[Federal Register Volume 87, Number 244 (Wednesday, December 21, 2022)]
[Proposed Rules]
[Pages 78206-78322]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-27206]



[[Page 78205]]

Vol. 87

Wednesday,

No. 244

December 21, 2022

Part II





Department of Health and Human Services





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45 CFR Parts 153, 155, and 156





Patient Protection and Affordable Care Act, HHS Notice of Benefit and 
Payment Parameters for 2024; Proposed Rule

  Federal Register / Vol. 87, No. 244 / Wednesday, December 21, 2022 / 
Proposed Rules  

[[Page 78206]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 153, 155, and 156

[CMS-9899-P]
RIN 0938-AU97


Patient Protection and Affordable Care Act, HHS Notice of Benefit 
and Payment Parameters for 2024

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of 
Health and Human Services (HHS).

ACTION: Proposed rule.

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SUMMARY: This proposed rule includes proposed payment parameters and 
provisions related to the HHS-operated risk adjustment and risk 
adjustment data validation programs, as well as proposed 2024 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 proposed rule also proposes 
requirements related to updating standardized plan options and reducing 
plan choice overload; re-enrollment hierarchy; plan and plan variation 
marketing name requirements for QHPs; essential community providers 
(ECPs) and network adequacy; failure to file and reconcile; special 
enrollment periods (SEPs); the annual household income verification; 
the deadline for QHP issuers to report enrollment and payment 
inaccuracies; requirements related to the State Exchange improper 
payment measurement program; and requirements for agents, brokers, and 
web-brokers assisting FFE and SBE-FP consumers.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, by no later than 5 p.m. on January 30, 
2023.

ADDRESSES: In commenting, please refer to file code CMS-9899-P.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-9899-P, P.O. Box 8016, 
Baltimore, MD 21244-8016.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY:
    Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, Attention: CMS-9899-P, Mail Stop C4-26-05, 7500 
Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: 
    Jeff Wu, (301) 492-4305, Rogelyn McLean, (301) 492-4229, Grace 
Bristol, (410) 786-8437, for general information.
    Jacquelyn Rudich, (301) 492-5211, Bryan Kirk, (443) 745-8999, or 
Joshua Paul, (301) 492-4347, for matters related to HHS-operated risk 
adjustment.
    Leanne Klock, (410) 786-1045, or Joshua Paul, (301) 492-4347, for 
matters related to risk adjustment data validation (HHS-RADV).
    Aaron Franz, (410) 786-8027, or Leanne Klock, (410) 786-1045, for 
matters related to FFE and SBE-FP user fees.
    Jacob LaGrand, (301) 492-4400, for matters related to actuarial 
value (AV).
    Brian Gubin, (401) 786-1659, for matters related to agent, broker, 
and web-broker guidelines.
    Claire Curtin, (301) 492-4400 or Marisa Beatley, (301) 492-4307, 
for matters related to failure to file and reconcile.
    Grace Bridges, (301) 492-5228, or Natalie Myren, (667) 290-8511, 
for matters related to the verification process related to eligibility 
for insurance affordability programs.
    Zarah Ghiasuddin, (301) 356-3598, for matters related to re-
enrollment in the Exchanges.
    Nicholas Eckart, (301) 492-4452, for matters related to enrollment 
of qualified individuals into QHPs and termination of Exchange 
enrollment or coverage.
    Marisa Beatley, (301) 492-4307, or Dena Nelson, (240) 401-3535, for 
matters related to qualified individuals losing MEC and qualifying for 
SEPs.
    Samantha Nguyen Kella, (816) 426-6339, for matters related to plan 
display error SEPs.
    Eva LaManna, (301) 492-5565, or Ellen Kuhn, (410) 786-1695, for 
matters related to the eligibility appeals requirements.
    Linus Bicker, (803) 931-6185, for matters related to State Exchange 
improper payment measurement.
    Alexandra Gribbin, (667) 290-9977, for matters related to stand-
alone dental plans.
    Nikolas Berkobien, (667) 290-9903, for matters related to 
standardized plan options.
    Carolyn Kraemer, (301) 492-4197, for matters related to plan and 
plan variation marketing name requirements for QHPs.
    Emily Martin, (301) 492-4423, or Deborah Hunter, (443) 386-3651, 
for matters related to network adequacy and ECPs.
    Zarin Ahmed, (301) 492-4400, for matters related to termination of 
coverage or enrollment for qualified individuals.
    Nora Simmons, (410) 786-1981 for matters related to reporting 
enrollment and payment inaccuracies.
    Jenny Chen, (301) 492-5156, or Shilpa Gogna, (301) 492-4257, for 
matters related to State Exchange Blueprint approval timelines.

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

Table of Contents

I. Executive Summary
II. Background
    A. Legislative and Regulatory Overview
    B. Summary of Major Provisions
III. Provisions of the Proposed Regulations
    A. Part 153--Standards Related to Reinsurance, Risk Corridors, 
and Risk Adjustment
    B. Part 155--Exchange Establishment Standards and Other Related 
Standards Under the Affordable Care Act
    C. Part 156--Health Insurance Issuer Standards Under the 
Affordable Care Act, Including Standards Related to Exchanges
IV. Collection of Information Requirements
    A. Wage Estimates
    B. ICRs Regarding Repeal of Risk Adjustment State Flexibility To 
Request a Reduction in Risk Adjustment State Transfers (Sec.  
153.320(d))
    C. ICRs Regarding Risk Adjustment Issuer Data Submission 
Requirements (Sec. Sec.  153.610, 153.700, and 153.710)

[[Page 78207]]

    D. ICRs Regarding Risk Adjustment Data Validation Requirements 
When HHS Operates Risk Adjustment (HHS-RADV) (Sec.  153.630)
    E. ICRs Regarding Navigator, Non-Navigator Assistance Personnel, 
and Certified Application Counselor Program Standards (Sec. Sec.  
155.210 and 155.225)
    F. ICRs Regarding Providing Correct Information to the FFEs 
(Sec.  155.220(j))
    G. ICRs Regarding Documenting Receipt of Consumer Consent (Sec.  
155.220(j))
    H. ICRs Regarding Failure To File and Reconcile Process (Sec.  
155.305(f))
    I. ICRs Regarding Income Inconsistencies (Sec. Sec.  155.315 and 
155.320)
    J. ICRs Regarding the Improper Payment Pre-Testing and 
Assessment (IPPTA) for State Exchanges (Sec. Sec.  155.1500-
155.1515)
    K. ICRs Regarding QHP Rate and Benefit Information (Sec.  
156.210)
    L. ICRs Regarding Establishing a Timeliness Standard for Notices 
of Payment Delinquency (Sec.  156.270)
    M. Summary of Annual Burden Estimates for Proposed Requirements
    N. Submission of PRA-Related Comments
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 (RFA)
    F. Unfunded Mandates Reform Act (UMRA)
    G. Federalism

I. Executive Summary

    We are proposing changes to the provisions and parameters 
implemented through prior rulemaking to implement the Patient 
Protection and Affordable Care Act (ACA).\1\ These proposals are 
published under the authority granted to the Secretary by the ACA and 
the Public Health Service (PHS) Act.\2\ In this proposed rule, we 
propose changes related to some of these ACA provisions and parameters 
we previously implemented and propose to implement new provisions. Our 
goal with the proposals is providing quality, affordable coverage to 
consumers while minimizing administrative burden and ensuring program 
integrity. The changes proposed in this rule are also intended to help 
advance health equity and mitigate health disparities.
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    \1\ The Patient Protection and Affordable Care Act (Pub. L. 111-
148) was enacted on March 23, 2010. The Healthcare and Education 
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and 
revised several provisions of the Patient Protection and Affordable 
Care Act, was enacted on March 30, 2010. In this rulemaking, the two 
statutes are referred to collectively as the ``Patient Protection 
and Affordable Care Act,'' ``Affordable Care Act,'' or ``ACA.''
    \2\ See sections 1311, 1312, 1313, 1321, and 1343 of the ACA and 
section 2792 of the PHS Act.
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II. Background

A. Legislative and Regulatory Overview

    Title I of the Health Insurance Portability and Accountability Act 
of 1996 (HIPAA) added a new title XXVII to the PHS Act to establish 
various reforms to the group and individual health insurance markets.
    These provisions of the PHS Act were later augmented by other laws, 
including the ACA. Subtitles A and C of title I of the ACA reorganized, 
amended, and added to the provisions of part A of title XXVII of the 
PHS Act relating to group health plans and health insurance issuers in 
the group and individual markets. The term ``group health plan'' 
includes both insured and self-insured group health plans.
    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 1301(a)(1)(B) of the ACA directs all issuers of QHPs to 
cover the essential health benefit (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 section 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 establish 
that the Secretary must define EHB in a manner that: (1) Reflects 
appropriate balance among the 10 categories; (2) is not designed in 
such a way as to discriminate based on age, disability, or expected 
length of life; (3) takes into account the health care needs of diverse 
segments of the population; and (4) does not allow denials of EHBs 
based on age, life expectancy, disability, degree of medical 
dependency, or quality of life.
    Section 1311(c) of the ACA provides the Secretary the authority to 
issue regulations to establish criteria for the certification of QHPs. 
Section 1311(c)(1)(B) of the ACA requires, among the criteria for 
certification that the Secretary must establish by regulation that QHPs 
ensure a sufficient choice of providers. Section 1311(e)(1) of the ACA 
grants the Exchange the authority to certify a health plan as a QHP if 
the health plan meets the Secretary's requirements for certification 
issued under section 1311(c) of the ACA, and the Exchange determines 
that making the plan available through the Exchange is in the interests 
of qualified individuals and qualified employers in the State. Section 
1311(c)(6)(C) of the ACA directs the Secretary of HHS to require an 
Exchange to provide for special enrollment periods and section 
1311(c)(6)(D) of the ACA directs the Secretary of HHS to require an 
Exchange to provide for a monthly enrollment period for Indians, as 
defined by section 4 of the Indian Health Care Improvement Act.
    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

[[Page 78208]]

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 premium tax credits (PTC) and cost-sharing reductions 
(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 establishes Federal 
policy regarding user fees and specifies that a user charge will be 
assessed against each identifiable recipient for special benefits 
derived from Federal activities beyond those received by the general 
public.
    Section 1321(d) of the ACA provides that nothing in title I of the 
ACA must be construed to preempt any State law that does not prevent 
the application of title I of the ACA. Section 1311(k) of the ACA 
specifies that Exchanges may not establish rules that conflict with or 
prevent the application of regulations issued by the Secretary.
    Section 1343 of the ACA establishes a permanent risk adjustment 
program to provide payments to health insurance issuers that attract 
higher-than-average risk populations, such as those with chronic 
conditions, funded by payments from those that attract lower-than-
average risk populations, thereby reducing incentives for issuers to 
avoid higher-risk enrollees. Section 1343(b) of the ACA provides that 
the Secretary, in consultation with States, shall establish criteria 
and methods to be used in carrying out the risk adjustment activities 
under this section. Consistent with section 1321(c) of the ACA, the 
Secretary is responsible for operating the risk adjustment program in 
any State the fails to do so.\3\
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    \3\ In the 2014 through 2016 benefit years, HHS operated the 
risk adjustment program in every State and the District of Columbia, 
except Massachusetts. Beginning with the 2017 benefit year, HHS has 
operated the risk adjustment program in all 50 States and the 
District of Columbia.
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    Section 1401(a) of the ACA added section 36B to the Internal 
Revenue Code (the Code), 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) of the ACA does not prescribe a specific 
verification procedure, in such manner as the Secretary determines 
appropriate.
    Section 1411(f) of the ACA requires the Secretary, in consultation 
with the 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 advance payments of the premium tax credit 
(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 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. 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).
1. Premium Stabilization Programs
    The premium stabilization programs refer to the risk adjustment, 
risk corridors, and reinsurance programs established by the ACA.\4\ For 
past rulemaking, we refer readers to the following rules:
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    \4\ See ACA section 1341 (transitional reinsurance program), ACA 
section 1342 (risk corridors program), and ACA section 1343 (risk 
adjustment program).
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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

[[Page 78209]]

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 External Data Gathering Environment (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 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.\5\
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    \5\ CMS. (2018, July 27). Updated 2019 Benefit Year Final HHS 
Risk Adjustment Model Coefficients. 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.
     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 
published the 2021 Benefit Year Final HHS Risk Adjustment Model 
Coefficients on the CCIIO website.\6\
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    \6\ CMS. (2020, May 12). Final 2021 Benefit Year Final HHS Risk 
Adjustment Model Coefficients. 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' hierarchical condition categories (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 (2022 Payment 
Notice) finalizing a subset of proposals from the 2022 Payment Notice 
proposed rule, including policy and regulatory revisions related to the 
risk adjustment program, 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.\7\
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    \7\ See CMS. (2021, July 19). 2022 Benefit Year Final HHS Risk 
Adjustment Model Coefficients. https://www.cms.gov/files/document/updated-2022-benefit-year-final-hhs-risk-adjustment-model-coefficients-clean-version-508.pdf.
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     In the May 6, 2022 Federal Register (87 FR 27208) (2023 
Payment Notice), we finalized revisions related to the risk adjustment 
program, including the benefit and payment parameters for the 2023 
benefit year, risk adjustment model recalibration, and collection and 
extraction of enrollee-level EDGE data.

[[Page 78210]]

We also finalized the adoption of the interacted HCC count 
specification for the adult and child models, along with modified 
enrollment duration factors for the adult model models, beginning with 
the 2023 benefit year.\8\ We also repealed the ability for States, 
other than prior participants, to request a reduction in risk 
adjustment State transfers starting with the 2024 benefit year. In 
addition, we approved a 25 percent reduction to 2023 benefit year 
transfers in Alabama's individual market and a 10 percent reduction to 
2023 benefit year transfers in Alabama's small group market. We also 
finalized further refinements to the HHS-RADV error rate calculation 
methodology beginning with the 2021 benefit year and beyond.
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    \8\ On May 6, 2022, we also published the 2023 Benefit Year 
Final HHS Risk Adjustment Model Coefficients at https://www.cms.gov/files/document/2023-benefit-year-final-hhs-risk-adjustment-model-coefficients.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 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 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.
     In the May 6, 2022 Federal Register (87 FR 27208), we 
finalized 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.
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 the Affordable Insurance Exchanges (``Exchanges''), 
consistent with title I of the ACA, to provide competitive marketplaces 
for individuals and small employers to directly compare available 
private health insurance options on the basis of price, quality, and 
other factors. This included implementation of components of the 
Exchanges and 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 May 6, 2022 Federal Register (87 FR 27208), we finalized 
changes 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 finalized various policies to 
address certain agent, broker, and web-broker practices and conduct. We 
also finalized updates to the requirement that all

[[Page 78211]]

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. 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 plan years (PYs) 2020 and 
beyond.

B. Summary of Major Provisions

    The regulations outlined in this proposed rule would be codified in 
45 CFR parts 153, 155, and 156.
1. 45 CFR Part 153
    In accordance with the OMB Report to Congress on the Joint 
Committee Reductions for Fiscal Year 2023, the permanent risk 
adjustment program is subject to the fiscal year 2023 sequestration.\9\ 
Therefore, the risk adjustment program will be sequestered at a rate of 
5.7 percent for payments made from fiscal year 2023 resources (that is, 
funds collected during the 2023 fiscal year). The funds that are 
sequestered in fiscal year 2023 from the risk adjustment program will 
become available for payment to issuers in fiscal year 2024 without 
further Congressional action. HHS did not receive any requests from 
States to operate risk adjustment for the 2024 benefit year; therefore, 
HHS will operate risk adjustment in every State and the District of 
Columbia for the 2024 benefit year.
---------------------------------------------------------------------------

    \9\ OMB. (2022, March 28). OMB Report to the Congress on the 
BBEDCA 251A Sequestration for Fiscal Year 2023. https://www.whitehouse.gov/wpcontent/uploads/2022/03/BBEDCA_251A_Sequestration_Report_FY2023.pdf.
---------------------------------------------------------------------------

    We propose to recalibrate the 2024 benefit year risk adjustment 
models using the 2018, 2019, and 2020 benefit year enrollee-level EDGE 
data, with an exception for the use of the 2020 benefit year to 
recalibrate the adult model age-sex coefficients. We propose to use 
only 2018 and 2019 benefit year enrollee-level EDGE data in the 
recalibration of the adult age-sex coefficients to account for the 
observed anomalies in the 2020 benefit year enrollee-level EDGE data 
for older adult enrollees, especially older adult female enrollees.
    For the 2024 benefit year, we propose to continue applying a market 
pricing adjustment to the plan liability associated with Hepatitis C 
drugs in the risk adjustment models (see, for example, 84 FR 17463 
through 17466). In addition, we are soliciting comment on whether to 
consider adding a new payment HCC for gender dysphoria to the risk 
adjustment models for future years.
    We propose under Sec.  153.320(d) to repeal the flexibility for 
States to request reductions of risk adjustment State transfers 
calculated by HHS under the State payment transfer formula in all State 
market risk pools, including prior participant States that previously 
requested a reduction, for the 2025 benefit year and beyond. We also 
seek comment on the requests from Alabama to reduce risk adjustment 
State transfers in its individual and small group markets by 50 percent 
for the 2024 benefit year.
    Additionally, we propose, beginning with the 2023 benefit year, to 
collect and extract from issuers' EDGE servers through issuers' EDGE 
Server Enrollment Submission (ESES) files and risk adjustment 
recalibration enrollment files a new data element, a Qualified Small 
Employer Health Reimbursement Arrangement (QSEHRA) indicator. In 
addition, we propose to extract the plan identifier and rating area 
data elements from issuers' EDGE servers for benefit years prior to the 
2021 benefit year. We also propose a risk adjustment user fee for the 
2024 benefit year of $0.21 per member per month (PMPM).
    Beginning with the 2022 benefit year HHS-RADV, we propose to change 
the materiality threshold established under Sec.  153.630(g)(2) for 
random and targeted sampling from $15 million in total annual premiums 
Statewide to 30,000 total billable member months (BMM) Statewide, 
calculated by combining an issuer's enrollment in a State's individual 
non-catastrophic, catastrophic, small group, and merged markets, as 
applicable, in the benefit year being audited.
    Beginning with the 2021 benefit year HHS-RADV, we propose to no 
longer exempt exiting issuers from adjustments to risk scores and risk 
adjustment transfers when they are negative error rate outliers in the 
applicable benefit year's HHS-RADV. Thus, HHS would apply HHS-RADV 
results to adjust the plan liability risk scores and State transfers of 
all issuers. We also solicit comments on discontinuing the use of the 
lifelong permanent condition list and the use of Non-EDGE Claims in 
HHS-RADV.
    We propose to shorten the window to confirm the findings of the 
second validation audit (SVA) (if applicable),\10\ or file a 
discrepancy report to dispute the SVA findings, to within 15 calendar 
days of the notification by HHS, beginning with the 2022 benefit year 
HHS-RADV.
---------------------------------------------------------------------------

    \10\ Only those issuers who have insufficient pairwise agreement 
between the Initial Validation Audit (IVA) and SVA receive SVA 
findings. See 84 FR 17495; 86 FR 24201.
---------------------------------------------------------------------------

    We propose to amend the EDGE discrepancy materiality threshold set 
forth at Sec.  153.710(e) to align with and mirror the policy finalized 
in preamble in part 2 of the 2022 Payment Notice (86 FR 24194 through 
24195). That is, the materiality threshold at Sec.  153.710(e) would be 
revised to provide that the amount in dispute must equal or exceed 
$100,000 or one percent of the total estimated transfer amount in the 
applicable State market risk pool, whichever is less.
2. 45 CFR Part 155
    In part 155, we propose to revise the Exchange Blueprint approval 
timelines for States transitioning from either a FFE to a SBE-FP or to 
a State-based Exchange (SBE), or from a SBE-FP to a SBE. We propose to 
remove the deadlines for when HHS provides approval, or conditional 
approval, on an Exchange Blueprint, and instead propose to require that 
such approval is provided at some point prior to the date on which the 
Exchange proposes to begin open enrollment either as an SBE or SBE-FP.
    We propose a change to address the standards applicable to 
Navigators and other assisters and their consumer service functions. At 
Sec.  155.210(d)(8), we propose to remove the prohibition on Navigators 
from going door-to-door or using other unsolicited means of direct 
contact to help provide consumers with enrollment assistance. The 
proposal would also apply to non-Navigator assistance personnel in FFEs 
and in State Exchanges if funded with section 1311(a) Exchange 
Establishment grants, through the reference to Sec.  155.210(d) in 
Sec.  155.215(a)(2)(i). In Sec.  155.225(g)(5), we propose to remove 
the prohibition on certified application counselors from going door-to-
door or using unsolicited means of direct contact to help consumers 
fill out applications or enroll in health coverage. We believe that 
these proposals would allow Navigators and other assisters in the FFEs 
to help more consumers.
    In part 155, we propose changes to address certain agent, broker, 
and web-

[[Page 78212]]

broker practices. We propose to allow HHS up to an additional 15 
calendar days to review evidence submitted by agents, brokers, or web-
brokers to rebut allegations that led to suspension of their Exchange 
agreement(s). We also propose to allow HHS up to an additional 30 
calendar days to review evidence submitted by agents, brokers, or web-
brokers that led to termination of their Exchange agreement(s). The 
proposal would provide HHS with up to 45 or 60 calendar days to review 
and respond to such evidence or requests for reconsideration submitted 
by agents, brokers, or web-brokers stemming from the suspension or 
termination of their Exchange agreement(s), respectively.
    Further, we propose to require agents, brokers, or web-brokers 
assisting consumers with completing eligibility applications through 
the FFEs and SBE-FPs or assisting an individual with applying for APTC 
and CSRs for QHPs to document that eligibility application information 
has been reviewed by and confirmed to be accurate by the consumer or 
their authorized representative prior to application submission. We 
propose that the documentation would be required to include: the date 
the information was reviewed; the name of the consumer or their 
authorized representative; an explanation of the attestations at the 
end of the eligibility application; and the name of the assisting 
agent, broker, or web-broker. Furthermore, the documentation would be 
required to be maintained by the agent, broker, or web-broker for a 
minimum of 10 years and produced upon request in response to 
monitoring, audit, and enforcement activities.
    We also propose to require agents, brokers, or web-brokers 
assisting consumers with applying and enrolling through FFEs and SBE-
FPs, making updates to an existing application, or assisting an 
individual with applying for APTC and CSRs for QHPs to document the 
receipt of consent from the consumer or their authorized representative 
seeking assistance prior to providing assistance, which would include 
the consumer taking an action that produces a record of consent and the 
maintenance of that record by the agent, broker, or web-broker. We also 
propose standards for the content of the documentation of consent, 
including that it would be required to include a description of the 
scope, purpose, and duration of the consent provided by the consumer or 
their authorized representative, the date consent was given, name of 
the consumer or their authorized representative, and the name of the 
agent, broker, web-broker, or agency being granted consent, as well as 
the process by which the consumer or their authorized representative 
may rescind consent. Further, we propose that agents, brokers, or web-
brokers would be required to maintain the consent documentation for a 
minimum of 10 years and produced upon request in response to 
monitoring, audit, and enforcement activities.
    We propose to revise the failure to file and reconcile (FTR) 
process at Sec.  155.305(f)(4). First, we are proposing codify CMS's 
guidance that, for plan year 2023 coverage, the Exchanges on the 
Federal platform would not act on data from the IRS for consumers who 
have failed to file tax returns and reconcile a previous year's APTC 
with the PTC allowed for the year. Second, we propose to provide that, 
beginning on January 1, 2024, Exchanges must once again determine 
enrollees ineligible for APTC when HHS notifies the Exchange that a 
taxpayer (or a taxpayer's spouse, if married) has failed to file a 
Federal income tax return and reconcile their past APTC. However, we 
propose that an Exchange may only determine enrollees ineligible for 
APTC after a taxpayer (or a taxpayer's spouse, if married) has failed 
to file a Federal income tax return and reconcile their past APTC for 
two consecutive years. We also propose a technical correction to Sec.  
155.305(f)(4) to clarify that HHS receives data from the IRS for 
consumers who have failed to file tax returns and reconcile a previous 
year's APTC.
    We propose to amend Sec.  155.320 to require Exchanges to accept an 
applicant's attestation of projected annual household income when the 
Exchange requests tax return data from the IRS to verify attested 
projected annual household income, but the IRS confirms there is no 
such tax return data available. Further, we propose to revise Sec.  
155.315 to add that an enrollee with income inconsistencies must 
receive a 60-day extension in addition to the 90 days currently 
provided in Sec.  155.315(f)(2)(ii). These changes would ensure 
consumers are treated equitably, ensure continuous coverage, and 
strengthen the risk pool.
    In the 2023 Payment Notice proposed rule (87 FR 584, 652), we 
solicited comments on revising the re-enrollment hierarchy at Sec.  
155.335(j) at a later date, and, after considering comments, we now 
propose amending and adding several provisions to this regulation to 
provide Exchanges (including Exchanges on the Federal platform and 
SBEs) with the option to make certain changes to the re-enrollment 
hierarchy beginning for PY 2024. Specifically, we propose to allow 
Exchanges to direct re-enrollment for CSR-eligible enrollees from a 
bronze QHP to a silver QHP with a lower or equivalent net premium under 
the same product and QHP issuer, regardless of whether the enrollee's 
current plan is available. We believe directing re-enrollment into 
lower or same cost, high generosity plans would place enrollees in more 
affordable plans with lower out-of-pocket costs, which would lower 
health insurance costs for those lower-income (CSR-eligible) 
individuals. We also propose to allow the Exchange to incorporate 
provider network considerations into the Exchange re-enrollment 
hierarchy.
    We are proposing changes related to SEPs at Sec.  155.420. First, 
we propose two technical corrections to Sec.  155.420(a)(4)(ii)(A) and 
(B) to align the text with Sec.  155.420(a)(d)(6)(i) and (ii). The 
proposed revisions would clarify that only one person in a tax 
household applying for coverage or financial assistance through the 
Exchange must qualify for an SEP in order for the entire tax household 
to qualify for the SEP. Second, we propose to change the current 
coverage effective date requirements at Sec.  155.420(b)(2)(iv) to 
permit Exchanges to offer earlier coverage effective start dates for 
consumers attesting to a future loss of MEC. These changes would ensure 
qualifying individuals are able to seamlessly transition from other 
forms of coverage to Exchange coverage as quickly as possible with 
minimal coverage gaps.
    Third, to mitigate coverage gaps, we are proposing to add Sec.  
155.420(c)(6) in which Exchanges would have the option to implement a 
new special rule for consumers eligible for a SEP under Sec.  
155.420(d)(1) due to loss of Medicaid or CHIP coverage which would give 
consumers up to 90 days after their loss of Medicaid or CHIP coverage 
to select a plan for Exchange coverage. Fourth, we are proposing to 
revise Sec.  155.420(d)(12) to align the policy of the Exchanges on the 
Federal platform for granting SEPs to persons who are adversely 
affected by a plan display error with current plan display error SEP 
operations. The proposal would remove the burden from the consumer to 
solely demonstrate to the Exchange that a material plan display error 
has influenced the consumer's decision to purchase a QHP through the 
Exchange.
    We propose to add Sec.  155.430(b)(3) to explicitly prohibit 
issuers participating in Exchanges on the Federal platform from 
terminating coverage for a dependent child prior to the end of the plan 
year because the dependent child has reached the applicable maximum

[[Page 78213]]

age. This change would provide clarity to issuers participating in 
Exchanges on the Federal platform regarding their obligation to 
maintain coverage for dependent children, as well as to enrollees 
regarding their ability to maintain coverage for dependent children. 
This proposal would be optional for State Exchanges.
    We propose to revise Sec.  155.505(g) to acknowledge the ability of 
the CMS Administrator to review Exchange eligibility appeals decisions 
prior to judicial review. This change would provide appellants and 
other parties with accurate information about the availability of 
administrative review by the CMS Administrator if they are dissatisfied 
with their eligibility appeal decision.
    HHS proposes to implement a new Improper Payment Pre-Testing and 
Assessment (IPPTA) program under which State Exchanges will be required 
to participate in pre-audit activities that will prepare State 
Exchanges for complying with audits required under the Payment 
Integrity Information Act of 2019 (PIIA). Activities under the proposed 
IPPTA program would provide State Exchanges experience helpful to 
preparing for future PIIA audits and will help HHS design and refine 
appropriate requirements for future PIIA audits of State Exchanges.
3. 45 CFR Part 156
    In part 156, we propose user fee rates for the 2024 benefit year 
for all issuers participating on the Exchanges using the Federal 
platform. For the 2024 benefit year, we propose an FFE user fee rate of 
2.5 percent of total monthly premiums and an SBE-FP user fee rate of 
2.0 percent of total monthly premiums. HHS will issue the 2024 benefit 
year premium adjustment percentage index and related payment parameters 
in guidance, consistent with the policy finalized in part 2 of the 2022 
Payment Notice.
    For PY 2024 and subsequent PYs, HHS would maintain a large degree 
of continuity with the approach to standardized plan options finalized 
in the 2023 Payment Notice and proposes only minor updates in this 
proposed rule. In particular, in contrast to the policy finalized in 
the 2023 Payment Notice, we are proposing to no longer include a 
standardized plan option for the non-expanded bronze metal level, 
mainly due to AV constraints. Thus, for PY 2024 and subsequent PYs, we 
propose standardized plan options for the following metal levels: one 
bronze plan that meets the requirement to have an AV up to five 
percentage 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 would continue to 
differentially display standardized plan options, including those 
standardized plan options required under State action that took place 
on or before January 1, 2020, on HealthCare.gov, and would continue 
enforcement of the 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.
    To mitigate the risk of choice overload, HHS proposes to limit the 
number of non-standardized plan options that QHP issuers may offer 
through the Exchanges using the Federal platform to two non-
standardized plan options per product network type and metal level 
(excluding catastrophic plans), in any service area for PY 2024 and 
beyond. In addition, HHS proposes, as an alternative to the proposal to 
limit the number of non-standardized plan options that an FFE or SBE-FP 
issuer may offer on the Exchange, to apply a meaningful difference 
standard which would be more stringent than the previous standard. HHS 
proposes to strengthen the standard by modifying the criteria and 
difference thresholds used to determine whether plans are 
``meaningfully different'' from one another.
    We propose to require stand-alone dental plan (SADP) issuers to use 
age on effective date as the sole method to calculate an enrollee's age 
for rating and eligibility purposes beginning with Exchange 
certification for PY 2024. Requiring SADPs to use the age on effective 
date methodology to calculate an enrollee's age as a condition of QHP 
certification, and consequently removing the less commonly used and 
more complex age calculation methods, would reduce consumer confusion 
and promote operational efficiency. We propose that this policy would 
apply to Exchange-certified SADPs as a requirement of certification, 
whether they are sold on- or off-Exchange.
    In addition, we propose to require Exchange-certified SADP issuers 
to submit guaranteed rates as a condition of QHP certification 
beginning with Exchange certification for PY 2024. This change would 
help reduce the risk of incorrect APTC calculation for the pediatric 
dental EHB portion of premiums, thereby reducing the risk of consumer 
harm. We propose that this policy would apply to Exchange-certified 
SADPs as a requirement of certification, whether they are sold on- or 
off-Exchange.
    We propose at Sec.  156.225 to require that plan and plan variation 
marketing names for QHPs offered through Exchanges on the Federal 
platform include correct information, without omission of material 
fact, and not include content that is misleading. If finalized as 
proposed, CMS would review plan and plan variation marketing names 
during the annual QHP certification process in close collaboration with 
State regulators.
    We propose to revise the network adequacy and ECP standards at 
Sec. Sec.  156.230 and 156.235 to provide that all individual market 
QHPs and SADPs and all Small Business Health Options Program (SHOP) 
QHPs across all Exchanges must use a network of providers that complies 
with the network adequacy and ECP standards in those sections, and to 
remove the exception that these sections do not apply to plans that do 
not use a provider network.
    To expand access to care for low-income and medically underserved 
consumers, we propose to establish two additional stand-alone ECP 
categories at Sec.  156.235(a)(2)(ii)(B) for PY 2024 and subsequent 
PYs, Mental Health Facilities and Substance Use Disorder Treatment 
Centers. HHS also proposes to require QHP issuers to contract with at 
least 35 percent of available FQHCs and at least 35 percent of 
available Family Planning Providers that qualify as an ECP in the 
plan's service area, in addition to meeting the current overall 35 
percent ECP threshold requirement in the plan's service area.
    We propose to add a timeliness standard to the requirement at Sec.  
156.270(f) for QHP issuers to send enrollees a notice of payment 
delinquency. Specifically, we propose to require issuers to send 
notices of payment delinquency promptly and without undue delay. This 
proposed revision will help ensure that enrollees are aware they are at 
risk of losing coverage and can avoid losing coverage by paying any 
outstanding premium amounts promptly.
    We propose to revise the final deadline in Sec.  156.1210(c) for 
issuers to report data inaccuracies identified in payment and 
collections reports for discovered underpayments of APTC to the issuer 
and user fee overpayments to HHS. Specifically, we propose to remove 
the deadline set forth at Sec.  156.1210(c)(2). Under this proposal, we 
would retain only the deadline at

[[Page 78214]]

Sec.  156.1210(c)(1), which requires that issuers describe all 
inaccuracies identified in a payment and collections report within 
three years of the end of the applicable plan year to which the 
inaccuracy relates to be eligible to receive an adjustment to correct 
an underpayment of APTC to the issuer and user fee overpayments to HHS. 
Under this proposal, beginning with the 2020 plan year coverage, HHS 
would not pay additional APTC payments or reimburse user fee payments 
for FFE, SBE-FP, and SBE issuers for data inaccuracies reported after 
the 3-year deadline. Further, we propose that HHS would not accept or 
take action that results in an outgoing payment on data inaccuracies or 
payment errors (except those identifying an overpayment by HHS) for the 
2015 through 2019 plan year coverage that are reported after December 
31, 2023. This proposal would better align with the existing IRS 
limitation on filing corrected Federal tax returns and reduce 
administrative and operational burden on issuers, State Exchanges, and 
HHS when handling payment and enrollment dispute.

III. Provisions of the Proposed Regulations

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

    In subparts A, D, G, and H of part 153, we established standards 
for the administration of the risk adjustment program. The risk 
adjustment program is a permanent program created by section 1343 of 
the ACA that transfers funds from lower-than-average risk, risk 
adjustment covered plans to higher-than-average risk, risk adjustment 
covered plans in the individual, small group markets, or merged 
markets, inside and outside the Exchanges. In accordance with Sec.  
153.310(a), a State that is approved or conditionally approved by the 
Secretary to operate an Exchange may establish a risk adjustment 
program, or have HHS do so on its behalf.\11\ HHS did not receive any 
requests from States to operate risk adjustment for the 2024 benefit 
year. Therefore, HHS will operate risk adjustment in every State and 
the District of Columbia for the 2024 benefit year.
---------------------------------------------------------------------------

    \11\ See also 42 U.S.C. 18041(c)(1).
---------------------------------------------------------------------------

1. Sequestration
    In accordance with the OMB Report to Congress on the Joint 
Committee Reductions for Fiscal Year 2023, the permanent risk 
adjustment program is subject to the fiscal year 2023 
sequestration.\12\ The Federal Government's 2023 fiscal year began on 
October 1, 2022. Therefore, the risk adjustment program will be 
sequestered at a rate of 5.7 percent for payments made from fiscal year 
2023 resources (that is, funds collected during the 2023 fiscal year).
---------------------------------------------------------------------------

    \12\ OMB. (2022, March 28). OMB Report to the Congress on the 
BBEDCA 251A Sequestration for Fiscal Year 2023. https://www.whitehouse.gov/wp-content/uploads/2022/03/BBEDCA_251A_Sequestration_Report_FY2023.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,\13\ as amended, and the underlying authority for the risk 
adjustment program, the funds that are sequestered in fiscal year 2023 
from the risk adjustment program will become available for payment to 
issuers in fiscal year 2024 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.
---------------------------------------------------------------------------

    \13\ Public Law 99-177 (1985).
---------------------------------------------------------------------------

    Additionally, we note that the Infrastructure Investment and Jobs 
Act \14\ amended section 251A(6) of the Balanced Budget and Emergency 
Deficit Control Act of 1985 and extended sequestration for the risk 
adjustment program through fiscal year 2031 at a rate of 5.7 percent 
per fiscal year.15 16
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    \14\ Public Law 117-58, 135 Stat. 429 (2021).
    \15\ 2 U.S.C. 901a.
    \16\ The Coronavirus Aid, Relief, and Economic Security (CARES) 
Act previously amended section 251A(6) of the Balanced Budget and 
Emergency Deficit Control Act of 1985 and extended sequestration for 
the risk adjustment program through fiscal year 2023 at a rate of 
5.7 percent per fiscal year. Section 4408 of the CARES Act, Public 
Law 116-136, 134 Stat. 281 (2020).
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2. HHS Risk Adjustment (Sec.  153.320)
    The HHS risk adjustment models predict plan liability for an 
average enrollee based on that person's age, sex, and diagnoses (also 
referred to as hierarchical condition categories (HCCs)), producing a 
risk score. The HHS risk adjustment methodology utilizes separate 
models for adults, children, and infants to account for clinical and 
cost differences in each age group. In the adult and child models, the 
relative risk assigned to an individual's age, sex, and diagnoses are 
added together to produce an individual risk score. Additionally, to 
calculate enrollee risk scores in the adult models, we added enrollment 
duration factors beginning with the 2017 benefit year,\17\ and 
prescription drug categories (RXCs) beginning with the 2018 benefit 
year.\18\ 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 cost-sharing reduction (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 (PLRS)) within a geographic rating area is one of 
the inputs into the risk adjustment State payment transfer formula,\19\ 
which determines the State transfer payment or charge that an issuer 
will receive or be required to pay for that plan for the applicable 
State market risk pool. Thus, the HHS risk adjustment models predict 
average group costs to account for risk across plans, in keeping with 
the Actuarial Standards Board's Actuarial Standards of Practice for 
risk classification.
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    \17\ For the 2017 through 2022 benefit years, there is a set of 
11 binary enrollment duration factors in the adult models that 
decrease monotonically from one to 11 months, reflecting the 
increased annualized costs associated with fewer months of 
enrollments. See, for example, 81 FR 94071 through 94074. These 
enrollment duration factors were replaced beginning with the 2023 
benefit year with HCC-contingent enrollment duration factors for up 
to 6 months in the adult models. See, for example, 87 FR 27228 
through 27230.
    \18\ 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.
    \19\ The State payment transfer formula refers to the part of 
the HHS risk adjustment methodology that calculates payments and 
charges at the State market risk pool level prior to the calculation 
of the high-cost risk pool payment and charge terms that apply 
beginning with the 2018 BY. See, for example, 81 FR 94080.
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a. Data for Risk Adjustment Model Recalibration for 2024 Benefit Year
    We propose to use 2018, 2019 and 2020 benefit year enrollee-level 
EDGE data to recalibrate the 2024 benefit year risk adjustment models 
with an exception to exclude the 2020 benefit year data from the 
blending of the age-sex coefficients for the adult 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 related to the annual 
recalibration of the risk adjustment models using data from the most 
recent available prior benefit years trended forwarded to reflect the

[[Page 78215]]

applicable benefit year of risk adjustment.
    Our proposed approach for 2024 recalibration aligns with the 
approach finalized in the 2022 Payment Notice (86 FR 24151 through 
24155) and reiterated in the 2023 Payment Notice (87 FR 27220 through 
27221), that involves use of the 3 most recent consecutive years of 
enrollee-level EDGE data that are available at the time we incorporate 
the data in the draft recalibrated coefficients published in the 
proposed rule for the applicable benefit year, and not updating the 
coefficients between the proposed and final rules if an additional year 
of enrollee-level EDGE data becomes available for incorporation. We 
continue to believe this approach promotes stability, better meets the 
goal of the risk adjustment program, and allows issuers more time to 
incorporate this information when pricing their plans for the upcoming 
benefit year than the previous approach which allowed for updates to 
the data used for recalibration if more data became available between 
the proposed and final rules.
    As such, we propose to determine coefficients for the 2024 benefit 
year based on a blend of separately solved coefficients from the 2018, 
2019, and 2020 benefit years of enrollee-level EDGE data, with an 
exception to exclude the 2020 benefit year data from the blending of 
the age-sex coefficients for the adult models. For all adult model age-
sex coefficients, we propose to use only 2018 and 2019 benefit year 
enrollee-level EDGE data in recalibration to account for the observed 
anomalous decreases in the unconstrained coefficients \20\ for the 2020 
benefit year enrollee-level EDGE data for older adult enrollees, 
especially older adult female enrollees.
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    \20\ HHS constrains the risk adjustment models in multiple 
distinct ways during model recalibration. These include (1) 
coefficient estimation groups, also referred to as G-Groups in the 
Risk Adjustment Do It Yourself (DIY) Software, (2) a priori 
stability constraints, and (3) hierarchy violation constraints. Of 
these, coefficient estimation groups and a priori stability 
constraints are applied prior to model fitting. The hierarchy 
violation constraints are applied after the initial estimates of 
coefficients are produced. We refer to the models and coefficients 
prior to the application of hierarchy violation constraints as the 
``unconstrained models'' and ``unconstrained coefficients,'' 
respectively. For a description of the various constraints we apply 
to the risk adjustment models, see, CMS' ``Potential Updates to HHS-
HCCs for the HHS-operated Risk Adjustment Program'' (the ``2019 
White Paper'') (June 17, 2019). https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Potential-Updates-to-HHS-HCCs-HHS-operated-Risk-Adjustment-Program.pdf.
---------------------------------------------------------------------------

    To further explain, due to the potential impact of the COVID-19 PHE 
on costs and utilization of services in 2020, HHS considered whether 
the 2020 enrollee-level EDGE data was appropriate for use in the annual 
model recalibration for the HHS-operated risk adjustment program 
applicable to the individual and small group (including merged) 
markets. As part of this analysis, we considered comments received in 
response to the 2023 Payment Notice proposed rule (87 FR 598), wherein 
we sought comments on the future use of the 2020 enrollee-level EDGE 
data due to the potential impact of the COVID-19 PHE. The current 
policy that involves using the 3 most recent years of EDGE data 
available as of the proposed rule for the annual risk adjustment model 
recalibration promotes stability and ensures the models reflect the 
year-over-year changes to the markets' patterns of utilization and 
spending without over-relying on any factors unique to one particular 
year. This approach was put in place based on feedback from issuers and 
other interested parties and our experience operating the program since 
the 2014 benefit year. Furthermore, we know from our experience that 
every year of data can be unique and therefore some level of deviation 
from year to year is expected.\21\ These general considerations all 
weigh in favor of including the 2020 benefit year data in the 
recalibration of the risk adjustment models.
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    \21\ Every year we expect some shifting in treatment and cost 
patterns, for example as new drugs come to market. Our goal in using 
multiple years of data for model calibration is to capture some 
degree of year-to-year cost shifting without over-relying on any 
factors unique to one particular year.
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    However, we recognize that if a benefit year has significant 
changes that differentially impact certain conditions or populations 
relative to others, or is sufficiently anomalous relative to expected 
future patterns of care, we should carefully consider what impact that 
benefit year of data could have if it is used in the annual model 
recalibration for the HHS-operated risk adjustment program. This 
includes consideration of whether to exclude or adjust that benefit 
year of data to increase the models' predictive validity or otherwise 
limit the impact of anomalous trends. The situation presented by the 
COVID-19 PHE and its potential impact on utilization and costs in the 
2020 benefit year is an example \22\ of a situation that requires this 
additional consideration. Thus, to help further inform HHS' decision on 
whether it is appropriate to use 2020 enrollee-level EDGE data to 
calibrate the risk adjustment coefficients, HHS analyzed the 2020 
benefit year enrollee-level EDGE recalibration data to assess how it 
compares to 2019 benefit year enrollee-level EDGE recalibration data. 
Our results found:
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    \22\ In the 10 years since the start of HHS model calibration 
for benefit year 2014, the COVID-19 PHE has been the only such 
situation to date. Other events and policy changes have not risen to 
the same level of uniqueness or impact.
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     The total sample size in the recalibration data set was 
similar between the 2019 and 2020 benefit years, with the individual 
market at the national level seeing an increase in enrollment in the 
2020 benefit year and the small group market at the national level 
seeing a slight decrease in enrollment in the 2020 benefit year.
     In the 2020 EDGE enrollee-level recalibration data set, 
even though PMPM spending dropped substantially between March and April 
2020, the total PMPM spending in the 2020 benefit year was similar to 
the 2019 benefit year, with the institutional and professional services 
PMPM slightly decreasing, preventive services PMPM notably decreasing, 
and the drug PMPM increasing. This represents a departure from 
historical medical costs trends, which have generally seen increases 
year-over-year in all cost categories.
     Across all data submitted through issuer's EDGE servers 
for the 2020 benefit year, we observed a large increase in telehealth 
paid claims amounts when compared to all data submitted through 
issuer's EDGE servers for the 2019 benefit year.
     The number of enrollees with one or more HCC was 
relatively stable between the 2019 and 2020 benefit year enrollee-level 
EDGE recalibration data sets in both the recalibration and full data 
sets.\23\
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    \23\ CMS. (2021, June 30). Summary Report on Permanent Risk 
Adjustment Transfers for the 2020 Benefit Year. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2020.pdf.
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     Individual HCC frequencies and costs generally remained 
constant between the 2019 and 2020 benefit year enrollee-level EDGE 
recalibration data sets, even for the HCCs related to the severe 
manifestations of COVID-19. An exception was a notable increase in 
frequency for HCC 127 Cardio-Respiratory Failure and Shock, Including 
Respiratory Distress Syndromes, which was likely coded for cases in 
which acute respiratory distress syndrome (ARDS) was a manifestation of 
COVID-19, but relative allowed charges, and therefore, risk adjustment 
model coefficients, for HCC 127 remained similar in 2020 compared to 
2019.

[[Page 78216]]

     RXC frequencies and costs were generally stable between 
the 2019 and 2020 benefit year enrollee-level EDGE recalibration data 
sets, with the exception of RXC 10 Cystic Fibrosis Agents, for which a 
new drug was introduced that increased costs in the 2020 data compared 
to the 2019 data.
     The unconstrained coefficients for the 2020 benefit year 
enrollee-level EDGE recalibration data are similar to the 2019 benefit 
year's unconstrainted coefficients with one exception. The exception 
exists within the age-sex coefficients in the adult models where we 
found decreases among coefficients for older enrollees, especially 
female enrollees, which are likely due to decreases in discretionary 
spending among this age group in the 2020 benefit year.
    In short, on many key dimensions, HHS found that the 2019 benefit 
year and 2020 benefit year enrollee-level EDGE data recalibration were 
largely comparable.
    With this analysis in mind, and based on the comments received in 
response to the 2023 Payment Notice proposed rule,\24\ HHS considered 
six different options for handling the 2020 benefit year enrollee-level 
EDGE recalibration data for purposes of the annual recalibration of the 
HHS risk adjustment models for the 2024 benefit year.\25\ Four options 
involve the use of 2020 benefit year enrollee-level EDGE recalibration 
data in the risk adjustment model recalibration, and two involve the 
exclusion of the 2020 benefit year data. These six options are as 
follows:
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    \24\ These comments offered a variety of perspectives with some 
commenters stating that 2020 enrollee-level EDGE data should be used 
for model recalibration as normal, a few commenters suggesting that 
2020 enrollee-level EDGE data should be excluded entirely, one 
commenter recommending that 2020 enrollee-level EDGE data should be 
used with a different weight assigned, and several commenters 
suggesting HHS release a technical paper on the use of 2020 
enrollee-level EDGE data, with several suggesting 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. See 87 FR 27220 through 27221.
    \25\ The proposals related to the use of 2020 benefit year 
enrollee-level EDGE data in this rule for model recalibration 
purposes are focused on the 2024 benefit year models. Consistent 
with the approach finalized in part 2 of the 2022 Payment Notice (86 
FR 24151 through 24155), any changes to the use of the 3 most recent 
consecutive years of enrollee-level EDGE data, including proposals 
related to the use of 2020 benefit year data, for recalibration of 
the 2025 and 2026 benefit year HHS risk adjustment models would be 
addressed and proposed in a future rulemaking.
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     Option 1: Maintain the current policy, recalibrating the 
2024 benefit year risk adjustment models using 2018, 2019, and 2020 
enrollee-level EDGE data with no exceptions or modifications.
     Option 2: Maintain the current policy, recalibrating the 
2024 benefit year risk adjustment models using 2018, 2019, and 2020 
benefit year enrollee-level EDGE recalibration data, but assign a lower 
weight to 2020 data. Assigning a lower weight to the 2020 data would 
dampen its impact on the models while continuing to capture in part the 
utilization and spending patterns underlying the data.
     Option 3: Utilize 4 years of enrollee-level EDGE data, 
instead of three, to recalibrate the 2024 benefit year risk adjustment 
models using 2017, 2018, 2019, and 2020 benefit year data. This would 
serve the purpose of dampening the effect of the 2020 data on the 
models by incorporating an extra year of data from a prior benefit year 
that was not impacted by the COVID-19 PHE.
     Option 4: Maintain the current policy, recalibrating the 
2024 benefit year risk adjustment models using 2018, 2019, and 2020 
enrollee-level EDGE recalibration data with an exception to exclude the 
2020 benefit year data from the blending of the age-sex coefficients 
for the adult models. Under this option, we would determine 
coefficients for the 2024 benefit year based on a blend of separately 
solved coefficients from the 2018, 2019, and 2020 benefit years of 
enrollee-level EDGE recalibration data and would exclude the 2020 
benefit year from the recalibration of the adult models' age-sex 
coefficients. Instead, only 2018 and 2019 benefit year enrollee-level 
EDGE recalibration data would be used to recalibrate the adult risk 
adjustment models age-sex coefficients.\26\
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    \26\ This is a similar approach to that taken in part 2 of the 
2022 Payment Notice, where we only used 2016 and 2017 enrollee-level 
EDGE data for the limited purpose of developing the RXC 09 
coefficients, RXC 09 HCC related coefficients, and RXC 09 
interaction term coefficients for the 2022 benefit year adult 
models, given concerns regarding unrepresentative expenditures and 
off-label prescribing of hydroxychloroquine during the COVID-19 PHE 
relative to drugs that enrollees with HCC 048, 056, or 057 may take. 
See 86 FR 24180.
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     Option 5: Exclude the 2020 benefit year enrollee-level 
EDGE recalibration data and instead use the 2017, 2018, and 2019 
benefit year enrollee-level EDGE recalibration data, trended forward to 
the 2024 benefit year, in recalibration of the risk adjustment models 
for the 2024 benefit year, or use the final 2023 risk adjustment model 
coefficients for the 2024 benefit year without trending the data to 
account for inflation and changes in costs and utilization between the 
2023 and 2024 benefit years.
     Option 6: Exclude the 2020 benefit year enrollee-level 
EDGE recalibration data and instead use only 2 years of enrollee-level 
EDGE data for recalibration--that is, use only 2018 and 2019 benefit 
year data to recalibrate the 2024 risk adjustment models.
    Although it is true our analyses found that the 2019 and 2020 
benefit year enrollee-level EDGE recalibration data were largely 
comparable, there were observed anomalous decreases in the 
unconstrained age-sex coefficients for the 2020 benefit year enrollee-
level EDGE recalibration data for older adult enrollees, especially 
older female enrollees. We are therefore concerned that not making any 
adjustments with respect to the use of 2020 enrollee-level EDGE 
recalibration data could have an undue impact on the risk captured by 
the age-sex factors in the adult models such that these factors would 
less accurately reflect the expected spending patterns for the 2024 
benefit year. Option 1 would not address the identified anomalous trend 
that is not expected to continue in future benefit years. Option 2 
represents a middle ground between those commenters who expressed 
support for including 2020 benefit year data in model recalibration and 
those who expressed support for excluding the data, by capturing the 
utilization and spending patterns underlying the 2020 data while 
dampening its effects in the models. However, we are concerned this 
approach would require identifying an appropriate weighting methodology 
other than the equal weighting that we generally use to blend the 
factors from the 3 data years, and we do not believe there is a self-
evident method of weighting 2020 data differently for this purpose. 
Furthermore, we are concerned that dampening the effect of the 2020 
benefit year data in all of the models for all factors (as opposed to 
just the age-sex factors in the adult models) defeats the purpose of 
using the next available benefit year of data to recalibrate the 
models, because doing so would prevent the models from reflecting 
changes in utilization and cost of care that are unrelated to the 
impact of the COVID-19 PHE. There are similar concerns with option 3 
and the inclusion of an additional prior benefit year (that is, 2017) 
to recalibrate the 2024 benefit year models to dampen the impact of the 
2020 benefit year data. We do not believe that such a broad dampening 
is necessary since the anomalous coefficient changes identified from 
the 2020 benefit year data were largely limited to the adult model age-
sex coefficients and incorporating an

[[Page 78217]]

additional prior benefit year of data would dampen the impact of the 
2020 benefit year data on other factors (for example, HCCs, RXCs, and 
interaction factors) and would prevent the models from reflecting 
changes in utilization and cost of care that are unrelated to the 
impact of the COVID-19 PHE. Furthermore, option 3 would use older data 
to fit the 2024 benefit year risk adjustment models than options 1 and 
2 (that is, 2017 benefit year data), which may impact the risk 
adjustment models such that they reflect older cost and utilization 
trends than would be desirable.
    We are similarly concerned about options 5 and 6, which would 
involve the complete exclusion of 2020 benefit year data. With respect 
to option 5, although using the same data years for 2024 benefit year 
model recalibration as 2023 benefit year model recalibration or using 
the 2023 benefit year models for the 2024 benefit year would likely 
yield the same or similar coefficients \27\ to those published for the 
2023 benefit year, thereby providing stability that issuers may find 
desirable, we are concerned this approach would also involve the use of 
older data as with option 3, which may not be the data set that would 
best reflect current utilization and spending trends including changes 
in drug prescribing patterns. In addition, our analyses of the 2020 
benefit year enrollee-level EDGE recalibration data found that it was 
largely comparable with the 2019 benefit year data set and we did not 
identify other major anomalous trends in our comparison of the 
unconstrained HCC coefficients in the 2019 and 2020 enrollee-level EDGE 
recalibration data sets, which raises the question about whether there 
is a sufficient justification to completely exclude 2020 benefit year 
enrollee-level EDGE recalibration data in the recalibration of the risk 
adjustment models.
---------------------------------------------------------------------------

    \27\ We expect that the trending of the prior benefit year data 
to reflect the anticipated costs and spending trends in the 
applicable future benefit year of risk adjustment that occurs as 
part of the annual model recalibration effort would impact the 2024 
risk adjustment model coefficients.
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    Option 6 has the same drawbacks as option 5--that is, it would not 
use the most recently available data for the applicable benefit year 
model recalibration, which may be the data set that would best reflect 
current utilization and spending trends, and raises the same question 
about whether there is a sufficient justification to completely exclude 
the 2020 benefit year data for model recalibration purposes. This 
option has the additional drawback of decreasing the stabilizing effect 
of using multiple years of data, as our goal in using multiple years of 
data for model calibration is to capture some degree of year-to-year 
cost shifting without over-relying on any factors unique to one 
particular year. When using 2 years of data, each year is weighted at 
50 percent, but with 3 years of data, each year is weighted at 33.3 
percent. As such, a change in a coefficient occurring in 1 year of the 
data that is actually included in recalibration would have a greater 
impact on the risk adjustment model coefficients if only using 2 years 
of data rather than 3 years, due to the increase in the reliance of the 
blended coefficients on the remaining 2 years of data.\28\
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    \28\ We do not have the same concerns with respect to using only 
2 years of data for recalibration of the adult model age-sex 
coefficients because age-sex coefficients tend to contribute less to 
enrollees' risk scores than HCC, RXC, and interaction coefficients, 
so changes in a single age-sex coefficient in one of the remaining 
years of data is less likely to have an undue impact. Additionally, 
the age-sex coefficients are derived from substantially larger 
samples of enrollees and are therefore theoretically more stable 
than HCC, RXC, enrollment duration and interaction coefficients. 
Furthermore, the anomalies seen in the age-sex coefficients fit with 
the 2020 EDGE data systematically impact a wide range of enrollees. 
As such, we believe the risks of including 2020 EDGE data in 
blending of the age-sex coefficients outweighs the risks of only 
using the 2018 and 2019 benefit years of EDGE data to blend the age-
sex coefficients for the 2024 benefit year adult models.
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    After consideration of these different options, we propose option 
4--that is, maintain the current policy of using the 3 most recent 
consecutive benefit year data sets that are available at the time of 
publication of this proposed rule, with a narrowly tailored exception 
to exclude the 2020 benefit year data from the blending of the age-sex 
coefficients for the adult models. Under this proposal, we would 
determine coefficients for the 2024 benefit year based on a blend of 
separately solved coefficients from the 2018, 2019, and 2020 benefit 
years of enrollee-level EDGE recalibration data except for the 
coefficients for the adult age-sex factors, which would instead be 
based on a blend of separately solved coefficients from only the 2018 
and 2019 benefit year enrollee-level EDGE recalibration. This approach 
preserves the current policy and use of the 3 most recent consecutive 
years of data available for the majority of the risk adjustment model 
coefficients, allowing for the use of the next available benefit year 
of data to recalibrate models that appears to be largely comparable 
with 2019 benefit year data to reflect changes in cost and utilization 
patterns for payment HCCs, RXCs, enrollment duration factors and 
interaction factors. At the same time, it includes an exception 
narrowly tailored to account for the observed anomalous decreases in 
the unconstrainted coefficients for the 2020 benefit year enrollee-
level EDGE recalibration data for older adult enrollees, especially 
female enrollees. Thus, we believe that this offers a balanced approach 
to the use of 2020 benefit year enrollee-level EDGE recalibration data 
for model recalibration purposes while also addressing the limited 
observed anomalous trends in the 2020 benefit year enrollee-level EDGE 
recalibration data.
    Our proposal to adopt option 4 is narrowly tailored to only address 
the observed trend in the unconstrained age-sex coefficients for the 
2020 benefit year enrollee-level EDGE recalibration data for older 
adult enrollees, especially older adult female enrollees, which are 
likely due to decreases in discretionary spending among this age group 
in the 2020 benefit year. We are not proposing adjustments in response 
to the other trends observed in the 2020 benefit year enrollee-level 
EDGE recalibration data, such as the decrease in PMPM spending that 
occurred in March and April 2020,\29\ because we generally found that 
the 2020 benefit year data and trends were otherwise largely comparable 
with the 2019 benefit year data and we did not identify other anomalous 
trends in our comparison of the unconstrained HCC coefficients in the 
2019 and 2020 benefit year enrollee-level EDGE recalibration data sets. 
We further note that the coefficients fit by the risk adjustment models 
reflect the cost of treatment rather than the number of enrollees 
accessing treatment or when during the year the treatment is accessed. 
Therefore, even though there was some observed decreased utilization in 
the 2020 benefit year enrollee-level EDGE recalibration data, the lack 
of change in diagnosis-related coefficients between the models fit with 
prior years of enrollee-level EDGE recalibration data and the models 
fit with 2020 enrollee-level EDGE recalibration data indicates that 
when an enrollee was able to access care and a diagnosis was recorded 
on EDGE for the benefit year, the cost of treatment of their diagnosed 
conditions was similar to that experienced in previous benefit years. 
As such, we believe the 2020 enrollee-level EDGE recalibration data is 
sufficiently similar to prior years of enrollee level EDGE 
recalibration data to

[[Page 78218]]

use in the fitting of coefficients for HCCs, RXCs, their interactions, 
and enrollment duration factors. We also do not believe that any 2020 
enrollee-level EDGE recalibration data exceptions are needed for the 
child or infant risk adjustment models because among those models we 
did not observe anomalous trends between age-sex groups analogous to 
those trends observed that differentially impacted age-sex factors in 
the adult models. The draft coefficients listed in Tables 2 through 7 
of this proposed rule reflect the use of 2018, 2019, and 2020 benefit 
year enrollee-level EDGE recalibration data, with an exception to 
exclude the 2020 benefit year data from the blending of the age-sex 
coefficients for the adult models, as well as the other risk adjustment 
model updates proposed in this proposed rule.\30\
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    \29\ As noted above, even though PMPM spending dropped 
substantially between March and April 2020, our analysis found that 
total PMPM spending in the 2020 benefit year was generally similar 
to the 2019 benefit year.
    \30\ Similar to recalibration of the 2023 risk adjustment adult 
models and consistent with the policies adopted in the 2023 Payment 
Notice, the draft factors in this rule also reflect the removal of 
the mapping of 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) from the 2018 and 
2019 benefit year enrollee-level EDGE data sets for purposes of 
recalibrating the 2024 benefit year adult models. See 87 FR 27232 
through 27235. Additionally, the draft factors for the adult models 
reflect the use of the final, fourth quarter (Q4) RXC mapping 
document that was applicable for each benefit year of data included 
in the current year's model recalibration (except under extenuating 
circumstances that can result in targeted changes to RXC mappings). 
See 87 FR at 27231 through 27232.
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    To aid interested parties in their consideration of the proposed 
option, we are providing in Table 1 the values for the adult age-sex 
coefficients under option 1, which blends the age-sex coefficients 
using all three benefit years (2018, 2019 and 2020). Interested parties 
may compare the coefficients in Table 1 (reflecting option 1) to those 
in Table 2 (reflecting proposed option 4) to understand the impact of 
the 2020 enrollee-level EDGE data on the blended age-sex coefficients 
for the 2024 benefit year.
[GRAPHIC] [TIFF OMITTED] TP21DE22.000

    In addition to considering alternative options to recalibration in 
this section, we note that the coefficients could change if we identify 
an error after publication of this rule or if some or all of the 
proposed model changes are not finalized or are modified in response to 
comments. In addition, consistent with Sec.  153.320(b)(1)(i), if we 
are unable to finalize the final coefficients in time for publication 
in the final rule, we would publish the final coefficients for the 2024 
benefit year in guidance soon after the publication of the final rule.
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    \31\ All coefficients in Table 2 except for the adult age-sex 
factors are blended using all three benefit years of enrollee-level 
EDGE data (2018, 2019, and 2020). Option 1 and proposed option 4 
only differ in the values of the adult age-sex coefficients. As 
such, in Table 1, we only provide the adult age-sex coefficients for 
option 1.
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    We seek comment on the proposal to determine 2024 benefit year 
coefficients based on a blend of separately solved coefficients from 
the 2018, 2019, and 2020 enrollee-level EDGE recalibration data, with 
an exception to exclude the 2020 benefit year data from the blending of 
the age-sex coefficients for the adult models. We also seek comment on 
all of the alternative approaches outlined above.
b. Pricing Adjustment for the Hepatitis C Drugs
    For the 2024 benefit year, we propose to continue applying a market 
pricing adjustment to the plan liability associated with Hepatitis C 
drugs in the risk adjustment models.\32\ Since the 2020 benefit year 
risk adjustment models, we have been making a market pricing adjustment 
to the plan liability associated with Hepatitis C drugs to reflect 
future market pricing prior to solving for coefficients for the 
models.\33\ The purpose of this market pricing adjustment is to account 
for 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.\34\
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    \32\ See for example, 84 FR 17463 through 17466.
    \33\ The Hepatitis C drugs market pricing adjustment to plan 
liability is applied for all enrollees taking Hepatitis C drugs in 
the data used for recalibration.
    \34\ Silseth, S., & Shaw, H. (2021). Analysis of prescription 
drugs for the treatment of hepatitis C in the United States. 
Milliman White Paper. https://www.milliman.com/-/media/milliman/pdfs/2021-articles/6-11-21-analysis-prescription-drugs-treatment-hepatitis-c-us.ashx.
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    We have committed to reassessing this pricing adjustment with 
additional years of enrollee-level EDGE data, as data become available. 
As part of the 2024 benefit year model recalibration, we reassessed the 
cost trend for Hepatitis C drugs using available

[[Page 78219]]

enrollee-level EDGE data (including 2020 benefit year data) to consider 
whether the adjustment was still needed and if it is still needed, 
whether it should be modified. We found that the data for the Hepatitis 
C RXC that would be used for the 2024 benefit year recalibration \35\ 
still do not account for the significant pricing changes due to the 
introduction of new Hepatitis C drugs, and therefore, do not precisely 
reflect the average cost of Hepatitis C treatments applicable to the 
benefit year in question.
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    \35\ As detailed above, we propose to use 2018, 2019 and 2020 
enrollee-level EDGE data for recalibration of the 2024 benefit year 
HHS risk adjustment models, with an exception to exclude 2020 data 
from recalibration of the age-sex factors for the adult models. 
However, for purposes of assessing whether this pricing adjustment 
was still needed and, if so, if it should be modified, we also 
assessed 2017 enrollee-level EDGE data in the event one of the 
alternative proposals regarding use of 2020 enrollee-level EDGE data 
is adopted.
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    Specifically, generic Hepatitis C drugs did not become available on 
the market until 2019, and we propose to use 2018 benefit year EDGE 
data in the 2024 benefit year model recalibration.\36\ Due to the lag 
between the data years used to recalibrate the risk adjustment models 
and the applicable benefit year of risk adjustment, as well as the 
expectation that the costs for Hepatitis C drugs will not increase at 
the same rate as other drug costs between the data year and the 
applicable benefit year of risk adjustment, we do not believe that the 
trends used to reflect growth in the cost of prescription drugs due to 
inflation and related factors for recalibrating the models will 
appropriately reflect the average cost of Hepatitis C treatments 
expected in the 2024 benefit year. Therefore, we continue to believe a 
market pricing adjustment specific to Hepatitis C drugs in our models 
for the 2024 benefit year is necessary to account for the significant 
pricing changes associated with the introduction of new and generic 
Hepatitis C drugs between the data years used for recalibrating the 
models and the applicable recalibration benefit year. We intend to 
continue to assess this pricing adjustment in future benefit year 
recalibrations using additional years of enrollee-level EDGE data.
---------------------------------------------------------------------------

    \36\ See Miligan, J, (2018). A perspective from our CEO: Gilead 
Subsidiary to Launch Authorized Generics to Treat HCV. Gilead. 
https://www.gilead.com/news-and-press/company-statements/authorized-generics-for-hcv. See also AbbVie. (2017). AbbVie Receives U.S. FDA 
Approval of MAVYRETTM (glecaprevir/pibrentasvir) for the 
Treatment of Chronic Hepatitis C in All Major Genotypes (GT 1-6) in 
as Short as 8 Weeks. Abbvie. https://news.abbvie.com/news/abbvie-receives-us-fda-approval-mavyret-glecaprevirpibrentasvir-for-treatment-chronic-hepatitis-c-in-all-major-genotypes-gt-1-6-in-as-short-as-8-weeks.htm.
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    We seek comment on our proposal to continue applying a market 
pricing adjustment to the plan liability associated with Hepatitis C 
drugs for the 2024 benefit year.
c. Request for Information: Payment HCC for Gender Dysphoria
    HHS requests information on adding a payment HCC for gender 
dysphoria to the HHS-operated risk adjustment models for future benefit 
years. As part of the ongoing assessment of improvements to the HHS-
operated risk adjustment program, HHS considers whether adjustments are 
needed to the payment HCCs in the risk adjustment models.\37\ In light 
of Executive Order (E.O.) 13985 ``Advancing Racial Equity and Support 
for Underserved Communities Through the Federal Government,'' \38\ E.O. 
13988 ``Preventing and Combating Discrimination on the Basis of Gender 
Identity or Sexual Orientation,'' \39\ and a comment received in 
response to the 2023 Payment Notice proposed rule, HHS is soliciting 
comment on whether to consider adding a new payment HCC for gender 
dysphoria to the risk adjustment models for future benefit years.
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    \37\ See, for example, the 2019 White Paper. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Potential-Updates-to-HHS-HCCs-HHS-operated-Risk-Adjustment-Program.pdf.
    \38\ 86 FR 7009.
    \39\ 86 FR 7023.
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    In considering the inclusion of a new payment HCC for gender 
dysphoria, we evaluated this potential payment HCC against the 10 
Principles of HHS-Operated Risk Adjustment and determined that a new 
payment HCC for gender dysphoria would satisfy some but not all of 
these principles (77 FR 73128).
    To further consider whether we should add a payment HCC for gender 
dysphoria to the HHS-operated risk adjustment models, we request 
feedback on the following questions:
     The implications of using the changing clinical concepts 
and labels from the ICD-10-CM diagnosis of ``gender identity disorder'' 
compared to the draft ICD-11-CM diagnosis of ``gender incongruence'' 
\40\ for the naming and inclusion of this diagnosis or payment HCC in 
the HHS risk adjustment models.
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    \40\ World Health Organization. (n.d.). Gender incongruence and 
transgender health in the ICD. https://www.who.int/standards/classifications/frequently-asked-questions/gender-incongruence-and-transgender-health-in-the-icd.
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     Whether a gender dysphoria HCC should be a separate and 
standalone payment HCC, or if gender dysphoria could be combined with 
any other diagnoses to form a broader payment HCC.\41\
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    \41\ Gender dysphoria codes are currently mapped to HCC 93 Other 
Psychiatric Disorders, a non-payment HCC that is not currently 
included in the HHS-operated risk adjustment models.
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     Any other factors HHS should consider when determining 
whether to add a gender dysphoria HCC to the HHS risk adjustment models 
as a payment HCC.
    While we are not proposing to add a payment HCC for gender 
dysphoria to the HHS risk adjustment models at this time, we solicit 
comments to inform our continued consideration of potential risk 
adjustment model updates for future benefit years.
d. List of Factors To Be Employed in the Risk Adjustment Models (Sec.  
153.320)
    The proposed 2024 benefit year risk adjustment model factors 
resulting from the equally weighted (averaged) blended factors from 
separately solved models using the 2018, 2019, and 2020 enrollee-level 
EDGE data, with an exception to exclude the 2020 data from 
recalibration of the age-sex factors for the adult models, are shown in 
Tables 1 through 6. The adult, child, and infant models have been 
truncated to account for the high-cost risk pool payment parameters by 
removing 60 percent of costs above the $1 million threshold.\42\ Table 
2 contains factors for each adult model, including the age-sex, HCCs, 
RXCs, RXC-HCC interactions, interacted HCC counts, and enrollment 
duration coefficients. Table 3 contains the factors for each child 
model, including the age-sex, HCCs, and interacted HCC counts 
coefficients. Table 4 lists the HHS-HCCs selected for the interacted 
HCC counts factors that apply to the adult and child models. Table 5 
contains the factors for each infant model. Tables 6 and 7 contain the 
HCCs included in the infant models' maturity and severity categories, 
respectively.
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    \42\ We are not proposing changes to the high-cost risk pool 
parameters for the 2024 benefit year. Therefore, we would maintain 
the $1 million threshold and 60 percent coinsurance rate.
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e. CSR Adjustments43 44 45 
46 4748
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    \43\ Starting with the 2024 risk adjustment adult models, HHS 
will group HCC 18 Pancreas Transplant Status and HCC 183 Kidney 
Transplant Status/Complications to reflect that these transplants 
frequently co-occur for clinical reasons and to reduce volatility of 
coefficients across benefit years due to the small sample size of 
HCC 18. This change will also be reflected in the DIY Software for 
the 2024 benefit year.
    \44\ HCC numbers that appear with an underscore in this document 
will appear without the underscore in the DIY software. For example, 
HCC 35_1 in this table will appear as HCC 351 in the DIY software.
    \45\ Starting with the 2024 risk adjustment adult models, HHS 
will group HCC 18 Pancreas Transplant Status and HCC 183 Kidney 
Transplant Status/Complications to reflect that these transplants 
frequently co-occur for clinical reasons and to reduce volatility of 
coefficients across benefit years due to the small sample size of 
HCC 18. This change will also be reflected in the DIY Software for 
the 2024 benefit year.
    \46\ As a note, we constrain RXC 03 to be equal to average plan 
liability for RXC 03 drugs, RXC 04 to be equal to the average plan 
liability for RXC 04 drugs, and we constrain RXC 03 x HCC142 and RXC 
04 x HCC184, 183, 187, 188 to be equal to 0. See CMS. (2016, March 
24). March 2016 Risk Adjustment Methodology Discussion Paper. 
https://www.cms.gov/cciio/resources/forms-reports-and-other-resources/downloads/ra-march-31-white-paper-032416.pdf (where we 
previously discussed the use of constraints in the risk adjustment 
models).
    \47\ Similar to recalibration of the 2023 risk adjustment adult 
models and consistent with the final policies adopted in the 2023 
Payment Notice, the draft factors in this rule reflect the removal 
of the mapping of 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 09x HCC048, 041) from the 2018 and 
2019 benefit year enrollee-level EDGE data sets for purposes of 
recalibrating the 2024 benefit year adult models. See 87 FR 27232 
through 27235. Additionally, the draft factors for the adult models 
reflect the use of the final, fourth quarter (Q4) RXC mapping 
document that was applicable for each benefit year of data included 
in the current year's model recalibration (except under extenuating 
circumstances that can result in targeted changes to RXC mappings), 
while continuing to engage in annual and quarterly review processes. 
See 87 FR 27231 through 27232.
    \48\ Starting with the 2024 risk adjustment adult models, HHS 
will group HCC 18 Pancreas Transplant Status and HCC 183 Kidney 
Transplant Status/Complications to reflect that these transplants 
frequently co-occur for clinical reasons and to reduce volatility of 
coefficients across benefit years due to the small sample size of 
HCC 18. This change will also be reflected in the DIY Software for 
the 2024 benefit year and will be applied to the adult models only. 
In the child models, HCC 18 and HCC 183 are subject to an a priori 
constraint (S1) with HCC 34, also for sample size reasons. See 
Section 4.2.2 of the 2019 White Paper. (June 17, 2019.) https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Potential-Updates-to-HHS-HCCs-HHS-operated-Risk-Adjustment-Program.pdf. Nevertheless, in both the adult and child models, the 
presence of one of these HCCs either alone or in a group will 
trigger a severity illness indicator and/or a transplant indicator 
for the interacted counts model specification depending on the total 
number of HCCs the enrollee has.
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    We propose to continue including an adjustment for the receipt of 
CSRs in the risk adjustment models in all 50 States and the District of 
Columbia. While we continue to study and explore a range of options to 
update the CSR adjustments to improve prediction for CSR enrollees and 
whether changes are needed to the risk adjustment transfer formula to 
account for CSR plans,\49\ to maintain stability and certainty for 
issuers for the 2024 benefit year, we are proposing to maintain the CSR 
adjustment factors finalized in the 2019, 2020, 2021, 2022, and 2023 
Payment Notices.\50\ See Table 8. We also propose to continue to use a 
CSR adjustment factor of 1.12 for all Massachusetts wrap-around plans 
in the risk adjustment plan liability risk score calculation, as all of 
Massachusetts' cost-sharing plan variations have AVs above 94 percent 
(81 FR 12228).
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    \49\ See CMS. (2021, October 26). HHS-Operated Risk Adjustment 
Technical Paper on Possible Model Changes. Appendix A. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf. We are also 
considering a letter recently published by the American Academy of 
Actuaries regarding accounting for the receipt of CSRs in risk 
adjustment and plan rating and are continuing to monitor changes 
related to these issues. Bohl, J., Novak, D., & Karcher, J. (2022, 
September 8). Comment Letter on Cost-Sharing Reduction Premium Load 
Factors. American Academy of Actuaries. https://www.actuary.org/sites/default/files/202209/Academy_CSR_Load_Letter_09.08.22.pdf.
    \50\ See 83 FR 16930 at 16953; 84 FR 17478 through 17479; 85 FR 
29190; 86 FR 24181; and 87 FR 27235 through 27236.
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    We seek comment on these proposals.

[[Page 78236]]

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f. Model Performance Statistics
    Each benefit year, to evaluate risk adjustment model performance, 
we examine each model's R-squared statistic and predictive ratios 
(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 model is the ratio of the weighted mean predicted plan 
liability for the model sample population to the weighted mean actual 
plan liability for the model sample population. The PR represents how 
well the model does on average at predicting plan liability for that 
subpopulation.
    A subpopulation that is predicted perfectly would have a PR of 1.0. 
For each of the current and proposed HHS risk adjustment models, the R-
squared statistic and the PRs are in the range of published estimates 
for concurrent risk adjustment models.\51\ Because we propose to blend 
the coefficients from separately solved models based on the 2018, 2019, 
and 2020 benefit years' enrollee-level EDGE data, with an exception to 
exclude 2020 benefit year data from the recalibration of the age-sex 
factors for the adult models, we are publishing the R-squared statistic 
for each model separately to verify their statistical validity. The R-
squared statistics for the proposed 2024 benefit models are shown in 
Table 9.
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    \51\ Hileman, G., & Steele, S. (2016). Accuracy of Claims-Based 
Risk Scoring Models. Society of Actuaries. https://www.soa.org/4937b5/globalassets/assets/files/research/research-2016-accuracy-claims-based-risk-scoring-models.pdf.
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3. Overview of the HHS Risk Adjustment Methodology (Sec.  153.320)
    In part 2 of the 2022 Payment Notice (86 FR 24183 through 24186), 
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. We 
explained that under this approach, we will no longer republish these 
formulas in future annual HHS notice of benefit and payment parameter 
rules unless changes are being proposed. We are not proposing any 
changes to the formula in this rule, and therefore, are not 
republishing the formulas in this rule. We would continue to apply the 
formula as finalized in the 2021 Payment Notice (86 FR 24183 through 
24186) \52\ in the States where HHS operates the risk adjustment 
program in the 2024 benefit year. Additionally, as finalized in the 
2020 Payment Notice (84 FR 17466 through 17468), we will maintain the 
high-cost risk pool parameters for the 2020 benefit year and beyond, 
unless amended through notice-and-comment rulemaking. We are not 
proposing any changes to the high-cost risk pool parameters for the 
2024 benefit year; therefore, we would maintain the $1 million 
threshold and 60 percent coinsurance rate.
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    \52\ Discussion provided an illustration and further details on 
the State payment transfer formula.
---------------------------------------------------------------------------

4. Repeal of Risk Adjustment State Flexibility To Request a Reduction 
in Risk Adjustment State Transfers (Sec.  153.320(d))
    We propose to repeal the flexibility under Sec.  153.320(d) for 
States to request reductions of risk adjustment State transfers under 
the State payment transfer formula in all State market risk pools, 
including those prior participant States that previously requested a 
reduction,\53\ for the 2025 benefit year and beyond. We also solicit 
comment on Alabama's requests to reduce risk adjustment State transfers 
in the individual (including the catastrophic and non-catastrophic risk 
pools) and small group markets for the 2024 benefit year.
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    \53\ Alabama is the only State that has previously requested a 
reduction in risk adjustment transfers through this flexibility and 
therefore is the only State considered a ``prior participant 
State''.
---------------------------------------------------------------------------

a. Repeal of State Flexibility To Request Transfer Reductions
    We propose to amend Sec.  153.320(d) to repeal the ability for any 
State to request a reduction in risk adjustment State transfers 
beginning with the 2025 benefit year. As part of this repeal, we 
propose conforming amendments to the introductory text of Sec.  
153.320(d), which currently provides that prior participant States may 
request to reduce risk adjustment transfers in all State market risk 
pools by up to 50 percent beginning with the 2024 benefit year, to 
remove this flexibility for the 2025 benefit year and beyond and limit 
the timeframe available for prior participants to request reductions to 
the 2024 benefit year only. Similarly, we propose conforming amendments 
to paragraphs (d)(1)(iv) and (d)(4)(i)(B), which describe the 
conditions for a prior participant State to request a reduction 
beginning with the 2024 benefit year, to also limit these requests to 
the 2024 benefit year only and to eliminate the ability for prior 
participant States to request a reduction for the 2025 benefit year and 
beyond.
    In the 2019 Payment Notice (83 FR 16955 through 16960), we amended 
Sec.  153.320 to add paragraph (d) to provide States the flexibility to 
request a reduction to the applicable risk adjustment State transfers 
calculated by HHS using the State payment transfer formula for the 
State's individual (catastrophic or non-catastrophic risk pools), small 
group, or merged market risk pool by up to 50 percent in States where 
HHS operates the risk adjustment program to more precisely account for 
differences in actuarial risk in the applicable State's markets 
beginning with the 2020 benefit year. We finalized that any requests we 
received would be published in the applicable benefit year's proposed 
HHS notice of benefit and payment parameters, and the supporting 
evidence provided by the State in support of its request would be made 
available for public comment.\54\
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    \54\ If the State requests that HHS not make publicly available 
certain supporting evidence and analysis because it contains trade 
secrets or confidential commercial or financial information within 
the meaning of HHS' Freedom of Information Act regulations at 45 CFR 
5.31(d), HHS will only make available on the CMS website the 
supporting evidence submitted by the State that is not a trade 
secret or confidential commercial or financial information by 
posting a redacted version of the State's supporting evidence. See 
Sec.  153.320(d)(3).
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    In the 2023 Payment Notice (87 FR 27236), HHS limited this 
flexibility by finalizing amendments to Sec.  153.320(d) that repealed 
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.\55\ We also limited 
the options for prior participants to request reductions by 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 risk adjustment payments does not 
exceed 1 percent in the relevant State market risk pool.\56\ In the 
2023 Payment Notice (87 FR 27239 through 27241), we also finalized the 
conforming amendments to the HHS approval framework in Sec.  
153.320(d)(4) to reflect the changes to the applicable criteria (that 
is, only retaining the de minimis criterion) beginning with the 2024 
benefit year, and we finalized the proposed definition of ``prior 
participant'' in Sec.  153.320(d)(5). In addition, HHS indicated our 
intention to propose in future rulemaking to repeal the exception for 
prior participants beginning with the 2025 benefit year.\57\
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    \55\ Section 153.320(d)(5) defines prior participants as 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.
    \56\ 87 FR 27239 through 27241. See also 83 FR 16957.
    \57\ 87 FR 27239 through 27241. See also 83 FR 16957.
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    Since finalizing the ability for States to request a reduction of 
risk adjustment transfers in the 2019 Payment Notice (83 FR 16955 
through 16960), we received public comments on subsequent proposed 
rulemakings requesting that HHS repeal this policy, with several 
commenters noting that reducing risk adjustment transfers to plans with 
higher-risk enrollees could create incentives for issuers to avoid 
enrolling high-risk enrollees in the future by distorting plan 
offerings and designs, including by avoiding broad network plans, not 
offering platinum plans at all, and only offering limited gold plans. 
Commenters further stated that issuers could also distort plan designs 
by excluding coverage or imposing high cost-sharing for certain drugs 
or services. For example, one commenter stated that the risk adjustment 
State payment transfer formula already adjusts for differences in types 
of individuals enrolled in different States and aggregate differences 
in prices and utilization by using the Statewide average premium as a 
scaling factor, so State flexibility to account for State-specific 
factors is unnecessary.\58\ In addition, since establishing this 
framework, we have observed a lack of

[[Page 78238]]

interest from States in using this policy. Only one State (Alabama) has 
exercised this flexibility and requested reductions to transfers in its 
individual and/or small group markets.\59\
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    \58\ See Fielder, M, & Layton, T. (2020, December 30). Comment 
Letter on 2022 Payment Notice Proposed Rule. Brookings. https://www.brookings.edu/wp-content/uploads/2020/12/FiedlerLaytonCommentLetterNBPP2022.pdf.
    \59\ For the 2020 and 2021 benefit years, Alabama submitted a 50 
percent risk adjustment transfer reduction request for its small 
group market, which HHS approved in the 2020 Payment Notice (84 FR 
17454) and in the 2021 Payment Notice (85 FR 29164). For the 2022 
and 2023 benefit years, Alabama submitted 50 percent risk adjustment 
transfer reduction requests for its individual and small group 
markets. HHS approved the State's requests for the 2022 benefit year 
in part 2 of the 2022 Payment Notice final rule (86 FR 24140) and 
approved a 25 percent reduction for Alabama's individual market 
State transfers (including the catastrophic and non-catastrophic 
risk pools) and a 10 percent reduction for the State's small group 
market transfers for the 2023 benefit year in the 2023 Payment 
Notice (87 FR 27208).
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    HHS believes this proposal to completely repeal the option for 
States to request reductions in risk adjustment State transfers would 
align HHS policy with Section 1 of E.O. 14009 (86 FR 7793), which 
prioritizes protecting and strengthening the ACA and making high-
quality health care accessible and affordable for all individuals. 
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. Consistent 
with this directive, HHS reviewed the risk adjustment State flexibility 
under Sec.  153.320(d) and determined it is inconsistent with policies 
described in sections 1 and 3 of E.O. 14009. We believe that a complete 
repeal of Sec.  153.320(d) would prevent the potential negative 
outcomes of risk adjustment State flexibility identified through public 
comment, including the possibility of risk selection, market 
destabilization, increased premiums, smaller networks, and less-
comprehensive plan options, the prevention of which would protect and 
strengthen the ACA and make health care more accessible and affordable. 
For all of these reasons, we propose to amend Sec.  153.320(d) to fully 
repeal the flexibility for States, including prior participants, to 
request reductions of risk adjustment State transfers calculated by HHS 
under the State payment transfer formula in all State market risk pools 
beginning with the 2025 benefit year. If these amendments are 
finalized, no State would be able to request a reduction in risk 
adjustment transfers calculated by HHS under the State payment transfer 
formula starting with the 2025 benefit year.
    We seek comment on this proposal.
b. Requests To Reduce Risk Adjustment Transfers for the 2024 Benefit 
Year
    In accordance with Sec.  153.320(d)(2), beginning with the 2020 
benefit year, States requesting a reduction in the transfers calculated 
by HHS under the State payment transfer formula must submit their 
requests with the supporting evidence and analysis outlined under Sec.  
153.320(d)(1) by August 1 of the calendar year that is 2 calendar years 
prior to the beginning of the applicable benefit year. As finalized in 
the 2023 Payment Notice (87 FR 27239 through 27241), under Sec.  
153.320(d)(1)(iv), State requests for a reduction to transfers must 
include 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 beginning with the 2024 benefit year. In 
accordance with Sec.  153.320(d)(4)(i)(B), HHS will approve State 
reduction requests if HHS determines, based on the review of the 
information submitted as part of the State's request, along with other 
relevant factors, including the premium impact of the transfer 
reduction for the State market risk pool, and relevant public comments, 
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 beginning with the 2024 benefit 
year. In addition, pursuant to Sec.  153.320(d)(4)(ii), HHS may approve 
a reduction amount that is lower than the amount requested by the State 
if the supporting evidence and analysis do not fully support the 
requested reduction amount. If approved by HHS, State reduction 
requests are applied to the plan PMPM payment or charge State payment 
transfer amount (Ti in the State payment transfer formula).
    For the 2024 benefit year, HHS received requests from Alabama to 
reduce risk adjustment State transfers for its individual \60\ and 
small group markets by 50 percent. As Alabama has stated in previous 
years, Alabama asserts that the HHS-operated risk adjustment program 
does not work precisely in the Alabama market, clarifying that they do 
not assert that the risk adjustment formula is flawed, only that it 
produces imprecise results in Alabama which has an ``extremely 
unbalanced market share.'' The State reports that its review of the 
issuers' 2021 financial data suggested that any premium increase 
resulting from a reduction of 50 percent to the 2024 benefit year risk 
adjustment payments for the individual market would not exceed one 
percent, the de minimis premium increase threshold set forth in Sec.  
153.320(d)(1)(iv) and (d)(4)(i)(B). Additionally, the State reports 
that its review of the issuers' 2021 financial data also suggested that 
any premium increase resulting from a 50 percent reduction to risk 
adjustment payments in the small group market for the 2024 benefit year 
would not exceed the de minimis threshold of one percent.
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    \60\ 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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    At this time, to make HHS's approval determination under Sec.  
153.320(d)(4), we seek comment on Alabama's requests to reduce risk 
adjustment State transfers in their individual and small group markets 
by 50 percent for the 2024 benefit year. The request and additional 
documentation submitted by Alabama are posted under the ``State 
Flexibility Requests'' heading at https://www.cms.gov/cciio/programs-and-initiatives/premium-stabilization-programs.
5. Risk Adjustment Issuer Data Requirements (Sec. Sec.  153.610, 
153.700, and 153.710)
    We propose, beginning with the 2023 benefit year, to collect and 
extract from issuers' EDGE servers through issuers' EDGE Server 
Enrollment Submission (ESES) files and risk adjustment recalibration 
enrollment files a new data element, a QSEHRA indicator. We also 
propose to extract plan ID and rating area data elements issuers have 
submitted to their EDGE servers from certain benefit years prior to 
2021.
    45 CFR 153.610(a) requires that health insurance issuers of risk 
adjustment covered plans submit or make accessible all required risk 
adjustment data in accordance with the data collection approach 
established by HHS \61\ in States where HHS operates the program on 
behalf of a State.\62\ In the 2014 Payment Notice (78 FR 15497 through 
15500; Sec.  153.720), HHS established an approach for obtaining the 
necessary data for risk adjustment calculations in States where HHS 
operates the program

[[Page 78239]]

through a distributed data collection model that prevented the transfer 
of individuals' personally identifiable information (PII). Then, in 
several subsequent rulemakings,\63\ we finalized policies for the 
extraction and use of enrollee-level EDGE data. The purpose of 
collecting and extracting enrollee-level data is to provide HHS with 
more granular data to use for recalibrating the HHS risk adjustment 
models, informing updates to the AV Calculator, conducting policy 
analysis, and calibrating HHS programs in the individual and small 
group (including merged) markets and the PHS Act requirements enforced 
by HHS that are applicable market-wide,\64\ as well as informing policy 
and improving the integrity of other HHS Federal health-related 
programs.\65\ The use of enrollee-level data extracted from issuers' 
EDGE servers and summary level reports produced from remote command and 
ad hoc queries enhances HHS' ability to develop and set policy and 
limits the need to pursue alternative burdensome data collections from 
issuers. We also previously finalized policies related to creating on 
an annual basis an enrollee-level EDGE Limited Data Set (LDS) using 
masked enrollee-level data submitted to EDGE servers by issuers of risk 
adjustment covered plans in the individual and small group (including 
merged) markets and making this LDS available to requestors who seek 
the data for research purposes.66 67
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    \61\ Also see 45 CFR 153.700-153.740.
    \62\ The full list of required data elements can be found in 
Appendix A of OMB Control Number 0938-1155/CMS-10401. (2022, May 
26). Standards Related to Reinsurance, Risk Corridors, and Risk 
Adjustment. https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS-10401.
    \63\ See the 2018 Payment Notice, 81 FR 94101; the 2020 Payment 
Notice, 84 FR 17488; and the 2023 Payment Notice, 87 FR 27241.
    \64\ See, for example, 42 U.S.C. 300gg-300gg-28.
    \65\ As detailed in the 2023 Payment Notice, the finalized 
policies related to the permitted uses of EDGE data and reports make 
clear that HHS can use this information to inform policy analyses 
and improve the integrity of other HHS Federal health-related 
programs outside the commercial individual and small group 
(including merged) markets, such as the programs in certain States 
to provide wrap-around QHP coverage through Exchanges to Medicaid 
expansion populations and coverage offered by non-Federal 
Governmental plans. See 87 FR 27243; 87 FR 630 through 631.
    \66\ See the 2020 Payment Notice, 84 FR 17486 through 17490 and 
the 2023 Payment Notice, 87 FR 27243. Also see CMS. (2022, August 
15). Enrollee-Level External Data Gathering Environment (EDGE) 
Limited Data Set (LDS). https://www.cms.gov/research-statistics-data-systems/limited-data-set-lds-files/enrollee-level-external-data-gathering-environment-edge-limited-data-set-lds.
    \67\ As explained in the 2020 Payment Notice, we do not 
currently make the EDGE LDS available to requestors for public 
health or health care operation activities. See 84 FR 17488.
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a. Collection and Extraction of the QSEHRA Indicator
    In the 2023 Payment Notice (87 FR 27241 through 27252), we 
finalized that we will collect and extract an individual coverage 
Health Reimbursement Arrangement (ICHRA) indicator and that we will 
make this indicator available in the enrollee-level EDGE LDS beginning 
with the 2023 benefit year. The primary purpose of collecting and 
extracting ICHRA indicator data is to 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 and small group (or merged) market risk pools. The 
additional information collected through the ICHRA indicator will be 
used to further analyze if any refinements to the HHS risk adjustment 
methodology should be examined or proposed through notice and comment 
rulemaking, and similarly may also be used to inform policy analysis 
and potential updates to the AV Calculator, other HHS individual or 
small group (including merged) market programs, or other HHS Federal 
health-related programs.
    Since finalizing the collection of the ICHRA indicator as part of 
the enrollee-level EDGE data extracted from issuers' EDGE servers, we 
determined that also collecting and extracting a QSEHRA indicator would 
provide a more thorough picture of the actuarial characteristics of the 
Health Reimbursement Arrangement (HRA) population and how or whether 
HRA enrollment is impacting State individual and small group (including 
merged) market risk pools. HHS needs QSEHRA data in order to conduct a 
comprehensive assessment of the HRA markets. A QSEHRA indicator would 
also allow HHS to investigate whether the risk profile of enrollees in 
QSEHRAs, which differ from ICHRAs with respect to standards related to 
employer eligibility, employee eligibility, restrictions on allowance 
amounts, and eligibility for PTCs, differ from enrollees in ICHRAs.\68\ 
While we acknowledge that FFEs, SBE-FPs, and SBEs collect information 
about the provision of QSEHRAs, we note that adding a QSEHRA indicator 
to the required risk adjustment EDGE data submissions would provide 
more uniform and comprehensive information than what is submitted by 
Exchange enrollees, as it would capture information on both Exchange 
and non-Exchange enrollment. It also would provide HHS the ability to 
extract and aggregate the QSEHRA indicator alongside other claims and 
enrollment data accessible through issuers' EDGE servers, which would 
not be possible with the data collection from consumers through other 
processes since the EDGE data is masked \69\ and therefore cannot be 
linked with other enrollment data sources.\70\
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    \68\ Rosso, R. (2022, May 7). Health Reimbursement Arrangements 
(HRAs): Overview and Related History. Congressional Research 
Service. https://crsreports.congress.gov/product/pdf/R/R47041.
    \69\ 45 CFR 153.720.
    \70\ For information on the challenges associated with linking 
the extracted enrollee-level EDGE data to other sources, see 87 FR 
631 through 632.
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    We therefore propose that, beginning with the 2023 benefit year, 
issuers would be required to collect and submit a QSEHRA indicator as 
part of the required risk adjustment data that issuers make accessible 
to HHS from their respective EDGE servers in States where HHS operates 
the risk adjustment program. This new data element would be included as 
part of the enrollee-level EDGE data extracted from issuers' EDGE 
servers and summary level reports produced from remote command and ad 
hoc queries beginning with the 2023 benefit year.\71\ We also propose 
to include this indicator in the enrollee-level EDGE LDS made available 
to qualified researchers upon request once available (that is, 
beginning with 2023 benefit year data).
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    \71\ The deadline for submission of 2023 benefit year risk 
adjustment data is April 30, 2024. See 45 CFR 153.730.
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    In the 2023 Payment Notice (87 FR at 27248), we acknowledged that 
ICHRA information is collected by HHS from FFE or SBE-FP enrollees 
through the eligibility application process and from SBE enrollees 
through the State Exchange enrollment and payment files, as well as 
collected directly by issuers and their affiliated agents and brokers. 
We also noted the ICHRA indicator was intended to capture whether a 
particular enrollee's health care coverage involves (or does not 
involve) an ICHRA and that we would structure this data element for 
EDGE data submissions similar to current collections, where possible. 
Additionally, we explained that the collection and extraction of an 
ICHRA indicator as part of the required risk adjustment data 
submissions issuers make accessible to HHS through their respective 
EDGE servers provides more uniform and comprehensive information than 
what is submitted by FFE and SBE-FP enrollees on a QHP application and 
by SBE enrollees through enrollment and payment files, as it would 
capture both on and off Exchange enrollees.
    The same is also true for QSEHRA information and we therefore 
propose to apply the same approach for the QSEHRA indicator. Currently, 
the FFEs and SBE-FPs collect information about

[[Page 78240]]

QSEHRA provision from all applicants to determine whether they are 
eligible for a special enrollment period (SEP), as individuals and 
their dependents who become newly eligible for a QSEHRA may be eligible 
for a SEP. SBEs also collect similar information from their applicants 
to determine SEP eligibility. This data may also be provided directly 
to issuers by consumers who seek to enroll in coverage directly with 
the issuer. In addition, an issuer may currently have or collect 
information that could be used to populate the QSEHRA indicator in 
situations where the issuer is being paid directly by the employer 
through the QSEHRA for the individual market coverage. We therefore 
propose to generally permit issuers to populate the required QSEHRA 
indicator with information from the FFE or SBE-FP enrollees or 
enrollees through SBEs, or from other sources for collecting this 
information. The QSEHRA indicator would be used to capture whether a 
particular enrollee's health care coverage involves (or does not 
involve) a QSEHRA, and we propose to structure this data element for 
EDGE data submissions similar to current collections, where possible. 
Beginning with the 2023 benefit year, HHS would provide additional 
operational and technical guidance on how issuers should submit this 
new data element 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.
    We are also proposing, similar to the transitional approach for the 
ICHRA indicator finalized in the 2023 Payment Notice (87 FR 27241 
through 27252), a transitional approach for the collection and 
extraction of the QSEHRA indicator. For the 2023 and 2024 benefit 
years, issuers would be required to populate the QSEHRA indicator using 
only data they already collect or have accessible regarding their 
enrollees. For example, when an FFE enrollee is using an SEP, 
information about QSEHRA provision is collected by the FFE, and the FFE 
may make these data available to issuers. In addition, as noted above, 
there may be situations where an issuer has or collects information 
that could be used to populate the QSEHRA indicator. Then, beginning 
with the 2025 benefit year, we propose that the transitional approach 
would end, and issuers would be required to populate the QSEHRA field 
using available sources (for example, information from Exchanges, 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 QSEHRA indictor for 
these enrollees. HHS would provide additional details on what 
constitutes a good faith effort to ensure collection and submission of 
the QSEHRA indicator in the future. HHS intends to seek input from 
issuers and other interested parties to inform development of the good 
faith standard and determine the most feasible methods for issuers to 
collect the information used to populate this data field.\72\
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    \72\ If the burden estimate for collection of QSEHRA 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 interested parties would 
be provided the opportunity to comment through that process.
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    We believe this transitional approach is necessary as the burden 
associated with the collection of this data would be similar to that of 
the collection of the ICHRA indicator, as finalized in the 2023 Payment 
Notice (87 FR 27241 through 27252). Much like the ICHRA indicator data, 
we believe that some issuers already collect the relevant QSEHRA data. 
However, we do not believe the information to populate the QSEHRA 
indicator is routinely collected by all issuers at this time; 
therefore, we anticipate that there may be administrative burden for 
some issuers in developing processes for collection, validation, and 
submission of this new data element. In recognition of the burden that 
collection of this new data element potentially would pose for some 
issuers, we propose to adopt a transitional approach for the 2023 and 
2024 benefit years. This transitional approach for the QSEHRA indicator 
would be the same as the approach finalized for the ICHRA indicator in 
the 2023 Payment Notice and is also similar to how we have handled 
other new data collection requirements.\73\ Further details regarding 
the estimated burden may be found below in the ICRs Regarding Risk 
Adjustment Issuer Data Submission Requirements (Sec. Sec.  153.610, 
153.700, and 153.710).
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    \73\ For example, HHS did not penalize issuers for temporarily 
submitting a default value for the in/out-of-network indictor for 
the 2018 benefit year in order to give issuers time to make the 
necessary changes to their operations and systems to comply with the 
new data collection requirement, but required issuers to provide 
full and accurate information for the in/out-of-network indicator 
beginning with the 2019 benefit year.
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    Consistent with the policy adopted in the 2020 Payment Notice (84 
FR 17488 through 17490) regarding HHS' use of data and reports 
extracted from issuers EDGE servers (including data reports and ad hoc 
query reports), and the policy adopted in the 2023 Payment Notice (87 
FR 27243) to expand the permissible uses of such data and reports, 
beyond the risk adjustment program, we would also use the QSEHRA 
indicator once it is available to conduct policy analysis; 
operationalize and calibrate other HHS programs in the individual and 
small group (including merged) markets; and to inform policy analysis 
and improve the integrity of other HHS Federal health-related programs 
to the extent such use is otherwise authorized by, required under, or 
not inconsistent with applicable Federal law. We would not use the 
QSEHRA indicator or any analysis that relied upon the indictor 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.
    In conjunction with the proposal to collect and extract this new 
data element, we also propose to include the QSEHRA indicator in the 
LDS containing enrollee-level EDGE data that HHS makes available to 
qualified researchers upon request once the QSEHRA indicator is 
available, beginning with the 2023 benefit year. We propose to include 
the new indicator as part of the LDS because it would enhance the 
usefulness of the data set for qualified researchers by making 
available additional data to increase understanding of these markets, 
particularly the impact QSEHRA provision may have on the individual and 
small group (including merged) markets, and contribute to greater 
transparency. We further note that similar to the ICHRA indicator, the 
proposed QSEHRA indicator would not be a direct identifier that must be 
excluded from an LDS under the HIPAA Privacy Rule and thus would not 
add to the risk of enrollees being identified. As noted in the 2023 
Payment Notice (87 FR at 27245), only an LDS of certain masked 
enrollee-level EDGE data elements is made available and this LDS 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.74 75 In

[[Page 78241]]

addition, consistent with how we created the LDS in prior years, HHS 
will continue to exclude data from the LDS that could lead to 
identification of certain enrollees.\76\
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    \74\ See CMS. (2020, June). Data Use Agreement. (Form CMS-R-
0235L).https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS-R-0235L.pdf. See also 84 FR 17486 through 17490.
    \75\ CMS. (2020, June). Data Use Agreement. (Form CMS-R-0235L). 
https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS-R-0235L.pdf.
    \76\ See, for example, CMS. (2021, August 25). Creation of the 
2019 Benefit Year Enrollee-Level EDGE Limited Data Sets: Methods, 
Decisions and Notes on Data Use. https://www.cms.gov/files/document/2019-data-use-guide.pdf.
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b. Extracting Plan ID and Rating Area
    Finally, in addition to collecting and extracting a QSEHRA 
indicator, we propose to extract the plan ID \77\ and rating area data 
elements from the 2017, 2018, 2019 and 2020 benefit year data 
submissions that issuers already made accessible to HHS. In the 2023 
Payment Notice (87 FR 27249), we finalized the proposal to extract 
these data elements beginning with the 2021 benefit year. However, HHS 
has determined that to aid in annual model recalibration, as well as 
HHS' analyses of risk adjustment data, it would be beneficial to also 
include these two data elements as part of the enrollee-level EDGE data 
and reports extracted from issuers' EDGE servers for the 2017, 2018, 
2019 and 2020 benefit years. Inclusion of plan ID and rating area in 
extractions of these additional benefit year data sets would also 
support analysis of other HHS individual and small group (including 
merged) market programs, as well as other HHS Federal health-related 
programs.
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    \77\ For details on the plan ID and its components, see p. 42 of 
the following: CMS. (2013, March 22). CMS Standard Companion Guide 
Transaction Information: Instructions related to the ASC X12 Benefit 
Enrollment and Maintenance (834) transaction, based on the 
005010X220 Implementation Guide and its associated 005010X220A1 
addenda for the FFE. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/companion-guide-for-ffe-enrollment-transaction-v15.pdf.
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    Moreover, since finalizing the 2023 Payment Notice, we have found 
that the analysis of risk adjustment data would be more valuable if we 
could compare historical trends, and access to these data elements for 
past years would further our ability to analyze and improve the risk 
adjustment program. For example, in assessing the 2020 enrollee-level 
EDGE data set for inclusion in the 2024 benefit year model 
recalibration, having access to plan ID and rating area would have 
allowed us to consider the different patterns of utilization and costs 
at a more granular level (for example, the State market risk pool 
level). Since issuers already collected and made available these data 
elements to HHS for the 2017, 2018, 2019 and 2020 benefit years,\78\ we 
do not believe that this proposal would increase burden on issuers. We 
are also not proposing any changes to the accompanying policies 
finalized in the 2023 Payment Notice with respect to these data 
elements and the enrollee-level EDGE LDS. Although we recognize that 
including plan ID and rating area would enhance the usefulness of the 
LDS, we continue to believe it is appropriate to exclude these data 
elements from the LDS to mitigate the risk that entities that receive 
the LDS file could identify issuers based on these identifiers, 
particularly in areas with a small number of issuers. As such, HHS 
would not include these data elements (plan ID and rating area) in the 
LDS files made available to qualified researchers upon request.
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    \78\ As detailed in the 2023 Payment Notice, issuers have been 
required to submit these two data elements as part of the required 
risk adjustment data submissions to their respective EDGE servers to 
support HHS' calculation of risk adjustment transfers since the 2014 
benefit year. See 87 FR 27243.
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    We seek comment on these proposals.
6. Risk Adjustment User Fee for 2024 Benefit Year (Sec.  153.610(f))
    We propose a risk adjustment user fee for the 2024 benefit year of 
$0.21 PMPM. Under Sec.  153.310, if a State is not approved to operate, 
or chooses to forgo operating, its own risk adjustment program, HHS 
will operate risk adjustment on its behalf. As noted previously in this 
proposed rule, for the 2024 benefit year, HHS will operate the risk 
adjustment program in every State and the District of Columbia. As 
described in the 2014 Payment Notice (78 FR 15416 through 15417), HHS' 
operation of risk adjustment on behalf of States is funded through a 
risk adjustment user fee. 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.
    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.\79\ The HHS-
operated risk adjustment program provides special benefits as defined 
in section 6(a)(1)(B) of OMB Circular No. A-25 to issuers of risk 
adjustment covered plans because it mitigates the financial instability 
associated with potential adverse risk selection.\80\ The risk 
adjustment program also contributes to consumer confidence in the 
health insurance industry by helping to stabilize premiums across the 
individual, merged, and small group markets.
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    \79\ OMB. (1993). OMB Circular No. A-25 Revised, Transmittal 
Memorandum No. https://www.whitehouse.gov/wp-content/uploads/2017/11/Circular-025.pdf.
    \80\ Ibid.
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    In the 2023 Payment Notice (87 FR 27252), we calculated the Federal 
administrative expenses of operating the risk adjustment program for 
the 2023 benefit year to result in a risk adjustment user fee rate of 
$0.22 PMPM based on our estimated costs for risk adjustment operations 
and estimated BMM for individuals enrolled in risk adjustment covered 
plans. For the 2024 benefit year, HHS proposes to use the same 
methodology to estimate our administrative expenses to operate the risk 
adjustment program. These costs cover development of the models and 
methodology, collections, payments, account management, data 
collection, data validation, program integrity and audit functions, 
operational and fraud analytics, interested parties training, 
operational support, and administrative and personnel costs dedicated 
to risk adjustment program activities. To calculate the risk adjustment 
user fee, we divided HHS' projected total costs for administering the 
risk adjustment program on behalf of States by the expected number of 
BMM in risk adjustment covered plans in States where the HHS-operated 
risk adjustment program will apply in the 2024 benefit year.
    We estimate that the total cost for HHS to operate the risk 
adjustment program on behalf of States for the 2024 benefit year will 
be approximately $60 million, which remains stable with the 
approximately $60 million estimated for the 2023 benefit year. We also 
project higher enrollment than our prior estimates in the individual 
and small group (including merged) markets in the 2023 and 2024 benefit 
years based on the increased enrollment between the 2020 and 2021 
benefit years, likely due to the increased PTC subsidies provided for 
in the American Rescue Plan Act of 2021 (ARP).81 82 In light 
of the passage

[[Page 78242]]

of the Inflation Reduction Act of 2022 (IRA), in which Section 12001 
extended the enhanced PTC subsidies in section 9661 of the ARP through 
the 2025 benefit year, we project increased 2021 enrollment levels to 
remain steady through the 2025 benefit year.\83\ Because this provision 
of the IRA is expected to continue higher enrollment, we propose a 
slightly lower risk adjustment user fee of $0.21 PMPM.
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    \81\ ARP. Public Law 117-2 (2021).
    \82\ CMS. (2022, July 19). Summary Report on Permanent Risk 
Adjustment Transfers for the 2021 Benefit Year. (p. 9). https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2021.pdf.
    \83\ Inflation Reduction Act. Public Law 1217-169 (2022).
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    We seek comment on the proposed risk adjustment user fee for the 
2024 benefit year.
7. Risk Adjustment Data Validation Requirements When HHS Operates Risk 
Adjustment (HHS-RADV) (Sec. Sec.  153.350 and 153.630)
    HHS will conduct risk adjustment data validation under Sec. Sec.  
153.350 and 153.630 in any State where HHS is operating risk adjustment 
on a State's behalf.\84\ The purpose of risk adjustment data validation 
is to ensure issuers are providing accurate high-quality information to 
HHS, which is crucial for the proper functioning of the HHS-operated 
risk adjustment program. HHS-RADV also ensures that risk adjustment 
transfers reflect verifiable actuarial risk differences among issuers, 
rather than risk score calculations that are based on poor quality 
data, thereby helping to ensure that the HHS-operated risk adjustment 
program assesses charges to issuers with plans with lower-than-average 
actuarial risk while making payments to issuers with plans with higher-
than-average actuarial risk. HHS-RADV consists of an initial validation 
audit (IVA) and a second validation audit (SVA). Under Sec.  153.630, 
each issuer of a risk adjustment covered plan must engage an 
independent initial validation audit entity. The issuer provides 
demographic, enrollment, and medical record documentation for a sample 
of enrollees selected by HHS to its initial validation auditor for data 
validation. Each issuer's IVA is followed by an SVA, which is conducted 
by an entity HHS retains to verify the accuracy of the findings of the 
IVA. Based on the findings from the IVA, or SVA (as applicable), HHS 
conducts error estimation to calculate an HHS-RADV error rate. The HHS-
RADV error rate is then applied to adjust the plan liability risk 
scores of outlier issuers, as well as the risk adjustment transfers 
calculated under the State payment transfer formula for the applicable 
State market risk pools, for the benefit year being audited.
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    \84\ HHS has operated the risk adjustment program in all 50 
States the District of Columbia since the 2017 benefit year.
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a. Materiality Threshold for Risk Adjustment Data Validation
    Beginning with 2022 benefit year HHS-RADV, we propose to change the 
HHS-RADV materiality threshold definition, first implemented in the 
2018 Payment Notice (81 FR 94104 through 94105), from $15 million in 
total annual premiums Statewide to 30,000 total BMM Statewide, 
calculated by combining an issuer's enrollment in a State's individual 
non-catastrophic, catastrophic, small group, and merged markets, as 
applicable, in the benefit year being audited.\85\ Consistent with the 
application of the current materiality threshold definition and 
accompanying exemption under Sec.  153.630(g)(2), issuers that fall 
below the new proposed materiality threshold would not be subject to 
the annual IVA (and SVA) audit requirements, but may be selected to 
participate in a given benefit year of HHS-RADV based on random 
sampling or targeted sampling due to the identification of any risk-
based triggers that warrant more frequent audits.
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    \85\ Activities related to the 2022 benefit year of HHS-RADV 
will generally begin in March 2023, when issuers can start selecting 
their IVA entity, and IVA entities can start electing to participate 
in HHS-RADV for the 2022 benefit year. See, for example, the 2021 
Benefit Year HHS-RADV Activities Timeline (May 3, 2022), available 
at: https://regtap.cms.gov/uploads/library/HRADV_2021Timeline_5CR_050322.pdf.
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    In the 2020 Payment Notice (84 FR 17508 through 17511), HHS 
established Sec.  153.630(g) to codify exemptions to HHS-RADV 
requirements, including an exemption for issuers that fell below a 
materiality threshold, as defined by HHS, to ease the burden of annual 
audit requirements for smaller issuers of risk adjustment covered plans 
that do not materially impact risk adjustment transfers.\86\ This 
materiality threshold was first implemented and defined in the 2018 
Payment Notice (81 FR 94104 through 94105), where HHS finalized a 
policy that issuers with total annual premiums at or below $15 million 
(calculated based on the Statewide premiums of the benefit year being 
validated) would not be subject to annual IVA requirements, but would 
still be subject to random and targeted sampling.\87\ Under this 
approach, issuers below the materiality threshold are subject to an IVA 
approximately every 3 years, barring any risk-based triggers that would 
warrant more frequent audits.
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    \86\ Additionally, in the 2019 Payment Notice (83 FR 16966), we 
finalized an exemption from HHS-RADV for issuers with 500 or fewer 
BMM Statewide in the benefit year being audited. This very small 
issuer exemption is codified at 45 CFR 153.630(g)(1). Issuers with 
500 or fewer BMM Statewide are not subject to random or targeted 
sampling.
    \87\ While the 2018 Payment Notice (81 FR 94104 through 94105) 
provided an applicability date for the materiality threshold that 
began with the 2017 benefit year of HHS-RADV, we postponed the 
application of the materiality threshold to the 2018 benefit year in 
the 2019 Payment Notice (83 FR 16966 through 16967).
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    We implemented the materiality threshold based on an evaluation of 
the burden associated with HHS-RADV, particularly the fixed costs 
associated with hiring an initial validation auditor and submitting IVA 
results to HHS on an annual basis, which may be a large portion of some 
issuers' administrative costs.\88\ To ease the burden of annual audit 
requirements for smaller issuers of risk adjustment covered plans that 
do not materially impact risk adjustment transfers, we finalized a 
threshold of $15 million in total annual premiums Statewide--a 
threshold at which 1 percent of an issuer's premiums would cover the 
estimated $150,000 cost of the IVA.\89\ When defining this threshold, 
we also considered the impact of the exemption on risk adjustment 
transfers and data validation activities, and estimated issuers above 
this threshold represented approximately 98.5 percent of enrollment in 
risk adjustment covered plans nationally. As such, we determined the 
annual audit of issuers at or below the threshold of total annual 
premiums Statewide of $15 million was not material.\90\ We committed to 
continue to monitor this threshold and further noted we may propose 
adjustments in the future to maintain this balance.\91\
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    \88\ See 81 FR 94104 through 94105. Also see 81 FR 61490.
    \89\ See 81 FR 94104 through 94105.
    \90\ See 81 FR 94104 through 94105. Also see 81 FR 61490.
    \91\ See 81 FR 94105.
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    Since we established the materiality threshold definition, the 
estimated costs to complete the IVA have increased, especially with the 
addition of prescription drug categories to the adult models starting 
with the 2018 benefit year, and our current estimate of the cost of the 
IVA is approximately $170,000 per an issuer. To maintain the same 
general framework and effectively limit the proportion of an issuer's 
premiums that would be used to cover IVA costs to 1 percent, we would 
need to adjust the current materiality threshold definition and 
increase it to

[[Page 78243]]

$17 million in total annual premiums Statewide. We estimate that 30,000 
BMM Statewide translates to approximately $17 million in total annual 
premiums Statewide on average across markets, and this proposed 
threshold would maintain that issuers of risk adjustment covered plans 
below this threshold would represent no more than 1.5 percent of 
enrollment in risk adjustment covered plans nationally. We therefore 
propose to change the HHS definition of the materiality threshold under 
Sec.  153.630(g)(2) to 30,000 BMM Statewide in the benefit year being 
audited beginning with the 2022 benefit year of HHS-RADV.
    We propose shifting the exemption from a dollar threshold to BMM 
threshold because a BMM threshold would continue to exempt small 
issuers that face a disproportionally higher burden even in situations 
where PMPM premiums grow overtime. Shifting the materiality threshold 
under Sec.  153.630(g)(2) to a BMM basis would also align with the 
threshold established in Sec.  153.630(g)(1), which exempts issuers 
with 500 or fewer BMM Statewide in the benefit year being audited from 
HHS-RADV requirements, including random and targeted sampling. We do 
not anticipate that this proposal would change the current estimated 
burdens of the annual HHS-RADV requirements on issuers as the pool of 
issuers falling below a 30,000 BMM Statewide threshold does not 
significantly differ from the pool of issuers falling below a $15 
million total annual premiums Statewide threshold. On average, between 
the 2017 and 2021 benefit years, there were 197 issuers of risk 
adjustment covered plans with total annual premiums Statewide below $15 
million and 201 issuers of risk adjustment covered plans with total BMM 
Statewide below 30,000. The proposed changes should also have a minimal 
impact on data validation activities as issuers of risk adjustment 
covered plans below this proposed threshold are estimated to represent 
no more than 1.5 percent of enrollment in risk adjustment covered plans 
nationally. We continue to believe that setting this 1.5 percent of 
enrollment threshold promotes the goals of the HHS-RADV process, while 
also considering the burden of the process on smaller plans, and 
therefore represents the appropriate balance.
    We are not proposing any changes to the regulatory text at Sec.  
153.630(g)(2) or to the other accompanying policies. As such, beginning 
with the 2022 benefit year of HHS-RADV, issuers below the proposed 
30,000 BMM Statewide threshold would be exempt from participating in 
the annual HHS-RADV IVA and SVA requirements if not otherwise selected 
by HHS to participate under random and targeted sampling conducted 
approximately every 3 years (barring any risk-based triggers based on 
experience that would warrant more frequent audits). To determine 
whether an issuer falls under the materiality threshold, its BMM would 
be calculated Statewide, that is, by combining an issuer's enrollment 
in a State's individual non-catastrophic, catastrophic, small group, 
and merged markets, as applicable, in the benefit year being audited. 
Issuers that qualify for the exemption under Sec.  153.630(g)(2) from 
HHS-RADV requirements for a particular benefit year must continue to 
maintain their risk adjustment documents and records consistent with 
Sec.  153.620(b) and may be required to make those documents and 
records available for review or to comply with an audit by the Federal 
Government.\92\ We further note that if an issuer of a risk adjustment 
covered plan that falls within the materiality threshold is not exempt 
from HHS-RADV for a given benefit year (that is, the issuer is selected 
as part of random or targeted sampling), and fails to engage an IVA or 
submit IVA results to HHS, the issuer would be subject to the default 
data validation charge in accordance with Sec.  153.630(b)(10) and may 
be subject to other enforcement action. Lastly, we affirm that an 
issuer that qualifies for an exemption under Sec.  153.630(g)(2) from 
HHS-RADV requirements for a particular benefit year would not have its 
risk scores and State transfers adjusted due to its own risk score 
error rate(s), but its risk scores and State transfers could be 
adjusted if other issuers in the applicable State market risk pools 
were outliers in that benefit year of HHS-RADV.
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    \92\ See 45 CFR 153.620(b) and (c).
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    We solicit comments on this proposal as well as comments on whether 
we should increase the materiality threshold to $17 million in total 
annual premiums Statewide instead of switching to 30,000 BMM Statewide 
and on the applicability date for when a new HHS-RADV materiality 
threshold should begin to apply.
b. HHS-RADV Adjustments for Issuers That Have Exited the Market
    Beginning with 2021 benefit year HHS-RADV, we propose to remove the 
policy to only apply an exiting issuer's HHS-RADV results if that 
issuer is a positive error rate outlier.\93\ We are proposing to change 
this policy because it is no longer necessary to treat exiting issuers 
differently from non-exiting issuers when they are negative error rate 
outliers in the applicable benefit year's HHS-RADV given the transition 
to the concurrent application of HHS-RADV results for all issuers.
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    \93\ To qualify as an exiting issuer, an issuer must exit all of 
the market risk pools in the State (that is, not selling or offering 
any new plans in the State). If an issuer only exits some markets or 
risk pools in the State, but continues to sell or offer new plans in 
others, it is not considered an exiting issuer. A small group market 
issuer with off-calendar year coverage who exits the market but has 
only carry-over coverage that ends in the next benefit year (that 
is, carry-over of run out claims for individuals or groups enrolled 
in the previous benefit year, with no new coverage being offered or 
sold) is considered an exiting issuer. See the 2020 Payment Notice, 
84 FR 17503 through 17504.
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    Consistent with 45 CFR 153.350(b) and (c), adjustments are made to 
risk scores and risk adjustment State transfers based on the errors 
discovered in HHS-RADV. In the 2015 Payment Notice (79 FR 13768 through 
13769), HHS established a prospective approach to adjust risk scores 
and risk adjustment State transfers based on the results of HHS-RADV. 
Under the prospective approach, an issuer's HHS-RADV error rate for a 
given benefit year is applied to the following benefit year's risk 
scores and risk adjustment State transfers. However, an issuer that 
exits all market risk pools in the State during or at the end of the 
benefit year being audited would not have risk scores and State 
transfers to adjust in the next applicable benefit year. As such, the 
2019 Payment Notice (83 FR 16965 through 16966) created an exception to 
the prospective approach for exiting issuers that provides for the 
concurrent application of HHS-RADV results for exiting issuers 
identified as outliers. Under this exception, the HHS-RADV error rate 
of an outlier exiting issuer is used to adjust the exiting issuer's 
prior year risk scores and State transfers for the applicable State 
market risk pool(s). Due to the budget neutral nature of the HHS-
operated risk adjustment program, including HHS-RADV, the application 
of an outlier exiting issuer's HHS-RADV error rate would also impact 
other issuers in the applicable State market risk pool(s). Recognizing 
the impact on non-exiting issuers, we further refined the exiting 
issuer HHS-RADV policies in the 2020 Payment Notice (84 FR 17503 
through 17504) to limit the re-opening of risk pools to make HHS-RADV 
adjustments to non-exiting issuers' risk adjustment State transfers in 
certain situations. More specifically, HHS finalized a policy to only 
make risk score and risk adjustment State transfer adjustments to 
reflect an exiting issuer's HHS-RADV results if that issuer is a

[[Page 78244]]

positive error rate outlier in the benefit year being audited, 
beginning with the 2018 benefit year.\94\ This policy makes adjustments 
for positive error rate outliers because those HHS-RADV results 
indicate there was an undercharge or overpayment in the initial 
calculation of the exiting issuer's State transfer amount(s).\95\ 
Adjustments were not made if an exiting issuer was found to be a 
negative error rate outlier.\96\ This policy was designed to ensure 
that other issuers in a State market risk pool are made whole when an 
issuer with a positive error rate exits the State and to remove the 
additional burden of having transfers adjusted (including the potential 
for additional charges to be assessed to other issuers) for a prior 
benefit year when a negative error rate outlier exits the State.
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    \94\ In adjusting exiting issuers with positive error rates, HHS 
collects funds (either increasing the charge amount or reducing the 
payment amount) from the exiting issuer and redistributes these 
funds to the other issuers who participated in that State market 
risk pool in the prior benefit year. See 84 FR 17503 through 17504.
    \95\ A positive error rate generally has the effect of 
decreasing an issuer's risk score and thereby decreasing its risk 
adjustment State transfer payment amount or increasing its risk 
adjustment State transfer charge amount.
    \96\ A negative error rate generally has the effect of 
increasing an issuer's risk score and thereby increasing its risk 
adjustment State transfer payment amount or decreasing its risk 
adjustment State transfer charge amount.
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    Subsequently, in the 2020 HHS-RADV Amendments Rule (85 FR 76979), 
HHS finalized a transition to the concurrent application of HHS-RADV 
results for all issuers, including non-exiting issuers, beginning with 
the 2020 benefit year HHS-RADV, and has continued the policy to only 
make risk scores and risk adjustment State transfers adjustments for 
exiting issuers if they are positive error rate outliers. However, in 
light of this shift to the concurrent application of HHS-RADV 
adjustments for all issuers, there is no longer a reason to treat 
exiting issuers differently than non-exiting issuers. We therefore 
propose, beginning with 2021 HHS-RADV, to modify this policy and apply 
HHS-RADV results to adjust the plan liability risk scores of the 
benefit year being audited for all positive and negative error rate 
outlier issuers.\97\
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    \97\ Due to the budget neutral nature of the HHS-operated risk 
adjustment program, including HHS-RADV, the application of an 
outlier issuer's HHS-RADV error rate would also impact other issuers 
in the applicable State market risk pool(s). As such, non-outlier 
and exempt issuers may also see their State transfers adjusted as a 
result of the application of HHS-RADV results if there are one or 
more outliers in the State market risk pool(s).
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    We are not proposing any other changes to the policies regarding 
HHS-RADV adjustments for issuers that exit the market and therefore 
would maintain the existing framework for determining whether an issuer 
is an exiting issuer. As such, the issuer would have to exit all of the 
market risk pools in the State (that is, not selling or offering any 
new plan in the State) to be considered an exiting issuer. If an issuer 
only exits some of the markets or risk pools in the State, but 
continues to sell or offer new plans in others, it would not be 
considered an exiting issuer. We also affirm that small group market 
issuers with off-calendar year coverage who exit the market and only 
have carry-over coverage that ends in the next benefit year (that is, 
carry-over of run out claims for individuals enrolled in the previous 
benefit year, with no new coverage being offered or sold) would be 
considered an exiting issuer and would be exempt from HHS-RADV under 
Sec.  153.630(g)(4). Individual market issuers offering or selling any 
new individual market coverage in the subsequent benefit year would be 
required to participate in HHS-RADV, unless another exemption applies.
    We solicit comments on this proposal.
c. Discontinue Lifelong Permanent Conditions List and Use of Non-EDGE 
Claims in HHS-RADV
    We seek comment on discontinuing the use of the Lifelong Permanent 
Conditions (LLPC) list \98\ and the use of non-EDGE claims starting 
with the 2022 benefit year of HHS-RADV.
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    \98\ See, for example, Appendix C: Lifelong Permanent Conditions 
in the 2021 Benefit Year PPACA HHS Risk Adjustment Data Validation 
(HHS-RADV) Protocols (November 9, 2022) available at https://regtap.cms.gov/uploads/library/HRADV_2021_Benefit_Year_Protocols_5CR_110922.pdf. Also see, for 
example, Appendix E: Lifelong Permanent Conditions in the 2018 
Benefit Year PPACA HHS Risk Adjustment Data Validation (HHS-RADV) 
Protocols (June 24, 2019) available at https://regtap.cms.gov/uploads/library/HRADV_2018Protocols_070319_RETIRED_5CR_070519.pdf.
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    The LLPC list was developed for HHS-RADV medical record abstraction 
purposes beginning with the 2016 benefit year, when issuers were first 
learning the HHS-RADV protocols and still gaining experience with EDGE 
data submissions.\99\ The intention of the LLPC list was to balance the 
burdens and costs of HHS-RADV with the program integrity goals of 
validating the actuarial risk of enrollees in risk adjustment covered 
plans to ensure that the HHS-operated risk adjustment program 
accurately assesses charges to issuers with plans with lower-than-
average actuarial risk while making payments to issuers with plans with 
higher-than-average actuarial risk. The LLPC list was designed to ease 
the burden of medical record retrieval for lifelong conditions by 
simplifying and standardizing coding abstraction for IVA and SVA 
entities that may have different interpretations of standard coding 
guidelines. Conditions on the LLPC list can be abstracted by IVA and 
SVA entities and validated in HHS-RADV if present anywhere on an 
enrollee's valid and authenticated medical record, even if the 
associated diagnosis is not present on a claim that meets EDGE server 
data submission requirements for the applicable benefit year.\100\ The 
associated diagnoses for the health conditions selected by HHS are 
considered to be lifelong, permanent conditions which last for multiple 
years, require ongoing medical attention, and are typically unresolved 
once diagnosed.\101\
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    \99\ CMS first published the ``Chronic Condition HCCs'' list in 
the 2016 Benefit Year PPACA HHS Risk Adjustment Data Validation 
(HHS-RADV) Protocols (October 20, 2017) available at https://regtap.cms.gov/uploads/library/HRADV_2016Protocols_v1_5CR_052218.pdf. Beginning with 2018 benefit 
year, CMS has provided the ``Lifelong Permanent Conditions'' list, a 
simplified list of health conditions which share similar 
characteristics as those on the ``Chronic Condition HCCs'' list. See 
supra note 93.
    \100\ Ibid.
    \101\ See, for example, Appendix C: Lifelong Permanent 
Conditions in the 2021 Benefit Year PPACA HHS Risk Adjustment Data 
Validation (HHS-RADV) Protocols (August 17, 2022) available at 
https://regtap.cms.gov/uploads/library/HRADV_2021_Benefit_Year_Protocols_v1_5CR_081722.pdf.
---------------------------------------------------------------------------

    While the LLPC list was developed for HHS-RADV medical record 
abstraction purposes, the EDGE Server Business Rules for risk 
adjustment EDGE data submissions direct that EDGE server data 
submissions are claim-based and follow standard coding principles and 
guidelines. EDGE Server Business Rules require that diagnoses codes 
submitted to the EDGE server be related to medical services performed 
during the patient's visit, be performed by a State licensed medical 
provider, be associated with a paid claim submitted to the issuer's 
EDGE server, and be associated with an active enrollment period with 
the issuer for the applicable risk adjustment benefit year.\102\ Some 
issuers have raised concerns that the LLPC list may incentivize issuers 
to submit EDGE supplemental diagnosis files containing LLPC diagnoses 
even though those diagnoses may not have been addressed in the claim 
submitted to the EDGE server for that encounter. While we allowed the 
use of the LLPC list for the last several years of HHS-RADV, we 
continued to consider these issues and

[[Page 78245]]

are now soliciting comments on the discontinuance of the use of the 
LLPC list beginning with the 2022 benefit year of HHS-RADV.
---------------------------------------------------------------------------

    \102\ See, for example, Section 8.1 Guidance on Diagnosis 
Code(s) Derived from Health Assessments of the EDGE Server Business 
Rules (ESBR) (November 1, 2022) available at https://regtap.cms.gov/uploads/library/DDC-ESBR-110122-5CR-110122.pdf.
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    We believe that discontinuing the use of the LLPC list in HHS-RADV, 
beginning with the 2022 benefit year, would better align HHS-RADV 
guidance with the EDGE Server Business Rules and would eliminate some 
situations where an issuer may receive risk score credit for conditions 
that did not require treatment during an active enrollment period with 
the issuer for the applicable risk adjustment benefit year. In 
addition, we also believe that issuers have now gained sufficient 
experience with the EDGE data submission process and HHS-RADV protocols 
that it may not be necessary to continue use of the LLPC list. For 
example, while nearly half the States subject to the HHS-operated risk 
adjustment program for the 2015 benefit year \103\ were not eligible to 
receive an interim risk adjustment summary report,\104\ this trend has 
not continued. In fact, all States have received an interim risk 
adjustment summary report since the 2017 benefit year of the HHS-
operated risk adjustment program \105\ and only one State where HHS was 
responsible for operating the risk adjustment program failed to receive 
an interim risk adjustment summary report for the 2016 benefit 
year.\106\ Further, after several pilot years of HHS-RADV, issuers also 
have now gained several years of experience with HHS-RADV and HHS-RADV 
protocols.\107\ Therefore, we solicit comment on all aspects of this 
potential change, including the applicability date for the 
discontinuance of the LLPC list. We also request comment on the extent 
that issuers and their IVA entities have relied on the LLPC list to 
document diagnoses when official coding guidance was unclear or the 
medical record lacked documentation to support diagnosis of a lifelong, 
permanent condition.
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    \103\ See the Interim Summary Report on Risk Adjustment for the 
2015 Benefit Year (March 18, 2016), available at: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/InterimRAReport_BY2015_5CR_032816.pdf.
    \104\ Since the 2015 benefit year of the HHS-operated risk 
adjustment program, in order for a State to receive the interim risk 
adjustment summary report, all issuers with 0.5 percent of market 
share must successfully submit at least 90 percent of full year 
enrollment and 90 percent of three quarters of medical claims to 
their EDGE servers by the applicable deadline, as well as pass EDGE 
quality checks. Details of EDGE quantity and quality assessment can 
be found in the ``Evaluation of EDGE Data Submissions'' guidance 
published every year. See, for example, the Evaluation of EDGE Data 
Submissions for 2015 Benefit Year EDGE Server Data Bulletin (March 
18, 2016), available at: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Part-2-EDGE-Q_Q-Guidance_03182016.pdf. Also see, for example, the Evaluation of EDGE 
Data Submissions for 2022 Benefit Year EDGE Server Data Bulletin 
(October 25, 2022), available at: https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/edge_2022_qq_guidance.pdf.
    \105\ See the Interim Summary Report on Risk Adjustment for the 
2017 Benefit Year (April 27, 2018), available at: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/Interim-RA-Report-BY2017.pdf. Also see, for 
example, the Interim Summary Report on Risk Adjustment for the 2018 
Benefit Year (March 22, 2019), available at: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/Interim-RA-Report-BY2018.pdf. Also see, for example, the 
Interim Summary Report on Risk Adjustment for the 2019 Benefit Year 
(March 25, 2020), available at: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/Interim-RA-Report-BY2019.pdf. Also see, for example, the Interim Summary Report 
on Risk Adjustment for the 2020 Benefit Year (March 31, 2021), 
available at: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/Interim-RA-Report-BY2020.pdf. Also see, for example, the Interim Summary Report on 
Risk Adjustment for the 2021 Benefit Year (March 22, 2022), 
available at: https://www.cms.gov/files/document/interim-ra-report-by2021.pdf.
    \106\ See the Interim Summary Report on Risk Adjustment for the 
2016 Benefit Year (April 11, 2017), available at: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/InterimRAReport_BY2016_5CR_033117.pdf.
    \107\ CMS conducted two (2) pilot years for HHS-RADV for the 
2015 and 2016 benefit years. The results of 2015 and 2016 benefit 
year HHS-RADV were not applied to adjust plan liability risk scores 
or risk adjustment transfers. In addition, 2017 benefit year HHS-
RADV was a pilot year for Massachusetts issuers; therefore, these 
issuers' 2017 benefit year HHS-RADV results were not applied to risk 
scores or transfers. Except for Massachusetts issuers, the 2017 
benefit year was the first non-pilot year where HHS-RADV results 
were used to adjust risk scores and risk adjustment transfers. See 
84 FR at 17508 (April 25, 2019). Also see the Summary Report of 2017 
Benefit Year HHS-RADV Adjustments to Risk Adjustment Transfers 
(August 1, 2019), available at: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/BY2017-HHSRADV-Adjustments-to-RA-Transfers-Summary-Report.pdf.
---------------------------------------------------------------------------

    Similarly, we seek comments on discontinuing the current policy 
that permits the use of non-EDGE claims in HHS-RADV beginning with the 
2022 HHS-RADV benefit year. Under Sec.  153.630(b)(6), issuers are 
required to provide their IVA entity with all relevant claims data and 
medical record documentation for the enrollees selected for audit. HHS 
currently allows issuers to submit medical records to their IVA entity 
for which no claim was accepted into the EDGE server in certain 
situations.\108\ Under the non-EDGE claims protocol, if issuers 
identify medical records with no associated EDGE server claim in HHS-
RADV, they must demonstrate that a non-EDGE claim meets risk adjustment 
eligibility criteria. Issuers must also allow the IVA entity to view 
the associated non-EDGE claim, and IVA entities must record their 
validation results in their IVA Entity Audit Results Submission.\109\ 
This protocol was also adopted during the early years of HHS-RADV when 
issuers were gaining experience with HHS-RADV protocols and some may 
have experienced challenges submitting claims to the EDGE server. 
However, as explained above, issuers have consistently met data 
integrity criteria for their EDGE data submissions for multiple 
consecutive benefit years such that we are now examining the non-EDGE 
claims protocol and considering whether it should be discontinued. 
Thus, as part of our ongoing effort to examine ways to better align 
HHS-RADV guidance and the EDGE Server Business Rules, and in 
recognition of the experience issuers have gained with HHS-RADV and 
EDGE data submissions, we solicit comments on discontinuing this 
protocol. If this change is adopted, beginning with the 2022 benefit 
year of HHS-RADV, issuers would no longer be able to submit non-EDGE 
claims to their IVA entities to supplement EDGE claims reviewed during 
HHS-RADV. We solicit comment on all aspects of this potential protocol 
change, including the applicability date. We also request comment on 
the extent that issuers and their IVA entities have relied on the 
current non-EDGE claims protocol and on how this potential change would 
impact issuers.
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    \108\ See, for example, Section 9.2.6.5: Documentation of Claims 
Not Accepted in EDGE of the 2021 Benefit Year PPACA HHS Risk 
Adjustment Data Validation (HHS-RADV) Protocols (August 17, 2022) 
available at https://regtap.cms.gov/uploads/library/HRADV_2021_Benefit_Year_Protocols_v1_5CR_081722.pdf.
    \109\ The non-EDGE claim must be risk adjustment eligible paid/
positively adjudicated within the benefit year for the specified 
sampled enrollee. Although the non-EDGE claim would have been 
accepted to EDGE had it met the EDGE submission deadline, diagnoses 
associated with non-EDGE claim s are not included in the risk 
adjustment risk score calculations in the June 30th Summary Report 
on Permanent Risk Adjustment Transfers. Diagnoses associated with 
non-EDGE claims are only used as an option for HCC validation 
purposes in HHS-RADV when the applicable criteria are met.
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d. HHS-RADV Discrepancy and Administrative Appeals Process
    We propose to shorten the window to confirm the findings of the SVA 
(if applicable),\110\ or file a discrepancy report, to within 15 
calendar days of the notification by HHS, beginning with the 2022 
benefit year of HHS-RADV. Under Sec.  153.630(d)(2), issuers currently 
have 30 calendar days to confirm the findings

[[Page 78246]]

of the SVA, or file a discrepancy report, in the manner set forth by 
HHS, to dispute those SVA findings. We propose the shorter attestation 
and discrepancy reporting window for SVA findings to improve HHS' 
ability to finalize SVA findings results prior to release of the 
applicable benefit year HHS Risk Adjustment Data Validation (RADV) 
Results Memo and the Summary Report of Risk Adjustment Data Validation 
Adjustments to Risk Adjustment Transfers for the applicable benefit 
year, which are time-sensitive publications because information on HHS-
RADV adjustments is used by issuers for medical loss ratio (MLR) 
reporting.\111\
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    \110\ Only those issuers who have insufficient pairwise 
agreement between the IVA and SVA receive SVA findings. See 84 FR 
17495. Also see 86 FR 24201.
    \111\ 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. See 42 U.S.C. 300gg-18 and 45 CFR part 
158. Also see 45 CFR 153.710(h).
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    We do not propose to shorten the 30-calendar-day window set forth 
in Sec.  153.630(d)(2) to confirm the risk score error rate, or file a 
discrepancy, as the same timing considerations do not extend to the 
risk score error rate attestation and discrepancy reporting window. In 
addition, all issuers who participate in HHS-RADV for the applicable 
benefit year must complete the risk score error rate attestation and 
discrepancy reporting process, whereas the SVA findings attestation and 
discrepancy reporting process is limited to the small number of issuers 
that have insufficient pairwise agreement between the IVA and SVA.
    In prior rulemakings, we proposed shortening the attestation and 
discrepancy reporting window for the SVA findings, but did not finalize 
these proposals in response to comments suggesting that we revisit this 
proposal once issuers had more experience with HHS-RADV after the first 
non-pilot year.\112\ Since issuers now have more than 4 years of 
experience with HHS-RADV, including several non-pilot years, HHS 
believes it is appropriate to revisit the proposal to shorten the 
reporting window to confirm the findings of the SVA, or file a 
discrepancy report, and that any disadvantages of this shortened 
reporting window would be outweighed by the benefits of timely 
resolution of any discrepancies before the release of the applicable 
benefit year HHS Risk Adjustment Data Validation (RADV) Results Memo 
and the Summary Report of Risk Adjustment Data Validation Adjustments 
to Risk Adjustment Transfers for the applicable benefit year. 
Specifically, based on our experience, we found that few issuers have 
insufficient pairwise agreement between the IVA and SVA that results in 
receiving SVA findings, and therefore, few issuers would even have the 
option to file an SVA discrepancy.\113\ Of these issuers, even fewer of 
them will actually file a discrepancy, and therefore, based on this 
experience, HHS believes only a very small number of issuers will 
receive SVA findings and file discrepancies in future years of HHS-
RADV.
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    \112\ See 84 FR 17495 and 86 FR 24201.
    \113\ Only those issuers who have insufficient pairwise 
agreement between the IVA and SVA receive SVA findings. See, for 
example, 84 FR 17495 and 86 FR 24201.
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    More importantly, without this timing change, we are concerned 
about HHS' continued ability to release the applicable benefit year HHS 
Risk Adjustment Data Validation (RADV) Results Memo and Summary Report 
of Risk Adjustment Data Validation Adjustments to Risk Adjustment 
Transfers on a timely basis. Specifically, this proposal would improve 
our ability to follow the HHS-RADV timeline as described in part 2 of 
the 2022 Payment Notice,\114\ which provides for release of the Summary 
Report of Risk Adjustment Data Validation Adjustments to Risk 
Adjustment Transfers in early summer of 2 calendar years after the 
applicable benefit year. This schedule was developed to support timely 
reporting of HHS-RADV adjustment amounts in the MLR reports \115\ due 
by July 31st of the same calendar year in which the results are 
released.\116\ The SVA findings need to be finalized to begin the HHS-
RADV error estimation process, publish the HHS-RADV Results Memo (which 
is released alongside issuer's HHS-RADV results reports), and prepare 
the Summary Report of Risk Adjustment Data Validation Adjustments to 
Risk Adjustment Transfers for publication. Shortening the current 30-
calendar-day attestation and discrepancy reporting window for SVA 
findings (if applicable) to 15 calendar days would better allow HHS to 
finalize SVA findings results and timely release the Summary Report of 
Risk Adjustment Data Validation Adjustments to Risk Adjustment 
Transfers in summer, which would support timely reporting of the HHS-
RADV adjustments to risk adjustment State transfers in issuers' MLR 
reports.
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    \114\ 86 FR 24198 through 24201.
    \115\ Issuer MLRs are calculated using a 3-year average. See 45 
CFR 158.220(b).
    \116\ See 45 CFR 158.110(b). Also see 45 CFR 153.710(h)(1)(v).
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    We further note that a 15-calendar-day attestation and discrepancy 
reporting window is consistent with the IVA sample and EDGE attestation 
and discrepancy reporting windows at Sec. Sec.  153.630(d)(1) and 
153.710(d), respectively. At the conclusion of the SVA for a given 
benefit year, we distribute SVA findings to issuers that have 
insufficient agreement between their IVA and SVA results during the 
pairwise means analysis, and use the SVA findings for the risk score 
error rate calculation.\117\ Under this proposal, a 15-calendar-day 
window to confirm the findings or file a discrepancy, in the manner set 
forth by HHS, would begin when the SVA finding reports are issued.
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    \117\ If sufficient pairwise means agreement is achieved, the 
IVA findings will be used for purposes of the risk score error rate 
calculation. Issuers with sufficient pairwise means agreement are 
only permitted to file a discrepancy or appeal the risk score error 
rate calculation. See 78 FR 72334 through 72337 and 79 FR 13761 
through 13768.
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    To effectuate this proposed amendment, we propose the following 
four revisions to Sec.  153.630(d). First, we propose to revise Sec.  
153.630(d)(2) to remove the reference to the calculation of the risk 
score error rate as a result of HHS-RADV. Second, we propose to revise 
Sec.  153.630(d)(2) to establish that the attestation and discrepancy 
reporting window for the SVA findings (if applicable) would be within 
15 calendar days of the notification by HHS of the SVA findings (if 
applicable), rather than the current 30-calendar-day reporting window. 
Third, we propose to redesignate current paragraph (d)(3) as paragraph 
(d)(4), to maintain the existing provision which explains that an 
issuer may appeal findings of an SVA (if applicable) or the calculation 
of a risk score error rate as a result HHS-RADV, under the process set 
forth in Sec.  156.1220. Fourth, we propose to add a new Sec.  
153.630(d)(3) to maintain the current attestation and discrepancy 
reporting window for the calculation of the risk score error rate. This 
new regulatory subsection would provide that within 30 calendar days of 
the notification by HHS of the calculation of the risk score error 
rate, in the manner set forth by HHS, an issuer must either confirm or 
file a discrepancy report to dispute the calculation of the risk score 
error rate as a result of HHS-RADV.
    In addition, we propose to make corresponding amendments to the 
cross-references to Sec.  153.630(d)(2) that appear in Sec. Sec.  
153.710(h)(1) and 156.1220(a)(4)(ii). Section 153.630(d)(2) currently 
sets forth the attestation and discrepancy reporting window for both 
SVA findings (if applicable) and the calculation of the risk score 
error rate as a result of HHS-RADV. Under this proposal, the 
attestation and discrepancy reporting window for SVA

[[Page 78247]]

findings (if applicable) and the calculation of the risk score error 
rate as a result of HHS-RADV would be set forth in separate paragraphs, 
Sec.  153.630(d)(2) and (d)(3), respectively. As such, we propose to 
amend the existing cross-reference to Sec.  153.630(d)(2) in Sec. Sec.  
153.710(h)(1) and 156.1220(a)(4)(ii) to add a reference to paragraph 
(d)(3).
    We seek comment on this proposal and the accompanying conforming 
amendments.
8. EDGE Discrepancy Materiality Threshold (Sec.  153.710)
    We propose to amend the EDGE discrepancy materiality threshold set 
forth at Sec.  153.710(e) to align it with the final policy adopted in 
preamble in part 2 of the 2022 Payment Notice.\118\ We also propose a 
conforming amendment to Sec.  153.710(h)(1) to add a reference to new 
proposed Sec.  153.630(d)(3).
---------------------------------------------------------------------------

    \118\ See 86 FR 24194 through 24195.
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    An issuer of a risk adjustment covered plan must provide to HHS, 
through their EDGE server,\119\ access to enrollee-level plan 
enrollment data, enrollee claims data, and enrollee encounter data as 
specified by HHS for a benefit year.\120\ Consistent with Sec.  
153.730, to be considered for risk adjustment payments and charges, 
issuers of risk adjustment covered plans must submit their respective 
EDGE data by April 30th of the year following the applicable benefit 
year or, if such date is not a business day, the next applicable 
business day. At the end of the EDGE data submission process, HHS 
issues final EDGE server reports \121\ which reflect an issuer's data 
that was successfully submitted by the data submission deadline. Within 
15 calendar days of the date of these final EDGE server reports, the 
issuer must confirm to HHS that the information in the final EDGE 
server reports accurately reflect the data to which the issuer has 
provided access to HHS through its EDGE server for the applicable 
benefit year by submitting an attestation; or the issuer must describe 
to HHS any discrepancies it identifies in the final EDGE server 
reports.\122\
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    \119\ This is also known as the dedicated distributed data 
collection environment.
    \120\ 45 CFR 153.710(a) through (c).
    \121\ These reports are: Enrollee (Without) Claims Summary 
(ECS), Enrollee (Without) Claims Detail (ECD), Frequency Report by 
Data Element for Medical Accepted Files (FDEMAF), Frequency Report 
by Data Element for Pharmacy Accepted Files (FDEPAF), Frequency 
Report by Data Element for Supplemental Accepted Files (FDESAF), 
Frequency Report by Data Element for Enrollment Accepted Files 
(FDEEAF), Claim and Enrollee Frequency Report (CEFR), High Cost Risk 
Pool Summary (HCRPS), High Cost Risk Pool Detail Enrollee (HCRPDE), 
Risk Adjustment Claims Selection Summary (RACSS), Risk Adjustment 
Claims Selection Detail (RACSD), Risk Adjustment Transfer Elements 
Extract (RATEE), Risk Adjustment Risk Score Summary (RARSS), Risk 
Adjustment Risk Score Detail (RARSD), Risk Adjustment Data 
Validation Population Summary Statistics (RADVPS), Risk Adjustment 
Payment Hierarchical Condition Category Enrollee (RAPHCCER), Risk 
Adjustment User Fee (RAUF).
    \122\ 45 CFR 153.710(d).
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    In part 2 of the 2022 Payment Notice (86 FR 24194 through 24195), 
we codified at Sec.  153.710(e) a materiality threshold for EDGE 
discrepancies reported under Sec.  153.710(d)(2) that the amount in 
dispute must equal or exceed $100,000 or one percent of the applicable 
payment or charge payable to or due from the issuer for the benefit 
year, whichever is less. However, in preamble, we explained the final 
policy was intended to establish that the amount in dispute must equal 
or exceed $100,000 or one percent of the total estimated transfer 
amount in the applicable State market risk pool, whichever is 
less.\123\ That is, the preamble uses one percent of the total 
estimated transfer amount in the applicable State market risk pool 
while the regulation uses one percent of the applicable payment or 
charge payable to or due from the issuer. As explained in the preamble 
in part 2 of the 2022 Payment Notice, the intended threshold is 
$100,000 or one percent of the total estimated transfer amount in the 
applicable State market risk pool because HHS generally only takes 
action on reported material EDGE discrepancies that harm other issuers 
in the same State market risk pool and, based on HHS' experience with 
prior benefit years, EDGE discrepancies that are less than a fraction 
of total State market risk pool transfers are unlikely to materially 
impact other issuers. We therefore propose to amend Sec.  153.710(e) to 
revise the materiality threshold for EDGE discrepancies to reflect that 
the amount in dispute must equal or exceed $100,000 or one percent of 
the total estimated transfer amount in the applicable State market risk 
pool, whichever is less.
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    \123\ See 86 FR 24194 through 24195. Also see 85 FR 78604 
through 78605.
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    Finally, as discussed in section III.A.7.d of this preamble (HHS-
RADV Discrepancy and Administrative Appeals Process), we also propose 
amendments to Sec.  153.710(h)(1) to add a reference to new proposed 
Sec.  153.630(d)(3). As discussed in the HHS-RADV Discrepancy and 
Administrative Appeals Process section of this proposed rule, under new 
proposed Sec.  153.630(d)(3), we would retain the 30-calendar-day 
window to confirm, or file a discrepancy, regarding the calculation of 
the risk score error rate as a result of HHS-RADV. Under this proposal, 
the cross-reference to Sec.  153.630(d)(2) in Sec.  153.710(h)(1) would 
be maintained and would capture the new proposed 15-calendar-day window 
to confirm, or file a discrepancy, for SVA findings (if applicable).
    We seek comment on the proposed amendment to Sec.  153.710 and the 
accompanying policies.

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

1. Exchange Blueprint Approval Timelines (Sec.  155.106)
    We propose a change to address the Exchange Blueprint approval 
timelines for States transitioning from either a Federally-facilitated 
Exchange (FFE) to a State-based Exchange on the Federal Platform (SBE-
FP) or to a State-based Exchange (SBE), or from an SBE-FP to an SBE. At 
Sec.  155.106(a)(3) (for FFE or SBE-FP to SBE transitions) and Sec.  
155.106(c)(3) (for FFE to SBE-FP transitions), we propose to revise the 
current timelines by which a State must have an approved or 
conditionally approved Exchange Blueprint to require that States gain 
approval prior to the date on which the Exchange proposes to begin open 
enrollment either as an SBE or SBE-FP. The current regulatory timeline 
by which a State must have an approved or conditionally approved 
Exchange Blueprint was finalized in the 2017 Payment Notice (81 FR 
12203, 12241 through 12242). Based on our experience with Exchange 
transitions since then, we believe the current timeline by which a 
State must gain Exchange Blueprint approval does not sufficiently 
support States' need to work with HHS to finalize and submit an 
approvable Exchange Blueprint.
    Section 155.106 requires States to have an approved or 
conditionally approved Exchange Blueprint 14 months prior to an SBE-FP 
to SBE transition in accordance with paragraph (a)(3) and three months 
prior to a FFE to SBE-FP transition in accordance with paragraph 
(c)(3). The submission and approval of Exchange Blueprints is an 
iterative process that generally takes place over the course of 15 
months prior to a State's first open enrollment with an SBE, or three 
to six months prior to a State's first open enrollment with an SBE-FP. 
The Exchange Blueprint serves as a vehicle for a State to document its 
progress toward implementing its intended Exchange operational model. 
HHS' review and approval of the Exchange Blueprint involves providing

[[Page 78248]]

substantial technical assistance to States as they design, finalize, 
and implement their Exchange operations. The transition from a FFE or 
SBE-FP to SBE, or SBE-FP to SBE, involves significant collaboration 
between HHS and States to develop plans and document readiness for the 
State to transition from one Exchange operational model and information 
technology infrastructure to another. These activities include the 
State completing key milestones, meeting established deadlines, and 
implementing contingency measures.
    Our proposal to require Exchange Blueprint approval or conditional 
approval prior to an Exchange's first open enrollment period would 
allow States the additional time and flexibility if needed, that, in 
HHS' experience, is necessary to support the development and 
finalization of an approvable Exchange Blueprint, as well as for 
completion of the myriad activities necessary to transition QHP 
enrollees in the State to a new Exchange model and operator. HHS is of 
the view that the more generous proposed timeline is appropriate and 
necessary to support a State's submission of an approvable Exchange 
Blueprint. The proposed timeline is more protective of the significant 
investments of personnel time and State tax dollars a State must make 
to stand up a new Exchange, by providing the State a more generous 
timeline to develop an approvable Exchange Blueprint that shows the 
Exchange will be ready to support the State's current and future QHP 
enrollees and applicants for QHP enrollment.
    We seek comment on this proposal, including comments related to how 
transitioning SBEs could provide greater transparency to consumers 
regarding the Exchange Blueprint approval process.
2. Navigator, Non-Navigator Assistance Personnel, and Certified 
Application Counselor Program Standards (Sec. Sec.  155.210, 155.215, 
and 155.225)
a. Repeal of Prohibitions on Door-to-Door and Other Direct Contacts
    HHS proposes to repeal the provisions that currently prohibit 
Navigators, certified application counselors, non-Navigator assistance 
personnel in FFEs, and non-Navigator assistance personnel in certain 
State Exchanges funded with section 1311(a) Exchange Establishment 
grants (collectively, Assisters) from going door-to-door or using other 
unsolicited means of direct contact to provide enrollment assistance to 
consumers. This proposal would eliminate barriers to coverage access by 
maximizing pathways to enrollment.
    Sections 1311(d)(4)(K) and 1311(i) of the ACA direct all Exchanges 
to establish a Navigator program. Navigator duties and requirements for 
all Exchanges are set forth in section 1311(i) of the ACA and Sec.  
155.210. Section 1321(a)(1) of the ACA directs the Secretary to issue 
regulations that set standards for meeting the requirements of title I 
of the ACA, with respect to, among other things, the establishment and 
operation of Exchanges. Pursuant to section 1321(a)(1) of the ACA, the 
Secretary issued Sec.  155.205(d) and (e), which authorizes Exchanges 
to perform certain consumer service functions in addition to the 
Navigator program, such as the establishment of a non-Navigator 
assistance personnel program. Section 155.215 establishes standards for 
non-Navigator assistance personnel in FFEs and in State Exchanges if 
they are funded with section 1311(a) Exchange Establishment grant 
funds.\124\ Section 155.225 establishes the certified application 
counselor program as a consumer assistance function of the Exchange, 
separate from and in addition to the functions described in Sec. Sec.  
155.205(d) and (e), 155.210, and 155.215.
---------------------------------------------------------------------------

    \124\ At this time, no State Exchanges are funded with section 
1311(a) Exchange Establishment grant funds.
---------------------------------------------------------------------------

    Assisters are certified and trusted community partners who provide 
free and impartial enrollment assistance to consumers. They conduct 
outreach and education to raise awareness about the Exchanges and other 
coverage options. Their mission focuses on assisting the uninsured and 
other underserved communities to prepare applications, establish 
eligibility and enroll in coverage through the Exchanges, among many 
other things. The regulations governing these Assisters prohibit 
Assisters from soliciting any consumer for application or enrollment 
assistance by going door-to-door or through other unsolicited means of 
direct contact, including calling a consumer to provide application or 
enrollment assistance without the consumer initiating the contact, 
unless the individual has a pre-existing relationship with the 
individual Assister or designated organization and other applicable 
State and Federal laws are otherwise complied with. HHS has interpreted 
this prohibition in the 2015 Market Standards final rule (79 FR 30240, 
30284 through 30285) as still permitting door-to-door and other 
unsolicited contacts to conduct for general consumer education or 
outreach, including to let the community know that the Assister's 
organization is available to provide application and enrollment 
assistance services to the public.
    The existing regulations prohibiting Navigators (at Sec.  
155.210(d)(8)), non-Navigator assistance personnel (through the cross-
reference to Sec.  155.210(d) in Sec.  155.215(a)(2)(i)), and certified 
application counselors (at Sec.  155.225(g)(5)) were initially 
finalized in the 2015 Market Standards final rule (79 FR 30240). At the 
time that HHS proposed and finalized the 2015 Market Standards rule in 
2014, the Exchanges were still in their infancy. At the time, we 
believed that prohibiting door-to-door solicitation and other 
unsolicited means of direct consumer contact by an Assister for 
application or enrollment assistance would ensure that Assisters' 
practices were sufficiently protective of the privacy and security 
interests of the consumers they served. We also believed that 
prohibiting unsolicited means of direct contacts initiated by Assisters 
was necessary to provide important guidance and peace of mind to 
consumers, especially when they were faced with questions or concerns 
about what to expect in their interactions with individuals offering 
Exchange assistance.\125\
---------------------------------------------------------------------------

    \125\ 79 FR 30240.
---------------------------------------------------------------------------

    However, under existing regulations, Navigators and other non-
Navigator assistance personnel in FFE States are permitted to conduct 
outreach to consumers using consumer information provided to them by an 
FFE. The Health Insurance Exchanges (HIX) System of Records 
Notice,\126\ Routine Use No. 1 provides that the FFEs may share 
consumer information with CMS grantees, including Navigators and other 
non-Navigator assistance personnel in FFE States, who have been engaged 
by CMS to assist in an FFE authorized function, which includes 
conducting outreach to persons who have been redetermined ineligible 
for Medicaid/CHIP. In this limited circumstance, an FFE may share with 
Navigators and other non-Navigator assistance personnel in FFE States 
consumer information that the FFE receives from Medicaid/CHIP agencies 
once a consumer has been redetermined ineligible for Medicaid/CHIP in 
order for the Navigators and other non-Navigator assistance personnel 
to conduct outreach to such consumers regarding opportunities for 
coverage through the FFEs.
---------------------------------------------------------------------------

    \126\ 78 FR 63211, 63215.
---------------------------------------------------------------------------

    Since finalizing the 2015 Market Standards final rule, HHS has 
enacted a number of measures designed to ensure that Assisters are 
properly safeguarding

[[Page 78249]]

the personally identifiable information of all consumers they assist. 
As part of their annual certification training, HHS requires Assisters 
to complete a course on privacy, security, and fraud prevention 
standards. Further, we require Assisters to obtain a consumer's consent 
before discussing or accessing their personal information (except in 
the limited circumstance described above) and to only create, collect, 
disclose, access, maintain, store and/or use consumer personally 
identifiable information to perform the functions that they are 
authorized to perform as Assisters in accordance with Sec. Sec.  
155.210(b)(2)(iv) and (c)(1)(v), 155.225(d)(3), and 155.215(b)(2), as 
applicable. In addition, now that the Exchanges and their Assister 
programs have been in operation for almost 10 years, Assisters have 
more name recognition and consumer trust within the communities the 
Assisters serve. Accordingly, HHS believes that its previous concerns 
related to consumers' privacy and security interests and consumers not 
knowing what to expect when interacting with Assisters have been 
sufficiently mitigated with the measures HHS has enacted such that a 
blanket prohibition on unsolicited direct contact of consumers by 
Assisters for application or enrollment assistance is no longer 
necessary.
    The prohibition on door-to-door enrollment places additional burden 
on consumers and Assisters to make subsequent appointments to 
facilitate enrollment, which creates access barriers for consumers to 
receive timely and relevant enrollment assistance. Additionally, this 
prohibition could impede the Exchanges' potential to reach a broader 
consumer base in a timely manner, reduce uninsured rates, and increase 
access to health care. We believe it is important to be able to 
increase access to coverage for those whose ability to travel is 
impeded due to mobility, sensory or other disabilities, who are 
immunocompromised, and who are limited by a lack of transportation.
    Consistent with the proposal to remove the general prohibition on 
door-to-door and other direct outreach by Navigators, we propose to 
delete Sec.  155.210(d)(8). If finalized, the repeal of Sec.  
155.210(d)(8) would remove the general prohibition on door-to-door and 
other direct outreach by non-Navigator assistance personnel in FFEs and 
in State Exchanges if funded with section 1311(a) Exchange 
Establishment grants, as Sec.  155.215(a)(2)(i) requires such entities 
to comply with the prohibitions on Navigator conduct set forth at Sec.  
155.210(d). Likewise, we propose to repeal Sec.  155.225(g)(5), which 
currently imposes the general prohibition against door-to-door and 
other direct contacts on certified application counselors.
    As we explained earlier in this preamble, HHS is now of the view 
that repealing restrictions on an Exchange's ability to allow 
Navigators, non-Navigator assistance personnel, and certified 
application counselors to offer application or enrollment assistance by 
going door-to-door or through other unsolicited means of direct contact 
is a positive step that would enable Assisters to reach a broader 
consumer base in a timely manner--helping to reduce uninsured rates and 
health disparities by removing underlying barriers to accessing health 
coverage.
    We seek comment on this proposal.
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)
    Section 1312(e) of the ACA directs the Secretary to establish 
procedures under which a State may permit agents and brokers to enroll 
individuals and employers in QHPs through an Exchange and to assist 
individuals in applying for financial assistance for QHPs sold through 
an Exchange. In addition, section 1313(a)(5)(A) of the ACA directs the 
Secretary to provide for the efficient and non-discriminatory 
administration of Exchange activities and to implement any measure or 
procedure the Secretary determines is appropriate to reduce fraud and 
abuse. Under Sec.  155.220, we established procedures to support the 
State's ability to permit agents, brokers, and web-brokers to assist 
individuals, employers, or employees with enrollment in QHPs offered 
through an Exchange, subject to applicable Federal and State 
requirements. This includes processes under Sec.  155.220(g) and (h) 
for HHS to suspend or terminate an agent's, broker's, or web-broker's 
Exchange agreement(s) in circumstances that involve fraud of abusive 
conduct or where there are sufficiently severe findings of non-
compliance. We also established FFE standards of conduct under Sec.  
155.220(j) for agents and brokers that assist consumers in enrolling in 
coverage through the FFEs to protect consumers and ensure the proper 
administration of the FFEs. Consistent with Sec.  155.220(l), agents, 
brokers and web-brokers that assist with or facilitate enrollment in 
States with SBE-FPs must comply with all applicable FFE standards, 
including the requirements in Sec.  155.220. In this rule, we propose 
to build on this foundation with new proposed procedures and additional 
consumer protection standards for agents, brokers, and web-brokers that 
assist consumers with enrollments through FFEs and SBE-FPs.
a. Extension of Time To Review Suspension Rebuttal Evidence and 
Termination Reconsideration Requests (Sec.  155.220(g) and (h))
    We propose to allow HHS up to an additional 15 or 30 calendar days 
to review evidence submitted by agents, brokers, or web-brokers to 
rebut allegations that led to suspension of their Exchange agreement(s) 
or to request reconsideration of termination of their Exchange 
agreement(s), respectively. This proposal would provide HHS a total of 
up to 45 or 60 calendar days to review such rebuttal evidence or 
reconsideration request and notify the submitting agents, brokers, or 
web-brokers of HHS' determination regarding the suspension of their 
Exchange agreement(s) or reconsideration decision related to the 
termination of their Exchange agreement(s), respectively. In the 2017 
Payment Notice, we added paragraph (5) to Sec.  155.220(g) to address 
the temporary suspension or immediate termination of an agent's or 
broker's agreements with the FFEs in cases involving fraud or abusive 
conduct.\127\ Consistent with section 1313(a)(5)(A) of the ACA, we 
added these procedures to give HHS authority to act quickly in these 
situations to prevent further harm to consumers and to support the 
efficient and effective administration of Exchanges on the Federal 
platform. Under Sec.  155.220(g)(5)(i)(A), if HHS reasonably suspects 
that an agent, broker, or web-broker may have engaged in fraud or 
abusive conduct using personally identifiable information of Exchange 
applicants or enrollees or in connection with an Exchange enrollment or 
application, HHS may temporarily suspend the agent's, broker's or web-
broker's Exchange agreement(s) for up to 90 calendar days, with the 
suspension effective as of the date of the notice to the agent, broker, 
or web-broker. This temporary suspension is effective immediately and 
prohibits the agent, broker, or web-broker from assisting with or 
facilitating enrollment in coverage in a manner that constitutes 
enrollment through the Exchange, including participating in the Classic 
DE and EDE Pathways, during this 90-day period.128 129 As 
previously

[[Page 78250]]

explained, immediate suspension is critical in these circumstances to 
stop additional potentially fraudulent enrollments through the FFEs and 
SBE-FPs.\130\ Consistent with Sec.  155.220(g)(5)(i)(B), the agent, 
broker, or web-broker can submit evidence to HHS to rebut the 
allegations that they have engaged in fraud or abusive conduct that led 
to a temporary suspension by HHS of their Exchange agreement(s) at any 
time during 90-day period. If such rebuttal evidence is submitted, HHS 
will review it and make a determination as to whether a suspension 
should be lifted within 30 days of receipt of such evidence.\131\ If 
HHS determines that the agent, broker, or web-broker satisfactorily 
addresses the concerns at issue, HHS will lift the temporary suspension 
and notify the agent, broker, or web-broker. If the rebuttal evidence 
does not persuade HHS to lift the suspension, HHS may terminate the 
agent's, broker's, or web-broker's Exchange agreement(s) for 
cause.132 133
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    \127\ See 81 FR at 12258-12264. Also see 80 FR at 75525-75526.
    \128\ 45 CFR 155.220(g)(5)(iii).
    \129\ The agent, broker, or web-broker must continue to protect 
any personally identifiable information accessed during the term of 
their Exchange agreements. See, e.g., 45 CFR 155.220(g)(5)(iii) and 
155.260.
    \130\ See, e.g., 81 FR at 12258-12264.
    \131\ See 45 CFR 155.220(g)(5)(i)(B).
    \132\ See 45 CFR 155.220(g)(5)(i)(B).
    \133\ If the agent, broker, or web-broker fails to submit 
rebuttal information during this 90-day period, HHS may terminate 
their Exchange agreement(s) for cause. 45 CFR 155.220(g)(5)(i)(B).
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    HHS also previously established a framework for termination of an 
agent's, broker's, or web-broker's Exchange agreement(s) for cause in 
situations where, in HHS' determination, a specific finding of 
noncompliance or pattern of noncompliance is sufficiently severe.\134\ 
This framework provides HHS the ability to terminate an agent's, 
broker's, or web-broker's Exchange agreement(s) for cause to protect 
consumers and the efficient and effective operation of Exchanges in 
cases of sufficiently severe violations or patterns of violations. In 
these situations, HHS provides the agent, broker, or web-broker, an 
advance 30-day notice and an opportunity to cure and address the non-
compliance finding(s).135 136 More specifically, upon 
identification of a sufficiently severe violation, HHS notifies the 
agent, broker, or web-broker of the specific finding(s) of 
noncompliance or pattern of noncompliance. The agent, broker, or web-
broker then has a period of 30 days from the date of the notice to 
correct the noncompliance to HHS' satisfaction. If after 30 days the 
noncompliance is not addressed to HHS' satisfaction, HHS may terminate 
the Exchange agreement(s) for cause. Once their Exchange agreement(s) 
are terminated for cause under Sec.  155.220(g)(3), the agent, broker, 
or web-broker is no longer registered with the FFE, is not permitted to 
assist with or facilitate enrollment of a qualified individual, 
qualified employer, or qualified employee in coverage in a manner that 
constitutes enrollment through the Exchange, and is not permitted to 
assist individuals in applying for APTC and CSRs for 
QHPs.137 138 Consistent with Sec.  155.220(h)(1), an agent, 
broker, or web-broker whose Exchange agreement(s) are terminated can 
request reconsideration of such action. Section 155.220(h)(2) provides 
the agent, broker, or web-broker with 30 calendar days to submit their 
request (including any rebuttal evidence or information) and Sec.  
155.220(h)(3) requires HHS to provide agents, brokers, or web-brokers 
with written notice of HHS' reconsideration decision within 30 calendar 
days of receipt of the request for reconsideration.
---------------------------------------------------------------------------

    \134\ See 45 CFR 155.220(g)(1)-(4). Also see, e.g., 78 FR at 
37047 through 37048 and 78 FR at 54076 through 54081.
    \135\ See 45 CFR 155.220(g)(3)(i).
    \136\ The one exception is for situations where the agent, 
broker, or web-broker fails to maintain the appropriate license 
under applicable State law(s). See 45 CFR 155.220(g)(3)(ii). In 
these limited situations, HHS may immediately terminate the agent, 
broker, or web-broker's Exchange agreement(s) for cause without any 
further opportunity to resolve the matter upon providing notice to 
the agent, broker, or web-broker. Ibid.
    \137\ 45 CFR 155.220(g)(4).
    \138\ The agent, broker, or web-broker must continue to protect 
any PII accessed during the term of their Exchange agreements. See, 
e.g., 45 CFR 155.220(g)(4) and 155.260.
---------------------------------------------------------------------------

    Our experience reviewing evidence and other information submitted 
by agents, brokers, or web-brokers to rebut allegations that led to the 
suspension of their Exchange agreement(s) or to request reconsideration 
of the termination of their Exchange agreement(s), found that the 
process, especially in more complex situations, often requires 
significant resources and time. The review process can involve parsing 
complex technical information and data, as well as revisiting consumer 
complaints or conducting outreach to consumers. The amount of time it 
takes for the review process is largely dependent on the particular 
situation at hand (for example, the number of alleged violations and 
impacted consumers, how much and what type of information an agent, 
broker, or web-broker submits, the amount of time it takes for 
consumers to locate and provide documentation related to their 
complaints, and the number of concurrent submissions in need of 
review). Given the large number of factors involved, we believe that 
allowing HHS additional time to complete the review would be 
beneficial.
    We are cognizant that this additional time could delay the ability 
of agents, brokers, and web-brokers to conduct business, which may be 
particularly burdensome to those who have compelling evidence to rebut 
allegations of noncompliance. Given the critical role that agents, 
brokers, and web-brokers serve in enrolling consumers in plans on the 
Exchanges, it is our intention to minimize the burden imposed on 
agents, brokers, and web-brokers to the greatest extent possible while 
also ensuring that HHS has additional time (if necessary) to review any 
submitted rebuttal evidence. As stated above, this additional time is 
warranted to accommodate particularly complex situations that require 
significant resources and time. We expect that not all reviews are so 
complex that they would require the use of this additional time; in 
cases where agents, brokers, and web-brokers present compelling 
evidence to rebut allegations of noncompliance, we expect to be able to 
resolve the vast majority of those reviews without the use of this 
additional time.
    We believe that the proposal to allow HHS a total of up to 45 
calendar days to review rebuttal evidence is warranted given that 
agents, brokers, and web-brokers have up to 90 days to submit rebuttal 
evidence to HHS during their suspension period, while HHS currently 
only has 30 days to review, consider, and make determinations based on 
that evidence. It does not seem unreasonable to increase this combined 
maximum 120-day time period \139\ to 135 days.\140\
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    \139\ As noted above, an agent, broker, or web-broker whose 
Exchange agreement(s) are temporarily suspended can submit rebuttal 
evidence at any time during the 90-day suspension period, thus 
triggering the start of the HHS review period and limiting the 
length of the suspension period. For example, under this proposal, 
if an agent were to submit rebuttal evidence within seven days of 
receiving the suspension notice and HHS were to respond on the last 
day of the proposed new review period (day 45) and lift the 
suspension, that would mean the agent's Exchange agreement(s) would 
have been suspended for only 52 days.
    \140\ For example, under this proposal, if an agent whose 
Exchange agreement(s) were temporarily suspended were to submit 
rebuttal evidence to rebut allegations that led to the suspension of 
their Exchange agreement(s) on the final day of the suspension 
period (day 90), pursuant to Sec.  155.220(g)(5)(i)(B), and HHS were 
to respond on the final day of the proposed new review period (day 
45) and lift the suspension, that agent's Exchange agreement(s) 
would be suspended for a maximum of 135 days.
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    We believe that this is not an unreasonable maximum timeframe,

[[Page 78251]]

particularly where HHS has a reasonable suspicion the agent, broker, or 
web-broker engaged in fraud or abusive conduct that may cause imminent 
or ongoing consumer harm using personally identifiable information of 
an Exchange enrollee or applicant or in connection with an Exchange 
enrollment or application. As noted in the 2017 Payment Notice, there 
is a similar requirement for Medicare providers, as 42 CFR 405.371 
provides HHS with the authority to suspend payment for at least 180 
days if there is reliable information that an overpayment exists, or 
there is a credible allegation of fraud (81 FR 12262 through 12263). 
Under Sec.  155.220(g)(5)(i)(A), HHS temporarily suspends an agent, 
broker or web-broker's Exchange agreement(s) only in situations in 
which there is sufficient evidence or other information such that HHS 
reasonably suspects the agent, broker or web-broker engaged in fraud, 
or in abusive conduct that may cause imminent or ongoing consumer harm 
using personally identifiable information of an Exchange enrollee or 
applicant or in connection with an Exchange enrollment or application. 
As such, HHS exercises this authority and sends suspension notices only 
in the limited situations where there may have been fraud or abusive 
conduct to stop further Exchange enrollment activity when the 
misconduct may cause imminent or ongoing harm to consumers or the 
effective and efficient administration of Exchanges. We also further 
emphasize that the proposed extension to allow for up to 45 days for 
HHS to review rebuttal evidence in these situations represents the 
maximum timeframe.\141\ To the extent the situation at hand does not, 
for example, involve a large number of alleged violations or impacted 
consumers, HHS may not need the maximum timeframe to complete the 
review and notify the agent, broker, or web-broker whether the 
suspension is lifted.
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    \141\ Further, as detailed above, the agent, broker, or web-
broker whose Exchange agreement(s) are suspended has an opportunity 
to limit the overall length of the suspension period with the timely 
submission of rebuttal evidence.
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    Terminations of Exchange agreement(s) by HHS are also limited, but 
in a different way. As outlined above, Sec.  155.220(g)(1) allows HHS 
to terminate an agent, broker, or web-brokers Exchange agreement for 
cause only when, in HHS' determination, a specific finding of 
noncompliance or pattern of noncompliance is sufficiently severe. 
Examples of specific findings of noncompliance that HHS might determine 
to be sufficiently severe to warrant termination of an agent's, 
broker's, or web-broker's Exchange agreement for cause under section 
Sec.  155.220(g)(1) include, but are not limited to, violations of the 
Exchange privacy and security standards.\142\ Patterns of noncompliance 
that HHS might determine to be sufficiently severe to warrant 
termination for cause include, for example, repeated violations of any 
of the applicable standards in Sec.  155.220 or Sec.  155.260(b) for 
which the agent or broker was previously found to be noncompliant.\143\ 
As proposed, if HHS takes the total up to 60 calendar days to review 
rebuttal evidence submitted by the agent, broker, or web-broker whose 
Exchange agreement was terminated for cause, the maximum timeframe for 
the reconsideration process under Sec.  155.220(h) would be 90 days. We 
believe this approach strikes the appropriate balance with respect to 
reviewing information submitted with a request to reconsider 
termination of their Exchange agreement(s) because it provides the 
agent, broker, or web-broker due process while also protecting 
consumers from potential harm. We are proposing a longer time period of 
60 days for HHS review of information and evidence submitted by an 
agent, broker, or web-broker as part of their reconsideration request 
(versus 45 days for HHS review of rebuttal evidence and information 
submitted in response to a suspension determination) because the HHS 
reviews under Sec.  155.220(h)(2) are part of the appeal process. As 
such, the agent, broker, or web-broker had an opportunity at an earlier 
stage of the suspension or termination process to rebut the allegations 
and/or findings, or otherwise take remedial steps to address the 
concerns identified by HHS, that led to suspension or termination of 
their Exchange agreement(s).144 145
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    \142\ As outlined in Sec.  155.220(g)(2), an agent, broker, or 
web-broker may be determined noncompliant if HHS finds that the 
agent, broker, or web-broker violated any standard specified in 
Sec.  155.220; any term or condition of their Exchange agreement(s); 
any State law applicable to agents, brokers, or web-brokers; or any 
Federal law applicable to agents, brokers, or web-brokers.
    \143\ Ibid.
    \144\ See 45 CFR 155.220(g)(5)(i)(B) (providing an opportunity 
to rebut allegations of fraud or abusive conduct) and 45 CFR 
155.220(g)(3)(i) (providing advance notice and an opportunity to 
correct the noncompliance).
    \145\ The one exception is for immediate terminations for cause 
due to the lack of appropriate State licensure under 45 CFR 
155.220(g)(3)(ii). In these situations, however, the maximum 
timeframe between the agent, broker, or web-broker receiving the 
termination notice and the issuance of the HHS reconsideration 
decision would be 90 days.
---------------------------------------------------------------------------

    For these reasons, we propose to amend Sec.  155.220(g)(5)(i)(B) to 
provide HHS with up to 45 calendar days to review evidence and other 
information submitted by agents, brokers, or web-brokers to rebut 
allegations that led to suspension of their Exchange agreement(s) and 
make a determination of whether to lift the suspension. We also propose 
to amend Sec.  155.220(h)(3) to provide HHS with up to 60 days to 
review evidence and other information submitted by agents, brokers, or 
web-brokers to rebut allegations that led to termination of their 
Exchange agreement(s) and provide written notice of HHS' 
reconsideration decision.
    We seek comment on this proposal.
b. Providing Correct Information to the FFEs (Sec.  155.220(j))
    We propose to amend Sec.  155.220(j)(2)(ii) to require agents, 
brokers, or web-brokers assisting with and facilitating enrollment 
through FFEs and SBE-FPs or assisting an individual with applying for 
APTC and CSRs for QHPs to document that eligibility application 
information has been reviewed by and confirmed to be accurate by the 
consumer or their authorized representative designated in compliance 
with Sec.  155.227, prior to application submission. We propose that 
such documentation would be created by the assisting agent, broker, or 
web-broker and would require the consumer or their authorized 
representative to take an action, such as providing a signature or a 
recorded verbal confirmation, that produces a record that can be 
maintained by the agent, broker, or web-broker and produced to confirm 
the submitted eligibility application information was reviewed and 
confirmed to be accurate by the consumer or their authorized 
representative. In addition, we propose that the documentation must 
include the date the information was reviewed, the name of the consumer 
or their authorized representative, an explanation of the attestations 
at the end of the eligibility application, and the name of the agent, 
broker, or web-broker providing assistance. Lastly, we propose that the 
documentation must be maintained by the agent, broker, or web-broker 
for a minimum of 10 years and produced upon request in response to 
monitoring, audit, and enforcement activities conducted consistent with 
Sec.  155.220(c)(5), (g), (h) and (k). These proposed changes would 
require amending Sec.  155.220(j)(2)(ii), creating new paragraph Sec.  
155.220(j)(2)(ii)(A), and redesignating current Sec.  
155.220(j)(2)(ii)(A), Sec.  155.220(j)(2)(ii)(B),

[[Page 78252]]

Sec.  155.220(j)(2)(ii)(C) and Sec.  155.220(j)(2)(ii)(D) without 
change as Sec.  155.220(j)(2)(ii)(B), Sec.  155.220(j)(2)(ii)(C), Sec.  
155.220(j)(2)(ii)(D), and Sec.  155.220(j)(2)(ii)(E), respectively.
    Agents, brokers and web-brokers are among those who play a critical 
role in educating consumers about Exchanges and insurance affordability 
programs, and in helping consumers complete and submit applications for 
eligibility determinations, compare plans, and enroll in coverage. 
Consistent with section 1312(e) of the ACA, Sec.  155.220 establishes 
the minimum standards for the process by which an agent, broker, or 
web-broker may help enroll an individual in a QHP in a manner that 
constitutes enrollment through the Exchange and to assist individuals 
in applying for PTC and CSRs. This process and minimum standards 
require the applicant's completion of an eligibility verification and 
enrollment application and the agent's, broker's, or web-broker's 
submission of the eligibility application information through the 
Exchange website or an Exchange-approved web service.\146\ While 
agents, brokers, and web-brokers can assist a consumer with completing 
the Exchange application, the consumer is the individual with the 
knowledge to confirm the accuracy of the information provided on the 
application.\147\
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    \146\ 45 CFR 155.220(c)(1). Also see, e.g., 77 FR at 18334-
18336.
    \147\ This is evidenced by the language in Sec.  155.220(j)(1) 
that refers to agents, brokers, or web-brokers that assist or 
facilitate enrollment (emphasis added).
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    Section 155.220(j)(2) sets forth the standards of conduct for 
agents, brokers, or web-brokers that assist with or facilitate 
enrollment of qualified individuals, qualified employers, or qualified 
employees in coverage in a manner that constitutes enrollment through 
an FFE or SBE-FP or that assist individuals in applying for APTC and 
CSRs for QHPs sold through an FFE or SBE-FP. As explained in the 2017 
Payment Notice proposed rule (81 FR 12258 through 12264), these 
standards are designed to protect against agent, broker, and web-broker 
conduct that is harmful towards consumers or prevents the efficient 
operation of the FFEs and SBE-FPs. Under Sec.  155.220(j)(2)(ii), 
agents, brokers, or web-brokers must provide the FFEs and SBE-FPs with 
``correct information under section 1411(b) of the Affordable Care 
Act.''
    Section 1411(h) of the ACA provides for the imposition of civil 
penalties if any person fails to provide correct information under 
section 1411(b) to the Exchange. Consistent with Sec.  155.220(l), 
agents, brokers and web-brokers that assist with or facilitate 
enrollment of qualified individuals, qualified employers, or qualified 
employees in States with SBE-FPs must comply with all applicable FFE 
standards. This includes, but is not limited to, compliance with the 
FFE standards of conduct in Sec.  155.220(j).
    Currently, Sec.  155.220(j)(2)(ii) requires that agents, brokers, 
and web-brokers provide the FFEs and SBE-FPs with correct information 
under section 1411(b) of the ACA, but it does not explicitly require 
agents, brokers, or web-brokers assisting consumers with completing 
eligibility applications through the FFEs and SBE-FPs to confirm with 
those consumers the accuracy of the information entered on their 
applications prior to application submission or document the consumer 
has reviewed and confirmed the information to be accurate. HHS has 
continued to observe applications submitted to the FFEs and SBE-FPs 
that contain incorrect consumer information. We have also received 
consumer complaints stating the information provided on their 
eligibility applications submitted by agents, brokers, or web-brokers 
on their behalf was incorrect. These complaints can be difficult to 
investigate and adjudicate, because the only evidence available is 
often the word of one person against another and the FFEs and SBE-FPs 
generally do not have access to other contextual information to help 
resolve the matter. By requiring the creation and maintenance of 
documentation that the assisting agent, broker, or web-broker confirmed 
with the consumer or their authorized representative that the entered 
information was reviewed and accurate, the adjudication of such 
complaints could be expedited and more easily resolved. In addition, 
the inclusion of incorrect consumer information on eligibility 
applications may result in consumers receiving inaccurate eligibility 
determinations, and may affect consumers' tax liability, or produce 
other potentially negative results. If a consumer receives an incorrect 
APTC determination or is unaware they are enrolled in a QHP, that 
consumer may owe money to the IRS when they file their Federal income 
tax return. Ensuring a consumer's income determination has been 
reviewed and is accurate would help avoid these situations. Incorrect 
consumer information on eligibility applications may also affect 
Exchange operations or HHS's analysis of Exchange trends. For example, 
a high volume of applications all containing the erroneous information, 
such as U.S. citizens attesting to not having an SSN, could hinder the 
efficient and effective operation of the Exchanges on the Federal 
platform by requiring HHS to focus its time and efforts on addressing 
these erroneous applications. This proposal is consistent with the fact 
that the consumer or their authorized representative is the individual 
with the knowledge to confirm the accuracy of the information provided 
on the application and would serve as an additional safeguard and 
procedural step to ensure the accuracy of the application information 
submitted to Exchanges. Thus, we propose to revise Sec.  
155.220(j)(2)(ii) to require agents, brokers, and web-brokers to 
document that the eligibility application information was reviewed and 
confirmed to be accurate by the consumer or their authorized 
representative before application submission.
    We also propose to establish in new proposed Sec.  
155.220(j)(2)(ii)(A) standards for what constitutes adequate 
documentation that eligibility application information has been 
reviewed and confirmed to be accurate by the consumer or their 
authorized representative. First, we propose to revise Sec.  
155.220(j)(2)(ii)(A) to establish that documenting that eligibility 
application information has been reviewed and confirmed to be accurate 
by the consumer or their authorized representative would require the 
consumer or their authorized representative to take an action that 
produces a record that can be maintained and produced by the agent, 
broker, or web-broker and produced to confirm the consumer or their 
authorized representative has reviewed and confirmed the accuracy of 
the eligibility application information.
    We do not propose any specific method for documenting that 
eligibility application information has been reviewed and confirmed to 
be accurate by the consumer or their authorized representative. To 
provide guidance to agents, brokers, and web-brokers, we propose to 
include in Sec.  155.220(j)(2)(ii)(A) a non-exhaustive list of 
acceptable methods to document that eligibility application information 
has been reviewed and confirmed to be accurate, including obtaining the 
signature of the consumer or their authorized representative 
(electronically or otherwise), verbal confirmation by the consumer or 
their authorized representative that is captured in an audio recording, 
or a written response (electronic or otherwise) from the consumer or 
their authorized

[[Page 78253]]

representative to a communication sent by the agent, broker, or web-
broker. We also invite comment on whether there may be other acceptable 
methods of documentation that HHS should consider specifying to be 
permissible for purposes of documenting that eligibility application 
information has been reviewed and confirmed to be accurate by the 
consumer or their authorized representative. For example, we are 
specifically interested in any current best practices or approaches 
that agents, brokers or web-brokers may use to create records or 
otherwise document that eligibility application information was 
reviewed by the consumer or their authorized representative prior to 
submission to the Exchange.
    We also propose that the consumer would be able to review and 
confirm the accuracy of application information on behalf of other 
applicants (for example, dependents or other household members), and 
authorized representatives would be able to provide review and confirm 
the accuracy of application information on behalf of the people they 
are designated to represent, as it may be difficult or impossible to 
obtain confirmation from each consumer whose information is included on 
an application. This would allow agents, brokers, and web-brokers to 
continue assisting consumers as they currently do (for example, often 
by working with an individual representing a household when submitting 
an application for a family).
    Next, we propose to require at new proposed Sec.  
155.220(j)(2)(ii)(A)(1) that the eligibility application information 
documentation, which would be created by the assisting agent, broker, 
or web-broker, must include an explanation of the attestations at the 
end of the eligibility application that the eligibility application 
information has been reviewed by and confirmed to be accurate by the 
consumer or their authorized representative. At the end of the Exchange 
eligibility application, one of the attestations the consumer must 
currently agree to before submitting the application is as follows: 
``I'm signing this application under penalty of perjury, which means 
I've provided true answers to all of the questions to the best of my 
knowledge. I know I may be subject to penalties under Federal law if I 
intentionally provide false information.'' The documentation the agent, 
broker, or web-broker creates to satisfy this proposed requirement 
would be required to include this language for awareness and to remind 
the consumer that they are responsible for the accuracy of the 
application information, even if the information was entered into the 
application on their behalf by an agent or broker assisting them. We 
believe that this proposal would help ensure that the consumer or their 
authorized representative understands the importance of confirming the 
accuracy of the information contained in the eligibility application 
and further safeguard against the provision and submission of incorrect 
eligibility application information. We also believe that that proposal 
would help safeguard consumers from the negative consequences of 
failing to understand the attestations and potentially attesting to 
conflicting information. For example, one common error we see on 
applications completed by agents, brokers, or web-brokers is an 
attestation that a consumer does not have an SSN while also including 
an attestation that the consumer is a U.S. citizen. These conflicting 
attestations can generate DMIs, which, if not resolved during the 
allotted resolution window, could result in the consumer's coverage 
being terminated. For these reasons, we propose to add a requirement at 
new Sec.  155.220(j)(2)(ii)(A)(1) that the documentation include the 
date the information was reviewed, the name of the consumer or their 
authorized representative, an explanation of the attestations at the 
end of the eligibility application, and the name of the assisting 
agent, broker, or web-broker.
    Lastly, at new proposed Sec.  155.220(j)(2)(ii)(A)(2) we propose to 
require agents, brokers, and web-brokers to maintain the documentation 
demonstrating that the eligibility application information was reviewed 
and confirmed as accurate by the consumer or their authorized 
representative for a minimum of 10 years. Section 155.220(c)(5) states 
HHS or our designee may periodically monitor and audit an agent, 
broker, or web-broker to assess their compliance with applicable 
requirements. However, there is not currently a maintenance of records 
requirement directly applicable to all agents, brokers, and web-brokers 
assisting consumers through the FFEs and SBE-FPs.\148\ Capturing a 
broad-based requirement mandating that all agents, brokers, and web-
brokers assisting consumers in the FFEs and SBE-FPs maintain the 
records and documentation demonstrating that information captured in 
their application has been reviewed and confirmed to be accurate by the 
consumer or their authorized representative they are assisting would 
provide a clear, uniform standard. It also would ensure this 
documentation is maintained for sufficient time to allow for 
monitoring, audit, and enforcement activities to take place.\149\ 
Therefore, consistent with other Exchange maintenance of records 
requirements,\150\ we propose to capture in new proposed Sec.  
155.220(j)(2)(iii)(A)(2) that agents, brokers, and web-brokers must 
maintain the documentation described in proposed Sec.  
155.220(j)(2)(ii)(A) for a minimum of 10 years, and produce the 
documentation upon request in response to monitoring, audit, and 
enforcement activities conducted consistent with Sec.  155.220(c)(5), 
(g), (h), and (k).
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    \148\ Section 155.220(c)(3)(i)(E) requires web-brokers to 
maintain audit trails and records in an electronic format for a 
minimum of 10 years and cooperate with any audit under this section. 
Section 156.340(a)(2) places responsibility on QHP issuers 
participating in Exchanges using the Federal platform to ensure 
their downstream and delegated entities (including agents and 
brokers) are complying with certain requirements, including the 
maintenance of records requirements in Sec.  156.705. In addition, 
under Sec.  156.340(b), agents and brokers that are downstream 
entities of QHP issuers in the FFEs must be bound by their 
agreements with the QHP issuer to comply with certain requirements, 
including the records maintenance standards in Sec.  156.705. 
Section 156.705(c) and (d) requires QHP issuers in the FFEs to 
maintain certain records for 10 years and to make all such records 
available to HHS, the OIG, the Comptroller General, or their 
designees, upon request.
    \149\ While investigations consumer complaints are an example of 
a more immediate, real-time monitoring and oversight activity, 
market conduct examinations, audits, and other types of 
investigations (e.g., compliance reviews) may occur several years 
after the applicable coverage year.
    \150\ See, for example, 45 CFR 155.220(c)(3)(i)(E) and 
156.705(c).
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    We seek comment on these proposals.
c. Documenting Receipt of Consumer Consent (Sec.  155.220(j))
    We propose to amend Sec.  155.220(j)(2)(iii) to require agents, 
brokers, or web-brokers assisting with and facilitating enrollment 
through FFEs and SBE-FPs or assisting an individual with applying for 
APTC and CSRs for QHPs to document the receipt of consent from the 
consumer, or the consumer's authorized representative designated in 
compliance with Sec.  155.227, qualified employers, or qualified 
employees they are assisting. We propose that documentation of receipt 
of consent would be created by the assisting agent, broker, or web-
broker and would require the consumer seeking to receive assistance, or 
the consumer's authorized representative, to take an action, such as 
providing a signature or a recorded verbal authorization, that produces 
a record that can be maintained by the agent, broker, or web-broker and 
produced to confirm the consumer's or their authorized representative's 
consent was provided. With regard to the content of

[[Page 78254]]

the documentation of consent, in addition to the date consent was 
given, name of the consumer or their authorized representative, and the 
name of the agent, broker, web-broker, or agency being granted consent, 
we propose the documentation would be required to include a description 
of the scope, purpose, and duration of the consent provided by the 
consumer, or their authorized representative, as well as the process by 
which the consumer or their authorized representative may rescind such 
consent. Lastly, we propose that documentation of the consumer's or 
their authorized representative's, consent be maintained by the agent, 
broker, or web-broker for a minimum of 10 years and produced upon 
request in response to monitoring, audit, and enforcement activities 
conducted consistent with Sec.  155.220(c)(5), (g), (h) and (k).
    Currently, Sec.  155.220(j)(2)(iii) requires agents, brokers, or 
web-brokers assisting with or facilitating enrollment through the FFEs 
or SBE-FPs or assisting an individual in applying for APTC and CSRs for 
QHPs to obtain the consent of the individual, employer, or employee 
prior to providing such assistance. However, Sec.  155.220(j)(2)(iii) 
does not currently require agents, brokers, or web-brokers to document 
the receipt of consent. We have observed several cases in which there 
have been disputes between agents, brokers, or web-brokers and the 
individuals they are assisting, or between two or more agents, brokers, 
or web-brokers, about who has been authorized to act on behalf of a 
consumer or whether anyone has been authorized to do so. We have also 
received complaints alleging enrollments by agents, brokers, and web-
brokers that occurred without the consumer's consent, and have 
encountered agents, brokers, and web-brokers who attest they have 
obtained consent and have acted in good faith, but who do not have 
reliable records of such consent to defend themselves from allegations 
of misconduct. Thus, we are proposing this standard because we believe 
that it would be beneficial to have reliable records of consent to help 
with the resolution of such disputes or complaints and to minimize the 
risk of fraudulent activities such as unauthorized enrollments. For 
these reasons, we propose to revise Sec.  155.220(j)(2)(iii) to require 
agents, brokers, and web-brokers to document the receipt of consent 
from the consumer seeking to receive assistance or the consumer's 
authorized representative, employer, or employee prior to assisting 
with or facilitating enrollment through the FFEs and SBE-FPs, making 
updates to an existing application or enrollment, or assisting the 
consumer in applying for APTC and CSRs for QHPs.
    We also propose to establish in proposed new Sec.  
155.220(j)(2)(iii)(A)-(C) standards for what constitutes obtaining and 
documenting consent to provide agents, brokers, and web-brokers with 
further clarity regarding this proposed requirement. First, we propose 
to add new proposed Sec.  155.220(j)(2)(iii)(A) to establish that 
obtaining and documenting the receipt of consent would require the 
consumer seeking to receive assistance, or the consumer's authorized 
representative designated in compliance with Sec.  155.227, to take an 
action that produces a record that can be maintained by the agent, 
broker, or web-broker and produced to confirm the consumer's or their 
authorized representative's consent has been provided.
    We do not intend to prescribe the method to document receipt of 
individual consent, so long as whatever method is chosen requires the 
consumer or their authorized representative to take an action and 
results in a record that can be maintained and produced by the agent, 
broker, or web-broker. Therefore, we propose to include in new proposed 
Sec.  155.220(j)(2)(iii)(A) a non-exhaustive list of acceptable means 
to document receipt of consent, including obtaining the signature of 
the consumer or their authorized representative (electronically or 
otherwise), verbal confirmation by the consumer or their authorized 
representative that is captured in an audio recording, a response from 
the consumer or their authorized representative to an electronic or 
other communication sent by the agent, broker, or web-broker, or other 
similar means or methods that HHS specifies in guidance. Other methods 
of documenting individual consent may be acceptable, such as requiring 
individuals to create user accounts on an agent's or agency's website 
where they designate or indicate the agents, brokers, or web-brokers to 
whom they have provided consent. Under this proposal, agents, brokers, 
and web-brokers would also be permitted to continue to utilize State 
Department of Insurance forms, such as agent or broker of record forms, 
provided these forms cover the minimum requirements set forth in this 
proposed rule. If agents, brokers, and web-brokers have already adopted 
consent documentation processes consistent with this proposed 
framework, no changes would be required if this proposed standard is 
finalized. We intend to allow for documentation methods well-suited to 
the full range of ways agents, brokers, and web-brokers interact with 
consumers they are assisting (for example: in-person, via phone, 
electronic communications, use of an agent's or agency's website, 
etc.). We also intend for the primary applicant to be able to provide 
consent on behalf of other applicants (for example, dependents or other 
household members), and authorized representatives to be able to 
provide consent on behalf of the people they are designated represent 
(for example, incapacitated persons), as it may be difficult or 
impossible to obtain consent from each individual whose information is 
included on an application. This would allow agents, brokers, and web-
brokers to continue assisting individuals as they currently do (for 
example, often by working with an individual representing a household 
when submitting an application for a family).
    Second, we propose to require at new proposed Sec.  
155.220(j)(2)(iii)(B) that the consent documentation must include the 
date consent was given, name of the consumer or their authorized 
representative, name of the agent, broker, web-broker, or agency being 
granted consent, a description of the scope, purpose, and duration of 
the consent obtained by the individual, as well as a process through 
which the consumer or their authorized representative may rescind 
consent. Agents, brokers, and web-brokers may work with individuals in 
numerous capacities. For example, they may assist individuals with 
applying for financial assistance and enrolling in QHPs through the 
FFEs and SBE-FPs, as well as shopping for other non-Exchange products. 
Similarly, agents, brokers, and web-brokers may have different business 
models such that individuals may interact with specific individuals 
consistently or numerous individuals representing a business entity 
that may vary upon each contact (for example, call center 
representatives), and the methods of interaction may vary as well (for 
example: in-person, phone calls, use of an agent's or agency's website 
etc.). In addition, individuals may wish to change the agents, brokers, 
or web-brokers they work with and provide consent to over time. For 
these reasons, the scope, purpose, and duration of the consent agents, 
brokers, and web-brokers seek to obtain from individuals can vary 
widely. Therefore, this proposal is intended to ensure individuals are 
making an informed decision when providing their consent

[[Page 78255]]

to the agents, brokers, or web-brokers assisting them, that individuals 
can make changes to their provision of consent over time, and that the 
documentation of consent at a minimum captures who is providing and 
receiving consent, for what purpose(s) the consent is being provided, 
when consent was provided, the intended duration of the consent, and 
how specifically consent may be rescinded. We expect that the 
information in the consent documentation would align with the 
information in the corresponding individuals' applications (for 
example: names, phone numbers, or email addresses should align as 
applicable depending on whether the consent is obtained via email, text 
message, call recording, or otherwise), except for in instances in 
which consent is being provided by an authorized representative.
    Lastly, at new proposed Sec.  155.220(j)(2)(iii)(C), we propose to 
require agents, brokers, and web-brokers to maintain the documentation 
described in proposed Sec.  155.220(j)(2)(iii)(A) for a minimum of 10 
years. Section 155.220(c)(5) states HHS or our designee may 
periodically monitor and audit an agent, broker, or web-broker to 
assess their compliance with applicable requirements. However, there is 
not currently a maintenance of records requirement directly applicable 
to all agents, brokers, and web-brokers assisting consumers through the 
FFEs and SBE-FPs.\151\ Capturing a broad-based requirement mandating 
that all agents, brokers, and web-brokers assisting consumers in the 
FFEs and SBE-FPs to maintain the records and documentation 
demonstrating receipt of consent from consumers or their authorized 
representative would provide a clear, uniform standard. It would also 
ensure these records and documentation are maintained for sufficient 
time to allow for monitoring, audit, and enforcement activities to take 
place.\152\ Therefore, consistent with other Exchange maintenance of 
records requirements,\153\ we propose to capture in new proposed Sec.  
155.220(j)(2)(iii)(C) that agents, brokers, and web-brokers must 
maintain the documentation described in proposed Sec.  
155.220(j)(2)(iii)(A) for a minimum of 10 years, and produce the 
documentation upon request in response to monitoring, audit and 
enforcement activities conducted consistent with Sec.  155.220(c)(5), 
(g), (h) and (k).
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    \151\ Section 155.220(c)(3)(i)(E) requires web-brokers to 
maintain audit trails and records in an electronic format for a 
minimum of 10 years and cooperate with any audit under this section. 
Section 156.340(a)(2) places responsibility on QHP issuers 
participating in Exchanges using the Federal platform to ensure 
their downstream and delegated entities (including agents and 
brokers) are complying with certain requirements, including the 
maintenance of records requirements in Sec.  156.705. Section 
156.705(c) requires QHP issuers in the FFEs to maintain certain 
records for 10 years.
    \152\ While investigations consumer complaints are an example of 
a more immediate, real-time monitoring and oversight activity, 
market conduct examinations, audits, and other types of 
investigations (e.g., compliance reviews) may occur several years 
after the applicable coverage year.
    \153\ See, for example, 45 CFR 155.220(c)(3)(i)(E) and 
156.705(c).
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    We seek comment on these proposals, including whether there are 
other means or methods of documentation that HHS should consider 
specifying are permissible for purposes of documenting the receipt of 
consent from consumer or their, qualified employers, or qualified 
employees.
4. Eligibility Standards (Sec.  155.305)
a. Failure to File and Reconcile Process (Sec.  155.305(f)(4))
    We are proposing to amend Sec.  155.305(f)(4) which currently 
prohibits an Exchange from determining a taxpayer eligible for APTC if 
HHS notifies the Exchange that a taxpayer (or a taxpayer's spouse, if 
married) has failed to file a Federal income tax return and reconcile 
their past APTC for a year for which tax data would be utilized for 
verification of household income and family size in accordance with 
Sec.  155.320(c)(1)(i).
    As background, Exchange enrollees whose taxpayer fails to comply 
with current paragraph Sec.  155.305(f)(4) are referred to as having 
failed to ``file and reconcile''. Since 2015, HHS has taken regulatory 
and operational steps to help increase taxpayer compliance with filing 
and reconciliation requirements under the Code as described at 26 CFR 
1.36B-4(a)(1)(i) and (a)(1)(ii)(A) by tying eligibility for future APTC 
to the taxpayer's reconciliation of past APTC paid. However, since the 
finalization of the requirement at Sec.  155.305(f)(4), HHS has 
determined that the costs of the current policy outweigh the benefits 
for a number of reasons. For one, Exchanges have faced a longstanding 
operational challenge, specifically that Exchanges sometimes have to 
determine an enrollee ineligible for APTC without having up-to-date 
information on the tax filing status of households while Federal income 
tax returns are still being processed by the IRS. Currently, Exchanges 
determine an enrollee ineligible for APTC if the IRS, through data 
passed from the IRS to HHS, via the Federal Data Services Hub (the 
Hub), tells an Exchange that the taxpayer did not comply with the 
requirement to file a Federal income tax return and reconcile APTC for 
one specific tax year. To address the challenge of receiving up-to-date 
information, and to promote continuity of coverage in an Exchange QHP, 
we are proposing a new process for Exchanges to conduct FTR while also 
ensuring that Exchanges preserve program integrity by paying APTC only 
to consumers who are eligible to receive it. HHS believes that any FTR 
process should encourage compliance with the filing and reconciling 
requirement under the Code, minimize the potential for APTC recipients 
to incur large tax liabilities over time, and support eligible 
enrollees' continuous enrollment in Exchange coverage with APTC by 
avoiding situations where enrollees become uninsured when their APTC is 
terminated.
    For Exchanges using the Federal eligibility and enrollment 
platform, which includes the FFEs and SBE-FPs, taxpayers who have not 
met the requirement of Sec.  155.305(f)(4) are put into the FTR process 
with the Exchange. As part of the normal process used by Exchanges 
using the Federal eligibility and enrollment platform during Open 
Enrollment, enrollees for whom IRS data indicates an FTR status for 
their taxpayer receive notices from the Exchange alerting them that IRS 
data shows that their taxpayer has not filed a Federal income tax 
return for the applicable tax year and reconciled APTC for that year 
using IRS Form 8962. FTR Open Enrollment notices sent directly to the 
taxpayer clearly state that IRS data indicates the taxpayer failed to 
file and reconcile, whereas FTR Open Enrollment notices sent to the 
applicant's household contact, who may or may not be the taxpayer, list 
a few different reasons consumers may be at risk of losing APTC, 
including the possibility that IRS data indicates the taxpayer failed 
to file and reconcile. Notices to the applicant's household contact can 
be confusing because of the multiple reasons listed. Both of these Open 
Enrollment notices encourage taxpayers identified as having an FTR 
status to file their Federal income tax return and reconcile their APTC 
for that year using IRS Form 8962, or risk losing APTC eligibility for 
the next coverage year.
    In late 2015, to allow consumers with an FTR status to be 
determined eligible for APTC temporarily (if otherwise eligible), HHS 
added a question to the single, streamlined application used by the 
Exchanges using the Federal eligibility and enrollment platform that 
allows enrollees to attest on their

[[Page 78256]]

application, under the penalty of perjury, that they have filed and 
reconciled their APTC by checking a box that says, ``Yes, I reconciled 
premium tax credits for past years.'' \154\ Enrollees who check this 
attestation and enroll in coverage during Open Enrollment retain their 
APTC, even if IRS data has not been updated to reflect their most 
current Federal income tax filing status or if the individual has not 
actually reconciled their APTC. Allowing enrollees to attest to filing 
and reconciling even though IRS data indicates that they did not, is a 
critical step to safeguard enrollees from losing APTC erroneously as 
the IRS typically takes several weeks to process Federal income tax 
returns, with additional time required for returns or amendments that 
are filed using a paper process.
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    \154\ We note that this question was removed from the single 
streamlined application once the FTR process was paused in 2020 for 
the 2021 PY.
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    After Open Enrollment, Exchanges using the Federal platform then 
conduct a second look at FTR data to follow up and verify an 
enrollee(s)' reconciliation attestation by conducting a verification of 
their taxpayer's FTR status early in the next coverage year, which 
includes additional notices to enrollees and taxpayers. This 
verification process early in the next coverage year is referred to as 
FTR Recheck. State Exchanges that operate their own eligibility and 
enrollment platform have each implemented similar processes to check 
the FTR status of their enrollees annually based on data provided by 
the IRS, to identify and notify enrollees who are at risk of losing 
APTC eligibility, and to allow enrollees to attest under the penalty of 
perjury that they have filed and reconciled their APTC.
    There are many reasons we are proposing the changes to Sec.  
155.305(f)(4) described herein. First, HHS' and State Exchanges' 
experiences with running FTR operations have shown that Exchange 
enrollees often do not understand the requirement that their taxpayer 
must file a Federal income tax return and reconcile their APTC or that 
they must also submit IRS Form 8962 to properly reconcile their APTC, 
even though the single, streamlined application used by Exchanges on 
the Federal platform and QHP enrollment process require a consumer to 
attest to understanding the requirement to file and reconcile in two 
places. For example, HHS is aware anecdotally that many third-party tax 
preparers, such as accountants, are not aware of the requirement to 
file and reconcile, nor prompt consumers to also include IRS Form 8962 
along with their Federal income tax return. Although enrollees who rely 
on third party tax preparers such as accountants or third-party tax 
preparation software to prepare their Federal income tax returns are 
still required to file and reconcile even if their tax preparer was 
unaware of the requirement, consumers should have the opportunity to 
receive additional guidance from Exchanges on the requirement to file 
and reconcile to promote compliance and prevent termination of APTC.
    While annual FTR notices help with this issue as the notices alert 
consumers that they did not provide adequate documentation to fulfill 
the requirement to file and reconcile, the current process that 
requires Exchanges to determine an enrollee ineligible for APTC after 1 
year of having an FTR status is overly punitive. Some consumers may 
have their APTC ended due to delayed data, in which case their only 
remedy is to appeal to get their APTC reinstated. Consumers also may be 
confused or may have received inadequate education on the requirement 
to file and reconcile, in which case they must actually file, 
reconcile, and appeal to get their APTC reinstated. By requiring 
Exchanges to determine an enrollee ineligible for APTC only after 
having an FTR status for two consecutive tax years (specifically, years 
for which tax data would be utilized for verification of household 
income and family size), Exchanges would have more opportunity to 
conduct outreach to consumers whom data indicate have failed to file 
and reconcile to prevent erroneous terminations of APTC and to provide 
access to APTC for an additional year even when APTC would have been 
correctly terminated under the original FTR process. Under the proposed 
change, Exchanges on the Federal platform would continue to send 
notices to consumers for the year in which they have failed to 
reconcile APTC as an initial warning to inform and educate consumers 
that they need to file and reconcile or risk being determined 
ineligible for APTC if they fail to file and reconcile for a second 
consecutive tax year. This change would also alleviate burden on HHS 
hearing officers by reducing the number of appeals related to denial of 
APTC due to FTR, and prevent consumers who did reconcile, but for whom 
IRS data was not updated quickly enough, from having to go through an 
appeal process to have their APTC rightfully reinstated.
    HHS believes in ensuring consumers have access to affordable 
coverage and places high value on consumers maintaining continuity of 
coverage in the Exchange as HHS has found that FFE and SBE-FP enrollees 
who lose APTC tend to end their Exchange coverage and will experience 
coverage gaps, as they cannot afford unsubsidized coverage. In light of 
this, HHS believes it is imperative that any change to the current FTR 
operations be done carefully and that HHS thoughtfully balance how it 
enforces the requirement to file and reconcile, since a consequence of 
losing APTC effectively means many consumers may lose access to needed 
medical care.
    Therefore, given these challenges that both Exchanges and consumers 
have faced with the requirement to file and reconcile, we are proposing 
to revise Sec.  155.305(f)(4) under which Exchanges would not be 
required, or permitted, to determine consumers ineligible for APTC due 
to having an FTR status for only 1 year. Given that HHS's experience 
running FTR shows continued issues with compliance with the requirement 
to file and reconcile, we propose that beginning on January 1, 2024, 
Exchanges must find an applicant ineligible for APTC only if the 
applicant has an FTR delinquent status for two consecutive years 
(specifically, two consecutive years for which tax data would be 
utilized for verification of household income and family size).
    Previously, CMS announced that Exchanges on the Federal platform 
would not act on data from the IRS for enrollees who have failed to 
file Federal income tax returns and reconcile a previous year's APTC 
with the PTC allowed for the year. The guidance also announced 
flexibility for State Exchanges that operate their own eligibility and 
enrollment platforms to take similar action.\155\ Due to the ongoing 
COVID-19 PHE in 2020, for plan year 2021, CMS temporarily paused ending 
APTC for enrollees with an FTR status due to IRS processing delays of 
2019 Federal income tax returns.\156\ CMS then extended this pause for 
the 2023 plan year in July 2022.\157\ As a result of these changes, 55 
percent of enrollees who were automatically re-enrolled during 2021 
open enrollment with an FTR status

[[Page 78257]]

remained enrolled in Exchange coverage as of March 2021. In contrast, 
only 12 percent of those enrollees with an FTR status who were 
automatically re-enrolled without APTC during the 2020 open enrollment 
were still enrolled in coverage as of March 2020. These results show 
the significant impact that loss of APTC due to FTR status has on 
whether enrollees continue to remain in coverage offered through the 
Exchange as these impacted enrollees must pay the full cost of their 
Exchange plan, which is often unaffordable without APTC.
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    \155\ See CMS. (2022, July 18). Failure to File and Reconcile 
(FTR) Operations Flexibilities for Plan Year 2023. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/FTR-flexibilities-2023.pdf.
    \156\ See CMS. (2021, July 23). Failure to File and Reconcile 
(FTR) Operations Flexibilities for Plan Years 2021 and 2022--
Frequently Asked Questions (FAQ). https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/FTR-flexibilities-2021-and-2022.pdf.
    \157\ See CMS. (2022, July 18). Failure to File and Reconcile 
(FTR) Operations Flexibilities for Plan Year 2023. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/FTR-flexibilities-2023.pdf.
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    CMS proposes to continue to pause FTR until the point in time that 
HHS and the IRS will be able to implement the new FTR policy, if 
finalized. That is to say, until the IRS can update its systems to 
implement the new FTR policy, and HHS can notify the Exchange of an 
enrollee's consecutive 2-year FTR status, the Exchange will not 
determine enrollees ineligible for APTC based on either the one-year or 
2-year FTR status. We believe that removing APTC after 2 consecutive 
years of an FTR status instead of one will help consumers avoid gaps in 
coverage by increasing retention in the Exchange even if they have 
failed to reconcile for 1 year, and will reduce the punitive nature of 
the current process which may erroneously terminate APTC for consumers 
who have filed and reconciled. We also believe that these proposed 
changes would help protect consumers from accruing large tax 
liabilities over multiple years by notifying and ending APTC for 
consumers with an FTR status for two consecutive years. Finally, we 
believe these proposed changes would allow Exchanges to maintain 
program integrity by denying APTC to consumers who have, over the 
course of two years, been given ample notification of their obligation 
to file and reconcile and have nevertheless failed to do so.
    We seek comment on this proposal, especially from States or other 
interested parties regarding tax burdens on consumers which would 
inform our decision on this proposal.
5. Verification Process Related to Eligibility for Insurance 
Affordability Programs (Sec. Sec.  155.315 and 155.320)
a. Income Inconsistencies
    We propose to amend Sec.  155.320 to require Exchanges to accept an 
applicant's or enrollee's attestation of projected annual household 
income when the Exchange requests tax return data from the IRS to 
verify attested projected annual household income, but the IRS confirms 
there is no such tax return data available. We further propose to amend 
Sec.  155.315(f) to add that income inconsistencies must receive an 
automatic 60-day extension in addition to the 90 days provided by Sec.  
155.315(f)(2)(ii).
    Section 155.320 sets forth the verification process for household 
income. The Exchange requires that an applicant or enrollee applying 
for financial assistance must attest to their projected annual 
household income. See Sec.  155.320(a)(1) and (c)(3)(ii)(b). The 
regulation also requires that for any individual in the applicant's or 
enrollee's tax household (and for whom the Exchange has a SSN), the 
Exchange must request tax return data regarding income and family size 
from the IRS.\158\ See Sec.  155.320(c)(i)(A). When the Exchange 
requests tax return data from the IRS and the data indicates that 
attested projected annual household income represents an accurate 
projection of the tax filer's household income for the benefit year for 
which coverage is requested, the Exchange must determine eligibility 
for APTC and CSR based on the IRS tax data. See Sec.  
155.320(c)(3)(ii)(C).
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    \158\ The Exchange must also request data regarding Social 
Security Benefits from the Social Security Administration.
---------------------------------------------------------------------------

    When the Exchange requests tax return data from the IRS and the IRS 
returns data that reflects that the attested projected annual household 
income is not an accurate projection of the tax filer's household 
income for the benefit year for which coverage is requested, the 
applicant or enrollee is considered to have experienced a change in 
circumstances, which allows HHS to establish procedures for determining 
eligibility for APTC on information other than IRS tax return data, as 
described in Sec.  155.320(c)(3)(iii)-(vi). See ACA Sec.  1412(b)(2).
    The Exchange also considers an applicant or enrollee to have 
experienced a change in circumstances when the Exchange requests tax 
return data from the IRS to verify attested projected household income, 
but the IRS confirms such data is unavailable. This is because tax data 
is usually unavailable when an applicant or enrollee has experienced a 
change in family size, other household circumstances (such as a birth 
or death), filing status changes (such as a marriage or divorce), or 
the applicant or enrollee was not required to file a tax return for the 
year involved. See Sec.  ACA 1412(b)(2). When an applicant or enrollee 
has experienced a change in circumstances as described in ACA Sec.  
1412(b)(2), the Exchange determines eligibility for APTC and CSR using 
alternate procedures designed to minimize burden and protect program 
integrity, described in Sec.  155.320(c)(3)(iii)-(vi).
    If an applicant or enrollee qualifies for an alternate verification 
process as described above, and the attested projected annual household 
income is greater than the income amount returned by the IRS, the 
Exchange accepts the applicant's attestation without further 
verification under Sec.  155.320(c)(iii)(A). If an applicant qualifies 
for an alternate verification process, and the attested projected 
annual household income is more than a reasonable threshold less than 
the income amount returned by the IRS, or there is no IRS data 
available, the Exchange generates an income inconsistency (also 
referred to as a data matching issue or DMI) and proceeds with the 
process described in Sec.  155.315(f)(1) through (4), unless a 
different electronic data source returns an amount within a reasonable 
threshold of the projected annual household income. See Sec.  
155.320(c)(3)(iv) and (c)(3)(vi)(D). This process usually requires the 
applicant or enrollee to present satisfactory documentary evidence of 
projected annual household income. If the applicant fails to provide 
documentation verifying their projected annual household income 
attestation, the Exchange determines the consumer's eligibility for 
APTC and CSRs based on available IRS data, as required in Sec.  
155.320(c)(3)(vi)(F). However, if there is no IRS data available, the 
Exchange must determine the applicant ineligible for APTC and CSRs as 
required in Sec.  155.320(c)(3)(vi)(G). We propose to make clarifying 
revisions to the current regulations to ensure consistency between the 
regulations and the current operations of the Exchanges on the Federal 
platform, as described here.
    We propose to add Sec.  155.320(c)(5) which would require Exchanges 
to accept an applicant's or enrollee's attestation of projected annual 
household income when the Exchange requests IRS tax return data but IRS 
confirms such data is not available. The current process is overly 
punitive to consumers and burdensome to Exchanges; reasons for IRS not 
returning consumer data can extend beyond the consumer not filing tax 
returns, and can be attributed to tax household composition changes 
(such as birth, marriage, and divorce), name changes, or other 
demographic updates or mismatches--all of which are legitimate changes 
that currently prevent a consumer from avoiding an income

[[Page 78258]]

DMI. Additionally, the consequence of receiving an income DMI and being 
unable to provide sufficient documentation to verify projected 
household income outweighs the intended programmatic benefits: under 
Sec.  155.320(c)(3)(vi)(G) consumers are determined completely 
ineligible for APTC and CSRs. With respect to burden on Exchanges, DMI 
verification by the Exchange requires an outlay of administrative hours 
to monitor and facilitate the resolution of income inconsistencies. 
Within the Federal Platform, this administrative task accounts for 
approximately 300,000 hours of labor annually, which we believe is 
proportionally mirrored by State Exchanges.
    Accordingly, we propose to accept an applicant's or enrollee's 
attestation of projected annual household income when IRS tax return 
data is requested but is not available, and to determine the applicant 
or enrollee eligible for APTC or CSRs in accordance with the 
applicant's or enrollee's attested projected household income, to more 
fairly determine eligibility for consumers and to reduce unnecessary 
burden on Exchanges. This proposal is consistent with Sec.  1412(b)(2) 
of the ACA, which allows the Exchange to utilize alternate verification 
procedures when a consumer has experienced substantial changes in 
income, family size or other household circumstances, or filing status, 
or when an applicant or enrollee was not required to file a tax return 
for the applicable year.\159\ It is also consistent with the 
flexibility under ACA Sec.  1411(c)(4)(B) to modify methods for 
verification of the information where we determine such modifications 
would reduce the administrative costs and burdens on the applicant.
---------------------------------------------------------------------------

    \159\ 42 U.S.C. 18081
---------------------------------------------------------------------------

    We clarify that the Exchange would continue to generate income DMIs 
when IRS tax data is available and the attested projected household 
income amount is more than a reasonable threshold below the income 
amount returned by the IRS, and other sources cannot provide income 
data within the reasonable threshold. Additionally, the Exchange would 
continue to generate income DMIs when IRS tax data cannot be requested, 
because an applicant or enrollee did not provide sufficient information 
(namely, a social security number), and other sources cannot provide 
income data within the reasonable threshold of the attested projected 
household income. Under Sec.  1411(c)(3) of the ACA, only data from the 
IRS is required to be used to determine if income is inconsistent. 
Currently, there are no reliable and accurate income data sources 
legally available to the Exchange that would provide quality data for 
the purpose of generating income DMIs. Income data from other 
electronic data sources may continue to be used by Exchanges to verify 
income when the attested projected household income amount is more than 
a reasonable threshold below the income amount returned by the IRS or 
IRS data cannot be requested.
    Lastly, we propose to revise Sec.  155.315(f) to add new paragraph 
(f)(7) to require that applicants must receive an automatic 60-day 
extension in addition to the 90 days currently provided by Sec.  
155.315(f)(2)(ii) to allow applicants sufficient time to provide 
documentation to verify household income. The extension would be 
automatically granted when consumers exceed the allotted 90 days 
without resolving any active household income DMIs. This proposal 
aligns with current Sec.  155.315(f)(3), which provides extensions to 
applicants beyond the existing 90 days if the applicant demonstrates 
that a good faith effort has been made to obtain the required 
documentation during the period. It is also consistent with the 
flexibility under ACA Sec.  1411(c)(4)(B) to modify methods for 
verification of the information where we determine such modifications 
would reduce the administrative costs and burdens on the applicant.
    We have found that 90 days is often an insufficient amount of time 
for many applicants to provide this income documentation, since it can 
require multiple documents from various household members along with an 
explanation of seasonal employment or self-employment, including 
multiple jobs. As applicants are asked to provide a projection for 
their next year's income, they often submit documents that do not fully 
explain their attestation due to the complexities noted above, which 
requires contact from the Exchange and additional document submission, 
which often pushes the verification timeline past 90 days. An 
additional 60 days would allow consumers more time to gather multiple 
documents from multiple sources, and also allows time for back and 
forth review with the Exchange. The majority of households with income 
DMIs are low income and consumers often have multiple sources of 
employment that can change frequently. Therefore, collecting and 
submitting documentation to verify projected household income is 
extremely complicated and difficult. The proposed extension would 
provide consumers with necessary time to gather and submit sufficient 
documentation to verify projected household income. The current 
authority allowing for the granting of extensions is applied on a case 
by case basis and requires the consumers to demonstrate difficulty 
before the 90- day deadline, which does not address the need for 
additional time more broadly for households with income DMIs.
    A review of income DMI data indicates that when consumers receive 
additional time, they are more likely to successfully provide 
documentation to verify their projected household income. Between 2018 
and 2021, over one third of consumers who resolved their income DMIs on 
the Exchange did so in more than 90 days. These consumers were provided 
additional time under Sec.  155.315(f)(3), but the extension under this 
existing provision places the burden on the consumer to obtain more 
time to submit documentation. The proposed extension would treat 
consumers more equitably and would take into consideration the 
complicated process of obtaining and submitting income documents for 
these households. We believe the proposed extension would provide more 
opportunity to work with consumers to submit the correct documentation 
to verify their projected annual household income. Extensions enabled 
HHS to determine eligibility for more consumers truly eligible for 
coverage. HHS continues to study consumer behavior in resolving 
consistencies to continue to support accurate eligibility 
determination.
    HHS has found that income DMIs have a negative impact on access, 
health equity, and the risk pool. Per a review of PY 2022 data, the 
majority of income DMIs disproportionately impacted households with 
lower attested household income. Among households with an income DMI in 
PY 2022, more than 60 percent attested to a household income of less 
than $25,000; compared to households without an income DMI, where only 
about 40 percent attested to household income less than $25,000. 
Additionally, households with an attested household income below 
$25,000 successfully submitted documentation to verify their income 25 
percent less often than households with higher household incomes.
    Income DMIs also may pose a strain on populations of color. A 
review of available data indicates that income DMI expirations are 
higher than expected among Black or African American consumers. 
Further, the proposed changes would ensure that all consumers are able 
to continue to have access to more affordable coverage by continuing to 
receive their APTC, which

[[Page 78259]]

also supports HHS' goal of consumers maintaining continuous coverage.
    Income DMIs also negatively impact the risk pool. When households 
are unable to submit documentation to verify their household income and 
lose eligibility for APTC, they are much more likely to drop coverage 
since they must pay the entire monthly premium, which in many cases may 
be significantly more than the premium minus the APTC. We found that 
consumers who were unable to submit sufficient documentation to verify 
their income and lost their eligibility for APTC were half as likely as 
other consumers to remain covered through the end of the plan year. 
Consumers aged 25-35 were the age group most likely to lose their APTC 
eligibility due to an income DMI, resulting in a loss of a population 
that, on average, has a lower health risk, thereby negatively impacting 
the risk pool. This finding underscores the importance of consumers 
being provided ample time to resolve their Income DMIs in order to 
support HHS' commitment to advancing health equity for consumers 
participating in the Exchange.
    Given the information we have on the negative and disproportionate 
impacts of income DMIs, we are proposing to adjust the household income 
verification requirements in order to treat consumers more equitably, 
help ensure continuous coverage, and strengthen the risk pool. If the 
proposed changes are finalized, Exchanges would utilize only data from 
the IRS to determine if income is inconsistent and would accept 
attestation when tax return data is requested from IRS but not 
returned. In cases where the IRS returns tax data that reflects that 
the attested projected annual household income is not an accurate 
projection of the tax filer's household income, Exchanges would 
continue existing operations. Additionally, Exchanges would utilize the 
additional time provided to work with consumers to submit documentation 
to verify their projected annual household income. While the increased 
protection for consumers from loss of eligibility for APTC could 
present a program integrity risk, households are required to provide 
true answers to application questions under penalty of perjury. 
Additionally, HHS does not believe that individuals with a mismatch due 
to situations such as family size change have a greater incentive to 
misreport income than their counterparts, given that changes in family 
size and other changes in circumstances are unlikely to be correlated 
with income misreporting incentives. HHS will continue to engage with 
partners to evaluate the impact of this proposal on APTC accuracy.
    We seek comment on these proposals.
6. Annual Eligibility Redetermination (Sec.  155.335)
    We propose amending Sec.  155.335(j)(1) and (2) to allow Exchanges, 
beginning for PY 2024, to modify their re-enrollment hierarchies such 
that enrollees who are eligible for CSRs in accordance with Sec.  
155.305(g) and who would otherwise be automatically re-enrolled in a 
bronze-level QHP without CSRs, to instead be automatically re-enrolled 
in a silver-level QHP (with income-based CSRs) in the same product with 
a lower or equivalent premium (after APTC), provided that certain 
conditions are met.\160\ Furthermore, we propose to amend the Exchange 
re-enrollment hierarchy to allow all Exchanges (Exchanges on the 
Federal platform and SBEs) to ensure enrollees whose QHPs are no longer 
available to them and enrollees who would be re-enrolled into a silver-
level QHP in order to receive income-based CSRs are re-enrolled into 
plans with the most similar network to the plan they had in the 
previous year, provided that certain conditions are met. To honor other 
criteria the enrollee may have used to make the original selection, we 
propose to limit re-enrollment of such enrollees into plans offered by 
the same issuer and of the same product if the enrollee's plan and 
product remains available through the Exchange for renewal consistent 
with Sec.  147.106. We propose that Exchanges (including Exchanges on 
the Federal platform and SBEs) would implement this option beginning 
with the open enrollment period for plan year 2024 coverage, if 
operationally feasible, and if not then beginning with the open 
enrollment period for plan year 2025 coverage.
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    \160\ Under Sec.  144.103, a product is defined as a discrete 
package of health insurance coverage benefits that are offered using 
a particular product network type (such as health maintenance 
organization, preferred provider organization, exclusive provider 
organization, point of service, or indemnity) within a service area.
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    The re-enrollment hierarchy previously prioritized placing an 
enrollee in a similar metal level; however, HHS now believes other 
factors, such as access to income-based CSRs and net premium (that is, 
premium minus the APTC), should also be taken into account. As 
discussed later, HHS is considering whether for future years it would 
be appropriate to modify the re-enrollment process to incorporate both 
net premium and out-of-pocket costs attributable to cost sharing 
(referred to in this preamble as total out-of-pocket cost) when both 
directing re-enrollment to a plan at the same metal level as the 
enrollee's current QHP and directing re-enrollment to a plan at a 
higher metal level than the enrollee's current QHP in all 
Exchanges.\161\ \162\
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    \161\ As defined at Sec.  155.20, cost sharing means any 
expenditure required by or on behalf of an enrollee with respect to 
essential health benefits; such term includes deductibles, 
coinsurance, copayments, or similar charges, but excludes premiums, 
balance billing amounts for non-network providers, and spending for 
non-covered services.
    \162\ Total out-of-pocket costs could also include balance 
billing amounts, but for purposes of this preamble, we use the term 
total out-of-pocket costs to refer to net premium and out-of-pocket 
costs attributable to amounts such as coinsurance, copayments, and 
deductibles.
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    In the 2014 Patient Protection and Affordable Care Act; Annual 
Eligibility Redeterminations for Exchange Participation and Insurance 
Affordability Programs; Health Insurance Issuer Standards Under the 
Affordable Care Act, Including Standards Related to Exchanges (79 FR 
52994, 52998 through 53001), we established the Exchange re-enrollment 
hierarchy at Sec.  155.335(j) with the goal of ensuring continuous 
coverage for consumers who opt not to make an active plan selection for 
the upcoming year. In paragraph (j)(1), we finalized that if an 
enrollee remains eligible for enrollment in a QHP through the Exchange 
upon annual redetermination, and the product under which the QHP in 
which the enrollee was enrolled remains available for renewal, 
consistent with Sec.  147.106, such enrollee will have his or her 
enrollment in a QHP through the Exchange under the product renewed 
unless he or she terminates coverage, including termination of coverage 
in connection with voluntarily selecting a different QHP, in accordance 
with Sec.  155.430. We further finalized that the QHP in which the 
enrollee's coverage will be renewed will be selected according to the 
following order of priority: (1) in the same plan as the enrollee's 
current QHP, unless the current QHP is not available through the 
Exchange; (2) if the enrollee's current QHP is not available, the 
enrollee's coverage will be renewed in a QHP at the same metal level as 
the enrollee's current QHP within the same product; (3) if the 
enrollee's current QHP is not available through the Exchange and the 
enrollee's product no longer includes a QHP at the same metal level as 
the enrollee's current QHP, the enrollee's coverage will be renewed in 
a plan that is one metal level higher or lower than the enrollee's 
current QHP (with the exception of when the enrollee's current QHP is a 
silver level

[[Page 78260]]

plan); or (4) if the enrollee's current QHP is not available through 
the Exchange and the enrollee's product no longer includes a QHP that 
is at the same metal level as, or one metal level higher or lower, than 
the enrollee's current QHP, the enrollee's coverage will be renewed in 
any other QHP offered under the product in which the enrollee's current 
QHP is offered in which the enrollee is eligible to enroll.\163\
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    \163\ Under Sec.  155.335(j)(1)(iii)(A), if the enrollee's 
current QHP is not available through the Exchange and the enrollee's 
product no longer includes a QHP at the same metal level as the 
enrollee's current QHP and the enrollee's current QHP is a silver 
level plan, the enrollee will be re-enrolled in a silver level QHP 
under a different product offered by the same QHP issuer that is 
most similar to the enrollee's current product. If no such silver 
level QHP is available for enrollment through the Exchange, the 
enrollee's coverage will be renewed in a QHP that is one metal level 
higher or lower than the enrollee's current QHP under the same 
product.
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    Under paragraph (j)(2), we finalized standards to address re-
enrollment in situations in which no plans under the product under 
which an enrollee's QHP is offered are available through the Exchange 
for renewal. In this situation, the enrollee may be enrolled in a QHP 
under a different product offered by the same issuer, to the extent 
permitted by applicable State law, unless the enrollee terminates 
coverage including termination of coverage in connection with 
voluntarily selecting a different QHP. In such cases, the re-enrollment 
will occur according to the following order of priority: (1) in a QHP 
through the Exchange at the same metal level as the enrollee's current 
QHP in the product offered by the same issuer that is the most similar 
to the enrollee's current product; (2) if the issuer does not offer 
another QHP through the Exchange at the same metal level as the 
enrollee's current QHP, the enrollee will be re-enrolled in a QHP 
through the Exchange that is one metal level higher or lower than the 
enrollee's current QHP in the product offered by the same issuer 
through the Exchange that is the most similar to the enrollee's current 
product; or (3) if the issuer does not offer another QHP through the 
Exchange at the same metal level as, or one metal level higher or lower 
than the enrollee's current QHP, the enrollee will be re-enrolled in 
any other QHP offered through the Exchange by the same issuer in which 
the enrollee is eligible to enroll.
    In the 2017 Payment Notice (81 FR 12203), we finalized the rule to 
provide for automatic re-enrollment in a QHP offered by another issuer 
through the Exchange in order to maintain coverage with APTC and 
income-based CSRs for the majority of Exchange enrollees who are 
receiving these subsidies, as opposed to permitting a QHP issuer that 
no longer has a QHP available to an enrollee through an Exchange to re-
enroll the enrollee outside the Exchange. Specifically, we established 
that, beginning in PY 2017, if no QHP from the same issuer is available 
to enrollees through the Exchange, the Exchange could direct alternate 
enrollments for such enrollees to the extent permitted by applicable 
State law into a QHP from a different issuer. In such cases, the re-
enrollment will occur as directed by the applicable State regulatory 
authority, or, if the applicable State regulatory authority declines to 
direct this activity, such alternate enrollments would be directed by 
the Exchange. This rule provides considerable flexibility to Exchanges 
to specify the logic that will be used to assign enrollees in this 
situation to specific plans.
    In the 2023 Payment Notice (87 FR 27208, 27273), HHS announced it 
would consider proposing amendments to the Exchange re-enrollment 
hierarchy in future rulemaking and would take into account comments 
received. In the preamble to the 2023 Payment Notice proposed rule (87 
FR 584, 652), we solicited comments on incorporating the net premium, 
maximum out-of-pocket amount (MOOP), deductible, and total out-of-
pocket cost of a plan into the Exchange re-enrollment hierarchy.\164\ 
We also solicited comments on additional criteria or mechanisms HHS 
could consider to ensure that the Exchange hierarchy for re-enrollment 
aligns with plan generosity and consumer needs (87 FR at 652). 
Additionally, we sought comment on the following examples: (1) re-
enrolling a current bronze QHP enrollee into an available silver QHP 
with a lower net premium and higher plan generosity (that is, a higher 
metal level) offered by the same QHP issuer; and (2) 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, which has lower 
total out-of-pocket cost (87 FR at 652). As described in further detail 
later, we propose to codify example (1) described above by amending 
Sec.  155.335(j)(1) and (2) to allow Exchanges, beginning for PY 2024, 
to modify their re-enrollment hierarchies such that enrollees who are 
eligible for CSRs in accordance with Sec.  155.305(g) and who would 
otherwise be automatically re-enrolled in a bronze-level QHP without 
CSRs, would instead be automatically re-enrolled in a silver-level QHP 
(with income-based CSRs) in the same product with a lower or equivalent 
premium after APTC. We believe initially limiting the scope to only 
income-based CSR-eligible enrollees who are currently in a bronze QHP 
and have a lower cost silver CSR QHP available would allow issuers and 
Exchanges to incrementally update their processes, as opposed to 
incorporating net premium and out-of-pocket cost (OOPC) throughout the 
hierarchy for PY 2024.
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    \164\ MOOP refers to the limit on cost sharing an enrollee has 
to pay for covered services in a plan year. After the enrollee 
spends this amount on cost sharing for in-network essential health 
benefits, the health plan pays 100 percent of the costs of covered 
essential health benefits. For purposes of this section of preamble, 
the term total out-of-pocket costs refers to net premium and out-of-
pocket costs attributable to cost sharing and excludes any costs 
attributable to balance billing.
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    We received substantial comments from diverse interested parties 
and have carefully considered these comments. Several commenters 
encouraged HHS to take net premium or total out-of-pocket cost into 
account for the re-enrollment hierarchy. Many commenters supported 
amending Sec.  155.335(j)(1)(i) to allow the enrollee to be re-enrolled 
into a different plan with a lower net premium and higher generosity if 
there is no change in the issuer, product, service area, and provider 
network. 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 they allow 
consumers to be re-enrolled in a plan with far higher costs if the 
issuer and provider networks types are prioritized. Commenters 
explained that the current policy does not provide flexibility for 
enrollees to be re-enrolled into a different plan even if a change in 
market conditions has significantly raised the old plan's cost to the 
enrollees. Further, commenters stated that the majority of enrollees 
who do not shop at all during the Open Enrollment Period (OEP) care 
more about cost than the issuer or provider network. More specifically, 
commenters cited research on plans sold through Covered California that 
showed, on average, families in California were charged an extra $466 a 
year in annual premiums as a result of remaining with a plan that no 
longer served their interests. Commenters stated that including total 
out-of-pocket cost and plan generosity into re-enrollment rules would 
be particularly beneficial for situations when enrollees are eligible 
for

[[Page 78261]]

cost-sharing reductions and are not enrolled in a silver plan.
    Commenters also recommended that provider network considerations be 
incorporated into any revised re-enrollment hierarchy. Specifically, 
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 plan. Some commenters urged the Exchange to provide 
accessible notices and reasonable opportunities for the consumer to 
return to their former plan or drop coverage. Commenters also mentioned 
the importance of enhancing the consumer shopping experience and 
decision support tools to improve consumer understanding, particularly 
around cost sharing. In the 2023 Payment Notice, HHS did not finalize 
any changes to Sec.  155.335(j).
    HHS is aware of interested parties' concerns that enrollees in the 
Exchanges on the Federal platform may fail to return to the Exchange to 
make an active plan selection in situations in which changing plans 
could be beneficial to the enrollee, and that re-enrollment rules may 
default enrollees into less beneficial plans than other available 
plans. Currently, the Federal hierarchy for re-enrollment ensures an 
enrollee's coverage will be renewed in the same plan as the enrollee's 
current QHP, unless the current QHP is not available through the 
Exchange. If the enrollee's current QHP is no longer available through 
the Exchange, the Federal hierarchy prioritizes the same metal level 
and product network type in order to determine the most similar plans 
within the same service area. However, if that is not an option, an 
enrollee will be re-enrolled in a QHP that is one metal level lower or 
higher within the same service area (with the exception of silver 
plans). In the 2022 OEP, 28 percent of returning Exchange enrollees 
using the HealthCare.gov platform were auto re-enrolled.\165\
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    \165\ CMS (2021, April 21). 2022 Marketplace Open Enrollment 
Public Use Files. https://www.cms.gov/research-statistics-data-systems/marketplace-products/2021-marketplace-open-enrollment-period-public-use-files.
---------------------------------------------------------------------------

    The current hierarchy assumes that the same metal level would be 
least disruptive to enrollees in terms of premium and coverage. 
However, in some instances it may be to the enrollee's advantage to 
move to a different metal level. For example, for PY 2022, 
approximately 110,000 consumers who were automatically re-enrolled also 
had available to them a plan at one metal level higher than their 
current plan in the same product from the same issuer with the same 
network that had a lower net premium \166\ More specifically, 
approximately 38,000 consumers who were automatically re-enrolled into 
bronze plans also had available a silver-level plan in the same product 
from the same issuer with the same network that had lower total costs. 
Furthermore, the Federal hierarchy does not consider the availability 
of lower premium plans at the same metal level under the same product 
as the enrollee's current QHP. Directing re-enrollment into lower or 
same cost, higher metal level plans would place enrollees in more 
affordable plans with lower out-of-pocket costs, which would lower 
health insurance costs for those lower-income (CSR-eligible) 
individuals. Currently, a large majority of Hispanic, Black, and Asian 
enrollees using the HealthCare.gov platform are in the 94 or 87 percent 
CSR-eligible populations (68, 66, and 62 percent, respectively).\167\ 
As such, re-enrolling enrollees who would otherwise be automatically 
re-enrolled in a bronze-level QHP without CSRs, into a silver-level QHP 
(with income-based CSRs) may also improve coverage and affordability 
for racial and ethnic minorities. Interested parties have emphasized 
the critical importance of automatic re-enrollment policies for 
immigrants and racial and ethnic minorities who may face greater 
challenges in understanding and accessing the active re-enrollment 
process, and who are disproportionately impacted by cost increases due 
often to lower wealth and discretionary income. While the vast majority 
of re-enrollees through HealthCare.gov actively select a plan for the 
upcoming year during the open enrollment period, some remain in their 
auto re-enrollment plan.
---------------------------------------------------------------------------

    \166\ CMS. (2022). Internal Eligibility and Enrollment Data.
    \167\ CMS. (2021, October). Internal Eligibility and Enrollment 
Data.
---------------------------------------------------------------------------

    We are aware that some number of enrollees who are automatically 
re-enrolled are eligible for income-based CSRs (or become eligible for 
these CSRs through the annual redetermination process under this 
section), but remain enrolled in a bronze-level QHP, under which they 
cannot receive income-based CSRs. Further, we know that in some cases, 
a silver-level QHP in the same product, with the same issuer and 
network and lower or equivalent premiums, is available. In order to 
assist these enrollees in obtaining access to income-based CSRs given 
their eligibility, and without additional net premium, we propose 
revisions at Sec.  155.335(j). All of these considerations informed our 
decision to propose the following revisions to the re-enrollment 
hierarchy at Sec.  155.335(j), as well as our specific approach for 
implementing these requirements.
    We propose revising Sec.  155.335(j)(1)(i) and adding paragraphs 
(j)(1)(i)(A), (B), and (C) to amend the Exchange re-enrollment 
hierarchy for enrollment in coverage beginning in PY 2024. 
Specifically, we propose that, if the enrollee's current QHP is 
available and: (1) the enrollee is not CSR-eligible, in accordance with 
Sec.  155.305(g), the Exchange will re-enroll the enrollee in the same 
plan as the enrollee's current QHP (paragraph (j)(1)(i)(A)); (2) the 
enrollee is CSR-eligible, in accordance with Sec.  155.305(g), and the 
enrollee's current QHP is a bronze level plan, the Exchange will re-
enroll the enrollee either in the same plan as the enrollee's current 
QHP, or, at the option of the Exchange, in a silver level QHP within 
the same product that has a lower or equivalent premium after APTC and 
that has the most similar network compared to the enrollee's current 
QHP (paragraph (j)(1)(i)(B)); and (3) the enrollee is CSR-eligible, in 
accordance with Sec.  155.305(g), and the enrollee's current QHP is not 
a bronze level plan, the Exchange will re-enroll the enrollee in the 
same plan as the enrollee's current QHP (paragraph (j)(1)(i)(C)). With 
respect to current operations, the only effective change to the re-
enrollment hierarchy would be the change proposed in paragraph 
(j)(1)(i)(B). HHS does not propose to shift enrollment out of the 
enrollee's current product or issuer if the enrollee's current product 
and/or issuer are available through the Exchange. We believe retaining 
coverage in the enrollee's current product when available is important 
in order to honor the various criteria the enrollee may have used to 
make the original selection and ensure there is no disruption to the 
enrollee's benefit coverage, such as the product network type (for 
example, HMO, PPO, etc.) and covered items and services. Furthermore, 
we believe it is of particular importance to ensure the enrollee's 
specific provider coverage is maintained beyond a product's provider 
network type when the enrollee is being auto re-enrolled into a 
different QHP than their current QHP.
    We also propose amending paragraphs (j)(1)(ii) through (iv), which 
outline the steps for re-enrollment determinations when the enrollee's 
current QHP is no longer available and the enrollee's current product 
is still available through the Exchange for renewal. Specifically, we 
propose revising paragraph (j)(1)(ii) by adding

[[Page 78262]]

paragraphs (j)(1)(ii)(A), (B), and (C) to specify for enrollment in 
coverage beginning in PY 2024, that if the enrollee's current QHP is 
not available through the Exchange and: (1) the enrollee is not CSR-
eligible, in accordance with Sec.  155.305(g), the Exchange will re-
enroll the enrollee in a QHP within the same product, at the same metal 
level and that has the most similar network compared to the enrollee's 
current QHP (paragraph (j)(1)(ii)(A)); (2) the enrollee is CSR-
eligible, in accordance with Sec.  155.305(g), and the enrollee's 
current QHP is a bronze level plan, the Exchange will re-enroll the 
enrollee in a bronze level QHP within the same product, or, at the 
option of Exchange, in a silver level QHP within the same product that 
has a lower or equivalent premium after APTC and that has the most 
similar network compared to the enrollee's current QHP (paragraph 
(j)(1)(ii)(B)); and (3) the enrollee is CSR-eligible, in accordance 
with Sec.  155.305(g), and the enrollee's current QHP is not a bronze 
level plan, the Exchange will re-enroll the enrollee in a QHP within 
the same product at the same metal level and that has the most similar 
network compared to the enrollee's current QHP (paragraph 
(j)(1)(ii)(C)).
    We also propose amending paragraphs (j)(1)(iii)(A) through (B), 
which outline the re-enrollment rules when the enrollee's current QHP 
is not available through the Exchange and the enrollee's product no 
longer includes a QHP at the same metal level as the enrollee's current 
QHP. Specifically, we propose, beginning for PY 2024, amending 
paragraphs (j)(1)(iii)(A) and (B) to require if: (1) the enrollee's 
current QHP is a silver level plan, the Exchange will re-enroll the 
enrollee in a silver level QHP under a different product offered by the 
same QHP issuer that is most similar to and that has the most similar 
network compared to the enrollee's current product; if no such silver 
level QHP is available for enrollment through the Exchange, the 
Exchange will re-enroll the enrollee in a QHP under the same product 
that is one metal level higher or lower than the enrollee's current QHP 
and that has the most similar network compared to the enrollee's 
current QHP (paragraph (j)(1)(iii)(A)); and (2) the enrollee's current 
QHP is not a silver level plan, the Exchange will re-enroll the 
enrollee in a QHP under the same product that is one metal level higher 
or lower than the enrollee's current QHP and that has the most similar 
network compared to the enrollee's current QHP (paragraph 
(j)(1)(iii)(A)).
    We propose amending paragraph (j)(1)(iv), which outlines the re-
enrollment rules when the enrollee's current QHP is not available 
through the Exchange and the enrollee's product no longer includes a 
QHP at the same metal level as, or one metal level higher or lower 
than, the enrollee's current QHP. We propose, adding to paragraph 
(j)(1)(iv) which would provide, beginning for PY 2024, if the 
enrollee's current QHP is not available through the Exchange and the 
enrollee's product no longer includes a QHP that is at the same metal 
level as, or one metal level higher or lower than the enrollee's 
current QHP, the Exchange will re-enroll the enrollee in any other QHP 
offered under the product in which the enrollee's current QHP is 
offered in which the enrollee is eligible to enroll that has the most 
similar network compared to the enrollee's current QHP.
    We propose amending paragraphs (j)(2)(i) through (iii), which 
outlines the re-enrollment rules when the enrollee's current product is 
no longer available through the Exchange for renewal. Specifically, we 
propose to amend paragraph (j)(2)(i) to provide, beginning for the PY 
2024, that if the enrollee is not CSR eligible, the Exchange will re-
enroll the enrollee in a QHP in the product offered by the same issuer 
that is the most similar to the enrollee's current product at the same 
metal level as and with the most similar network compared to the 
enrollee's current QHP. We propose revising and redesignating paragraph 
(j)(2)(ii) as paragraph (j)(2)(iv), which would require, if the issuer 
does not offer another QHP at the same metal level as the enrollee's 
current QHP, the Exchange will re-enroll the enrollee in a QHP that is 
one metal level higher or lower than the enrollee's current QHP and 
that has the most similar network compared to the enrollee's current 
QHP in the product offered by the same issuer through the Exchange that 
is the most similar to the enrollee's current product. We propose to 
add a new paragraph (j)(2)(ii) to establish that if the enrollee is 
CSR-eligible, in accordance with Sec.  155.305(g), and the enrollee's 
current QHP is a bronze level plan, the Exchange will re-enroll the 
enrollee in a bronze level QHP, or, at the option of the Exchange, in a 
silver level QHP that has a lower or equivalent premium after APTC and 
that has the most similar network compared to the enrollee's current 
QHP in the product offered by the same issuer through the Exchange that 
is most similar to the enrollee's current product.
    We also propose, beginning for PY 2024, revising and redesignating 
paragraph (j)(2)(iii) as paragraph (j)(2)(v), which would state that if 
the issuer does not offer another QHP through the Exchange at the same 
metal level as, or one metal level higher or lower than the enrollee's 
current QHP, the Exchange will re-enroll the enrollee in any other QHP 
offered by the same issuer in which the enrollee is eligible to enroll 
in the product that is most similar to the enrollee's current product 
and in a QHP within that product that has the most similar network to 
the enrollee's current QHP. Lastly, we propose to add a new paragraph 
(j)(2)(iii) to establish that if the enrollee is CSR-eligible, in 
accordance with Sec.  155.305(g), and the enrollee's current QHP is not 
a bronze level plan, the Exchange will re-enroll the enrollee in a QHP 
at the same metal level that has the most similar network compared to 
the enrollee's current QHP in the product offered by the same issuer 
that is the most similar to the enrollee's current product.
    We believe that enrollees are best able to make plan selections 
themselves, and outreach from the Exchanges on the Federal platform 
always encourages enrollees to actively return, provide their latest 
eligibility information, and shop and compare Exchange plans to make 
the selection that best meets their needs. Income-based CSR-eligible 
enrollees in Exchanges on the Federal platform who are subject to the 
proposed policy would receive a notice from the Exchange advising them 
that they will be re-enrolled into a silver plan if they do not make an 
active selection on or before December 15th, and would also see the 
silver plan highlighted in the online shopping experience if they 
return on or before December 15th to review their options. The notice 
would also inform the enrollee that if they prefer to keep their bronze 
plan, they can actively select it through December 15th, for an 
effective date of January 1st. Enrollees in Exchanges on the Federal 
platform who do not make an active selection on or before December 15th 
would receive an additional communication from the Exchange after 
December 15th reminding them of their new plan enrollment for January 
1st, as well as their ability to make a different plan selection by 
January 15th that would be effective starting February 1st.
    This proposal is consistent with the 2014 Patient Protection and 
Affordable Care Act; Annual Eligibility Redeterminations for Exchange 
Participation and Insurance Affordability Programs; Health

[[Page 78263]]

Insurance Issuer Standards Under the Affordable Care Act, Including 
Standards Related to Exchanges (79 FR 52994, 53001) explanation of the 
guaranteed renewability provisions at Sec.  147.106. If a product 
remains available for renewal, including outside the Exchange, the 
issuer must renew the coverage within the product in which the enrollee 
is currently enrolled at the option of the enrollee, unless an 
exception to the guaranteed renewability requirements applies. However, 
to the extent that the issuer is subject to Sec.  155.335(j) with 
regard to an enrollee's coverage through the Exchange, the issuer must, 
subject to applicable State law regarding automatic re-enrollments, 
automatically enroll the enrollee in accordance with the re-enrollment 
hierarchy, even where that results in re-enrollment in a plan under a 
different product offered by the same QHP issuer through the Exchange. 
Enrollments completed pursuant to Sec.  155.335(j) will be considered 
to be a renewal of the enrollee's coverage, provided the enrollee also 
is given the option to renew coverage within his or her current product 
outside the Exchange. This proposal is intended to provide greater 
financial security to bronze plan enrollees who do not actively re-
enroll and may not be aware that a more generous silver plan at the 
same or lesser cost may be available with dramatically more costs 
covered by the plan. Additionally, some of these consumers may have 
been initially enrolled before more generous APTC became available with 
the passage of the ARP,\168\ and may not have been initially income-
based CSR-eligible when they first enrolled, or may have been helped by 
an agent, broker or assister who did not adequately explain the 
benefits of silver enrollment for CSR-eligible enrollees. This proposal 
would assist bronze enrollees who may be less engaged and are not aware 
that a more generous version of their plan was available at the same or 
lesser cost.
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    \168\ With the passage of the IRA, these enhanced subsidies have 
been extended for an additional three years (through 2025).
---------------------------------------------------------------------------

    Additionally, we note that HHS is not proposing any changes to SEP 
eligibility or duration in connection with the proposed changes at 
Sec.  155.335(j). Currently, under Sec.  155.420(d)(1)(i), a qualified 
individual is eligible for a SEP to enroll in or change from one QHP to 
another if the qualified individual loses MEC, which includes when an 
enrollee's current product is no longer available for renewal. As such, 
it is not considered a loss of MEC when an enrollee is re-enrolled from 
a bronze QHP to a silver QHP within the same product and their current 
plan is still available. We also note that consistent with longtime 
binder payment policy for Exchange enrollees, auto re-enrollment into a 
different plan or product with the same issuer that offers their 
current plan would not require enrollees with already effectuated 
coverage to make a new binder payment. This means, for example, that a 
CSR-eligible bronze plan enrollee receiving APTC who is auto re-
enrolled in a silver plan offered by the same issuer as their current 
bronze plan would enter the 3-month APTC grace period if they were late 
on paying for January coverage in the future year.\169\
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    \169\ Please refer to the following for further explanation on 
binder payments and re-enrollment: CMS. (2022, July 28). 2022 
Federally-facilitated Exchange (FFE) and Federally-facilitated Small 
Business Health Options Program (FF-SHOP) Enrollment Manual. 
(Exhibit 12, pp. 33-37, and p. 87). https://www.hhs.gov/guidance/document/2022-enrollment-manual.
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    We acknowledge the operational complexities issuers and States may 
face as a result of these proposed changes. Issuers would continue to 
identify the re-enrollment plan for all enrollees still served by the 
issuer in the new plan year, except that the Exchange would identify 
the silver re-enrollment plan for bronze enrollees if those enrollees 
were redetermined CSR eligible in accordance with Sec.  155.305(g). In 
order to ensure enrollees are auto re-enrolled in a plan with the most 
similar network to their current QHP, in the situations where the 
enrollee would not be auto re-enrolled into their current QHP, HHS 
would place enrollees into a plan with the same network ID as their 
current QHP, if possible. Similar to the current Plan ID Crosswalk 
process, issuers would be able to submit justifications for HHS review 
if they believed a different network ID in the following plan year had 
the most similar network to the enrollee's current QHP.\170\ Exchanges 
and State regulators would have a more complicated analysis in assuring 
that the issuer-identified re-enrollment plan was consistent with the 
proposed premium and network requirements at Sec.  155.335(j). However, 
we believe incorporating net premium and provider networks into re-
enrollment determinations would help ensure the hierarchy for re-
enrollment in all Exchanges takes into account plan generosity and 
consumer needs beyond merely the retention of the most similar plan 
available. The Exchanges would need to develop new Exchange notices to 
provide the enrollees advance and sufficient notice that their plan 
will change unless they return during open enrollment, and would seek 
to improve other existing notices, as applicable, to improve 
transparency and enrollees' understanding of their re-enrollment 
options. We believe it is important to ensure re-enrollment rules 
default consumers into lower-cost or more generous plans; promote 
consumer access to affordable, high-quality coverage; and increase 
consumer understanding of their re-enrollment options by developing 
additional consumer notices and guidance.
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    \170\ CMS (2022). Qualified Health Plan Certification Website. 
https://www.qhpcertification.cms.gov/s/Plan%20Crosswalk.
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    We seek comment on this proposal. We also seek comments on using 
network IDs to determine the most similar network. Consistent with the 
definition of a product at Sec.  144.103, the product ID accounts for 
different product network types (for example, HMO, PPO, etc.) whereas 
network IDs account for specific provider differences. As discussed 
earlier, in situations where the enrollee would not be auto re-enrolled 
into their current QHP, HHS intends to place enrollees into a plan with 
the same network ID as their current QHP to ensure enrollee are being 
auto re-enrolled into plans with the most similar network. We 
particularly solicit comments on how States review network IDs and the 
criteria or thresholds States use to determine whether a new network ID 
is warranted, for example, whether States require that an issuer create 
a new network ID if there is a five percent difference in the providers 
covered under a network.
    Additionally, HHS is considering whether for future years it would 
be appropriate to incorporate net premium and total out-of-pocket cost 
throughout the Exchange re-enrollment hierarchy. We solicit comments on 
amending the hierarchy at Sec.  155.335(j), for future plan years, to 
also allow the Exchange take the following actions in the following 
circumstances: (1) if the enrollee's current plan is not available, 
regardless of income-based CSR eligibility, direct re-enrollment to a 
plan at a higher metal level than their current QHP, with a lower or 
equivalent net premium and total out-of-pocket cost, within the same 
product, network, and QHP issuer; (2) if the enrollee's current plan is 
not available and the enrollee does not have a plan at a higher metal 
level than their current QHP with a lower or equivalent net premium and 
total out-of-pocket cost, regardless of income-based CSR eligibility, 
direct re-enrollment to a plan at the same metal level as their current 
QHP, with a lower or equivalent net premium and total out-of-pocket 
cost, within the same product, network, and

[[Page 78264]]

QHP issuer; and (3) if a plan at the same metal level as their current 
QHP is not available and the enrollee is not income-based CSR eligible, 
direct re-enrollment to a QHP that is one metal level higher or lower 
than the enrollee's current QHP, with a lower or equivalent net premium 
and total out-of-pocket cost, under the same product, network, and 
issuer. For example, an Exchange could consider re-enrolling a current 
gold QHP enrollee into another available gold QHP, within the 
enrollee's service area and current product that is issued by the same 
QHP issuer that has a lower or equivalent net premium and out-of-pocket 
cost. We also solicit comments on re-enrolling consumers into the 
lowest cost silver plan in the following year if the consumer chose the 
lowest cost silver plan in the current plan year. Due to operational 
complexities, we seek comment on whether the actuarial value (AV) of a 
plan should be used as a proxy for estimating the total costs that an 
enrollee may be subject to under a given plan.\171\ Specifically, we 
solicit comments on whether the Exchange should ensure that the net 
premium of the higher AV plan is less than or equal to the net premium 
of the default plan or use net premium and total out-of-pocket cost 
calculations to determine if enrollees should be upgraded to a higher 
metal level in future plan years.
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    \171\ Actuarial value refers to the percentage of total average 
costs for covered benefits that a plan will cover. However, the 
enrollee could be responsible for a higher or lower percentage of 
the total costs of covered services for the year, depending on their 
actual health care needs and the terms of the insurance policy.
---------------------------------------------------------------------------

    We also seek comments on whether 73 percent CSR plan variation-
eligible enrollees should be re-enrolled into silver plan variations or 
gold level plans since in some cases gold plans may be more affordable 
than silver plan variations for 73 percent CSR-eligible enrollees. 
Additionally, we solicit comments on the States' process for 
calculating total out-of-pocket cost to understand if, and to what 
extent, the States' methodology for calculating total out-of-pocket 
costs vary. Furthermore, we solicit comment on whether the re-
enrollment hierarchy should also factor in potential out-of-pocket 
costs, not attributable to cost sharing, such as balance billing, and 
if so, how.
    HHS also seeks broad comment on alternative auto-enrollment 
policies that we should consider in future years.\172\ For example, we 
are curious about interested parties' thoughts on an auto-enrollment 
policy under which consumers who have entered delinquency on their QHP 
premiums would be auto-enrolled into QHPs with no net premium after 
application of APTC (referred to as zero-dollar plans). In accordance 
with Sec. Sec.  155.430(b)(2)(ii) and 156.270, a QHP/SADP may terminate 
an enrollee's coverage for non-payment of premiums, subject to certain 
conditions. Specifically, Sec.  156.270(d) requires issuers to observe 
a three-consecutive-month grace period before terminating coverage for 
those enrollees who are eligible for, and have elected to receive, APTC 
and who, upon failing to timely pay their premiums, are receiving APTC. 
Research suggests that even small net premiums can significantly 
decrease enrollment and that this could be because paying even a small 
premium requires enrollees to take additional action.\173\ \174\ 
Enrollees may experience life changes that make it challenging to pay 
their monthly premiums on an ongoing basis. Currently, the Exchanges on 
the Federal platform only track nonpayment once the three-month APTC 
grace period has expired, and do not know when the enrollee first 
becomes delinquent on payment of premiums. Since providers are notified 
when an individual is in the second and third month of the grace 
period, they know that claims may not be paid and may require that the 
enrollee pay in full at the point of service. A potential challenge 
with auto enrolling enrollees into zero-dollar premium plans, with 
retroactive coverage, if they go into delinquency is that re-processing 
any claims for those enrollees able to self-pay during the pended 
months would be difficult if the zero-dollar premium auto-assignment 
was to the original issuer and would be especially burdensome if the 
new plan was issued by another issuer. We solicit comments on if auto 
enrolling enrollees into zero-dollar premium plans if they go into 
delinquency should be prospective or retroactive. In order to mitigate 
the barriers enrollees face to enroll, effectuate, and maintain 
coverage, HHS is considering enrolling consumers who enter delinquency 
into zero-dollar plans.
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    \172\ HHS seeks comment on all auto-enrollment policies that 
could better ensure consumer's continuous access to health coverage, 
including policies that may require additional grants of authority 
from Congress to HHS.
    \173\ Fiedler, M., & McIntyre, A. (2022, September 13). Tweaking 
the marketplace enrollment process could magnify effects of larger 
premium tax credits. Brookings. https://www.brookings.edu/blog/usc-brookings-schaeffer-on-health-policy/2022/09/13/tweaking-the-marketplace-enrollment-process-could-magnify-effects-of-larger-premium-tax-credits/.
    \174\ Drake, C., Cai, S., Anderson, D., and Sacks, D. (2021, 
October 22). Financial Transaction Costs Reduce Benefit Take-Up: 
Evidence from Zero-Premium Health Plans in Colorado. SSRN. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3743009.
---------------------------------------------------------------------------

    We also solicit comments on enrolling consumers into zero dollar 
plans if they fail to make a binder payment. Sometimes QHP applicants 
select plans, but fail to make a binder payment to effectuate coverage, 
and thus have their coverage canceled by the issuer. As mentioned 
previously in this proposed rule, enrollees face non-financial burdens 
that cause them to miss these payments or in some cases fail to 
complete the enrollment process. As such, it is likely that by 
alleviating or eliminating these non-financial burdens, some enrollees 
would choose to enroll in coverage. We request comments on these 
proposals.
7. Special Enrollment Periods (Sec.  155.420)
a. Use of Special Enrollment Periods by Enrollees
    We propose two technical corrections to Sec.  155.420(a)(4)(ii)(A) 
and (B) to align the text with Sec.  155.420(d)(6)(i) and (ii). The 
proposed revisions would clarify that only one person in a tax 
household applying for coverage or financial assistance through the 
Exchange must qualify for a special enrollment period under paragraphs 
(d)(6)(i) and (ii) in order for the entire household to qualify for the 
special enrollment period.
    As discussed in previous rulemaking, certain SEPs under Sec.  
155.420(d) are available to an entire tax household applying for 
coverage or financial assistance through the Exchange when a qualified 
individual or the qualified individual's dependent satisfies specified 
requirements (rather than when the qualified individual and the 
qualified individual's dependent satisfy such requirements).\175\ In 
the 2022 Payment Notice (86 FR 24140), we finalized revisions to Sec.  
155.420(a)(4)(ii)(C) to update the language from ``if an enrollee and 
his or her dependents'' to ``if an enrollee or his or her dependents'' 
to align with the regulatory text for triggering events under Sec.  
155.420(d)(6)(i) and (ii), but we neglected to propose and finalize 
similar but necessary changes to the text of Sec.  155.420(a)(4)(ii)(A) 
and (B) and noted that we intended to propose these changes in future 
rulemaking. Therefore, to align the text of Sec.  155.420(a)(4)(ii)(A) 
and (B) with the triggering event provisions under Sec.  
155.420(d)(6)(i) and (ii), we are

[[Page 78265]]

proposing two technical corrections to Sec.  155.420(a)(4)(ii)(A) and 
(B) by updating the sentence at paragraph (a)(4)(ii)(A) from ``if an 
enrollee and his or her dependents'' to ``if an enrollee or his or her 
dependents'' and by updating the sentence at paragraph (a)(4)(ii)(B) 
from ``if an enrollee and his or her dependents'' to ``if an enrollee 
or his or her dependents.'' Because these are two technical changes, we 
do not anticipate that it will impact Exchanges' operations or 
messaging.
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    \175\ See 78 FR 42262. Also, the 2017 Market Stabilization Rule 
used the phrase ``if an enrollee or his or her dependent'' when 
describing the rule that would be finalized at what is now paragraph 
Sec.  155.420(a)(4)(ii)(A), See 82 FR 18359.
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    We seek comment on this proposal.
b. Effective Dates for Qualified Individuals Losing Other Minimum 
Essential Coverage (Sec.  155.420(b))
    We are proposing amendments to the coverage effective date rules at 
Sec.  155.420(b)(2)(iv) to permit Exchanges the option to offer earlier 
coverage effective start dates for consumers attesting to a future loss 
of MEC. Doing so could mitigate coverage gaps when consumers lose forms 
of MEC (other than Exchange coverage) mid-month and allow for more 
seamless transitions from other coverage to Exchange coverage. We are 
aware that consumers may face gaps in coverage because current coverage 
effective date rules do not allow for retroactive or mid-month coverage 
effective dates for consumers whose other coverage ends mid-month. 
Under current rules, the earliest start date for Exchange coverage is 
the first day of the month following the date of loss of MEC. We are 
aware that in some States, Medicaid or CHIP is regularly terminated 
mid-month, so we are soliciting input on whether the proposed change 
would help consumers, especially those impacted by Medicaid/CHIP 
unwinding, to seamlessly transition from another form of MEC to 
Exchange coverage.
    Consumers losing MEC, such as coverage through an employer, 
Medicaid, or CHIP, already qualify for a special enrollment period 
under Sec.  155.420(d)(1) and may report a loss of MEC to Exchanges and 
select a QHP up to 60 days before or 60 days after their loss of MEC. 
Exchanges must generally provide a regular coverage effective date as 
described in Sec.  155.420(b)(1): for a QHP selection received by the 
Exchange between the 1st and the 15th day of any month, the Exchange 
must ensure a coverage effective date of the 1st day of the following 
month; and for a QHP selection received by the Exchange between the 
16th and the last day of any month, the Exchange must ensure a coverage 
effective date of the 1st day of the second following month. However, 
Exchanges must provide special coverage effective dates for certain 
special enrollment period types including loss of MEC, as described in 
Sec.  155.420(b)(2), and may elect to provide coverage effective dates 
earlier than those specified in Sec.  155.420(b)(1) and (2)(i), as 
described in Sec.  155.420(b)(3). The loss of MEC coverage effective 
dates are generally governed by Sec.  155.420(b)(2)(iv). Currently, for 
all Exchanges, consumers who report a future loss of MEC and select a 
plan on or before the loss of MEC are provided an Exchange coverage 
effective date of the 1st of the month after the date of loss of MEC, 
pursuant to Sec.  155.420(b)(2)(iv). For example, if a consumer reports 
on June 1st that they will lose MEC on July 15th and they make a plan 
selection on or before July 15th, Exchange coverage will be effective 
August 1st. The consumer in this case cannot avoid a gap in coverage of 
more than two weeks.
    For consumers reporting a loss of MEC that occurred up to 60 days 
in the past, Exchanges must ensure that coverage is effective in 
accordance with Sec.  155.420(b)(1) (the regular coverage effective 
dates described above) \176\ through a cross reference from Sec.  
155.420(b)(2)(iv). Alternatively, Exchanges can offer prospective 
coverage effective dates so that coverage is effective the first of the 
month following plan selection, at the option of the Exchange. See 
Sec.  155.420(b)(2)(i). For example, if a consumer reports on July 1st 
a past loss of MEC that occurred on June 30th and selects a plan on 
July 15th, Exchange coverage is effective August 1st.
---------------------------------------------------------------------------

    \176\ For example, if a consumer selects a plan on May 2nd, 
coverage will be effective June 1st, if a consumer selects a plan on 
May 16th, coverage will be effective July 1st.
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    Because current regulation at Sec.  155.420(b)(2)(iv) does not 
allow for retroactive or mid-month coverage effective dates, consumers 
may experience gaps in coverage, especially those consumers who live in 
States that allow mid-month terminations of Medicaid or CHIP coverage. 
Further, after the COVID-19 PHE comes to an end, HHS expects to see a 
higher than usual volume of individuals transitioning from Medicaid and 
CHIP coverage to the Exchange. This is because States will be required 
to return to normal eligibility and enrollment operations after the 
expiration of the continuous enrollment condition that provided a 
temporary increase in Federal Medicaid matching funds authorized by the 
Families First Coronavirus Response Act (FFCRA),\177\ and we expect 
that many individuals experienced changes in income or household size 
since the continuous enrollment condition took effect. Consumers who 
become ineligible for Medicaid are at risk of being uninsured for a 
period of time and postponing use of health care services, which can 
lead to poorer health outcomes, if they are not able to successfully 
transition between coverage programs without coverage gaps.
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    \177\ FFCRA. Public Law 116-127 (2020). These provisions enabled 
States to receive the temporary Federal Medical Assistance 
Percentage increase under that section.
---------------------------------------------------------------------------

    Therefore, to ensure that qualifying individuals whose prior MEC 
ends mid-month are able to seamlessly transition from non-Exchange MEC 
to Exchange coverage as quickly as possible with no coverage gaps, we 
are proposing to revisions to paragraph (b)(2)(iv). Specifically, we 
propose to add additional language to paragraph (b)(2)(iv) that if a 
qualified individual, enrollee, or dependent, as applicable, loses 
coverage as described in paragraph (d)(1), experiences a change in 
eligibility for APTC per paragraph (d)(6)(iii), or experiences a loss 
of government contribution or subsidy per paragraph (d)(15), and if the 
plan selection is made on or before the day of the triggering event, 
the Exchange must ensure that the coverage effective date is the 1st 
day of the month following the date of the triggering event (as 
currently required under paragraph (b)(2)(iv)) and, at the option of 
the Exchange, if the plan selection is made on or before the last day 
of the month preceding the triggering event, the Exchange must ensure 
that coverage is effective on the first of the month in which the 
triggering event occurs. For example, if a consumer attests between May 
16th and June 30th that they will lose MEC on July 15th and selects a 
plan on or before June 30th, coverage would be effective on August 1st 
(first of the month after the last day of prior MEC), or at the option 
of the Exchange, on July 1st (the first of the month in which the 
triggering event occurs).
    We acknowledge that this proposed change may have a limited impact 
because many types of coverage do not typically have end dates in the 
middle of the month. However, for those that it does impact, the 
proposed change would provide earlier access to coverage and APTC and 
CSR. Under the current rule at paragraph (b)(2)(iv), consumers 
reporting a future loss of MEC may have to wait weeks for their 
coverage to start, even if they were proactive and attested to a 
coverage loss as soon as they became aware. We do not believe that this 
proposed change introduces

[[Page 78266]]

program integrity concerns because it only applies to those consumers 
who report a future loss of MEC and have been determined eligible for 
an SEP and found eligible for an Exchange QHP, fall within their 60-day 
reporting window for reporting a future loss of MEC, and select a plan 
on or before the last day of the month preceding the loss of MEC.
    We believe this proposed change would provide additional 
flexibilities for Exchanges as the proposed changes to paragraph 
(b)(2)(iv) would provide Exchanges with the option to use the current 
coverage effective dates available under current paragraph (b)(2)(iv) 
as well as the option to provide earlier coverage effective dates for 
some consumers who attest to a future loss of MEC. We also acknowledge 
that if Exchanges do elect an earlier coverage effective date as we 
propose, this would result in some consumers paying for both an 
Exchange QHP and their other MEC for a short period of dual enrollment. 
However, we do not believe the partial-month period of dual enrollment 
should bar an enrollee from APTC or CSR benefits for the Exchange 
coverage if otherwise eligible. Given that consumers impacted by the 
proposed change to Sec.  155.420(b)(2) will have other MEC for only 
part of the first month of their QHP coverage, Exchanges could look to 
the definition of coverage month in 26 CFR 1.36B-3, which states that a 
consumer may qualify when not eligible for the full calendar month for 
minimum essential coverage, to find a consumer who receives an earlier 
effective date under this rule as eligible for APTC and CSRs for the 
first month of their QHP coverage, despite the brief period of 
overlapping coverage. In order to clarify our interpretation that 
consumers may be eligible for APTC and CSRs as of the earlier SEP 
effective date proposed in this rulemaking, we are considering whether 
any corresponding amendments to APTC eligibility rules may be necessary 
and plan to codify such changes in the final rule as needed. For 
example, since Exchange regulations regarding APTC eligibility do not 
reference the statutory definition of a coverage month, we seek comment 
on whether Exchange regulations at Sec.  155.305(f) should be revised 
to correspond with the statutory definition of a coverage month.
    We believe the largest beneficiaries of these proposed changes 
would be consumers whose States permit mid-month terminations of 
Medicaid or CHIP coverage. We seek comment from interested parties on 
the frequency of mid-month coverage end dates, potential program 
integrity issues associated with earlier effective dates, and on 
instances when the expedited effective date would or would not mitigate 
coverage gaps or introduce coordination of benefits issues.
    Under Sec.  147.104(b)(5), applicable to health insurance issuers 
that offer health insurance coverage in the individual, small group, or 
large group market in a State, coverage elected during limited open and 
special enrollment periods described in Sec.  147.104(b)(2) and (3) 
must become effective consistent with the dates described in Sec.  
155.420(b) (this excludes the special enrollment period under Sec.  
155.420(d)(6) which is explicitly excepted from Sec.  147.104(b)(2)). 
Therefore, with the exception of the triggering event in Sec.  
155.420(d)(6), which is limited to coverage purchased through an 
Exchange, these proposed changes to the effective date for future loss 
of MEC would be effective for individual market coverage purchased off 
an Exchange, as well as for coverage purchased through an Exchange, and 
the proposed option of the Exchange to specify the effective date would 
refer to an option of the applicable State authority with respect to 
individual market coverage purchased off an Exchange.
    While we also considered proposing retroactive coverage effective 
dates for consumers reporting past loss of MEC, we decided to limit 
these proposed changes to future loss of MEC to avoid adverse selection 
and reduce burden on Exchanges, States, and issuers, as allowing for 
retroactive coverage start dates can be operationally complex for 
Exchanges to implement and for issuers to process. Also, we believe the 
proposed changes would limit the financial burden on consumers, as 
consumers who report a loss of MEC in the past 60 days may not want or 
be able to afford to pay past premiums to effectuate coverage 
retroactively. While we also considered providing mid-month coverage 
effective dates for consumers who lose MEC mid-month, this would have 
been disadvantageous to affording coverage given that IRS regulations 
at 26 CFR 1.36B-3 generally provide that PTC is only available for a 
month when, as of the first day of the month, the individual is 
enrolled in a plan through the Exchange. We seek comment on additional 
regulatory changes that would improve transitions to Exchange coverage 
and minimize periods of uninsurance for consumers who report a loss of 
MEC to the Exchange.
    We seek comment on these proposals.
c. Special Rule for Loss of Medicaid or CHIP Coverage (Sec.  
155.420(c))
    In order to mitigate coverage gaps when consumers lose Medicaid or 
CHIP coverage and to allow for a more seamless transition into Exchange 
coverage, we are proposing a new special rule under Sec.  155.420(c)(6) 
to provide more time for consumers who lose Medicaid or CHIP coverage 
that is considered MEC as described in Sec.  155.420(d)(1)(i) to report 
their loss of coverage and enroll in Exchange coverage. The proposed 
regulation would align the special enrollment period window following 
loss of Medicaid or CHIP with the reconsideration period available 
under 42 CFR 435.916(a).
    Currently, qualified individuals or their dependents who lose MEC, 
such as coverage through an employer or most kinds of Medicaid or CHIP, 
qualify for a special enrollment period under Sec.  155.420(d)(1)(i) 
and may report a loss of MEC to Exchanges up to 60 days before and up 
to 60 days after their loss of MEC. 45 CFR 155.420(c)(2). When these 
qualified individuals or their dependents are disenrolled from Medicaid 
or CHIP based on modified adjusted gross income (MAGI) following an 
eligibility redetermination, 42 CFR 435.916 requires that the State 
Medicaid agency provide a 90-day reconsideration window, which allows 
former beneficiaries to provide the necessary information to their 
State Medicaid agency to re-establish their eligibility for Medicaid or 
CHIP without having to complete a new application. During the 90 days 
following a Medicaid or CHIP denial or disenrollment, it would be 
reasonable for a consumer who becomes uninsured to proceed first by 
attempting to regain coverage through Medicaid or CHIP. However, 
because the special enrollment period for loss of MEC at Sec.  
155.420(d)(1)(i) currently lasts only 60 days after the loss of 
Medicaid or CHIP coverage, by the time that a consumer exhausts their 
attempt to regain coverage through Medicaid or CHIP (which they must do 
within 90 days of loss of Medicaid or CHIP), they may have missed their 
window to enroll in Exchange coverage through a special enrollment 
period based on loss of MEC (60 days after loss of Medicaid or CHIP).
    In further support of this proposal, we are aware that most 
consumers losing Medicaid or CHIP may not transition to Exchange 
coverage in a timely manner. A recent report published by the Medicaid 
and CHIP Payment and Access Commission (MACPAC) \178\

[[Page 78267]]

found that only about three percent of beneficiaries who were 
disenrolled from Medicaid or CHIP in 2018 enrolled in Exchange coverage 
within 12 months. The 2018 data also showed that more than 70 percent 
of adults and children moving from Medicaid to Exchange coverage had 
gaps in coverage for an average of about three months.\179\ While there 
are likely several reasons that consumers did not transition directly 
from Medicaid or CHIP coverage to Exchange coverage in 2018, the 
proposed special rule at Sec.  155.420(c)(6) has the potential to 
mitigate an administrative hurdle that may pose a barrier to enrolling 
in Exchange coverage in a timely manner and with little to no coverage 
gaps.
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    \178\ Medicaid and CHIP Payment Access Commission. (2022, July). 
Transitions Between Medicaid, CHIP, and Exchange Coverage. https://www.macpac.gov/wp-content/uploads/2022/07/Coverage-transitions-issue-brief.pdf.
    \179\ Ibid.
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    Therefore, to ensure that qualifying individuals are able to 
seamlessly transition from Medicaid or CHIP coverage to Exchange 
coverage as quickly as possible to and mitigate the risk of coverage 
gaps, we propose to create new paragraph (c)(6) which would add 
language stating that effective January 1, 2024, Exchanges will have 
the option to implement a new special rule that consumers eligible for 
an SEP under Sec.  155.420(d)(1)(i) due to loss of Medicaid or CHIP 
coverage that is considered MEC will have up to 90 days after their 
loss of Medicaid or CHIP coverage to enroll in an Exchange QHP. This 
proposal would align the special enrollment period window following 
loss of Medicaid or CHIP with the reconsideration period available 
under 42 CFR 435.916(a). We also propose adding language to paragraph 
(c)(2) to clarify that a qualified individual or his or her dependent 
who is described in paragraph (d)(1)(i) continues to have 60 days after 
the triggering event to select a QHP unless an Exchange exercises the 
option proposed in new paragraph (c)(6). We believe these proposed 
changes would have a positive impact on consumers while providing 
additional flexibilities for Exchanges as they can choose whether to 
offer this special rule or not, depending on enrollment trends for 
their respective populations.
    We seek comment on this proposal.
d. Plan Display Error Special Enrollment Periods (Sec.  155.420(d))
    We propose amending Sec.  155.420(d)(12) to align the policy of the 
Exchanges for granting SEPs to persons who are adversely affected by a 
plan display error with current plan display error SEP operations. We 
propose amending paragraph (d)(12) by changing the subject of the 
regulation to focus on the affected enrollment, not the affected 
qualified individual or enrollees.\180\
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    \180\ In this section, ``consumer'' may be used as shorthand for 
``qualified individual, enrollee, or their dependents.''
---------------------------------------------------------------------------

    In accordance with Sec.  155.420, SEPs allow a qualified individual 
or enrollee who experiences certain qualifying events to enroll in, or 
change enrollment in, a QHP through the Exchange outside of the annual 
OEP. In 2016, CMS added warnings on HealthCare.gov about inappropriate 
use of SEPs, and tightened certain eligibility rules.\181\ We sought 
comment on these issues in the Patient Protection and Affordable Care 
Act; HHS Notice of Benefit and Payment Parameters for 2018 proposed 
rule (81 FR 61456), especially on data that could help distinguish 
misuse of SEPs from low take-up of SEPs among healthier eligible 
individuals; evidence on the impact of eligibility verification 
approaches, including pre-enrollment verification, on health insurance 
enrollment, continuity of coverage, and risk pools (whether in the 
Exchange or other contexts); and input on what SEP-related policy or 
outreach changes could help strengthen risk pools. We examined 
attrition rates in our enrollment data and have found that the 
attrition rate for any particular cohort is no different at the end of 
the year than at points earlier in the year, suggesting that any such 
gaming, if it is occurring, does not appear to be occurring at 
sufficient scale to produce statistically measurable effects.
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    \181\ February 25, 2016. Fact Sheet: Special Enrollment 
Confirmation Process. Available online at https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-02-24.html.
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    In the Patient Protection and Affordable Care Act; HHS Notice of 
Benefit and Payment Parameters for 2018; Amendments to Special 
Enrollment Periods and the Consumer Operated and Oriented Plan Program 
(81 FR 94058, 94127 through 94129), CMS codified the plan display error 
SEP in Sec.  155.420(d)(12) to reflect that plan display error SEP may 
be triggered when a qualified individual or enrollee, or their 
dependent, adequately demonstrates to the Exchange that a material 
error related to plan benefits, service area, or premium (hereinafter 
``plan display error'') influenced the qualified individual's, 
enrollee's, or their dependents' decision to purchase a QHP through the 
Exchange. This generally allowed consumers who enrolled in a plan for 
which HealthCare.gov displayed incorrect plan benefits, service area, 
cost-sharing, or premium, and who could demonstrate that such incorrect 
information influenced their decision to purchase a QHP through the 
Exchange, to select a new plan that better suited their needs.
    In the same final rule, CMS also finalized the policies at Sec.  
147.104(b)(2) to make clear that the plan display error SEP only 
creates an opportunity to enroll in coverage through the Exchange, and 
clarified that the special enrollment period is limited to plan display 
errors presented to the consumer by the Exchange at the point at which 
the consumer enrolls in a QHP (81 FR at 94128 through 94129). By this 
we meant that the consumer must have already completed their Exchange 
application, the Exchange must have determined that the consumer is 
eligible for QHP coverage and any applicable APTC or CSRs, and the 
consumer must have viewed the material error while making a final 
selection to enroll in the QHP.
    Currently, Sec.  155.420(d)(12) requires the qualified individual, 
enrollee, or their dependent, to adequately demonstrate to the Exchange 
that a material error related to plan benefits, service area, or 
premium influenced the qualified individual's or enrollee's decision to 
purchase a QHP through the Exchange. However, we have found that 
consumers may benefit when other interested parties, besides a 
qualified individual, enrollee, or their dependents, can demonstrate to 
the Exchange that a material plan error influenced the qualified 
individual's, enrollee's, or their dependents' enrollment decision to 
purchase a QHP through the Exchange. In our experience, plan display 
errors may not be obvious or detectable to the consumer and the 
Exchange until after the enrollment has been impacted by the error 
related to plan benefits, service area, premiums, or even cost-sharing. 
In majority of the plan display errors, the issuer or State regulator 
has identified the display error. For example, a plan display error can 
influence a consumer's enrollment without the consumer's knowledge when 
a consumer enrolls in a QHP, pays an incorrect premium amount that was 
submitted to and displayed on HealthCare.gov, and the plan display 
error regarding the premium amount is not known until the enrollment is 
cancelled by the issuer for non-payment of premiums. In this case, the 
plan display error would not be discovered until the issuer 
investigates the reason for cancellation. The issuer is the only party 
that can identify that the plan display error was caused by

[[Page 78268]]

incorrect premium amounts between the issuer's records and data 
submitted to HealthCare.gov, and that can notify CMS of the plan 
display error. CMS can then work with the issuer to implement its 
established data correction processes to make the necessary corrections 
to the Healthcare.gov. This process includes CMS investigating the plan 
display error to determine if it is reasonable to expect that the 
material error has influenced the enrollment or the consumer's 
purchasing decision. In this example, CMS is likely to determine that 
the plan display error impacted the consumer's purchasing decision 
because the consumer was presented erroneous information when 
purchasing the plan and likely made an enrollment decision based on the 
premium and cost-sharing amount. Issuers that submit a data change 
request that adversely impacts the consumers' enrollment on 
HealthCare.gov are required to notify consumers of the plan display 
error and the remediation.
    Since qualified individuals, enrollees, and their dependents are 
not always the parties best suited to demonstrate to the Exchange that 
a material plan display has influenced their enrollment, we propose 
revising paragraph (d)(12) to remove the burden solely from the 
qualified individual, enrollee, and their dependents. We propose adding 
cost-sharing to the list of plan display errors which is displayed on 
HealthCare.gov alongside plan benefits, service area, and premiums, and 
equally influence the consumer's purchasing decision or enrollment. 
Specifically, we propose revising Sec.  155.420(d)(12) to reflect that 
an SEP is available when the enrollment in a QHP through the Exchange 
was influenced by a material error related to plan benefits, cost-
sharing, service area, or premium. We propose to consider a material 
error to be one that is likely to have influenced a qualified 
individual's, enrollee's, or their dependent's enrollment in a QHP.
    It should be noted that an error related to plan benefits, service 
area, cost-sharing or premium does not trigger an SEP when the error is 
not material, such as when the error is honored as it was displayed. 
Errors related to plan benefits, service area, cost-sharing or premium 
include situations where coding on HealthCare.gov causes benefits to 
display incorrectly, or where CMS identifies incorrect QHP data 
submission or discrepancy between an issuer's QHP data and its State-
approved form filings.\182\ If the error involves information that 
displays on HealthCare.gov, CMS works with the issuer and applicable 
State's regulatory authority to arrive at a solution that has minimal 
impact on consumers and affirms, to the extent possible, that they are 
not negatively affected by the error. Generally, the most 
straightforward and consumer-friendly resolution is for issuers to 
honor the benefit as it was displayed incorrectly for affected 
enrollees, if permitted by the applicable State regulatory authority. 
If the issuer chooses to honor the error and administers the plan as it 
was incorrectly displayed for the affected consumers, CMS will not 
provide the consumers with an SEP. The proposed revision to the 
regulation would be consistent with this approach, as the issuer's 
honoring of the error would effectively eliminate the materiality of 
the error.
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    \182\ See the following: CMS. (2022, July 28). 2022 Federally-
facilitated Exchange (FFE) and Federally-facilitated Small Business 
Health Options Program (FF-SHOP) Enrollment Manual. (Section 6.8.1, 
p. 82). https://www.cms.gov/files/document/ffeffshop-enrollment-manual-2022.pdf.
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    Our proposal would have minimal operational impact, as interested 
parties currently have the infrastructure to demonstrate to the 
Exchange that a plan display error influenced a qualified individual's, 
enrollee's, or their dependents' decision to purchase a QHP through the 
Exchange. CMS currently engages with partners and interested parties 
throughout the plan display error SEP process, ensuring that issuers 
and States are notified of CMS decisions as appropriate. States have 
access to the status of all applicable plan display error SEPs and can 
track the progress of the plan display error SEPs until remediation. In 
addition, under Sec.  156.1256, issuers ``must notify their enrollees 
of material plan or benefit display errors and the enrollees' 
eligibility for an [SEP] . . . within 30 calendar days after being 
notified by the [FFE] that the error has been fixed, if directed to do 
so by the [FFE].'' Thus, impacted consumers are also currently being 
notified and made aware of plan display error SEPs policies if their 
plan data had a significant, material error. We expect that this 
experience is similar on all Exchanges, and therefore are proposing 
that this amendment to the description of the SEP trigger would apply 
for all Exchanges.
    We request comment on this proposal.
    Additionally, HHS is considering for future years, whether 
consumers whose providers leave their network mid-year should be 
eligible for an SEP. Significant network changes, whether it is 
initiated by the QHP issuer or the provider, can occur at any point 
during the year. Under Medicare Advantage regulation 42 CFR 
422.62(b)(23), individuals affected by a significant change in their 
plan's provider network are eligible for an SEP that permits re-
enrollment into another Medicare Advantage plan or to original 
Medicare. CMS is seeking comments on whether QHP consumers similarly 
affected by a significant change in their plan's provider network 
should be eligible for an SEP. We also solicit comment on whether we 
should consider an enrollee who is impacted by a provider contract 
termination to be someone who is experiencing an exceptional 
circumstance, as specified in Sec.  155.420(d)(9), or should be 
eligible for a new SEP for provider contract terminations, and what 
standards for when termination of a provider from the network should 
serve as a basis for SEP eligibility.
8. Termination of Exchange Enrollment or Coverage (Sec.  155.430)
a. Prohibition of Mid-Plan Year Coverage Termination for Dependent 
Children Who Reach the Maximum Age
    We propose to add Sec.  155.430(b)(3) to explicitly prohibit QHP 
issuers participating in Exchanges on the Federal platform from 
terminating coverage of dependent children before the end of the 
coverage year because the child has reached the maximum age at which 
issuers are required to make coverage available under Federal or State 
law. The ACA amended the PHS Act to require at section 2714 
(implemented at Sec.  147.120) that group health plans and health 
insurance issuers offering group or individual health insurance 
coverage that offer dependent child coverage must make such coverage 
available for an adult child until age 26. The ACA also adds section 
9815(a)(1) to the Code and section 715(a)(1) to the Employee Retirement 
Income Security Act to incorporate the provisions of part A of title 
XXVII of the PHS Act (including section 2714) and make them applicable 
to group health plans, and health insurance issuers providing health 
insurance coverage in connection with group health plans. This proposal 
to amend Sec.  155.430 would not change the requirements under Sec.  
147.120 nor would it affect parallel provisions in 26 CFR 54.9815-2714 
and 29 CFR 2590.715-2714. Some States have established higher age 
limits, and some issuers adopt higher than legally required age limits 
as a business decision.
    In operationalizing this regulation on the Federal eligibility and 
enrollment platform, HHS has required issuers that

[[Page 78269]]

cover dependent children to provide coverage to dependent children 
until the end of the plan year in which they turn 26 (or the maximum 
age under State law), although this is not specifically required under 
Sec.  147.120. Nevertheless, interested parties have requested that 
HHS' policy be codified in regulation for clarity. Doing so would 
reduce uncertainty for Federally-facilitated Exchange issuers regarding 
their obligation under Sec.  155.430 to maintain coverage for a 
dependent child who has turned 26 (or the maximum age under State law) 
until the end of the plan year (unless coverage is otherwise permitted 
to be terminated). Likewise, it would provide clarity for enrollees 
themselves who may be uncertain about the rules governing their ability 
to remain enrolled as a dependent child until the end of the plan year 
in which they reach the maximum age (that is, age 26 or the maximum age 
under State law). This proposal would codify the current implementation 
of the Federal platform.
    Payment of APTC on the Exchange, in addition to the way the Federal 
eligibility and enrollment platform has operationalized Exchange 
eligibility determinations, warrants a different policy for issuers of 
individual market QHPs on the Exchanges with regard to child dependents 
turning age 26 (or the maximum age under State law). This is especially 
true when comparing individual market Exchange coverage to the employer 
market, where the employer is typically contributing toward the cost of 
child dependent coverage, but only until the child dependent attains 
the maximum dependent age under the group health plan; in the Exchange, 
the dependent child can receive a portion of the family's APTC for the 
entire plan year. Exchange eligibility determinations for enrollment 
through the Exchange and for APTC are based on the tax household, and 
the determination is made for the entire plan year unless it is 
replaced by a new determination of eligibility, such as when a change 
is reported by the enrollee or identified by the Exchange in accordance 
with Sec.  155.330. The annual basis of Exchange eligibility 
determinations, absent a new determination, is made clear by the annual 
eligibility redetermination requirements in Sec.  155.335. Eligibility 
standards for enrollment through the Exchange and for APTC make no 
mention of an issuer's business rules regarding dependent 
relationships, or otherwise regarding the specific relationships 
between applicants. Additionally, Exchange eligibility criteria do not 
prohibit allocation of APTC to dependent children enrollees over the 
age of 26. Every family member who is part of the tax household must be 
listed on the Exchange application for coverage, and the IRS has no 
maximum age cap for tax dependents. Because eligibility determinations 
are made for the entire plan year, the Exchange will generally continue 
to pay the issuer APTC, including the portion attributable to the 
dependent child, through the end of the plan year in which the 
dependent child turns 26, or through the end of the plan year in which 
the dependent reaches the maximum age required under State law.
    In developing the Federal eligibility and enrollment platform, HHS 
directed QHP issuers on Exchanges that use the Federal platform to 
honor the eligibility determination made by the Exchange. This 
requirement applies whether or not the enrollees are determined 
eligible for APTC. The situation for issuers on these Exchanges thus 
differs from those in the off-Exchange insurance market, where 
enrollees do not receive APTC, and in the group insurance market, where 
contributions by employers may end on the day in which the dependent 
child turns 26 (or the maximum age under State law).
    To clarify, in Exchanges on the Federal platform, during the annual 
re-enrollment process, enrollees who, during the plan year, have 
reached age 26 (or the maximum age under State law) are, if otherwise 
eligible, re-enrolled into a separate policy (following the re-
enrollment hierarchy at Sec.  155.335(j)) beginning January 1st of the 
following plan year, with APTC, if applicable.
    Additionally, consistent with existing policy, in circumstances in 
which a household with an dependent child who has reached age 26 (or 
the maximum age under State law) reports a change in circumstance to 
the Exchanges on the Federal platform during the plan year after having 
reached that age and becomes eligible for an SEP, the dependent child 
who has exceeded age 26 (or the maximum age under State law) will have 
their eligibility redetermined in accordance with Sec.  155.330, the 
dependent child's coverage under that policy will be terminated, and 
they will be enrolled into their own policy, subject to payment of a 
binder payment. If, however, the household is not eligible for an SEP 
as a result of the change, the original eligibility determination from 
the initial enrollment will remain in place and the dependent child 
will remain as a covered dependent on the original policy.
    Therefore, we propose to add new paragraph (b)(3) to Sec.  155.430 
to expressly prohibit QHP issuers participating in Exchanges on the 
Federal platform from terminating coverage until the end of the plan 
year for dependent children because the dependent child has reached age 
26 (or the maximum age under State law). This change would provide 
clarity to issuers participating in Exchanges on the Federal platform 
regarding their obligation to maintain coverage for dependent children, 
as well as to enrollees themselves regarding their ability to maintain 
coverage. In addition, we propose to make implementation optional for 
State Exchanges that wish to establish a similar prohibition.
    We request comments on this proposal.
9. General Eligibility Appeals Requirements (Sec.  155.505)
    We propose revising Sec.  155.505(g) to acknowledge the ability of 
the CMS Administrator to review Exchange eligibility appeals decisions 
prior to judicial review. Section 155.505 describes the general 
Exchange eligibility appeals process, including applicants' and 
enrollees' right to appeal certain Exchange eligibility determinations 
specified in Sec.  155.505(b), and the obligation of the HHS appeals 
entity and State Exchange appeals entities to conduct certain Exchange 
eligibility appeals as described in Sec.  155.505(c). In accordance 
with Sec.  155.505(g), appellants may seek judicial review of an 
Exchange eligibility appeal decision made by the HHS appeals entity and 
State Exchange appeals entities to the extent it is available by law. 
Currently, the regulation specifies no other administrative 
opportunities for appellants to appeal Exchange eligibility appeal 
decisions made by the HHS appeals entity. We propose revising this 
regulation to acknowledge the ability of the CMS Administrator to 
review Exchange eligibility appeals decisions prior to judicial review.
    This proposed change would ensure that accountability for the 
decisions of the HHS appeals entity is vested in a principal officer, 
as well as to bring Sec.  155.505(g) of the appeals process to a more 
similar posture as other CMS appeals entities that provide 
Administrator review.\183\ Revising the

[[Page 78270]]

regulation would also provide appellants and other parties with 
accurate information about the availability of administrative review by 
the CMS Administrator if they are dissatisfied with their Exchange 
eligibility appeal decision.
---------------------------------------------------------------------------

    \183\ Examples include: 42 CFR 405 subpart R (Provider 
Reimbursement Review Board); 42 CFR 412 subpart L (Medicare 
Geographic Classification Review Board); 42 CFR 430.60-430.104 
(Medicaid State Plan Materials/Compliance Determinations); 42 CFR 
423.890 (Retiree Drug Subsidy (RDS) Appeals); 42 CFR 411.120-124 
(Group Health Plan Non-conformance Appeals); 42 CFR 417.640, 
417.492. 417.500, 417.494 (Health Maintenance Organization 
Competitive Medical Plan (HMO/CMP) Contract Related Appeals); 42 CFR 
423.2345 (Termination of Discount Program Agreement Appeals).
---------------------------------------------------------------------------

    We seek comment on this proposal.
10. Improper Payment Pre-Testing and Assessment (IPPTA) for State 
Exchanges (Sec. Sec.  155.1500 Through 155.1515)
    We propose the establishment of the IPPTA, an improper payment 
measurement program of APTC, that will include State Exchanges. The 
proposed IPPTA would prepare State Exchanges for the planned 
measurement of improper payments of APTC, would test processes and 
procedures that support HHS' review of determinations of APTC made by 
State Exchanges, and would provide a mechanism for HHS and State 
Exchanges to share information that would aid in developing an 
efficient measurement process. To codify the IPPTA requirements, we 
propose to establish new subpart P under 45 CFR part 155.
    The Payment Integrity Information Act of 2019 (PIIA) \184\ requires 
Federal agencies to annually identify, review, measure, and report on 
the programs they administer that are considered susceptible to 
significant improper payments. HHS determined that APTC are susceptible 
to significant improper payments and are subject to additional 
oversight. In accordance with 45 CFR part 155, FFEs, SBE-FPs, and State 
Exchanges that operate their own eligibility and enrollment systems 
determine the amount of APTC to be paid to qualified applicants. Only 
improper payments of APTC made by FFEs and SBE-FPs will be measured and 
reported in the Annual Financial Report beginning in 2022 as part of 
the Exchange Improper Payment Measurement (EIPM) program. We stated in 
the 2023 Payment Notice proposed rule (87 FR 654 through 655) that HHS 
was in the planning phase of establishing an improper payment 
measurement program that would include State Exchanges--the SEIPM 
program. We also stated in the 2023 Payment Notice proposed rule that 
HHS had intended to implement the proposed SEIPM program beginning with 
the 2023 benefit year. In response to that proposed rule, HHS received 
several comments from State Exchanges that indicated concerns with the 
proposed requirements, particularly with respect to the SEIPM program's 
implementation timeline and proposed data collection processes. For 
example, some State Exchanges commented that they would need more time 
and information from HHS to prepare for the implementation of the SEIPM 
program. We decided not to finalize the proposed rule due to 
commenters' concerns surrounding the proposed implementation timeline 
and other burdens that would be imposed by the proposed SEIPM program 
(87 FR 27281). HHS is now proposing the IPPTA to provide State 
Exchanges with more time to prepare for the planned measurement of 
improper payments of APTC, to test processes and procedures that 
support HHS' review of determinations of APTC made by State Exchanges, 
and to provide a mechanism for HHS and State Exchanges to share 
information that would aid in developing an efficient measurement 
process.
---------------------------------------------------------------------------

    \184\ PIIA, 31 U.S.C. 3352 (2020).
---------------------------------------------------------------------------

    In 2019, HHS developed an initiative to provide the State Exchanges 
with an opportunity to voluntarily engage with HHS to prepare for 
future measurement of improper payments of APTC. HHS provided three 
options to State Exchanges--program analysis, program design, and 
piloting--designed to accommodate the State Exchanges' schedules and 
availability to participate in the initiative. Currently, of the 18 
State Exchanges, 10 have participated in various levels of engagement.
    HHS proposes that the proposed IPPTA would replace the current, 
voluntary State engagement initiative. HHS additionally proposes that 
activities already completed by State Exchanges as part of the current 
voluntary engagement may be used to satisfy elements of the proposed 
IPPTA. HHS has determined that participation from all State Exchanges 
is required in order to test processes and procedures that would 
prepare the State Exchanges for the planned measurement of improper 
payments of APTC.
    Therefore, we propose to establish a new subpart P under 45 CFR 
part 155 (containing Sec. Sec.  155.1500 through 155.1515) to codify 
the proposed IPPTA requirements. The proposed regulations at subpart P 
would be applicable beginning in 2024 with each State Exchange being 
selected to participate for a period of one calendar year which would 
occur either in 2024 or 2025.
a. Purpose and Scope (Sec.  155.1500)
    We are proposing to add new subpart P to part 155, which would 
address various State Exchange and HHS responsibilities. HHS may use 
Federal contractors as needed to support the performance of IPPTA.
    We are proposing to add new Sec.  155.1500 to convey the purpose 
and scope of the IPPTA.
    At paragraph (a), we are proposing the purpose and scope of subpart 
P as setting forth the requirements of the IPPTA for State Exchanges. 
The proposed IPPTA is an initiative between HHS and State Exchanges. 
The proposed requirements are intended to prepare State Exchanges for 
the planned measurement of improper payments, test processes and 
procedures that support HHS' review of determinations of APTC made by 
State Exchanges, and provide a mechanism for HHS and State Exchanges to 
share information that would aid in developing an efficient measurement 
process.
b. Definitions (Sec.  155.1505)
    We are proposing to codify the definitions that are specific to 
IPPTA and key to understanding the processes and procedures of IPPTA.
     We are proposing the definition of ``business rules'' to 
mean the State Exchange's internal directives defining, guiding, or 
constraining the State Exchange's actions when making eligibility 
determinations and related APTC calculations. For example, the internal 
directives, methodologies, algorithms, or policies that a State 
Exchange applies or executes on its own data to determine whether an 
applicant meets the eligibility requirements for a QHP and any 
associated APTC would be considered to be a business rule.
     We are proposing the definition of ``entity relationship 
diagram'' to mean a graphical representation illustrating the 
organization and relationship of the data elements that are pertinent 
to applications for QHP and associated APTC payments.
     We are proposing the definition of ``Pre-testing and 
assessment'' to mean the process that uses the procedures specified in 
Sec.  155.1515 to prepare State Exchanges for the planned measurement 
of improper payments of APTC.
     We are proposing the definition of ``Pre-testing and 
assessment checklist'' to mean the document that contains criteria that 
HHS will use to review a State Exchange's completion of the 
requirements of the IPPTA.
     We are proposing the definition of ``Pre-testing and 
assessment data request form'' to mean the document that

[[Page 78271]]

specifies the structure for the data elements that HHS would require 
each State Exchange to submit.
     We are proposing the definition of ``Pre-testing and 
assessment period'' to mean the timespan during which HHS will engage 
in the pre-testing and assessment procedures with a State Exchange. The 
pre-testing and assessment period will cover one calendar year.
     We are proposing the definition of ``Pre-testing and 
assessment plan'' to mean the template developed by HHS in 
collaboration with each State Exchange enumerating the procedures, 
sequence, and schedule to accomplish the pre-testing and assessment.
     We are proposing the definition of ``Pre-testing and 
assessment report'' to mean the summary report provided by HHS to each 
State Exchange at the end of the State Exchange's pre-testing and 
assessment period that will include, but not be limited to, the State 
Exchange's status regarding completion of each of the pre-testing and 
assessment procedures specified in proposed Sec.  155.1515, as well as 
observations and recommendations that result from processing and 
testing the data submitted by the State Exchange to HHS. At Sec.  
155.1515(g), we are proposing that the pre-testing and assessment 
report is intended to be used internally by HHS and each State Exchange 
as a reference document for performance improvement. The pre-testing 
and assessment report will not be released to the public by HHS unless 
otherwise required by law.
c. Data Submission (Sec.  155.1510)
    We are proposing to add new Sec.  155.1510 which would address the 
data submission requirements to support the IPPTA. Consistent with 
this, we are proposing to establish a pre-testing and assessment data 
request form to collect and compile information from each State 
Exchange. As explained below in section IV., Collection of Information 
Requirements, the pre-testing and assessment data request form has been 
submitted to OMB for review and approval. As described below, HHS 
proposes that each State Exchange submit to HHS a sample of no fewer 
than 10 tax household identification numbers (that is, the record of a 
tax household that applied for and was determined eligible to enroll in 
a QHP and was determined eligible to receive APTC in an amount greater 
than $0).
     At paragraph (a)(1), we are proposing that a State 
Exchange would be required to submit to HHS by the deadline in the pre-
testing and assessment plan the following documentation for their data: 
(i) the State Exchange's data dictionary including attribute name, data 
type, allowable values, and description; (ii) an entity relationship 
diagram, which shall include the structure of the data tables and the 
residing data elements that identify the relationships between the data 
tables; and (iii) business rules and related calculations.
     At paragraph (a)(2), we are proposing that the State 
Exchange must use the pre-testing and assessment data request form, or 
other method as specified by HHS, to submit to HHS the application data 
associated with no fewer than 10 tax household identification numbers 
and the associated policy identification numbers that address scenarios 
specified by HHS to allow HHS to test all of the pre-testing and 
assessment processes and procedures. The proposed scenarios would 
include various application characteristics such as household 
composition, data matching inconsistencies (for example, SSN, 
citizenship, lawful presence, annual income) identified for the 
applications, special enrollment period application types (for example, 
relocation, marriage), periodic data matching (for example, Medicaid/
CHIP, Medicare, death), application status (for example, policy 
terminated, policy canceled), and application types (for example, 
initial application). HHS understands that it is unlikely that the 
application data associated with a singular tax household could address 
all of the characteristics contained in all of the scenarios specified. 
Therefore, HHS proposes that while the application data for each tax 
household does not need to address all of the scenarios specified, the 
application data submitted for no fewer than 10 tax households should, 
when taken together as a whole, address all of the characteristics in 
all of the scenarios specified. For example, the application data for 
one tax household may address lawful presence inconsistency 
adjudication but not special enrollment eligibility verification. 
Accordingly, the application data for another tax household should 
address special enrollment eligibility verification. After receiving 
the application data associated with no fewer than 10 tax households 
from the State Exchange, HHS would test the data from each of the tax 
households against its review procedures to determine if the respective 
policy applications fulfill the scenarios. If the submitted application 
data does not collectively fulfill the scenarios, HHS would coordinate 
with the State Exchange to select additional tax households. For the 
data submitted, HHS would also require the State Exchange to provide 
digital copies such as PDFs of supporting consumer-submitted 
documentation (for example, proof of residency, proof of citizenship).
     In proposed Sec.  155.1515(e)(2), HHS proposes that for 
each of the tax households, the State Exchange would align and populate 
the data in the pre-testing and assessment data request form with the 
assistance of HHS. HHS would require that the State Exchange 
electronically transmit the completed pre-testing and assessment data 
request form to HHS within the deadline specified in the pre-testing 
and assessment plan. Once HHS receives the transmission from the State 
Exchange, HHS then would execute the pre-testing and assessment 
processes and procedures on the application data.
     At paragraph (b), we are proposing the requirement that a 
State Exchange must submit the data documentation as specified in Sec.  
155.1510(a)(1) and the application data associated with no fewer than 
10 tax households as specified in Sec.  155.1510(a)(2) within the 
timelines in the pre-testing and assessment plan specified in Sec.  
155.1515.
d. Pre-Testing and Assessment Procedures (Sec.  155.1515)
    We are proposing to add new Sec.  155.1515 which would address the 
requirements associated with the pre-testing and assessment procedures 
that underlie and support the IPPTA. The pre-testing and assessment 
procedures are the activities of the IPPTA that are, in part, designed 
to test HHS' review processes and procedures that support HHS' review 
of determinations of the APTC made by State Exchanges, to improve the 
State Exchange's understanding of the IPPTA, to prepare State Exchanges 
for the planned measurement of improper payments, and to provide HHS 
and the State Exchanges with a mechanism to share information that 
would aid in developing an efficient measurement process.
     At paragraph (a), we are proposing the general requirement 
that the State Exchange must participate in the IPPTA for a period of 
one calendar year that would occur in either 2024 or 2025, and that the 
State Exchange and HHS would work together to execute the IPPTA 
procedures in accordance with timelines in the pre-testing and 
assessment plan.
     At paragraph (b), we are proposing the requirements for 
the orientation and planning processes.

[[Page 78272]]

     At paragraph (b)(1), we are proposing HHS would provide 
State Exchanges with an overview of the pre-testing and assessment 
procedures as part of the orientation process. We are also proposing 
that, during the orientation process, HHS would identify the 
documentation that a State Exchange must provide to HHS for pre-testing 
and assessment. For example, if data use agreements or information 
exchange agreements need to be executed, HHS would inform State 
Exchanges about that documentation requirement.
     At paragraph (b)(2), we are proposing that HHS, in 
collaboration with each State Exchange, would develop a pre-testing and 
assessment plan as part of the orientation process. The pre-testing and 
assessment plan would be based on a template that enumerates the 
procedures, sequence, and schedule to accomplish pre-testing and 
assessment. While HHS would need to meet milestones specified in the 
schedule and applicable deadlines due to the time span allotted for 
this proposed program, HHS would take into account feedback from the 
State Exchanges in an effort to minimize burden. The pre-testing and 
assessment plan would take into consideration relevant activities, if 
any, that were completed during a prior, voluntary, State engagement. 
The pre-testing and assessment plan would include the pre-testing and 
assessment checklist.
     At paragraph (b)(3), we are proposing that HHS will issue 
a pre-testing and assessment plan specific to a State Exchange at the 
conclusion of the pre-testing and assessment planning process. The pre-
testing and assessment plan would be for HHS and State Exchange 
internal use only and would not be made available to the public by HHS 
unless otherwise required by law.
     At paragraph (c), we are proposing the requirements 
associated with notifications and updates.
     At paragraph (c)(1), we are proposing the requirements 
associated with HHS' responsibility to notify State Exchanges, as 
needed throughout the pre-testing and assessment period, concerning 
information related to the pre-testing and assessment processes and 
procedures.
     At paragraph (c)(2), we are proposing the requirements 
associated with information State Exchanges must provide to HHS 
throughout the pre-testing and assessment period regarding any 
operational, policy, business rules (for example, data elements and 
table relationships), information technology, or other changes that may 
impact the ability of the State Exchange to satisfy the requirements of 
the IPPTA during the pre-testing and assessment period. For example, 
HHS would need to be made aware of changes to the State Exchange's 
technical platform or modifications to its policies or procedures as 
these changes may impact specific pre-testing and assessment processes 
or procedures, the data to be reviewed, and ultimately a State 
Exchange's determinations of an applicant's eligibility for APTC. We 
are proposing that other decisions or changes made by a State Exchange, 
which could affect the pre-testing and assessment including any changes 
regarding items such as naming conventions or definitions of specific 
data elements used in the pre-testing and assessment, must be submitted 
to HHS. We propose this requirement because any lack of clarity in how 
State Exchanges make eligibility determinations and payment 
calculations could impact HHS' ability to assist the State Exchange in 
understanding the pre-testing and assessment processes and procedures 
and could affect HHS' recommendations in the pre-testing and assessment 
report.
     At paragraph (d), we are proposing the requirements 
regarding the submission of required data and data documentation by 
State Exchanges, and we state that, as specified in Sec.  155.1510(a) 
of this subpart, HHS will inform State Exchanges about the form and 
manner for State Exchanges to submit required data and data 
documentation to HHS in accordance with the pre-testing and assessment 
plan.
     At paragraph (e), we are proposing the general 
requirements regarding coordination between HHS and the State Exchanges 
to facilitate HHS' processing of data and data documentation submitted 
by State Exchanges.
     At paragraph (e)(1), we are proposing the requirements 
associated with HHS' responsibility to coordinate with each State 
Exchange to track and manage the data and data documentation submitted 
by a State Exchange as specified in Sec.  155.1510(a)(1) and (a)(2).
     At paragraph (e)(2), we are proposing the requirements 
associated with HHS' responsibility to coordinate with each State 
Exchange to provide assistance in aligning the data specified in Sec.  
155.1510(a)(2) from the State Exchange's existing data structure to 
HHS' standardized set of data elements.
     At paragraph (e)(3), we are proposing the requirement that 
HHS will coordinate with each State Exchange to interpret and validate 
the data specified in Sec.  155.1510(a)(2).
     At paragraph (e)(4), we are proposing the requirement that 
HHS would use the data and data documentation submitted by the State 
Exchange to execute the pre-testing and assessment procedures.
     At paragraph (f), we are proposing the requirements that 
HHS would issue the pre-testing and assessment checklist in conjunction 
with and as part of the pre-testing and assessment plan. The pre-
testing and assessment checklist criteria we are proposing would 
include but would not be limited to:
    ++ At paragraph (f)(1), the State Exchange's submission of the data 
documentation as specified in Sec.  155.1510(a)(1);
    ++ At paragraph (f)(2), the State Exchange's submission of the data 
for processing and testing as specified in Sec.  155.1510(a)(2); and
    ++ At paragraph (f)(3), the State Exchange's completion of the pre-
testing and assessment processes and procedures related to the IPPTA 
program.
     At paragraph (g), we are proposing that, subsequent to the 
completion of a State Exchange's pre-testing and assessment period, HHS 
will prepare and issue a pre-testing and assessment report specific to 
that State Exchange. The report would be for HHS and State Exchange 
internal use only and would not be made available to the public by HHS 
unless otherwise required by law.
    We seek comments on these proposals.

C. 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 2024 Benefit Year (Sec.  
156.50)
    For the 2024 benefit year, we propose an FFE user fee rate of 2.5 
percent of total monthly premiums and an SBE-FP user fee rate of 2.0 
percent of the total monthly premiums. Section 1311(d)(5)(A) of the ACA 
permits an Exchange to charge assessments or user fees on participating 
health insurance issuers as a means of generating funding to support 
its operations. If a State does not elect to operate an Exchange or 
does not have an approved Exchange, section 1321(c)(1) of the ACA 
directs HHS to operate an Exchange within the State. Accordingly, in 
Sec.  156.50(c), we state that a participating issuer offering a plan 
through an FFE or SBE-FP must remit a user fee to HHS each month that 
is equal to the product of the annual user fee rate specified in the 
annual HHS

[[Page 78273]]

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 A-25 established Federal policy regarding user fees and what 
the fees can be used for. In particular, 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 2024 Benefit Year
    Based on estimated costs, enrollment (including anticipated 
establishment of State Exchanges in certain States in which FFEs 
currently are operating), and premiums for the 2023 plan year, we 
propose a 2024 user fee rate for all participating FFE issuers of 2.5 
percent of total monthly premiums.
    In Sec.  156.50(c)(1), to support the functions of FFEs, an issuer 
offering a plan through an FFE 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 FFE. As in benefit years 2014 through 2023, issuers seeking 
to participate in an FFE in the 2024 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 2024 benefit year, issuers 
participating in an FFE will receive special benefits from the 
following Federal activities:
     Provision of consumer assistance tools;
     Consumer outreach and education;
     Management of a Navigator program;
     Regulation of agents and brokers;
     Eligibility determinations;
     Enrollment processes; and
     Certification processes for QHPs (including ongoing 
compliance verification, recertification, and decertification).
    Activities performed by the Federal Government that do not provide 
issuers participating in an FFE with a special benefit are not covered 
by the FFE user fee.
    The proposed user fee rate reflects our estimates for the 2024 
benefit year of costs for operating the Federal Exchanges, premiums, 
enrollment, and transitions in Exchange models (from the FFE and SBE-FP 
models to either the SBE-FP or State Exchange models). To develop the 
proposed 2024 benefit year FFE user fee rates, we considered a range of 
costs, premium and enrollment projections.\185\ We estimated stable 
contract costs on FFE user fee eligible costs from the 2023 benefit 
year. We took a number of factors into consideration in choosing which 
premium and enrollment projections should inform the proposed 2024 FFE 
user fee rates. The enhanced PTC subsidies in section 9661 of the ARP 
were extended in section 12001 of the IRA through the 2025 benefit 
year. The extension of enhanced PTC subsidies significantly influenced 
our development of the 2024 enrollment and premium projections. We 
expect this provision of the IRA to sustain the higher enrollment 
levels observed in the 2021 benefit year after the ARP was established 
and as a result, we expect the projected total premiums where the user 
fee applies to increase, thereby increasing the amount of user fee that 
will be collected. Our 2024 enrollment estimates also account for the 
2022 benefit year transition (and projected transitions through the 
2024 benefit year) of States from FFEs or SBE-FPs to State Exchanges, 
as well as the enrollment impacts of section 1332 State innovation 
waivers. We project that 2024 benefit year premiums will generally 
increase at the rate of medical inflation. After considering the range 
of costs, premium and enrollment projections, we propose a 2024 user 
fee rate that will exert downward pressure on consumer premiums when 
compared to the user fee rate from prior years, and that also ensures 
adequate funding for Federal Exchange operations. The proposed FFE user 
fee rates for 2024 are slightly lower than the 2.75 percent FFE user 
fee rate that we established for the 2023 benefit year. After 
accounting for the impact of the lower user fee rate, we estimate that 
we would have sufficient funding available to fully fund user-fee 
eligible Exchange activities.
---------------------------------------------------------------------------

    \185\ We used the most recent projections from the Congressional 
Budget Office (https://www.cbo.gov/publication/57962) and our own 
internal data.
---------------------------------------------------------------------------

    We seek comment on the proposed 2024 FFE user fee rate.
b. SBE-FP User Fee Rates for the 2024 Benefit Year
    We propose to charge issuers offering QHPs through an SBE-FP a user 
fee rate of 2.0 percent of the monthly premium charged by the issuer 
for each policy under plans offered through an SBE-FP for the 2024 
benefit year.
    In Sec.  156.50(c)(2), we specify 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. 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. The benefits provided to issuers in 
SBE-FPs by the Federal Government include use of the Federal Exchange 
information technology and call center infrastructure used in 
connection with eligibility determinations for enrollment in QHPs and 
other applicable State health subsidy programs, as defined at section 
1413(e) of the ACA, and QHP enrollment functions under 45 CFR part 155, 
subpart E. The user fee rate for SBE-FPs is calculated based on the 
proportion of user fee eligible FFE costs that are associated with the 
FFE information technology infrastructure, the consumer call center 
infrastructure, and eligibility and enrollment services, and allocating 
a share of those costs to issuers in the relevant SBE-FPs.
    To calculate the proposed SBE-FP rates for the 2024 benefit year, 
we used the same assumptions on contract costs, enrollment, and 
premiums as the proposed FFE user fee rates. The user fee rate for SBE-
FPs is calculated based on the proportion of the total FFE costs 
utilized by SBE-FPs, such as the costs associated with the FFE 
information technology infrastructure, the consumer call center 
infrastructure, and eligibility and enrollment services and other 
applicable State health subsidy programs, which we estimate to be 
approximately 80 percent. Based on this methodology, the proposed 2024 
SBE-FP user fee rate is lower than the user fee rate of 2.25 percent of 
premiums that we established for the 2023 benefit year. The lower 
proposed user fee rate for SBE-FP issuers for the 2024 benefit year 
reflects our estimates of costs for operating the Federal Exchanges, 
premiums, enrollment, as well as State Exchange transitions for the 
2024 benefit year, and the costs associated

[[Page 78274]]

with performing these services that benefit SBE-FP issuers.
    We seek comment on the proposed 2024 SBE-FP user fee rate.
2. Publication of the 2024 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, maximum annual limitations on cost-sharing, and reduced 
maximum annual limitation on cost-sharing, in guidance annually 
starting with the 2023 benefit year. We note that these parameters are 
not included in this rulemaking, as HHS does not propose to change the 
methodology for these parameters for the 2024 benefit year, and 
therefore, HHS is required to publish these parameters in guidance no 
later than January 2023.
3. Standardized Plan Options (Sec.  156.201)
    HHS proposes to exercise its authority under sections 1311(c)(1) 
and 1321(a)(1)(B) of the ACA to make minor updates to its approach with 
respect to standardized plan options for PY 2024 and subsequent PYs. 
Section 1311(c)(1) of the ACA directs the Secretary to establish 
criteria for the certification of health plans as QHPs. Section 
1321(a)(1)(B) of the ACA directs the Secretary to issue regulations 
that set standards for meeting the requirements of title I of the ACA 
with respect to, among other things, the offering of QHPs through such 
Exchanges.
    Standardized plan options were first introduced in the 2017 Payment 
Notice, and defined at Sec.  155.20. In the first iteration of 
standardized plan options, HHS finalized one set of standardized plan 
options designed to be similar to the most popular QHPs in the 2015 
individual market FFEs at the bronze, silver, and gold metal levels. 
Issuers were not required to offer these standardized plan options. To 
facilitate plan shopping and to educate consumers about the distinctive 
cost-sharing features of standardized plan options, these plans were 
differentially displayed on HealthCare.gov under the authority at Sec.  
155.205(b)(1). Specifically, consumers had the ability to filter plan 
options to view only standardized plan options and received an 
accompanying message explaining how standardized plan options differed 
from non-standardized plan options.
    In the 2018 Payment Notice, HHS finalized three new sets of 
standardized plan options. The original standardized plan options from 
the 2017 Payment Notice were updated to reflect changes in QHP 
enrollment data in 2016, to include SBE-FP data, and to account for 
State cost-sharing laws. Standardized plan options were once more 
differentially displayed, but this time, they were also labeled 
``Simple Choice'' plans to make them more easily distinguishable from 
non-standardized plan options. HHS also established display 
requirements for approved web-brokers and QHP issuers using a direct 
enrollment pathway to facilitate enrollment through an FFE or SBE-FP--
including both the Classic DE and EDE Pathways--at Sec. Sec.  
155.220(c)(3)(i)(H) and 156.265(b)(3)(iv), respectively (81 FR 94117 
through 94118, 94148; 45 CFR 155.220(l) and 155.221(i)). Under these 
requirements, these entities must differentially display standardized 
plan options 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 approved a deviation.
    Standardized plan options were then discontinued in the 2019 
Payment Notice, but the discontinuance was challenged in the United 
States District Court for the District of Maryland. On March 4, 2021, 
the court decided City of Columbus, et al. v. Cochran.\186\ The court 
reviewed nine separate policies HHS had promulgated in the 2019 Payment 
Notice, vacating four of them. The court specifically vacated the 
portion of the 2019 Payment Notice that ceased HHS' practice of 
designating some plans in the FFEs as ``standardized options,'' a 
policy that the 2019 Payment Notice stated was seeking to maximize 
innovation by issuers in designing and offering a wide range of plans 
to consumers (83 FR 16974 and 16975). Subsequently, HHS announced its 
intent to engage in rulemaking under which it would propose to resume 
standardized plan options in time for PY 2023.\187\ Relatedly, 
President Biden's Executive Order on Promoting Competition in the 
American Economy directed HHS to implement standardized plan options in 
order to facilitate the plan selection process for consumers on the 
Exchanges.\188\
---------------------------------------------------------------------------

    \186\ 523 F. Supp. 3d 731 (D. Md. 2021).
    \187\ In part 3 of the 2022 Payment Notice, 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.
    \188\ Executive Order 14036 on Promoting Competition in the 
American Economy, July 9, 2021. See 86 FR 36987.
---------------------------------------------------------------------------

    More recently, in the 2023 Payment Notice, HHS finalized 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. HHS did not require issuers in the 
small group market to offer these standardized plan options. 
Furthermore, HHS did not subject issuers in State Exchanges to these 
requirements. HHS also exempted issuers 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,\189\ from the requirement to offer the standardized plan 
options finalized in the 2023 Payment Notice.
---------------------------------------------------------------------------

    \189\ See Or. Admin. R. 836-053-0009.
---------------------------------------------------------------------------

    In the 2023 Payment Notice, HHS finalized two sets of standardized 
plan options for two different sets of States at the following metal 
levels: 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 
finalize standardized plan option designs for the Indian CSR plan 
variations as provided for at Sec.  156.420(b) given that the cost-
sharing parameters for these plan variations are already largely 
specified, but HHS still required issuers to offer these plan 
variations for standardized plan options.\190\
---------------------------------------------------------------------------

    \190\ See QHP Certification Standardized Plan Options FAQs, 
https://www.qhpcertification.cms.gov/s/Standardized%20Plan%20Options%20FAQs.
---------------------------------------------------------------------------

    In the 2023 Payment Notice, HHS also elaborated upon the 
methodology it utilized in creating the standardized plan options 
designs. Specifically, HHS explained that it designed these plans to be 
similar to the most popular QHPs in FFEs and SBE-FPs in PY 2021. This 
was done based on an examination of the proportion of consumers 
enrolled in plans with different cost sharing types (including 
copayment exempt from the deductible, copayment subject to the 
deductible, coinsurance exempt from

[[Page 78275]]

the deductible, and coinsurance subject to the deductible) for every 
benefit category in the actuarial value (AV) calculator at each metal 
level.
    HHS chose the cost-sharing type with the majority or plurality of 
enrollees. HHS then chose the enrollee-weighted median values for this 
cost-sharing type as the copayment amount or coinsurance rate for each 
benefit category before modifying these plans to have an AV near the 
lower end of the de minimis range for each metal level to ensure the 
competitiveness of these plans. HHS applied this methodology in 
selecting the deductibles and MOOPs for these plans, as well.
    HHS also explained that it designed two separate sets of 
standardized plan options in order to accommodate applicable cost-
sharing laws in different sets of FFE and SBE-FP States, similar to the 
approach previously taken for standardized plan options. Specifically, 
in the 2018 Payment Notice, HHS designed three sets of standardized 
plan options tailored to unique cost-sharing laws in different States. 
The second and third sets of these standardized plan options differed 
from the first set only to the extent necessary to comply with State 
cost sharing laws.
    The second set of standardized plan options in the 2018 Payment 
Notice was designed to work in States that: (1) require that cost 
sharing for physical therapy, occupational therapy, and speech therapy 
be no greater than the cost sharing for primary care visits; (2) limit 
the cost-sharing amount that can be charged for a 30-day supply of 
prescription drugs by tier; or (3) require that all drug tiers carry a 
copayment rather than coinsurance. The second set of standardized plan 
options applied to Arkansas, Delaware, Iowa, Kentucky, Louisiana, 
Missouri, Montana, and New Hampshire. The third set was designed to 
work in a State with maximum deductible requirements and other cost 
sharing standards. The third set of standardized plan options was 
designed to work in the Exchange in New Jersey, which has since 
transitioned to become a State Exchange and was thus outside the scope 
of this particular rulemaking.
    HHS explained that it included several of the defining features of 
the second set of standardized plan options from the 2018 Payment 
Notice in the first set of standardized plan options in the 2023 
Payment Notice. As a result, in the first set of standardized plan 
options, there was cost sharing parity between the primary care visit, 
the speech therapy, and the occupational and physical therapy benefit 
categories. There were also copayments for all prescription drug tiers, 
including the non-preferred brand and specialty tiers, instead of 
coinsurance rates. Finally, the copayment for the mental health/
substance use disorder in-network outpatient office visit sub-
classification was equal to the least restrictive level for copayments 
for medical/surgical benefits in the in-network, outpatient office 
visit sub-classification (and copayments applied to substantially all 
medical/surgical benefits in this sub-classification), to ensure 
issuers were able to design plans that comply with the Paul Wellstone 
and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 
(MHPAEA) and its implementing regulations.\191\ This first set of 
standardized plan options applied to all FFE and SBE-FP issuers, 
excluding those in Delaware and Louisiana.
---------------------------------------------------------------------------

    \191\ In general, MHPAEA requires that the financial 
requirements (such as coinsurance and copays) and treatment 
limitations (such as visit limits) imposed on mental health or 
substance use disorder benefits cannot be more restrictive than the 
predominant financial requirements and treatment limitations that 
apply to substantially all medical/surgical benefits in a 
classification.
---------------------------------------------------------------------------

    HHS further explained that it included all of the defining features 
of the second set of standardized plan options from the 2018 Payment 
Notice in the second set of standardized plan options in the 2023 
Payment Notice. As a result, in this set of standardized plan options, 
similar to the first set of standardized plan options, there was cost-
sharing parity between the primary care visit, the speech therapy, and 
the occupational and physical therapy benefit categories, and there 
were copayments for all prescription drug tiers, including the non-
preferred brand and specialty tiers, instead of coinsurance rates. 
Additionally, the copayment for the mental health/substance use 
disorder in-network outpatient office visit sub-classification was 
equal to the least restrictive level for copayments for medical/
surgical benefits in the in-network, outpatient office visit sub-
classification (and copayments applied to substantially all medical/
surgical benefits in this sub-classification), to ensure issuers were 
able to design plans that comply with MHPAEA and its implementing 
regulations.
    The feature that distinguished the first set of standardized plan 
options from the second is that the second set of standardized plan 
options had copayments of $150 or less for the specialty drug tiers of 
standardized plan options at all metal levels. This feature was 
included in the second set of standardized plan options in order to 
accommodate relevant specialty tier prescription drug cost sharing laws 
in Delaware and Louisiana (87 FR 674 through 676; 87 FR 27311 through 
27313).\192\
---------------------------------------------------------------------------

    \192\ See 87 FR 674 through 676 and 87 FR 27311 through 27313 
for a more detailed discussion on the methodology HHS used to create 
the standardized plan options in the 2023 Payment Notice.
---------------------------------------------------------------------------

    In the 2023 Payment Notice, HHS also exercised the authority under 
Sec.  155.205(b)(1) to resume the differential display of standardized 
plan options, including those standardized plan options required under 
State action taking place on or before January 1, 2020, on 
HealthCare.gov beginning with the PY 2023 open enrollment period. 
Similarly, also beginning with the PY 2023 open enrollment period, HHS 
resumed 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 these entities 
were required to differentially display standardized plan options in a 
manner consistent with how standardized plan options were displayed on 
HealthCare.gov, unless HHS approved a deviation, beginning with the PY 
2023 open enrollment period.
    Most recently, after publishing the 2023 Payment Notice, HHS 
conducted extensive interested party engagement with a range of 
participants, including issuers, agents, brokers, web-brokers, States, 
State Exchanges, researchers, disease advocacy groups, and consumer 
support groups (87 FR 27318). HHS discussed a range of topics related 
to standardized plan options in these engagement sessions, including 
plan designs, cost sharing, pre-deductible coverage of particular 
benefits, formulary tiering, enhancing choice architecture, plan 
display on HealthCare.gov, reducing the risk of plan choice overload 
(either through direct limits on the number of non-standardized plan 
options or a revised version of the meaningful difference standard), 
and advancing health equity.
    For PY 2024 and subsequent PYs, we would maintain a large degree of 
continuity with our approach to standardized plan options in the 2023 
Payment Notice, except for minor updates as proposed in this section. 
First, in contrast to the policy finalized in the 2023 Payment Notice, 
we propose, for PY 2024 and subsequent PYs, to no longer include a 
standardized

[[Page 78276]]

plan option for the non-expanded bronze metal level. Accordingly, we 
propose at new Sec.  156.201(b) that for PY 2024 and subsequent PYs, 
FFE and SBE-FP issuers offering QHPs through the Exchanges must offer 
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 except the non-expanded bronze level, and throughout 
every service area that they offer non-standardized QHP options. We 
propose to re-designate the current regulation text at Sec.  156.201 as 
paragraph (a) and revise it to apply only to PY 2023.
    Thus, for PY 2024 and subsequent PYs, we propose standardized plan 
options for the following metal levels: 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. 
Consistent with our approach in the 2023 Payment Notice, we are not 
proposing standardized plan options for the Indian CSR plan variations 
as provided for at Sec.  156.420(b) given that the cost-sharing 
parameters for these plan variations are already largely specified. We 
would continue to require issuers to offer these plan variations for 
all standardized plan options offered, and we propose to remove the 
regulation text language stating that standardized plan options for 
these plan variations are not required to clarify that while issuers 
must, under Sec.  156.420(b), continue to offer such plan variations 
based on standardized plan options, those plan variations will 
themselves not be standardized plan options based on designs we will 
specify in this rulemaking.\193\
---------------------------------------------------------------------------

    \193\ See QHP Certification Standardized Plan Options FAQs, 
https://www.qhpcertification.cms.gov/s/Standardized%20Plan%20Options%20FAQs.
---------------------------------------------------------------------------

    We propose to discontinue standardized plan options for the non-
expanded bronze metal level mainly due to AV constraints. Specifically, 
it is not feasible to design a non-expanded bronze plan that includes 
any pre-deductible coverage while maintaining an AV within the 
permissible AV de minimis range for the non-expanded bronze metal 
level. Furthermore, few issuers chose to offer non-expanded bronze 
standardized plan options in PY 2023, with the majority of issuers 
offering bronze plans instead choosing to offer only expanded bronze 
standardized plan options. Thus, we believe discontinuing non-expanded 
bronze standardized plan options would minimize burden without any 
deleterious consequences. We also clarify that issuers would still be 
permitted to offer non-standardized plan options at the non-expanded 
bronze metal level, meaning consumers would still have the ability to 
choose these plan options if they so choose. We also clarify that if an 
issuer offers a non-standardized plan option at the bronze metal level, 
whether expanded or non-expanded, it would need to also offer an 
expanded bronze standardized plan option.
    Similar to the approach taken in the 2023 Payment Notice, we 
propose to create standardized plan options that resemble the most 
popular QHP offerings that millions are already enrolled in by 
selecting the most popular cost-sharing type for each benefit category; 
selecting enrollee-weighted median values for each of these benefit 
categories based on refreshed PY 2022 cost-sharing and enrollment data; 
modifying these plans to be able accommodate State cost-sharing laws; 
and decreasing the AVs for these plan designs to be at the floor of 
each AV de minimis range primarily by increasing deductibles.
    Furthermore, consistent with the approach taken in the 2023 Payment 
Notice, we propose to create two sets of standardized plan options at 
the previously proposed metal levels, with the same sets of designs 
applying to the same sets of States as in the 2023 Payment Notice. 
Specifically, the first set of standardized plan options would continue 
to apply to FFE and SBE-FP issuers in all FFE and SBE-FP States, 
excluding those in Delaware, Louisiana, and Oregon, and the second set 
of standardized plan options would continue to apply to Exchange 
issuers specifically in Delaware and Louisiana. See Table 10 and Table 
11 for the two sets of standardized plan options we propose for PY 
2024.
    In addition, since SBE-FPs use the same platform as the FFEs, we 
would continue to apply the standardized plan option requirements 
equally on FFEs and SBE-FPs. We continue to believe that proposing a 
distinction between FFEs and SBE-FPs for purposes of these requirements 
would create a substantial financial and operational burden that we 
believe outweighs the benefit of permitting such a distinction.
    Also, consistent with our policy in PY 2023, we would continue to 
apply these requirements to applicable issuers in the individual market 
but not in the small group market. We also would continue to exempt 
issuers offering QHPs through 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,\194\ from the requirement to offer the standardized plan 
options included in this rule. In addition, we would continue to exempt 
issuers in State Exchanges from these requirements for several reasons. 
First, we do not wish to impose duplicative standardized plan option 
requirements on issuers in the eight State Exchanges that already have 
standardized plan option requirements. Additionally, we continue to 
believe that State Exchanges are best positioned to understand both the 
nuances of their respective markets and consumer needs within those 
markets. Finally, we continue to 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, and we do not wish to impede these innovative policies so long as 
they comply with existing legal requirements.
---------------------------------------------------------------------------

    \194\ See Or. Admin. R. 836-053-0009.
---------------------------------------------------------------------------

    Furthermore, consistent with the policy finalized in the 2023 
Payment Notice, we would continue to differentially display 
standardized plan options, including those standardized plan options 
required under State action taking place on or before January 1, 2020, 
on HealthCare.gov under the authority at Sec.  155.205(b)(1). We would 
also continue enforcement of the 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 DE and EDE Pathways--at Sec. Sec.  
155.220(c)(3)(i)(H) and 156.265(b)(3)(iv), respectively. This means 
that these entities would be required to differentially display the 
2024 benefit year standardized plan options 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, beginning with the 2024 benefit year open 
enrollment period. Consistent with our PY 2023 policy, any requests 
from web-brokers and QHP issuers seeking approval for an alternate 
differentiation format would continue to be reviewed based on whether 
the same or similar level of differentiation and clarity is being

[[Page 78277]]

provided under the requested deviation as is provided on 
HealthCare.gov.
    Consistent with the approach to plan designs in the 2023 Payment 
Notice, we would also continue to use the following four tiers of 
prescription drug cost sharing in the proposed standardized plan 
options: generic drugs, preferred brand drugs, non-preferred brand 
drugs, and specialty drugs. We believe the use of four tiers of 
prescription drug cost-sharing in the standardized plan options will 
continue to allow for predictable and understandable drug coverage. We 
believe the use of four tiers of prescription drug cost-sharing will 
also play an important role in facilitating the consumer decision-
making process by allowing consumers to more easily compare formularies 
between plans, and allow for easier year-to-year comparisons with their 
current plan. The continued use of four tiers will also minimize issuer 
burden since, for PY 2023, issuers have already created standardized 
plan options with formularies that include only four tiers of 
prescription drug cost-sharing. We will consider including additional 
drug tiers for future years, and invite comment on the appropriate 
number of drug tiers to use in standardized plan options in the future. 
However, we would continue to use four tiers of prescription drug cost-
sharing in standardized plan options for PY 2024 and subsequent PYs to 
maintain continuity with our approach to standardized plan options in 
PY 2023.
    We are aware of concerns that issuers may not be including specific 
drugs at appropriate cost-sharing tiers for the standardized plan 
options; for example, some issuers may be including brand name drugs in 
the generic drug cost-sharing tier, while others include generic drugs 
in the preferred or non-preferred brand drug cost-sharing tiers. We 
believe that consumers understand the difference between generic and 
brand name drugs, and that it is reasonable to assume that consumers 
expect that only generic drugs are covered at the cost-sharing amount 
in the generic drug cost-sharing tier, and that only brand name drugs 
are covered at the cost-sharing amount in the preferred or non-
preferred brand drug cost-sharing tiers.
    Accordingly, we propose to revise Sec.  156.201 to add a new 
paragraph (c) specifying that issuers of standardized plan options must 
(1) place all covered generic drugs in the standardized plan options' 
generic drug cost-sharing tier, or the specialty drug tier if there is 
an appropriate and non-discriminatory basis in accordance with Sec.  
156.125 for doing so, and (2) place brand name drugs in either the 
standardized plan options' preferred brand or non-preferred brand 
tiers, or specialty drug tier if there is an appropriate and non-
discriminatory basis in accordance with Sec.  156.125 for doing so. For 
purposes of this proposal, ``non-discriminatory basis'' means there 
must be a clinical basis for placing a particular prescription drug in 
the specialty drug tier in accordance with Sec.  156.125.
    We also specify that within the Prescription Drug Template, for 
standardized plan options, issuers should enter zero cost preventive 
drugs for tier one, generic drugs for tier two, preferred brand drugs 
for tier three, non-preferred drugs for tier four, specialty drugs for 
tier five, and medical services drugs for tier six, if applicable.
    We propose the approach described in this section for PY 2024 and 
subsequent PYs for several reasons. To begin, we are continuing to 
require FFE and SBE-FP issuers to offer standardized plan options in 
large part due to continued plan proliferation, which has only 
increased since the standardized plan option requirements were 
finalized in the 2023 Payment Notice. With this continued plan 
proliferation, it is increasingly important to continue to attempt to 
streamline and simplify the plan selection process for consumers on the 
Exchanges. We believe these standardized plan options can continue to 
play a meaningful role in that simplification by reducing the number of 
variables that consumers have to consider when selecting a plan option, 
thus allowing consumers to more easily compare available plan options. 
More specifically, with these standardized plan options, consumers will 
continue to be able to take other meaningful factors into account, such 
as networks, formularies, and premiums, when selecting a plan option. 
We further believe these standardized plan options include several 
distinctive features, such as enhanced pre-deductible coverage for 
several benefit categories, that will continue to play an important 
role in reducing barriers to access, combatting discriminatory benefit 
designs, and advancing health equity. Including enhanced pre-deductible 
coverage for these benefit categories will ensure consumers are more 
easily able to access these services without first meeting their 
deductibles. Furthermore, including copayments instead of coinsurance 
rates for a greater number of benefit categories will enhance consumer 
certainty and reduce the risk of unexpected financial harm sometimes 
associated with high coinsurance rates.
    Additionally, given that insufficient time has passed to assess all 
the impacts of the standardized plan option requirements finalized in 
the 2023 Payment Notice, we propose to maintain a high degree of 
continuity with respect to many of the standardized plan option 
policies previously finalized to reduce the risk of disruption for all 
involved interested parties, including issuers, agents, brokers, 
States, and enrollees. We believe making major departures from the 
methodology used to create the standardized plan options as finalized 
in the 2023 Payment Notice could result in drastic changes in these 
plan designs that could potentially create undue burden for these 
interested parties. Furthermore, if the standardized plan options that 
HHS creates vary significantly from year to year, those enrolled in 
these plans could experience unexpected financial harm if the cost-
sharing for services they rely upon differs substantially from the 
previous year. Ultimately, we believe consistency in standardized plan 
options is important to allow both issuers and enrollees to become 
accustomed to these plan designs.
    We seek comment on our proposed approach to standardized plan 
options for PY 2024 and subsequent PYs. We also seek comment on the 
specific approach to tiering for these standardized plan options within 
the Prescription Drug Template.

[[Page 78278]]

[GRAPHIC] [TIFF OMITTED] TP21DE22.020


[[Page 78279]]


[GRAPHIC] [TIFF OMITTED] TP21DE22.021

    4. Non-Standardized Plan Option Limits (Sec.  156.202)
    At Sec.  156.202, HHS proposes to exercise the authority under 
sections 1311(c)(1) and 1321(a)(1)(B) of the ACA to limit the number of 
non-standardized plan options that issuers of QHPs can offer through 
Exchanges on the Federal platform (including State-based Exchanges on 
the Federal Platform) to two non-standardized plan options per product 
network type (as described in the definition of ``product'' at Sec.  
144.103) and metal level (excluding catastrophic plans), in any service 
area, for PY 2024 and beyond, as a condition of QHP certification. 
Section 1311(c)(1) of the ACA directs the Secretary to establish 
criteria for the certification of health plans as QHPs. Section 
1321(a)(1)(B) of the ACA directs the Secretary to issue regulations 
that set standards for meeting the requirements of title I of the ACA 
with respect to, among other things, the offering of QHPs through such 
Exchanges.
    Under this proposed requirement, an issuer would, for example, be 
limited to offering through an Exchange two gold HMO and two gold PPO 
non-standardized plan options in any service area in PY 2024 or any 
subsequent PY. As an additional clarifying example, if an issuer wanted 
to offer two Statewide bronze HMO non-standardized plan options as well 
as two additional bronze HMO non-standardized plan options in one 
particular service area that covers less than the entire State, in the 
service areas that all four plans would cover, the issuer could choose 
to offer through the Exchange either the two bronze HMO non-
standardized plan options offered Statewide or the two bronze HMO non-
standardized plan options offered in that particular service area (or 
any combination thereof, so long as the total number of non-
standardized plan options does not exceed the limit of two per issuer, 
product network type, and metal level in the service area).
    Similar to the approach taken with respect to standardized plan 
options in the 2023 Payment Notice and in this proposed rule, HHS 
proposes to not apply this requirement to issuers in State Exchanges 
for several reasons. First, HHS does not wish to impose duplicative 
requirements on issuers in the State Exchanges that already limit the 
number of non-standardized plan options. Additionally, HHS believes 
that State Exchanges are best positioned to understand both the nuances 
of their respective markets and consumer needs within those markets. 
Finally, HHS

[[Page 78280]]

believes 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, and HHS does 
not wish to impede these innovative policies, so long as they comply 
with existing legal requirements.
    However, consistent with the approach taken with respect to 
standardized plan options in the 2023 Payment Notice and in this this 
proposed rule, since SBE-FPs use the same platform as the FFEs, HHS 
proposes to apply this requirement equally on FFEs and SBE-FPs. HHS 
believes that proposing a distinction between FFEs and SBE-FPs for 
purposes of this requirement would create a substantial financial and 
operational burden that HHS believes outweighs the benefit of 
permitting such a distinction.
    Finally, also in alignment with the approach taken with 
standardized plan options in the 2023 Payment Notice as well as the 
approach taken in this proposed rule, HHS proposes that this proposed 
requirement would not apply to plans offered through the SHOPs or to 
SADPs, given that the nature of these markets differ substantially from 
the individual medical QHP market, in terms of issuer participation, 
plan offerings, plan enrollment, and services covered. For example, the 
degree of plan proliferation observed in individual market medical QHPs 
over the last several plan years is not evident to the same degree for 
QHPs offered through the SHOPs or for SADPs offered in the individual 
market. For these reasons, HHS does not believe the same requirements 
should be applied to these other markets.
    HHS believes that given the large number of plan offerings that 
would continue to exist on the Exchanges, a sufficiently diverse range 
of plan offerings would still exist for consumers to continue to select 
innovative plans that meet their unique health needs, even if HHS did 
ultimately choose to limit the number of non-standardized plan options 
that issuers can offer. Thus, even if consumers believe that their 
health needs may not be best met with the standardized plan options 
included in this current rulemaking, they would still have the option 
to select from a sufficient number of other non-standardized plan 
options.
    Under this proposed limit, we estimate that the weighted average 
number of non-standardized plan options (which does not take into 
consideration standardized plan options) available to each consumer 
would be reduced from approximately 107.8 in PY 2022 to 37.2 in PY 
2024, which we believe still provides consumers with a sufficient 
number of plan offerings.\195\ Additionally, we estimate that of a 
total of 106,037 non-standardized plan option plan-county combinations 
offered in PY 2022, approximately 60,949 (57.5 percent) of these plan-
county combinations would no longer be permitted to be offered, a 
number we believe would still provide consumers with a sufficient 
degree of choice during the plan selection process.\196\
---------------------------------------------------------------------------

    \195\ Utilizing weighted as opposed to unweighted averages takes 
into consideration the number of enrollees in a particular service 
area when calculating the average number of plans available to 
enrollees. As a result of weighting by enrollment, service areas 
with a higher number of enrollees have a greater impact on the 
overall average than service areas with a lower number of enrollees. 
Weighting averages allows a more representative metric to be 
calculated that more closely resembles the actual experience of 
enrollees.
    \196\ Plan-county combinations are the count of unique plan ID 
and FIPS code combinations. This measure is used because a single 
plan may be available in multiple counties, and specific limits on 
non-standardized plan options may have different impacts on one 
county where there are four plans of the same product network type 
and metal level versus another county where there are only two plans 
of the same product network type and service area, for example.
---------------------------------------------------------------------------

    Finally, if this limit were adopted, we estimate that of the 
approximately 10.21 million enrollees in the FFEs and SBE-FPs in PY 
2022, approximately 2.72 million (26.6 percent) of these enrollees 
would have their current plan offerings affected, and issuers would 
therefore be required to select another QHP to crosswalk these 
enrollees into for PY 2024.\197\ CMS would utilize the existing 
discontinuation notices and process as well as the current re-
enrollment hierarchy at Sec.  155.335(j) to ensure a seamless 
transition and continuity of coverage for affected enrollees. In 
addition, CMS would ensure that the necessary consumer assistance would 
be made available to affected enrollees as part of the expanded funding 
for Navigator programs.
---------------------------------------------------------------------------

    \197\ These calculations assume that the non-standardized plan 
options removed due to the proposed limit would be those with the 
fewest enrollees based on PY 2022 data, which includes individual 
market medical QHPs for Exchanges using the HealthCare.gov 
eligibility and enrollment platform, including SBE-FPs.
---------------------------------------------------------------------------

    In the 2023 Payment Notice, HHS solicited comment on enhancing 
choice architecture and on preventing plan choice overload for 
consumers on HealthCare.gov (87 FR 689 through 691 and 87 FR 27345 
through 27347). In this comment solicitation, HHS noted that although 
it continues to prioritize competition and choice on the Exchanges, it 
was concerned about plan choice overload, which can result when 
consumers have too many choices in plan options on an Exchange. HHS 
referred to a 2016 report by the RAND Corporation reviewing over 100 
studies which 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.\198\ HHS also 
referred to a study of consumer behavior in Medicare Part D, Medicare 
Advantage, and Medigap that demonstrated that 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.\199\
---------------------------------------------------------------------------

    \198\ Taylor EA, Carman KG, Lopez A, Muchow AN, Roshan P, and 
Eibner C. Consumer Decisionmaking in the Health Care Marketplace. 
RAND Corporation. 2016.
    \199\ Chao Zhou and Yuting Zhang, ``The Vast Majority of 
Medicare Part D Beneficiaries Still Don't Choose the Cheapest Plans 
That Meet Their Medication Needs.'' Health Affairs, 31, no.10 
(2012): 2259-2265.
---------------------------------------------------------------------------

    With this concern in mind, HHS explained in the 2023 Payment Notice 
that it was interested in exploring possible methods of improving 
choice architecture and preventing plan choice overload. HHS expressed 
interest in exploring the feasibility and utility of limiting the 
number of non-standardized plan options that FFE and SBE-FP issuers can 
offer through the Exchanges in future plan years as one option to 
reduce the risk of plan choice overload and to further streamline and 
optimize the plan selection process for consumers on the Exchanges. 
Accordingly, HHS sought comment on the impact of limiting the number of 
non-standardized plan options that issuers can offer through the 
Exchanges, on effective methods to achieve this goal, the advantages 
and disadvantages of these methods, and if there were alternative 
methods not considered.
    In response to this comment solicitation, many commenters agreed 
that the number of plan options that consumers can choose from on the 
Exchanges has increased beyond a point that is productive for 
consumers. Many of these commenters further explained that consumers do 
not have the time, resources, our health literacy to be able to 
meaningfully compare all available plan options. These commenters also 
agreed that when consumers are faced with an overwhelming number of 
plan options, many of which are similar with only minor differences 
between them, the risk of plan choice overload is significantly 
exacerbated.
    Similarly, during the standardized plan option interested party 
engagement

[[Page 78281]]

sessions HHS conducted after publishing the 2023 Payment Notice, many 
participants agreed that the number of plan options was far too high 
and supported taking additional action to prevent plan choice overload. 
In short, many 2023 Payment Notice commenters and interested party 
engagement participants supported limiting the number of non-
standardized plan options that issuers can offer to streamline the plan 
selection process for consumers on the Exchanges.
    In addition, current QHP submission data provide support for the 
argument that enacting such a limit would be beneficial for consumers. 
For example, it is estimated that there will be a weighted average of 
113.6 plans available per enrollee on HealthCare.gov in PY 2023 
compared to a weighted average of 107.8 plans available per enrollee in 
PY 2022 and a weighted average of 25.9 plans available per enrollee in 
PY 2019.\200\ Similarly, it is expected that there will be a weighted 
average of 18.3 plan offerings per issuer in PY 2023 compared to 17.1 
plan offerings per issuer in PY 2022 and 9.7 plan offerings per issuer 
in PY 2019.\201\ With this continued plan proliferation for both 
enrollees and issuers, HHS believes that limiting the number of non-
standardized plan options that FFE and SBE-FP issuers of QHPs can offer 
through the Exchanges beginning in PY 2024 could greatly enhance the 
consumer experience on HealthCare.gov.
---------------------------------------------------------------------------

    \200\ Weighted averages were calculated by accounting for the 
number of enrollees in particular service areas, with service areas 
with a higher number of enrollees having a more significant impact 
on the overall average than service areas with a lower number of 
enrollees.
    \201\ Ibid.
---------------------------------------------------------------------------

    To reduce the risk of plan choice overload, HHS also considered 
solely focusing on enhancing choice architecture on HealthCare.gov, 
instead of enhancing choice architecture in conjunction with limiting 
the number of non-standardized plan options that issuers can offer, an 
approach recommended by several commenters in the 2023 Payment Notice. 
HHS agrees that enhancements to the consumer experience on 
HealthCare.gov are critical in ensuring that consumers are able to more 
meaningfully compare plan choices and more easily select a health plan 
that meets their unique health needs. As such, HHS made several 
enhancements to HealthCare.gov for the open enrollment period for PY 
2023. HHS also intends to continue conducting research to inform 
further enhancements to the consumer experience on HealthCare.gov for 
PY 2024 and subsequent plan years.
    That said, HHS believes that enhancing choice architecture on 
HealthCare.gov is necessary but, alone, insufficient to reduce the risk 
of plan choice overload for several reasons. First, HealthCare.gov is 
not the only pathway for consumers to search for, compare, select, and 
enroll in a QHP, and it is not the only information resource consumers 
seek when considering Exchange coverage. Instead, consumers shop 
through a multitude of channels, sometimes utilizing a mix of customer 
service channels including the Marketplace Call Center; online on 
HealthCare.gov; through assisters, agents, and brokers; and through 
certified enrollment partners (such as Classic DE and EDE web brokers 
and issuers). Thus, HHS believes that consumers enrolling in QHPs 
through these alternative pathways would not benefit to the same degree 
as those enrolling through HealthCare.gov if HHS focused on reducing 
plan choice overload solely by making enhancements to HealthCare.gov. 
Moreover, considering that an increasingly greater portion of QHP 
enrollment is occurring through these alternative enrollment pathways, 
HHS believes that a more comprehensive approach to reducing plan choice 
overload that would also benefit those utilizing these alternative 
enrollment pathways is required.
    Furthermore, while enhancements to choice architecture and the plan 
comparison experience can play a critical role in streamlining the plan 
selection process and reducing the risk of plan choice overload, the 
number of plans available per enrollee has increased beyond a number 
that is beneficial for consumers, and this high number of plan choices 
makes it increasingly difficult to meaningfully manage choice 
architecture on HealthCare.gov and through other Exchange customer 
service channels.
    Relatedly, HHS believes that low-income consumers would 
particularly benefit from a policy that limits the number of plans. 
This is because silver plans deliver the most value to low-income 
consumers, but it is exactly these consumers--who often have the lowest 
health insurance literacy--who now face choosing among the highest 
number of near-duplicate silver plans, which will continue unless 
limits on the number of these plans are set. Near-duplicate plans are 
the most difficult to filter and sort out by interface improvements.
    As such, HHS believes that having an excessive number of plans 
(particularly those at the silver metal level) places an inequitable 
burden on those who need insurance the most, those who face the 
greatest challenges in selecting the most suitable health plan, and 
those who can least withstand the consequences of choosing a plan that 
costs too much and delivers too little. For this reason, HHS believes 
that reducing the number of available plans (particularly silver plans) 
by limiting the number of non-standardized plan options that issuers 
can offer, can play an important role in advancing the agency's 
commitments to health equity.
    In short, HHS believes that limiting the number of non-standardized 
plan options that issuers can offer in conjunction with enhancing the 
plan comparison experience on HealthCare.gov is the most effective 
method to streamline the plan selection process and to reduce the risk 
of plan choice overload for consumers on the HealthCare.gov Exchanges.
    As an alternative to limiting the number of non-standardized plan 
options that issuers in FFEs and SBE-FPs can offer through the 
Exchanges to reduce the risk of plan choice overload, HHS could also 
apply a meaningful difference standard. Such a standard was previously 
codified at Sec.  156.298.
    The original meaningful difference standard was introduced 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 
the consumer experience on the Exchanges by preventing duplicative plan 
offerings. The decision to discontinue the meaningful difference 
standard in the 2019 Payment Notice was made largely due to the 
decreased number of plan offerings on the Exchanges (that is, there was 
a weighted average of 25.9 plans available per enrollee in PY 2019), as 
well as the low number of plans flagged under the prior review.
    Under the original meaningful difference standard introduced in the 
2015 Payment Notice, a plan was considered to be ``meaningfully 
different'' from another plan in the same service area and metal tier 
(including catastrophic plans) if a reasonable consumer would be able 
to identify one or more material differences among the following 
characteristics between the plan and other plan offerings: (1) cost 
sharing; (2) provider networks; (3) covered benefits; (4) plan type; 
(5) Health Savings Account eligibility; or (6) self-only, non-self-
only, or child only plan offerings (79 FR 13813, 13840). Additionally, 
CMS believed that a

[[Page 78282]]

reasonable consumer would be likely to identify a difference in MOOP of 
$100 or more or a difference in deductible of $50 for purposes of the 
meaningful difference standard.\202\ The 2017 Payment Notice eliminated 
the Health Savings Account eligibility element, and revised the self-
only, non-self-only, or child-only plan offerings element (87 FR 27208, 
27345). In the 2017 Letter to Issuers, the MOOP and deductible dollar 
difference thresholds were increased to $500 and $250, 
respectively.\203\
---------------------------------------------------------------------------

    \202\ 2015 Letter to Issuers in the Federally-facilitated 
Marketplaces, chapter 3, section 3. Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2015-final-issuer-letter-3-14-2014.pdf.
    \203\ 2017 Letter to Issuers in the Federally-facilitated 
Marketplaces, chapter 2, section 12. Available at https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/final-2017-letter-to-issuers-2-29-16.pdf.
---------------------------------------------------------------------------

    In the 2023 Payment Notice comment solicitation on enhancing choice 
architecture and preventing plan choice overload (87 FR 27208, 27345), 
in addition to soliciting comment on limiting the number of non-
standardized plan options that issuers can offer, HHS also solicited 
comment on resuming the meaningful difference standard as one potential 
method it could use to reduce the risk of plan choice overload. In 
response to this comment solicitation, many commenters and standardized 
plan option interested party engagement participants supported resuming 
the meaningful difference standard, with the caveat that the standard 
should be strengthened since the original version of the standard from 
the 2015 Payment Notice as well as the updated version of the standard 
from the 2017 Payment Notice both failed to meaningfully reduce 
duplicative plan offerings.
    These commenters and workgroup participants further explained that 
earlier versions of the meaningful difference standard relied on 
several criteria and difference thresholds (that is, only having one 
difference among the following attributes: cost sharing, provider 
networks, covered benefits, plan type, Health Savings Account 
eligibility, or self-only, non-self-only, or child only plan offerings) 
which allowed issuers to more easily meet the standard. Several of 
these commenters and workgroup participants noted that no State 
Exchange currently utilizes the meaningful difference standard to 
reduce the risk of plan choice overload.
    As such, HHS proposes, as an alternative to our proposal to limit 
the number of non-standardized plan options that an FFE or SBE-FP 
issuer may offer on the Exchange, to impose a new meaningful difference 
standard, which would be more stringent than the previous standard, for 
PY 2024 and subsequent PYs. Specifically, instead of including all of 
the criteria from the original standard from the 2015 Payment Notice 
(that is, cost sharing, provider networks, covered benefits, plan type, 
Health Savings Account eligibility, or self-only, non-self-only, or 
child only plan offerings), HHS proposes grouping plans by issuer ID, 
county, metal level, product network type, and deductible integration 
type, and then evaluating whether plans within each group are 
``meaningfully different'' based on differences in deductible amounts.
    With this proposed approach, two plans would need to have 
deductibles that differ by more than $1,000 to satisfy the new proposed 
meaningful difference standard. We believe that adopting this approach 
for a new meaningful difference standard would more effectively reduce 
the risk of plan choice overload and streamline the plan selection 
process for consumers on the Exchanges. With a dollar deductible 
difference threshold of $1,000, we estimate that the weighted average 
number of non-standardized plan options (which does not take into 
consideration standardized plan options) available to each consumer 
would be reduced from approximately 107.8 in PY 2022 to 53.2 in PY 
2024, which we believe still provides consumers with a sufficient 
number of plan offerings. In addition, we estimate that of a total of 
106,037 non-standardized plan option plan-county combinations offered 
in PY 2022, approximately 49,629 (46.8 percent) of these plan-county 
combinations would no longer be permitted to be offered, a number we 
believe would still provide consumers with a sufficient degree of 
choice during the plan selection process.\204\ If this dollar 
deductible difference threshold were adopted, we estimate that of the 
approximately 10.21 million enrollees in the FFEs and SBE-FPs in PY 
2022, approximately 2.64 million (25.9 percent) of these enrollees 
would have their current plan offerings affected.\205\
---------------------------------------------------------------------------

    \204\ Plan-county combinations are the count of unique plan ID 
and FIPS code combinations. This measure is used because a single 
plan may be available in multiple counties, and specific limits on 
non-standardized plan options or specific dollar deductible 
difference thresholds may have different impacts on one county where 
there are four plans of the same product network type and metal 
level versus another county where there are only two plans of the 
same product network type and metal level, for example.
    \205\ These calculations assume that the non-standardized plan 
options removed due to the proposed limit would be those with the 
fewest enrollees based on PY 2022 data, which includes individual 
market medical QHPs for Exchanges using the HealthCare.gov 
eligibility and enrollment platform, including SBE-FPs.
---------------------------------------------------------------------------

    We seek comment on the feasibility and utility of limiting the 
number of non-standardized plan options that FFE and SBE-FP issuers can 
offer through the Exchanges beginning in PY 2024. We also seek comment 
on whether the limit of two non-standardized plan options per issuer, 
product network type, and metal level in any service area is the most 
appropriate approach, or if a stricter or more relaxed limit should be 
adopted instead. In addition, we seek comment on the advantages and 
disadvantages of utilizing a phased approached of limiting the number 
of non-standardized plan options (for example, if there were a limit of 
three non-standardized plan options per issuer, product network type, 
metal level, and service area for PY 2024, two for PY 2025, and one for 
PY 2026). We also seek comment on the effect that adopting such a limit 
would have on particular product network types, and whether this limit 
would cause a proliferation of product network types that are not 
actually differentiated for consumers.
    Furthermore, we seek comment on whether we should consider 
additional factors, such as variations of products or networks, when 
limiting the number of non-standardized plan options--which would mean 
that issuers would be limited to offering two non-standardized plan 
options per product network type, metal level, product, and network 
variation (for example, by network ID) in any service area (or some 
combination thereof). If we were to adopt such an approach, issuers 
would be permitted to offer two non-standardized gold HMOs within one 
product as well as an additional two non-standardized gold HMOs within 
a second product in a particular service area, for example. This would 
also mean that issuers would be permitted to offer two non-standardized 
gold HMOs with one particular network ID as well as two additional non-
standardized gold HMOs with a different network ID in a particular 
service area, for example.
    We also seek comment on whether permitting additional variation 
only for specific benefits, such as adult dental and adult vision 
benefits, instead of permitting any variation in a product (for 
example, by product ID) would be more appropriate--which would mean,

[[Page 78283]]

for example, that issuers could offer two gold HMO non-standardized 
plan options without adult vision and dental benefits and two gold HMO 
non-standardized plan options with adult vision and dental benefits in 
the same service area.
    In addition, we seek comment on imposing a new meaningful 
difference standard in place of limiting the number of non-standardized 
plan options that issuers can offer. We also seek comment on additional 
or alternative specific criteria that would be appropriate to include 
in the meaningful difference standard to determine whether plans are 
``meaningfully different'' from one another, including whether the same 
criteria and difference thresholds from the original standard from the 
2015 Payment Notice or the updated difference thresholds from the 2017 
Payment Notice should be instituted, or some combination thereof. 
Finally, we seek comment on the specific deductible dollar difference 
thresholds that would be appropriate to determine whether plans are 
considered to be ``meaningfully different'' from other plans in the 
same grouping, and whether a deductible threshold of $1,000 would be 
most appropriate and effective, or if a stricter or more relaxed 
threshold should be adopted instead.
5. QHP Rate and Benefit Information (Sec.  156.210)
a. Age on Effective Date for SADPs
    We propose at new Sec.  156.210(d)(1) to require issuers of stand-
alone dental plans (SADPs), as a condition of Exchange certification, 
to use an enrollee's age at the time of policy issuance or renewal 
(referred to as age on effective date) as the sole method to calculate 
an enrollee's age for rating and eligibility purposes, beginning with 
Exchange certification for PY 2024. We propose that this requirement 
apply to Exchange-certified SADPs, whether sold on- or off-Exchange.
    Since PY 2014, the process the FFEs use in QHP certification allows 
SADP issuers seeking certification of their SADPs to enter multiple 
options to explain how age is determined for rating and eligibility 
purposes. Because the Federal eligibility and enrollment platform 
operationalizes the rating and eligibility standards when an applicant 
seeks SADP coverage through an SBE-FP, issuers in SBE-FPs have also 
been required to comply with this part of the process. While market 
rules at Sec.  147.102(a)(1)(iii) require medical QHP issuers to enter 
age on effective date as the method to calculate an enrollee's age for 
rating and eligibility purposes, SADP issuers have been able to enter 
any of the following four options in the Business Rules Template: (1) 
Age on effective date; (2) Age on January 1st of the effective date 
year; (3) Age on insurance date (age on birthday nearest the effective 
date); or (4) Age on January 1st or July 1st.\206\
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    \206\ See, for example, Qualified Health Plan Issuer Application 
Instructions, Plan Year 2023, Extracted section: Section 3B: 
Business Rules. https://www.qhpcertification.cms.gov/s/Business%20Rules.
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    Despite the availability of these other options for SADPs, age on 
effective date is the most commonly used age rating methodology; the 
vast majority of individual market SADP issuers have used the age on 
effective date method since PY 2014. Not only is it the most commonly 
used method, but it is also the most straightforward methodology for 
consumers to understand. For example, under the age on effective date 
method, if an enrollee is age 30 at the time of a plan's effective 
date, the enrollee is rated at age 30 for the rest of the plan year. 
The less commonly used options are likely more confusing for consumers, 
who may experience a mismatch between their age on the date on which 
they enrolled into an SADP versus the age on which the rate charged to 
them is based, due to the alternate age calculation methodologies. 
Thus, consumers can more easily understand the premium rate they are 
charged when the age on effective date method is used instead of the 
other methods, reducing consumers confusion.
    Allowing Exchange-certified SADPs to rate by other methods imposes 
unnecessary complexity, not only to CMS as operator of the FFEs and the 
Federal eligibility and enrollment platform, but also to enrollment 
partners and consumers in the Exchanges on the Federal platform. For 
example, the added complexity results in occasional inability to 
effectuate enrollment due to the unclear logic used to support the 
uncommon and alternative Exchange-certified SADP rating methods, which 
require expensive manual workarounds for the Exchanges on the Federal 
platform and Exchange-certified SADP issuers. Using the other methods 
also affects the efficiency of Classic DE and EDE partners, who rely 
more on Application Programming Interfaces (APIs) and must account for 
these alternate Exchange-certified SADP age calculation methods. It is 
more challenging for the Classic DE and EDE partners to replicate the 
logic needed for enrolling consumers into Exchange-certified SADPs 
using methods other than the conventional age on effective date method. 
Additionally, the more complicated alternative age calculation methods 
currently in use make it more difficult for consumers to understand the 
premium rate they are charged. Thus, requiring Exchange-certified SADPs 
to use the age on effective date methodology to calculate an enrollee's 
age as a condition of QHP certification, and consequently removing the 
less commonly used and more complex age calculation methods, will 
reduce consumer confusion and promote operational efficiency.
    By helping to reduce consumer confusion and promote operational 
efficiency during the QHP certification process, this proposed policy 
would help facilitate more informed enrollment decisions and enrollment 
satisfaction. Accordingly, we believe it is appropriate to extend this 
proposed certification requirement to SADPs seeking certification on 
the FFEs as well as the SBE-FPs and SBEs. We seek comment on any 
anticipated challenges that this proposal could present for SBEs using 
their own platform, and whether and to what extent we should, if this 
proposal is finalized, limit or delay this proposed certification 
requirement for those SBEs.
    We acknowledge the potential that Exchange-certified SADPs whose 
issuers use the alternative age calculation methods could withdraw from 
the Exchanges rather than comply with this new requirement. However, we 
do not anticipate that any such issuers would choose to withdraw from 
the Exchanges because of this proposal; and even if an issuer were to 
withdraw, we would expect that any such withdrawal would cause minimal 
disruption to consumers and other Exchange-certified plans. Given that 
a large majority of Exchange-certified SADP issuers are already using 
the age on effective date method, and based on the current availability 
of such plans in all service areas, we do not anticipate that consumers 
or other Exchange-certified plans would be materially affected.\207\
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    \207\ In the EHB Rule (78 FR at 12853), we operationalized 
section 1302(b)(4)(F) of the ACA to permit QHP issuers to omit 
coverage of the pediatric dental EHB if an Exchange-certified SADP 
exists in the same service area in which they intend to offer 
coverage. As a corollary, if no such SADP is offered through an 
Exchange in that service area, then all health plans offered through 
the Exchange in that service area would be required to provide 
coverage of the pediatric dental EHB, as section 2707(a) of the PHS 
Act requires all non-grandfathered plans in the individual and small 
group markets to provide coverage of the EHB package described at 
section 1302(a) of the ACA.
---------------------------------------------------------------------------

    We seek comment on this proposal to require Exchange-certified 
SADPs, whether sold on- or off-Exchange, to use age on effective date 
as the sole method

[[Page 78284]]

to calculate an enrollee's age for rating and eligibility purposes, 
beginning with PY 2024.
b. Guaranteed Rates for SADPs
    We propose at new Sec.  156.210(d)(2) to require issuers of SADPs, 
as a condition of Exchange certification, to submit guaranteed rates 
beginning with Exchange certification for PY 2024. We propose that this 
requirement apply to Exchange-certified SADPs, whether they are sold 
on- or off-Exchange.
    SADPs are excepted benefits, as defined by section 2791(c)(2)(A) of 
the PHS Act and HHS implementing regulations at Sec. Sec.  
146.145(b)(3)(iii)(A) and 148.220(b)(1), and are not subject to the PHS 
Act insurance market reform provisions that generally apply to non-
grandfathered health plans in the individual and group markets inside 
and outside the Exchange.\208\ In particular, because SADP issuers are 
not required to comply with the premium rating requirement under 
section 2701 of the PHS Act applicable to non-grandfathered individual 
and small group health insurance coverage, we have permitted SADP 
issuers in the FFEs and SBE-FPs to comply with the rate information 
submission requirements at Sec.  156.210 under a modified 
standard.\209\ Specifically, CMS has historically granted SADP issuers 
the flexibility to offer guaranteed or estimated rates. By indicating 
the rate is a guaranteed rate, the SADP issuer commits to charging the 
consumer the approved premium rate, which has been calculated using 
consumers' geographic location, age, and other permissible rating 
factors. Estimated rates require enrollees to contact the issuer to 
determine a final rate.
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    \208\ See 42 U.S.C. 300gg-21(b) and (c) and 42 U.S.C. 300gg-
63(b). Examples of PHS Act insurance market reforms added by the ACA 
that do not apply to stand-alone dental plans include but are not 
limited to section 2702 guaranteed availability standards, section 
2703 guaranteed renewability standards, and section 2718 medical 
loss ratio standards.
    \209\ See, for example, the 2014 Final Letter to Issuers on 
Federally-facilitated and State Partnership Exchanges for more 
information on how SADPs in the FFEs and SBE-FPs have flexibility to 
comply with the rate information submission requirements at Sec.  
156.210.
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    This flexibility for SADPs to offer estimated rates was effective 
for SADP issuers beginning with PY 2014. It was necessary because the 
relevant certification template was originally designed to support 
medical QHPs, which forced operational limits that prevented the 
accurate collection of rating rules for SADPs. Since PY 2014, we have 
improved the certification templates to allow SADPs to set the maximum 
age for dependents to 18, and to rate all such dependents. Thus, the 
FFEs and SBE-FPs can now accommodate dental rating rules properly in 
most reasonable circumstances.
    We believe this proposal would significantly benefit enrollees. 
Consistent with Sec. Sec.  156.440(b) and 156.470, APTC may be applied 
to the pediatric dental EHB portion of SADP premiums. If SADP issuers 
submit estimated rates and subsequently modify their actual rates, the 
Exchanges, including State Exchanges (including State Exchanges on the 
Federal platform) and FFEs, could incorrectly calculate APTC for the 
pediatric dental EHB portion of a consumer's premium, which could 
potentially cause consumer harm. Thus, since low-income individuals may 
qualify for APTC \210\ and are disproportionately impacted by limited 
access to affordable health care,\211\ we believe this proposed policy 
change would help advance health equity by helping ensure that low-
income individuals who qualify for APTC are charged the correct premium 
amount when enrolling in SADPs on the Exchange.
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    \210\ The PTC is generally available to people who buy 
Marketplace coverage and who have a household income that equals or 
exceeds the Federal poverty level, and who meet other eligibility 
criteria.
    \211\ Research and policy analysis has shown that low-income 
individuals are disproportionately impacted by lack of access to 
affordable health care. According to a 2018 Health Affairs Health 
Policy Brief, compared to higher-income Americans, low-income 
individuals face greater barriers to accessing medical care. More 
specifically, low-income individuals are less likely to have health 
insurance, receive new drugs and technologies, and have ready access 
to primary and specialty care. See Khullar, D., & Chokshi, D. A. 
(2018). Health, Income, And Poverty: Where We Are And What Could 
Help. Health Affairs. https://doi.org/10.1377/hpb20180817.901935. 
Additionally, a 2007 study found that barriers to health care can be 
insurmountable for low-income families, even those with insurance 
coverage. In particular, this study found that families reported 
three major barriers to health care: lack of insurance coverage, 
poor access to services, and unaffordable costs. See DeVoe, J. E., 
Baez, A., Angier, H., Krois, L., Edlund, C., Carney, P. A. (2007). 
Insurance + Access [ne] Health Care: Typology of Barriers to Health 
Care Access for Low-Income Families. Annals of Family Medicine, 
5(6), 511-518. https://doi.org/10.1370/afm.748.
---------------------------------------------------------------------------

    We acknowledge that requiring guaranteed rates presents a small 
risk that SADP issuers that offer estimated rates could cease offering 
SADPs on the Exchanges. While we recognize this risk, we strongly 
believe that the benefits of this proposal far exceed the 
disadvantages. Specifically, as discussed previously, we believe this 
proposed policy change would significantly reduce the risk of consumer 
harm by reducing the risk of incorrect APTC calculation for the 
pediatric dental EHB portion of premiums. Thus, we believe this 
proposed policy would have a positive financial impact by ensuring that 
SADP enrollees receive the correct APTC calculation for the pediatric 
dental EHB portion of premiums, and therefore, are charged the correct 
premium rate.
    We also note that although the FFEs and SBE-FP issuers currently 
allow SADP issuers to submit estimated rates, the vast majority elect 
to submit guaranteed rates. The vast majority of SADP issuers offering 
on-Exchange and off-Exchange Exchange-certified SADPs also elect to 
submit guaranteed rates. Given that most SADP issuers already submit 
guaranteed rates, the majority of SADP issuers are unlikely to be 
impacted by this proposal.
    Because we believe this proposed policy would significantly benefit 
enrollees by ensuring that SADP enrollees receive the correct APTC 
calculation for the pediatric dental EHB portion of premiums, and 
therefore, are charged the correct premium rate, we believe it is 
appropriate to apply this proposed certification requirement to SADPs 
seeking certification on the FFEs as well as the SBE-FPs and SBEs. We 
seek comment on any anticipated challenges that this proposal could 
present for SBEs using their own platform, and whether and to what 
extent we should, if this proposal is finalized, limit or delay this 
proposed certification requirement for those SBEs.
    We seek comment on this proposal to require Exchange-certified SADP 
issuers to submit guaranteed rates as a condition of Exchange 
certification beginning with Exchange certification for PY 2024.
6. Plan and Plan Variation Marketing Name Requirements for QHPs (Sec.  
156.225)
    We propose to add a new paragraph (c) to Sec.  156.225 to require 
that QHP plan and plan variation \212\ marketing names include correct 
information, without omission of material fact, and do not include 
content that is misleading. If finalized as proposed, CMS would review 
plan and plan variation marketing names during the annual

[[Page 78285]]

QHP certification process in close collaboration with State regulators 
in States with Exchanges on the Federal platform.
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    \212\ In practice, CMS and interested parties often use the term 
``plan variants'' to refer to ``plan variations.'' Per Sec.  
156.400, plan variation means a zero-cost sharing plan variation, a 
limited cost sharing plan variation, or a silver plan variation. 
Issuers may choose to vary plan marketing name by the plan variant--
for example, use one plan marketing name for a silver plan that 
meets the actuarial value (AV) requirements at Sec.  156.140(b)(2), 
and a different name for that plan's equivalent that meets the AV 
requirements at Sec.  156.420(a)(1), (2), or (3).
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    Section 1311(c)(1)(A) of the ACA states that the Secretary shall 
establish QHP certification criteria, which must include, at a minimum, 
that a QHP meet marketing requirements and not employ marketing 
practices or benefit designs that have the effect of discouraging 
enrollment by individuals with significant health needs. CMS, States, 
and QHP issuers work together to ensure that consumers can make 
informed decisions when selecting a health insurance plan based on 
factors such as QHP benefit design, cost-sharing requirements, and 
available financial assistance. In PY 2022, Exchanges on the Federal 
platform saw a significant increase in the number of plan and plan 
variation marketing names that included cost-sharing information and 
other benefit details. Following Open Enrollment for PY 2022, CMS 
received complaints from consumers in multiple States who misunderstood 
cost-sharing information in their QHP's marketing name.
    Upon further investigation, CMS and State regulators determined 
that this language was often incorrect or could be reasonably 
interpreted by consumers as misleading based on information in 
corresponding plan benefit documentation submitted as part of the QHP 
certification process.\213\ CMS's review of QHP data for PY 2023 
indicates continued use of cost-sharing information in plan and plan 
variation marketing names.
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    \213\ For example, in some cases a plan marketing name described 
a limited benefit in a way that could be understood as being 
unlimited, such as a ``$5 co-pay'' when the $5 co-pay was only 
available for an initial visit. Consumers were concerned upon 
learning the full extent of the cost-sharing for which they would be 
responsible during the plan year.
---------------------------------------------------------------------------

    This proposed policy would require all information included in plan 
and plan variation marketing names that relates to plan attributes to 
correspond to and match information that issuers submit for the plan in 
the Plans & Benefits Template, and in other materials submitted as part 
of the QHP certification process, such as any content that is part of 
the Summary of Benefits and Coverage. If necessary, this information 
can be included in the ``Benefit Explanation'' field of the Plans & 
Benefits Template. Consumers applying for coverage should be able to 
understand references to benefit information in plan and plan variation 
marketing names, and they should be able to confirm any information 
from a plan or plan variation marketing name in the plan's publicly 
available benefit descriptions. Also, plan benefit or cost sharing 
information in a plan or plan variation marketing name should not 
conflict with plan or plan variation information displayed on 
HealthCare.gov during the plan selection process in terms of dollar 
amount and, where applicable, terminology.
    Under this proposal, as an example, CMS would flag plan and plan 
variation marketing names for revision to help consumers understand the 
cost-sharing and coverage implications. The following are examples of 
information that should be validated to ensure accuracy and consistency 
across the plan or plan variation marketing name, Plans & Benefits 
Template, HealthCare.gov plan selection information, and other 
applicable QHP certification materials. These examples are not all-
inclusive, but they illustrate the kinds of information in plan and 
plan variation marketing names that could mislead consumers through 
inaccurate information or omission of material facts.
     Cost-sharing amounts that do not specify limitations the 
plan or plan variation includes, such as whether the cost-sharing 
amount is only available for drugs in a certain prescription drug 
category/tier, providers in a specific network or tier, or for a 
certain number of provider visits following which a higher cost-sharing 
amount will apply;
     Dollar amounts that do not specify what they refer to (for 
example, deductible, maximum out-of-pocket, or something else), whether 
they apply only to medical, drug, or another type of benefit, or 
whether, in cases of deductible or maximum out-of-pocket amounts, they 
apply to an individual or a family;
     Benefits, such as adult dental care, that are listed in a 
plan or plan variation marketing name to indicate that they are 
covered, but that plan documents indicate are not covered; and
     Reference(s) to health savings accounts (HSAs) in 
marketing names of plans or plan variations that do not permit 
enrollees to set up an HSA.\214\
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    \214\ An HSA is a tax-exempt trust or custodial account that a 
taxpayer may set up with a qualified HSA trustee to pay or reimburse 
certain medical expenses they incur. (See IRS Publication 969 
(2021), Health Savings Accounts and Other Tax-Favored Health Plans: 
https://www.irs.gov/publications/p969#en_US_2021_publink1000204030.) 
Taxpayers must meet certain requirements to qualify for an HSA, 
including being enrolled in a High Deductible Health Plan (HDHP) as 
defined in Section 223(c)(2) of the U.S. Tax Code. HDHP requirements 
include minimum levels for family and individual deductible 
amounts--for example, for calendar year 2022, an HDHP was defined as 
a health plan with an annual deductible not less than $1,400 for 
self-only coverage or $2,800 for family coverage, with annual out-
of-pocket expenses not more than $7,050 for self-only coverage or 
$14,100 for family coverage. (See IRS Rev. Proc. 2021-25: https://www.irs.gov/pub/irs-drop/rp-21-25.pdf.) Plan variants with limited 
or no cost sharing, such as those described at Sec.  156.420(a)(1) 
and (b)(1), by definition do not meet the requirements to be HDHPs, 
and enrollees in these plans therefore cannot set up an HSA. CMS 
will consider references to HSAs in the names of plans that do not 
qualify as HDHPs to be incorrect and misleading.
---------------------------------------------------------------------------

    We seek comment on this proposal and whether there are additional 
methods of preventing consumer confusion and market disruption related 
to this issue. In particular, we seek comment on the potential to 
identify components of plan and plan variation marketing names that 
could be uniformly structured and defined across QHPs, so as to 
consistently communicate information and ensure that plan and plan 
variation marketing names complement and do not contradict other 
sources of plan detail, such as cost-sharing and benefit information, 
displayed during the plan selection process on HealthCare.gov and other 
enrollment platforms. For example, we seek comment on whether, to 
address this, CMS should establish a required format for plan and plan 
variation marketing names that specifies elements such as name of 
issuer, metal level, and limited cost-sharing information.
7. Plans That Do Not Use a Provider Network: Network Adequacy (Sec.  
156.230) and Essential Community Providers (Sec.  156.235)
    We propose to revise the network adequacy and ECP standards at 
Sec. Sec.  156.230 and 156.235 to state that all individual market QHPs 
and SADPs and all SHOP QHPs across all Exchanges must use a network of 
providers that complies with the standards described in those sections, 
and to remove the exception that these sections do not apply to plans 
that do not use a provider network.
    In the Exchange Establishment Rule, we established the minimum 
network adequacy criteria that health and dental plans must meet to be 
certified as QHPs at Sec.  156.230. In the 2016 Payment Notice, we 
modified Sec.  156.230(a), in part, to specify that network adequacy 
requirements apply only to QHPs that use a provider network to deliver 
services to enrollees and that a provider network includes only 
providers that are contracted as in-network. We also revised Sec.  
156.235(a) to state that the ECP criteria apply only to QHPs that use a 
provider network. In Part 1 of the 2022

[[Page 78286]]

Payment Notice (86 FR 6138), we added section (f) to Sec.  156.230 to 
state that a plan for which an issuer seeks QHP certification or any 
certified QHP that does not use a provider network (meaning that the 
plan or QHP does not condition or differentiate benefits based on 
whether the issuer has a network participation agreement with a 
provider that furnishes covered services) is not required to comply 
with the network adequacy standards at paragraphs (a) through (e) of 
Sec.  156.230 to qualify for certification as a QHP. In that rule, we 
also stated that plans that do not utilize a provider network must 
still comply with all applicable QHP certification requirements to 
obtain QHP certification, which ensures that any plan that does not 
comply with applicable QHP certification requirements will be denied 
QHP certification (86 FR 6138).
    Since 2016, only a single issuer has sought a certification on an 
FFE for a plan that does not use a network. Despite lengthy 
negotiations with this issuer, our experience with this plan convinced 
us that commenters to Part 1 of the 2022 Payment Notice who raised 
concerns about the burden plans without networks place on enrollees 
appear to have been correct, and so, for that reason and the other 
reasons explained below, we are proposing to revisit this policy.
    Section 1311(c)(1)(B) and (C) 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, which governs insured health plans that include a provider 
network), provide information to enrollees and prospective enrollees on 
the availability of in-network and out-of-network providers, and to 
include within health insurance plan provider networks those ECPs that 
serve predominantly low income, medically underserved individuals. HHS 
carries out this directive through establishing network adequacy and 
ECP requirements and reviewing QHP compliance with such requirements.
    When we added section (f) to Sec.  156.230 in Part 1 of the 2022 
Payment Notice to except plans that do not use a provider network from 
meeting the network adequacy standards described at Sec.  156.230(a) 
through (e), we did not intend to allow a plan to ignore the minimum 
statutory criteria for QHP certification. Plans without provider 
networks still are required by section 1311(c)(1)(B) of the ACA to 
ensure sufficient choice of providers and provide information to 
enrollees and prospective enrollees on the availability of in-network 
and out-of-network providers to obtain certification, even though they 
are not currently subject to Sec. Sec.  156.230 and 156.235. Whether a 
plan that does not use a network provides sufficient a choice of 
providers is a more nuanced inquiry than a simple assertion that an 
enrollee can receive benefits for any provider. For a prospective 
enrollee, a ``sufficient choice of providers'' likely involves factors 
like the burden of accessing those providers, including whether there 
are providers nearby that they can see without unreasonable delay that 
would accept such a plan's benefit amount as payment in full, or 
whether they are able to receive all of the care for a specific health 
condition from a single provider without incurring additional out-of-
pocket costs. These are among the factors involved in determining 
whether a network plan is in compliance with the network adequacy and 
ECP standards at Sec. Sec.  156.230 and 156.235; a plan's compliance 
with these regulatory standards is one way that HHS can verify that 
plans meet the statutory criteria that QHPs ensure a sufficient choice 
of providers, including ECPs.
    To more effectively ensure that all plans provide sufficient choice 
of providers and to provide for consistent standards across all QHPs, 
we believe it would be appropriate to revise the network adequacy and 
ECP standards at Sec. Sec.  156.230 and 156.235 to state that all QHPs, 
including SADPs, must use a network of providers that complies with the 
standards described in those sections and to remove the exception at 
Sec.  156.230(f). Consistent standards also would allow for easier 
comparability across all QHPs in a more comprehensible manner for 
prospective enrollees. The benefits of easier comparability between 
plans and other challenges posed by plan choice overload are discussed 
in more detail in the preamble sections about Standardized Plan Options 
and Non-Standardized Plan Option Limits.
    We have previously stated that ``nothing in [the ACA] requires a 
QHP issuer to use a provider network,'' (84 FR at 6154) and it is true 
that the ACA includes no standalone network requirement. However, after 
revisiting the statute, we now doubt that a plan without a network can 
comply with the statutory requirement at section 1311(c)(1)(C) of the 
ACA that ``a plan shall, at a minimum . . . include within health 
insurance plan networks those essential community providers, where 
available, that serve predominately low-income, medically-underserved 
individuals.'' We have always understood Section 1311(c)(1)(C) of the 
ACA to require all plans to provide sufficient access to ECPs, where 
available, whether or not the plan included a provider network. But we 
have not previously considered whether this specific statutory text is 
consistent with a policy exempting plans without a network from network 
adequacy regulations. We now understand the statute's text to best 
support a reading that access to ECPs will be provided ``within health 
insurance networks.''
    Additionally, under section 1311(e)(1)(B) of the ACA and Sec.  
155.1000(c)(2), an Exchange may certify plans only if it determines 
that making the plans available through the Exchange is in the 
interests of qualified individuals. Section 155.1000 provides Exchanges 
with broad discretion to certify health plans that may otherwise meet 
the QHP certification standards specified in part 156. When we 
implemented section 1311(e)(1)(B) of the ACA at Sec.  155.1000(c)(2) in 
the Exchange Establishment Rule, we noted that ``an Exchange could 
adopt an `any qualified plan' certification, engage in selective 
certification, or negotiate with plans on a case-by-case basis'' (77 FR 
18405). Under this authority, we believe that requiring QHPs to use a 
provider network would be in the interests of qualified individuals and 
would better protect consumers from potential harms that could arise in 
cases where QHPs do not use provider networks. For example, the 
implementation of a provider network can help mitigate against risks of 
substantial out-of-pocket costs, ensure access without out-of-pocket 
costs to preventive services that must be covered without cost sharing, 
and, in the individual market, facilitate comparability of standardized 
plan options. Furthermore, studies have found that provider networks 
allow for insurer-negotiated prices and controlled (that is, reduced) 
costs in the form of reduced patient cost sharing, premiums, and 
service price, as compared with such services obtained out of 
network.\215 216\
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    \215\ Benson NM, Song Z. Prices And Cost Sharing For 
Psychotherapy In Network Versus Out Of Network In The United States. 
Health Aff (Millwood). 2020 Jul;39(7):1210-1218. https://www.healthaffairs.org/doi/10.1377/hlthaff.2019.01468.
    \216\ Song, Z., Johnson, W., Kennedy, K., Biniek, J. F., & 
Wallace, J. Out-of-network spending mostly declined in privately 
insured populations with a few notable exceptions from 2008 to 2016. 
Health Aff. 2020;39(6), 1032-1041. https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2019.01776.
---------------------------------------------------------------------------

    This proposed revision would assure HHS that all plans certified as 
QHPs

[[Page 78287]]

offer sufficient choice of providers in compliance with a consistent 
set of criteria for easier comparability across all QHPs and better 
ensure substantive consumer protections afforded by the ACA without 
undue barriers to access those protections. This consistency would be 
valuable to consumers as it ensures all consumers will have access to a 
set of providers with whom their plan has contracted in accordance with 
our established network adequacy and ECP requirements and allows for 
easier comparison between plans for prospective enrollees. This will 
also allow consumers to seek care from providers with whom their plan 
has negotiated a rate, limiting their potential exposure to out-of-
pocket costs under the plan.
    Accordingly, pursuant to the authority delegated to HHS to 
establish criteria for the certification of health plans as QHPs, we 
propose to remove the exception at Sec.  156.230(f) and to revise 
Sec. Sec.  156.230 and 156.235 to state that all individual market QHPs 
and SADPs and all SHOP plan QHPs across all Exchanges-types must use a 
network of providers that complies with the standards described in 
those sections, beginning with PY 2024. Under this proposal, an 
Exchange could not certify as a QHP a health plan that does not use a 
network of providers. However, we solicit comment on whether it is 
possible to design a plan that does not use a network in a way that 
would address our concerns about the plan's ability to offer a 
sufficient choice of providers without excessive burden on consumers, 
or what regulatory standards such a plan could meet to ensure a 
sufficient choice of providers without excessive burden on consumers.
    This proposal would also generally apply to SADPs. Since 2014, the 
FFEs have received, and approved, QHP certification applications for 
SADPs that do not use a provider network in every plan year. However, 
the number of SADPs that do not use a provider network has never 
accounted for a significant number of SADPs approved as QHPs on the 
FFEs. At their most prevalent in PY 2014, only 50 of the 1,521 SADPs 
certified as QHPs on the FFEs were plans that do not use a provider 
network. In PY 2022, only 8 of the 672 SADPs certified as QHPs on the 
FFEs were plans that do not use a provider network.
    Further, the number of SADPs on the FFEs that do not use a provider 
network appears to be limited since 2017 to fewer and fewer States; 
while 9 FFE States had SADPs that do not use a provider network 
certified as QHPs in PY 2014, only 2 FFE States still had SADPs that do 
not use a provider network certified in PY 2022. Since PY 2021, only 85 
counties in Alaska and Montana still have SADPs that do not use a 
provider network certified as QHPs. We assume that the few SADP issuers 
that still offer SADPs that do not use a provider network on the FFEs 
in Alaska and Montana only do so because of difficulty in maintaining a 
sufficient provider network in those States. We believe it is 
reasonable to assume that consumers increasingly gravitate towards 
SADPs that use a network, given this overall decrease in the 
availability of SADPs that do not use a provider network. We invite 
comment to confirm these understandings, as well as comment on the 
prevalence of SADPs that do not use a provider network offered outside 
of the FFEs in the non-grandfathered individual and small group 
markets.

[[Page 78288]]

[GRAPHIC] [TIFF OMITTED] TP21DE22.022

    Given the overall lack of popularity of SADPs that do not use a 
provider network, we believe that consumers find that such plans do not 
offer the same levels of protections against out-of-pocket costs as 
network plans. Thus, we believe it would be appropriate to revise 
Sec. Sec.  156.230 and 156.235 so that all SADPs must use a network of 
providers that complies with the standards described in those sections 
as a condition of QHP certification, beginning with PY 2024.
    However, we are cognizant that it can be more challenging for SADPs 
to establish a network of dental providers based on the availability of 
nearby dental providers, and we are aware this proposal could result in 
no SADPs offered through Exchanges in States like Alaska and Montana, 
which have historically offered SADPs without

[[Page 78289]]

provider networks (see Table 12). Further, we are aware that having no 
Exchange-certified SADPs offered through an Exchange in an area would 
impact all non-grandfathered individual and small group plans in such 
areas. Without an SADP available on the respective Exchange, all non-
grandfathered individual and small group health plans in impacted areas 
would be required to cover the pediatric dental EHB. We note that 
section 1302(b)(4)(F) of the ACA states that if such an SADP is offered 
through an Exchange, another health plan offered through such Exchange 
shall not fail to be treated as a QHP solely because the plan does not 
offer coverage of pediatric dental benefits offered through the SADP.
    In the EHB Rule (78 FR at 12853), we operationalized this provision 
at section 1302(b)(4)(F) of the ACA to permit QHP issuers to omit 
coverage of the pediatric dental EHB if an Exchange-certified SADP 
exists in the same service area in which they intend to offer coverage. 
As a corollary, if no such SADP is offered through an Exchange in that 
service area, then all health plans offered through the Exchange in 
that service area would be required to provide coverage of the 
pediatric dental EHB, as section 2707(a) of the ACA requires all non-
grandfathered plans in the individual and small group markets to 
provide coverage of the EHB package described at section 1302(a) of the 
ACA. However, to our knowledge, at least one Exchange-certified SADP 
has been offered in all service areas nationwide since implementation 
of this requirement in 2014, and no Exchange has required a medical QHP 
to provide coverage of the pediatric dental EHB in this manner. We 
solicit comment to confirm this understanding.
    To prevent a situation where this proposal would require health 
plans in those areas to cover the pediatric dental EHB, we solicit 
comment on the extent to which we should finalize a limited exception 
to this proposal only for SADPs that sell plans in areas where it is 
prohibitively difficult for the issuer to establish a network of dental 
providers; this exception would not be applicable to health plans. 
Under such an exception, we could consider an area to be 
``prohibitively difficult'' for the SADP issuer to establish a network 
of dental providers on a case-by-case basis, taking into account a 
number of non-exhaustive factors, such as the availability of other 
SADPs that use a provider network in the service area, and prior years' 
network adequacy data to identify counties in which SADP issuers have 
struggled to meet standards due to a shortage of dental providers. 
Other factors could include an attestation from the issuer about 
extreme difficulties in developing a dental provider network, or data 
provided in the ECP/NA template or justification forms during the QHP 
application submission process that reflect such extreme difficulties. 
We seek comment on whether it would be appropriate to finalize such an 
exception in this rule, other factors that we might consider in 
evaluating whether an exception is appropriate, as well as alternative 
approaches to such an exception.
    We seek comment on this proposal, as well as on other topics 
included in this section.
Compliance With Appointment Wait Time Standards
    In the 2023 Payment Notice, HHS finalized the requirement that 
issuers demonstrate compliance with appointment wait time standards via 
attestation, beginning in PY 2024. Issuers must work with their network 
providers to collect the necessary data to assess appointment wait 
times and determine if their provider network meets the wait time 
standards detailed in the 2023 Letter to Issuers, as CMS will begin 
conducting such reviews of issuer attestations for PY 2024.
8. Essential Community Providers (Sec.  156.235)
    We propose to expand access to care for low-income and medically 
underserved consumers by strengthening ECP standards for QHP 
certification, as discussed in this section. First, HHS proposes to 
establish two additional stand-alone ECP categories at Sec.  
156.235(a)(2)(ii)(B) for PY 2024 and beyond: Mental Health Facilities 
and Substance Use Disorder (SUD) Treatment Centers. In doing so, two 
provider types currently categorized as ``Other ECP Providers'' 
(Community Mental Health Centers and Substance Use Disorder (SUD) 
Treatment Centers) would be recategorized within these new proposed 
stand-alone ECP categories. We propose to crosswalk the Community 
Mental Health Centers provider type into the newly created stand-alone 
Mental Health Facilities category and the SUD Treatment Centers 
provider type into the newly created stand-alone SUD Treatment Centers 
category. Additionally, we propose to add Rural Emergency Hospitals 
(REHs) as a provider type in the Other ECP Providers ECP category. This 
addition reflects the fact that on or after January 1, 2023, REHs may 
begin participating in the Medicare program. As CMS noted in July of 
this year, ``[t]he REH designation provides an opportunity for Critical 
Access Hospitals (CAHs) and certain rural hospitals to avert potential 
closure and continue to provide essential services for the communities 
they serve.'' \217\ HHS believes that the inclusion of REHs on the ECP 
List may increase access to needed care for low-income and medically 
underserved consumers in rural communities.
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    \217\ https://www.cms.gov/newsroom/fact-sheets/rural-emergency-hospitals-proposed-rulemaking.
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    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 Act). Section 
156.235 establishes the requirements for the inclusion of ECPs in QHP 
provider networks. Section 156.235(a) requires QHP issuers to include a 
sufficient number and geographic distribution of ECPs in their 
networks, where available. Each plan year, HHS releases a final list of 
ECPs to assist issuers with identifying providers that qualify for 
inclusion in a QHP issuer's plan network toward satisfaction of the ECP 
standard under Sec.  156.235. The list is not exhaustive and does not 
include every provider that participates or is eligible to participate 
in the 340B drug program, every provider that is described under 
section 1927(c)(1)(D)(i)(IV) of the Act, or every provider that may 
otherwise qualify under Sec.  156.235. CMS endeavors to continue 
improving the ECP list for future years. These efforts include direct 
provider outreach to ECPs themselves, as well as reviewing the provider 
data with Federal partners.
    Section 156.235(b) establishes an Alternate ECP Standard for QHP 
issuers that provide a majority of their covered professional services 
through physicians employed directly by the issuer or a single 
contracted medical group. We note that the above proposal establishing 
two additional ECP categories and the proposed threshold requirements 
discussed later in this section would affect all QHP issuers, 
regardless of whether they are subject to the General ECP Standard 
under Sec.  156.235(a) or Alternate ECP Standard under Sec.  
156.235(b). However, SADP issuers would only be subject to such 
requirements as applied to provider types that offer dental services, 
as reflected in Sec.  156.235(a)(2)(ii)(B).
    Currently, QHPs that utilize provider networks are required to 
contract with at least 35 percent of available ECPs in each plan's 
service area to participate in the plan's provider network. In

[[Page 78290]]

addition, under Sec.  156.235(a)(2)(ii)(B), medical QHPs must offer a 
contract in good faith 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 in good faith to all available Indian health care providers in 
the plan's service area. Under Sec.  156.235(a)(2)(ii)(B), the six ECP 
categories currently include Federally Qualified Health Centers, Ryan 
White Program Providers, Family Planning Providers, Indian Health Care 
Providers, Inpatient Hospitals, and Other ECP Providers (currently 
defined to include 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).
    The proposed establishment of two new stand-alone ECP categories 
(Mental Health Facilities and SUD Treatment Centers) would strengthen 
the ECP standard in two ways: (1) by requiring that medical QHP issuers 
offer a contract in good faith to at least one SUD Treatment Center and 
at least one Mental Health Facility that qualify as ECPs in each county 
in the plan's service area, as opposed to being blended with other 
provider types in the existing ``Other ECP Provider'' category; and (2) 
by decreasing the number of provider types remaining in the ``Other ECP 
Provider'' category, thereby increasing the likelihood that remaining 
provider types included in the ``Other ECP Provider'' category will 
receive a contract offer from a medical QHP issuer to satisfy the 
requirement that they must offer a contract in good faith to at least 
one provider in each ECP category in each county in the plan's service 
area.
    Given that the ECP standard is facility-based, if finalized as 
proposed, the inclusion of SUD Treatment Centers and Mental Health 
Facilities on the HHS ECP List would be limited to those facilities 
identified by the Substance Abuse and Mental Health Services 
Administration (SAMHSA) and/or CMS as providing such services, in 
addition to fulfilling other ECP qualification requirements as 
specified at Sec.  156.235(c).
    If finalized as proposed, the eight available stand-alone ECP 
categories would consist of the following: (1) Federally Qualified 
Health Centers; (2) Ryan White Program Providers; (3) Family Planning 
Providers; (4) Indian Health Care Providers; (5) Inpatient Hospitals, 
(6) Mental Health Facilities; (7) SUD Treatment Centers, and (8) Other 
ECP Providers, to include Rural Health Clinics, Black Lung Clinics, 
Hemophilia Treatment Centers, Sexually Transmitted Disease Clinics, and 
Tuberculosis Clinics. The proposed ECP categories and ECP provider 
types within those categories in the FFEs for PY 2024 and beyond are 
set forth in Table 13.
[GRAPHIC] [TIFF OMITTED] TP21DE22.023


[[Page 78291]]


    In addition, HHS proposes to revise Sec.  156.235(a)(2)(i) to 
require QHPs to contract with at least a minimum percentage of 
available ECPs in each plan's service area within certain ECP 
categories, as specified by HHS. Specifically, HHS proposes to require 
QHPs to contract with at least 35 percent of available FQHCs that 
qualify as ECPs in the plan's service area and at least 35 percent of 
available Family Planning Providers that qualify as ECPs in the plan's 
service area. Furthermore, HHS proposes to revise Sec.  
156.235(a)(2)(i) to clarify that these proposed requirements would be 
in addition to the existing provision that QHPs must satisfy the 
overall 35 percent ECP threshold requirement in the plan's service 
area. We note that HHS would retain its current overall ECP provider 
participation standard of 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 is proposing that only two ECP categories, FQHCs and Family 
Planning Providers, be subject to the additional 35 percent threshold 
in PY 2024 and beyond. These two categories were selected, in part, 
because they represent the two largest ECP categories; together, these 
two categories comprise roughly 62 percent of all facilities on the ECP 
List. Applying an additional 35 percent threshold to these two 
categories could increase consumer access in low-income areas that 
could benefit from the additional access to the broad range of health 
care services that these particular providers offer. HHS may consider 
applying a specified threshold to other ECP categories in future 
rulemaking, if HHS finds that additional ECP categories contain a 
sufficient number and geographic distribution of providers to allow for 
application of the threshold without inflicting undue burden on issuers 
by effectively forcing them to contract with a few specific providers.
    Based on data from PY 2023, it is likely that a majority of issuers 
would be able to meet or exceed the threshold requirements for FQHCs 
and Family Planning Providers without needing to contract with 
additional providers in these categories. To illustrate, if these 
requirements had been in place for PY 2023, out of 137 QHP issuers on 
the FFEs, 76 percent would have been able to meet or exceed the 35 
percent FQHC threshold, while 61 percent would have been able to meet 
or exceed the 35 percent Family Planning Provider threshold without 
contracting with additional providers. For SADP issuers, 84 percent 
would have been able to meet the 35 percent threshold requirement for 
FQHCs offering dental services without contracting with additional 
providers. In PY 2023, for medical QHPs, the mean and median 
percentages of contracted ECPs for the FQHC category were 74 and 83 
percent, respectively. For the Family Planning Providers category, the 
mean and median percentages of contracted ECPs were 66 and 71 percent, 
respectively. For SADPs, the mean and median percentages of contracted 
ECPs for the FQHC category were 61 and 64 percent, respectively.
    We acknowledge challenges associated with a general shortage and 
uneven distribution of SUD Treatment Centers and Mental Health 
Facilities. However, the ACA requires that a QHP's network include ECPs 
where available. As such, the proposal to require QHPs to offer a 
contract to at least one available SUD Treatment Center and one 
available Mental Health Facility in every county in the plan's service 
area does not unduly penalize issuers facing a lack of certain types of 
ECPs within a service area, meaning that if there are no provider types 
that map to a specified ECP category available within the respective 
county, the issuer is not penalized. Further, as outlined in prior 
Letters to Issuers, HHS prepares the applicable PY HHS ECP list that 
potential QHPs use to identify eligible ECP facilities. The HHS ECP 
list reflects eligible providers (that is, the denominator) from which 
an issuer may select for contracting to count toward satisfying the ECP 
standard. As a result, issuers are not disadvantaged if their service 
areas contain fewer ECPs. HHS anticipates that any QHP issuers falling 
short of the 35 percent threshold for PY 2024 and beyond 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.
    We seek comment on these proposals.
9. Termination of Coverage or Enrollment for Qualified Individuals 
(Sec.  156.270)
a. Establishing a Timeliness Standard for Notices of Payment 
Delinquency
    We propose to amend Sec.  156.270(f) by adding a timeliness 
standard to the requirement for QHP issuers to send enrollees notice of 
payment delinquency. Specifically, we propose to revise Sec.  
156.270(f) to require issuers to send notice of payment delinquency 
promptly and without undue delay. HHS has long required issuers to send 
notices of non-payment of premium (77 FR 18469), so that enrollees who 
become delinquent on premium payments are aware and have a chance to 
avoid termination of coverage. In accordance with Sec.  156.270(a), 
issuers may terminate coverage for the reasons specified in Sec.  
155.430(b), which under paragraph (2)(ii) includes termination of 
coverage due to non-payment of premiums. Enrollees who are receiving 
APTC and who fail to timely pay their premiums are entitled to a 3-
month grace period, described at Sec.  156.270(d), during which they 
may return to good standing by paying all outstanding premium before 
the end of the 3 months. Enrollees who are not receiving APTC may also 
be entitled to a grace period under State law, if applicable.
    HHS has an interest in helping enrollees maintain coverage by 
establishing basic standards of communication between the QHP issuer 
and enrollee regarding premium payment status, especially at the start 
of an enrollment and when an enrollment has entered delinquency for 
failure to timely pay premium and is at risk for termination. For 
example, before Exchange coverage is effectuated, the Exchanges on the 
Federal platform generally require that the enrollee make a binder 
payment (first month's premium) by prescribed due dates.\218\ At Sec.  
156.270(f), HHS has also regulated on communicating to an enrollee when 
they have become delinquent on premium payment and when their coverage 
has been terminated. But while the regulation at Sec.  156.270(f) 
requires that issuers notify enrollees when they become delinquent on 
premium payments, CMS currently sets no timeliness requirements for 
issuers. In conducting oversight of issuers, HHS is aware that in some 
instances, issuers have delayed notifying enrollees of delinquency. HHS 
is concerned that there may be situations in which enrollees are not 
timely informed that they have become delinquent on premium payments, 
thus limiting the amount of time they have available to rectify the 
delinquency and avoid termination of coverage. In extreme cases, an 
enrollee may not become aware that they have become delinquent until 
termination of coverage has already occurred. For example, if an 
enrollee (who was not receiving APTC) failed to pay August's premium 
but was not informed by the issuer they had become delinquent until 
September, they would have already lost coverage and would not have an 
opportunity to

[[Page 78292]]

restore it. There may also be uncertainty among issuers regarding their 
requirement to send notices of delinquency, since HHS has not provided 
guidance on when this notice must be sent.
---------------------------------------------------------------------------

    \218\ See Sec.  155.400(e).
---------------------------------------------------------------------------

    Modifying Sec.  156.270(f) to require issuers to send notices of 
payment delinquency promptly and without undue delay would ensure that 
issuers are promptly sending these notices when enrollees fail to make 
premium payments, so that enrollees are aware they are at risk of 
losing coverage, including when they are entering a grace period 
(either the 3-month grace period for enrollees who are receiving APTC, 
or a State grace period if applicable). It would also provide clarity 
to issuers regarding their obligation to send a notice when an enrollee 
becomes delinquent on premium payment. Finally, updating this 
regulation would serve HHS' goal of promoting continuity of coverage by 
ensuring enrollees are aware they have become delinquent on premium 
payment and have a chance to pay their outstanding premium to avoid 
losing coverage. To further help ensure that notices are sent in a 
timely and uniform manner, HHS also believes it would be important to 
specify the number of days within which the issuer must send notice 
from the time an enrollee becomes delinquent on payment. However, we 
also recognize that issuers have a variety of practices for sending 
delinquency notices, and thus we request comment on what a reasonable 
timeframe would be for sending notices of delinquency to enrollees.
    We seek comments on this proposal.
10. Final Deadline for Reporting Enrollment and Payment Inaccuracies 
Discovered After the Initial 90-Day Reporting Window (Sec.  
156.1210(c))
    We propose to amend Sec.  156.1210(c) to remove the alternate 
deadline at Sec.  156.1210(c)(2) that allows an issuer to describe all 
data inaccuracies identified in a payment and collection report by the 
date HHS notifies issuers that the HHS audit process with respect to 
the plan year to which such inaccuracy relates has been completed, in 
order for these data inaccuracies to be eligible for resolution.
    In prior rulemakings (78 FR 65080 through 65081, 85 FR 29254, and 
86 FR 24256 through 24258), we established provisions at Sec.  156.1210 
related to the review and identification of inaccuracies in the monthly 
payment and collection reports provided by HHS for Exchange coverage. 
These reports currently include information on APTC the Federal 
Government is paying to the issuer for each policy listed on the 
report, any amounts owed by the issuer for FFE and SBE-FP user fees, as 
well as any adjustments from previous payments under those programs. 
This process is intended to confirm that accurate payments are made and 
to facilitate adjustments where inaccuracies are identified. The 
policies and standards governing this process have evolved over time as 
HHS, State Exchanges, and issuers have gained experience with handling 
payment errors and enrollment reconciliation activities for Exchange 
coverage. Issuers are generally required to review these detailed 
monthly reports against the payments they expect for each policy based 
on the eligibility and enrollment information transmitted by the 
Exchange, and any amounts it expects the Federal Government to collect 
for FFE and SBE-FP user fees. If an issuer identifies an inaccuracy in 
these amounts (including incorrect payment amounts, or extra or missing 
policies in the report), it must notify HHS or the State Exchange (as 
applicable) within certain timeframes. HHS works with issuers and State 
Exchanges (as applicable) to resolve any discrepancies between the 
amounts listed in the payment and collections report and the amounts 
the issuer believes it should receive for the time period(s) specified 
on the report. The prompt identification and correction of payment and 
enrollment errors protects enrollees from unanticipated tax liability 
that could result if the APTC is greater than the amount authorized by 
the Exchange and accepted by the enrollee. It also supports the 
efficient operation of Exchanges by aligning the Exchange's enrollment 
and eligibility data, payments provided by and collected by HHS for 
Exchange coverage, and the issuer's own records of payments due.
    Section 156.1210(c) currently establishes the final deadline to 
report inaccuracies identified in a payment and collections report for 
discovered underpayments \219\ as before the later of (1) the end of 
the 3-year period beginning at the end of the plan year to which the 
inaccuracy relates or (2) the date by which HHS notifies issuers that 
the HHS audit process with respect to the plan year to which such 
inaccuracy relates has been completed. The final 3-year or end of the 
HHS audit process deadline set forth in Sec.  156.1210(c)(1) and (2) is 
significant because HHS will only provide payment to the issuer for 
identified data inaccuracies related to discovered underpayments 
reported before this deadline.\220\ As we explained in part 2 of the 
2022 Payment Notice (86 FR 24257), under section 1313(a)(6) of the ACA, 
``payments made by, through, or in connection with an Exchange are 
subject to the False Claims Act (31 U.S.C. 3729, et. seq.) if those 
payments include any Federal funds.'' As such, if any issuer has an 
obligation to pay back APTC or pay additional user fees, the issuer 
could be liable under the False Claims Act for knowingly and improperly 
avoiding the obligation to pay. Section 156.1210(c)(3) therefore states 
that if a payment error is discovered after the 3-year or end of audit 
reporting deadline as set forth at Sec.  156.1210(c)(1) and (2), the 
issuer is obligated to notify HHS and the State Exchange (as 
applicable) and repay any overpayment.
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    \219\ Underpayment refers to both APTC underpayments to the 
issuer and user fee overpayments to HHS, for which an issuer would 
be entitled to additional payment from HHS.
    \220\ HHS will work with the issuer or the State Exchange (as 
applicable) to resolve the inaccuracy in these situations as long as 
the issuer meets other applicable requirements. For example, the 
issuer must demonstrate that failure to identify the inaccuracy and 
submit it to HHS or the State Exchange (as applicable) in a timely 
manner (within the 90-day reporting window under Sec.  156.1210(a)) 
was not unreasonable or due to the issuer's misconduct or 
negligence. See 45 CFR 156.1210(b)(2). In addition, once identified, 
the issuer must notify HHS or the State Exchange (as applicable) 
within 15 days of identifying the inaccuracy. See 45 CFR 
156.1210(b)(1).
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    After further consideration of the final deadline for reporting 
identified data inaccuracies for discovered underpayments, we propose, 
beginning with adjustments to APTC and user fee payments and 
collections for 2015 plan year coverage,\221\ to remove the alternate 
deadline currently set forth at Sec.  156.1210(c)(2) to ensure HHS and 
Exchange processes for handling payment and enrollment disputes related 
to discovered underpayments are completed before the existing IRS 
limitation on filing corrected tax returns. We further propose to 
revise Sec.  156.1210(c) to generally include the final 3-year deadline 
to identify and report data inaccuracies for discovered 
underpayments.\222\ As such, the first sentence in proposed new Sec.  
156.1210(c) would provide that to be eligible for resolution under 
Sec.  156.1210(b), the issuer must describe all inaccuracies identified 
in a payment and collections report before the end of the 3-year period 
beginning at the end of the plan

[[Page 78293]]

year to which the inaccuracy relates. By requiring all issuers in all 
Exchanges \223\ to adhere to the final 3-year deadline for identifying 
and reporting discovered underpayments, HHS would be balancing the 
desire to continue to provide issuers flexibility to identify and 
report discovered underpayments after the initial 90-day reporting 
window at Sec.  156.1210(a), to encourage the prompt reporting and 
timely resolution of data inaccuracies, and to establish a more 
consistent, predictable, and less operationally burdensome process for 
the identification and resolution of such inaccuracies for enrollees, 
issuers, HHS, and State Exchanges.
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    \221\ The 2014 plan year is excluded because the alternative 
deadline for reporting inaccuracies closed upon completion of the 
2014 audits. See CMS. (2019, April 1). CMS Issuer Audits of the 
Advanced Payments of the Premium Tax Credit. www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/2014-CMS-APTC-Audits.PDF.
    \222\ See 45 CFR 156.1210(c)(1).
    \223\ The requirements captured in 45 CFR 156.1210 apply to all 
issuers who receive APTC, including issuers in State Exchanges. See 
part 2 of the 2022 Payment Notice, 86 FR at 24258.
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    Under this proposal, and consistent with the deadline currently set 
forth in Sec.  156.1210(c)(1), for 3 years after the end of the 
applicable plan year, HHS would accept and work with the issuer (or 
State Exchange, as applicable) to resolve the identified data 
inaccuracies for discovered underpayments, and would process resulting 
payment corrections through policy-level data, which would generate new 
Forms 1095-A for impacted enrollees', if other applicable requirements 
are met.\224\ Establishing a firm 3-year timeframe to resolve data 
inaccuracies and make subsequent adjustments for discovered APTC 
underpayments ensures that new Forms 1095-A are generated and sent to 
enrollees and filed with the IRS with sufficient time for the enrollee 
to potentially amend their tax filing with the IRS. This change would 
therefore provide greater consistency and predictably for enrollees and 
reduce potential confusion caused by the receipt of Forms 1095-A 
outside of the allowable re-filing window with the IRS. In addition to 
reducing enrollee confusion, requiring adherence to a firm 3-year final 
deadline to report data inaccuracies for discovered APTC underpayments 
(or user fee overpayments) would also benefit issuers by ensuring a 
more consistent and predictable timeline for resolution of these data 
inaccuracies. Aligning the payment and enrollment final dispute 
timeline with the 3-year Form 1095-A timeline would limit 
administrative burden on issuers, State Exchanges, and HHS by 
standardizing these related processes for resolving errors and 
generating new Forms 1095-A for enrollees.
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    \224\ For example, the issuer must demonstrate the failure to 
identify and promptly report the data inaccuracies and discovered 
underpayments within the initial 90-day reporting window, under 
Sec.  156.1210(a), was not unreasonable or due to the issuer's 
misconduct or negligence. See Sec.  156.1210(b)(2). In addition, 
once identified, the issuer must notify HHS or the State Exchange 
(as applicable) within 15 days of identifying the inaccuracy. See 
Sec.  156.1210(b)(1).
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    Under this proposal, beginning with the 2020 plan year coverage, 
HHS would not pay additional APTC payments or reimburse user fee 
payments for FFE, SBE-FP, and SBE issuers for data inaccuracies 
reported after the 3-year deadline. HHS would require issuers to adhere 
to the 3-year deadline to submit all disputes and address all errors, 
instead of utilizing the end of the audit process as an alternative 
timeframe to receive additional APTC or reimbursement of user fee 
payments beyond the 3-year deadline. Thus, HHS would not accept or take 
action that results in an outgoing payment on data inaccuracies or 
payment errors for 2020 plan year coverage that are reported after 
December 31, 2023. Similarly, HHS would not accept or take action that 
results in an outgoing payment on data inaccuracies or payment errors 
for 2021 plan year coverage that are reported after December 31, 2024, 
and so on.
    Additionally, we propose that HHS would not accept or take action 
that results in an outgoing payment on data inaccuracies or payment 
errors for the 2015 through 2019 plan year coverage that are reported 
after December 31, 2023. If finalized, this proposal would grant 
issuers some additional time after this rule is finalized to submit any 
inaccuracies for the 2015 through 2019 plan year coverage, for which 
submission would no longer be permitted if this proposal was effective 
upon finalization.
    We are not proposing any changes to the general framework outlined 
in Sec.  156.1210(c)(3), which currently states that if a payment error 
is discovered after the final deadline set forth in Sec.  
156.1210(c)(1) and (2), the issuer must notify HHS, the State Exchange, 
or SBE-FP (as applicable) and repay any overpayments to HHS. We propose 
to retain this language as the last sentence of new proposed Sec.  
156.1210(c), except for the reference to the alternative deadline at 
Sec.  156.1210(c)(2).
    With regard to issuers in State Exchanges, we further affirm that 
this proposal would not change the requirement that issuers promptly 
identify and report data inaccuracies to the State Exchange.\225\ Under 
the proposed revisions to Sec.  156.1210(c), issuers in State Exchanges 
would be subject to the same final 3-year deadline to work with the 
State Exchange to resolve any enrollment or payment inaccuracies 
identified after the initial 90-day reporting window for discovered 
underpayments. Similarly, we also propose that HHS would not make any 
payments to issuers in State Exchanges on data inaccuracies or payment 
errors for 2015 through 2019 plan year coverage that are reported after 
December 31, 2023. Issuers in State Exchanges would also remain subject 
to the existing requirement to report data inaccuracies identified at 
any time when related to overpayments. We note that when HHS initially 
proposed the deadline of 3 years or the date by which the HHS audit 
process is completed, as currently described at Sec.  156.1210(c), we 
requested comment on the ability of State Exchanges to resolve data 
inaccuracies and report payment adjustments to HHS under the 3-year 
deadline framework currently captured in Sec.  156.1210(c)(1). We did 
not receive any comments objecting to this timeframe based on the 
ability of State Exchanges to resolve such disputes, and therefore, 
believe that the current proposal to set the final deadline to identify 
and report data inaccuracies for discovered underpayments at 3 years is 
reasonable and will not pose a challenge to State Exchanges or issuers.
---------------------------------------------------------------------------

    \225\ As previously noted, the requirements captured in 45 CFR 
156.1210 apply to all issuers who receive APTC, including issuers in 
State Exchanges. Also see part 2 of the 2022 Payment Notice, 86 FR 
at 24258.
---------------------------------------------------------------------------

    We seek comment on this proposal.
11. Administrative Appeals (Sec.  156.1220)
    As discussed in section III.A.7.d. of this preamble (HHS-RADV 
Discrepancy and Administrative Appeals Process), we propose amendments 
to Sec.  156.1220(a)(4)(ii) to add a reference to new proposed Sec.  
153.630(d)(3). As discussed in section III.A.7.d of this preamble, 
under new proposed Sec.  153.630(d)(3), we would retain the 30-
calendar-day window to confirm, or file a discrepancy, regarding the 
calculation of the risk score error rate as a result of HHS-RADV. Under 
this proposal, the cross-reference to Sec.  153.630(d)(2) in Sec.  
156.1220(a)(4)(ii) would be maintained and would capture the new 
proposed 15-calendar-day window to confirm, or file a discrepancy, for 
SVA findings (if applicable).
    In addition, we propose to amend Sec.  156.1220(b)(1) to address 
situations when the last day of the period to request an informal 
hearing does not fall on a business day. In these cases, we propose 
that the deadline to request an informal hearing would be extended to 
the next applicable business day. This proposal is consistent with our 
policy

[[Page 78294]]

for other risk adjustment deadlines that do not fall on a business 
day.\226\
---------------------------------------------------------------------------

    \226\ See, for example, 45 CFR 153.730.
---------------------------------------------------------------------------

    We solicit comment on these proposed amendments.

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of the agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements (ICRs).

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 the cost of fringe benefits and overhead) for estimating 
the burden associated with the ICRs.\227\ Table 14 in this proposed 
rule presents the mean hourly wage, the cost of fringe benefits and 
overhead, and the adjusted hourly wage.
---------------------------------------------------------------------------

    \227\ See May 2021 Bureau of Labor Statistics, Occupational 
Employment Statistics, National Occupational Employment and Wage 
Estimates. Available at https://www.bls.gov/oes/current/oes_stru.htm.
---------------------------------------------------------------------------

    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.
[GRAPHIC] [TIFF OMITTED] TP21DE22.024

B. ICRs Regarding Repeal of Risk Adjustment State Flexibility To 
Request a Reduction in Risk Adjustment State Transfers (Sec.  
153.320(d))

    We propose to repeal the flexibility for any State, including prior 
participant States, to request a reduction in risk adjustment State 
transfers in all State market risk pools beginning with the 2025 
benefit year. As such, we propose several amendments to Sec.  
153.320(d).
    The burden currently associated with this requirement is the time 
and effort for the State regulator to submit its request and supporting 
evidence and analysis to HHS. In the Standards Related to Reinsurance, 
Risk Corridors, and Risk Adjustment information collection (OMB control 
number: 0938-1155), we estimated that submitting the request and 
supporting evidence and analysis would 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 would 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 operations 
specialist and 20 hours for the operations manager).
    Since this proposal would eliminate the ability of the one prior 
participating State (Alabama) to request this flexibility beginning 
with benefit year 2025, we similarly propose to rescind this 
information collection beginning with the 2025 benefit year. The burden 
associated with this information collection estimated above would be 
removed if this proposal is finalized, since no State would have the 
opportunity to request this flexibility moving forward. This 
information collection is approved under OMB control number 0938-1155, 
and if this proposal is finalized, HHS would rescind the information 
collection under OMB control number 0938-1155 accordingly and provide 
the applicable comment periods once the policy is no longer in effect.
    We seek comment on this proposed rescission.

C. ICRs Regarding Risk Adjustment Issuer Data Submission Requirements 
(Sec. Sec.  153.610, 153.700, and 153.710)

    We propose to require issuers to collect and make available for 
HHS' extraction from issuers' EDGE servers a new data element, a QSEHRA 
indicator. We propose to adopt the same transitional approach and 
schedule for the population of the QSEHRA indicator as was finalized 
for the ICHRA indicator in the 2023 Payment Notice. Under this 
proposal, for the 2023 and 2024 benefit years, issuers would be 
required to populate the QSEHRA indicator using

[[Page 78295]]

data they already collect or have accessible regarding their enrollees. 
Then, beginning with the 2025 benefit year, issuers that do not have an 
existing source to populate this field for particular enrollees would 
be required to make a good faith effort to collect and submit the 
QSEHRA indicator for these enrollees. We propose to extract this data 
element beginning with the 2023 benefit year and also propose to 
include the QSEHRA indicator in the enrollee-level EDGE limited data 
sets available to qualified researchers upon request, once available.
    We propose to begin collection of the QSEHRA indicator with the 
2023 benefit year, and estimate that approximately 650 issuers of risk 
adjustment covered plans would be subject to this data collection. We 
propose to collect a QSEHRA indicator from issuers' ESES files and risk 
adjustment recalibration enrollment files. We believe the burden 
associated with the collection of this data would be similar to that of 
the collection of ICHRA indicator finalized in the 2023 Payment Notice. 
Much like the ICHRA indicator data, we believe that some issuers 
already collect or have access to the relevant information to populate 
the QSEHRA indicator. However, we do not believe the information to 
populate the QSEHRA indicator is routinely collected by all issuers at 
this time; therefore, we anticipate that there may be administrative 
burden for some issuers in developing processes for collection, 
validation, and submission of this new data element. In recognition of 
the burden that collection of this new data element potentially would 
pose for some issuers, we propose to adopt a transitional approach for 
the QSEHRA indicator that mirrors the approach finalized for the ICHRA 
indicator in the 2023 Payment Notice and is similar to how we have 
handled other new data collection requirements.\228\ For successful 
EDGE server data submission, each issuer would need to update their 
file creation process to include the new data element, which would 
require a one-time administrative cost. After incorporating the most 
recently updated wage estimate data, we estimate this one-time 
administrative cost at $579.96 per issuer (reflecting 6 hours of work 
by a management analyst at an average hourly rate of $96.66 per hour). 
Based on this, we estimate the cumulative one-time cost to update 
issuers' file creation process to be $376,974 for 650 issuers (3,900 
total hours for all issuers). We also estimate a cost of $96.66 in 
total annual labor costs for each issuer which reflects 1 hour of work 
by a management analyst per issuer at an average hourly rate of $96.66 
per hour. Based on this, we estimate $62,829 in total annual labor 
costs for 650 issuers (650 total hours per year for all issuers). We 
believe that this proposed data collection should not pose significant 
additional operational burden to issuers given that the operational 
burden associated with populating the QSEHRA indicator should be aided 
by the requirement finalized in the 2023 Payment Notice mandating the 
collection of the ICHRA indicator in the same fashion. The proposed 
extraction of the new proposed QSEHRA indicator should also not pose 
additional burden to issuers since the creation and storage of the 
extract--which issuers do not receive--are mainly handled by HHS. If 
finalized, HHS would revise the information collection request to 
account for the burden associated with this policy, and would provide 
the applicable comment periods.\229\
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    \228\ For example, HHS did not penalize issuers for temporarily 
submitting a default value for the in/out-of-network indictor for 
the 2018 benefit year to give issuers time to make the necessary 
changes to their operations and systems to comply with the new data 
collection requirement, but required issuers to provide full and 
accurate information for the in/out-of-network indicator beginning 
with the 2019 benefit year.
    \229\ Standards Related to Reinsurance, Risk Corridors, and Risk 
Adjustment (OMB control number 0938-1155).
---------------------------------------------------------------------------

    We also propose to amend the applicability date for the extraction 
of the plan ID and rating area data elements to extend the extraction 
of these two data elements to the 2017, 2018, 2019 and 2020 benefit 
year data sets. As detailed earlier and in prior rulemakings, issuers 
have been required to collect and submit these two data elements as 
part of the required risk adjustment data since the 2014 benefit year. 
Therefore, HHS estimates that the proposal to extract these data 
elements would not pose additional operational burden to the majority 
of issuers, since the creation and storage of the extract--which 
issuers do not receive--is mainly handled by HHS. However, some issuers 
may not have benefit year 2017, 2018, 2019, or 2020 data readily 
available for extraction from their EDGE servers, and therefore, there 
may be some burden associated with restoring past years' data to their 
respective EDGE servers should this be the case. Our intention with 
this policy proposal is to limit the burden on issuers for us to 
collect and extract the plan ID and rating area data elements from 
additional prior benefit year data. Therefore, while we broadly solicit 
comment on these data collection proposals, we specifically solicit 
comments on this burden estimate and ways that we can further limit the 
burden on extracting these two data elements from the 2017, 2018, 2019 
and 2020 benefit year data sets.

D. ICRs Regarding Risk Adjustment Data Validation Requirements When HHS 
Operates Risk Adjustment (HHS-RADV) (Sec.  153.630)

    Under Sec.  153.630(g)(2), issuers below a materiality threshold, 
as defined by HHS, are exempt from the annual HHS-RADV audit 
requirements in Sec.  153.630(b). While these issuers are exempt from 
the annual HHS-RADV audit process, they are subject to random and 
targeted sampling such that they undergo HHS-RADV approximately every 3 
years (barring any risk-based triggers based on experience that would 
warrant more frequent audits). We propose, beginning with 2022 benefit 
year HHS-RADV, to change the materiality threshold from $15 million in 
total annual premiums Statewide in the benefit year being audited to 
30,000 BMM Statewide in the benefit year being audited.
    We estimate that this proposal will not significantly impact issuer 
burden relative to previous estimates for HHS-RADV and the current 
materiality threshold. In particular, the proposed threshold will not 
significantly alter the anticipated number of issuers that would fall 
under the materiality threshold and be subject to random and targeted 
sampling rather than the annual audit requirements. We estimate that 
each year, on average, there are 197 issuers of risk adjustment covered 
plans with total annual Statewide premiums below $15 million and 201 
issuers of risk adjustment covered plans below 30,000 BMM Statewide. If 
we assume one-third of issuers below the materiality threshold would be 
subject to HHS-RADV each year, we estimate that the total number of 
issuers selected for HHS-RADV that fall under the materiality threshold 
would remain fairly constant. We believe that the number of issuers 
participating in HHS-RADV for any given benefit year under the proposed 
30,000 BMM Statewide threshold will not be significantly different than 
the number of issuers participating under the current $15 million total 
annual premium Statewide threshold and reflected in our current HHS-
RADV burden estimates, and therefore, we believe that there will not be 
an overall increase or decrease in burden. If finalized, we would 
revise the information collection currently approved under OMB control 
number 0938-1155 to account for the changes to

[[Page 78296]]

the HHS definition for the materiality threshold in Sec.  
153.630(g)(2).

E. ICRs Regarding Navigator, Non-Navigator Assistance Personnel, and 
Certified Application Counselor Program Standards (Sec. Sec.  155.210 
and 155.225)

    This proposal would not impose any new information collection 
requirements, that is, reporting, recordkeeping or third-party 
disclosure requirements. Though CMS requires Navigator grantees to 
track enrollment numbers on weekly, monthly, and quarterly progress 
reports, this is already accounted for in an existing PRA package (OMB 
control number 0938-1205, Exchange Functions: Standards for Navigators 
and Non-Navigator Assistance Personnel--CAC), and they are not required 
to specifically track enrollments completed for door-to-door 
enrollments.

F. ICRs Regarding Providing Correct Information to the FFEs (Sec.  
155.220(j))

    As discussed in the preamble of this proposed rule, we are 
proposing amendments to Sec.  155.220(j)(2)(ii) to require agents, 
brokers, and web-brokers to document that eligibility application 
information has been reviewed by and confirmed to be accurate by the 
consumer or their authorized representative prior to application 
submission. This proposal would require the consumer or their 
authorized representative to take an action that produces a record that 
they reviewed and confirmed the information on the eligibility 
application to be accurate prior to application submission. This 
documentation would be required to be maintained by agents, brokers, 
and web-brokers for a minimum of 10 years and produced upon request in 
response to monitoring, audit, and enforcement activities.
    We estimate costs will be associated with this proposal, including 
those related to documenting, maintaining, and producing the 
documentation. Our proposal, if finalized, would not mandate any method 
or prescribe a template for documenting that a consumer or their 
authorized representative reviewed and confirmed the accuracy of their 
eligibility application information. It would be up to the agents, 
brokers, and web-brokers to determine the best way to meet these 
proposed regulatory requirements.
    Costs related to requiring the consumer take some affirmative 
action to memorialize the review of application information are as 
follows. We estimate it would take an additional 5 minutes for an 
enrolling agent, broker, or web-broker to obtain documentation from a 
consumer or their authorized representative that they have reviewed and 
confirmed the accuracy of their application information. Billing at 
$66.68 per hour using the Insurance Sales Agent occupation code, each 
enrollment will have approximately $5.33 additional cost associated 
with it based on extra time commitment. In PY 2021, agents submitted 
3,630,849 policies. This makes the yearly total cost associated with 
the extra time per enrollment approximately $19,352,425.17 (3,630,849 x 
$5.33).
    Costs associated with maintaining consumer or their authorized 
representative's documentation would depend on the method selected by 
the agent, broker, or web-broker to meet the regulatory requirements. 
For those agents, brokers, or web-brokers currently meeting the 
requirements, no additional costs would be incurred. If an enrolling 
entity opts to use paper for documentation, they would bear the costs 
of paper, ink and filing cabinets to store the paperwork.
    HHS would only require an agent, broker, or web-broker to produce 
retained records in limited circumstances related to monitoring, audit, 
and enforcement activities. In instances of fraud investigation, HHS 
typically asks for documentation associated with approximately 10 
different applications, generally from the past 2 to 3 years. We 
estimate it would take an agent approximately 2 hours to gather 
consumer documentation for 10 applications. Each year, HHS generally 
investigates approximately 50 agents, brokers, or web-brokers. 
Therefore, we estimate the yearly cost of producing documentation for 
HHS to be approximately $6,668 (($66.68 hourly rate x 2 hours) x 50). 
The documentation would be able to be mailed electronically, so there 
would be no cost associated with printing or mailing the documentation. 
Agency-wide audits are not completed often by HHS but may become more 
widespread. In those instances, HHS would ask the agency to produce a 
certain number of records from the past 10 years.
    We seek comment on these burden estimates.

G. ICRs Regarding Documenting Receipt of Consumer Consent (Sec.  
155.220(j))

    As discussed earlier in the preamble of this proposed rule, we are 
proposing amendments to Sec.  155.220(j)(iii) to require agents, 
brokers, and web-brokers to document the receipt of consumer consent. 
This proposal would require the consumer or their authorized 
representative to take an action that produces a record that they 
provided consent. Agents, brokers, and web-brokers would be required to 
maintain the records for a minimum of 10 years and produce the records 
upon request in response to monitoring, audit, and enforcement 
activities.
    We estimate costs will be associated with this proposal, including 
those related to documenting, maintaining, and producing the records of 
consumer consent. Our proposal, if finalized, would not mandate any 
method or prescribe a template for documenting receipt of consumer 
consent. It would be up to the agents, brokers, and web-brokers to 
determine the best way to meet these proposed regulatory requirements. 
As agents, brokers, and web-brokers are currently required to obtain 
consumer consent prior to assisting them, the requirement to obtain 
consent would not add any costs to the enrolling agent, broker, or web-
broker.
    Costs related to requiring that the consumer or their authorized 
representative take some affirmative action to memorialize that consent 
was provided are as follows. We estimate it would take about 5 minutes 
for an enrolling agent, broker or web-broker to obtain consumer, or 
their authorized representative, affirmation of their consent. Using 
the adjusted hourly wage rate of $66.68 for an Insurance Sales Agent, 
each enrollment will have approximately $5.33 in additional cost 
associated with it based on the extra time commitment from these 
proposed policy changes. In PY 2021, agents submitted 3,630,849 
policies. Based on this number of enrollments, the total annual burden 
is 290,468 hours with a total annual cost of $19,352,425.17. HHS would 
only require an agent, broker, or web-broker to produce retained 
records in limited circumstances related to fraud investigation or 
agency audits. In instances of fraud investigation, HHS typically asks 
for consent records of approximately 10 different applications, 
generally from the past 2 to 3 years. We estimate it would take an 
agent approximately 2 hours to gather consent documentation for 10 
applications. Each year, HHS generally investigates approximately 50 
agents, brokers, or web-brokers. Therefore, we estimate the yearly cost 
of producing consumer consent documentation to HHS to be approximately 
$6,668 (($66.68 hourly rate x 2 hours) x 50). These records are able to 
be mailed electronically, so there would be no cost associated with 
printing or mailing the records. Agency-wide audits are not completed 
often by HHS but may become more widespread.

[[Page 78297]]

In those instances, HHS would ask the agency to produce a certain 
number of records from the past 10 years.
    The estimated total annual cost of memorializing the documentation 
of consumer consent is $19,352,425.17, and the estimated total cost of 
producing the retained eligibility and consent records is $6,668.00. 
Combined, the total annual cost of the proposed information collection 
requirements is $19,359,093.17.
    We seek comment on these burden estimates.

H. ICRs Regarding Failure To File and Reconcile Process (Sec.  
155.305(f))

    We are proposing to amend current regulation at Sec.  155.305(f)(4) 
under which an Exchange may not find a consumer eligible for APTC where 
a consumer has failed to file a tax return reconciling their APTC for a 
previous year to provide more flexibility to Exchanges to ensure that 
consumers are complying with the requirement to file their Federal 
income tax returns and reconcile past year's APTC, while ensuring 
continuity of coverage in Exchange QHPs. We are proposing to provide 
Exchanges the option to end APTC after 1 year of a taxpayer's (or 
taxpayer's spouse, if married) failure to file and reconcile APTC, or 
only after two consecutive years of a taxpayer's failure to file and 
reconcile APTC.
    On Exchanges on the Federal platform, FTR would otherwise be 
conducted in the same as manner it had previously been conducted, with 
minimal changes to the language of the Exchange application questions 
necessary to obtain relevant information; as such, we anticipate that 
the proposed amendment will not impact the information collection (OMB 
control number 0938-1191) burden for consumers.

I. ICRs Regarding Income Inconsistencies (Sec. Sec.  155.315 and 
155.320)

    Section 155.320 requires the Exchange to generate an income DMI and 
proceed with the process in Sec.  155.315(f)(1) through (4) when there 
is no IRS data available to verify attested projected annual household 
income or when such IRS data available but it is inconsistent with the 
projected annual household income attestation. In order to verify an 
applicant or enrollee's attested projected annual household income to 
determinate eligibility for APTC and CSRs, an applicant generally must 
mail or upload documentation which must then be reviewed by an HHS 
eligibility support staffer. We propose to amend Sec.  155.320 to 
require Exchanges to accept attestation when the Exchange requests tax 
return data from the IRS to verify attested projected annual household 
income, but the IRS confirms there is no such tax return data 
available.
    Based on historical DMI data, we estimate that HHS would conduct 
document verification for 1.2 million fewer households per year. Once 
households have submitted the required verification documents, we 
estimate that it takes approximately 12 minutes for an eligibility 
support staff person (occupation No. 43-4061), at an hourly cost of 
$46.70, to review and verify submitted verification documents. The 
proposed revisions to Sec.  155.320 would result in a decrease in 
annual burden for the Federal Government of 240,000 hours at a cost of 
$11,208,000.
    In addition to the reduced administrative burden for HHS 
eligibility support staff, the proposed change would reduce the time 
consumers spend submitting documentation to verify their income. We 
estimate that consumers each spend 1 hour to submit documentation and 
that the proposed change would decrease burden on consumers by 1.2 
million hours per year.
    We would revise the information collection currently approved under 
OMB control number 0938-1207 (Medicaid and Children's Health Insurance 
Programs: Essential Health Benefits in Alternative Benefit Plans, 
Eligibility Notices, Fair Hearing and Appeal Processes, and Premiums 
and Cost Sharing; Exchanges: Eligibility and Enrollment) to account for 
this decreased burden. Given that this change entails a reduction in 
consumer burden, the 30-day notice soliciting public comment will be 
published in the Federal Register at a future date.

J. ICRs Regarding the Improper Payment Pre-Testing and Assessment 
(IPPTA) for State Exchanges (Sec. Sec.  155.1500-155.1515)

    As described in the preamble to Sec.  155.1510, the IPPTA is 
proposed to replace the existing voluntary State engagement initiative 
with mandatory participation and related requirements. The IPPTA is 
designed to test processes and procedures that support HHS's review of 
determinations of APTC made by State Exchanges and to prepare State 
Exchanges for the planned measurement of improper payments.
    In the preamble to Sec.  155.1510(a)(1), we propose that State 
Exchanges provide to HHS: (1) the State Exchange's data dictionary 
including attribute name, data type, allowable values, and description; 
(2) an entity relationship diagram; and (3) business rules and related 
calculations. This data documentation is currently retained by State 
Exchanges in a digital format and can be electronically transmitted to 
HHS. We estimate that the burden associated with this data transfer 
would be no more than 22 hours.
    In the preamble to Sec.  155.1510(a)(2), we propose that HHS will 
provide State Exchanges with the pre-testing and assessment data 
request form. HHS proposes to review the form and its instructions with 
each State Exchange prior to the State Exchange completing and 
returning the form and required data to HHS. Both the pre-testing and 
assessment data request form and the requested source data are in an 
electronic format. The burden associated with completion and return of 
the pre-testing and assessment data request form and required data 
would be the time it would take each State Exchange to meet with HHS to 
review the form and its requirements, analyze and design the database 
queries based on the data elements identified in the form, 
electronically transmit the data to HHS, and meet with HHS to verify 
and validate the data.
    We expect respondent costs will not substantially vary since the 
data being collected is largely in a digitized format and that each 
State Exchange will be providing the application data and consumer 
submitted documents for approximately 10 tax households. We seek 
comment on these assumptions.
    We estimate that gathering and transmitting the data documentation 
as specified in Sec.  155.1510(a)(1) and completion of the pre-testing 
and assessment data request form as specified in Sec.  155.1510(a)(2) 
would take 530 hours per respondent at an estimated cost of $56,986.48 
per respondent. To compile our estimates, we referenced our experience 
collecting data in our FFE pilot initiative and in working with State 
Exchanges in the existing voluntary State engagement initiative. We 
identified specific personnel and the number of hours that would be 
involved in collecting the 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).
    Hourly wage rates vary from $92.92 for a Computer Programmer to 
$156.66 for a Computer and Information Systems Manager depending on 
occupation code and function. With a mean hourly rate of $111.07 for 
the respective occupation codes, the burden across the 18 State 
Exchanges equals 9,540 hours for a total

[[Page 78298]]

cost of up to $1,025,756. We seek comment on these burden estimates.

K. ICRs Regarding QHP Rate and Benefit Information (Sec.  156.210)

a. Age on Effective Date for SADPs
    In this proposed rule, we propose to require issuers of Exchange-
certified stand-alone dental plans (SADPs), whether they are sold on- 
or off-Exchange, to use the age on effective date methodology as the 
sole method to calculate an enrollee's age for rating and eligibility 
purposes, as a condition of QHP certification, beginning with Exchange 
certification for PY 2024. This rule does not propose to alter any of 
the information collection requirements related to age determination 
for rating and eligibility purposes during the QHP certification 
process in a way that would create any additional costs or burdens for 
issuers seeking QHP certification. This information collection is 
currently approved under OMB control number 0938-1187.
b. Guaranteed Rates for SADPs
    The proposal to require issuers of Exchange-certified SADPs, 
whether they are sold on- or off-Exchange, to submit guaranteed rates, 
as a condition of Exchange certification beginning with Exchange 
certification for PY 2024, will not impose an additional burden on 
issuers. Exchange-certified SADP issuers already submit either 
guaranteed or estimated rates during QHP certification, and are 
therefore, familiar with the QHP certification rate submission process. 
This information collection is currently approved under OMB control 
number 0938-1187.

L. ICRs Regarding Establishing a Timeliness Standard for Notices of 
Payment Delinquency (Sec.  156.270)

    The proposal to add a timeliness standard to the requirement for 
QHP issuers to send enrollees notice of payment delinquency would not 
impose an additional information burden on issuers. Per Sec.  
156.270(f), issuers are already required to send notices to enrollees 
when they become delinquent on premium payments, and this proposal 
would not require any additional information collection. We are merely 
proposing to add a requirement that issuers send these notices promptly 
and without undue delay. This information collection is currently 
approved under OMB control number 0938-1341 (CMS-10592).

M. Summary of Annual Burden Estimates for Proposed Requirements
[GRAPHIC] [TIFF OMITTED] TP21DE22.025

    This proposed rule includes one proposal--repealing risk adjustment 
State flexibility to request a reduction in risk adjustment State 
transfers (Sec.  153.320(d))--with information collection requests 
which seeks to use this rulemaking as the Federal Register notice 
through which to receive comment on its proposed revisions to the 
associated PRA package.
    The following proposals with associated information collection 
requests will be submitted for PRA approval outside of this rulemaking, 
through separate Federal Register notices: risk adjustment issuer data 
submission requirements (Sec. Sec.  153.610, 153,700, and 153.710); and 
income inconsistencies (Sec.  155.320).
    The HHS-RADV, Navigator, FTR, application to SADPs, and QHP rate 
and benefit information proposals contain information collections which 
are covered by the following PRA packages: Standards Related to 
Reinsurance, Risk Corridors, and Risk Adjustment, OMB control number: 
0938-1155; Cooperative Agreement to Support Navigators in Federally-
facilitated and State Partnership Exchanges, OMB control number: 0938-
1215; Data Collection to Support Eligibility Determinations for 
Insurance Affordability Programs and Enrollment through Health Benefits 
Exchanges, Medicaid and CHIP Agencies, OMB control number: 0938-1191; 
Initial Plan Data Collection to Support QHP Certification and other 
Financial Management and Exchange Operations, OMB control number: OMB 
0938-1187; and Establishment of Qualified Health Plans and American 
Health Benefit Exchanges, OMB control number: 0938-1156.

N. Submission of PRA-Related Comments

    We have submitted a copy of this proposed rule to OMB for its 
review of the rule's information collection and recordkeeping 
requirements. These requirements are not effective until they have been 
approved by the OMB. To obtain copies of the supporting statement and 
any related forms for the proposed collections discussed above, please 
access the CMS PRA website by copying and pasting the following web 
address into your web browser: https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing, or call 
the Reports Clearance Office at 410-786-1326.

[[Page 78299]]

    We invite public comments on these potential information collection 
requirements. If you wish to comment, please submit your comments 
electronically as specified in the ADDRESSES section of this proposed 
rule and identify the rule (CMS-9899-P), the ICR's CFR citation, CMS ID 
number, and OMB control number.
    Comments must be received on/by February 13, 2023.

V. Regulatory Impact Analysis

A. Statement of Need

    This rule proposes to improve risk adjustment and HHS-RADV policies 
to use the most recent data to recalibrate the risk adjustment models 
and reduce operational burden for HHS-RADV, and to update Navigator 
standards to permit door-to-door and other unsolicited means of direct 
contact. The rule also proposes to require agents, brokers, and web-
brokers to provide correct consumer information and document consumer 
consent; and require Exchanges on the Federal platform to accept an 
applicant's or enrollee's attestation of projected annual household 
income when IRS data is not available and determine the applicant or 
enrollee eligible for APTC or CSRs in accordance with the applicant's 
or enrollee's attested projected household income. In addition, the 
rule proposes to implement the IPPTA, reduce 2024 user fee rates to 2.5 
percent of premiums for FFE issuers and 2.0 percent of premiums for 
SBE-FP issuers, and make minor updates to standardized plan options and 
limit the number of non-standardized plan options issuers can offer. 
Finally, the rule proposes to require that QHP plan marketing names 
include correct information, without omission of material fact, and do 
not include content that is misleading; revise the network adequacy and 
ECP standards Sec. Sec.  156.230 and 156.235 to state that all QHP 
issuers, including SADPs, must use a network of providers that complies 
with the standards described in those sections; expand access to care 
for low-income and medically underserved consumers by strengthening ECP 
standards for QHP certification; and add a timeliness standard to the 
requirement for QHP issuers to send enrollees notice of payment 
delinquency.

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 1102(b) of the Act, section 202 of the 
Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), 
Executive Order 13132 on Federalism (August 4, 1999).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Section 
3(f) of Executive Order 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule: (1) having an 
annual effect on the economy of $100 million or more in any 1 year, or 
adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with significant regulatory action/s and/or with economically 
significant effects ($100 million or more in any 1 year). Based on our 
estimates, OMB's Office of Information and Regulatory Affairs has 
determined this rulemaking is ``economically significant'' as measured 
by the $100 million threshold. Accordingly, we have prepared an RIA 
that to the best of our ability presents the costs and benefits of the 
rulemaking. Therefore, OMB has reviewed these proposed regulations, and 
the Departments have provided the following assessment of their impact.

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

    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf), we have prepared an accounting statement in 
Table 16 showing the classification of the impact associated with the 
provisions of this proposed rule.
    This proposed rule proposes standards for programs that will have 
numerous effects, including providing consumers with access to 
affordable health insurance coverage, reducing the impact of adverse 
selection, and stabilizing premiums in the individual and small group 
health insurance markets and in an Exchange. We are unable to quantify 
all benefits and costs of this proposed rule. The effects in Table 16 
reflect qualitative assessment of impacts and estimated direct monetary 
costs and transfers resulting from the provisions of this proposed rule 
for health insurance issuers and consumers. The annual monetized 
transfers described in Table 16 include changes to costs associated 
with the risk adjustment user fee paid to HHS by issuers.
    We are proposing the risk adjustment user fee of $0.21 PMPM for the 
2024 benefit year to operate the risk adjustment program on behalf of 
States,\230\ which we estimate to cost approximately $60 million in 
benefit year 2024. This estimated total cost remains stable with the 
approximately $60 million estimated for the 2023 benefit year.
---------------------------------------------------------------------------

    \230\ As noted previously in this proposed rule, no State has 
elected to operate the risk adjustment program for the 2024 benefit 
year; therefore, HHS will operate the risk adjustment program for 
all 50 States and the District of Columbia.
---------------------------------------------------------------------------

    Additionally, for 2024, we are proposing an FFE and SBE-FP user fee 
rate of 2.5 and 2.0 percent of premiums, respectively. These user fee 
rates are lower than the 2023 FFE and SBE-FP user fee rates of 2.75 and 
2.25 percent of premiums, respectively.
    For our proposed implementation of the IPPTA program, we estimate 
record keeping costs for data submission to be approximately $1,025,756 
beginning in PY 2024.
BILLING CODE 4120-01-P

[[Page 78300]]

[GRAPHIC] [TIFF OMITTED] TP21DE22.026


[[Page 78301]]


[GRAPHIC] [TIFF OMITTED] TP21DE22.027

BILLING CODE 4120-01-C
    This RIA expands upon the impact analyses of previous rules and 
utilizes the Congressional Budget Office's (CBO) analysis of the ACA's 
impact on Federal

[[Page 78302]]

spending, revenue collections, and insurance enrollment. Table 17 
summarizes the effects of the risk adjustment program on the Federal 
budget from fiscal years 2024 through 2028, with the additional, 
societal effects of this proposed rule discussed in this RIA. We do not 
expect the provisions of this proposed rule to significantly alter 
CBO's estimates of the budget impact of the premium stabilization 
programs that are described in Table 17.\231\
---------------------------------------------------------------------------

    \231\ Reinsurance collections ended in FY 2018 and outlays in 
subsequent years reflect remaining payments, refunds, and allowable 
activities.
[GRAPHIC] [TIFF OMITTED] TP21DE22.028

1. Data for Risk Adjustment Model Recalibration for 2024 Benefit Year
    We propose to use the 2018, 2019, and 2020 benefit year enrollee-
level EDGE data to recalibrate the 2024 benefit year risk adjustment 
models with an exception for the use of the 2020 benefit year to 
recalibrate the age-sex coefficients for the adult models. 
Specifically, we propose to use only 2018 and 2019 benefit year 
enrollee-level EDGE data to recalibrate the age-sex coefficients in the 
adult models to account for the observed anomalous decreases in the 
unconstrained coefficients for the 2020 benefit year enrollee-level 
EDGE data for older adult enrollees, especially older female adult 
enrollees. Consistent with the approach outlined in the 2020 Payment 
Notice to no longer rely upon MarketScan[supreg] data for recalibrating 
the risk adjustment models, under this proposal, we would continue to 
recalibrate the risk adjustment models for the 2024 benefit year using 
only enrollee-level EDGE data, and would continue to use blended, or 
averaged, coefficients from the 3 years of separately solved models for 
the 2024 benefit year model recalibration, with the noted exception for 
recalibration of the adult models' age-sex factors. This approach seeks 
to maintain stability in the markets, and therefore, we anticipate that 
this proposal would have minimal impact on risk scores and transfers 
for issuers in the individual and small group (including merged) 
markets.
2. Repeal of Risk Adjustment State Flexibility To Request a Reduction 
in Risk Adjustment State Transfers (Sec.  153.320(d))
    We propose to eliminate the flexibility for any State, including 
prior participant States, to request reductions of risk adjustment 
State transfers calculated by HHS under the State payment transfer 
formula beginning with the 2025 benefit year. We anticipate that this 
change would have a minimal impact as only one State, Alabama, is 
considered a prior participant and would no longer be able to request 
reductions in risk adjustment transfers if this policy is finalized.
3. Risk Adjustment Issuer Data Requirements (Sec. Sec.  153.610, 
153.700, and 153.710)
    We are also proposing the collection and extraction of a new data 
element, the QSEHRA indicator, as part of the required risk adjustment 
data submissions issuers make accessible to HHS through their 
respective EDGE servers. For the 2023 and 2024 benefit years, similar 
to the transitional approach finalized for the ICHRA indicator, issuers 
would be required to populate the field for the QSEHRA indicator using 
only data they already collect or have accessible regarding their 
enrollees. Then, beginning with the 2025 benefit year, the transitional 
approach would end, and issuers would be required to populate the field 
using available sources (for example, information from Exchanges, 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 QSEHRA indicator for 
these enrollees. HHS would provide additional details on what 
constitutes a good faith effort to ensure collection and submission of 
the QSEHRA indicator beginning with 2025 benefit year data submissions 
in the future. An updated burden estimate associated with this policy 
may be found in section IV of this proposed rule, in the ICRs Regarding 
Risk Adjustment Issuer Data Submission Requirements (Sec. Sec.  
153.610, 153.700, and 153.710) section earlier in this rule.
    In addition, we propose to extract the plan ID and rating area data 
elements from issuers' EDGE servers that issuers already make 
accessible to HHS as part of the required risk adjustment data for 
additional prior benefit years of data. Specifically, we propose to 
amend the applicability date for the extraction of these two data 
elements from issuers' enrollee-level EDGE data as finalized in the 
2023 Payment Notice to also allow extraction of these data elements 
from the 2017, 2018, 2019 and 2020 benefit year data.
4. Risk Adjustment User Fee for 2024 Benefit Year (Sec.  153.610(f))
    For the 2024 benefit year, HHS will operate a risk adjustment 
program in every State and the District of Columbia. As described in 
the 2014 Payment Notice (78 FR 15416 through 15417), HHS' operation of 
risk adjustment on behalf of States is funded through a risk adjustment 
user fee. For the 2024 benefit year, we propose to use the same 
methodology to estimate our

[[Page 78303]]

administrative expenses to operate the risk adjustment program as was 
used in the 2023 Payment Notice. Risk adjustment user fee costs for the 
2024 benefit year are expected to remain stable from the prior 2023 
benefit year estimates. However, we project higher enrollment than our 
prior estimates in the individual and small group (including merged) 
markets in the 2023 and 2024 benefit years due to the enactment of the 
ARP,\232\ and section 12001 of the IRA, which extended the enhanced PTC 
subsidies in section 9661 of ARP through the 2025 benefit year. We 
estimate that the total cost for HHS to operate the risk adjustment 
program on behalf of States and the District of Columbia for 2024 will 
be approximately $60 million, and therefore, the proposed risk 
adjustment user fee would be $0.21 PMPM. Because enrollment projections 
have increased for the 2023 and 2024 benefit year due to the IRA and 
the proposed 2024 risk adjustment user fee is $0.01 PMPM lower than the 
2023 user fee, we expect the proposed risk adjustment user fee for the 
2024 benefit year to reduce the transfer amounts collected or paid by 
issuers of risk adjustment covered plans.
---------------------------------------------------------------------------

    \232\ Public Law 117-2.
---------------------------------------------------------------------------

5. Risk Adjustment Data Validation Requirements When HHS Operates Risk 
Adjustment (HHS-RADV) (Sec.  153.630)
    We propose, beginning with 2022 benefit year HHS-RADV, to change 
the HHS definition for the materiality threshold for the HHS-RADV 
exemption under Sec.  153.630(g)(2) from $15 million total annual 
premiums Statewide to 30,000 BMM Statewide in the benefit year being 
audited. The purpose of this policy is to address the estimated 
increase in costs to complete the IVA over the years and to ensure the 
materiality threshold is not eroded as costs increase. We quantify this 
increase in IVA cost in the Standards Related to Reinsurance, Risk 
Corridors, Risk Adjustment, and Payment Appeal of the PRA (OMB Control 
Number 0938-1155), which was updated in 2022.\233\ We believe that the 
number of issuers exempt from HHS-RADV for any given benefit year under 
the proposed 30,000 BMM threshold will not be significantly different 
than the number of issuers exempt under the current $15 million total 
annual premium Statewide threshold, and therefore, we believe that 
there will not be an overall reduction in burden. However, those 
issuers that are exempted from HHS-RADV will have less burden and 
administrative costs than an issuer subject to these requirements.
---------------------------------------------------------------------------

    \233\ Available at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202207-0938-001.
---------------------------------------------------------------------------

    We propose, beginning with 2021 benefit year HHS-RADV, to remove 
the policy to only make adjustments to reflect exiting outlier issuers 
HHS-RADV results when the issuer is a positive error rate outlier in 
the applicable benefit year's HHS-RADV. Under the proposal to remove 
this policy, exiting and non-exiting outlier issuers would be treated 
the same, and HHS would apply HHS-RADV adjustments to risk scores and 
risk adjustment State transfers for both positive and negative error 
rate outlier exiting and non-exiting issuers. Based on our experience, 
we estimate that the number of negative error rate outlier exiting 
issuers in any given benefit year would be very small, and therefore, 
we believe that changing this policy would not significantly increase 
burden.
    We also propose to change the attestation and discrepancy reporting 
window to file a discrepancy report or confirm SVA findings from 30 
calendar days to within 15 calendar days of the notification by HHS, 
beginning with the 2022 benefit year HHS-RADV. Shortening this 
attestation and discrepancy reporting window would improve HHS' ability 
to finalize SVA findings results prior to release of the HHS Risk 
Adjustment Data Validation (RADV) Results Memo and the Summary Report 
of Risk Adjustment Data Validation Adjustments to Risk Adjustment 
Transfers for the applicable benefit year in a timely fashion, which 
would support timely reporting of information on HHS-RADV adjustments 
to risk adjustment State transfers in issuers' MLR reports.
    Based on our experience operating HHS-RADV, few issuers have 
insufficient pairwise agreement and receive SVA findings, and the 15-
calendar-day attestation and discrepancy reporting window is consistent 
with the IVA sample and EDGE discrepancy reporting windows under 
Sec. Sec.  153.630(d)(1) and 153.710(d)(1). Further, HHS believes that 
this shortened reporting window would not be overly burdensome to the 
few impacted issuers, and that any disadvantages of this shortened 
reporting window would be outweighed by the benefits of timely 
resolution of any discrepancies before the release of the applicable 
benefit year HHS Risk Adjustment Data Validation (RADV) Results Memo 
and the Summary Report of Risk Adjustment Data Validation Adjustments 
to Risk Adjustment Transfers for the applicable benefit year.
6. EDGE Discrepancy Materiality Threshold (Sec.  153.710)
    We propose to amend the materiality threshold for EDGE 
discrepancies at Sec.  153.710(e) to align with the materiality 
threshold as described in the preamble of part 2 of the 2022 Payment 
Notice final rule (86 FR 24194 through 24195) to reflect that the 
amount in dispute must equal to or exceeds $100,000 or 1 percent of the 
total estimated transfer amount in the applicable State market risk 
pool, whichever is less. HHS generally only takes action on reported 
material EDGE discrepancies when an issuer's submission of incorrect 
EDGE server premium data has the effect of increasing or decreasing the 
magnitude of the risk adjustment transfers to other issuers in the 
market (83 FR 16970 through 16971). We do not believe that the proposal 
related to the materiality threshold for EDGE discrepancies would 
impose additional administrative burden on issuers beyond the effort 
already required to submit data to HHS for the purposes of operating 
State market risk pool transfers, as previously estimated in part 2 of 
the 2022 Payment Notice (86 FR 24273 through 24274).
7. Exchange Blueprint Approval Timelines (Sec.  155.106)
    As discussed in the preamble of this proposed rule, the proposed 
regulatory amendments would not eliminate the requirement for States 
seeking to transition to a different Exchange operational model (FFE to 
SBE-FP or SBE, or SBE-FP to SBE) to submit an Exchange Blueprint or for 
HHS to approve, or conditionally approve, a State's Exchange Blueprint. 
It would only impact the timeline, by providing additional time, for 
HHS to provide approval, or conditional approval.
    We do not estimate any burden associated with this proposal as 
States are currently required to submit an Exchange Blueprint to HHS 
for approval, or conditional approval, and HHS is currently required to 
approve, or conditionally approve, a State's Exchange Blueprint.
    We seek comment on this estimate.
8. Navigator, Non-Navigator Assistance Personnel, and Certified 
Application Counselor Program Standards (Sec. Sec.  155.210 and 
155.225)
    As discussed in the preamble, this new language would permit 
enrollment assistance on initial door-to-door outreach. Currently, 
Assisters are permitted to go door-to-door to engage in outreach and 
education activities, just not enrollment assistance. Therefore, this 
proposed change would

[[Page 78304]]

not impose any new or additional opportunity costs on Navigators, non-
Navigator assistance personnel, or CACs, and we do not anticipate any 
estimated burden associated with this proposal. The benefits of this 
proposal would be eliminating barriers to coverage access by maximizing 
pathways to enrollment. We believe it is important to be able to 
increase access to coverage for those whose ability to travel is 
impeded due to mobility, sensory or other disabilities, who are 
immunocompromised, and who are limited by a lack of transportation. We 
anticipate that this proposal would be a positive step toward enabling 
Assisters to reach a broader consumer base in a timely manner--helping 
to reduce uninsured rates and health disparities by removing underlying 
barriers to accessing health coverage.
    We seek comment on these assumptions, specifically about any 
reduction in costs, benefits, or burdens on Navigators, non-Navigator 
assistance personnel, CACs, and consumers as related to this proposal.
9. Extension of Time To Review Suspension Rebuttal Evidence and 
Termination Reconsideration Requests (Sec. Sec.  155.220(g) and 
155.220(h))
    As discussed in the preamble of this proposed rule, the proposed 
regulatory amendments would provide HHS with up to an additional 15 
calendar days to review evidence submitted by agents, brokers, or web-
brokers to rebut allegations that led to the suspension of their 
Exchange agreement(s) and up to an additional 30 calendar days to 
review evidence submitted by agents, brokers, or web-brokers to request 
reconsideration of termination of their Exchange agreement(s).
    We do not estimate much burden associated with this proposal, as 
there is no requirement for HHS to utilize the additional 15 or 30 
calendar days and this will only impact a very small percentage of 
enrolling agents, brokers, or web-brokers. Only those agents, brokers, 
or web-brokers that are reasonably suspected to have engaged in fraud 
or abusive conduct, or those with a specific finding of non-compliance 
against them or who have exhibited a pattern of non-compliance or abuse 
that may pose imminent consumer harm would be impacted.
    As discussed in the preamble, this proposal would not impose any 
new requirements on agents, brokers, or web-brokers. At present, 
agents, brokers, or web-brokers whose Exchange agreement(s) are 
suspended or terminated may submit rebuttal evidence or reconsideration 
requests for HHS to consider. During this review, the submitting agent, 
broker, or web-broker remains unable to enroll consumers on the FFEs. 
This process would not change. While we would be increasing the amount 
of potential time the review process would take, which could lead to 
slightly longer periods during which agents, brokers, or web-brokers 
cannot enroll consumers through the FFEs and SBE-FPs, we would not be 
mandating HHS utilize the additional 15 or 30 calendars days for its 
reviews. For this reason, we do not expect any impact on agents, 
brokers, or web-brokers based on this proposal. We seek comment on this 
assumption.
10. Providing Correct Information to the FFEs and Documenting Receipt 
of Consumer Consent (Sec.  155.220(j))
    As discussed in the preamble of this proposed rule, the proposed 
regulatory amendments would require agents, brokers, and web-brokers 
assisting with and facilitating enrollment through FFEs and SBE-FPs or 
assisting an individual with applying for APTC and CSRs for QHPs to 
document that eligibility application information has been reviewed by 
and confirmed to be accurate by the consumer or their authorized 
representative prior to application submission. The proposal would 
require the consumer or their authorized representative taking an 
action that produces a record showing the consumer or their authorized 
representative reviewed and confirmed the accuracy of their application 
information that must be maintained by the assisting agent, broker, or 
web-broker and produced to confirm the submitted eligibility 
application information was reviewed and confirmed to be accurate by 
the consumer or their authorized representative.
    Also discussed in the preamble of this proposed rule, the proposed 
regulatory amendments would require agents, brokers, and web-brokers 
assisting with and facilitating enrollment through FFEs and SBE-FPs or 
assisting an individual with applying for APTC and CSRs for QHPs to 
document the receipt of consent from the consumer or their authorized 
representative, designated in compliance with Sec.  155.227, qualified 
employers, or qualified employees they are assisting. The proposal 
would require the consumer or their authorized representative taking an 
action that produces a record of consent that must be maintained by the 
assisting agent, broker, or web-broker and produced to confirm the 
consumer or their authorized representative's consent was provided. As 
these two documentation processes would likely be occurring as part of 
the same consumer interaction,\234\ the two proposals are discussed 
below together.
---------------------------------------------------------------------------

    \234\ We note that obtaining documentation of consumer consent 
must occur before an application is completed. In contrast, 
obtaining documentation that a consumer has reviewed and confirmed 
the accuracy of their application information must necessarily take 
place during or after the application is completed. However, we 
expect generally that application completion, including the 
documentation we are proposing to require before and after the 
completion of the application, would occur as part of a single 
interaction in most cases.
---------------------------------------------------------------------------

    A potential cost to consider is the additional time it would take 
to process and submit each consumer's application. It currently takes 
approximately 30 minutes for an assisting agent, broker, or web-broker 
to submit a consumer's application. These proposed requirements may add 
approximately five minutes additional time, per proposal, to each 
application, making each application submission take 40 minutes under 
the new proposed policies. This means that for every six policies 
submitted under the proposed regulatory requirements, there would have 
been two additional applications that could have been submitted under 
the former regulatory requirements (10 extra minutes per application x 
3 applications = 30 minutes, which is the estimated completion time for 
applications at present). If we assume agents, brokers, and web-brokers 
work traditional 8-hour days, they would have been able to enroll 
approximately 4 more consumers per day (1 application per 30 minutes = 
16 per day; 1 application per 40 minutes = 12 per day). An 
approximation of commission for each submitted policy is $16.67.\235\ 
Therefore, the proposed regulatory text may result in $66.68 lost per 
day per agent, broker, or web-broker. ($16.67 x 4 less applications 
submitted).
---------------------------------------------------------------------------

    \235\ This was derived using the Insurance Sales Agent mean 
hourly wage from the above wage estimate table of $33.34 and 
dividing in-half.
---------------------------------------------------------------------------

    However, there would only be a potential loss of income if an 
agent, broker, or web-broker were constantly enrolling consumers and 
running out of time during the workday. It is unlikely agents, brokers, 
and web-brokers are constantly enrolling consumers non-stop throughout 
an 8-hour workday. During PY 2021, agents submitted 3,630,849 policies. 
The top 1 percent of agents \236\ submitted 1,159,608 policies during 
PY 2021, which equals approximately 7 submitted policies per day.\237\ 
As it was determined under the

[[Page 78305]]

new proposed policies that an agent could submit approximately 12 
applications per day, there is no clear impact associated with this 
proposal as far as the number of applications being submitted. However, 
this could be different during Open Enrollment Period (OEP) as that 
generally has more activity than regular business days. During PY 2022 
Open Enrollment, agents submitted 2,572,341 applications, which 
translates to 38 per agent. The top selling 1 percent of agents 
submitted 689,146 applications during Open Enrollment, which is 
approximately 18 applications per day.\238\ Under the proposed 
regulatory amendments, a top-selling agent could lose approximately 6 
applications per day due to time constraints. OEP runs from November 1 
through January 15, which is 76 days. Under the assumption an agent is 
working 5 days per work for eight hours per day, an agent would submit 
330 fewer applications during OEP (55 days working x 6 fewer 
applications per day). Using the above reference of $16.67 commission 
gained per submitted policy, a top-selling agent may lose $5,501.10 in 
commissions during OEP (330 applications x $16.67). It is likely these 
agents are working more hours than we accounted for, meaning the 330 
fewer applications is an estimate such that the actual loss of 
commission would be less than we estimated. We seek comment on these 
burden estimates.
---------------------------------------------------------------------------

    \236\ The current number of agents registered with the Exchange 
is 66,893. We looked at data from the 668 top-selling agents.
    \237\ This assumed an agent worked 250 days per year (50 weeks 
at 5 days per week).
    \238\ This assumed an agent worked 5 days per week at 8 hours 
per day, which is likely a low estimate.
---------------------------------------------------------------------------

11. Failure To File and Reconcile Process (Sec.  155.305)
    We propose to require that Exchanges instead determine an enrollee 
as ineligible for APTC if their taxpayer did not file a Federal income 
tax return and reconcile their APTC for two consecutive tax years, 
rather than one tax year as currently outlined at Sec.  155.305(f)(4). 
We believe this proposal would benefit both Exchanges and consumers as 
it provides Exchanges with additional flexibility with their FTR 
operations and procedures, while ensuring continuity of coverage for 
consumers, that would otherwise go uninsured after losing ATPC to help 
pay for their Exchange QHPs.
    We anticipate that this proposal would increase APTC expenditures 
by promoting continuous enrollment of consumers with APTC, who, absent 
this proposal, would likely choose to terminate their coverage 
altogether after losing their APTC eligibility due to having an FTR 
status. Based on HHS' own analysis, for Open Enrollment 2020, about 
116,000 enrollees with an FTR status were automatically re-enrolled 
into an Exchange QHP without APTC; by March 2020, approximately 14,000 
(12 percent) of those enrollees were still enrolled in an Exchange QHP. 
With the new 2-year FTR proposal, if those enrollees that ended their 
QHP coverage after losing APTC were given another year of APTC 
eligibility to come into compliance with the requirement to file and 
reconcile, we estimate that about 102,000 enrollees would have retained 
coverage with APTC for another coverage year; however, based on HHS' 
experience running FTR since 2015, we anticipate that about 20,400 (20 
percent) of these enrollees are likely to receive a second FTR flag. 
Therefore, we estimate that this 2-year FTR proposal is likely to 
increase APTC expenditures by approximately $373 million per year 
beginning in benefit year 2024.
    HHS is also aware of five States that have only recently 
transitioned to operating their own State Exchange and have not yet 
fully implemented the infrastructure to run FTR operations for plan 
years through 2023 due to the flexibility the Exchanges were given to 
temporarily pause FTR operations between 2021 and 2023 due to the 
COVID-19 public health emergency. We estimate the one-time costs for 
these five States to fully implement the functionality and 
infrastructure to conduct FTR operations to be approximately $6.6 
million and estimate that the annual costs to maintain FTR operations 
to be approximately $10 million.
    We invite comments from interested parties on this proposal, 
including regarding additional costs, burdens, and benefits to issuers, 
consumers, and Exchanges as a result of this proposal.
12. Income Inconsistencies (Sec. Sec.  155.315 and 155.320)
    We anticipate that proposed revision to Sec.  155.315 would impose 
a minimal regulatory and cost burden on Exchanges using the Federal 
platform and State Exchanges in order to grant the 60-day extension for 
income DMIs. We estimate that the proposed change to grant a 60-day 
extension to applicants with income DMIs would result in a $500,000 
one-time cost to Exchanges on the Federal platform and to each of the 
State Exchanges using their own platform. Therefore, we estimate that 
the total cost for State Exchanges would be $9 million to comply with 
the requirement to grant the 60-day extension, and the total cost to 
the Federal Government would be $500,000.
    We anticipate that the proposed revisions to Sec.  155.320 would 
impose a minimal regulatory burden and a one-time cost burden on the 
Exchanges using the Federal platform and State Exchanges using their 
own platform. We estimate that the proposed change to accept the income 
attestation for households for which the Exchange requests tax return 
data from the IRS to verify attested projected annual household income 
but for whom the IRS confirms there is no such tax return data 
available would result in a $500,000 one-time cost to the Federal 
Government and a one-time cost of $500,000 to each of the State 
Exchanges using their own platform. We also anticipate $175 million in 
increased APTC costs annually as a result of this proposal, due to 
applicants remaining enrolled through the end of the plan year instead 
of losing eligibility for APTC due to not providing sufficient 
documentation to verify their projected household income.
    However, we do anticipate that the proposed revisions to Sec.  
155.320 would also result in some decreases in ongoing administrative 
costs for the Exchanges using the Federal platform and State Exchanges. 
The proposed change would eliminate the requirement to generate income 
DMIs when the Exchange requests tax return data from the IRS for an 
applicant or enrollee and the IRS confirms no such data is available. 
For Exchanges on the Federal platform, we anticipate that this will 
result in 1.2 million fewer households receiving an income DMI, which 
would result in $66 million in annual cost savings to the Federal 
Government. Additionally, State Exchanges using their own platform 
would also experience annual cost savings of $37 million due to this 
proposed change.
    We do not anticipate that these proposed changes would impose a 
cost or regulatory burden on issuers. However, the proposed changes 
would have a financial impact on issuers via the continued enrollment 
of consumers who otherwise would have experienced APTC adjustment and 
are thus likely to disenroll.
13. Annual Eligibility Redetermination (Sec.  155.335(j))
    We propose revising Sec.  155.335(j) to allow the Exchange, 
beginning in PY 2024, to direct re-enrollment for enrollees who are 
eligible for CSR in accordance with Sec.  155.305(g) from a bronze QHP 
to a silver QHP with a lower or equivalent premium after APTC within 
the same product and QHP issuer, regardless of whether their current 
plan is available or not. We also

[[Page 78306]]

propose to amend the Exchange re-enrollment hierarchy to allow all 
Exchanges (Exchanges on the Federal platform and SBEs) to ensure 
enrollees whose QHPs are no longer available to them and enrollees who 
would be re-enrolled into a silver-level QHP in order to receive 
income-based CSRs are re-enrolled into plans with the most similar 
network to the plan they had in the previous year, provided that 
certain conditions are met.
    We propose revising paragraph (j)(2)(i) to state that if the 
enrollee is not CSR eligible, the Exchange will re-enroll the enrollee 
in a QHP at the same metal level as and with the most similar network 
compared to the enrollee's current QHP. We propose amending and 
redesignating paragraphs (j)(2)(ii) and (iii) as paragraphs (j)(2)(iv) 
and (v), respectively, to specify that the enrollee's provider network 
must also be considered in re-enrollment determinations. We also 
propose adding a new paragraph (j)(2)(ii) to establish that if the 
enrollee is CSR-eligible, in accordance with Sec.  155.305(g), and the 
enrollee's current QHP is a bronze level plan, the Exchange will re-
enroll the enrollee either in a bronze level QHP, or, at the option of 
the Exchange, in a silver level QHP that has a lower or equivalent 
premium after APTC and has the most similar network compared to the 
enrollee's current QHP in the product offered by the same issuer 
through the Exchange that is most similar to the enrollee's current 
product. Lastly, we propose to add a new paragraph (j)(2)(iii) to 
establish that if the enrollee is CSR-eligible, in accordance with 
Sec.  155.305(g), and the enrollee's current QHP is not a bronze level 
plan, the enrollee will be re-enrolled in a QHP at the same metal level 
that has the most similar network compared to the enrollee's current 
QHP in the product offered by the same issuer that is the most similar 
to the enrollee's current product.
    We anticipate that the inclusion of additional criteria in the 
Federal hierarchy for re-enrollment would increase costs and burden for 
issuer and Exchanges, although we are unable to quantify this increase. 
However, we believe initially limiting the scope to only CSR-eligible 
enrollees who are currently in a bronze QHP and have a lower cost 
silver CSR QHP available would allow issuers and Exchanges to 
incrementally update their processes, as opposed to incorporating both 
premium (after APTC) and out-of-pocket cost (OOPC) throughout the 
hierarchy in PY 2024. Additionally, we believe that allowing the 
Exchange to direct re-enrollment for CSR-eligible enrollees from bronze 
plans to silver CSR plans with lower or equivalent premium after APTC 
would facilitate enrollment into silver CSR plans and help reduce CSR 
forfeiture. We believe these proposed changes to the re-enrollment 
process, in combination with improved consumer notification, would 
further streamline the consumer shopping experience, enhance consumer 
understanding of plan options, and help move enrollment into more 
affordable, higher generosity plans, especially in cases where market 
conditions have substantially increased the old plan's cost. By 
amending the current Federal hierarchy for re-enrollment to incorporate 
provider networks and facilitate enrollment into lower cost, higher 
generosity plans, we believe we would be promoting consumer access to 
affordable, high-quality coverage.
    We seek comment on the estimated costs and benefits described in 
this section, as well as any additional impacts on consumers, issuers, 
and Exchanges as a result of this proposal.
14. Coverage Effective Dates for Qualified Individuals Losing Other 
Minimum Essential Coverage (Sec.  155.420(b))
    We propose to add paragraph (b)(2)(iv) to Sec.  155.420(b) to 
provide earlier SEP coverage effective dates for qualifying individuals 
who attest to a future loss of MEC, such as coverage offered through an 
employer, Medicaid, CHIP, or Medicare., within 60 days before such loss 
of MEC s. Currently, the earliest start date for Exchange coverage when 
a qualifying individual attests to a future loss of MEC is the first 
day of the month following the date of loss of MEC, which may result in 
coverage gaps when consumers lose forms of MEC (other than Exchange 
coverage) mid-month. We believe that this proposed change is necessary 
to ensure that qualifying individuals are able to seamlessly transition 
from other non-Exchange MEC to Exchange coverage as quickly as possible 
with minimal coverage gaps. As discussed earlier in preamble, ensuring 
smooth and quick transitions into Exchange coverage will be especially 
critical once the COVID-19 PHE comes to an end and higher numbers of 
consumers lose their Medicaid or CHIP coverage and transition to 
Exchange coverage, as applicable.
    Based on HHS' own analysis, for plan years 2019 through 2021, 
approximately 214,000 households seeking coverage on Exchanges using 
the Federal platform reported a future mid-month loss of MEC date and 
ultimately did not enroll in a QHP. In PY 2021, about 45,000 households 
attested to a future mid-month loss of coverage MEC date and did not 
enroll in QHP coverage. If these consumers had been given the 
opportunity for Exchange coverage to begin the first of the month in 
which their prior mid-month loss of MEC coverage end date occurred, 
rather than having to wait weeks for their coverage to start, these 
consumers could have avoided a gap in coverage and could have received 
an additional month of APTC, given our interpretation of IRS' 
definition of a coverage month, which we plan to codify in the final 
rule. Therefore, for consumers who report a future loss of MEC, 
especially those who reside in States that allow mid-month terminations 
for Medicaid or CHIP, we estimate that this proposed change could 
increase APTC expenditures by approximately $161 million dollars per 
coverage year by allowing Exchange coverage to start the first of the 
month in which the mid-month loss of MEC or COBRA occurs and assuming 
that similar volume of consumers would choose enroll in an Exchange 
QHP, however, this number could be slightly lower but we are unable to 
estimate what proportion of consumers would still elect to not enroll 
in an Exchange QHP. We also anticipate additional costs to certain 
consumers as some consumers would be required to pay for an additional 
month of Exchange coverage for which they would not have previously 
been eligible while also still possibly paying for one last month of 
their prior MEC coverage. However, in order to mitigate adverse 
selection concerns, we are not proposing that Exchanges permit 
consumers to select a different, prospective coverage start date, such 
as the first of the month following plan selection. We also seek 
comment from issuers regarding any additional or remaining risk 
regarding mid-month coverage effective dates.
    We seek comment on this proposal, specifically about any additional 
costs, benefits, or burdens on State Exchanges, issuers, and consumers 
as related to this proposal.
15. Special Rule for Loss of Medicaid or CHIP Coverage (Sec.  
155.420(c))
    We propose to add paragraph (c)(6) to Sec.  155.420(c) to provide 
qualifying individuals losing Medicaid or CHIP that is considered MEC 
in accordance with Sec.  155.420(d)(1)(i), and who qualify for a 
special enrollment period, with up to 60 days before and up to 90 days 
after their loss of coverage to enroll in QHP coverage. We believe that 
this proposed change is necessary to ensure that qualifying individuals 
are able to seamlessly transition from Medicaid or

[[Page 78307]]

CHIP into Exchange coverage as quickly as possible with little to no 
coverage gaps. As discussed earlier in preamble, ensuring smooth and 
quick transitions into Exchange coverage will be especially critical 
once the COVID-19 PHE comes to an end and higher numbers of consumers 
lose their Medicaid or CHIP coverage and transition to Exchange 
coverage, as applicable.
    Based on HHS's own analysis, in plan year 2019, about 60,000 
consumers seeking coverage on Exchanges using the Federal platform 
attested to a Medicaid/CHIP loss or denial between 60 to 90 days prior 
on their HealthCare.gov application. We estimate that this proposed 
change to permit Exchanges to use a special rule to provide consumers 
losing Medicaid or CHIP with 90 days after their loss of Medicaid or 
CHIP to enroll in QHP coverage would increase APTC expenditures by 
approximately $98 million per year.
    We seek comment on this proposal, specifically about any additional 
costs, benefits, or burdens on States, issuers, and consumers as 
related to this proposal.
16. Plan Display Error Special Enrollment Periods (Sec.  155.420(d))
    We anticipate that revisions to Sec.  155.420(d)(12) would maintain 
current regulatory burden and cost on issuers. As discussed earlier in 
preamble, our proposal to make necessary changes to the text of Sec.  
155.420(d)(12) is to align the policy for granting SEPs to persons who 
are adversely affected by a plan display error with current plan 
display error SEP operations. Our proposal would have minimal 
operational impact, as interested parties such as issuers, States, and 
the Exchanges on the Federal platform currently have the infrastructure 
to demonstrate that a material plan display error influenced a 
qualified individual's, enrollee's, or their dependents' enrollment 
and, or decision to purchase a QHP through the Exchange. This does not 
impose additional regulatory burden or costs because the revisions do 
not require the consumers, HHS, or issuers to conduct new or additional 
processes to existing data change requirements.
17. Termination of Exchange Enrollment or Coverage (Sec.  155.430)
    We anticipate that the proposal to expressly prohibit issuers from 
terminating coverage for policy dependent children because they reached 
the maximum allowable age mid-plan year would benefit affected 
enrollees by providing clarity regarding their ability to maintain 
coverage. Because this prohibition has already been in place on the 
Exchanges on the Federal platform, we do not anticipate a financial 
impact to issuers or HHS. There may be some minor costs for State 
Exchanges that choose to implement this prohibition and have not 
previously done so, but we do not have adequate data to estimate these 
costs. We seek comment on these benefit and burden assumptions.
18. Improper Payment Pre-Testing and Assessment for State Exchanges 
(Sec.  155.1500)
    This proposal would prepare HHS to implement the Payment Integrity 
Information Act of 2019 (PIIA) requirements for State Exchanges. As 
described in the preamble earlier in this proposed rule, the PIIA 
requires that agencies measure the improper payments rate for programs 
susceptible to significant improper payments. HHS already undertakes 
annual measurements for Medicare, Medicaid, FFEs, and SBE-FPs. This 
proposed rule would lay the groundwork to complete the Exchanges' 
measurement program by including State Exchanges and to enable HHS to 
estimate improper payment rates as mandated by statute.
    This proposal tests State Exchanges' readiness to provide the 
information necessary to measure the rate of improper payments. Even 
slight decreases in this rate would accrue large taxpayer savings. The 
IPPTA incurs approximately $57,000 in costs per respondent. 
Nevertheless, HHS believes that the potential benefits of this 
regulatory action justify the present costs.
    This proposal would prepare HHS to implement the statutory 
requirement for measurement of improper payments for programs 
susceptible to significant improper payments. We have quantified the 
costs for this proposal. Neither this IPPTA nor any follow-on program 
should affect transfers between parties.
19. FFE and SBE-FP User Fee Rates for the 2024 Benefit Year (Sec.  
156.50)
    We are proposing an FFE user fee rate of 2.5 percent of monthly 
premiums for the 2024 benefit year, which is a decrease from the 2.75 
percent FFE user fee rate finalized in the 2023 Payment Notice (87 FR 
27289). We also propose an SBE-FP user fee rate of 2.0 percent for the 
2024 benefit year, which is a decrease from the 2.25 percent SBE-FP 
user fee rate finalized in the 2023 Payment Notice. Based on our 
estimated costs, enrollment (including anticipated transitions of 
States from the FFE and SBE-FP models to either the SBE-FP or State 
Exchange model), premiums for the 2024 benefit year, and proposed user 
fee rates, we are estimating that FFE and SBE-FP user fee transfers 
from issuers to the Federal Government would be $170 million lower 
compared to those estimated for the prior benefit year. We also 
anticipate that the lower user fee rates may exert downward pressure on 
premiums.
20. Standardized Plans
a. Standardized Plan Options (Sec.  156.201)
    At Sec.  156.201, we propose minor updates to our approach to 
standardized plan options for PY 2024 and subsequent PYs. In 
particular, in contrast to the policy finalized in the 2023 Payment 
Notice, HHS proposes, for PY 2024 and subsequent PYs, to no longer 
include a standardized plan option for the non-expanded bronze metal 
level. Accordingly, HHS proposes at new Sec.  156.201(b) that for PY 
2024 and subsequent PYs, FFE and SBE-FP issuers offering QHPs through 
the Exchanges must offer 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 except the non-
expanded bronze level, and throughout every service area that they 
offer non-standardized QHP options.
    HHS believes that maintaining the highest degree of continuity 
possible in the approach to standardized plan options minimizes the 
risk of disruption for a range of interested parties, including 
issuers, agents, brokers, States, and enrollees. HHS believes that 
making major departures from the approach to standardized plan options 
in the 2023 Payment Notice could result in drastic changes in these 
plan designs that could potentially cause undue burden for these 
interested parties. Furthermore, if the standardized plan options HHS 
creates vary significantly from year to year, those enrolled in these 
plans could experience unexpected financial harm if the cost-sharing 
for services they rely upon differs substantially from the previous 
year. Ultimately, HHS believes consistency in standardized plan options 
is important to allow both issuers and enrollees to become accustomed 
to these plan designs.
    Thus, similar to the approach taken in the 2023 Payment Notice, HHS 
proposes to create standardized plan options that would continue to 
resemble the most popular QHP offerings that millions of consumers are 
already enrolled in. As such, these proposed standardized plan options 
are based on refreshed PY 2022

[[Page 78308]]

cost-sharing and enrollment data to ensure that these plans continue to 
reflect the most popular offerings in the Exchanges.
    With HHS proposing to maintain a similar approach to standardized 
plan options to that taken in the 2023 Payment Notice, issuers would 
continue to be able to utilize many existing benefit packages, 
networks, and formularies, including those paired with standardized 
plan options for PY 2023. Furthermore, since HHS is proposing to 
require QHP issuers to offer standardized plan options at every product 
network type, at every metal level except the non-expanded bronze metal 
level, and throughout every service area they also offer non-
standardized plan options (but not for different product network types, 
metal levels, and service areas where they do not also offer non-
standardized plan options), issuers would continue to not be required 
to extend plan offerings beyond their existing service areas.
    Furthermore, as discussed earlier in the preamble, HHS noted that 
it would continue to differentially display standardized plan options 
on HealthCare.gov per the existing authority at Sec.  155.205(b)(1). 
Since HHS would continue to assume the burden for differentially 
displaying standardized plan options on HealthCare.gov, FFE and SBE-FP 
issuers would continue to not be subject to this burden.
    In addition, as noted in the preamble, HHS would continue 
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 believes that continuing the 
enforcement of these differential display requirements would not 
require significant modification of these entities' platforms and non-
Exchange websites, especially since the majority of this burden already 
occurred when the standardized plan option differential display 
requirements were first finalized in the 2018 Payment Notice \239\ or 
when enforcement of these requirements resumed beginning with the PY 
2023 open enrollment period.
---------------------------------------------------------------------------

    \239\ These differential display requirements were first 
effective and enforced beginning with PY 2018. See 81 FR 94117 
through 94118, 94148.
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    Finally, since HHS would continue to allow these entities to submit 
requests to deviate from the manner in which standardized plan options 
are differentially displayed on HealthCare.gov, the burden for these 
entities would continue to be minimized. HHS intends to continue 
providing access to information on standardized plan options to web-
brokers through the Health Insurance Marketplace Public Use Files 
(PUFs) and QHP Landscape file to further minimize burden. Specific 
burden estimates for these requirements can be found in the 
corresponding ICR sections for Sec. Sec.  155.220 and 156.265 of the 
2023 Payment Notice (87 FR 698 and 699 and 87 FR 27360 and 27361).
b. Non-Standardized Plan Option Limits (Sec.  156.202)
    At Sec.  156.202, we propose to limit the number of non-
standardized plan options that issuers of individual market medical 
QHPs can offer through the FFEs and SBE-FPs to two per product network 
type, metal level, and service area. If such a limit were adopted in PY 
2024, it is estimated that the weighted average number of non-
standardized plan options (which does not take into consideration 
standardized plan options) available to each consumer would be reduced 
from approximately 107.8 in PY 2022 to 37.2 in PY 2024. Furthermore, it 
is estimated that approximately 60,949 of a total 106,037 non-
standardized plan option plan-county combinations (amounting to 57.5 
percent of non-standardized plan option plan-county combinations) would 
be discontinued.\240\ Finally, it is estimated that approximately 2.72 
million of the approximate 10.21 million enrollees on the FFEs and SBE-
FPs (amounting to 26.6 percent of enrollees) would be affected by these 
discontinuations.\241\
---------------------------------------------------------------------------

    \240\ Plan-county combinations are the count of unique plan ID 
and FIPS code combinations. This measure is used because a single 
plan may be available in multiple counties, and specific limits on 
non-standardized plan options may have different impacts on one 
county where there are four plans of the same product network type 
and metal level versus another county where there are only two plans 
of the same product network type and service area, for example.
    \241\ These calculations assume that the non-standardized plan 
options removed due to the proposed limit would be those with the 
fewest enrollees based on PY 2022 data, which includes individual 
market medical QHPs for Exchanges using the HealthCare.gov 
eligibility and enrollment platform, including SBE-FPs.
---------------------------------------------------------------------------

    The total number of QHPs that would have to undergo QHP 
certification each year would be reduced as a result of limiting the 
number of non-standardized plan options. Relatedly, although issuers 
would be required to select another QHP to which to crosswalk affected 
enrollees from discontinued non-standardized plan options, the existing 
discontinuation notices and process as well as the current re-
enrollment hierarchy and corresponding crosswalk process outlined at 
Sec.  155.335(j) could accommodate crosswalking these affected 
enrollees, and no additional modification to these processes or to this 
re-enrollment hierarchy would be required. Finally, no additional 
action would be required from consumers to complete this crosswalking 
process.
    We do not have sufficient data to estimate the costs associated 
with these proposed changes, so we seek comment from interested parties 
regarding cost estimates and data sources.
21. QHP Rate and Benefit Information (Sec.  156.210)
a. Age on Effective Date for SADPs
    This rule proposes standards related to the rate submission process 
for Exchange-certified SADPs during QHP certification. This rule 
proposes to modify the rate submission process to require issuers of 
Exchange-certified SADPs, whether they are sold on- or off-Exchange, to 
use age on effective date as the sole method to calculate an enrollee's 
age for rating and eligibility purposes beginning with Exchange 
certification in PY 2024. Requiring these issuers to use the age on 
effective date methodology for calculating an enrollee's age, and 
consequently removing the less common and more complex age calculation 
methods, will reduce potential consumer confusion and the burden placed 
on Exchange interested parties (including issuers, as well as DE and 
EDE partners) by promoting operational efficiency.
    This proposed policy change reduces the risk of consumer harm and 
confusion since the age on effective date method allows consumers to 
more easily understand the rate they are charged. This proposed policy 
also helps reduce enrollment blockers, which will improve the 
efficiency of the enrollment process and reduce the burden placed on 
Exchange interested parties (including issuers, as well as DE and EDE 
partners). Therefore, this proposed policy helps facilitate more 
informed enrollment decisions and enrollment satisfaction.
    We also do not anticipate any negative financial impact as a result 
of this proposed policy, given that it would be a small operational 
change. If anything, this proposed policy has the potential to reduce 
financial burden on issuers and CMS, as removing the other age rating 
methods would reduce the added expense and slower development times 
that must account for test cases in

[[Page 78309]]

the rating engine for the less commonly used and more complex methods.
    Additionally, this proposed policy change would not create any 
additional information submission burden, as it would apply to 
information that Exchange issuers already submit as part of the QHP 
certification process.
b. Guaranteed Rates for SADPs
    This rule proposes standards related to the rate submission process 
for Exchange-certified SADPs during QHP certification. This rule 
proposes to modify the rate submission process to require issuers of 
Exchange-certified SADPs, whether they are sold on- or off-Exchange, to 
submit guaranteed rates beginning with Exchange certification in PY 
2024. Requiring guaranteed rates would reduce potential consumer harm 
and burden associated with incorrect APTC calculation for the pediatric 
dental EHB portion of premiums, and the need for consumers to contact 
issuers who post estimated rates for final rates.
    Requiring guaranteed rates would reduce the risk of consumer harm 
by reducing the risk of incorrect APTC calculation for the pediatric 
dental EHB portion of premiums. Therefore, we believe that this 
proposed policy change would support health equity by helping to ensure 
that low-income enrollees who qualify for APTC are charged the correct 
premium amount. Beyond reducing the potential for consumer financial 
harm, this proposed policy would also reduce the burden placed on 
consumers because it would allow them to rely on the information they 
see on the issuer's website and not have to contact issuers for final 
rates after the QHP certification process.
22. Plan and Plan Variation Marketing Name Requirements for QHPs (Sec.  
156.225)
    We propose at Sec.  156.225 to require that QHP plan and plan 
variation marketing names include correct information, without omission 
of material fact, and do not include content that is misleading. CMS, 
States, and QHP issuers work together to ensure that consumers can make 
informed decisions when selecting a health insurance plan based on 
factors such as QHP benefit design, cost-sharing requirements, and 
available financial assistance. In PY 2022, Exchanges on the Federal 
platform saw a significant increase in the number of plan and plan 
variation marketing names using cost-sharing information and other 
benefit details. Following Open Enrollment for PY 2022, CMS received 
complaints from consumers in multiple States who misunderstood cost-
sharing information in their QHP's marketing name. We believe that 
clear policy can result in plan and plan variation marketing names that 
reduce consumer confusion.
    By providing standards that help ensure plan and plan variation 
marketing names are clear and accurate, we anticipate the proposed 
policy will reduce burden on consumers and on those who help consumers 
to enroll in Exchange coverage because it will allow them to rely on 
information they see during the plan selection process. In addition, we 
believe that the proposed standards for plan and plan variation 
marketing names would have an overall positive impact on other Exchange 
interested parties as well, by ensuring that the consumer education 
that plans use to compete in the individual health insurance market is 
clear and accurate.
    This proposed policy may require additional effort during the QHP 
certification process on the part of Exchange issuers to comply with 
new plan marketing name standards. However, we would work to streamline 
this process by incorporating education about plan and plan variation 
marketing name standards into the annual QHP certification process, and 
proactively addressing issuer and State questions through existing 
outreach and education vehicles including webinars, email blasts, and 
regularly scheduled meetings on individual health insurance market 
policy and operations.
    The proposed policy would not create any new information submission 
burden, because it would apply to information that Exchange issuers 
already submit as part of the QHP certification process. Additionally, 
while requiring increased effort initially, we believe this proposed 
policy would ultimately decrease issuer and State effort following QHP 
certification, and during and after the annual Open Enrollment Period, 
by reducing the number of plan and plan variation marketing name-
related consumer complaints to triage and, in some cases, special 
enrollment periods to be provided.
    We seek comment on the burden that this proposed policy would 
impose, and on the burden reduction it could provide. We also seek 
comment on how CMS can further alleviate any burden associated with 
this proposed policy, such as through technical assistance to Exchange 
interested parties, including issuers and enrollment assisters.
    Finally, we also believe that the proposed policy would promote 
health equity by reducing the likelihood of QHP benefit 
misunderstanding and confusion that leads to less informed enrollment 
decisions, especially for consumers with low health literacy, which is 
disproportionately experienced among underserved communities and other 
vulnerable populations. For example, a 2022 study found higher self-
reported low health literacy among people who are Hispanic, non-U.S. 
citizens, unemployed, or who have less than a high school 
education.\242\ A 2019 study that tested participants' knowledge of 
health insurance terminology found statistically significant 
disparities based on race, ethnicity, and language preference.\243\ We 
seek comment on this proposal and on whether this proposal would 
promote health equity, and on additional ways that CMS can support 
health insurance literacy through plan marketing guidance and technical 
assistance.
---------------------------------------------------------------------------

    \242\ Edward J, Wiggins A, Young MH, Rayens MK. Significant 
Disparities Exist in Consumer Health Insurance Literacy: 
Implications for Health Care Reform. Health Lit Res Pract. 2019 Nov 
5;3(4):e250-e258. doi: 10.3928/24748307-20190923-01. PMID: 31768496; 
PMCID: PMC6831506.
    \243\ Villagra VG, Bhuva B, Coman E, Smith DO, Fifield J. Health 
insurance literacy: disparities by race, ethnicity, and language 
preference. Am J Manag Care. 2019 Mar 1;25(3):e71-e75. PMID: 
30875174.
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23. Network Adequacy (Sec.  156.230)
    Regarding HHS's proposal to require all QHP issuers, including SADP 
issuers, to utilize a contracted network of providers and comply with 
network adequacy standards at Sec.  156.230 and ECP standards at Sec.  
156.235, we acknowledge that SADP issuers that only offer plans that do 
not use a provider network and that want to be certified may initially 
face increased costs associated with developing contractual 
relationships with providers or leveraging pre-existing networks 
associated with their other plans. However, studies have found that 
provider networks allow for insurer-negotiated prices and controlled 
(that is, reduced) costs in the form of reduced patient cost-sharing, 
premiums, and service price, as compared with such services obtained 
out of network.\244\ \245\ We expect any initial increased issuer costs 
to differ from the costs experienced once such provider

[[Page 78310]]

contractual relationships have been established or pre-existing 
networks associated with their other plans have been leveraged. We 
request comment on whether and how to extrapolate from literature on 
voluntary network formation for purposes of assessing impacts of this 
regulatory provision.
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    \244\ Benson NM, Song Z. Prices And Cost Sharing For 
Psychotherapy In Network Versus Out Of Network In The United States. 
Health Aff (Millwood). 2020 Jul;39(7):1210-1218. https://www.healthaffairs.org/doi/10.1377/hlthaff.2019.01468.
    \245\ Song, Z., Johnson, W., Kennedy, K., Biniek, J. F., & 
Wallace, J. Out-of-network spending mostly declined in privately 
insured populations with a few notable exceptions from 2008 to 2016. 
Health Aff. 2020;39(6), 1032-1041. https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2019.01776.
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    For SADPs that do not use a provider network, this proposal would 
require these issuers to contract with providers in accordance with our 
existing network adequacy requirements or withdraw from the Exchange. 
The latter may create a burden for enrollees and QHP plans in the 
service area if no SADPs remain. However, we expect this burden to only 
affect a small number of consumers, given the overall small number of 
Exchange-certified SADPs that do not use a provider network on the 
FFEs. As discussed further in Table 12 in the preamble for part 156, 
over the last few years, fewer than 100 counties have had SADPs without 
provider networks, and most of these counties had SADPs with provider 
network options available. For PY 2022, there were only 8 Exchange-
certified SADPs without provider networks in the FFEs. Similarly, the 
number of States with these types of plans has decreased over time. At 
its highest, in 2014, 9 FFE States had Exchange-certified SADPs without 
provider networks. Since PY 2020, this number has dropped to 4 or fewer 
FFE States, with only 2 FFE States having this plan type in PYs 2022 
and 2023. Additionally, Exchange-certified SADPs with provider networks 
are becoming more available in counties that previously only had no-
network SADP options: for PYs 2022 and 2023, only 2 FFE States (Alaska 
and Montana) offer Exchange-certified SADPs without provider networks. 
For Montana, all counties offering this plan type also offer Exchange-
certified SADPs with provider networks. For Alaska in PYs 2022 and 
2023, 90 percent of counties with Exchange-certified SADPs without 
provider networks have no Exchange-certified SADPs with provider 
networks.
    We anticipate approximately 2,200 enrollees will be affected by 
this proposal. Enrollees in SADPs that choose not to comply with this 
requirement would need to select a different plan for coverage, which 
may cause hardship if the enrollee cannot access assistance, requires 
culturally and linguistically appropriate support, and/or does not have 
an understanding of health insurance design and benefits. In the event 
service areas are left without SADPs due to the provider network 
requirement, health plans will have to amend their benefits to include 
the pediatric dental benefit EHB. This change may require costs for 
issuers to build the benefit and contract with providers.
    These impacts may be mitigated if we finalize a limited exception 
to allow SADPs to not use a provider network in areas where it is 
prohibitively difficult for the SADP issuer to establish a network of 
dental providers that complies with Sec. Sec.  156.230 and 156.235.
    Finally, we do not anticipate any impact as a result of this 
proposal on health plans that do not use a network, given our 
understanding that no such plan is currently certified as a QHP by an 
Exchange, but solicit comment to inform that understanding.
24. Essential Community Providers (Sec. Sec.  156.235(a)(2)(i) and 
156.235(a)(2)(ii)(B))
    Regarding HHS's proposal to strengthen the ECP standards under 
Sec.  156.235(a)(2)(i) by requiring QHPs to contract with at least 35 
percent of available FQHCs that qualify as ECPs in the plan's service 
area and at least 35 percent of available Family Planning Providers 
that qualify as ECPs in the plan's service area, we acknowledge that 
issuers whose provider networks do not currently include such a 
percentage of these provider types that qualify as ECPs may face 
increased costs associated with complying with the proposed policies. 
However, we do not expect this increase to be prohibitive. Based on 
data from PY 2023, it is likely that a majority of issuers would be 
able to meet or exceed the threshold requirements for FQHCs and Family 
Planning Providers without needing to contract with additional 
providers in these categories.
    To illustrate, if these requirements had been in place for PY 2023, 
out of 137 QHP issuers on the FFEs, 76 percent would have been able to 
meet or exceed the 35 percent FQHC threshold, while 61 percent would 
have been able to meet or exceed the 35 percent Family Planning 
Provider threshold without contracting with additional providers. For 
SADP issuers, 84 percent would have been able to meet the 35 percent 
threshold requirement for FQHCs offering dental services without 
contracting with additional providers. In PY 2023, for medical QHPs, 
the mean and median ECP percentages for the FQHC category were 74 and 
83 percent, respectively. For the Family Planning Providers category, 
the mean and median ECP percentages were 66 and 71 percent, 
respectively. For SADPs, the mean and median ECP percentages for the 
FQHC category were 61 and 64 percent, respectively.
    Regarding HHS's proposal to strengthen the ECP standards under 
Sec.  156.235(a)(2)(ii)(B) by establishing two additional stand-alone 
ECP categories to include SUD Treatment Centers and Mental Health 
Facilities, we acknowledge challenges associated with a general 
shortage and uneven distribution of SUD Treatment Centers and mental 
health providers. However, the ACA requires that a QHP's network 
include ECPs where available. As such, the proposal to require QHPs to 
offer a contract to at least one available SUD Treatment Center and one 
available Mental Health Facility in every county in the plan's service 
area does not unduly penalize issuers facing a lack of certain types of 
ECPs within a service area, meaning that if there are no provider types 
that map to a specified ECP category available within the respective 
county, the issuer is not penalized. Further, as outlined in prior 
Letters to Issuers, HHS prepares the applicable PY HHS ECP list that 
potential QHPs use to identify eligible ECP facilities. The HHS ECP 
list reflects the total supply of eligible providers (that is, the 
denominator) from which an issuer may select for contracting to count 
toward satisfying the ECP standard. As a result, issuers are not 
disadvantaged if their service areas contain fewer ECPs. HHS 
anticipates that any QHP issuers falling short of the 35 percent 
threshold for PY 2024 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.
25. Termination of Coverage or Enrollment for Qualified Individuals 
(Sec.  156.270)
    We propose to amend Sec.  156.270(f) by adding a timeliness 
standard to the requirement for QHP issuers to send enrollees notice of 
payment delinquency. Specifically, we propose to revise Sec.  
156.270(f) to require issuers to send notice of payment delinquency 
promptly and without undue delay. We anticipate that this proposal 
would be beneficial to enrollees who become delinquent on premium 
payments by ensuring they are properly informed of their delinquency in 
time to avoid losing coverage. It may be especially beneficial to 
enrollees who are low income, who would be especially negatively 
impacted by disruptions in coverage. We expect some minimal costs to 
issuers associated with updating their internal processes to ensure 
compliance with the finalized

[[Page 78311]]

timeliness standard, but do not have adequate data to estimate these 
costs. We seek comment on the benefit and cost assumptions of this 
proposal.
26. Final Deadline for Reporting Enrollment and Payment Inaccuracies 
Discovered After the Initial 90-Day Reporting Window (Sec.  
156.1210(c))
    We propose to amend Sec.  156.1210(c) to remove the alternate 
deadline at Sec.  156.1210(c)(2), which requires an issuer to describe 
all data inaccuracies identified in a payment and collection report by 
the date HHS notifies issuers that the HHS audit process with respect 
to the plan year to which such inaccuracy relates has been completed, 
in order for these data inaccuracies to be eligible for resolution. 
Under this proposal, we would retain only the deadline at Sec.  
156.1210(c)(1), which requires that issuers describe all inaccuracies 
identified in a payment and collections report within 3 years of the 
end of the applicable plan year to which the inaccuracy relates to be 
eligible to receive an adjustment to correct an underpayment. Under 
this proposal, beginning with the 2020 plan year coverage, HHS would 
not pay additional APTC payments or reimburse user fee payments for 
FFE, SBE-FP, and SBE issuers for data inaccuracies reported after the 
3-year deadline. Further, we propose that HHS would not accept or take 
action that results in an outgoing payment on data inaccuracies or 
payment errors for the 2015 through 2019 plan year coverage that are 
reported after December 31, 2023. We anticipate that this proposed 
change would result in a less operationally burdensome process for the 
identification and resolution of these data inaccuracies for issuers, 
State Exchanges, and HHS, and a slight reduction in associated burdens, 
such as resolution of data inaccuracies for discovered underpayments. 
However, we anticipate the impact would be minimal, if any, and result 
in no significant financial impact.
27. Regulatory Review Cost Estimation
    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this proposed or final 
rule, we should estimate the cost associated with regulatory review. 
Due to the uncertainty involved with accurately quantifying the number 
of entities that will review the rule, we assume that the total number 
of unique commenters on last year's proposed rule (465) will be the 
number of reviewers of this proposed rule. We acknowledge that this 
assumption may understate or overstate the costs of reviewing this 
rule. It is possible that not all commenters reviewed last year's rule 
in detail, and it is also possible that some reviewers chose not to 
comment on the proposed rule. For these reasons, we thought that the 
number of past commenters would be a fair estimate of the number of 
reviewers of this rule. We welcome any comments on the approach in 
estimating the number of entities which will review this proposed rule.
    We also recognize that different types of entities are in many 
cases affected by mutually exclusive sections of this proposed rule, 
and therefore, for the purposes of our estimate we assume that each 
reviewer reads approximately 50 percent of the rule. We seek comments 
on this assumption.
    Using the wage information from the BLS for medical and health 
service managers (Code 11-9111), we estimate that the cost of reviewing 
this rule is $115.22 per hour, including overhead and fringe 
benefits.\246\ Assuming an average reading speed, we estimate that it 
would take approximately 1 hour for the staff to review half of this 
proposed or final rule. For each entity that reviews the rule, the 
estimated cost is $115.22 (1-hour x $115.22). Therefore, we estimate 
that the total cost of reviewing this regulation is $53,577.30 ($115.22 
x 465).
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    \246\ https://www.bls.gov/oes/current/oes_nat.htm.
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D. Regulatory Alternatives Considered

    With respect to the inclusion or exclusion of the 2020 benefit year 
enrollee-level EDGE data in the recalibration of 2024 benefit year risk 
adjustment models, we considered a variety of alternative options to 
our proposal to use 2018, 2019, and 2020 enrollee-level EDGE data with 
an exception to exclude 2020 benefit year data from recalibration of 
the age-sex coefficients for the adult models, which is the fourth 
option outlined above. The first option considered was to maintain 
current policy, recalibrating the risk adjustment models using 2018, 
2019, and 2020 enrollee-level EDGE data (without any adjustment). The 
second option involved using 2018, 2019, and 2020 enrollee-level EDGE 
data, but assigning a lower weight to the 2020 data. The third option 
we considered would utilize 4 years of enrollee-level EDGE data, 
instead of three, to recalibrate the risk adjustment models using 2017, 
2018, 2019, and 2020 data. The fifth option would exclude the 2020 
enrollee-level EDGE data and use the 2017, 2018, and 2019 enrollee-
level EDGE data in recalibration for the 2024 benefit year or to use 
the final 2023 models as the 2024 risk adjustment models. The sixth and 
final option we considered would use 2 years of enrollee-level EDGE 
data for 2024 benefit year recalibration--only 2018 and 2019 data.
    Our analyses found that the 2019 and 2020 benefit year enrollee-
level EDGE recalibration data were largely comparable, however, there 
were observed anomalous decreases in the unconstrained coefficients for 
the 2020 benefit year enrollee-level EDGE recalibration data for older 
adult enrollees, especially older female enrollees. Option 1 therefore 
would not address the identified anomalous trend that is not expected 
to continue in future benefit years.
    The second option would represent a compromise between those who 
wish to include 2020 data in model recalibration and those who wish to 
exclude 2020 data, by capturing the utilization and spending patterns 
underlying the 2020 data while dampening its effects in the model. 
However, we were concerned this approach would require finding an 
appropriate weighting methodology, and we are further concerned that 
broadly dampening the effect of the 2020 benefit year data in the 
models defeats the purpose of adding the next available benefit year of 
data as part of model recalibration because doing so would prevent the 
models from reflecting changes in utilization and cost of care that are 
unrelated to the impact of the COVID-19 PHE. There are similar concerns 
with option 3 and the inclusion of an additional prior benefit year 
(that is, 2017) to recalibrate the 2024 benefit year models to dampen 
the impact of the 2020 benefit year data. We do not believe that such a 
broad dampening is necessary because the anomalous coefficient changes 
identified from the 2020 benefit year data were largely limited to the 
adult model age-sex coefficients, and incorporating an additional prior 
benefit year of data would dampen the impact of the 2020 benefit year 
data on other factors and would prevent the models from reflecting 
changes in utilization and cost of care that are unrelated to the 
impact of the COVID-19 PHE.
    We are similarly concerned about options 5 and 6, which would 
involve the complete exclusion of 2020 benefit year data, because both 
of these options would result in reliance on data that may not be the 
most reflective data set of the utilization and spending trends. 
Furthermore, there are questions about whether there is a sufficient 
justification to completely exclude 2020 benefit year

[[Page 78312]]

enrollee-level EDGE recalibration data in the recalibration of the risk 
adjustment models. The sixth option has the same limitations and would 
also have the additional drawback of decreasing the stabilizing effect 
of using multiple years of data in model recalibration. More 
specifically, because this option would reduce the number of years of 
data used, a change in a coefficient occurring in just 1 year of the 
data that is actually included in recalibration (that is, the 2018 or 
2019 benefit years of enrollee-level EDGE recalibration data) would 
have a greater impact on the risk adjustment model coefficients due to 
the increase in the reliance of the blended coefficients on the 
remaining 2 years of data.
    We solicit comment on all of these alternatives for the use of the 
2020 enrollee-level EDGE data in the 2024 benefit year risk adjustment 
model recalibration.
    In developing the updated materiality threshold for HHS-RADV 
proposed in this rule, we sought to ensure the materiality threshold 
would ease the burden of annual audit requirements for smaller issuers 
of risk adjustment covered plans that do not materially impact risk. To 
do this, we considered the costs associated with hiring an initial 
validation auditor and submitting IVA results and the relative growth 
of issuers' total annual premiums Statewide and total BMM. We also 
evaluated the benefits of shifting to a threshold based on BMM rather 
than annual premiums, and we are proposing changing the materiality 
threshold from $15 million in total annual premiums Statewide to 30,000 
BMM Statewide. As an alternative option, we considered increasing the 
threshold to $17 million in total annual premiums Statewide and 
maintaining a cutoff based on premium dollars (instead of BMMs). 
However, we were concerned that a premium threshold would fail to 
capture small issuers overtime as PMPM premiums grow and would require 
more regular updates to the materiality threshold to maintain the 
current balance. The use of a BMM threshold avoids this issue. We 
invite comment on our proposed materiality threshold and on the 
potential alternative option to update the threshold to $17 million 
annual premiums Statewide for the benefit year being audited, and we 
also invite comment on the applicability date for when the new 
materiality threshold should begin to apply.
    Regarding our proposal to require Exchanges to determine an 
enrollee as ineligible for APTC after having failed to file and 
reconcile for two consecutive tax years rather than after one tax year, 
we considered multiple alternatives. One alternative we considered was 
extending the current pause on FTR operations through plan year 2024, 
while HHS continued to examine the current FTR process, and explore 
ways in which the FTR process could promote continuity of coverage, 
while maintaining its critical program integrity function to ensure 
that only enrollees eligible for APTC continue to do so. Another 
alternative we considered was repealing the requirement under 45 CFR 
155.305(f)(4) that a taxpayer(s) must file a Federal income tax return 
and reconcile their APTC for any tax year in which they or their tax 
household received APTC in order to continue their eligibility for 
APTC. However, we wanted to maintain the program integrity benefits of 
the FTR process, and believe there is still value in ensuring that only 
people who are filing and reconciling remain eligible to receive APTC. 
Because of this, we have amended our proposal and are instead proposing 
requiring that Exchanges end APTC only after two consecutive years of 
FTR status rather than ending APTC after a single year.
    We considered two alternatives to accepting attestation to 
determine household income for households for which IRS does not return 
any data and expanding the amount of time to resolve income DMIs to 
meet the goal of increased consumer service and advancing health 
equity. We considered establishing a threshold when adjusting APTC 
following an income inconsistency period. Under this alternative, HHS 
would continue current operations but would not eliminate APTC 
eligibility completely if consumers are unable to provide sufficient 
documentation. While this alternative would require fewer changes to 
implement, our current proposal would create better outcomes for more 
consumers and decrease administrative burden. Additionally, we 
considered eliminating income DMIs for all consumers, including those 
for whom the Exchanges have IRS data, due to the large burden the 
income verification process places on consumers, but we found that the 
verification process was required for consumers with IRS data, and that 
consumers with other IRS data would have their household income 
adjusted based on that data as opposed to those without IRS data who 
would instead lose all of their APTC.
    In developing the proposal for re-enrollment hierarchy, we 
considered a variety of alternatives, including making no 
modifications. We also considered revising the policy, beginning in PY 
2024, such that the Exchange could direct re-enrollment for income-
based CSR-eligible enrollees from a bronze QHP to a silver QHP with a 
$0 net premium within the same product and QHP issuer, regardless if 
the enrollee's current plan is available. Under this alternative we 
considered revising the policy to allow the Exchange to ensure the 
enrollee's coverage retained a similar provider network throughout the 
Federal hierarchy for re-enrollment. While we believe this may slightly 
reduce operational complexity, we believe income-based CSR-eligible 
enrollees who have a de minimis or non-zero-dollar premium would still 
greatly benefit from having their coverage renewed into a silver CSR 
QHP with a lower or equivalent net premium and OOPC, by saving 
thousands in care costs.
    We also considered revising the policy, beginning in PY 2024, such 
that the Exchange could: (1) direct re-enrollment, for income-based 
CSR-eligible enrollees, from a bronze QHP to a silver QHP with a lower 
or equivalent net premium and total OOPC within the same product and 
QHP issuer regardless if their current plan is available; (2) if their 
current plan is available and the enrollee is not income-based CSR 
eligible, re-enroll the enrollee's coverage in the enrollee's same 
plan; (3) if their current plan is not available and the enrollee is 
not income-based CSR eligible, direct re-enrollment to a plan at the 
same metal level that has a lower or equivalent net premium and total 
out-of-pocket cost compared to the enrollee's current QHP within the 
same product and QHP issuer; and (4) if a plan at the same metal level 
as their current QHP is not available and the enrollee is not income-
based CSR eligible, direct re-enrollment to a QHP that is one metal 
level higher or lower than the enrollee's current QHP and has a lower 
or equivalent net premium and total OOPC compared to the enrollee's 
current QHP within the same product and issuer. Under this alternative, 
we considered revising the policy to allow the Exchange to ensure the 
enrollee's coverage retained a similar provider network throughout the 
Federal hierarchy for re-enrollment. While we believe this alternative 
would be beneficial for all enrollees, we understand this would pose a 
substantial operational burden and complexities for issuers and 
Exchanges to shift from the current policy to this revised alternative. 
We believe an incremental change would help issuers and Exchanges 
diligently and appropriately adjust their re-enrollment operations. We 
solicit comment on all

[[Page 78313]]

aspects of the re-enrollment proposal at Sec.  155.335(j).
    HHS considered taking no action related to the two technical 
corrections to the regulatory text at Sec.  155.420(a)(4)(ii)(A) and 
(B). However, HHS felt these changes were necessary to make it 
explicitly clear that when a qualified individual or enrollee, or his 
or her dependent, experiences the special enrollment period triggering 
event, all members of a household may enroll in or change plans 
together in response to the event experienced by one member of the 
household. These proposed technical corrections should eliminate any 
confusion surrounding special enrollment period triggering events and 
may help Exchanges and other interested parties more effectively 
communicate and message rules that determine eligibility for special 
enrollment periods and how plan category limitations may apply for 
certain special enrollment periods as outlined under Sec.  155.420(a).
    We considered taking no action related to our proposal to revise 
paragraph Sec.  155.420(b)(2)(iv), to provide Exchanges with more 
flexibility by allowing Exchanges the option to provide consumers with 
earlier coverage effective dates so that consumers are able to 
seamlessly transition from one form of coverage to Exchange coverage as 
quickly as possible with no coverage gaps. However, we believe that 
many consumers would benefit from this proposed change, especially 
those consumers whose States allow for mid-month terminations for 
Medicaid/CHIP or those consumers whose COBRA coverage ends mid-month 
and who report their coverage loss to the Exchange before it happens. 
We also considered allowing consumers the option to request a 
prospective coverage start date rather than the day following loss of 
MEC or COBRA coverage but we determined that this could introduce 
adverse selection as consumers could choose to delay enrolling in 
Exchange coverage and paying premiums until coverage was necessary. 
Finally, we also considered for consumers attesting to a past loss of 
MEC and who also report a mid-month coverage loss that Exchange 
coverage would be effective retroactively back to the first day after 
the prior coverage loss date. For example, if a consumer lost coverage 
on July 15, coverage would be effective retroactively back to July 16. 
We decided against this option as it would require a statutory change 
to allow for mid-month PTC for consumers losing MEC mid-month, in 
addition to being too operationally complex for both Exchanges and 
issuers to implement.
    We considered taking no action related to our proposal to add new 
paragraph Sec.  155.420(c)(6), to ensure that qualifying individuals 
losing Medicaid or CHIP coverage are able to seamlessly transition to 
Exchange coverage as quickly as possible with little to no coverage 
gaps. However, we believe that many consumers will benefit from this 
proposed change, especially during the PHE unwinding period, where many 
consumers will need to seamlessly transition off Medicaid or CHIP and 
into Exchange coverage. We also considered whether this proposed change 
should be broadened to include consumers in other disadvantaged groups 
such as those impacted by natural disasters or other exceptional 
circumstances, consumers losing Medicaid or CHIP that is not considered 
MEC, and consumers who are denied Medicaid or CHIP coverage. We decided 
not to include other groups, such as those residing in a Federal 
Emergency Management Agency (FEMA) declared disaster area, as current 
CMS guidance requires that an SEP be made available for an additional 
60 days after the end of a FEMA declaration.\247\ Additionally, for 
other exceptional circumstances, there is flexibility under Sec.  
155.420(d)(9) that CMS may offer impacted consumers more time to enroll 
under an SEP depending on the type of exceptional circumstance, like a 
national PHE such as COVID-19. Finally, regarding the population that 
is denied Medicaid or CHIP coverage, we also considered whether to 
extend the SEP window length from 60 days to 90 days for the population 
that is denied Medicaid or CHIP, however, we chose not to extend the 
SEP window length for this population as there is no 90 day 
reconsideration period that needs alignment for consumers denied 
Medicaid or CHIP as there is for consumers who have lost eligibility 
for Medicaid or CHIP as described earlier in preamble.
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    \247\ https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/8-9-natural-disaster-SEP.pdf.
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    We considered taking no action regarding our proposal to modify 
Sec.  155.430(b) to expressly prohibit issuers from terminating 
coverage for policy dependent enrollees because they reached the 
maximum allowable age mid-Plan Year. However, we believe it is 
important to provide clarity to issuers and consumers regarding this 
policy so that coverage is not prematurely disrupted.
    In developing the IPPTA policies contained in this proposed rule 
(Sec.  155.1500), we requested to meet individually with each State 
Exchange currently participating in the voluntary State engagement 
initiative in order to gather State-specific information regarding 
options for data collection that would impose the least burden on State 
Exchanges. Based on information provided by those State Exchanges that 
were able to participate in the meetings, we considered several data 
collection options but chose the option that provides State Exchanges 
with the greatest amount of control in aligning their source data to 
the requested data elements. In addition, the proposed data collection 
option requests that the State Exchange provide no fewer than 10 
sampled tax households that we propose the State Exchange would 
identify based upon fulfilling the scenarios described in the preamble. 
An alternative option consisted of allowing the State Exchange to 
provide to HHS all of the source data in an unstructured format for the 
respective, sampled tax households. HHS using its own resources would 
then map the State Exchange source data to the required data elements 
that are necessary for performing the pre-testing and assessment. The 
mapping process would require consultative sessions with each State 
Exchange and a validation process to ensure the accurate mapping of the 
data. While the proposed pre-testing and assessment data request form 
also entails a process to validate the data with the State Exchanges, 
the consultative process associated with this alternative data 
collection mechanism would entail more frequency and a higher level of 
intensity.
    We invite comment on this proposed data collection option and 
invite comment on potential alternative data collection options.
    With respect to standardized plan options, we considered a range of 
options for the proposed policy approach at Sec.  156.201, such as 
modifying the methodology used to create the standardized plan options 
for PY 2024 and subsequent PYs. Specifically, we considered including 
more than four tiers of prescription drug cost-sharing in the 
standardized plan option formularies. We also considered lowering the 
deductibles in these plan designs and offsetting this increase in plan 
generosity by increasing cost-sharing amounts for several benefit 
categories. We also considered simultaneously maintaining the current 
cost-sharing structures and decreasing the deductibles for these plan 
designs, which would have increased the AVs of these plans to be at the 
ceiling of each AV de minimis range. Ultimately, we

[[Page 78314]]

decided to maintain the AVs of these plans near the floor of each de 
minimis range by largely maintaining the cost-sharing structures and 
deductible values from the standardized plan options from PY 2023, as 
well as by increasing the MOOP values for these plan designs. We 
believe this proposed approach would strike the greatest balance in 
providing enhanced pre-deductible coverage while ensuring competitive 
premiums for these standardized plan options.
    We invite comment on this proposed approach.
    With respect to non-standardized plan option limits, we considered 
a range of options for the proposed policy approach at Sec.  156.202. 
Specifically, we considered limiting the number of non-standardized 
plan options to three, two, or one per issuer, product network type, 
metal level, and service area combination. We also considered no longer 
permitting non-standardized plan options to be offered through the 
Exchanges.
    We also considered redeploying the meaningful difference standard, 
which was previously codified at Sec.  156.298, either in place of or 
in conjunction with imposing limits on the number of non-standardized 
plan options that issuers can offer through the Exchanges. In this 
scenario, we considered selecting from among several combinations of 
the criteria in the original version of the meaningful difference 
standard to determine whether plans are ``meaningfully different'' from 
one another.\248\ Specifically, we considered using only a difference 
in deductible type (that is, integrated or separate medical and drug 
deductible), as well as a $1,000 difference in deductible to determine 
whether plans are ``meaningfully different'' from one another.
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    \248\ Under the original meaningful difference standard, a plan 
was considered to be ``meaningfully different'' from other plans in 
the same product network type, metal level, and service area 
combination if the plan had at least one of the following 
characteristics: difference in network ID, difference in formulary 
ID, difference in MOOP type, difference in deductible, multiple in-
network provider tiers rather than only one, a difference of $500 or 
more in MOOP, a difference of $250 or more in deductible, or any 
difference in covered benefits.
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    We believe the proposed approach of limiting the number of non-
standardized plan options to two per issuer, product network type, 
service area, and metal level would most significantly reduce the risk 
of plan choice overload, streamlining the plan selection process and 
enhancing choice architecture for consumers on the Exchanges.
    We invite comment on this proposed approach.
    With respect to plan and plan variation marketing names, we 
considered issuing sub-regulatory guidance in lieu of proposed 
rulemaking to require that marketing names include correct information, 
without omission of material fact, and not include content that is 
misleading. However, given the important role that plan and plan 
variation marketing names play in facilitating plan competition through 
consumer education on Exchanges, we are proposing this requirement in 
regulation to allow interested parties the opportunity to comment.
    We considered leaving the ECP provider participation threshold and 
major ECP categories unchanged from PY 2023, but elected to propose 
these changes to ECP policy in an effort to increase access to care, 
particularly mental health care and SUD treatment, for low-income and 
medically underserved consumers. We invite comment on these proposals.
    We considered not introducing a proposal to require all QHP 
issuers, including stand-alone dental plans, to utilize a contracted 
network of providers, but elected to propose this change to network 
adequacy policy in an effort to ensure that consumers have access to 
insurer-negotiated prices and reduced costs in the form of reduced 
cost-sharing, premiums, and service price, as compared with cost-
sharing, premiums, and service prices obtained from plans with no 
network of contracted providers. We invite comment on this proposal.
    We considered not proposing an amendment to Sec.  156.270(f) to add 
a timeliness standard to the requirement for QHP issuers to send 
enrollees notices of payment delinquency. However, because there is 
currently no timeliness standard for delinquency notices, we are 
concerned that there is a risk that enrollees may not receive 
sufficient notice of their delinquency in order to avoid termination of 
coverage. We also considered proposing requirements on how much advance 
notice issuers must provide on premium bills after coverage is 
effectuated, but have declined to propose regulation here, determining 
that our focus on delinquency notice timeliness will have the desired 
impact without creating potential conflicts with the existing pattern 
of State rules and issuer practices that have long applied in the 
individual market.

E. Regulatory Flexibility Act (RFA)

    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, we estimate that 
small businesses, nonprofit organizations, and small governmental 
jurisdictions are small entities as that term is used in the RFA. The 
great majority of hospitals and most other health care providers and 
suppliers are small entities, either by being nonprofit organizations 
or by meeting the SBA definition of a small business (having revenues 
of less than $8.0 million to $41.5 million in any 1 year). Individuals 
and States are not included in the definition of a small entity.
    For purposes of the RFA, we believe that health insurance issuers 
and group health plans would be classified under the North American 
Industry Classification System (NAICS) code 524114 (Direct Health and 
Medical Insurance Carriers). According to SBA size standards, entities 
with average annual receipts of $41.5 million or less would be 
considered small entities for these NAICS codes. Issuers could possibly 
be classified in 621491 (HMO Medical Centers) and, if this is the case, 
the SBA size standard would be $35 million or less.\249\ We believe 
that few, if any, insurance companies underwriting comprehensive health 
insurance policies (in contrast, for example, to travel insurance 
policies or dental discount policies) fall below these size thresholds. 
Based on data from MLR annual report submissions for the 2020 MLR 
reporting year, approximately 78 out of 480 issuers of health insurance 
coverage nationwide had total premium revenue of $41.5 million or 
less.\250\ This estimate may overstate the actual number of small 
health insurance issuers that may be affected, since over 76 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.
---------------------------------------------------------------------------

    \249\ https://www.sba.gov/document/support--table-size-standards.
    \250\ Available at https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html.
---------------------------------------------------------------------------

    In this proposed rule, we propose standards for the risk adjustment 
and HHS-RADV programs, which are intended to stabilize premiums and 
reduce incentives for issuers to avoid higher-risk enrollees. Because 
we believe that insurance firms offering comprehensive health insurance 
policies generally exceed the size thresholds for ``small entities'' 
established by the SBA, we do not

[[Page 78315]]

believe that an initial regulatory flexibility analysis is required for 
such firms. Furthermore, the proposals related to IPPTA at Sec. Sec.  
155.1500-155.1515 will affect only State Exchanges. As State 
governments do not constitute small entities under the statutory 
definition, and as all State Exchanges have revenues exceeding $5 
million, an impact analysis for these provisions is not required under 
the RFA.
    As its measure of significant economic impact on a substantial 
number of small entities, HHS uses a change in revenue of more than 3 
to 5 percent. We do not believe that this threshold will be reached by 
the requirements in this proposed rule. Therefore, the Secretary has 
certified that this proposed rule will not have a significant economic 
impact on a substantial number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a metropolitan 
statistical area and has fewer than 100 beds. While this rule is not 
subject to section 1102 of the Act, we have determined that this 
proposed rule would not affect small rural hospitals. Therefore, the 
Secretary has certified that this proposed rule will not have a 
significant impact on the operations of a substantial number of small 
rural hospitals.

F. Unfunded Mandates Reform Act (UMRA)

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 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 unfunded mandate.

G. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications.
    In compliance with the requirement of E.O. 13132 that agencies 
examine closely any policies that may have Federalism implications or 
limit the policy making discretion of the States, we have engaged in 
efforts to consult with and work cooperatively with affected States, 
including participating in conference calls with and attending 
conferences of the NAIC, and consulting with State insurance officials 
on an individual basis.
    While developing this rule, we attempted to balance the States' 
interests in regulating health insurance issuers with the need to 
ensure market stability. By doing so, we complied with the requirements 
of E.O. 13132.
    Because States have flexibility in designing their Exchange and 
Exchange-related programs, State decisions will ultimately influence 
both administrative expenses and overall premiums. States are not 
required to establish an Exchange or risk adjustment program. For 
States that elected previously to operate an Exchange, those States had 
the opportunity to use funds under Exchange Planning and Establishment 
Grants to fund the development of data. Accordingly, some of the 
initial cost of creating programs was funded by Exchange Planning and 
Establishment Grants. After establishment, Exchanges must be 
financially self-sustaining, with revenue sources at the discretion of 
the State. Current State Exchanges charge user fees to issuers.
    In our view, while this proposed rule would not impose substantial 
direct requirement costs on State and local governments, this 
regulation has Federalism implications due to potential direct effects 
on the distribution of power and responsibilities among the State and 
Federal Governments relating to determining standards relating to 
health insurance that is offered in the individual and small group 
markets. For example, the repeal of the risk adjustment State 
flexibility policy may have Federalism implications, but they are 
mitigated because States have the option to operate their own Exchange 
and risk adjustment program if they believe the HHS risk adjustment 
methodology does not account for State-specific factors unique to the 
State's markets.
    As previously noted, the proposals in this rule related to IPPTA 
would impose a minimal unfunded mandate on State Exchanges to supply 
data for the improper payment calculation. Accordingly, E.O. 13132 does 
not apply to this section of the proposed rule. In addition, statute 
requires HHS to determine the amount and rate of improper payments. 
Finally, States have the option to choose an FFE or SBE-FP, each of 
which place different Federal burdens on the State. As the IPPTA 
section of the proposed rule should not conflict with State law, HHS 
does not anticipate any preemption of State law. We invite State 
Exchanges to submit comments on this section of the proposed rule if 
they believe it would conflict with State law.
    In addition, we believe this proposed regulation does have 
Federalism implications due to our proposal that Exchanges offer 
earlier effective dates for consumers attesting to future mid-month 
loss of MEC or COBRA coverage. However, the Federalism implications are 
mitigated as Exchanges would have the flexibility to continue offering 
the current coverage effective dates as described at Sec.  
155.420(b)(2)(iv) or the new proposed earlier effective dates for 
consumers attesting to a future loss of MEC as described earlier in 
preamble. In addition, through the cross-references in Sec.  
147.104(b)(5), the new proposed earlier coverage effective dates for 
consumers attesting to a future loss of MEC would be applicable market-
wide at the option of the applicable State authority.
    Additionally, we believe this proposed regulation does have 
Federalism implications due to our proposal that Exchanges provide 
consumers losing Medicaid or CHIP with a 90-day special enrollment 
period window to enroll in an Exchange QHP rather than the current 60-
day window. However, the Federalism implications are mitigated as 
Exchanges will have the flexibility to decide whether to continue 
providing 60 days before or 60 days after for consumers losing Medicaid 
or CHIP to enroll in a QHP plan as described at Sec.  155.420(c)(1) or 
to implement the proposed new special rule providing consumers with 60 
days before or 90 days after their loss of Medicaid or CHIP to enroll 
in QHP coverage.

List of Subjects

45 CFR Part 153

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

45 CFR Part 155

    Administrative practice and procedure, Advertising, Brokers,

[[Page 78316]]

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

45 CFR Part 156

    Administrative practice and procedure, Advertising, Advisory 
committees, Brokers, Conflict of interests, Consumer protection, Grant 
programs-health, Grants administration, Health care, Health insurance, 
Health maintenance organization (HMO), Health records, Hospitals, 
Indians, Individuals with disabilities, Loan programs-health, Medicaid, 
Organization and functions (Government agencies), Public assistance 
programs, Reporting and recordkeeping requirements, State and local 
governments, Sunshine Act, Technical assistance, Women, and Youth.
    For the reasons set forth in the preamble, under the authority at 5 
U.S.C. 301, the Department of Health and Human Services proposes to 
amend 45 CFR subtitle A, subchapter B, as set forth below.

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

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

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

0
2. Amend Sec.  153.320 by revising paragraphs (d) introductory text, 
(d)(1)(iv), and (d)(4)(i)(B) to 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. For 
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) * * *
    (i) * * *
    (iv) For the 2024 benefit year only, a justification for the 
requested reduction 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) * * *
    (B) For the 2024 benefit year only, 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.
* * * * *
0
3. Section 153.630 is amended by--
0
a. Revising paragraph (d)(2);
0
b. Redesignating paragraph (d)(3) as paragraph (d)(4); and
0
c. Adding new paragraph (d)(3).
    The revision and addition read as follows:


Sec.  153.630  Data validation requirements when HHS operates risk 
adjustment.

* * * * *
    (d) * * *
    (2) Within 15 calendar days of the notification of the findings of 
a second validation audit (if applicable) by HHS, in the manner set 
forth by HHS, an issuer must confirm the findings of the second 
validation audit (if applicable), or file a discrepancy report to 
dispute the findings of a second validation audit (if applicable).
    (3) Within 30 calendar days of the notification by HHS of the 
calculation of a risk score error rate, in the manner set forth by HHS, 
an issuer must confirm the calculation of the risk score error rate as 
a result of risk adjustment data validation, or file a discrepancy 
report to dispute the calculation of a risk score error rate as a 
result of risk adjustment data validation.
* * * * *
0
4. Section 153.710 is amended by revising paragraphs (e) and (h)(1) 
introductory text to read as follows:


Sec.  153.710  Data requirements.

* * * * *
    (e) Materiality threshold. HHS will consider a discrepancy reported 
under paragraph (d)(2) of this section to be material if the amount in 
dispute is equal to or exceeds $100,000 or 1 percent of the total 
estimated transfer amount in the applicable State market risk pool, 
whichever is less.
* * * * *
    (h) * * *
    (1) Notwithstanding any discrepancy report made under paragraph 
(d)(2) of this section, any discrepancy filed under Sec.  153.630(d)(2) 
or (3), 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:
* * * * *

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

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

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

0
6. Section 155.106 is amended by revising paragraphs (a)(3) and (c)(3) 
to read as follows:


Sec.  155.106  Election to operate an Exchange after 2014.

    (a) * * *
    (3) Have in effect an approved, or conditionally approved, Exchange 
Blueprint and operational readiness assessment prior to the date on 
which the Exchange would begin open enrollment as a State Exchange;
* * * * *
    (c) * * *
    (3) Have in effect an approved, or conditionally approved, Exchange 
Blueprint and operational readiness assessment prior to the date on 
which the Exchange proposes to begin open enrollment as an SBE-FP, in 
accordance with HHS rules, as a State Exchange utilizing the Federal 
platform;
* * * * *


Sec.  155.210  [Amended]

0
7. Section 155.210 is amended by removing and reserving paragraph 
(d)(8).
0
8. Section 155.220 is amended by--
0
a. Revising paragraphs (g)(5)(i)(B), (h)(3), and (j)(2)(ii) 
introductory text;
0
b. Redesignating paragraphs (j)(2)(ii)(A) through (D) as paragraphs 
(j)(2)(ii)(B), through (E), respectively;
0
c. Adding new paragraph ((j)(2)(ii)(A); and

[[Page 78317]]

0
d. Revising paragraph (j)(2)(iii).
    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 QHPs.

* * * * *
    (g) * * *
    (5) * * *
    (i) * * *
    (B) The agent, broker, or web-broker may submit evidence in a form 
and manner to be specified by HHS, to rebut the allegation during this 
90-day period. If the agent, broker, or web-broker submits such 
evidence during the suspension period, HHS will review the evidence and 
make a determination whether to lift the suspension within 45 calendar 
days of receipt of such evidence. If the rebuttal evidence does not 
persuade HHS to lift the suspension, or if the agent, broker, or web-
broker fails to submit rebuttal evidence during the suspension period, 
HHS may terminate the agent's, broker's, or web-broker's agreements 
required under paragraph (d) of this section and under Sec.  155.260(b) 
for cause under paragraph (g)(5)(ii) of this section.
* * * * *
    (h) * * *
    (3) Notice of reconsideration decision. The HHS reconsideration 
entity will provide the agent, broker, or web-broker with a written 
notice of the reconsideration decision within 60 calendar days of the 
date it receives the request for reconsideration. This decision will 
constitute HHS' final determination.
* * * * *
    (j) * * *
    (2) * * *
    (ii) Provide the Federally-facilitated Exchanges with correct 
information, and document that eligibility application information has 
been reviewed by and confirmed to be accurate by the consumer, or the 
consumer's authorized representative designated in compliance with 
Sec.  155.227, prior to the submission of information under section 
1411(b) of the Affordable Care Act, including but not limited to:
    (A) Documenting that eligibility application information has been 
reviewed by and confirmed to be accurate by the consumer or the 
consumer's authorized representative must require the consumer or their 
authorized representative to take an action that produces a record that 
can be maintained by the individual or entity described in paragraph 
(j)(1) of this section and produced to confirm the consumer or their 
authorized representative has reviewed and confirmed the accuracy of 
the eligibility application information. Non-exhaustive examples of 
acceptable documentation include obtaining the signature of the 
consumer or their authorized representative (electronically or 
otherwise), verbal confirmation by the consumer or their authorized 
representative that is captured in an audio recording, a written 
response (electronic or otherwise) from the consumer or their 
authorized representative to a communication sent by the agent, broker, 
or web-broker, or other similar means or methods specified by HHS in 
guidance.
    (1) The documentation required under paragraph (j)(2)(ii)(A) of 
this section must include the date the information was reviewed, the 
name of the consumer or their authorized representative, an explanation 
of the attestations at the end of the eligibility application, and the 
name of the assisting agent, broker, or web-broker.
    (2) An individual or entity described in paragraph (j)(1) of this 
section must maintain the documentation described in paragraph 
(j)(2)(ii)(A) of this section for a minimum of ten years, and produce 
the documentation upon request in response to monitoring, audit, and 
enforcement activities conducted consistent with paragraphs (c)(5), 
(g), (h), and (k) of this section.
* * * * *
    (iii) Obtain and document the receipt of consent of the consumer or 
their authorized representative designated in compliance with Sec.  
155.227, employer, or employee prior to assisting with or facilitating 
enrollment through a Federally-facilitated Exchange or assisting the 
individual in applying for advance payments of the premium tax credit 
and cost-sharing reductions for QHPs;
    (A) Obtaining and documenting the receipt of consent must require 
the consumer, or the consumer's authorized representative designated in 
compliance with Sec.  155.227, to take an action that produces a record 
that can be maintained and produced by an individual or entity 
described in paragraph (j)(1) of this section to confirm the consumer's 
or their authorized representative's consent has been provided. Non-
exhaustive examples of acceptable documentation of consent include 
obtaining the signature of the consumer or their authorized 
representative (electronically or otherwise), verbal confirmation by 
the consumer or their authorized representative that is captured in an 
audio recording, a response from the consumer or their authorized 
representative to an electronic or other communication sent by the 
agent, broker, or web-broker.
    (B) The documentation required under paragraph (j)(2)(iii)(A) of 
this section must include a description of the scope, purpose, and 
duration of the consent provided by the consumer or their authorized 
representative designated in compliance with Sec.  155.227, the date 
consent was given, name of the consumer or their authorized 
representative, and the name of the agent, broker, web-broker, or 
agency being granted consent, as well as a process through which the 
consumer or their authorized representative may rescind the consent.
    (C) An individual or entity described in paragraph (j)(1) of this 
section must maintain the documentation described in paragraph 
(j)(2)(iii)(A) of this section for a minimum of 10 years, and produce 
the documentation upon request in response to monitoring, audit, and 
enforcement activities conducted consistent with paragraphs (c)(5), 
(g), (h), and (k) of this section.
* * * * *


Sec.  155.225  [Amended]

0
9. Section 155.225 is amended by removing and reserving paragraph 
(g)(5).
0
10. Section 155.305 is amended by revising paragraph (f)(4) to read as 
follows.


Sec.  155.305  Eligibility standards.

* * * * *
    (f) * * *
    (4) Compliance with filing requirement. Beginning January 1, 2024, 
the Exchange may not determine a tax filer eligible for APTC if the IRS 
notifies HHS and HHS notifies the Exchange as part of the process 
described in Sec.  155.320(c)(3) that APTC payments were made on behalf 
of the tax filer or either spouse if the tax filer is a married couple 
for two consecutive years for which tax data would be utilized for 
verification of household income and family size in accordance with 
Sec.  155.320(c)(1)(i), and the tax filer or his or her spouse did not 
comply with the requirement to file an income tax return for that year 
and for the previous year as required by 26 U.S.C. 6011, 6012, and 
their implementing regulations and reconcile APTC for that period.
* * * * *
0
11. Section 155.315 is amended by adding paragraph (f)(7) to read as 
follows:

[[Page 78318]]

Sec.  155.315  Verification process related to eligibility for 
enrollment in a QHP through the Exchange.

* * * * *
    (f) * * *
    (7) Must extend the period described in paragraph (f)(2)(ii) of 
this section by a period of 60 days for an applicant if the applicant 
is required to present satisfactory documentary evidence to verify 
household income.
* * * * *
0
12. Section 155.320 is amended by adding paragraph (c)(5) to read as 
follows:


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

* * * * *
    (c) * * *
    (5) Notwithstanding any other requirement described in this 
paragraph (c) to the contrary, when the Exchange requests tax return 
data and family size from the Secretary of Treasury as described in 
Sec.  155.320(c)(1)(i)(A) but no such data is returned for an 
applicant, the Exchange will accept that applicant's attestation of 
income and family size without further verification.
* * * * *
0
13. Section 155.335 is amended by revising paragraphs (j)(1)(i), 
(j)(1)(ii), (j)(1)(iii)(A) and (B), (j)(1)(iv), (j)(2)(i) through (iii) 
and adding paragraphs (j)(2)(iv) and (v) to read as follows:


Sec.  155.335  Annual eligibility redetermination.

* * * * *
    (j) * * *
    (1) * * *
    (i) If the enrollee's current QHP is available through the Exchange 
and -
    (A) The enrollee is not CSR-eligible, in accordance with Sec.  
155.305(g), the Exchange will re-enroll the enrollee in the same plan 
as the enrollee's current QHP.
    (B) The enrollee is CSR-eligible, in accordance with Sec.  
155.305(g), and the enrollee's current QHP is a bronze level plan, the 
Exchange will re-enroll the enrollee either in the same plan as the 
enrollee's current QHP, or, at the option of the Exchange, in a silver 
level QHP within the same product that has a lower or equivalent 
premium after APTC and that has the most similar network compared to 
the enrollee's current QHP;
    (C) The enrollee is CSR-eligible, in accordance with Sec.  
155.305(g), and the enrollee's current QHP is not a bronze level plan, 
the Exchange will re-enroll the enrollee in the same plan as the 
enrollee's current QHP.
    (ii) If the enrollee's current QHP is not available through the 
Exchange and -
    (A) The enrollee is not CSR-eligible, in accordance with Sec.  
155.305(g), the Exchange will re-enroll the enrollee in a QHP within 
the same product, at the same metal level and that has the most similar 
network compared to the enrollee's current QHP.
    (B) The enrollee is CSR-eligible, in accordance with Sec.  
155.305(g), and the enrollee's current QHP is a bronze level plan, the 
Exchange will re-enroll the enrollee either in a bronze level QHP 
within the same product, or, at the option of Exchange, in a silver 
level QHP within the same product that has a lower or equivalent 
premium after APTC and that has the most similar network compared to 
the enrollee's current QHP;
    (C) The enrollee is CSR-eligible, in accordance with Sec.  
155.305(g), and the enrollee's current QHP is not a bronze level plan, 
the Exchange will re-enroll the enrollee in a QHP within the same 
product at the same metal level and that has the most similar network 
compared to the enrollee's current QHP;
    (iii) * * *
    (A) The enrollee's current QHP is a silver level plan, the Exchange 
will re-enroll the enrollee in a silver level QHP under a different 
product offered by the same QHP issuer that is most similar to and that 
has the most similar network compared to the enrollee's current 
product. If no such silver level QHP is available for enrollment 
through the Exchange, the Exchange will re-enroll the enrollee in a QHP 
under the same product that is one metal level higher or lower than the 
enrollee's current QHP and that has the most similar network compared 
to the enrollee's current QHP;
    (B) The enrollee's current QHP is not a silver level plan, the 
Exchange will re-enroll the enrollee under the same product that is one 
metal level higher or lower than the enrollee's current QHP and that 
has the most similar network compared to the enrollee's current QHP and 
; or
    (iv) If the enrollee's current QHP is not available through the 
Exchange and the enrollee's product no longer includes a QHP that is at 
the same metal level as, or one metal level higher or lower than the 
enrollee's current QHP, the Exchange will re-enroll the enrollee in any 
other QHP offered under the product in which the enrollee's current QHP 
is offered in which the enrollee is eligible to enroll that has the 
most similar network compared to the enrollee's current QHP.
    (2) * * *
    (i) If the enrollee is not CSR eligible, the Exchange will re-
enroll the enrollee in a QHP in the product offered by the same issuer 
that is the most similar to the enrollee's current product at the same 
metal level as and with the most similar network compared to the 
enrollee's current QHP;
    (ii) If the enrollee is CSR-eligible, in accordance with Sec.  
155.305(g), and the enrollee's current QHP is a bronze level plan, the 
Exchange will re-enroll the enrollee either in a bronze level QHP, or, 
at the option of the Exchange, in a silver level QHP that has a lower 
or equivalent premium after APTC and that has the most similar network 
compared to the enrollee's current QHP in the product offered by the 
same issuer through the Exchange that is most similar to the enrollee's 
current product;
    (iii) If the enrollee is CSR-eligible, in accordance with Sec.  
155.305(g), and the enrollee's current QHP is not a bronze level plan, 
the Exchange will re-enroll the enrollee in a QHP at the same metal 
level that has the most similar network compared to the enrollee's 
current QHP in the product offered by the same issuer that is the most 
similar to the enrollee's current product;
    (iv) If the issuer does not offer another QHP at the same metal 
level as the enrollee's current QHP, the Exchange will re-enroll the 
enrollee in a QHP that is one metal level higher or lower than the 
enrollee's current QHP and that has the most similar network compared 
to the enrollee's current QHP in the product offered by the same issuer 
through the Exchange that is the most similar to the enrollee's current 
product; or
    (v) If the issuer does not offer another QHP through the Exchange 
at the same metal level as, or one metal level higher or lower than the 
enrollee's current QHP, the Exchange will re-enroll the enrollee in any 
other QHP offered by the same issuer in which the enrollee is eligible 
to enroll in the product that is most similar to the enrollee's current 
product and in a QHP within that product that has the most similar 
network to the enrollee's current QHP.
* * * * *
0
14. Section 155.420 is amended by--
0
a. Revising paragraphs (a)(4)(ii)(A) and (B), (b)(2)(iv), and (c)(2);
0
b. Adding paragraph (c)(6); and
0
c. Revising paragraph (d)(12).
    The revisions and addition read as follows:


Sec.  155.420  Special enrollment periods.

    (a) * * *
    (4) * * *
    (ii) * * *
    (A) If an enrollee or his or her dependents become newly eligible 
for cost-sharing reductions in accordance with paragraph (d)(6)(i) or 
(ii) of this section and the enrollee or his or her

[[Page 78319]]

dependents are not enrolled in a silver-level QHP, the Exchange must 
allow the enrollee and his or her dependents to change to a silver-
level QHP if they elect to change their QHP enrollment; or
    (B) Beginning January 2022, if an enrollee or his or her dependents 
become newly ineligible for cost-sharing reductions in accordance with 
paragraph (d)(6)(i) or (ii) of this section and the enrollee or his or 
her dependents are enrolled in a silver-level QHP, the Exchange must 
allow the enrollee and his or her dependents to change to a QHP one 
metal level higher or lower if they elect to change their QHP 
enrollment;
* * * * *
    (b) * * *
    (2) * * *
    (iv) If a qualified individual, enrollee, or dependent, as 
applicable, loses coverage as described in paragraphs (d)(1) or 
(d)(6)(iii) of this section, or is enrolled in COBRA continuation 
coverage for which an employer is paying all or part of the premiums, 
or for which a government entity is providing subsidies, and the 
employer contributions or government subsidies completely cease as 
described in paragraph (d)(15) of this section, gains access to a new 
QHP as described in paragraph (d)(7) of this section, becomes newly 
eligible for enrollment in a QHP through the Exchange in accordance 
with Sec.  155.305(a)(2) as described in paragraph (d)(3) of this 
section, becomes newly eligible for advance payments of the premium tax 
credit in conjunction with a permanent move as described in paragraph 
(d)(6)(iv) of this section, and if the plan selection is made on or 
before the day of the triggering event, the Exchange must ensure that 
the coverage effective date is the first day of the month following the 
date of the triggering event. If the plan selection is made after the 
date of the triggering event, the Exchange must ensure that coverage is 
effective in accordance with paragraph (b)(1) of this section or on the 
first day of the following month, at the option of the Exchange. 
Notwithstanding the requirements of this paragraph (b)(2)(iv), and at 
the option of the Exchange, if the plan selection is made on or before 
the last day of the month preceding the triggering event, the Exchange 
must ensure that the coverage effective date is the first of the month 
in which the triggering event occurs for losses of coverage as 
described in paragraphs (d)(1), (d)(6)(iii), and (d)(15) of this 
section.
* * * * *
    (c) * * *
    (2) Advanced availability. A qualified individual or his or her 
dependent who is described in paragraph (d)(1), (d)(6)(iii), or (d)(15) 
of this section has 60 days before and, unless the Exchange exercises 
the option in paragraph (c)(6) of this section, 60 days after the 
triggering event to select a QHP. At the option of the Exchange, a 
qualified individual or his or her dependent who is described in 
paragraph (d)(7) of this section; who is described in paragraph 
(d)(6)(iv) of this section becomes newly eligible for advance payments 
of the premium tax credit as a result of a permanent move to a new 
State; or who is described in paragraph (d)(3) of this section and 
becomes newly eligible for enrollment in a QHP through the Exchange 
because he or she newly satisfies the requirements under Sec.  
155.305(a)(2), has 60 days before or after the triggering event to 
select a QHP.
* * * * *
    (6) Special rule for individuals losing Medicaid or CHIP. Beginning 
January 1, 2024, at the option of the Exchange, a qualified individual 
or his or her dependent(s) who is described in paragraph (d)(1)(i) of 
this section and whose loss of coverage is a loss of Medicaid or CHIP 
coverage shall have 90 days after the triggering event to select a QHP.
* * * * *
    (d) * * *
    (12) The enrollment in a QHP through the Exchange was influenced by 
a material error related to plan benefits, service area, cost-sharing, 
or premium. A material error is one that is likely to have influenced a 
qualified individual's, enrollee's, or their dependent's enrollment in 
a QHP.
* * * * *
0
15. Section 155.430 is amended by adding paragraph (b)(3) to read as 
follows:


Sec.  155.430  Termination of Exchange enrollment or coverage.

* * * * *
    (b) * * *
    (3) Prohibition of issuer-initiated terminations due to aging-off. 
Exchanges on the Federal platform must, and State Exchanges using their 
own platform may, prohibit QHP issuers from terminating dependent 
coverage of a child before the end of the plan year in which the child 
attains age 26, or before the end of the plan year in which the child 
attains the maximum age a QHP issuer is required to make available 
dependent coverage of children under applicable State law, on the basis 
of the child's age, unless otherwise permitted.
* * * * *
0
16. Section 155.505 is amended by revising paragraph (g) to read as 
follows:


Sec.  155.505  General eligibility appeals requirements.

* * * * *
    (g) Review of Exchange Eligibility Appeal Decisions. An appellant 
may seek review of Exchange eligibility appeal decisions issued under 
paragraph (b) of this section as follows:
    (1) Administrative Review. The Administrator may review an Exchange 
eligibility appeal decision as follows:
    (i) Request by a party to the appeal. (A) Within 14 calendar days 
of the date of the Exchange eligibility appeal decision issued by an 
impartial official as described in Sec.  155.535(c)(4), a party to the 
appeal may request review of the Exchange eligibility appeal decision 
by the CMS Administrator. Such a request may be made even if the CMS 
Administrator has already at their initiative declined review as 
described in paragraph (g)(1)(ii)(B) of this section. If the CMS 
Administrator accepts that party's request for a review after having 
declined review, then the CMS Administrator's initial declination to 
review the eligibility appeal decision is void.
    (B) Within 30 days of the date of the party's request for 
administrative review, the CMS Administrator may:
    (1) Decline to review the Exchange eligibility appeal decision;
    (2) Render a final decision as described in Sec.  155.545 (a)(1) 
based on their review of the eligibility appeal decision; or
    (3) Choose to take no action on the request for review.
    (C) The Exchange eligibility appeal decision of the impartial 
official as described in Sec.  155.535(c)(4) is final as of the date of 
the Exchange eligibility appeal decision if the CMS Administrator 
declines the party's request for review or if the CMS Administrator 
does not take any action on the party's request for review by the end 
of the 30-day period described in paragraph (a)(ii).
    (ii) Review at the discretion of the CMS Administrator. (A) Within 
14 calendar days of the date of the Exchange eligibility appeal 
decision issued by an impartial official as described in Sec.  
155.535(c)(4), the CMS Administrator may initiate a review of an 
eligibility appeal decision at their discretion.
    (B) Within 30 days of the date the CMS Administrator initiates a 
review, the CMS Administrator may:

[[Page 78320]]

    (1) Decline to review the Exchange eligibility appeal decision;
    (2) Render a final decision as described in Sec.  155.545 (a)(1) 
based on their review of the eligibility appeal decision; or
    (3) Choose to take no action on the Exchange eligibility appeal 
decision.
    (C) The eligibility Exchange appeal decision of the impartial 
official as described in Sec.  155.535(c)(4) is final as of the date of 
the Exchange eligibility appeal decision if the CMS Administrator 
declines to review the eligibility appeal decision or chooses to take 
no action by the end of the 30-day period described in paragraph 
(g)(1)(i)(B) of this section.
    (iii) Effective dates. If a party requests a review of an Exchange 
eligibility appeal decision by the CMS Administrator or the CMS 
Administrator initiates a review of an Exchange eligibility appeal 
decision at their own discretion, the eligibility appeal decision is 
effective as follows:
    (A) If an Exchange eligibility appeal decision is final pursuant to 
paragraphs (g)(1)(ii)(B) of this section and (g)(1)(ii)(C) in this 
section, the Exchange eligibility appeal decision of the impartial 
official as described in Sec.  155.535(c)(4) is effective as of the 
date of the official's decision.
    (B) If the CMS Administrator renders a final decision after 
reviewing an Exchange eligibility appeal decision as described in 
paragraphs (g)(1)(i)(B)(2) and (1)(ii)(B)(2) of this section, the CMS 
Administrator may choose to change the effective date of the Exchange 
eligibility appeal decision as described in Sec.  155.545 (a)(5).
    (iv) Informal resolution decisions as described in Sec.  
155.535(a)(4) are not subject to administrative review by the CMS 
Administrator.
    (2) Judicial Review. To the extent it is available by law, an 
appellant may seek judicial review of a final Exchange eligibility 
appeal decision.
* * * * *
0
17. Add subpart P to read as follows:
Subpart P--Improper Payment Pre-Testing and Assessment (IPPTA) for 
State Exchanges
Sec.
155.1500 Purpose and scope.
155.1505 Definitions.
155.1510 Data submission.
155.1515 Pre-testing and assessment procedures.

Subpart P--Improper Payment Pre-Testing and Assessment (IPPTA) for 
State Exchanges


Sec.  155.1500  Purpose and scope.

    (a) This subpart sets forth the requirements of the IPPTA. The 
IPPTA is an initiative between HHS and the State Exchanges. These 
requirements are intended to:
    (1) Prepare State Exchanges for the planned measurement of improper 
payments.
    (2) Test processes and procedures that support HHS's review of 
determinations of APTC made by State Exchanges.
    (3) Provide a mechanism for HHS and State Exchanges to share 
information that will aid in developing an efficient measurement 
process.
    (b) [Reserved]


Sec.  155.1505  Definitions.

    As used in this subpart--
    Business rules means the State Exchange's internal directives 
defining, guiding, or constraining the State Exchange's actions when 
making eligibility determinations and related APTC calculations.
    Entity relationship diagram means a graphical representation 
illustrating the organization and relationship of the data elements 
that are pertinent to applications for QHP and associated APTC 
payments.
    Pre-testing and assessment means the process that uses the 
procedures specified in Sec.  155.1515 to prepare State Exchanges for 
the planned measurement of improper payments of APTC.
    Pre-testing and assessment checklist means the document that 
contains criteria that HHS will use to review a State Exchange's 
ability to accomplish the requirements of the IPPTA.
    Pre-testing and assessment data request form means the document 
that specifies the structure for the data elements that HHS will 
require each State Exchange to submit.
    Pre-testing and assessment period means the one calendar year 
timespan during which HHS will engage in pre-testing and assessment 
procedures with a State Exchange.
    Pre-testing and assessment plan means the template developed by HHS 
in collaboration with each State Exchange enumerating the procedures, 
sequence, and schedule to accomplish pre-testing and assessment.
    Pre-testing and assessment report means the summary report provided 
by HHS to each State Exchange at the end of the State Exchange's pre-
testing and assessment period that will include, but not be limited to, 
the State Exchange's status regarding completion of each of the pre-
testing and assessment procedures specified in Sec.  155.1515, as well 
as observations and recommendations that result from processing and 
reviewing the data submitted by the State Exchange to HHS.


Sec.  155.1510  Data submission.

    (a) Requirements. For purposes of the IPPTA, a State Exchange must 
submit the following information in a form and manner specified by HHS:
    (1) Data documentation. The State Exchange must provide to HHS the 
following data documentation:
    (i) The State Exchange's data dictionary including attribute name, 
data type, allowable values, and description;
    (ii) An entity relationship diagram, which shall include the 
structure of the data tables and the residing data elements that 
identify the relationships between the data tables; and
    (iii) Business rules and related calculations.
    (2) Data for processing and testing. The State Exchange must use 
the pre-testing and assessment data request form, or other method as 
specified by HHS, to submit to HHS the application data associated with 
no fewer than 10 tax household identification numbers and the 
associated policy identification numbers that address scenarios 
specified by HHS to allow HHS to test all of the pre-testing and 
assessment processes and procedures.
    (b) Timing. The State Exchange must submit the information 
specified in paragraph (a) of this section within the timelines in the 
pre-testing and assessment plan specified in Sec.  155.1515.


Sec.  155.1515  Pre-testing and assessment procedures.

    (a) General requirement. The State Exchanges are required to 
participate in the IPPTA for a period of one calendar year. The State 
Exchange and HHS will execute the pre-testing and assessment procedures 
in this section within the timelines in the pre-testing and assessment 
plan.
    (b) Orientation and planning processes. (1) As a part of the 
orientation process, HHS will provide State Exchanges with an overview 
of the pre-testing and assessment procedures and identify documentation 
that a State Exchange must provide to HHS for pre-testing and 
assessment.
    (2) As a part of the planning process, HHS, in collaboration with 
each State Exchange, will develop a pre-testing and assessment plan 
that takes into consideration relevant activities, if any, that were 
completed during a prior,

[[Page 78321]]

voluntary State engagement. The pre-testing and assessment plan will 
include the pre-testing and assessment checklist.
    (3) At the conclusion of the pre-testing and assessment planning 
process, HHS will issue the pre-testing and assessment plan specific to 
that State Exchange. The pre-testing and assessment plan will be for 
HHS and State Exchange internal use only and will not be made available 
to the public by HHS unless otherwise required by law.
    (c) Notifications and updates. (1) Notifications. As needed 
throughout the pre-testing and assessment period, HHS will issue 
notifications to State Exchanges concerning information related to the 
pre-testing and assessment processes and procedures.
    (2) Updates regarding changes. Throughout the pre-testing and 
assessment period, the State Exchange must provide HHS with information 
regarding any operational, policy, business rules, information 
technology, or other changes that may impact the ability of the State 
Exchange to satisfy the requirements of the pre-testing and assessment.
    (d) Submission of required data and data documentation. As 
specified in Sec.  155.1510, HHS will inform State Exchanges about the 
form and manner for State Exchanges to submit required data and data 
documentation to HHS in accordance with the pre-testing and assessment 
plan.
    (e) Data processing. (1) HHS will coordinate with each State 
Exchange to track and manage the data and data documentation submitted 
by a State Exchange as specified in Sec.  155.1510(a)(1) and (2).
    (2) HHS will coordinate with each State Exchange to provide 
assistance in aligning the data specified in Sec.  155.1510(a)(2) from 
the State Exchange's existing data structure to the standardized set of 
data elements.
    (3) HHS will coordinate with each State Exchange to interpret and 
validate the data specified in Sec.  155.1510(a)(2).
    (4) HHS will use the data and data documentation submitted by the 
State Exchange to execute the pre-testing and assessment procedures.
    (f) Pre-testing and assessment checklist. HHS will issue the pre-
testing and assessment checklist as part of the pre-testing and 
assessment plan. The pre-testing and assessment checklist criteria will 
include but are not limited to:
    (1) A State Exchange's submission of the data documentation as 
specified in Sec.  155.1510(a)(1).
    (2) A State Exchange's submission of the data for processing and 
testing as specified in Sec.  155.1510(a)(2); and
    (3) A State Exchange's completion of the pre-testing and assessment 
processes and procedures related to the IPPTA program.
    (g) Pre-testing and assessment report. Subsequent to the completion 
of a State Exchange's pre-testing and assessment period, HHS will issue 
a pre-testing and assessment report specific to that State Exchange. 
The pre-testing and assessment report will be for HHS and State 
Exchange internal use only and will not be made available to the public 
by HHS unless otherwise required by law.

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

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

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

0
18. Section 156.201 is revised to read as follows:


Sec.  156.201  Standardized plan options.

    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:
    (a) For the plan year 2023, 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); and
    (b) For plan year 2024 and subsequent plan years, 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 except the non-expanded bronze 
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)
    (c) With respect to covered drugs:
    (1) Place all covered generic drugs in the standardized plan 
options' generic drug cost-sharing tier, or the specialty drug tier if 
there is an appropriate and non-discriminatory basis in accordance with 
Sec.  156.125 for doing so; and
    (2) Place all covered brand drugs in either the standardized plan 
options' preferred brand or non-preferred brand drug cost-sharing tier, 
or the specialty drug cost-sharing tier if there is an appropriate and 
non-discriminatory basis in accordance with Sec.  156.125 for doing so.
0
19. Section 156.202 is added to read as follows:


Sec.  156.202  Non-standardized plan option limits.

    For the plan year 2024 and subsequent plan years, a QHP issuer in a 
Federally-facilitated Exchange or a State-based Exchange on the Federal 
platform is limited to offering two non-standardized plan options per 
product network type, as the term is described in the definition of 
``product'' at Sec.  144.103 of this subchapter, and metal level 
(excluding catastrophic plans), in any service area.
0
20. Section 156.210 is amended by adding paragraph (d) to read as 
follows:
    The addition reads as follows:


Sec.  156.210  QHP rate and benefit information.

    (d) Rate requirements for stand-alone dental plans. For benefit and 
plan years beginning on or after January 1, 2024:
    (1) Age on effective date. The premium rate charged by an issuer of 
stand-alone dental plans may vary with respect to the particular plan 
or coverage involved by determining the enrollee's age. Any age 
calculation for rating and eligibility purposes must be based on the 
age as of the time of policy issuance or renewal.
    (2) Guaranteed rates. An issuer of stand-alone dental plans must 
set guaranteed rates.
0
21. Section 156.225 is amended by --
0
a. In paragraph (a) removing ``and'' from the end of the paragraph; and
0
b. In paragraph (b) removing ``.'' from the end of the paragraph and 
replacing it with ``; and''; and
0
c. By adding paragraph (c).
    The addition reads as follows:


Sec.  156.225  Marketing and Benefit Design of QHPs.

* * * * *
    (c) Plan marketing names. Offer plans and plan variations with 
marketing names that include correct information, without omission of 
material fact, and

[[Page 78322]]

do not include content that is misleading.
* * * * *
0
22. Section 156.230 is amended by--
0
a. Revising paragraphs (a)(1) introductory text and (e) introductory 
text; and
0
b. Removing and reserving paragraph (f).
    The revisions read as follows:


Sec.  156.230  Network adequacy standards.

    (a) General requirement. (1) Each QHP issuer must use a provider 
network and ensure that the provider network consisting of in-network 
providers, as available to all enrollees, meets the following 
standards:
* * * * *
    (e) Out-of-network cost-sharing. Beginning for the 2018 and later 
benefit years, for a network to be deemed adequate, each QHP must:
* * * * *
0
23. Section 156.235 is amended by revising paragraphs (a)(1), (a)(2)(i) 
and (a)(2)(ii)(B) to read as follows:


Sec.  156.235  Essential community providers.

    (a) * * *
    (1) A QHP issuer must include in its provider network a sufficient 
number and geographic distribution of essential community providers 
(ECPs), where available, to ensure reasonable and timely access to a 
broad range of such providers for low-income individuals or individuals 
residing in Health Professional Shortage Areas within the QHP's service 
area, in accordance with the Exchange's network adequacy standards.
    (2) * * *
    (i) The QHP issuer's provider network includes as participating 
providers at least a minimum percentage, as specified by HHS, of 
available ECPs in each plan's service area collectively across all ECP 
categories defined under paragraph (ii)(B) of this section, and at 
least a minimum percentage of available ECPs in each plan's service 
area within certain individual ECP categories, as specified by HHS. 
Multiple providers at a single location will count as a single ECP 
toward both the available ECPs in the plan's service area and the 
issuer's satisfaction of the ECP participation standard. For plans that 
use tiered networks, to count toward the issuer's satisfaction of the 
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 will be counted towards 
ECP standards.; and
    (ii) * * *
    (B) At least one ECP in each of the eight (8) 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, Mental 
Health Facilities, Substance Use Disorder Treatment Centers, and Other 
ECP Providers. The Other ECP Providers category includes the following 
types of providers: Rural Health Clinics, Black Lung Clinics, 
Hemophilia Treatment Centers, Sexually Transmitted Disease Clinics, 
Tuberculosis Clinics, and Rural Emergency Hospitals
* * * * *
0
24. Section 156.270 is amended by revising paragraph (f) to read as 
follows:


Sec.  156.270  Termination of coverage or enrollment for qualified 
individuals

* * * * *
    (f) Notice of non-payment of premiums. If an enrollee is delinquent 
on premium payment, the QHP issuer must provide the enrollee with 
notice of such payment delinquency promptly and without undue delay.
* * * * *
0
25. Section 156.1210 is amended by revising paragraph (c) to read as 
follows:


Sec.  156.1210  Dispute submission.

* * * * *
    (c) Deadline for describing inaccuracies. To be eligible for 
resolution under paragraph (b) of this section, an issuer must describe 
all inaccuracies identified in a payment and collections report before 
the end of the 3-year period beginning at the end of the plan year to 
which the inaccuracy relates. For plan years 2015 through 2019, to be 
eligible for resolution under paragraph (b) of this section, an issuer 
must describe all inaccuracies identified in a payment and collections 
report before January 1, 2024. If a payment error is discovered after 
the timeframe set forth in this paragraph, the issuer must notify HHS, 
the State Exchange, or SBE-FP (as applicable) and repay any 
overpayments to HHS.
0
26. Section 156.1220 is amended by revising paragraphs (a)(4)(ii) and 
(b)(1) to read as follows:


Sec.  156.1220  Administrative appeals.

    (a) * * *
    (4) * * *
    (ii) Notwithstanding paragraph (a)(1) of this section, a 
reconsideration with respect to a processing error by HHS, HHS's 
incorrect application of the relevant methodology, or HHS's 
mathematical error may be requested only if, to the extent the issue 
could have been previously identified, the issuer notified HHS of the 
dispute through the applicable process for reporting a discrepancy set 
forth in Sec. Sec.  153.630(d)(2) and (3), 153.710(d)(2), and 
156.430(h)(1) of this subchapter, it was so identified and remains 
unresolved.
* * * * *
    (b) * * *
    (1) Manner and timing for request. A request for an informal 
hearing must be made in writing and filed with HHS within 30 calendar 
days of the date of the reconsideration decision under paragraph (a)(5) 
of this section. If the last day of this period is not a business day, 
the request for an informal hearing must be made in writing and filed 
by the next applicable business day.
* * * * *

    Dated: December 12, 2022.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2022-27206 Filed 12-14-22; 4:15 pm]
BILLING CODE 4120-01-P