reporting or apportioning indirect expenses without
adequate documentation or support.
We sought comment on this proposal.
We summarize and respond to public comments received on the
activities that improve health care quality proposal (Sec. 158.150).
We note that we received a few comments and suggestions that were
outside the scope of the proposed rule, which are not addressed in this
final rule.
Comment: The majority of commenters supported the proposal 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. These commenters agreed that it is reasonable, appropriate,
and necessary to prevent issuer MLRs from being inflated.
Most commenters generally agreed that overhead costs should not be
allowed to be reported as QIA. A few commenters requested that certain
non-salary expenses associated with employees performing QIA functions
be allowed in QIA expenses. These commenters noted that employee
benefits are part of compensation, and that expenses related to office
space, equipment, and IT infrastructure are necessary for such
employees to perform QIA. Several of these commenters stated that
issuers should be allowed to allocate a portion of indirect costs to
QIA on a pro rata basis. Several commenters requested that we provide a
specific list of examples of expenses that are or are not permitted as
direct expenses. Another commenter suggested that HHS should convene
stakeholders to discuss an appropriate methodology for allocating
indirect costs to QIA expenses rather than adopting the proposed
amendment to
[[Page 27351]]
Sec. 158.150(a) to specify that only expenditures directly related to
activities that improve health care quality may be included in QIA
expenses.
Response: We appreciate the supportive comments on this proposal.
We agree with commenters that non-salary benefits of employees
performing QIA functions that are part of compensation packages are
directly tied to QIA, and we clarify that we consider the cost of such
employee benefits to be a direct QIA expense. Thus, the issuer's cost
of health coverage, retirement contributions, life insurance, or
similar benefits provided to employees actually performing QIA may be
included in QIA expenses under Sec. 158.150(a), as amended. However,
similar to salary costs, such costs may only be included up to the
percentage that reflects the percentage of the employees' time actually
spent on QIA. Issuers that report such costs as QIA should take care to
both document and retain records supporting the amount(s) reported and
the determination of what portion of these costs are a direct QIA
expense.\351\
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\351\ See 45 CFR 158.502.
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However, as explained in the proposed rule, many of the other
indirect expenses identified by these commenters \352\ would be
incurred even if issuers did not engage in QIA. For example, it is
unlikely that an issuer's cost of purchasing, renting, and maintaining
an office building or equipment is meaningfully impacted by the
engagement of some of its employees in QIA. Therefore, we disagree that
expenses for items such as office space, equipment, and IT
infrastructure are directly or in some cases even indirectly related to
QIA, or that they are incurred in the furtherance of quality
improvement. As such, for MLR reporting and rebate purposes, these
expenses are classified as non-claims, administrative costs and should
not be included in the MLR numerator. Allowing issuers to report these
same expenses as expenditures on QIA is inappropriate. It would
undermine the purpose and intent of section 2718 of the PHS Act and
would allow issuers to inflate QIA costs (and the MLR numerator) by
including fixed costs that would be incurred regardless of whether the
issuer engages in QIA. We also do not believe that there is a
compelling policy rationale to allow issuers to automatically shift a
pro rata portion of such costs to consumers. For the same reasons, we
do not believe that convening stakeholders to discuss an appropriate
methodology for allocating such expenses is necessary.
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\352\ Examples of other indirect expenses identified by
commenters include costs related to office space, equipment, and IT
infrastructure.
---------------------------------------------------------------------------
We provided multiple examples of the types of expenses that we
consider to be indirect expense that should not be reported as QIA in
both the proposed rule and this rule. Examples include: Office space
(including rent or depreciation, facility maintenance, janitorial,
utilities, property taxes, insurance, wall art), human resources,
salaries of counsel and executives, computer and telephone usage,
travel and entertainment, company parties and retreats, IT systems, and
marketing of issuers' products. This list, however, is not intended to
be exhaustive or all-inclusive. As a general matter, expenses for items
or services that have no direct or quantifiable relationship to health
care quality cannot reported as QIA and will not be considered direct
QIA expenses. Conversely, expenses for items or services that primarily
or exclusively support QIA as opposed to regular business or other
functions, when reasonable and quantifiable,\353\ are likely to
constitute direct expenses that are properly included in QIA expenses.
We intend to continue to monitor issuer QIA reporting and will issue
further guidance, as may be necessary, and welcome stakeholder feedback
on which other types of expenses they would like us to address in
technical guidance on direct versus indirect expenses.
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\353\ Consistent with 45 CFR 158.502, issuers must maintain all
documents and other evidence necessary to enable HHS to verify that
the data reported complied with the applicable definitions and
criteria.
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Comment: Two commenters expressed concern that, under the proposal,
HHS appears to take the position that health information technology
(HIT) expenses, which are specifically allowed by Sec. Sec. 158.150
and 158.151, cannot be reported as QIA if they are determined to be
indirect.
Response: We do not believe that the amendment to Sec. 158.150(a)
to specify that only direct expenses related to activities that improve
health care quality can be included in QIA expenses for MLR reporting
and rebate purposes conflicts with the definition of HIT at Sec.
158.151. Section 158.151 defines HIT as specifically being ``designed
for use by health plans, health care providers, or enrollees for the
electronic creation, maintenance, access, or exchange of health
information, as well as those consistent with Medicare and/or Medicaid
meaningful use requirements.'' This definition recognizes that some
information technology is HIT; while also recognizing that not all
information technology is HIT. We affirm and clarify that HIT expenses
that meet the applicable requirements in Sec. Sec. 158.150 and 158.151
are permissible costs that can be included as QIA expenses. For
example, the cost of software designed and used primarily for QIA
purposes, such as HEDIS reporting, constitutes a direct expense related
to activities that improve health care quality and can be included in
QIA expenses for MLR reporting and rebate purposes. In contrast, as
explained above and in the proposed rule, the costs of IT
infrastructure that primarily supports regular business functions such
as billing, enrollment, claims processing, financial analysis, and cost
containment, even when the same IT infrastructure also happens to
support QIA activities in addition to regular business functions, do
not constitute a direct expense related to activities that improve
health care quality and cannot be included in QIA expenses for MLR
reporting and rebate purposes. As a simple example, the cost of the
computer software license for an employee that works part of the time
on QIA should not be allocated to QIA expenses for MLR reporting
purposes. The fact that the employee uses this software to write QIA
documents in addition to other documents does not convert this
otherwise general non-claims, administrative cost into one of the types
of expenses eligible to be included in the MLR numerator as QIA
expenses.
Comment: A few commenters that opposed the proposal disagreed with
the classification of the administrative expenses and profits of
issuers' QIA vendors as indirect expenses. These commenters stated that
this approach will disincentivize issuers from engaging vendors with
appropriate expertise. Some commenters stated that vendors'
administrative expenses and profits should be treated in the same
manner regardless of whether vendors perform clinical services or QIA.
Response: We disagree that clinical providers' administrative costs
and profits are analogous to non-clinical providers' administrative
costs and profits. Clinical services are a provider function. QIA, on
the other hand, is an issuer function. Where an issuer performs its own
QIA without engaging a vendor, any ``profit'' that it makes on such QIA
cannot be included in the MLR calculation. Accordingly, where an issuer
chooses to outsource its QIA to a third party, rather than developing
the necessary skills in-house, as it does for other issuer functions
such as claims
[[Page 27352]]
processing, network development, clinical policies, and case and
utilization management, for example, for MLR reporting and rebate
purposes that vendor stands in the shoes of the issuer. Consequently,
the vendor's indirect costs, as well as any profit, cannot be reported
as a QIA expense that is included in the MLR calculation.\354\ We also
disagree with the assertion that disallowing issuers to include QIA
vendor administrative expenses and profits in QIA will disincentivize
issuers from engaging with vendors with the appropriate expertise
because, as noted, if the issuer were to perform the QIA itself, those
same administrative expenses and profits would still not be a
permissible inclusion in QIA. Further, many issuers have not been
dissuaded from outsourcing claims processing, network development,
clinical policies, and case and utilization management (UM) to vendors
who have the respective, requisite expertise even though they cannot
include the vendor's administrative expenses and profits in their MLR
calculations.
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\354\ See 45 CFR 158.140(3)(ii) and CCIIO Technical Guidance
(CCIIO 2011-002): Questions and Answer Regarding the Medical Loss
Ratio Interim Final Rule, May 13, 2011, Q&As 10-14, at https://wayback.archive-it.org/2744/20200125161941/https://www.cms.gov/CCIIO/Resources/Files/Downloads/mlr-guidance-20110513.pdf.
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Comment: A commenter urged us to review how insurers are
categorizing their UM expenses and set clear guardrails around when, if
ever, such activities can be categorized as QIA.
Response: We agree with the commenter that certain UM activities
are designed to target cost-containment rather than quality
improvement. To that end, under current regulations at Sec.
158.150(c), issuers cannot include in QIA any prospective or concurrent
UM costs or any retrospective UM costs that do not meet the definition
of a QIA. Additionally, in the course of performing MLR examinations,
HHS routinely reviews the UM program expenses that issuers report as
QIA to ensure they comply with the regulatory requirements. We believe
the current regulations provide sufficient guardrails on the reporting
of UM expenses and therefore did not propose, and are not finalizing,
any such changes at this time.
Comment: One commenter requested that we allow health equity
accreditation costs in QIA.
Response: Issuers are currently permitted by Sec.
158.150(b)(2)(i)(A)(5) to include in QIA expenses the costs associated
with accreditation fees that are directly related to the quality of
care activities. Therefore, to the extent, a health equity activity
requiring accreditation meets the definition of a QIA at Sec. 158.150,
such accreditation fees can be reported as QIA expenses.
Comment: One commenter requested that the definition of QIA be
revised to explicitly include issuer payments to providers for quality
or clinical improvements directed at people with disabilities, such as
the purchase of accessible medical and examination equipment.
Response: We did not propose and are not finalizing regulatory
changes to address issuer payments to providers for quality or clinical
improvements directed at people with disabilities. As such, modifying
the regulation to specifically allow issuers to include expenses such
as payments to clinical providers to purchase accessible medical office
equipment for people with disabilities is out of the scope of this
rulemaking. However, we note that to the extent such equipment
purchases meet the requirements of Sec. 158.150, Sec. 158.151, or
Sec. 158.162(c), they may be included as QIA expenses in issuers' MLR
calculations.
Comment: A few commenters requested that we clarify in which MLR
reporting year the clarification is effective and requested that the
effective date be prospective, suggesting that it should be effective
beginning with the 2023 MLR reporting year to allow for contract
renegotiation.
Response: We note that in the course of conducting MLR
examinations, we have consistently disallowed some of the more
egregious types of indirect expenses that issuers have reported and
which we believe are unambiguously inconsistent with the spirit and
intent of the law. Therefore, we are clarifying that this change is
effective beginning with the 2021 MLR reporting year (reports due July
31, 2022). However, to allow issuers additional time to revise their
reporting processes or undergo contract negotiations (and
renegotiations), we intend to maintain the existing enforcement posture
with respect to the MLR reports filed for the 2021 MLR reporting year,
and will otherwise exercise enforcement discretion to not penalize
issuers who make good faith efforts to comply and report QIA consistent
with the clarifications in this rule until the 2022 MLR reporting year
(reports due July 31, 2023). Issuers should not interpret this
enforcement approach to justify reporting any and all indirect QIA
expenses on their 2021 Annual MLR Reporting Forms; instead it is
intended to provide a transition in the limited situations, such as
those identified by the commenter, that present barriers to adjusting
the issuer's reporting practices for the 2021 MLR reporting year.
After consideration of the comments received on this proposal, we
are finalizing the amendment to Sec. 158.150(a) to specify that only
expenditures directly related to activities that improve health care
quality may be included in QIA expenses, as proposed.
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.\355\
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 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 the 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 proposed to make a technical
amendment to Sec. 158.170(b) to correct this oversight and remove the
reference to the percentage
[[Page 27353]]
of premium QIA reporting option described in Sec. 158.221(b)(8).
---------------------------------------------------------------------------
\355\ 86 FR 24140.
---------------------------------------------------------------------------
We summarize and respond to public comments received on the
allocation of expenses proposed technical amendment (Sec. 158.170).
Comment: No commenters commented on this technical correction, but
a commenter requested we reconsider and permit the previous allowance
for plans to report 0.8 percent of earned premium as QIA in the MLR
numerator to reduce the effort required of issuers to identify, track,
and report QIA.
Response: While we appreciate the comment, as stated above, this
change aligns Sec. 158.170(b) with the vacatur of Sec. 158.221(b)(8)
by the United States District Court for the District of Maryland in
City of Columbus. We are therefore finalizing this technical correction
as proposed.
G. Solicitation of Comments on Health Equity, Climate Health, and
Qualified Health Plans
To further HHS' 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, HHS is considering other ways to
incorporate health equity standards through HHS' authority to enhance
criteria for the certification of QHPs or by leveraging existing QHP
requirements such as the Network Adequacy Standards at Sec. 156.230
and Accreditation of QHP Issuers at Sec. 156.275. We also sought 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.
We also sought comment on ways HHS might improve its understanding
of the existing landscape of issuer collection of health equity data,
including demographic information, as well as comment on how HHS might
assess data sources that focus on population-level factors made
available by governments, quasi-governmental entities, data vendors and
other organizations. Specifically, we sought input on, among other
things, health equity assessment tools, the challenges QHP issuers
could face implementing a new accreditation product on health equity;
\356\ and information on the demographic or SDOH data QHP issuers
currently collect from enrollees. We summarize and respond to public
comments received on HHS' solicitation of comments on health equity and
climate health.
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\356\ Health Equity. National Committee for Quality Assurance.
https://store.ncqa.org/accreditation/health-equity-he.html.
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Comment: Commenters supported CMS' suggestion for QHP issuers to
obtain a health equity accreditation, and some specified support for
the National Committee for Quality Assurance (NCQA) Health Equity
Accreditation to encourage issuers to take meaningful steps to advance
health equity. Some commenters expressed concerns that the scope of the
NCQA's Heath Equity Accreditation was too narrow, noting that the NCQA
does not explicitly discuss disability status in their accreditation
language and that the accreditation is still new while other commenters
found the NCQA's Health Equity Accreditation requirements too broad. In
addition, commenters noted that NCQA may have not collaborated with the
historically marginalized groups that are disproportionately impacted
by health disparities when they developed the parameters of the
accreditation. Furthermore, some commenters expressed concern with CMS
sourcing a health equity accreditation from one accrediting body,
suggesting that other organizations' accreditations may also provide
useful parameters and requirements. A few commenters expressed that
requiring any additional QHP accreditations would create significant
cost and burdens for issuers.
Response: We appreciate commenters' input on potentially requiring
issuers to obtain a health equity accreditation and the challenges QHP
issuers could face implementing a new accreditation product. We will
consider the feedback as we continue to explore options for advancing
health equity in the Exchanges.
Comment: Commenters supported the idea of collecting demographic or
SDOH data, including information on enrollees' race, ethnicity, gender,
sexual orientation, primary language, and disabilities, while also
acknowledging the challenges of collecting data.
Commenters encouraged HHS to set standards for how issuers and
other stakeholders should collect demographic data and suggested that
recommendations from the Institute of Medicine, the Williams Institute
at the University of California, Los Angeles, and forthcoming
recommendations from the National Academies of Sciences, Engineering,
and Medicine could offer foundational guidance. Commenters also
suggested that HHS set an example for improving data collection.
While noting the importance of collecting accurate demographic
data, some commenters identified data sharing and use agreements,
Federal privacy and data protection laws, State laws, and a lack of
formal standards for collecting data as barriers that may impede
issuers' abilities to meaningfully collect and use SDOH and demographic
data.
Response: We appreciate the commenters' insight into the current
landscape of demographic data and SDOH. We will take these comments
into consideration when considering ways to advance health equity
through QHPs.
Comment: Commenters provided examples of datasets related to
population factors that CMS could leverage to analyze whether QHP
networks are providing adequate access to health care services for
members within specific geographic areas, such as social vulnerability
index scores, provider and consumer data, Provider Master Index/Shared
Provider Profile (PMI/SPP), and census data.
Response: We will consider the use of these data sources to analyze
and evaluate QHPs' performance related to providing equitable access to
health care services.
Comment: Some commenters commented on the ability of QHP issuers to
tailor provider networks based on the health needs of enrollees in
specific geographic areas. Commenters were supportive of tailored
provider networks, noting that issuers could contract with and develop
networks based on the health needs of their enrollees, which issuers
could identify through improved data collection. Commenters suggested
QHP issuers could conduct this work in concert with CMS' ECP
requirements.
Response: We appreciate the input and will consider the feedback as
we continue to explore ways to promote health equity.
Comment: Commenters discussed health conditions and outcomes
variables for which analysis and measurement may help CMS promote
health equity. While many of these commenters encouraged CMS to use
appropriate variables to promote health equity without providing
specific feedback, some commenters identified populations that were
vulnerable and may require target interventions to improve health
outcomes. Some examples of the populations identified
[[Page 27354]]
were minority mothers, individuals with diagnosed opioid use disorder
or substance use disorders, individuals with special immigrant juvenile
status, and individuals with behavioral health conditions.
Some commenters also suggested options that CMS could consider to
effectively use outcome variables for analysis and measurement, which
included relying on network adequacy standards to ensure that adequate
health care services are available and provided, adding Value-Based
Insurance Designs into the Exchanges, increasing the ratio of required
Essential Community Provider contracts, and educating providers on the
use of ICD-10 z-codes.
Response: We appreciate the suggestions for the use of health
conditions and outcomes variables for which analysis and measurement
may help CMS promote health equity. HHS understands the importance of
addressing vulnerable populations as it continues to explore ways to
promote health equity.
Comment: Several commenters offered feedback on ways in which CMS
could encourage QHP issuers to be accountable for improving health
outcomes across all populations equitably. Commenters suggested that
CMS encourage QHP issuers to engage with local organizations and become
more integrated with providers and other community partners. Commenters
also suggested that CMS could hold QHP issuers financially accountable
for integrating with the communities they serve or for a small number
of clinical measures.
Response: We will consider these suggestions as ways to advance
health equity through QHPs.
Comment: Some commenters suggested that CMS could incentivize QHP
issuers to advance health equity outside of the QHP certification
requirement by considering activities that promote health equity as a
QIA within MLR calculations or tie equity to plans' quality ratings.
Several commenters recommended that we define QIA to explicitly include
expenses related to coverage of SDOH and interventions that address
social barriers to care or other health disparities. One commenter
requested that we specify what types of SDOH expenses qualify as QIA.
Response: We appreciate these comments and supports issuers'
efforts to design plans that improve health equity and address SDOH and
will consider these suggestions as ways to promote health equity. While
modifying the MLR regulation and framework to explicitly allow issuers
to include investments in SDOH is outside the scope of this rulemaking,
we will consider these comments for future rulemaking or guidance. We
note that under the current MLR regulation at Sec. 158.140, issuers
can include SDOH costs in incurred claims if the SDOH expenses are for
a covered policy benefit. Issuers can also include SDOH expenses that
do not relate to covered benefits in QIA if the underlying activity
meets the definition and applicable criteria for QIA at Sec. 158.150.
Additionally, issuers exempt from Federal income tax or not subject to
State premium taxes can, pursuant to Sec. Sec. 158.162(b)(1)(vii) or
158.162(b)(1)(viii), respectively, deduct the expense from earned
premium to the extent their SDOH expenses meet the regulatory
definition of Community Benefit Expenditures under Sec. 158.162(c).
Comment: Commenters discussed challenges that QHP issuers face in
promoting and advancing health equity, but did not specify strategies
that could overcome these challenges. Challenges included lack of
Federal guidance and standardization for data collection.
Response: We appreciate the feedback and will consider these
suggestions as we explore ways to promote health equity.
Comment: Commenters suggested several health equity tools that may
help CMS address health disparities within QHPs, for example, Area
Deprivation Index, Population Health Assessment, Consumer Assessment of
Healthcare Providers and Systems (CAHPS) Survey, additional NCQA
resources, and updated HEDIS health equity measures. In addition,
commenters noted the Institute of Medicine, the Williams Institute at
UCLA, and the National Academies on race, ethnicity, and language (REL)
could offer models for health equity tools that CMS may want to
consider.
Response: We will consider these health equity tools as a way to
advance health equity through QHPs.
HHS also sought comment on how Exchanges and related health care
system organizations can more readily prepare for the impacts of
climate change. HHS believes that it is critical to study and prepare
for these impacts given mounting evidence linking climate change to
catastrophic natural events and chronic disease disproportionately
harming at-risk populations including groups already suffering serious
health disparities.
Comment: Of the 52 total comments received by HHS, all commenters
acknowledged the threats climate change presents to human health and
supported health care stakeholders considering the impact of climate
change on their enrollees, providers, and employees. Twenty-five
commenters supported the collection and public reporting of greenhouse
gas emissions data by providers and, in fewer cases, issuers. Thirteen
commenters noted the importance of preparing health care systems for
climate health threats by identifying at-risk enrollees prior to
climate change events to better assist them with access to cooling and
clean air resources. Twelve commenters suggested tying health care
system and provider reimbursement to action on climate change and
emissions reduction. Some commenters suggested incentives tied to
action, and others suggested fines due to lack of commitment. Twelve
commenters discussed the relationship between climate change and social
determinants of health, noting the importance of anticipating and
managing climate change's impact on the health of certain marginalized
and high-risk populations. Nine commenters suggested that issuers or
health care systems should further educate providers and enrollees
about the health effects of climate change. Three commenters noted the
importance of creating or updating measures sensitive to climate health
impacts. Two commenters noted the strong connection between climate
change and respiratory health problems. Additional commenters noted the
impact of climate change on maternal and child health; women's health;
skin cancers; and maintaining care quality. Commenters also mentioned
the need to develop better forecasting tools to anticipate climate
disasters and threats; maintaining care quality, and consider supply
chain contributions to overall health care sector emissions.
Specific insight was shared on possible actions health care systems
and issuers could take to better support preparedness for climate
disasters and related impacts, especially for at-risk populations, and
the opportunity for issuers to provide education and technical
assistance on climate resilience and emissions reduction to providers
and enrollees.
Response: These comments will inform HHS in determining how best to
support the health care system and benefit delivery changes in response
to climate change. These comments also will inform HHS through its
Office of Climate Change and Health Equity, as well as other Federal
agencies pursuing policies on climate change.
[[Page 27355]]
We will consider these comments as we consider ways QHPs can be
more effective in addressing climate health.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA), we are required to
provide 30-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
OMB for review and approval. This final 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 Tables 18 and 19.
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 solicited public comment on each of the required issues under
section 3506(c)(2)(A) of the PRA for the following information
collection requirements.
We summarize general comments on the Collection of Information
Requirements (ICR) below:
Comment: A few commenters provided general comments regarding the
ICR section of the proposed rule. These commenters urged HHS to
consider the impact of the various data collection requirements on
impacted entities. One commenter noted that the burden estimates
contained in the ICR compound, and urged HHS to consider their total
impact on the affected entities. Another commenter requested that HHS
suspend new data collection on the proposed policies during the COVID-
19 PHE to relieve the operational burden on impacted entities.
Response: We have carefully considered the burden of the
information collection requirements associated with the proposed
policies, including their combined impact, which is quantified in the
Final Annual Recordkeeping and Reporting Requirements Tables, and the
Accounting Table. While we appreciate the burden placed on all systems
during the COVID-19 PHE, we believe that the new information
collections for the finalized policies are necessary to carry out the
proper functions of the agency.
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.\357\ Table 17 in this final 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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\357\ May 2021 National Occupational Employment and Wage
Estimates. Available at Occupational Employment Statistics. (2022,
March 31). Bureau of Labor Statistics. https://www.bls.gov/oes/current/oes_stru.htm.
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[GRAPHIC] [TIFF OMITTED] TR06MY22.016
B. ICRs Regarding State Flexibility for Risk Adjustment (Sec. 153.320)
We are finalizing the proposal to repeal the risk adjustment State
flexibility to request reductions to risk adjustment State transfer
payments for the 2024 benefit year and beyond, as proposed. We are also
finalizing, as proposed, to provide an exception for the States that
previously submitted State flexibility requests under Sec. 153.320(d)
to allow those States to continue to request this flexibility in the
2024 benefit year and beyond. As part of this policy, we are also
finalizing, as proposed, the removal of the option for States applying
under this exception in the 2024 benefit year and beyond 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
market risk pool as a justification for the State's request and the
criteria for HHS
[[Page 27356]]
approval. This retains the de minimis standard as the only option for
prior participants to justify the reduction and for HHS to approve a
request and is designed to 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. Further, we are finalizing
this policy as proposed with the intention to propose in future
rulemaking to repeal the exception for prior participants beginning
with the 2025 benefit year to provide impacted stakeholders additional
time to prepare for this proposed change and the potential elimination
of this flexibility. Consistent with these policies, we finalized
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 of prior participants, and to remove one of the
criteria for State justification and HHS approval beginning with the
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. Since publishing the proposed rule, we have
updated the burden associated with this requirement based on the most
recent available national occupational employment and wage estimates
statistics. We estimate that submitting the request and supporting
evidence and analysis will take a business operations specialist 40
hours (at a rate of $76.20 per hour) to prepare the request and 20
hours for a senior operations manager (at a rate of $110.82 per hour)
to review the request and transmit it electronically to HHS. We
estimated that each State seeking a reduction will incur a burden of 60
hours at a cost of approximately $5,264.40 per State to comply with
this reporting requirement (40 hours for the insurance operations
analyst and 20 hours for the senior manager). We have updated the
estimated burden related to the submission of these requests because
only one State, will continue to have this ability to make this request
on the policy being finalized in this rule. In the 2019 Payment
Notice,\358\ we estimated that 25 States would submit requests and
provided a total burden of approximately 1,500 hours across all States,
which would total $131,610 based on current wage estimates. Since we
estimate that only one State will continue to request reductions, we
estimate that this burden will be reduced by $126,345.60 to a total
annual cost of $5,264.40, reflecting the burden associated with one
State's submission. We are finalizing this proposal to account for the
burden associated with this revision, HHS submitted a reinstatement
request to OMB for approval of the previously expired information
collection request (OMB control number 0938-1155/CMS-10401). As noted
in previous sections of this rule, HHS intends to propose in future
rulemaking to fully repeal the State flexibility framework and
eliminate the ability of prior participants to request reductions in
risk adjustment transfers starting with the 2025 benefit year.
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\358\ 82 FR 51118.
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We did not receive any comments in response to the information
collection requirements related to the proposed policy.
C. ICRs Regarding Distributed Data and Risk Adjustment Data Submission
Requirements (Sec. Sec. 153.610, 153.700, and 153.710)
We are finalizing the proposal to collect and extract five new data
elements from issuers' EDGE servers: ZIP Code, race, ethnicity, ICHRA
indicator, and subsidy indicator beginning with the 2023 benefit year.
Specifically, we are finalizing that starting with the 2023 benefit
year, issuers will be required to populate the ZIP Code data field,
using the five-digit level based on the enrollee's mailing address, and
the subsidy indicator data field, which is intended to indicate whether
a particular enrollee is (or is not) receiving APTC. For the 2023 and
2024 benefit years, we are adopting a transitional period during which
issuers are required to populate the fields for race and ethnicity
using only data they already collect or have accessible regarding their
enrollees.\359\ For example, for the 2023 and 2024 benefit years, for
race and ethnicity data, issuers will be deemed in compliance if they
submit these data elements using data they already have or collect
through existing means, including, for example, through enrollee data
captured and reported to the issuer by the FFE, SBE-FPs, and State
Exchanges at the time of enrollment. Then, beginning with the 2025
benefit year, the transitional approach will end, and issuers will be
required to populate the fields using available sources and, in the
absence of such an existing source for particular enrollees, to make a
good faith effort to ensure collection and submission of the race and
ethnicity data for these enrollees.
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\359\ HHS will collect these data elements in a format that is
consistent with the 2011 HHS Data Standards. We also will provide a
value for the race or ethnicity data elements that allows issuers to
indicate that race or ethnicity are not known for a specific
enrollee in recognition of situations where the enrollee declines to
provide the information and situations where the issuer does not
have an available data source to populate the fields.
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We are also finalizing, with slight modification, collection of the
ICHRA indicator. For the 2023 and 2024 benefit year, similar to the
transitional approach for race and ethnicity data, issuers are required
to populate the field for the ICHRA indicator using only data they
already collect or have accessible regarding their enrollees. Then,
beginning with the 2025 benefit year, the transitional approach will
end, and issuers will be required to populate the field using available
sources (for example, information from Exchanges and small employers,
and requesting information directly from enrollees) and, in the absence
of an existing source for particular enrollees, to make a good faith
effort to ensure collection and submission of the ICHRA indicator for
these enrollees. HHS will provide additional details on what
constitutes a good faith effort to ensure collection and submission of
the race, ethnicity, and ICHRA indicator data elements beginning with
2025 benefit year data submissions in the future.\360\
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\360\ After the transitional approach ends (beginning in the
2025 benefit year), the option to select the value to indicate race
or ethnicity are not known for a specific enrollee will be available
to issuers who comply with the good faith standard but are unable to
populate the race or ethnicity EDGE data field for one or more
enrollees.
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In addition, as detailed earlier, we are finalizing the extraction
of the three data elements that issuers already make accessible to HHS
as part of the required risk adjustment data--plan ID, rating area, and
subscriber indicator--but will extract plan ID and rating area
beginning with the 2021 benefit year, and the subscriber indicator
beginning with the 2022 benefit year. We concluded the proposals to
extract these data elements will not pose an 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 did not
propose to change the existing burden for the proposal to extract plan
ID, rating area, and subscriber indicator.
For the five new data elements we proposed to collect beginning
with the 2023 benefit year, we estimated that approximately 600 issuers
would be subject to this new data collection. We proposed to collect
these new data elements via issuers' ESES files and risk adjustment
recalibration enrollment files. In the proposed rule (87 FR 584 and
695), we estimated a cost of
[[Page 27357]]
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 was $225,168 for 600 issuers
(2,400 total hours per year for all issuers). We explained the
proposals to extract these data elements would not pose an additional
operational burden to issuers, since the creation and storage of the
extract are mainly handled by HHS. We are finalizing the proposed
collection and extraction of ZIP Code, race, ethnicity, the ICHRA
indicator, and the subsidy indicator. HHS submitted a reinstatement
request to OMB for approval of the previously expired information
collection request (OMB control number 0938-1155/CMS-10401). Once
reinstated, HHS will revise the information collection request to
account for the burden associated with this policy, and will provide
the applicable comment periods.
After a review of the comments received, and after incorporating
the most recently updated wage estimate data, we are updating the
burden estimates for this policy as described below.
We summarize and respond to public comments received on ICRs
related to Distributed Data and Risk Adjustment Data Submission
Requirements (Sec. Sec. 153.610, 153.700, and 153.710) below.
Comment: One commenter disagreed with the estimated 4 hours of work
per issuer to collect and submit additional data elements estimated in
this section of the proposed rule and reflected in the regulatory
impact analysis of the proposed rule. The commenter stated that the
cost associated with these collection and extraction proposals would be
500 hours of work per issuer. The commenter did not provide further
detail regarding the methodology used to calculate its burden estimate
of 500 hours.
Response: We are finalizing the proposal to require issuers of risk
adjustment covered plans to submit and make accessible five new data
elements (ZIP Code, race, ethnicity, the ICHRA indicator, and the
subsidy indicator) as part of the enrollee-level EDGE data to HHS in
States where HHS operates the risk adjustment program beginning with
the 2023 benefit year. We are also finalizing the accompanying proposal
for HHS to extract these data elements once available. To better
reflect the most current agency estimates, we have modified the
estimates from our proposed rule. Currently, all issuers that submit
data to their EDGE servers \361\ have automated the creation of data
files that are submitted to their EDGE servers. For successful EDGE
server data submission, each issuer will need to update their file
creation process to include the five new data elements, which will
require a one-time administrative cost. After incorporating the most
recently updated wage estimate data, we estimate this cost at $2,899.80
(reflecting 30 hours of work by a management analyst at an average
hourly rate of $96.66 per hour). In addition, rather than 4 hours of
work, we now estimate, based on the most current agency estimates, that
the new data collection will require 5 hours of work by a management
analyst (one hour of work per new data element collected), at an
average hourly rate of $96.66 per hour. We have limited this estimate
to the incremental information collection associated with the
requirements of the new data collection. As such, although the new data
collection requires that issuers transform and submit additional data
elements, it does not require changes to the process or distributed
data collection approach currently used by an issuer to submit and make
risk adjustment data accessible to HHS, which is via issuers' ESES
files and risk adjustment recalibration enrollment files on their EDGE
servers. We also estimate that approximately 650 issuers, rather than
600 issuers as initially estimated, will be subject to this new data
collection. Based on these modifications, we estimate approximately
$483.30 in total labor costs per year for each issuer. In addition, the
cumulative one-time cost to update issuers' file creation process is
$1,884,870 for 650 issuers (19,500 total hours for all issuers). The
cumulative additional annual cost estimate as a result of this proposal
is $314,145 for 650 issuers (3,250 total hours per year for all
issuers).
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\361\ Issuers that elect a risk adjustment default charge are
not required to submit EDGE data. See 45 CFR 153.740(b) and 81 FR at
12237-12238. Also see, for example, Summary Report on Permanent Risk
Adjustment Transfers for the 2020 Benefit Year (2021, June 30). CMS.
https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2020.pdf.
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In addition, we are finalizing the proposed extraction of the three
data elements that issuers already make accessible to HHS as part of
the required risk adjustment data--plan ID, rating area, and subscriber
indicator--but will extract plan ID and rating area beginning with the
2021 benefit year, and the subscriber indicator beginning with the 2022
benefit year. As explained previously in this rule and in the proposed
rule, extracting these data elements will not pose an additional
operational burden to issuers since the creation and storage of the
extract are not received by issuers and is primarily handled by HHS.
Therefore, there is no additional issuer burden associated with
extracting any of the new data elements that will be collected (ZIP
Code, race, ethnicity, the ICHRA indicator, and the subsidy indicator),
or with extracting the data elements that are already being collected
(plan ID, rating area, and subscriber indicator).
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)
In this final rule, we are finalizing the proposal to revise Sec.
155.220(c)(3)(i)(A) to include at proposed new Sec. Sec.
155.220(c)(3)(i)(A)(1) through (6) \362\ a list of the QHP comparative
information web-broker non-Exchange websites are required to display
consistent with Sec. 155.205(b)(1). We are also finalizing the
proposal 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. We are finalizing as proposed.
---------------------------------------------------------------------------
\362\ While the preamble in the proposed rule referred to
amendments to add new Sec. 155.220(c)(3)(i)(A)(1) through
(c)(3)(i)(A)(5), the discussion of the proposal and the proposed
regulations made clear that the proposal would add new Sec.
155.220(c)(3)(i)(A)(1) through (c)(3)(i)(A)(6). See, for example, 87
FR 641 through 642 and 721 through 722.
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The revised disclaimer policy should result in a very limited new
burden for web-brokers. The new standardized disclaimer requires 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 will be displaying a disclaimer much like the
plan detail disclaimer that they have historically been required to
display.
We estimated the revised disclaimer policy 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
[[Page 27358]]
web-brokers. Given the minor modifications necessary to implement the
revised disclaimer, we estimated 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 policy is
$8,220 for 20 web-brokers in the 2022 benefit year. We have updated
these estimates based on the most recent available national
occupational employment and wage estimates. We estimate a cost of $459
in total labor costs for each web-broker, which reflects 5 hours of
work by Web and Digital Interface Designers (15-1255) per web-broker
(100 hours across all web-brokers annually) at an average hourly rate
of $91.80. The cumulative additional cost estimate as a result of the
revised disclaimer policy is $9,180 for 20 web-brokers in the 2022
benefit year. We are finalizing this proposal and will revise the
information collection under OMB control number 0938-1349 accordingly
and provide the applicable comment periods.
We are also finalizing the proposal to amend Sec. 155.220 to add a
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 the plan name,
from lowest to highest premium, etc.). We are finalizing as proposed.
This policy should result in very limited new costs for web-
brokers, since the information it requires they display on their
websites is limited to text-based changes that are relatively easy to
implement. Some web-brokers are already providing the information, and
therefore, will not have to make any website updates. Other web-broker
websites do not explicitly recommend QHPs, and therefore, the impact is
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. Furthermore, the extent of those textual
updates should be relatively minor in most cases. We expect
explanations to be short and easy for consumers to understand.
Generally, we believe that a single phrase or a few sentences will
suffice.
We estimated this policy 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 estimated 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 policy is $8,220 for 20 web-brokers in the 2022 benefit
year. We have updated these estimates based on the most recently
available national occupational employment and wage estimates. We
estimate a cost of $459 in total labor costs for each web-broker, which
reflects 5 hours of work by Web and Digital Interface Designers (15-
1255) per web-broker (100 hours across all web-brokers annually) at an
average hourly rate of $91.80. The cumulative additional cost estimate
as a result of this policy is $9,180 for 20 web-brokers in the 2022
benefit year. We are finalizing this proposal and will 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 proposed to amend Sec. 155.420 to add a 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 the burden on
consumers applying for special enrollment period types that no longer
require pre-enrollment verification. We expected 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 compared to a
total of 970,000 individuals in 2019. We estimated 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. We have updated these estimates to reflect the most recent
wage estimates based on the most recent national occupational
employment and wage estimates. We anticipate that it will take an
Eligibility Interviewer approximately 12 minutes (at an hourly cost of
$46.70) 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 130,000 hours at a cost of $5,306,600.\363\ 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 the annual burden for
the Federal Government of 38,800 hours at a cost of $1,811,960. It
would also result in a decrease in the annual burden for consumers
attesting to special enrollment period types that no longer require
document verification of 194,000 hours.
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\363\ 82 FR 18346.
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We are finalizing this requirement 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).\364\
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\364\ 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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[[Page 27359]]
We did not receive any comments in response to the information
collection requirements related to the proposed policy.
F. ICRs Regarding General Program Integrity and Oversight Requirements
(Sec. 155.1200)
1. Programmatic Audit Requirement (Sec. 155.1200(c))
We proposed 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 proposed under part
155, subpart P. We estimated that there would be a burden reduction for
State Exchanges related to the programmatic audit requirement under
Sec. 155.1200(c). Based on industry estimates of the average cost of
contracting an auditor to conduct an independent external programmatic
audit, HHS estimated 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 the SMART. 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 estimated 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 expected 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.
We requested comment on the reduction in burden proposed, and
specifically sought feedback from State Exchanges regarding the annual
cost of the programmatic audit process.
We did not receive any comments in response to the information
collection requirements related to the proposed policy. We are not
finalizing this provision at this time. Since we are not finalizing
this provision, we have not provided updated burden estimates based on
the most recently published wage estimate date. We provide further
details in the preamble section of this final rule.
2. Reporting on APTC Calculation Methodology (Sec. 155.1200(b)(2))
We are finalizing to codify the proposed APTC proration methodology
to be used by the Exchanges on the Federal platform, but we are not
finalizing the requirement to prorate premium or APTC amounts for State
Exchanges. Rather, beginning in PY 2024 we will require State Exchanges
to implement a methodology to ensure that the total monthly APTC amount
does not exceed an enrollee's monthly PTC eligibility to maintain
compliance with HHS and IRS regulations. We are also finalizing the
requirement that State Exchanges must prospectively report to HHS
through existing State Exchange oversight mechanisms described at Sec.
155.1200(b)(2) the methodology the State Exchange plans to use in PY
2024. The requirement to report this methodology to HHS will be
fulfilled through the SMART and will impose minimal burden on State
Exchanges, who already report on eligibility and enrollment and
compliance with other Exchange program requirements through this tool.
This information collection is currently approved under OMB control
number: 0938-1244 (Expiration date July 31, 2022/CMS-10507).
G. ICRs Regarding State Exchange Improper Payment Measurement Program
(Sec. Sec. 155.1500-155.1540)
1. Data Collection (Sec. 155.1510)
As described in the preamble to Sec. 155.1510, we explain the
sampling process for each SEIPM review cycle. In Sec. 155.1510(a)(1),
we proposed 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
proposed 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 the 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 expected 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 did not expect reporting costs to vary considerably
based on sample size. We sought comment on these assumptions.
We estimated 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 State Exchange into the burden estimates.
HHS estimated 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.
[[Page 27360]]
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 believed 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 proposed 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 estimated that it would take each selected State Exchange up
to 1,000 hours to develop a CAP. We estimated 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 estimated 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.
After reviewing the public comments received for the SEIPM program
proposal, we will not finalize this provision at this time. We have not
provided updated burden estimates for any of the elements associated
with the SEIPM program policy to reflect the most recent wage estimate
data, as we are not finalizing this provision and the final estimated
burden will not be included in the Accounting Table (Table 20). We
summarize and respond to public comments received on ICRs Regarding
State Exchange Improper Payment Measurement program (Sec. Sec.
155.1500 through 155.1540) below.
Comment: One commenter stated their State Exchange currently
expends approximately $280,000 annually on other audit requirements.
The commenter noted the SEIPM program will require significant changes
to their reporting systems, as well as providing access to certain
data. The commenter noted that CMS' estimated annual cost of the SEIPM
program at $3 million is over 10 times what their State Exchange spends
on all of its current audits. Other commenters did not estimate the
dollar amount of the burden cost to their State Exchanges but expressed
concern about duplicative data collection and needed IT investments.
Response: After considering the public comments received, we will
not finalize the SEIPM program proposal at this time. We will solicit
public comments on the SEIPM program in future rulemaking.
H. ICRs Regarding State Selection of EHB-Benchmark Plan for Plan Years
Beginning on or After January 1, 2020 (Sec. 156.111)
We proposed 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.\365\
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\365\ See 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,\366\ repealing the annual reporting requirement will
also remove the associated ICRs and the anticipated burden on States
submitting such reports. Thus, as we are finalizing 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).
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\366\ 86 FR 24140.
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After reviewing the public comments, we are finalizing the repeal
of the annual reporting policy at Sec. 156.111(d) and (f), including
revising the section heading to Sec. 156.111 to instead read, ``State
selection of EHB-benchmark plan for PYs beginning on or after January
1, 2020.''
I. ICRs Regarding Differential Display of Standardized Plan Options on
the Websites of Web-Brokers (Sec. 155.220) and QHP Issuers (Sec.
156.265)
As detailed above, we are resuming enforcement of the standardized
plan option 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, beginning with the PY 2023 open enrollment period.
We estimated that a total of 110 web-brokers and QHP issuers
participating in the FFEs and SBE-FPs would be
[[Page 27361]]
required to comply with these requirements. We estimated 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. Therefore, we estimated a total annual burden of 220 hours at a
cost of $18,804 for all applicable web-brokers and QHP issuers. Since
the proposed rule, we have updated these estimates to reflect the most
recently available national occupational employment and wage data. We
estimated that it would take a web digital interface designer (OES
occupational code 15-1255) 2 hours annually, at an average hourly cost
of $91.80 per hour, to implement these changes, at a total annual cost
of $183.60 per entity. Therefore, we estimated a total annual burden of
220 hours at a cost of $20,196 for all applicable web-brokers and QHP
issuers.
Consistent with the approach finalized in the 2018 Payment
Notice,\367\ we continue to recognize that system constraints may
prevent web-broker and QHP issuers from mirroring the HealthCare.gov
display. We therefore will 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
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.
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\367\ 81 FR 94118.
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We estimated that 55 of the above web-brokers and QHP issuers would
submit a request to deviate from the manner in which standardized plan
options are differentially displayed on HealthCare.gov. We estimated 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. Therefore, we estimated 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. Since the proposed rule, we
have updated these estimates to reflect the most recently available
national occupational employment and wage estimates. We estimate it
would take a compliance officer (OES occupational code 13-1041)
approximately 1 hour annually, at a rate of $72.90 per hour, to
complete the request to deviate from the display on HealthCare.gov, as
well as the justification for the request. Therefore, we estimated a
total annual burden for all web-brokers and issuers subject to the
differential display requirements submitting a request to deviate of
approximately $4009.50 beginning in 2023.
To account for the burden associated with this ICR, (Non-Exchange
Entities--OMB control number 0938-1329 (CMS-10666)) HHS submitted a
reinstatement request to OMB for approval to restore the previously
discontinued request.
We did not receive any comments in response to the information
collection requirements related to the proposed policies.
J. ICRs Regarding Network Adequacy and Essential Community Providers
(Sec. Sec. 156.230 and 156.235)
We are finalizing amendments to Sec. 156.230, including the
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 finalized raising the ECP provider
participation standard 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. Reviews of appointment wait time standards will begin in
the QHP certification cycle for PY 2024. Lastly, an issuer must report
the offering of telehealth services for each provider to help inform
the future development of telehealth standards. We provided the
definition of telehealth in the draft PY 2023 Letter to Issuers.
Issuers will be required 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 can 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 final 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 the
geographic location of ECPs in an issuer's provider network. Since we
are finalizing raising 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.\368\ 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 increase in the ECP threshold would
somewhat increase the 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.
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\368\ The ECP/NA template requires QHP issuers to report only
that number of providers sufficient to demonstrate compliance with
relevant requirements.
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The 20-hour burden estimate for the ECP/NA template also includes
the 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 finalized a broader provider specialty list for time and distance
standards than was evaluated for PYs 2015-2017. We also added
appointment wait time standards and will begin implementing network
adequacy reviews of appointment wait time standards in PY 2024. HHS
estimates that the burden
[[Page 27362]]
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
4 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 estimated that the total annual burden associated with
completing the additional requirements proposed within the ECP/NA
template for medical QHPs for up to 215 issuers would be up to 4,300
hours. Assuming the compliance officer's average hourly rate of $36.35
per hour, plus a 100% fringe benefit rate of $36.45, we estimated 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
estimated that the total annual burden associated with this requirement
for SADPs for up to 270 issuers would be up to 1,080 hours. Assuming
the compliance officer's average hourly rate of $36.35 per hour, plus a
100 percent fringe benefit rate of $36.35, we estimated 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.
Since publishing the proposed rule, we have updated these estimates
to reflect the most recently available national occupational employment
and wage estimates. We currently estimate that the total annual burden
associated with completing the additional requirements proposed within
the ECP/NA template for medical QHPs for up to 215 issuers would be up
to 4,300 hours. Assuming the compliance officer's average adjusted
hourly rate of $72.90 per hour, we estimate that the cost of completing
the ECP/NA template for an individual medical QHP could be up to $1,458
and for all 215 issuers, up to $313,470. We estimate that the total
annual burden associated with this requirement for SADPs for up to 270
issuers would be up to 1,080 hours. Assuming the compliance officer's
average adjusted hourly rate of $72.90 per hour, we estimate that the
cost of completing the ECP/NA template for an individual SADP could be
up to $291.60, and for all 270 issuers, up to $78,732. The total
estimated cost for the annual burden associated with completing the
ECP/NA template across both medical QHP and SADP issuers is $392,202.
HHS submitted the Essential Community Provider-Network Adequacy
(ECP/NA) Data Collection to Support QHP Certification information
collection request (OMB control number 0938-NEW/CMS-10803) to OMB to
request approval for data collections related to essential community
provider and network adequacy requirements, which includes the changes
finalized in this final rule. The existing information collection for
QHP certification (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 in this rule.
We summarize and respond to public comments received on ICR
regarding network adequacy and essential community providers
(Sec. Sec. 156.230 and 156.235) below.
Comment: Commenters submitted two remarks regarding the burden
estimates associated with the addition of telehealth data collection
reporting for SADPs. Commenters expressed concern that the burden was
underestimated for SADPs and should be reassessed. The commenters
shared that they believe the burden is underestimated because: SADPs do
not currently collect data on telehealth; the estimate does not include
costs for a second reviewer; and the hourly rate and total estimated
hours are too low.
Response: We appreciate the feedback received on the burden
estimates for SADPs. HHS is aware that the actual burden will vary for
each QHP based on a variety of factors. We acknowledge that telehealth
data collection may increase the burden for some QHPs, including SADPs.
We are also aware that some QHPs already have telehealth data
available, from sources like claims data or provider surveys. We have
reflected the telehealth data collection requirement in our burden
estimates and believe these estimates are reasonable. For issuers that
have not yet received responses from providers regarding telehealth
availability and do not have that information available from other
sources, like claims data, they can select the response on the template
that they are awaiting a response from that provider.
For QHP certification data collection and reporting, we use the
mean hourly wages for a compliance officer to estimate costs. This data
was retrieved from the Bureau of Labor Statistics website.\369\ HHS
believes that this job title and associated hourly wage provide a
reasonable basis for our estimates. We understand that multiple staff
at different levels may be involved and the total number of anticipated
hours reflects that. It is up to each issuer to determine their process
for collecting and reporting ECP/NA data and how many staff are
involved. We will collect user experience data regarding the
information collection requirements related to network adequacy and
will reassess burden estimates for future years as needed.
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\369\ Occupational Employment and Wages, May 2021. (2022, March
31). Bureau of Labor Statistics. https://www.bls.gov/oes/current/oes131041.htm.
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Comment: Two commenters expressed concern that the burden estimate
was too low.
Response: HHS believes the burden estimates accurately reflect the
time it takes for an issuer to complete the activities described in
this package and bases its estimates on extrapolation from experience
in prior plan years.
Comment: One commenter stated that updates made to ECP/NA data
collection are necessary and should be approved.
Response: HHS agrees that the ECP/NA data collection is necessary
to
[[Page 27363]]
support the ECP/NA portions of the QHP certification review process.
Comment: Some commenters recommended that HHS defer to States that
have similar network adequacy standards as the Federal network adequacy
standards, and coordinate with States and NAIC where possible.
Response: As described in the preamble of this rule, HHS will defer
to States performing plan management that elect to perform their own
reviews during QHP certification, provided that the State applies and
enforces network adequacy standards that are at least as stringent as
the Federal standards. HHS will continue to coordinate with States and
NAIC.
Comment: A commenter encouraged HHS to identify plans that use very
narrow networks as a discriminatory enrollment selection process rather
than to control costs.
Response: HHS appreciates this suggestion and will consider the
possibility of identifying plans that use narrow networks as a method
to deter consumers with greater health needs from enrollment.
Comment: Some commenters recommended that HHS align network
adequacy standards with NCQA and Utilization Review Accreditation
Commission (URAC) standards.
Response: HHS reviewed the NCQA and URAC standards regarding
network adequacy. We believe it is appropriate to align with NCQA in
its use of business days to measure appointment wait time standards,
which will be finalized in the final PY 2023 Letter to Issuers. We will
also finalize that the appointment wait time standard for the
behavioral health category will align with NCQA's standards. NCQA and
URAC do not have quantitative parameters for the other categories we
are finalizing for appointment wait times nor do they have quantitative
standards for time and distance.
Comment: One commenter requested HHS allow providers from multiple
network tiers to be considered when assessing network adequacy.
Response: HHS is not finalizing the network tiering policy for
network adequacy.
Comment: Some commenters requested that HHS defer network adequacy
standards until PY 2024 and defer appointment wait time standards until
COVID-related provider staffing issues are addressed.
Response: HHS is finalizing appointment wait time standards and
delaying implementation until PY 2024.
Comment: Some commenters shared concerns that plans will not have
enough time to implement changes required by the proposed network
adequacy policies and that plans do not have sufficient details on the
implementation plans for these policies. Some commenters offered
feedback on specific provider types and requested more detail on how
provider types are defined. One commenter requested clarification about
aspects of the ECP/NA template, such as telehealth data collection,
provider specialty codes, and time and distance parameters.
Response: HHS included details on the implementation of network
adequacy policies in the draft 2023 Letter to Issuers and believes
issuers will have sufficient time to comply with time and distance
standards for PY 2023 and appointment wait time standards beginning in
PY 2024. Further information, including detail on definitions of
provider types and clarification requested regarding aspects of the
ECP/NA template, will be included in the ECP/NA template, FAQs, QHP
Application Instructions, and other related documents.
Comment: One commenter requested deferral of telehealth data
collection.
Response: HHS will collect data from issuers on which providers
offer telehealth as many issuers already have this information, can
gather it during the required timeframe, or can select that they have
requested information from the provider and are awaiting their
response.
Comment: Two commenters recommended a clear network adequacy
justification process.
Response: HHS has developed streamlined justification processes for
network adequacy and ECP that are described in the preamble.
Comment: Some commenters requested that HHS use a phased-in
approach to increasing the ECP threshold or that HHS defer raising the
ECP threshold until PY 2024.
Response: HHS is finalizing the ECP threshold for PY 2023 as
proposed as we anticipate the majority of issuers will be able to meet
the standard and the justification process can be used by issuers that
are working to come into compliance with the ECP standards.
Comment: One commenter requested HHS consider a different approach
to assess network adequacy in rural areas.
Response: HHS believes the time and distance standards for rural
areas are reasonable based on our review of industry standards. We will
assess time and distance standards at the county level. Rural counties
and counties with extreme access considerations will have time and
distance parameters that are longer than more metropolitan areas.
Comment: A commenter asked HHS to exclude SADPs from appointment
wait time standards requirement.
Response: HHS does not agree that SADPs should be exempt from
compliance with appointment wait time standards. HHS believes it is
important that timely access to care is ensured, regardless of plan
type. HHS will evaluate all plans seeking QHP certification, including
SADPs, for compliance with appointment wait times beginning in PY 2024.
Comment: One commenter recommended that HHS provide additional
opportunities for stakeholder feedback on the implementation of network
adequacy policies.
Response: HHS will continue seeking stakeholder feedback on network
adequacy policies on an ongoing basis.
HHS received one out-of-scope comment to which we have not
responded in this final rule.
K. ICRs Regarding Payment for Cost-Sharing Reductions (Sec. 156.430)
We proposed 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.\370\ We expected 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.
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\370\ OMB control number 0938-1266 (Cost-Sharing Reduction
Reconciliation (CMS-10526)/Expiration date: July 31, 2024).
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We did not receive any comments in response to the information
collection requirements related to the proposed policy.
L. ICRs Regarding Quality Improvement Strategy (Sec. 156.1130)
We did not propose and are not finalizing any amendments to the
[[Page 27364]]
regulatory text in 45 CFR 156.1130, which outlines QIS data collection
and submission framework established in the 2016 Payment Notice.\371\
The information collections associated with QIS data collection and
submission requirements are currently 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 rule, we
are finalizing, as proposed, that beginning with QIS submissions in
calendar year 2023 (for the PY 2024 coverage), a QHP issuer would be
required to address reducing health and health care disparities as one
of the 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 did not estimate additional burden to be accounted for since
the current QIS submission form already encompasses the estimated
burden and costs associated with a QIS submission that may include
several QIS topic areas.
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\371\ 80 FR 10750, 10844 through 10848.
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We did not receive any comments in response to the information
collection requirements related to the proposed policy.
M. ICRs Regarding Medical Loss Ratio (Sec. Sec. 158.140, 158.150,
158.170)
We are finalizing the proposed amendments to Sec. 158.140 to
codify in regulation 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 are also finalizing amendments to 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 are also
finalizing the proposed 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.\372\ We
anticipate that implementing these provisions will require minor
changes to the MLR Annual Reporting Form Instructions but will 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.
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\372\ 86 FR 24261.
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We did not receive any comments in response to the information
collection requirements related to the proposed policies.
N. Summary of Annual Burden Estimates for Proposed Requirements
[GRAPHIC] [TIFF OMITTED] TR06MY22.017
[[Page 27365]]
[GRAPHIC] [TIFF OMITTED] TR06MY22.018
This final rule includes several policies with information
collection requirements for which we use this rulemaking as the Federal
Register notice through which to receive comment on their proposed
revisions to or submissions of ICRs. These proposals include
Verification of Eligibility for Special Enrollment Periods (Sec.
155.420), 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 Plan Options (Sec. Sec. 155.220)
and 156.265).
The following policies with associated information collection
requests that require revision to align with policies in this rule,
including State Flexibility for Risk Adjustment (Sec. 153.320), Risk
Adjustment Distributed Data and Risk Adjustment Data Submission
Requirements (Sec. Sec. 153.610, 153.700 and 153.710), and the 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) will be submitted for OMB approval
outside of this rulemaking, through a separate Federal Register notice.
The policies for Quality Improvement Strategy (Sec. 156.1130),
Medical Loss Ratio (Sec. Sec. 158.140, 158.150, 158.170), Payment for
Cost-Sharing Reductions (Sec. 156.430), and Reporting APTC Calculation
Methodology (Sec. 155.1200(b)(2)) contain information collections
which are currently approved by OMB that do not require revision. One
policy, the State Selection of EHB-Benchmark Plan for Plan Years
Beginning on or After January 1, 2020 (Sec. 156.111), as finalized,
will discontinue the associated information collections and remove them
from the ICRs, and the information collected in the Determination of
Error Findings Decision and Appeal Redetermination (Sec. Sec. 155.1525
and 155.1530) policy is exempt from the PRA.
We have submitted a copy of this final rule to OMB for its review
of the rule's information collection requirements. These requirements
are not effective until they have been approved by OMB.
V. Regulatory Impact Analysis
A. Statement of Need
This rule finalizes 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
finalizes 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 finalizes to remove the annual reporting
requirement on States to report State-required benefits to HHS. The
rule also finalizes refinements to the EHB nondiscrimination framework
by including examples of presumptively discriminatory benefit designs.
The rule also finalizes the requirement that issuers in FFEs and SBE-
FPs offer standardized plan options. This rule finalizes to expand QIS
standards and requires 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
final 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), and the Congressional Review Act (5 U.S.C.
804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health, and safety effects, distributive impacts, and equity).
Executive Order 13563 emphasizes the importance of quantifying both
costs and benefits, reducing costs, 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
[[Page 27366]]
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, and hence also a major rule under Subtitle E of the
Small Business Regulatory Enforcement Fairness Act of 1996 (also known
as the Congressional Review Act). In accordance with the provisions of
Executive Order 12866, this regulation was reviewed by the Office of
Management and Budget.
The provisions in this final 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 anticipated that the provisions of this final 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 believed 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 20 depicts an accounting
statement summarizing HHS' assessment of the benefits, costs, and
transfers associated with this regulatory action.
This final rule implements standards for programs that will have
numerous effects, including 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 final rule. The effects in Table 20
reflect the qualitative assessment of impacts and estimated direct
monetary costs and transfers resulting from the provisions of this
final rule for health insurance issuers and consumers. The annual
monetized transfers described in Table 20 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
amendments to MLR requirements.
We are finalizing 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 estimated to cost approximately $60 million in the
benefit year 2023.\373\ 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 20.
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\373\ As noted previously in this final 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.
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Additionally, for 2023, we are maintaining the FFE and the SBE-FP
user fee rates at current levels, 2.75 and 2.25 percent of premiums,
respectively.
[[Page 27367]]
[GRAPHIC] [TIFF OMITTED] TR06MY22.019
[[Page 27368]]
[GRAPHIC] [TIFF OMITTED] TR06MY22.020
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 21 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 final rule discussed in this
RIA. We did not expect the provisions of this final rule to
significantly alter CBO's estimates of the budget impact of the premium
stabilization programs that are described in Table 21.
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\1\ Healthy People 2030 defines health equity as ``the
attainment of the highest level of health for all people.'' Healthy
People 2030 Questions & Answers. (2022, March 9). Office of Disease
Prevention and Health Promotion. https://health.gov/our-work/national-health-initiatives/healthy-people/healthy-people-2030/questions-answers.
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[[Page 27369]]
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 anticipated that, quantitatively,
the effects of the provisions proposed in this rule are consistent with
our previous estimates in the 2022 Payment Notice \375\ for the impacts
associated with the APTC, the premium stabilization programs, and FFE
(including SBE-FP) user fee requirements.
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\375\ 86 FR 6166 through 6173 and 24270 through 24282.
\376\ Reinsurance collections ended in FY 2018 and outlays is
subsequent years reflect remaining payments, refunds, and allowable
activities.
[GRAPHIC] [TIFF OMITTED] TR06MY22.021
1. Guaranteed Availability of Coverage (Sec. 147.104(i))
This rule finalizes amendments to Sec. 147.104(i), which reverse
the current 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 the current
policy, individuals may have had to pay up to 3 months of past-due
premiums plus a binder payment before enrolling in coverage.\377\ HHS
lacks information on the frequency with which consumers miss payments
or the frequency with which binder payments are made, and sought data
or information related to past-due premiums in the proposed rule (87 FR
584 and 706). HHS was also interested in learning more about the
population and characteristics of individuals with past-due premiums.
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\377\ 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
2022 survey, 36 percent of insured adults reported being worried about
being able to afford their monthly health insurance premium, with 12
percent being ``very worried'' and 23 percent being ``somewhat
worried.'' \378\ In a 2021 survey, 27 percent of insured adults
reported having a difficult time covering the cost of health insurance
each month.\379\ In 2019, 73.7 percent of uninsured adults pointed to
the high cost of coverage as the reason for being uninsured.\380\
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\378\ Kirzinger, A., Kearney, A., Quasem, M., Stokes, M., Hamel,
L., & Brodie, M. (2022). ``KFF Health Tracking Poll--March 2022:
Economic Concerns and Health Policy, The ACA, and Views of Long-term
Care Facilities.'' KFF, https://www.kff.org/health-costs/poll-finding/kff-health-tracking-poll-march-2022/.
\379\ Data Note: Kearney, A., Hamel, L., Stokes, M., & Brodie,
M. (2021). Americans' Challenges with Health Care Costs. KFF,
https://www.kff.org/health-costs/issue-brief/data-note-americans-challenges-health-care-costs/.
\380\ Tolbert, J., Orgera, K., & Damico, A. (2020). Key Facts
about the Uninsured Population. KFF. 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.\381\ 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
estimated 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.\382\ 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. \383\ That figure was 13.5 percent in 2018 and 13.2
percent in 2017. Our analysis also suggested 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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\381\ 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.
\382\ As we reported in the April 18, 2017 Federal Register (82
FR 18346), that figure was approximately 16 percent in 2016.
\383\ 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
[[Page 27370]]
interpretation of the guaranteed availability requirement stated in the
Market Stabilization final rule. However, this final rule will 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 may lead to
better health outcomes, if these individuals are able to maintain
coverage.\384\ This final rule will also increase the ability for
enrollees to access coverage with the same issuer or another issuer in
the same controlled group in the next year. This will be of particular
benefit to those Exchange enrollees living in counties with only one or
two participating issuers.\385\ It may also reduce the costs and burden
to enrollees related to searching for a new plan from another issuer or
an issuer in a different controlled group when seeking to enroll in
health care coverage. Being able to enroll with the same issuer will
support access to the same network of services and providers, which
could improve continuity of care.
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\384\ We requested comment on whether there would be any impact
on premiums, affordability, and access for the individuals who
reliably pay. We solicited 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.
\385\ 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, D. & Cox, C.
(2020). Insurer Participation on the ACA Marketplaces, 2014-2021.
KFF. 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 current
interpretation of the guaranteed availability requirement. Source:
Ahn, S. & Volk, J. (2017). Relaxing the Affordable Care Act's
Guaranteed Issue Protection: Issues for Consumers and State Options.
CHIRblog. http://chirblog.org/relaxing-the-affordable-care-acts-guaranteed-issue-protection-issues-for-consumers-and-state-options/.
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This final rule may result in transfers from issuers who would have
been able to recoup unpaid premiums from enrollees to those enrollees
who will 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 will be
minimal, as issuers generally are not permitted to waive past-due
premiums and would be expected to pursue other means of collecting
them.
We sought comment on the potential costs, benefits, and transfers
associated with this provision. We also sought data related to past-due
premiums, missed binder payments, and information on the population and
characteristics of individuals with past-due premiums.
We summarize and respond to public comments received regarding the
impact of the proposed change to the guaranteed availability of
coverage (Sec. 147.104(i)) requirement below.
Comment: Many commenters stated that this provision will increase
access to health insurance coverage and care for individuals who stop
paying premiums and are currently unable to enroll in coverage because
they cannot afford to pay past-due premiums. Commenters provided a
number of reasons why individuals stop paying premiums, such as
financial hardship or affordability, not receiving a notice of past-due
premiums, or mistakenly forgetting to cancel coverage when becoming
eligible for other forms of coverage. Commenters also provided various
reasons for financial hardship such as periodic unemployment, chronic
conditions, serious illnesses, addiction, domestic violence, crime,
environmental disaster, and medical emergencies. Commenters mentioned
high rates of being uninsured among individuals in minority and
underserved communities and women and children and the risks associated
with being uninsured. One commenter cited studies that found a
correlation between the lack of health insurance coverage and
preventable deaths.
Many commenters stated that the current policy creates a barrier to
coverage for and has a negative impact on low- or middle-income
individuals and individuals experiencing financial hardship. Several
commenters also stated that the current policy has a disproportionate
impact on underserved populations, such as immigrants, people of color,
disabled women, and the LGBTQI+ community, that continue to face
cultural and financial barriers to coverage and care.
A few commenters also stated that if individuals are better able to
maintain coverage because of this provision, it will improve continuity
of care and lead to better health outcomes. One of these commenters
noted in particular that enabling individuals to enroll with the same
issuer the next plan year increases the likelihood that they will
maintain relationships with their providers. Several commenters also
highlighted the importance of continuous coverage during the COVID-19
pandemic.
Response: We agree with the commenters that this change improves
health equity by removing a barrier to health insurance coverage and
health care that disproportionately affects low-income, minority and
underserved communities.
Comment: A few commenters stated that this provision will have a
negative impact on consumers. Some commenters suggested that the
provision will lead to higher costs for issuers and result in higher
premiums for consumers. One commenter speculated that the increase in
premiums could range from 0.3 percent to more than 3 percent. A few
commenters also stated that the proposed rule will reduce access to
coverage if issuers exit the market. A few commenters stated that the
proposed rule could negatively affect risk pools. A commenter also
expressed concern about the potential financial impact on providers who
may not receive payments when individuals fail to pay their premiums.
One commenter also stated that it may negatively affect MLRs.
On the other hand, some commenters suggested that the proposed rule
could improve the stability of risk pools, for instance, by reducing
adverse selection. One of these commenters noted that the current
policy may have deterred enrollment among younger, healthier
individuals. A few commenters stated that the current policy worsened
the risk pool and led to higher premiums, since individuals with
significant health care costs are more likely to pay past-due premiums.
One commenter noted that restrictions on enrollment outside of open
enrollment periods limit adverse selection. In addition, one commenter
stated that few issuers chose to implement the current policy because
the implementation costs outweighed the premium losses. A commenter
also speculated that the change would lead to reduced administrative
costs for issuers. Several commenters stated that the amount of past-
due premiums is minimal relative to issuers' profits. Several
commenters also stated that issuers would be able to recoup past-due
premiums by other means. One commenter noted that the financial risk to
the individual from not having continuous coverage outweighs the cost
to the risk pool from individuals not paying premiums (which could be
recouped by issuers).
Response: We disagree that this rule is likely to result in an
increase in premiums, have a negative financial impact on issuers or
providers, or cause issuers to exit the market. There is no evidence
that suggests that premiums would noticeably change because of a shift
in how the guaranteed availability requirement is interpreted. As one
commentator stated, few issuers have implemented the current policy of
[[Page 27371]]
attributing payment made for new coverage to past-due premiums before
effectuating new enrollment. In addition, as another commenter stated,
issuers that did adopt the current policy are likely to experience a
reduction in administrative costs due to this change. Issuers also have
other means to recoup past-due premiums. We also agree with commenters
that stated that this change may result in an improved risk pool by
removing barriers to enrollment for young and relatively healthy
individuals.
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)
In the 2023 Payment Notice proposed rule, HHS proposed amendments
to certain regulations prohibiting discrimination in health insurance
coverage, including discrimination in the design and implementation of
health plan designs, under Sec. Sec. 147.104(e), 155.120(c),
155.220(j), 156.125(b), 156.200(e), 156.1230(b), and 156.125. HHS
proposed to amend these regulations so that they explicitly identify
and recognize sexual orientation and gender identity as prohibited
forms of discrimination based on sex consistent with pre-2020 HHS
discrimination policy. HHS also proposed refinements to its EHB
nondiscrimination policy for health plan benefit designs through
proposed amendments to Sec. 156.125 regulation text that would require
that a nondiscriminatory health plan design that provides EHB to be
clinically based, incorporate evidence-based guidelines into coverage
and programmatic decisions, and rely on a current and relevant peer-
reviewed medical journal articles, practice guidelines, or
recommendations from reputable governing bodies, or similar sources. We
provided examples of presumptively discriminatory benefit designs to
provide further clarity on our refined EHB nondiscrimination policy.
HHS proposed that its refined EHB nondiscrimination policy under Sec.
156.125, as reflected in the examples of presumptively discriminatory
health plan designs, would be applicable starting on the earlier of PY
2023 or upon renewal of any plan subject to the EHB requirements.
We sought comment on the potential costs, benefits, and transfers
associated with the proposals in these provisions.
As explained in the Supplementary Information section earlier in
this preamble, HHS will address in future rulemaking the proposed
amendments to Sec. Sec. 147.104(e), 155.120(c), 155.220(j),
156.125(b), 156.200(e), and 156.1230(b) that would have explicitly
identified and recognized sexual orientation and gender identity as
prohibited forms of sex discrimination.
HHS is finalizing the proposed revisions to Sec. 156.125(a) to
state that a nondiscriminatory benefit design that provides EHB is one
that is clinically based. However, HHS does not finalize the proposed
revisions to Sec. 156.125(a) that would have provided that a
nondiscriminatory benefit design is one that incorporates evidence-
based guidelines into coverage and programmatic decisions and relies on
a current and relevant peer-reviewed medical journal articles, practice
guidelines, or recommendations from reputable governing bodies, or
similar sources.
HHS finalizes all but one of the examples of presumptively
discriminatory benefit designs. Specifically, consistent with the
explanation in the Supplementary Information section earlier in this
preamble, HHS will address in future rulemaking the example related to
gender-affirming care that illustrated a benefit design that
presumptively discriminates against enrollees based on gender identity
under Sec. 156.125.
We summarize and respond to public comments received on the
regulatory impact and burden analysis relevant to our proposals under
Sec. 156.125 that we finalize in this final rule. Accordingly, we do
not respond to comments that relate to the proposal to specifically
identify sexual orientation and gender identity as prohibited forms of
sex discrimination, nor do we respond to comments that relate to the
gender-affirming care example in the 2023 Payment Notice proposed rule.
Comment: One commenter questioned what the regulatory impact and
burden would be on issuers and enrollees to declare a class of
treatment based on ``presumptive nondiscrimination.'' Another commenter
stated the policy refining the nondiscrimination standard would
unintentionally impose costs that far exceed any benefits by limiting
the ability of issuers to develop cost-effective formulary plan designs
and by compelling plans to ignore the standard use of clinical evidence
as a factor in determining the appropriate tier for drugs.
A commenter also asserted that the lack of a cost-benefit analysis
makes the rule arbitrary and capricious (noting CMS does not cite how
many plans already cover the procedures, how many individuals will seek
them, their cost, and increased costs to issuers and insured). Other
commenters expressed concern that health plans may see increased
utilization and higher costs due to an unintended adverse impact on
issuers' ability to administer packages of benefits under the refined
framework. Yet another commenter recommended that HHS should conduct
and publish the results of a detailed cost study demonstrating premium
impacts of refining the nondiscrimination standard for consumers prior
to finalizing the proposal.
Response: With regards to the EHB nondiscrimination policy we are
finalizing at Sec. 156.125, we reiterate that the nondiscrimination
requirements at Sec. 156.125 apply only to benefit designs or
implementation of a benefit designs to the extent that those benefits
are EHB. The policy at Sec. 156.125 does not apply to benefits that
are not EHB. As mentioned in the proposed rule, the clarifications and
changes we are finalizing to Sec. 156.125 will most likely affect the
vast majority of State EHB-benchmark plans. Because some current EHB-
benchmark plans continue to be based on plan year 2014 plans, some of
the EHB-benchmark plan designs may not comply with current Federal
requirements such as nondiscrimination requirements at Sec. 156.125.
Therefore, when designing plans that are substantially equal to the
EHB-benchmark plan, issuers may need to further conform plan benefits
covered as EHB, including coverage and limitations, to comply with
current Federal requirements, such as the nondiscrimination requirement
of Sec. 156.125.
If a State EHB-benchmark plan has a discriminatory benefit design,
the State may prohibit plans providing benefits that are substantially
equal to the EHB-benchmark plan from replicating that discriminatory
benefit design. However, we clarify that we will not consider State
EHB-benchmark plan designs to be out of compliance with EHB-benchmark
plan requirements at Sec. 156.110(d) or Sec. 156.111(b)(2)(v) if the
State provides such guidance or otherwise directs issuers to comply
with these refined nondiscrimination standards notwithstanding any
aspects of the EHB-benchmark plan that are not otherwise consistent
with these refined nondiscrimination standards. Therefore, under this
approach, States are not required at this time to go through the formal
process at Sec. 156.111 to update their EHB-benchmark plans solely for
the purpose of removing any such discriminatory benefit designs on
EHBs, but States that do elect to update their
[[Page 27372]]
EHB-benchmark plans at any point going forward will be expected to
ensure their new EHB-benchmark plans are compliant.
To the extent that States take actions necessary to come into
compliance with the refined EHB nondiscrimination policy such actions
may have a small impact on premiums. States making changes to their
EHB-benchmark plans for plan years after 2020 have the flexibility to
design their EHB-benchmark plans consistent with Sec. 156.111, which
provides more options in plan designs. 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 the scope of benefits requirements, under Sec.
156.111(b).\386\
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\386\ Section 156.111(b). https://www.ecfr.gov/current/title-45/subtitle-A/subchapter-B/part-156.
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Plans subject to the EHB requirement have always been required to
comply with the nondiscrimination requirements in Sec. 156.125
regardless of the presence of any noncompliant discriminatory language
in the relevant EHB-benchmark plan. We therefore further recognize that
issuers subject to Sec. 156.125 requirements may choose to carefully
review the refined EHB nondiscrimination final rule to ensure
compliance. We also recognize that such reviews may take time and that
issuers may experience added burden to the extent that issuers make
additional changes to their plans designs for benefits covered as EHB
in response to those reviews. Although we expect that issuers are
already compliant with current Sec. 156.125 requirements, we also
believe that finalizing the refined EHB nondiscrimination policy at
Sec. 156.125 to be applicable on the earlier of PY 2023 or upon
renewal of any plan subject to the EHB requirements will lessen any
burden on issuers to make any necessary conforming changes than if we
had finalized a mid-year effect date as proposed.
Further, we are declining to finalize that a nondiscriminatory
benefit design that provides EHB must incorporate evidence-based
guidelines into coverage and programmatic decisions, and rely on
current and relevant peer-reviewed medical journal articles, practice
guidelines, recommendations from reputable governing bodies, or similar
sources. By instead finalizing only that plan designs providing EHB
must be clinically based, we believe we are better balancing the need
to protect consumers from discriminatory benefit designs without
unreasonably limiting the sources that may be relied upon to assess
whether a benefit design or its implementation are discriminatory. We
will continually assess this policy to evaluate whether changes or
further refinements are warranted.
3. Risk Adjustment (Sec. Sec. 153.320, 153.610, 153.620, 153.700,
153.710, and 153.730)
We are finalizing two of the three proposed model specifications.
Beginning with the 2023 benefit year, we are finalizing, as proposed,
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 to revise the enrollment duration factors for the
adult models. However, we are not finalizing the proposed addition of a
two-stage weighted model specification to the adult and child 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 an additional burden
on State governments. The model specifications finalized in this rule
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 HHS-operated risk
adjustment program.\387\ To 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 the proposed changes using 2020 benefit year risk
adjustment data.\388\
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\387\ 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
Supporting Statement A. (2017, December 22). OIRA. https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201712-0938-015.
\388\ See the 2021 HHS-Operated Risk Adjustment Technical Paper
on Possible Model Changes. (2021, October 26). CMS. 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. (2021, December 28). CMS.
https://www.cms.gov/files/document/report-summary-results-transfer-simulations.pdf. Issuers that participated in the simulation also
received detailed issuer-specific data, including risk score and
transfer estimates for the simulated results.
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Additionally, we are finalizing, as proposed, the use of the 2017,
2018, and 2019 enrollee-level EDGE data to recalibrate the HHS risk
adjustment models for the 2023 benefit year. 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 are also finalizing, as proposed, 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 are finalizing, as proposed, 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
will 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.\389\ For
the 2024 benefit year and beyond, we will 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 (except under the extenuating circumstances that
are described previously in this rule). We removed 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.\390\ For the 2023 benefit year, we are finalizing, as
proposed, to maintain the CSR adjustment factors finalized in the
[[Page 27373]]
2019-2022 Payment Notices.\391\ Overall, we do not estimate that these
policies will impact issuer burden beyond the current burden for the
HHS-operated risk adjustment program.
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\389\ See 81 FR 94075.
\390\ 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.
\391\ 83 FR 16953; 84 FR 17479; 85 FR 29190; and 86 FR 24181.
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For the 2023 benefit year, HHS will operate a risk adjustment
program in every State and the District of Columbia. For the 2023
benefit year, we are finalizing, as proposed, to use the same
methodology that we finalized in the 2022 Payment Notice to estimate
our administrative expenses to operate the program. 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 2023 risk adjustment user fee will 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 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 will also repeal, as proposed, 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 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 removed, as proposed, as
a criterion for State justification and HHS review and 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. We will retain as the sole
requirement for State justification and criterion for HHS review and
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 changes to risk adjustment State flexibility
request framework will 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
policy, Alabama would be considered a prior participant and could
continue to request such reductions. However, we note that we intend to
propose in future rulemaking to repeal the exception for prior
participants beginning with the 2025 benefit year to provide impacted
stakeholders additional time to prepare for this proposed change and
the potential elimination of this flexibility. We did not anticipate
any new burden or costs as a result of this policy.
We finalize the collection and extraction of five new data elements
from issuers' EDGE servers through issuers' ESES files and risk
adjustment recalibration enrollment files: ZIP Code, race, ethnicity,
subsidy indicator, and ICHRA indicator beginning with the 2023 benefit
year. Specifically, we are finalizing that starting with the 2023
benefit year, issuers will be required to populate the ZIP Code data
field, using the five-digit level based on the enrollee's mailing
address, and the subsidy indicator data field, which is intended to
indicate whether a particular enrollee is (or is not) receiving APTC.
For the 2023 and 2024 benefit years, we are adopting a transitional
period during which issuers are required to populate the fields for
race and ethnicity using only data they already collect or have
accessible regarding their enrollees.\392\ For example, for the 2023
and 2024 benefit years, for race and ethnicity data, issuers will be
deemed in compliance if they submit these data elements using data they
already have or collect through existing means, including, for example,
through enrollee data captured and reported to the issuer by the FFE,
SBE-FPs, and State Exchanges at the time of enrollment. Then, beginning
with the 2025 benefit year, the transitional approach will end, and
issuers will be required to populate the fields using available sources
and, in the absence of such an existing source for particular
enrollees, to make a good faith effort to ensure collection and
submission of the race and ethnicity data for these enrollees.
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\392\ HHS will collect these data elements in a format that is
consistent with the 2011 HHS Data Standards. We also will provide a
value for the race or ethnicity data elements that allows issuers to
indicate that race or ethnicity are not known for a specific
enrollee in recognition of situations where the enrollee declines to
provide the information and situations where the issuer does not
have an available data source to populate the fields.
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We are also finalizing, with slight modification, collection of the
ICHRA indicator. For the 2023 and 2024 benefit year, similar to the
transitional approach for race and ethnicity data, issuers are required
to populate the field for the ICHRA indicator using only data they
already collect or have accessible regarding their enrollees. Then,
beginning with the 2025 benefit year, the transitional approach will
end, and issuers will be required to populate the field using available
sources (for example, information from Exchanges and small employers,
and requesting information directly from enrollees) and, in the absence
of an existing source for particular enrollees, to make a good faith
effort to ensure collection and submission of the ICHRA indicator for
these enrollees. HHS will provide additional details on what
constitutes a good faith effort to ensure collection and submission of
the race, ethnicity, and ICHRA indicator data elements beginning with
2025 benefit year data submissions in the future.\393\
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\393\ After the transitional approach ends (beginning in the
2025 benefit year), the option to select the value to indicate race
or ethnicity are not known for a specific enrollee will be available
to issuers who comply with the good faith standard but are unable to
populate the race or ethnicity EDGE data field for one or more
enrollees.
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In addition, we will 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. We will
extract plan ID and rating area beginning with the 2021 benefit year,
and the subscriber indicator beginning with the 2022 benefit year. The
extraction of plan ID, rating area, and subscriber indicator will pose
a minimal burden on issuers (only the burden associated with the
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 estimated in
the proposed rule that the cumulative additional cost estimate would be
$225,168 for 600 issuers (87 FR 584, 695). However, to reflect the most
current agency estimates, we have modified the estimates from the
proposed rule to reflect new wage data, and estimate that the
cumulative additional cost estimate will be $314,145 for 650 issuers,
and that the addition of these five new data elements to the risk
adjustment data submission requirements will be $483.30 per issuer. In
addition, we estimate a cumulative one-time administrative cost
estimate to update the issuer's file creation process of $1,884,870 for
650 issuers, reflecting a one-time cost of $2,8992 per issuer, which is
further explained in the Collection of Information section of this
final rule. The extraction of these data elements will pose a minimal
burden on issuers (only the burden associated with
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the running of a command) since the creation and storage of the
extract--which issuers do not receive--is mainly handled by HHS. We
expected minimal costs to HHS as a result of these new collections and
extractions.
We are also finalizing, as proposed, 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 will not pose an 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 sought comment on estimated costs and transfers and potential
benefits associated with these provisions.
We received one comment related to the burden associated with the
requirement that issuers of risk adjustment covered plans to submit and
make accessible the five new data elements as part of the enrollee-
level EDGE data to HHS in States where HHS operates the risk adjustment
program beginning with the 2023 benefit year, which we summarized and
responded to in the Information Collection Requirements section of the
rule.
4. Risk Adjustment Data Validation (Sec. Sec. 153.350 and 153.630)
In this final rule, we finalize 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 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
policies 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 sought comment on these burden estimates. We did not receive any
comments in response to the burden estimates for the HHS-RADV policies
in this rule.
5. Agents, Brokers, and Web-Brokers (Sec. 155.220)
a. Required QHP Comparative Information on Web-Broker Websites and
Related Disclaimer
In this final rule, we are finalizing the proposal 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)(6) a list of the QHP
comparative information web-broker non-Exchange websites are required
to display consistent with Sec. 155.205(b)(1). We are also finalizing
the proposal 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. We are finalizing as proposed.
This policy should result in very limited new burden for web-
brokers. As we explained in the proposed rule (87 FR 584, 709), given
CMS' current enforcement policies relative to these requirements, the
QHP comparative information we are requiring web-broker websites to
display is consistent with previously established requirements. As a
result, these requirements would not present a new burden to web-
brokers.
The new disclaimer will 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 will be displaying a
standardized disclaimer much like the plan detail disclaimer that they
have historically been required to display.
We estimated this policy will affect approximately 20 web-brokers.
Given the minor modifications necessary to implement the revised
disclaimer, we estimated 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 estimated as a result of this policy is
$8,220 for 20 web-brokers in the 2022 benefit year. We have updated
these estimates based on the most recently available national
occupational employment and wage estimates. We estimate a cost of $459
in total labor costs for each web-broker, which reflects 5 hours of
work by Web and Digital Interface Designers (15-1255) per web-broker
(100 hours across all web-brokers annually) at an average hourly rate
of $91.80. The cumulative additional cost estimate as a result of this
policy is $9,180 for 20 web-brokers in the 2022 benefit year.
We sought comment on the estimated burden associated with these
proposals.
We did not receive any comments specific to the potential costs,
benefits, and transfers associated with this provision.
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 are
finalizing the proposal 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 are
finalizing this proposal as proposed.
This policy 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 must update their websites to remove those
advertisements and will lose any advertising revenue associated with
such placements. Since advertisements on websites are inherently
subject to change, even for those web-brokers that are required to make
updates to their websites, the costs may be very limited, although we
acknowledge that there may be loss of advertising revenue. We also
realized, 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
[[Page 27375]]
brokers using their websites or may pursue increased commissions from
QHP issuers.
We sought comment on the potential costs, benefits, and transfers
associated with this proposal. We did not receive any comments specific
to the potential costs, benefits, and transfers associated with this
provision.
c. Explanation of Rationale for QHP Recommendations on Web-Broker
Websites
We are finalizing the proposal 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 are finalizing
this proposal as proposed.
This policy should result in very limited new costs for web-
brokers, since the information it requires they display on their
websites is limited to text-based changes that are relatively easy to
implement. Furthermore, the extent of those textual updates should be
relatively minor in most cases. We expect explanations to be short and
easy for consumers to understand. Generally, we believe that a single
phrase or a few sentences will suffice. Some web-brokers are already
providing the required information, and therefore, will not have to
make any website updates. Other web-broker websites do not explicitly
recommend QHPs, and therefore, the impact of this policy is 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 estimated this policy 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 estimated 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 policy is $8,220 for 20 web-brokers in the 2022 benefit
year. We have updated these estimates based on the most recently
available national occupational employment and wage estimates. We
estimate a cost of $459 in total labor costs for each web-broker, which
reflects 5 hours of work by Web and Digital Interface Designers (15-
1255) per web-broker (100 hours across all web-brokers annually) at an
average hourly rate of $91.80. The cumulative additional cost estimate
as a result of this policy is $9,180 for 20 web-brokers in the 2022
benefit year.
We sought comment on the potential costs and benefits associated
with this proposal. We did not receive any comments specific to the
potential costs, benefits, and transfers associated with this
provision.
d. Providing Correct Information to the FFEs and Prohibited Business
Practices
The 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 believed 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 sought 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 sought comment on any potential costs or benefits associated
with these proposals. We did not receive any comments specific to the
potential costs, benefits, and transfers associated with this
provision.
6. Verification Process Related to Eligibility for Insurance
Affordability Programs (Sec. 155.320)
We proposed 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 believed this proposal would benefit
employers, employees, Exchanges using the Federal platform, and State
Exchanges that operate their own eligibility and enrollment platform,
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 (82 FR 51128), 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. 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).
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
estimated 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 estimated 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
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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 estimated 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
estimated 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 the 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 requested a comment on the estimated and potential costs and
impacts of this proposal.
We summarize and respond to public comments received on the
verification process related to eligibility for insurance affordability
programs (Sec. 155.320) below.
HHS wishes to note that since the publication of the proposed rule,
three States have transitioned from having State Exchanges using the
Federal eligibility and enrollment platform to operating as State
Exchanges that operate their own eligibility and enrollment platform,
therefore, we are revising our previous estimated cost and saving
estimates. We revise the 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 $81 million for the 18 State Exchanges that operate their own
eligibility and enrollment platform (operating in 17 States and the
District of Columbia). We are still 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 $63
million. The total annual cost to conduct sampling has been revised to
$126 million for the 18 State Exchanges. Therefore, the total annual
cost for the Exchanges using the Federal platform and the 18 State
Exchanges that operate their own eligibility and enrollment platform
has been revised to $134 million in 2023 and onward. Finally, we
revised the estimated cost to conduct research for Exchanges using the
Federal platform to be approximately $295,000 and for the 18 State
Exchanges that operate their own eligibility and enrollment platform to
be approximately $5.3 million.
Comment: While not directly related to the cost estimates, one
commenter expressed concern with the proposed risk-based approach for
designing and developing processes for employer sponsored coverage
verification as it could lead to increased APTC/CSR improper payments.
The commenter noted that the Congressional Budget Office estimated that
approximately $83 billion will be spent on APTC/CSR in 2022. The
commenter stated that based on HHS' own analysis that about two percent
of consumers may have an incentive to enroll in Exchange coverage
rather than coverage offered through an employer, this could result in
about $1.7 billion in APTC/CSR payments, which is larger than HHS'
estimates to operationalize the random sampling requirement.
Response: HHS disagrees with the commenter's estimate because there
are many other factors to take into consideration when estimating
potential inappropriate payments of APTC/CSR, such as the average
number of months an enrollee would have received APTC/CSR after HHS
took action to end APTC/CSR. HHS believes using a flat estimate based
on CBO projections, which doesn't take these factors into
consideration, is misleading.
After reviewing the public comments, we are finalizing as proposed.
7. Proration of Advance Premium Tax Credit and Premium (Sec. Sec.
155.240(e), 155.305(f)(5), and 155.340)
HHS proposed 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 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, using a
specified methodology. This method of administering APTC would reduce
instances of payments of APTC in excess of an applicable taxpayer's
monthly PTC eligibility for a month in which an enrollee is enrolled in
multiple policies within a month, each lasting less than the full
calendar month, and thus would protect the applicable taxpayer from
incurring income tax liability due to excess APTC.
HHS noted that this would benefit both issuers and enrollees by
reducing instances of APTC over-payment and eliminating wasted
resources dedicated to resolving over-payment issues. While the FFEs
and SBE-FPs already prorate APTC and premium amounts, some State
Exchanges do not currently prorate consistently the amount of applied
APTC administered to issuers in their applicable States.
HHS acknowledged that those State Exchanges that do not currently
prorate APTC or premium amounts would be financially impacted by the
proposed requirement to implement this methodology, and this proposal
would likely require operational systems
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builds to support this new proration requirement.
Based on historical cost data for State Exchanges 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 estimated 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 anticipated that each affected State 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 estimated that 8 State Exchanges currently prorate premium
amounts but do not prorate APTC amounts. HHS anticipated that those
State Exchanges which already prorate premium amounts would have the
operational and systems capacity to calculate the prorated premium and
APTC amounts as required in the proposed policy.
Currently, State Exchanges vary in their approaches to implementing
the proposed APTC and premium proration. In order to provide an upper
bound estimate of this proposal's burden, HHS assumed that 10 State
Exchanges, including State Exchanges that newly transitioned to being
State Exchanges by the time of this rulemaking, would incur the highest
level of implementation cost detailed earlier in this final 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 sought comment on the estimated costs and
benefits described in this section.
We summarize and respond to public comments received on the
proration of APTC and premium (Sec. Sec. 155.240(e), 155.305(f)(5),
and 155.340) below.
Comment: We received several comments on the estimated costs for a
State Exchange to implement the proposed APTC and premium proration
methodology. A few commenters stated that the estimated one-time
implementation cost of $1 million dollars per State Exchange was
unreasonably burdensome, particularly considering competing
programmatic demands and the ongoing COVID-19 PHE. Another commenter
noted that HHS severely underestimated the implementation cost and
estimated that it would cost approximately four times the burden
estimate detailed in the proposed rule to implement the proposed
proration methodology within their Exchange.
Response: HHS appreciates the comments on the estimated burden
associated with the proposed policy. The estimates in the proposed rule
were made using the best available information that HHS could access,
and the comments received helped to clarify the impact that the
proposed policy could have State Exchanges. In an effort to be
responsive to comments regarding implementation costs, HHS is
finalizing this policy with modifications that will significantly
reduce the burden on State Exchanges. We are not finalizing the
requirement to prorate premium or APTC amounts for State Exchanges.
Rather, we are finalizing a requirement that, beginning in PY 2024,
State Exchanges must implement a methodology to ensure that APTC
calculations do not cause an enrollee's total monthly APTC amount from
exceeding their PTC, in compliance with HHS and IRS regulations.
Further, State Exchanges must prospectively report to HHS through
existing State Exchange oversight mechanisms the methodology the State
intends to use in PY 2024.
While many State Exchanges already have a methodology that meets
the requirement of preventing an enrollee's monthly APTC amount from
exceeding their monthly PTC eligibility, we note that some States will
likely require operational IT systems changes to implement a compliant
methodology. HHS estimates that 8 State Exchanges will require some
form of operational investment to comply with this policy. The cost of
a systems builds may vary among State Exchanges depending on their
elected methodology, but we estimate $500,000 in one-time contact labor
cost per State Exchange. This cost estimate is lower than that in the
proposed rule to reflect that State Exchanges will have the flexibility
to implement any methodology that ensures an enrollee's monthly APTC
does not exceed their PTC eligibility. We estimate that the one-time
financial impact of this requirement to be approximately $500,000 for 8
State Exchanges, or $4 million in PY 2024.
The burden to report this information to HHS will be negligible, as
State Exchanges will use existing oversight mechanisms. This reporting
requirement will be included within the reporting requirements
described at Sec. 155.1200(b)(2) and the information collected will be
addressed by the State Based Marketplace Annual Report Tool (SMART) PRA
(OMB Control Number 0938-1244) which we explain earlier in the ICR
section of this rule.
After reviewing the public comments, we are finalizing with
modifications.
10. Special Enrollment Periods--Special Enrollment Period Verification
(Sec. 155.420)
We proposed to amend Sec. 155.420 to add a 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 did 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 anticipated 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 (or 20 percent) 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
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the Exchanges on the Federal platform, but State Exchanges will not be
required to align with the Exchanges on the Federal platform.
We did not anticipate that this would increase administrative costs
on QHP issuers. Additionally, our data suggest 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 sought comment on the potential costs, benefits, and transfers
associated with this proposal.
We did not receive any comments specific to the potential costs,
benefits, and transfers associated with this provision. Therefore, we
are finalizing these provisions as proposed.
11. General Program Integrity and Oversight Requirements (Sec.
155.1200)
As explained earlier in this preamble, we are not finalizing this
provision related to general program integrity and oversight
requirements at this time. We estimated 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 anticipated
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 the benefit year 2024. The total cost annual
reduction across 18 State Exchanges would be approximately
$1,631,243.16.
We sought comment on the potential costs, benefits, and transfers
associated with this provision.
Comment: A few commenters expressed general concern regarding the
estimated burden reduction associated with this proposal.
Response: We address these comments in the General Program
Integrity and Oversight 155.1200 preamble discussion earlier in this
rule. Based on public comments received, we are not finalizing this
provision at this time.
12. State Exchange Improper Payment Measurement Program (Sec. Sec.
155.1500 Through 155.1540)
As we explained earlier in section III. of the preamble, HHS is not
finalizing the regulations we proposed to govern implementation of the
SEIPM program could have the direct effect of reducing improper
payments. We sought comment on the estimated costs and benefits and
potential transfers associated with these provisions but did not
receive any responsive comments.
13. FFE and SBE-FP User Fees (Sec. 156.50)
We are finalizing an FFE user fee rate of 2.75 percent of monthly
premiums charged by the FFE issuer 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.\394\ We are finalizing an SBE-FP user fee rate
of 2.25 percent of monthly premiums charged by the SBE-FP issuer 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.\395\
Therefore, we do not believe that these user fee rates will have any
additional impact on premiums compared to the 2022 benefit year. We
also finalize an amendment to 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.\396\ We do not expect that it will have
any additional regulatory impact
---------------------------------------------------------------------------
\394\ 86 FR 53412, 53445.
\395\ Ibid.
\396\ Ibid.
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We sought comment on the potential costs, benefits, and transfers
associated with this provision. We did not receive any comments
specific to 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 proposed 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, any such burden experienced by States would be minimal.\397\
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 final rule.
---------------------------------------------------------------------------
\397\ 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 noted 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 sought comment on the potential costs, benefits, and transfers
associated with this provision.
After reviewing the public comments, we are finalizing repeal of
the annual reporting policy at Sec. 156.111(d) and (f), including
revising the section heading to Sec. 156.111 to instead read, ``State
selection of EHB-benchmark plan for PYs beginning on or after January
1, 2020.''
We summarize and respond to public comments received repealing the
annual reporting of State-required benefits below.
[[Page 27379]]
Comment: Many commenters supported the repeal of the annual
reporting policy and noted that the policy is an unnecessary new
administrative burden on States without adequate justification. One
commenter explained that the reporting structure would have required
State officials to either procure consultants or divert existing staff
from other work to comply with an entirely new reporting process.
Commenters stated that the elimination of this reporting requirement
would remove a needless administrative burden while maintaining States'
responsibility to comply with the defrayal rule.
Other commenters objected to the repeal of the annual reporting
policy and challenged the claims that the policy was overly burdensome.
Such commenters noted that States should already have determined the
status and cost of State-required benefits and that the reporting
requirement should not place a burden on States of conducting new
analyses. Commenters further noted that, after the initial reporting
cycle, the administrative burden on States would be even more minimal.
Response: We maintain that the annual reporting policy would have
imposed a minimal burden on States as the information that States would
have been required to report to HHS should already be readily
accessible to States, as every State should already be identifying
which State-required benefits are in addition to EHB and should be
defraying any such costs. States should already have ready access to
the information the annual reports would have required as States should
already have in place a process for tracking and analyzing State-
required benefits. However, even if the State burden would have been
minimal, we still believe that taking a more targeted approach of
engaging with individual States on questions of compliance with the
defrayal requirement will yield similar results to the annual reporting
policy without requiring all States, including even compliant States,
to expend additional time and resources submitting a report with this
detailed information.
15. Levels of Coverage (Actuarial Value) (Sec. 156.140, 156.200,
156.400)
We proposed 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 proposed 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 proposed 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 (82 FR 18346), 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 long 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.
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 an 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 an 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 22.
[GRAPHIC] [TIFF OMITTED] TR06MY22.022
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.\398\ 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
[[Page 27380]]
which we do not have data to make an informed estimate.
---------------------------------------------------------------------------
\398\ There are no enrollees in bronze plans below 58% AV.
---------------------------------------------------------------------------
We estimated 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 stated that 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 stated that 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.\399\ 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 estimated silver plans with an AV
below 70 percent will see premiums increase by approximately 2 percent
on average due to more generous benefits. We stated that we do not
believe this would have a significant impact on the number of employers
willing to offer ICHRAs or whether an ICHRA is considered affordable to
most employees, but we invited comments to refute or refine this
understanding on these issues in particular.
---------------------------------------------------------------------------
\399\ See section 4980H of the Code; 26 CFR 54.4980H-1-26 CFR
54.4980H-6.
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We sought comment on the estimated costs, benefits, and transfers
associated with this provision. However, we did not receive comments
that specifically addressed the accuracy of the burden estimates
included in the proposed rule; instead, the comments received addressed
the merits of the proposal itself, which we have addressed in the
preamble. Thus, we are finalizing these burden estimates as proposed.
16. Standardized Plan Options (Sec. 156.201)
Section 156.201 finalizes the provision to require QHP issuers to
offer standardized QHP options. Though these requirements necessitate
the creation of new plans, HHS explained that it 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 a majority of plans that issuers
currently offer and because HHS designed the cost-sharing parameters,
MOOPs, and deductibles for these new plans. Additionally, HHS designed
these standardized plan options to resemble the most popular QHPs in
the individual market FFEs and SBE-FPs in PY 2021, making these
standardized plan options comparable to plans that the majority of
issuers already offer. Furthermore, since HHS is requiring QHP issuers
to offer standardized plan options at every product network type, at
every metal level, and throughout every service area 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 are not required to extend plan offerings
beyond their existing service areas.
Additionally, since HHS did not finalize any provision to limit the
number of non-standardized QHP options that issuers can offer in PY
2023, HHS explained that it believes the majority of enrollees will
remain enrolled in their current non-standardized plan options.
Moreover, since HHS did not finalize any provisions 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 explained that it does not expect the total
number of plans that issuers are offering to change substantially
subsequent to the imposition of the requirement. Thus, though these new
plans will have to be submitted for approval, certification, and
display, we expected 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 non-standardized offerings.
As noted earlier in the preamble, HHS noted that it is resuming the
differential display of standardized plan options per the existing
authority at Sec. 155.205(b)(1). HHS is assuming burden for the
differential display of standardized plan options on HealthCare.gov,
meaning FFE and SBE-FP issuers are not subject to this burden.
In addition, as noted in the preamble, HHS noted that it is
resuming enforcement of the standardized plan option 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 explained
that it 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 is
allowing these entities to submit requests to deviate from the manner
in which standardized plan options are differentially displayed on
HealthCare.gov, the potential burden for these for these entities is
further reduced. HHS also noted that it intends to provide access to
information on standardized plan options to web-brokers through the
Health Insurance Marketplace PUFs and QHP Landscape file to further
minimize the 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 sought comment on the potential costs, benefits, and transfers
associated with this provision. We did not receive any comments
specific to the potential costs, benefits, and transfers associated
with this provision. We are finalizing these burden estimates as
proposed.
[[Page 27381]]
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 final rule, HHS is finalizing that for PY 2023 and
future PYs that all QHPs or QHP candidates that use a provider network
must comply with network adequacy standards.
HHS finalized the proposal 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. HHS finalized 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 will be calculated at the county level using
information from the ECP/NA template. HHS also proposed to adopt
appointment wait time standards to assess whether FFE QHPs or QHP
candidates fulfill network adequacy standards. HHS will begin
implementation of reviews for appointment wait time standards in PY
2024. 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 did not finalize the proposal 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.
Finally, HHS finalized the proposal 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 the 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 sought comment on the potential costs, benefits, and transfers
associated with this provision. We did not receive any comments
specific to 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 noted 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
believed 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 expected that administrative cost changes would likely be
minimal for most issuers.
HHS proposed 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 sought comment on the potential costs, benefits, and transfers
associated with this provision. We did not receive any comments
specific to the potential costs, benefits, and transfers associated
with this provision.
19. Standards for Delegated and Downstream Entities (Sec. 156.340)
In this final rule, we are finalizing the proposal to amend and add
language to Sec. 156.340, to extend its applicability to QHP issuers
on all Exchange models. We are finalizing changes to 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 is also finalizing the proposal 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 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 are also finalizing 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 anticipated these policies 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. 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
[[Page 27382]]
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 sought comment on the potential costs, benefits, and transfers
associated with this provision.
After reviewing the public comments and the general nature of the
assertions that are unsupported by data, HHS will finalize our burden
estimate and implementation date as proposed.
We summarize and respond to public comments received for standards
for delegated and downstream entities.
Comment: A few commenters expressed concern that the addition of
contract language proposed in paragraph (b)(5) would place a burden on
downstream and delegated entities. Other commenters supported the
benefits the proposed language in paragraph (b)(5) would confer by
clarifying Sec. 156.340 and its applicability.
Response: As acknowledged in our analysis, we anticipate this
policy change will impose a minimal burden (that is, a limited
additional burden). For example, some QHP issuers in State Exchanges
may need to make changes to existing record retention policies and
their agreements with delegated and downstream entities. Relatedly,
some delegated and downstream entities may need to revise their record
retention policies. However, we believe such changes will be relatively
easy to make and implement (for example, changing a record retention
policy and related agreements to retain records for 10 years instead of
7 years). We note that none of the commenters provided any data or
specificity concerning the actual burdens, costs, or transfers they
expected the changes to impose. We believe our analysis accounts for
all burden.
20. Payment for Cost-Sharing Reductions (Sec. 156.430)
We are amending 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
an appropriation to make CSR payments and voluntary for all other
issuers. In the event HHS has not made CSR payments to issuers 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 did not expect any of these provisions to
increase the burden on issuers, as this amendment would codify existing
practices.
We sought comment on any potential costs, benefits, and transfers
associated with this provision. We did not receive any comments
specific to the potential costs, benefits, and transfers associated
with this provision.
21. Quality Improvement Strategy (Sec. 156.1130)
We proposed 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 did not propose any changes to the regulatory text. We did not
estimate additional costs or burdens as a result of this proposal.
We sought comment on any potential costs, benefits, and transfers
associated with this proposal. We did not receive any comments specific
to the potential costs, benefits, and transfers associated with this
provision.
22. Medical Loss Ratio (Sec. Sec. 158.140, 158.150, 158.170)
We are finalizing the proposal 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 are also finalizing the proposal 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. The 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 estimated 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 2019, 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 are also finalizing the proposal 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,\400\ and thus deleted in part 2 of the 2022 Payment Notice
final rule.\401\ We did not anticipate any impact on rebates or
premiums as a result of this change.
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\400\ 523 F. Supp. 3d 731 (D. Md. 2021).
\401\ 86 FR 24261.
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We sought comment on any potential costs, benefits, and transfers
associated with this provision. We did not receive any comments
specific to the potential costs, benefits, and transfers associated
with this provision.
D. Regulatory Alternatives Considered
In developing the policies contained in this final 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
[[Page 27383]]
the proposed model specifications and updated enrollment duration
factors for the HHS risk adjustment models.\402\ 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,\403\
we found that non-linear model specifications often failed to converge.
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 aforementioned HCC
counts terms approach posed gaming concerns, which would violate
principle six of the HHS-operated risk adjustment program by rewarding
coding proliferation.
---------------------------------------------------------------------------
\402\ 85 FR 78572 at 78583-78586; See the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model Changes. (2021, October
26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\403\ 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 of the proposed rule (87 FR 584, 620) (shown in Table 1 of this
rule). We chose the list of HCCs in Table 3 of the proposed rule (shown
in Table 1 of this rule) 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
overall predictive accuracy.
For the enrollment duration factors in the adult models, we are
finalizing the replacement of the enrollment duration factors with
monthly duration factors of up to 6 months for enrollees with HCCs. The
purpose for changing the enrollment duration factors was to 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.\404\
We chose the 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.\405\
---------------------------------------------------------------------------
\404\ See, for example, 85 FR 78572 at 78585-78586 and Sections
3.3.1 and 3.3.2, 2021 HHS-Operated Risk Adjustment Technical Paper
on Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\405\ As detailed above, these new factors, which we are
finalizing as proposed, will only apply to partial-year adult
enrollees with up to 6 months of enrollment and at least one payment
HCC.
---------------------------------------------------------------------------
With respect to the changes to the recalibration of the RXC
mappings for the adult risk adjustment models, we considered using the
latest RXC mapping document available at the time that we recalibrate
the adult risk adjustment models and applying it to all three
underlying EDGE data years used to recalibrate the models for the
benefit year. We chose the approach of recalibrating the adult risk
adjustment models using each final, Q4 RXC mapping document that was
developed using the benefit year of data corresponding to that benefit
year. We believe that the benefits of this approach, which include
limiting the volatility of some coefficients from year-to-year,
ensuring that we are capturing the utilization and costs observed for
the underlying drugs in use during the data year, and improving
issuers' ability to plan for downstream implications of changes to RXC
mapping, outweigh the benefits of the alternative approach of using the
latest RXC mapping available at the time of recalibration, which would
more closely align costs between recalibration data and current benefit
year data.
With respect to the 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 \406\ 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. Therefore, we also
considered whether to adopt a complete repeal of the flexibility to
request reductions risk adjustment State transfers.
---------------------------------------------------------------------------
\406\ Executive Order 14009; 86 FR 7793 (2021, February 2).
---------------------------------------------------------------------------
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 believed 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 believed the
proposed change would protect the integrity of the
[[Page 27384]]
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
before which they may not be eligible, 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 final 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 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 plan options, we considered a range of
options for the proposed policy approach at Sec. 156.201. On one end
of this range, we considered resuming standardized plan options as
reflected in the 2017 and 2018 Payment Notices. This approach would
have allowed issuers to voluntarily offer standardized plan 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 plan options per
issuer, product network type, metal level, and service area over the
course of several PYs. We also considered preferentially displaying
standardized plan options over non-standardized plan options. We also
considered requiring issuers to offer exclusively standardized plan
options in FFEs and SBE-FPs. We explained that we believe that the
approach we have chosen for standardized plan options in which we
finalized the provision to require issuers to offer standardized plan
options but did not finalize any provision 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 plan options.
For the 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.\407\ Under this alternative, HHS would assume
responsibility for prorating the amount of APTC due to each State
Exchange based on the methodology HHS proposed 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' Form 1095-
[[Page 27385]]
A. HHS expected 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 sought
comment on the alternative proposals considered.
---------------------------------------------------------------------------
\407\ 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 proposed 2024 benefit year
implementation and request comments on the feasibility of 2023 benefit
year implementation.
We did not receive any comments in response to the proposals in our
general discussion regarding regulatory alternatives.
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 final rule, we finalize 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 believed that insurance firms offering comprehensive health
insurance policies generally exceed the size thresholds for ``small
entities'' established by the SBA, we did not believe that an initial
regulatory flexibility analysis is required for such firms.
We believed 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.\408\ We believed 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.\409\
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 final rule in part
158. Therefore, we do not expect the MLR provisions finalized in this
rule to affect a substantial number of small entities.
---------------------------------------------------------------------------
\408\ Table of Size Standards. (2019, August 19). U.S. Small
Business Administration. https://www.sba.gov/document/support--
table-size-standards.
\409\ Medical Loss Ratio Data and System Resources. (2020). CMS.
https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html.
---------------------------------------------------------------------------
The proposals related to SEIPM at Sec. Sec. 155.1500-155.1540 were
proposed to affect only State Exchanges, and HHS is not finalizing
these proposals at this time.
In addition, section 1102(b) of the Social Security 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 604 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 final rule will not affect small rural hospitals. Therefore, the
Secretary has determined that this final rule will 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 2022, that threshold is approximately $165 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 an 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 were elected previously to operate an Exchange, those
States had
[[Page 27386]]
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 final rule will 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 (with an exception for prior participants) 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 believed this regulation has federalism
implications due to the 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
are not being finalized. Accordingly, E.O. 13132 does not apply to this
section of the final rule.
H. Congressional Review Act
This final rule is subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801, et seq.), which specifies that before a rule can
take effect, the Federal agency promulgating the rule shall submit to
each House of the Congress and to the Comptroller General a report
containing a copy of the rule along with other specified information,
and has been transmitted to the Congress and the Comptroller for
review. This final rule is a ``major rule'' as that term is defined in,
because it is likely to result in an annual effect on the economy of
$100 million or more.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on April 26, 2022.
List of Subjects
45 CFR Part 144
Health care, Health insurance, Reporting and recordkeeping
requirements.
45 CFR Part 147
Aged, Citizenship and naturalization, Civil rights, Health care,
Health insurance, Individuals with disabilities, Intergovernmental
relations, Reporting and recordkeeping requirements, Sex
discrimination.
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, Aged, Brokers,
Citizenship and naturalization, Civil rights, Conflict of interests,
Consumer protection, Grant programs-health, Grants administration,
Health care, Health insurance, Health maintenance organizations (HMO),
Health records, Hospitals, Indians, Individuals with disabilities,
Intergovernmental relations, Loan programs-health, Medicaid,
Organization and functions (Government agencies), Public assistance
programs, Reporting and recordkeeping requirements, Sex discrimination,
State and local governments, Taxes, Technical assistance, Women, 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 amends 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. Redesignating paragraph (i) as paragraph (j); and
0
b. Adding a new paragraph (i).
The addition reads as follows:
Sec. 147.104 Guaranteed availability of coverage.
* * * * *
(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.
* * * * *
[[Page 27387]]
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 market risk pool 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 market risk pool 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 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
and risk adjustment data validation adjustments; 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 Corridors 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.
[[Page 27388]]
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. 155.206 [Amended]
0
10. 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
11. 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. Revising paragraph (j)(2)(ii);
0
d. In paragraph (j)(2)(iv), 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
e. 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 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) Entering only 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 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 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 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
(2) The email address may not have domains that belong to the
agent, broker, or web-broker or their business or agency.
(B) Entering only 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 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) Entering only 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 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), entering only 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 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
12. Amend Sec. 155.305 by revising paragraphs (f)(1)(i) and (5) to
read as follows:
[[Page 27389]]
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
* * * * *
(5) Calculation of advance payments of the premium tax credit. The
Exchange must calculate advance payments of the premium tax credit in
accordance with 26 CFR 1.36B-3 and Sec. 155.340(i) of this subpart.
* * * * *
0
13. 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 newly redesignated paragraph (d)(4)(i)(E); 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 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. For purposes of this paragraph (d)(4), the Exchange
reasonably expects to obtain sufficient verification data for the
benefit year when 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) The Exchange must provide notice to the applicant 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;
* * * * *
(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
14. 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 with 2024 and beyond, when an 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--
(i) In an Exchange using the Federal eligibility and enrollment
platform, the amount of the advance payment of the premium tax credit
paid to the issuer of the policy must equal the product of--
(A) 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
(B) 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.
(ii) [Reserved]
(2) For plan years beginning with 2024 and beyond, a State Exchange
operating its own platform will be required to calculate advance
payments of the premium tax credit in accordance with a methodology
that does not cause the amount of advance payments of the premium tax
credit applied to an enrollee's monthly premium to exceed their
expected monthly premium assistance credit amount when 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, and to prospectively report
the methodology it intends to implement in the subsequent plan year to
HHS under Sec. 155.1200(b)(2).
0
15. 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
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 consistent with the non-discrimination
requirements under Sec. 155.120(c). 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.
PART 156--HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE
CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES
0
16. 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
17. 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
[[Page 27390]]
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 29 CFR
2590.715-2713A(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
18. 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:
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 of the year 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 of the year 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 of the year that is 2 years before the effective date
of the new EHB-benchmark plan. These must include:
* * * * *
0
19. 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
20. 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 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. Beginning on the earlier of January 1, 2023 (the
start of the 2023 plan year) or upon renewal of any plan subject to
this rule, a non-discriminatory benefit design that provides EHB is one
that is clinically-based.
* * * * *
0
21. 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
[[Page 27391]]
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
22. Amend Sec. 156.200 by revising paragraph (b)(3) to 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
23. Add Sec. 156.201 to read as follows:
Sec. 156.201 Standardized plan options.
For the 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 plan options under State action taking place on or before
January 1, 2020, must offer in the individual market 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, at every 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
24. Amend Sec. 156.230 by revising paragraph (a) to read as follows:
Sec. 156.230 Network adequacy standards.
(a) General requirement. (1) Each QHP issuer that uses a provider
network must ensure that the provider network consisting of in-network
providers, 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 use disorder 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. A QHP issuer on a Federally-facilitated Exchange
must comply with the requirement in paragraph (a)(1)(ii) of this
section by:
(A) For plan years beginning on or after January 1, 2023, 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.
Quantitative reviews of compliance with time and distance standards
will be conducted using issuer-submitted data; and
(B) For plan years beginning on or after January 1, 2024, 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 Exchanges
does not satisfy the network adequacy standards described in paragraphs
(a)(2)(i)(A) and (B) of this section, the issuer must include it 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 paragraphs (a)(2)(i)(A) and (B) 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
25. Amend Sec. 156.235 by revising paragraphs (a)(2)(i),
(a)(2)(ii)(B), 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
(ii) * * *
(B) At least one ECP in each of the six (6) ECP categories in each
county in the service area, where an ECP in that category is available
and provides medical or dental services that are covered by the issuer
plan type. The ECP categories are: Federally Qualified Health Centers,
Ryan White Program Providers, Family Planning Providers, Indian Health
Care Providers, Inpatient Hospitals, and Other ECP Providers. The Other
ECP Providers category includes the following types of providers:
Substance Use Disorder Treatment Centers, Community Mental Health
Centers, Rural Health Clinics, Black Lung Clinics, Hemophilia Treatment
Centers, Sexually Transmitted Disease Clinics, and Tuberculosis
Clinics.
* * * * *
(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
[[Page 27392]]
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
26. Revise the subpart D heading to read as set forth above.
0
27. 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 paragraphs (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 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 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 an 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 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
28. 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 and +1 percentage point allowable AV variation.
* * * * *
0
29. 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
* * * * *
[[Page 27393]]
PART 158--ISSUER USE OF PREMIUM REVENUE: REPORTING AND REBATE
REQUIREMENTS
0
30. The authority citation for part 158 continues to read as follows:
Authority: 42 U.S.C. 300gg-18.
0
31. 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
32. 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
33. 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: April 28, 2022.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2022-09438 Filed 5-2-22; 4:15 pm]
BILLING CODE 4120-01-P