[Federal Register Volume 88, Number 81 (Thursday, April 27, 2023)]
[Rules and Regulations]
[Pages 25740-25923]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-08368]



[[Page 25739]]

Vol. 88

Thursday,

No. 81

April 27, 2023

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; Final Rule

  Federal Register / Vol. 88 , No. 81 / Thursday, April 27, 2023 / 
Rules and Regulations  

[[Page 25740]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 153, 155, and 156

[CMS-9899-F]
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: Final rule.

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SUMMARY: This final rule includes payment parameters and provisions 
related to the HHS-operated risk adjustment and risk adjustment data 
validation programs, as well as 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 final rule also has requirements related to updating 
standardized plan options and reducing plan choice overload; the 
automatic 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: These regulations are effective on June 18, 2023.

FOR FURTHER INFORMATION CONTACT: Jeff Wu, (301) 492-4305, Rogelyn 
McLean, (301) 492-4229, Grace Bristol, (410) 786-8437, for general 
information.
    Joshua Paul, (301) 492-4347, Jacquelyn Rudich, (301) 492-5211, John 
Barfield, (301) 492-4433, or Bryan Kirk, (443) 745-8999, 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).
    John Barfield, (301) 492-4433, 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, (410) 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.
    Carolyn Kraemer, (301) 492-4197, for matters related to auto re-
enrollment in the Exchanges.
    Nicholas Eckart, (301) 492-4452, for matters related to termination 
of Exchange enrollment or coverage for qualified individuals.
    Marisa Beatley, (301) 492-4307, or Dena Nelson, (240) 401-3535, for 
matters related to qualified individuals losing minimum essential 
coverage (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.
    Rebecca Braun-Harrison, (667) 290-8846 for matters related to 
reporting enrollment and payment inaccuracies and administrative 
appeals.
    Jenny Chen, (301) 492-5156, or Shilpa Gogna, (301) 492-4257, for 
matters related to State Exchange Blueprint approval timelines.

SUPPLEMENTARY INFORMATION: 

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)
    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-based Exchanges (Sec. Sec.  155.1500 
through 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 finalizing changes to the provisions and parameters 
implemented through prior rulemaking to implement the Patient 
Protection and Affordable Care Act (ACA).\1\ These requirements are 
published under the authority granted to the Secretary by the ACA and 
the Public Health Service (PHS) Act.\2\ In this final rule, we are 
finalizing changes related to some of the ACA provisions and parameters 
we previously implemented and are implementing new provisions. Our goal 
with these requirements is providing quality,

[[Page 25741]]

affordable coverage to consumers while minimizing administrative burden 
and ensuring program integrity. The changes finalized 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 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 advance payments of the premium tax credit (APTC) 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.

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    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 that 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 
premium tax credit (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 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 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 data set.\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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[[Page 25743]]

     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 Sec.  153.320(b)(1)(i), 
we published the 2021 Benefit Year Final HHS Risk Adjustment Model 
Coefficients on the Center for Consumer Information and Insurance 
Oversight (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 
International Classification of Diseases, Tenth Revision (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. 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.

[[Page 25744]]

     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 for the 2023 benefit year. 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 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 final rule will 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. We did not receive any requests from 
States to operate risk adjustment for the 2024 benefit year; therefore, 
HHS will operate risk adjustment in every

[[Page 25745]]

State and the District of Columbia for the 2024 benefit year.
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    \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.
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    We will recalibrate the 2024 benefit year risk adjustment models 
using the 2018, 2019, and 2020 benefit year enrollee-level EDGE data, 
with no exceptions. For the 2024 benefit year, we will continue to 
apply 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). We will also continue to maintain the CSR 
adjustment factors finalized in the 2019, 2020, 2021, 2022, and 2023 
Payment Notices.\10\
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    \10\ See 83 FR 16930 at 16953; 84 FR 17454 at 17478 through 
17479; 85 FR 29164 at 29190; 86 FR 24140 at 24181; and 87 FR 27208 
at 27235 through 27235.
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    We are finalizing the repeal of the ability under Sec.  153.320(d) 
for prior participant States to request reductions of State risk 
adjustment transfers calculated by HHS under the State payment transfer 
formula in all State market risk pools for the 2025 benefit year and 
beyond. We are approving Alabama's requests to reduce risk adjustment 
State transfers in its individual and small group markets by 50 percent 
for the 2024 benefit year.
    Additionally, we are finalizing, beginning with the 2023 benefit 
year, the proposal 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 are finalizing our proposal to extract the 
plan identifier and rating area data elements from issuers' EDGE 
servers for certain benefit years prior to the 2021 benefit year. We 
are finalizing the proposed 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 are changing 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 of HHS-RADV, we are no longer 
exempting 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, we are applying HHS-RADV 
results to adjust the plan liability risk scores of all exiting and 
non-exiting issuers identified as outliers in the benefit year being 
audited.
    Beginning with the 2022 benefit year of HHS-RADV, we announce that 
we are discontinuing the use of the lifelong permanent condition list 
and the use of non-EDGE claims in HHS-RADV. Additionally, beginning 
with the 2022 benefit year of HHS-RADV, we are finalizing the 
shortening of the window to confirm the findings of the second 
validation audit (SVA) (if applicable),\11\ or file a discrepancy 
report to dispute the SVA findings, to within 15 calendar days of the 
notification by HHS.
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    \11\ 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 are amending 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) will 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 are finalizing the revision of 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 are finalizing the removal of the existing deadlines for when 
we provide approval, or conditional approval, on an Exchange Blueprint, 
and instead will require that such approval be provided at some point 
prior to the date on which the Exchange proposes to begin open 
enrollment either as a SBE or SBE-FP.
    We are finalizing the proposal to address the standards applicable 
to Navigators and other assisters and their consumer service functions. 
At Sec.  155.210(d)(8), we are finalizing the removal of the 
prohibition on Navigators from going door-to-door or using other 
unsolicited means of direct contact to provide application or 
enrollment assistance. This will 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 are 
finalizing the removal of the prohibition on certified application 
counselors from going door-to-door or using unsolicited means of direct 
contact to provide application or enrollment assistance. We believe 
policies as finalized will allow Navigators and other assisters in the 
FFEs to help more consumers.
    In part 155, we are finalizing changes to address certain agent, 
broker, and web-broker practices. We are finalizing the proposal 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 the suspension of their Exchange agreement(s). We also are 
finalizing the proposal to allow HHS up to an additional 30 calendar 
days to review evidence submitted by agents, brokers, or web-brokers 
that led to the termination of their Exchange agreement(s). The 
amendments adopted in this final rule will 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 are finalizing the proposal 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 are finalizing the proposal that the 
documentation will 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 agent, broker, or web-broker will be required 
to maintain the documentation for a minimum of 10 years and produce it 
upon request in response to monitoring, audit, and enforcement 
activities.
    We also are finalizing the proposal 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 seeking assistance or 
their authorized

[[Page 25746]]

representative prior to providing assistance. We are finalizing the 
proposal that the documentation will 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; the 
name of the agent, broker, web-broker, or agency being granted consent; 
and the process by which the consumer or their authorized 
representative may rescind consent. Further, we are finalizing the 
requirement that agents, brokers, or web-brokers will be required to 
maintain the consent documentation for a minimum of 10 years and 
produce it upon request in response to monitoring, audit, and 
enforcement activities.
    We are finalizing the revisions to the failure to file and 
reconcile (FTR) process at Sec.  155.305(f)(4). First, we are 
finalizing the proposal to amend the FTR process described in Sec.  
155.305(f)(4) so 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 (specifically, years for 
which tax data will be utilized for verification of household income 
and family size). In the proposed rule (87 FR 78256), we proposed that 
this policy would be effective January 1, 2024, with the intent that 
the proposed rule would apply to eligibility determinations made in 
2024 for PY 2025 (and beyond). We are clarifying in the final rule that 
this will become effective on the general effective date of the final 
rule. Second, we are finalizing the proposal to continue to pause FTR 
operations until HHS and the Internal Revenue Service (IRS) will be 
able to implement the new FTR policy.
    We are finalizing revisions to Sec.  155.320, which will require 
Exchanges to accept an applicant's attestation of projected annual 
household income when the Exchanges request 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 are 
finalizing revisions to Sec.  155.315, which will require that an 
enrollee with a household income inconsistency receive a 60-day 
extension to present satisfactory documentary evidence to resolve a 
data matching issue (DMI) in addition to the 90 days currently provided 
in Sec.  155.315(f)(2)(ii). These changes will ensure consumers are 
treated equitably, ensure continuous coverage, and strengthen the risk 
pool.
    We are finalizing amendments and additions to Sec.  155.335(j), 
including the clarification that when an enrollee is determined upon 
annual redetermination eligible for income-based CSRs, is currently 
enrolled in a bronze level QHP, and would be re-enrolled in a bronze 
level QHP, then to the extent permitted by applicable State law, unless 
the enrollee terminates coverage, including termination of coverage in 
connection with voluntarily selecting a different QHP, in accordance 
with Sec.  155.430, at the option of the Exchange, the Exchange may re-
enroll such enrollee in a silver level QHP within the same product, 
with the same provider network, and with a lower or equivalent premium 
after the application of APTC as the bronze level QHP into which the 
Exchange would otherwise re-enroll the enrollee. We are also finalizing 
modifications to the proposed policy to specify that Exchanges 
implementing this policy may auto re-enroll enrollees from a bronze QHP 
to a silver QHP provided that the net monthly silver plan premium for 
the future year is not more than the net monthly bronze plan premiums 
for the future year, as opposed to comparing net monthly bronze plan 
premiums for the current year with future year silver plan premiums. 
Lastly, for enrollees whose current QHP or product will no longer be 
available in the coming year, we are finalizing the policy to require 
Exchanges to incorporate network similarity into auto re-enrollment 
criteria.
    We are finalizing the proposed changes related to SEPs at Sec.  
155.420. First, we are finalizing 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 revisions will clarify that only one 
person in a household applying for coverage or financial assistance 
through the Exchange must qualify for a SEP in order for the entire 
household to qualify for the SEP. Second, we are finalizing the change 
to the current coverage effective date requirements at Sec.  
155.420(b)(2)(iv) to permit Exchanges to offer earlier coverage 
effective dates for consumers attesting to a future loss of MEC. This 
change will 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 finalizing the proposed 
new rule at Sec.  155.420(c)(6) with a modification that will give 
Exchanges the option to allow consumers who are eligible for a SEP 
under Sec.  155.420(d)(1)(i) due to loss of Medicaid or Children's 
Health Insurance Program (CHIP) coverage up to 90 days after their loss 
of Medicaid or CHIP coverage to select a plan and enroll in coverage 
through the Exchange. The modification will grant an Exchange the 
option to provide more than 90 days to select a plan and enroll in 
coverage through the Exchange up to the length of the applicable 
Medicaid or CHIP redetermination period if the State Medicaid Agency 
allows or provides for a Medicaid or CHIP reconsideration period 
greater than 90 days. Fourth, we are finalizing Sec.  155.420(d)(12) to 
align the policy of the Exchanges on the Federal platform for granting 
SEPs to consumers who enrolled in a plan influenced by a material plan 
display error with current plan display error SEP operations. The 
proposal will 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 are finalizing 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 
age. This change will clarify to issuers participating in Exchanges on 
the Federal platform their obligation to maintain coverage for 
dependent children, as well as to enrollees regarding their ability to 
maintain coverage for dependent children. This change is optional for 
State Exchanges.
    We are finalizing Sec.  155.505(g), which acknowledges the ability 
of the CMS Administrator to review Exchange eligibility appeals 
decisions prior to judicial review. This change will 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.
    We are finalizing the Improper Payment Pre-Testing and Assessment 
(IPPTA) program under which SBEs will be required to participate in 
pre-audit activities that will prepare SBEs for complying with audits 
required under the Payment Integrity Information Act of 2019 (PIIA). 
Activities under the proposed IPPTA program will provide SBEs 
experience helpful to preparing for future PIIA audits and will help 
HHS design and refine appropriate requirements for future PIIA audits 
of SBEs.

[[Page 25747]]

3. 45 CFR part 156
    In part 156, after revising our projections based on newly 
available data that impacted enrollment projections, we are finalizing 
for the 2024 benefit year a user fee rate for all issuers offering QHPs 
through an FFE of 2.2 percent of the monthly premium charged by issuers 
for each policy under plans where enrollment is through an FFE, and a 
user fee rate for all issuers offering QHPs through an SBE-FP of 1.8 
percent of the monthly premium charged by issuers for each policy under 
plans offered through an SBE-FP.
    We are also finalizing the proposal to maintain a large degree of 
continuity with our approach to standardized plan options finalized in 
the 2023 Payment Notice, making only minor updates to each set of plan 
designs. In particular, for PY 2024 and subsequent PYs, we are 
finalizing two sets of plan designs that, in contrast to the policy 
finalized in the 2023 Payment Notice (87 FR 28278 through 28279), 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 are finalizing revisions 
to Sec.  156.201 to require issuers to offer standardized plan options 
for the following metal levels throughout every service area that they 
also offer non-standardized plan options: 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 also will 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 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 (Classic DE) and Enhanced 
Direct Enrollment (EDE) Pathways.
    To mitigate the risk of plan choice overload, we are finalizing 
Sec.  156.202, which limits the number of non-standardized plan options 
that QHP issuers may offer through the Exchanges using the Federal 
platform to four non-standardized plan options per product network 
type, metal level (excluding catastrophic plans), and inclusion of 
dental and/or vision benefit coverage, in any service area for PY 2024, 
and to two non-standardized plan options per product network type, 
metal level (excluding catastrophic plans), and inclusion of dental 
and/or vision benefit coverage, in any service area for PY 2025 and 
subsequent PYs.
    We are finalizing new Sec.  156.210(d)(1) to require stand-alone 
dental plan (SADP) issuers 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, as a condition of QHP certification, beginning 
with Exchange certification for PY 2024. We believe 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, will 
reduce consumer confusion and promote operational efficiency. This 
policy will apply to Exchange-certified SADPs, whether they are sold 
on- or off-Exchange.
    In addition, we are finalizing new Sec.  156.210(d)(2) to require 
SADP issuers to submit guaranteed rates as a condition of QHP 
certification, beginning with Exchange certification for PY 2024. We 
believe this change will help reduce the risk of incorrect APTC 
calculation for the pediatric dental EHB portion of premiums, thereby 
reducing the risk of consumer harm. This policy will apply to Exchange-
certified SADPs, whether they are sold on- or off-Exchange.
    We are finalizing a new rule at Sec.  156.225(c) to require that 
plan and plan variation marketing names for QHPs include correct 
information, without omission of material fact, and not include content 
that is misleading. We will review plan and plan variation marketing 
names during the annual QHP certification process in close 
collaboration with State regulators in States with Exchanges on the 
Federal platform.
    We are finalizing revisions to the network adequacy and ECP 
standards at Sec. Sec.  156.230 and 156.235 to provide that all 
individual market QHPs, including individual market SADPs, and all 
Small Business Health Options Program (SHOP) QHPs, including SHOP 
SADPs, 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. However, we are finalizing a 
limited exception at Sec.  156.230(a)(4) for certain SADP issuers that 
sell plans in areas where it is prohibitively difficult for the issuer 
to establish a network of dental providers. Specifically, under this 
exception, an area is considered ``prohibitively difficult'' for the 
SADP issuer to establish a network of dental providers based on 
attestations from State departments of insurance in States with at 
least 80 percent of their counties classified as Counties with Extreme 
Access Considerations (CEAC) that at least one of the following factors 
exists in the area of concern: a significant shortage of dental 
providers, a significant number of dental providers unwilling to 
contract with Exchange issuers, or significant geographic limitations 
impacting consumer access to dental providers.
    To expand access to care for low-income and medically underserved 
consumers, we are finalizing our proposal 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, and adding rural emergency hospitals (REHs) as a 
provider type in the Other ECP Providers category. In addition, we are 
finalizing our proposed revisions to 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, we will require that QHPs contract with at least 
35 percent of available Federally Qualified Health Centers (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 for PY 2024 and subsequent PYs. Furthermore, we are 
finalizing revisions to Sec.  156.235(a)(2)(i) to clarify that these 
threshold requirements will be in addition to the existing provision 
that QHPs must satisfy the overall 35 percent ECP threshold requirement 
in the plan's service area. In addition, we revised Sec.  
156.235(b)(2)(i) to reflect that these policies would also affect 
issuers subject to the Alternate ECP Standard under Sec.  156.235(b).
    We are finalizing revisions to Sec.  156.270(f) to require QHP 
issuers in Exchanges operating on the Federal platform to send 
enrollees a notice of payment delinquency promptly and without undue 
delay. Specifically, we will require QHP issuers in Exchanges operating 
on the Federal platform to send such notices within 10 business days of 
the date the issuer should have

[[Page 25748]]

discovered the delinquency. This requirement 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 are finalizing the proposal 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 will 
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 of APTC to the issuer and user 
fee overpayments to HHS. Under this policy, beginning with the 2015 PY 
coverage, we will 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, for PYs 2015 through 2019, 
to be eligible for resolution, an issuer must describe before January 
1, 2024, all inaccuracies identified in a payment and collections 
report for these PYs that relate to discovered underpayments to the 
issuer of APTC or user fee overpayments to HHS, thus allowing issuers 
additional time to submit and seek resolution of such inaccuracies for 
the 2015 through 2019 PY coverage. These policies will better align 
with the existing limitation under the Code on amending a Federal 
income tax return and reduce administrative and operational burden on 
issuers, State Exchanges, and HHS when handling payment and enrollment 
disputes.

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.\12\ We did not receive any 
requests from States to operate a risk adjustment program for the 2024 
benefit year. Therefore, we will operate risk adjustment in every State 
and the District of Columbia for the 2024 benefit year.
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    \12\ See also 42 U.S.C. 18041(c)(1).
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1. Sequestration
    In accordance with the OMB Report to Congress on the Joint 
Committee Reductions for Fiscal Year 2023, the permanent risk 
adjustment program is subject to the fiscal year 2023 
sequestration.\13\ 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).
---------------------------------------------------------------------------

    \13\ 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,\14\ 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 will be sequestered in future 
fiscal years, and any sequestered funding will become available in the 
fiscal year following that in which it was sequestered.
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    \14\ Public Law 99-177 (1985).
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    Additionally, we note that the Infrastructure Investment and Jobs 
Act \15\ 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.16 17
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    \15\ Public Law 117-58, 135 Stat. 429 (2021).
    \16\ 2 U.S.C. 901a.
    \17\ 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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    We received no comments on the fiscal year 2023 sequestration rate 
for risk adjustment.
2. HHS Risk Adjustment (Sec.  153.320)
    The HHS risk adjustment models predict plan liability for an 
average enrollee based on that person's age, sex, and diagnoses (also 
referred to as hierarchical condition categories (HCCs)), producing a 
risk score. The HHS risk adjustment methodology utilizes separate 
models for adults, children, and infants to account for clinical and 
cost differences in each age group. In the adult and child models, the 
relative risk assigned to an individual's age, sex, and 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,\18\ and 
prescription drug categories (RXCs) beginning with the 2018 benefit 
year.\19\ Starting with the 2023 benefit year, we added interacted HCC 
count factors to the adult and child models applicable to certain 
severity and transplant HCCs.
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    \18\ 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.
    \19\ For the 2018 benefit year, there were 12 RXCs, but starting 
with the 2019 benefit year, the two severity-only RXCs were removed 
from the adult risk adjustment models. See, for example, 83 FR 
16941.
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    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,\20\ 
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

[[Page 25749]]

Standards of Practice for risk classification.
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    \20\ 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 benefit year (BY). See, for example, 81 FR 
94080.
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a. Data for Risk Adjustment Model Recalibration for 2024 Benefit Year
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78214), we proposed 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. However, after consideration of comments, we are 
not finalizing the 2024 benefit year model recalibration approach as 
proposed. Instead, based on our analysis and in response to comments, 
we are finalizing the use of 2018, 2019 and 2020 benefit year enrollee-
level EDGE data for recalibration of the 2024 benefit year risk 
adjustment models for all model coefficients, including the adult age-
sex coefficients, with no exceptions.
    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 
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 proposed 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 proposed 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 \21\ for the 2020 
benefit year enrollee-level EDGE data for older adult enrollees, 
especially older adult female enrollees.
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    \21\ 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.
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    To further explain, due to the potential impact of the COVID-19 PHE 
on costs and utilization of services in 2020, we 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: (1) comments received 
in response to the 2023 Payment Notice proposed rule (87 FR 598); (2) 
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 which 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; and (3) our experience that every year of data can 
be unique and therefore some level of deviation from year to year is 
expected.\22\ All of these general considerations weigh in favor of 
including the 2020 benefit year data in the recalibration of the risk 
adjustment models.
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    \22\ 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 recognized 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 \23\ of a situation that requires this 
additional consideration. Thus, to help further inform our decision on 
whether it is appropriate to use 2020 enrollee-level EDGE data to 
calibrate the risk adjustment coefficients, we analyzed the 2020 
benefit year enrollee-level EDGE recalibration data to assess how it 
compares to 2019 benefit year enrollee-level EDGE recalibration data. 
For more information on our analysis of the 2020 benefit year enrollee-
level EDGE recalibration data see the proposed rule (87 FR 78215 
through 78218). Based on this analysis, we determined that on many key 
dimensions, the 2019 benefit year and 2020 benefit year enrollee-level 
EDGE data recalibration were largely comparable. However, there were 
some observed anomalous decreases in the unconstrained age-sex 
coefficients in the 2020 benefit year data for older adult enrollees, 
especially older female enrollees.
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    \23\ In the 10 years since the start of model calibration for 
the HHS-operated risk adjustment program, which began with 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 potential impact.
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    With this analysis in mind, and based on the comments received in 
response to the 2023 Payment Notice proposed rule,\24\ we outlined six 
different options the Department considered 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 involved the use of 2020 benefit year 
enrollee-level EDGE recalibration data in the risk adjustment

[[Page 25750]]

model recalibration, and two involved the exclusion of the 2020 benefit 
year data. These six options were 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\ See 87 FR 78214 through 78218.
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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.
     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.
     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 have determined 
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 blending of the adult models' age-sex 
coefficients. Instead, only 2018 and 2019 benefit year enrollee-level 
EDGE recalibration data would be used in blending the adult risk 
adjustment models age-sex coefficients.
     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.
    As noted above, we proposed to use the 3 most recent available 
consecutive benefit year data sets (the 2018, 2019, and 2020 benefit 
year enrollee-level EDGE recalibration data), with a narrowly tailored 
exception to exclude the 2020 benefit year data from the blending of 
the age-sex coefficients for the adult models (Option 4).
    After reviewing the public comments, we are finalizing the use of 
2018, 2019, and 2020 enrollee-level EDGE data with no exceptions or 
modifications for recalibration of the risk adjustment models for the 
2024 benefit year (Option 1). Consistent with prior benefit model 
recalibrations and the proposed adoption of Option 4 to recalibrate the 
HHS risk adjustment models for the 2024 benefit year, this will involve 
the use of the 3 most recent consecutive years of enrollee-level EDGE 
data that were available 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. The coefficients listed in Tables 1 through 6 of this 
final rule reflect the use of 2018, 2019, and 2020 benefit year 
enrollee-level EDGE recalibration data for all coefficients, including 
adult age-sex coefficients, as well as the pricing adjustment for 
Hepatitis C drugs finalized in this final rule.26 27 We 
summarize and respond to public comments received on the proposed 
approach to recalibration of the HHS risk adjustment models for the 
2024 benefit year below.
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    \26\ Similar to recalibration of the 2023 risk adjustment adult 
models and consistent with the policies adopted in the 2023 Payment 
Notice, the 2024 benefit year 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 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 27231 through 27232.
    \27\ 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. We did not 
propose changes to the high-cost risk pool parameters for the 2024 
benefit year. See 87 FR 78237. Therefore, as detailed below, we are 
maintaining the $1 million threshold and 60 percent coinsurance 
rate.
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    Comment: Several commenters supported our proposal to recalibrate 
the 2024 risk adjustment models with 2018, 2019, and 2020 enrollee-
level EDGE data, except for the age-sex coefficients, which would be 
calculated by blending the age-sex coefficients from the 2018 and 2019 
enrollee-level EDGE data only. One of these commenters stated that, of 
the options presented by HHS, Option 4 struck the best balance between 
maintaining HHS's established practice of recalibrating the models 
based on the 3 most recent years of available EDGE data while also 
accounting for the anomalous decreases in the age-sex coefficients 
observed in the 2020 benefit year enrollee-level EDGE recalibration 
data. Another commenter stated that using 2017, 2018, and 2019 
enrollee-level EDGE data for recalibration (Option 5), or using only 
2018 and 2019 enrollee-level EDGE data (Option 6) would also be 
reasonable approaches. One commenter supported the proposal to adopt 
Option 4, but generally objected to the use of age-sex factors in the 
HHS-operated risk adjustment program due to concerns about 
discrimination.
    However, several commenters opposed the finalization of Option 4, 
objecting to the use of different data years to recalibrate different 
coefficients for the same benefit year of the HHS-operated risk 
adjustment program (that is, blending benefit year 2024 adult age-sex 
coefficients using 2018 and 2019 enrollee-level EDGE data, and blending 
all other benefit year 2024 coefficients using 2018, 2019, and 2020 
enrollee-level EDGE data) on the grounds that model coefficients are 
interrelated, so the 2020 enrollee-level EDGE data adult age-sex 
coefficients that were excluded from blending had an influence during 
initial model fitting on 2020 enrollee-level EDGE data adult model 
coefficients that were used in blending. One commenter urged HHS to 
include 2020 enrollee-level EDGE data, but to weight that data year 
less than other data years (Option 2).
    Several other commenters supported using the 2017, 2018, and 2019 
enrollee-level EDGE data for the 2024 benefit year model recalibration 
(Option 5). One commenter suggested that HHS might identify fixable 
anomalies in the 2020 enrollee-level EDGE recalibration data prior to 
model fitting and then refit the models as an alternative option to use 
2018, 2019 and 2020 data for all coefficients across all models.
    Response: In light of our analysis and further consideration of the 
previously identified model recalibration options along with the 
benefit of interested party comments on the six options, we are 
finalizing the use of 2018, 2019, and 2020 enrollee-level EDGE data to 
recalibrate the 2024 risk adjustment models for all model coefficients, 
with no exceptions (Option 1). As stated in the proposed rule, although 
our analyses found that the 2019 and 2020 benefit year enrollee-level 
EDGE data were largely comparable, there were observed anomalous 
decreases in the unconstrained age-sex coefficients for the 2020 
benefit year enrollee-level

[[Page 25751]]

EDGE data for older adult enrollees, especially older female enrollees. 
Therefore, our proposed adoption of Option 4 included an exception 
narrowly tailored to account for the observed anomalous decreases in 
the unconstrained coefficients for the 2020 benefit year enrollee-level 
EDGE data. At the same time, as explained in the proposed rule (87 FR 
78215 through 78216), our analysis generally found that the 2020 
enrollee-level EDGE data were anomalous primarily in the volume and 
frequencies of certain types of claims, but that the relative costs of 
specific services, at least those associated with payment HCCs in the 
HHS risk adjustment models, were largely unaffected. Because the risk 
adjustment models predict relative costs of care for specific 
conditions on an enrollee-level basis and tend not to rely on overall 
patterns of utilization, the minimal impacts to relative costs of care 
for payment HCCs likewise resulted in minimal impacts on the 
coefficients fitted by the 2020 enrollee-level EDGE recalibration data.
    Although we found anomalous trends in the adult age-sex factors, 
they were limited to the direction of coefficient changes. 
Specifically, age and sex in the adult models seemed to be predictive 
of whether an age-sex coefficient would go up or down with older female 
enrollees more likely to see a decrease in their age-sex coefficient 
fit to 2020 enrollee-level EDGE data relative to their age-sex 
coefficient fit to 2019 enrollee-level EDGE data, and younger male 
enrollees more likely to see an increase in the coefficient fit to 2020 
data relative to the coefficient fit with 2019 data. To put these 
directional changes into perspective, the magnitudes of these changes 
were small and did not appear as anomalous when further compared to 
previous benefit years. Specifically, as part of our consideration of 
comments we further investigated these anomalies and found that:
     For the risk adjustment model coefficients from the 2016 
through the 2023 benefit years, the adult age-sex factors varied in 
magnitude from their prior benefit year by a historic median value of 
16.1 percent.
     Using only 2018 and 2019 data to blend the adult age-sex 
factors (as in our proposed approach, Option 4,\28\) across metal 
levels, the median change in magnitude between the 2023 final adult 
age-sex coefficients \29\ and the 2024 proposed adult age-sex 
coefficients was 2.0 percent and the maximum change in magnitude was 
12.0 percent.
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    \28\ See the 2024 Payment Notice proposed rule, Table 2 at 87 FR 
78220.
    \29\ See the 2023 Benefit Year Final HHS Risk Adjustment Model 
Coefficients, Table 1, available at https://www.cms.gov/files/document/2023-benefit-year-final-hhs-risk-adjustment-model-coefficients.pdf.
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     Using all 3 years of enrollee-level EDGE data (2018, 2019, 
and 2020), the median change in magnitude between the 2023 final adult 
age-sex coefficients and the 2024 adult age-sex coefficients was 3.6 
percent and the maximum change in magnitude was 13.2 percent.
     The median magnitude of the differences between the 
proposed age-sex coefficients, and blended age-sex coefficients using 
2018, 2019, and 2020 enrollee-level EDGE data \30\ was 2.7 percent.
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    \30\ See the 2024 Payment Notice proposed rule, Table 1 at 87 FR 
78218.
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    These values show that although the pattern of the direction of the 
changes in adult age-sex coefficients might appear to be anomalous, 
with older female enrollees showing more decreases than expected, the 
coefficients were actually more consistent between the 2023 final risk 
adjustment models and those proposed or explored as alternatives for 
the 2024 benefit year than we have seen in previous benefit years. As 
noted in the proposed rule (78 FR 78217), 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. Although the adult age-sex 
trends may have displayed a systematic effect such that older female 
enrollees were more likely to see lower coefficients, the magnitude of 
this effect appears very small and does not rise above what we have 
seen in prior year-to-year variation.
    Moreover, the intent of the established policy to use the 3 most 
recent consecutive years of enrollee-level EDGE data for recalibration 
of the risk adjustment models is to provide stability within the HHS-
operated risk adjustment program and minimize volatility in changes to 
risk scores between benefit years due to differences in the data set's 
underlying populations, while reflecting the most recent years' claims 
experience available.\31\ Given that the magnitude of differences in 
the coefficients between separately solved models from the 2019 and 
2020 enrollee-level EDGE data sets are similar in magnitude to the 
normal variation we see between data years, despite the initially 
observed anomalous trends, after review of comments and further 
consideration and analysis of the options presented, we now believe 
that the blending of 3 years of data for all coefficients, including 
the adult model age-sex coefficients, is the better approach for 
recalibration of the 2024 benefit year risk adjustment models, because 
we continued to find that there may not be a sufficient justification 
to exclude 2020 benefit year enrollee-level EDGE data in the 
recalibration of the risk adjustment models. Additionally, this 
approach will continue to serve the purpose of providing stability in 
risk scores by maintaining the policy to use the 3 most recent 
consecutive years of enrollee-level data available at the time we 
incorporated the data in the draft recalibrated coefficients published 
in the proposed rule and will update the models to reflect the most 
recent year's claims experience available.
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    \31\ For a discussion of the established policy governing the 
data used for the annual risk adjustment model recalibration, see 86 
FR 24151 through 24155.
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    Additionally, we agree with commenters and recognize there are 
disadvantages with Option 4 and the use of different benefit years to 
recalibrate the adult model age-sex coefficients because model 
coefficients are interdependent. For example, if the 2020 data differed 
from the 2019 data in that some risk had shifted from an HCC to an age-
sex category for which that HCC was common, the removal of the age-sex 
category from blending would result in that HCC being slightly 
underpredicted relative to its predicted value if all three benefit 
years of data were used because the shifted risk would not be captured 
in the blended age-sex coefficient with that benefit year of data being 
included. Another example may include vaccinations. Costs associated 
with vaccinations have an impact on age-sex coefficients because they 
are not associated with a diagnosis that would be captured by an HCC. 
As such, if there were changes in the relative costs of common 
vaccinations between the 2019 and 2020 years of enrollee-level EDGE 
data, removing the 2020 enrollee-level EDGE data age-sex coefficients 
from blending would prevent the models from capturing these changes.
    We also continue to believe that the COVID-19 PHE is an example of 
the type of situation that requires a close examination of the 
potential impact on utilization and costs to identify whether there are 
sufficiently anomalous trends relative to expected future patterns of 
care or significant changes that differentially impact certain 
conditions or populations relative to others that could impact the use 
of that benefit year in the annual recalibration of the HHS risk 
adjustment models. HHS intends to similarly examine 2021 enrollee-level 
EDGE data, which will be available for use in recalibration of the 2025 
benefit

[[Page 25752]]

year HHS risk adjustment models,\32\ and would propose any changes to 
current policies for recalibration of the models in future benefit 
years through notice-and-comment rulemaking.
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    \32\ Consistent with the policies finalized in the 2022 Payment 
Notice, use of the 3 most recent consecutive years of enrollee-level 
EDGE data would result in the use of 2019, 2020, and 2021 enrollee-
level EDGE data for recalibration of the 2024 benefit year models; 
the use of 2020, 2021, and 2022 enrollee-level EDGE data for 
recalibration of the 2025 benefit year models; and the use of 2021, 
2022, and 2023 enrollee-level EDGE data for recalibration of the 
2026 benefit year models. See 86 FR 24151 through 24155.
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    We recognize that some commenters preferred alternative options 
that would use 2017, 2018, and 2019 enrollee-level EDGE data (Option 5) 
or only 2018 and 2019 enrollee-level EDGE data (Option 6). We remain 
concerned about these options, which would completely exclude 2020 
enrollee-level EDGE data, because these options would result in the HHS 
risk adjustment models reflecting older costs and utilization trends 
than would be desirable. As previously stated, our analyses of the 2020 
benefit year enrollee-level EDGE recalibration data found that it was 
largely comparable to 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. This raises the question about whether there 
is a sufficient justification to completely exclude 2020 benefit year 
enrollee-level EDGE data in the recalibration of the HHS risk 
adjustment models. Beyond the concern about using older data and the 
question about the justification to completely exclude 2020 benefit 
year data, Option 6 has the additional drawback of decreasing the 
stabilizing effect of using multiple years of data. As our goal in 
using the 3 most recent consecutive years of data that are available at 
the time we incorporate data to recalibrate the models and determine 
draft coefficients based on a blend of equally-weighted, separately 
solved coefficients from each year 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 under this approach, 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 HHS 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.
    Option 2, which was supported by one commenter and would have 
weighted 2020 enrollee-level EDGE data less than the other two benefit 
years (2018 and 2019 enrollee-level EDGE data) used in recalibration 
while continuing to include it in the blended coefficients, would 
represent a middle ground between Option 1 and Option 6. However, we 
continue to be concerned that this approach would require identifying 
an appropriate weighting methodology other than the equal weighting 
that we generally use to blend coefficients 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, although Option 2 would not 
completely eliminate 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), this option would dampen the effect of 2020 benefit 
year data, raising similar concerns as Options 5 and 6 in that Option 2 
would also, to some extent, prevent the models from reflecting changes 
in utilization and cost of care that are unrelated to the impact of the 
COVID-19 PHE.
    Regarding the recommendation to identify and address fixable 
anomalies in the underlying data and then refit the models using the 
modified data, we do not believe this recommendation is feasible or 
prudent. Although it may be possible to identify an increase or a 
decrease in the frequency of particular diagnosis or service codes, 
these checks and procedures do not presently allow HHS to identify 
whether a diagnosis or service code on a given enrollee's record was 
directly attributable to the COVID-19 PHE. We are also presently unable 
to determine whether an enrollee had care deferred due to office 
closures or other logistical issues or what care would have been 
provided in the absence of the PHE. We generally consider this sort of 
enrollee-level adjustment to be out of scope for model calibration 
unless there is a clear data error. As such, we generally \33\ use the 
data as is, with only some basic trending assumptions \34\ to ensure 
the costs are measured for the year in which the coefficients will be 
used. Furthermore, as previously stated, the HHS risk adjustment models 
rely more on relative cost of care for a given diagnosis than they do 
on how many such diagnoses are present in the underlying data.
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    \33\ As previously stated in the March 2016 Risk Adjustment 
Methodology White Paper (March 24, 2016; available at https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/RA-March-31-White-Paper-032416.pdf), we exclude enrollees 
with capitated claims from the recalibration sample due to concerns 
that methods for computing and reporting derived amounts from 
capitated claims would not result in reliable data for recalibration 
or analysis. See also 87 FR 27227.
    \34\ These trending assumptions include the pricing adjustment 
for Hepatitis C drugs. See 84 FR 17463 through 17466. See also 87 FR 
78218.
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    Regarding the general concerns about use of age-sex factors in the 
HHS risk adjustment models, HHS takes very seriously our obligation to 
protect individuals from discrimination and generally disagrees that 
the use of these factors in risk adjustment is inappropriate. 
Consistent with section 1343 of the ACA, the HHS-operated risk 
adjustment program reduces the incentives for issuers to avoid higher-
than-average risk enrollees, such as those with chronic conditions, by 
using charges collected from issuers that attract lower-than-average 
risk enrollees to provide payments to health insurance issuers that 
attract higher-than-average risk enrollees. The ACA also prohibits 
issuers from establishing or charging premiums on the basis of sex,\35\ 
and limits issuers ability to do so on the basis of age.\36\ However, 
the cost of care for and actuarial risk of enrollees is, in part, 
predicted by their age and sex. As such, without the inclusion of age-
sex factors in the HHS risk adjustment models, some issuers would be 
incentivized to design plans that are less attractive to potential 
enrollees whose age-sex category is predicted to create a higher 
liability for the issuer. The age-sex factors in the HHS risk 
adjustment models help alleviate this incentive by ensuring issuers 
whose enrollees' actuarial risk is greater than the average actuarial 
risk of all enrollees in the State market risk pool, such as issuers 
that enroll a higher-than-average proportion of enrollees who fall into 
a high-cost age-sex category, are appropriately compensated. The use of 
age and sex factors in the HHS risk adjustment models is therefore 
necessary, appropriate, and helps reduce the likelihood that 
discrimination based on age or sex will occur with respect to health 
insurance coverage issued or renewed in the individual and small group 
(including merged) markets.
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    \35\ See section 2701 of the Public Health Service Act (42 
U.S.C. 300gg) as amended by section 1201 of the ACA.
    \36\ Ibid. See also the Market Rules and Rate Review final rule 
(78 FR 13411 through 13413).
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    After review of comments and further consideration of the options 
presented, for the reasons outlined above, we are finalizing adoption 
of Option 1 for recalibrating the HHS risk adjustment models for the 
2024 benefit year. The

[[Page 25753]]

model coefficients for the 2024 benefit year listed in Tables 1 through 
6 of this final rule are based on a blend of equally-weighted, 
separately solved coefficients from the 2018, 2019, and 2020 benefit 
years of enrollee-level EDGE data for all 
coefficients.37 38 39
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    \37\ The coefficients listed in Tables 1 through 6 of this final 
rule also reflect the pricing adjustment for Hepatitis C drugs 
finalized in this rule. In addition, the 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 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 27231 through 27232.
    \38\ The adult, child and infant models have also been truncated 
to account for the high-cost risk pool payment parameters by 
removing 60 percent of costs above the $1 million threshold.
    \39\ Starting with the 2024 risk adjustment adult models, HHS 
will group HCC 18 Pancreas Transplant Status and CC 83 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.
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    Comment: Several commenters were concerned about some of the 
proposed RXC adult model coefficients, in particular RXCs 1 (Anti-HIV 
Agents), 8 (Multiple Sclerosis Agents), and 9 (immune suppressants and 
immunomodulators), for which the majority of filled prescriptions fall 
into the category of specialty drugs. As a result, many of these 
commenters supported Option 5, described above, for addressing 2020 
enrollee-level EDGE data in model recalibration and recommended that 
the 2017, 2018 and 2019 enrollee-level EDGE data not be trended forward 
to the 2024 benefit year (that is, that HHS should use the 2023 final 
model coefficients for the 2024 benefit year). These commenters also 
requested that HHS publish additional information on these 
coefficients, including the separately solved model coefficients from 
each data year, the trending methodology, and how these trend factors 
were applied as part of the 2024 benefit year risk adjustment model 
recalibration. Some of these commenters questioned whether the changes 
for these coefficients were due to anomalies in the 2020 enrollee-level 
EDGE data or, as others suggested, if the changes may be due to the 
trending methodology applied. One of these commenters suggested 
different trend factors may need to be applied differently for 
different RXCs, noting that market patterns for non-RXC specialty drugs 
may not align with market patterns for specialty drugs included in the 
affected RXCs.
    Response: We are finalizing the RXC coefficients as proposed 
because we believe the 2024 risk adjustment models' RXCs are accurately 
predicting the costs of RXCs in the market for the applicable benefit 
year. Although there are RXC coefficients changes between the 2023 and 
2024 benefit year models, these changes are not due to anomalies in the 
2020 enrollee-level EDGE data and are of a similar magnitude to RXC 
changes found in previous benefit years. The change in these RXC 
coefficients relative to the previous benefit year are due to decisions 
HHS made in trending costs for traditional and specialty drugs, as 
suggested by some commenters.
    To explain, we analyzed separately solved model coefficients from 
each data year used in the proposed 2024 risk adjustment model 
recalibration and found that all 3 data years used for 2024 model 
recalibration exhibited similar changes in these RXC coefficients. This 
indicates that the 2020 enrollee-level EDGE data (or any potential 
anomalies related to that data year) were not driving the decrease. 
Although we understand the importance of transparency, we do not 
believe it is necessary to release the separately solved model 
coefficients from each data year.
    However, we appreciate it is important to share more information 
about the RXC coefficients identified by commenters and generally note 
that, between benefit years, the RXC coefficients are typically less 
stable than HCC coefficients in the HHS risk adjustment models due to 
smaller sample sizes than their corresponding HCC coefficients, and 
multicollinearity with HCC coefficients and HCC-RXC interaction 
factors. In addition, as part of our consideration of these comments 
and to investigate whether the 2020 enrollee-level EDGE data 
coefficients for these three RXCs were substantially different from the 
2018 and 2019 years of enrollee-level EDGE data coefficients, we 
engaged in a further analysis of the differences between coefficients 
solved from each year of enrollee-level EDGE data (2018, 2019, and 2020 
enrollee-level EDGE data) for these three RXCs and found:
     In the HHS risk adjustment adult model coefficients from 
the 2018 through the 2023 benefit years, across the five metal levels, 
the distance between RXC coefficient values from the 2 most dissimilar 
data years used in the annual model recalibration for RXC 1 have ranged 
between 9.2 percent and 40.7 percent. Across the five metal levels, the 
median distance between RXC 1 coefficients from the 2 most dissimilar 
data years for the 2024 benefit year risk adjustment adult models is 
30.9 percent.
     For RXC 8, the distance between values from the 2 most 
dissimilar data years used in the annual model recalibration for this 
adult model coefficient across the 2018 through 2023 benefit years 
ranged from between 5.1 percent and 28.4 percent, with the median value 
for the 2024 benefit year risk adjustment adult models at 7.0 percent 
across metal levels.
     For RXC 9, the range of distance between values from the 2 
most dissimilar data years used in the annual model recalibration for 
this adult model coefficient across the 2018 through 2023 benefit years 
has fallen between 1.6 percent and 60.1 percent, with the median value 
for the proposed and final 2024 risk adjustment adult models at 4.7 
percent across the five metal levels.
    Although coefficients for these three RXCs decreased between the 
2023 and 2024 benefit year risk adjustment adult models, the similarity 
of the coefficients among the 3 data years used to fit the 2024 benefit 
year risk adjustment models and the consistency of the dispersion 
between data years with the range of dispersion observed for previous 
benefit years' HHS risk adjustment models demonstrates that these 
decreases are not due to any anomalous patterns in the 2020 enrollee-
level EDGE data. As noted above, in past benefit years, we have 
attributed the lower level of stability among RXC and RXC-HCC 
interaction factors to the high level of collinearity between these 
variables. Due to their close association with one another, the models 
may fit coefficients that divide risk between an interaction factor and 
its related RXC and HCC(s) differently for different years of enrollee-
level EDGE data.
    However, the change in these RXC coefficients relative to the 
previous benefit year are due to decisions we made in trending costs 
for traditional and specialty drugs, as suggested by some commenters, 
which have been trended separately from medical expenditures since the 
2017 benefit year.\40\ More specifically, in our annual assessment of 
the trending factors for the 2024 HHS risk adjustment models, we 
determined that the trend factors used for specialty drugs was higher 
than the market data supported. Therefore,

[[Page 25754]]

for the 2024 benefit year, we used trend factors for specialty drugs 
that aligned with the market data rather than continuing the 
historical, higher trend factors. In determining these trend factors, 
we consulted our actuarial experts, reviewed relevant Unified Rate 
Review Template (URRT) submission data, analyzed multiple years of 
enrollee-level EDGE data, and consulted National Health Expenditure 
Accounts (NHEA) data as well as external reports and documents \41\ 
published by third parties. In this process, we also ensured that the 
trends we use reflect changes in cost of care rather than gross growth 
in expenditures. As such, we believe the trend factors we used for 
specialty drugs are appropriate for the most recent trends we have seen 
in the market and the proposed RXC coefficient values that we finalize 
in this rule reflect the appropriate amount of growth between the data 
years used to fit the model and the 2024 benefit year. As part of our 
annual model recalibration activities, we intend to continue to 
reassess the trend factors used to update the HHS risk adjustment 
models in future benefit years. Consistent with Sec.  153.320(b)(1), we 
will also continue to include and solicit comments on the draft model 
factors to be employed in the HHS risk adjustment models for a given 
benefit year, including but not limited to the proposed coefficients, 
as part of the applicable benefit year's Payment Notice proposed rule.
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    \40\ See 81 FR 12218.
    \41\ See for example, ``How much is health spending expected to 
grow?'' by the Peterson-Kaiser Family Foundation, available at 
https://www.healthsystemtracker.org/chart-collection/how-much-is-health-spending-expected-to-grow/. See also ``Medical cost trend: 
Behind the numbers 2022'' by PwC Health Research Institute, 
available at https://www.pwc.com/us/en/industries/health-industries/library/assets/pwc-hri-behind-the-numbers-2022.pdf. See also, ``MBB 
health trends'' by MercerMarsh Benefits, available at https://www.mercer.com/content/dam/mercer/attachments/private/gl-2022-mmb-health-trends-report.pdf.
---------------------------------------------------------------------------

b. Pricing Adjustment for the Hepatitis C Drugs
    In the HHS Notice of Benefits and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78218), for the 2024 benefit year, we 
proposed to continue applying a market pricing adjustment to the plan 
liability associated with Hepatitis C drugs in the risk adjustment 
models.\42\
---------------------------------------------------------------------------

    \42\ See for example, 84 FR 17463 through 17466.
---------------------------------------------------------------------------

    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.\43\ 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.\44\
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    \43\ 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.
    \44\ 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.
---------------------------------------------------------------------------

    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 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 
will be used for the 2024 benefit year recalibration \45\ 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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    \45\ As detailed above, we are finalizing that we will use 2018, 
2019 and 2020 enrollee-level EDGE data for recalibration of the 2024 
benefit year HHS risk adjustment models, with no exceptions. 
However, for the proposed rule, we also assessed 2017 enrollee-level 
EDGE data in the event one of the alternative proposals regarding 
use of 2020 enrollee-level EDGE data were to be adopted.
---------------------------------------------------------------------------

    Specifically, generic Hepatitis C drugs did not become available on 
the market until 2019, and we proposed to use 2018 benefit year EDGE 
data in the 2024 benefit year model recalibration.\46\ 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. As noted in the 
proposed rule, we intend to continue to assess this pricing adjustment 
in future benefit year recalibrations using additional years of 
enrollee-level EDGE data.
---------------------------------------------------------------------------

    \46\ 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.
---------------------------------------------------------------------------

    We sought comment on this proposal. After reviewing the public 
comments, we are finalizing this proposal to continue applying a market 
pricing adjustment to the plan liability associated with Hepatitis C 
drugs in the 2024 benefit year HHS risk adjustment models as proposed. 
We summarize and respond to public comments received on the proposed 
pricing adjustment for Hepatitis C drugs below.
    Comment: Most commenters supported the continued use of the pricing 
adjustment for Hepatitis C drugs with one commenter stating that the 
proposed Hepatitis C pricing adjustment seems reasonably well 
calibrated to reduce the incentives for issuers to create 
discriminatory plans that would drive away enrollees with Hepatitis C.
    Some commenters expressed concern about the Hepatitis C pricing 
adjustment. These commenters cautioned against reducing the Hepatitis C 
RXC coefficient more than the expected decrease in cost as that may 
incentivize issuers to reduce the availability of treatment. These 
commenters were also concerned about undercompensating issuers for 
enrollees with serious chronic conditions, which they stated would 
incentivize issuers to avoid these enrollees. One commenter asserted 
that the professional independence and ethical standards of providers 
would prevent providers from prescribing drugs that they did not 
believe were medically necessary and appropriate, reducing the 
potential for issuers to game the program.
    Response: We believe that continuing to apply the Hepatitis C 
pricing adjustment in the 2024 benefit year HHS risk adjustment models 
is appropriate at this time. This pricing adjustment will help avoid 
perverse incentives and will

[[Page 25755]]

lead to Hepatitis C RXC coefficients that better reflect anticipated 
actual 2024 benefit year plan liability associated with Hepatitis C 
drugs. Specifically, the purpose of the Hepatitis C pricing adjustment 
is to address the significant pricing changes associated with the 
introduction of new and generic Hepatitis C drugs between the data 
years used for recalibrating the models and the applicable 
recalibration benefit year that present a risk of creating perverse 
incentives by overcompensating issuers. We reassessed the pricing 
adjustment for the Hepatitis C RXC for the 2024 benefit year model 
recalibration and found that the data used for the 2024 benefit year 
risk adjustment model recalibration (that is, 2018, 2019, and 2020 
enrollee-level EDGE data) still do not account for the significant 
pricing changes that we have observed for the Hepatitis C drugs due to 
the introduction of newer and cheaper Hepatitis C drugs. Therefore, the 
data that will be used to recalibrate the models needs to be adjusted 
because it does not precisely reflect the average cost of Hepatitis C 
treatments expected in the 2024 benefit year.
    In making this determination, we consulted our clinical and 
actuarial experts, and analyzed the most recent enrollee-level EDGE 
data available to further assess the changing costs associated with 
Hepatitis C enrollees. Due to the high cost of these drugs reflected in 
the 2018, 2019, and 2020 enrollee-level EDGE data, without a pricing 
adjustment to plan liability, issuers would be overcompensated for the 
Hepatitis C RXC in the 2024 benefit year, and issuers could be 
incentivized to encourage overprescribing practices and game risk 
adjustment such that their risk adjustment payment is increased or risk 
adjustment charge is decreased. We also recognize concerns that 
applying a pricing adjustment that would reduce the coefficient for the 
Hepatitis C RXC by more than the expected decrease in costs could 
incentivize issuers to reduce the availability of the treatment. 
However, we believe that the Hepatitis C pricing adjustment we are 
finalizing accurately captures the costs of Hepatitis C drugs for the 
2024 benefit year using the most recently available data, balances the 
need to deter gaming practices with the need to ensure that issuers are 
adequately compensated, and does not undermine recent progress in the 
treatment of Hepatitis C. Nevertheless, we intend to continue to 
reassess this pricing adjustment as part of future benefit years' model 
recalibrations using additional years of available enrollee-level EDGE 
data.
    We appreciate commenters' concerns about undercompensating issuers 
for enrollees with serious chronic conditions. We note that HHS, in the 
2023 Payment Notice (87 FR 27221 through 27230), finalized several risk 
adjustment model changes to address the adult and child models' 
underprediction for enrollees with many HCCs. Specifically, we 
finalized the interacted HCC counts and HCC-contingent enrollment 
duration factor model specifications to improve model prediction for 
the higher risk enrollees and ensure that issuers are being accurately 
compensated for these enrollees. As such, the potential for 
underprediction or overprediction in the HHS risk adjustment models is 
an area that we are consistently monitoring and addressing as needed 
and will continue to monitor and address in the future as part of our 
ongoing efforts to continually improve the HHS risk adjustment models.
    Additionally, we recognize the important role that the ethical 
standards of providers play in preventing overprescribing of drugs that 
they do not believe are medically necessary and appropriate, but we 
believe that the Hepatitis C pricing adjustment is the most effective 
way to protect against perverse incentives that could affect 
prescribing patterns.
    Comment: One commenter urged HHS to expand the pricing adjustment 
to other drugs, noting that biosimilar versions of adalimumab 
(Humira[supreg]), a drug that is currently classified in RXC 9 Immune 
suppressants and Immunomodulators in the adult risk adjustment models, 
will soon enter the market and the logic for applying a market pricing 
adjustment to the plan liability associated with Hepatitis C drugs may 
be extended to these biosimilar drugs.
    Response: We did not propose or solicit comments on extending a 
pricing adjustment to drugs treating conditions other than Hepatitis C. 
As such, at this time, we will not be finalizing any pricing 
adjustments for the RXC 9 drug adalimumab or other specialty drugs with 
alternatives (whether generic or biosimilar) entering the market in the 
coming year. In the 2023 Payment Notice (87 FR 27231 through 27235), we 
explained our criteria for inclusion and exclusion of drugs in RXC 
mapping and recalibration. We stated that in extenuating circumstances 
where HHS believes there will be a significant impact from a change in 
an RxNorm Concept Unique Identifiers (RXCUI) to RXC mapping, such as: 
(1) evidence of significant off-label prescribing (as was the case with 
hydroxychloroquine sulfate); \47\ (2) abnormally large changes in 
clinical indications or practice patterns associated with drug usage; 
or (3) certain situations in which the cost of a drug (or biosimilars) 
become much higher or lower than the typical cost of drugs in the same 
prescription drug category, HHS will consider whether changes to the 
RXCUI to RXC mapping from the applicable data year crosswalk (or, in 
this case, pricing adjustments) are needed for future benefit year 
recalibrations.
---------------------------------------------------------------------------

    \47\ See, for example, 86 FR 24180.
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    Although making a pricing adjustment due to the introduction of new 
drugs in a market is not the same as adjusting the RXC mappings, we 
take a similar approach in considering whether a pricing adjustment for 
new drugs in a market is needed. We do not believe there is evidence at 
this time that the introduction of biosimilar alternatives to 
adalimumab will create market patterns that meet any of these three 
criteria. Our current understanding is that the biosimilar alternatives 
to adalimumab entering the market are not analogous to the generic 
versions of drugs used to treat Hepatitis C. Biosimilars, in general, 
differ from common generic drugs and their market behaviors are 
expected to be distinct. Because biosimilars are made from living 
material (which is not the case with common generic drugs), they differ 
in their interchangeability and manufacturing cost savings from common 
generics.\48\ Furthermore, although costs are expected to be lower for 
adalimumab biosimilars due to lower costs of development, the nature of 
the different production process for biologic drugs means that the 
price reductions are expected to be much smaller with biosimilars than 
we see with the introduction of generic medications.\49\ As such, we 
also do not believe that the costs and prescribing patterns of 
adalimumab (and its biosimilars) will be much higher or lower than the 
typical cost of drugs in the same prescription drug category in the 
near future. Nevertheless, we will continue to monitor the prescription 
drug market as part of our ongoing efforts to continually improve the 
HHS risk adjustment models.
---------------------------------------------------------------------------

    \48\ See https://www.uspharmacist.com/article/biosimilars-not-simply-generics. See also https://www.goodrx.com/humira/biosimilars.
    \49\ See https://www.reuters.com/business/healthcare-pharmaceuticals/abbvies-humira-gets-us-rival-costs-could-stay-high-2023-01-31/. See also https://info.goodrootinc.com/download-our-biosimilars-white-paper.

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[[Page 25756]]

c. Request for Information: Payment HCC for Gender Dysphoria
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78219), HHS requested information on adding a 
payment HCC for gender dysphoria to the HHS risk adjustment models for 
future benefit years. We thank commenters for their feedback and will 
take these comments into consideration if we pursue this potential risk 
adjustment model update for future benefit years through notice-and-
comment rulemaking.
d. List of Factors To Be Employed in the Risk Adjustment Models (Sec.  
153.320)
    We are finalizing the 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 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.\50\ Table 1 contains factors for each adult model, including 
the age-sex, HCCs, RXCs, RXC-HCC interactions, interacted HCC counts, 
and enrollment duration coefficients. Table 2 contains the factors for 
each child model, including the age-sex, HCCs, and interacted HCC 
counts coefficients. Table 3 lists the HHS-HCCs selected for the 
interacted HCC counts factors that apply to the adult and child models. 
Table 4 contains the factors for each infant model. Tables 5 and 6 
contain the HCCs included in the infant models' maturity and severity 
categories, respectively.
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    \50\ We did not propose changes to the high-cost risk pool 
parameters for the 2024 benefit year. Therefore, we will maintain 
the $1 million threshold and 60 percent coinsurance rate.
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BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C
    After reviewing public comments, we are finalizing the list of 
factors to be employed in the HHS risk adjustment models with the 
following modifications. In the proposed rule (87 FR 78219 through 
78226), the adult risk adjustment model factor coefficients reflected 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. In this final rule, the adult risk 
adjustment model factor coefficients for the 2024 benefit year have 
been updated to reflect the finalization of the use of the 2018, 2019 
and 2020 benefit year enrollee-level EDGE data for recalibration of the 
2024 benefit year risk adjustment models for all model coefficients, 
including the adult age-sex coefficients, as detailed in an earlier 
section of this rule.
    We summarize and respond to public comments received on the list of 
factors to be employed in the HHS risk adjustment models below.
    Comment: One commenter stated that the enrollment duration factors 
do not fully capture the financial impact of enrollment duration for 
consumers who enroll during SEPs, and requested HHS further investigate 
how the HHS risk adjustment models can be updated and improved to 
reflect more recent changes to SEPs.
    Response: In the 2023 Payment Notice (87 FR 27228 through 27230), 
we changed the enrollment duration factors in the adult risk adjustment 
models to improve prediction for partial-year adult enrollees with and 
without HCCs. As described in the 2021 Risk Adjustment (RA) Technical 
Paper,\51\ we found that the previous adult model enrollment duration 
factors underpredicted plan liability for partial-year adult enrollees 
with HCCs and overpredicted plan liability for partial-year adult 
enrollees without HCCs. Therefore, beginning with the 2023 benefit 
year, we eliminated the enrollment duration factors of up to 11 months 
for all enrollees in the adult models, and replaced them with new 
monthly enrollment duration factors of up to 6 months that would apply 
only to adult enrollees with HCCs. HHS did not propose and is not 
finalizing any changes to the enrollment duration factors as part of 
this rulemaking. However, as more data years become available, we will 
continue to investigate the performance of the enrollment duration 
factors. Specifically, as the SEP landscape changes and we have new 
data to reflect those changes,\52\ we will assess the extent to which 
the enrollment duration factors fully capture the financial impact of 
enrollment duration for enrollees who enroll during an SEP.
---------------------------------------------------------------------------

    \51\ HHS published analysis of CSR population utilization in the 
HHS-Operated Risk Adjustment Technical Paper on Possible Model 
Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
    \52\ See, for example, CMS. (2022, October 28). Marketplace 
Stakeholder Technical Assistance Tip Sheet on the Monthly Special 
Enrollment Period for Advance Payments of the Premium Tax credit--
Eligible Consumers with Household Income at or below 150% of the 
Federal Poverty Level. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/150FPLSEPTATIPSHEET.
---------------------------------------------------------------------------

e. CSR Adjustments
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78235), we proposed to continue including 
an adjustment for the receipt of CSRs in the risk adjustment models in 
all 50 States and the District of Columbia. We explained that while we 
continue to study and explore 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,\53\ to maintain stability and certainty for issuers for the 2024 
benefit year, we proposed to maintain the CSR adjustment factors 
finalized in the 2019, 2020, 2021, 2022, and 2023 Payment Notices.\54\ 
See Table 7. We also proposed to continue to use a CSR adjustment 
factor of 1.12 for all Massachusetts wrap-around plans in the risk 
adjustment PLRS calculation, as all

[[Page 25773]]

of Massachusetts' cost-sharing plan variations have AVs above 94 
percent (81 FR 12228).
---------------------------------------------------------------------------

    \53\ 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/2022-09/Academy_CSR_Load_Letter_09.08.22.pdf.
    \54\ 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 sought comment on these proposals. After reviewing the public 
comments, we are finalizing the CSR adjustment factors as proposed.
[GRAPHIC] [TIFF OMITTED] TR27AP23.017

    We summarize and respond to public comments received on the 
proposed CSR adjustment factors below.
    Comment: One commenter supported using the proposed CSR adjustment 
factors in the HHS-operated risk adjustment program. Another commenter 
supported continuing to apply an adjustment for Massachusetts wrap-
around plans to account for its unique market dynamics. A few 
commenters supported further evaluation of the CSR adjustment factors. 
One commenter requested evaluation of the current CSR adjustment 
factors in light of an absence of funding of CSR subsidies and due to 
the potential socioeconomic health equity issues associated with lower-
than-anticipated induced utilization levels in the CSR population.\55\ 
Another commenter requested a technical paper before future proposed 
rulemaking with further CSR induced demand analysis.
---------------------------------------------------------------------------

    \55\ HHS published analysis of CSR population utilization in the 
HHS-Operated Risk Adjustment Technical Paper on Possible Model 
Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------

    One commenter stated that current CSR adjustment factors, 
specifically when applied to CSR 87 percent and 94 percent variants, do 
not accurately reflect population risk and another commenter requested 
the risk adjustment formula reflect actual costs incurred by 87 percent 
and 94 percent AV enrollees.
    Response: We appreciate the comments in support of these proposals 
and are finalizing the 2024 benefit year CSR adjustment factors as 
proposed. While we have studied the CSR adjustment factors, we agree 
continued study of the CSR adjustment factors is warranted to further 
assess the different options outlined in the 2021 RA Technical Paper 
and other potential approaches before pursuing any changes.\56\ 
However, at this time, we are not planning to publish another technical 
paper with additional CSR induced demand analysis prior to pursing 
changes to these factors in any future proposed rulemaking. We 
anticipate that between the 2021 RA Technical Paper and any future 
notice-and-comment rulemaking, sufficient analysis and justification 
for any proposed changes would be provided.
---------------------------------------------------------------------------

    \56\ Ibid.
---------------------------------------------------------------------------

    Additionally, we reiterate the findings from the 2021 RA Technical 
Paper that the current CSR adjustment factors are predicting actual 
plan liability relatively accurately on average, with the nationally-
approximated risk term predictive ratios for CSR 87 percent and 94 
percent variants both within +/-5 percent. We also believe that the 
collection and extraction of additional data elements from issuers' 
EDGE servers, including plan ID and rating area, will help further 
inform our study of the CSR adjustment factors and may allow us to 
further consider potential socioeconomic issues in the CSR populations. 
Therefore, HHS intends to review the enrollee-level EDGE data with the 
plan ID and rating area before proposing any changes to the CSR 
adjustment factors in future notice-and-comment rulemaking.
    Comment: A few commenters were concerned about the underprediction 
of zero and limited sharing CSR plan variants for American Indian/
Alaska Natives (AI/AN) in the risk term of the State payment transfer 
formula, as outlined in the 2021 RA Technical Paper,\57\ particularly 
in States that have a high percentage of AI/AN enrollment, because 
competition for these enrollees may be discouraged by this 
underprediction.\58\ These commenters were concerned that this market 
dynamic would result in issuers with fewer AI/AN enrollees having the 
ability to more aggressively price silver plan premiums, gaining 
competitive advantage and depressing premium tax credits for enrollees 
in that State's market. One commenter recommended that HHS reframe and 
recalibrate the CSR adjustment factors to fully eliminate the 
underprediction of liability for AI/AN enrollees to best capture actual 
CSR experience and mitigate any existing imbalances in risk adjustment 
State transfers across metal and CSR plan variants.
---------------------------------------------------------------------------

    \57\ Ibid.
    \58\ The CSR adjustment factors for zero cost sharing recipients 
(less than 300 percent of FPL) and limited cost sharing recipients 
(greater than 300 percent of FPL) for each metal level are included 
in Table 7 of this rule.
---------------------------------------------------------------------------

    Response: As part of our overall analysis of the CSR adjustment 
factors,

[[Page 25774]]

we will also continue to consider options for how to recalibrate and 
adjust the CSR adjustment factors for the zero and limited sharing CSR 
plan variants for future benefit years. In the 2021 RA Technical Paper, 
we provided an analysis that showed the underprediction of zero and 
limited sharing CSR plan variants for AI/AN in HHS risk adjustment and 
considered a variety of different options to adjust the CSR adjustment 
factors.\59\ Because this analysis was conducted at the national level, 
we did not observe any trends of particular issuers, States or rating 
areas having a higher percentage of AI/AN enrollment as noted by the 
commenter. Specifically, we were extracting and using national 
enrollee-level EDGE data without issuer or geographic markers. 
Therefore, in the past and when we developed the proposed rule, we did 
not have the ability to analyze the distribution of the CSR populations 
at a more granular level (for example, at the issuer, State or rating 
area level) to see, for example, which issuers, States or rating areas 
have a high percentage of AI/AN enrollment. However, with policies 
finalized in the 2023 Payment Notice (87 FR 27241 through 27243) and 
this final rule, we will have the ability to extract and use multiple 
years of enrollee-level EDGE data with plan ID and rating area markers 
and will be able to further analyze the CSR populations at a more 
granular level, including analyzing whether incentives may exist in 
certain States with high proportions of AI/AN populations for issuers 
with fewer AI/AN enrollees to more aggressively price silver plan 
premiums in those States, to further consider potential changes to 
these factors for future benefit years. In the meantime, we are 
finalizing the CSR adjustment factors as proposed for the 2024 benefit 
year to maintain stability and certainty for issuers.
---------------------------------------------------------------------------

    \59\ HHS published analysis of CSR population utilization in the 
HHS-Operated Risk Adjustment Technical Paper on Possible Model 
Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------

    Comment: We also received several comments in response to a 
reference to the American Academy of Actuaries' letter on CSR loading 
in a footnote in the proposed rule.\60\ These commenters objected to 
HHS considering any method of estimating CSR premium load factors that 
involves issuers using experience data or issuer pricing models to 
estimate the CSR load for silver plan variants. These commenters stated 
that they believed such a methodology is a violation of the ACA's 
single risk pool requirement, which requires issuers to treat all 
individual market enrollees as part of a single risk pool so that 
pricing reflects utilization of essential benefits by a standard 
population. These commenters shared their experience from Texas and New 
Mexico, where they claim aligning plan prices by AV when regulating the 
variation in metal level premiums resulted in large enrollment 
increases and enhanced affordability following premium realignment. One 
commenter expressed concern about using a nationally weighted CSR 
silver load in the rating term of the transfer formula due to 
variations in State CSR enrollment mixes or CSR loading requirement 
recommending the use of State-specific AV factors, as discussed in the 
2021 RA Technical Paper. Another of these commenters suggested that 
anticipated premiums should instead reflect the average AV of all CSR 
variants.
---------------------------------------------------------------------------

    \60\ 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/2022-09/Academy_CSR_Load_Letter_09.08.22.pdf.
---------------------------------------------------------------------------

    Response: We appreciate the comments on potential approaches to 
change the current CSR adjustment factors and, as previously noted, are 
continuing to study these issues for potential updates to these factors 
in future benefit years. We did not propose and are not adopting any 
changes to the CSR adjustment factors. With policies finalized in the 
2023 Payment Notice (87 FR 27241 through 27243), we have the ability to 
extract and use enrollee-level EDGE data with plan ID and rating area 
markers to further analyze the CSR populations at a more granular level 
to further consider potential changes to these factors for future 
benefit years, as well as other potential approaches. This includes 
consideration of the American Academy of Actuaries letter regarding 
accounting for the receipt of CSRs in the HHS-operated risk adjustment 
program and plan rating.\61\ As part of this effort, we will also 
consider interested parties' analysis and comments on potential 
approaches under consideration, including the feedback provided by 
these commenters. We are aware of the interaction that potential future 
changes to the CSR adjustment factors may have with regard to the ACA's 
single risk pool requirement, and confirm that any changes to the CSR 
adjustment factors would be designed to align with other applicable 
Federal market reforms. We also affirm that interested parties will 
have an opportunity to comment on any potential changes to the CSR 
adjustment factors for future benefit years, as those updates would be 
pursued through notice-and-comment rulemaking.
---------------------------------------------------------------------------

    \61\ Ibid.
---------------------------------------------------------------------------

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 will 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.\62\ Because we are finalizing a 
blend of coefficients from separately solved models based on the 2018, 
2019, and 2020 benefit years' enrollee-level EDGE data, we are 
publishing the R-squared statistic for each model separately to verify 
their statistical validity. The R-squared statistics for the 2024 
benefit models are shown in Table 8.
---------------------------------------------------------------------------

    \62\ 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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[[Page 25775]]

[GRAPHIC] [TIFF OMITTED] TR27AP23.018

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 did not propose any changes 
to the formula in the proposed rule, and therefore, are not 
republishing the formulas in this rule. We will continue to apply the 
formula as finalized in the 2021 Payment Notice (86 FR 24183 through 
24186) \63\ 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 did not 
propose any changes to the high-cost risk pool parameters for the 2024 
benefit year; therefore, we will maintain the $1 million threshold and 
60 percent coinsurance rate.
---------------------------------------------------------------------------

    \63\ Discussion provided an illustration and further details on 
the State payment transfer formula.
---------------------------------------------------------------------------

    We summarize and respond to public comments received on the HHS 
risk adjustment methodology below.
    Comment: A few commenters asserted that using a population's 
history of health care utilization, as the HHS-operated risk adjustment 
program currently does, entrenches resource disparities and barriers to 
health care access, and shifts resources from issuers serving lower-
income communities to issuers serving higher-income communities in the 
State of Massachusetts. These commenters also stated that they believe 
HHS should include social determinants of health (SDOH) as factors in 
the HHS risk adjustment models. The commenters stated that using the 
Statewide average premium as a scaling factor in the State payment 
transfer formula amplifies the transfer of funds away from issuers with 
low-priced provider networks, who disproportionately serve lower-income 
communities.
    Response: We appreciate these comments, which were based on 
findings in a report released by the Massachusetts Attorney General's 
Office titled Examination of Health Care Cost Trends and Cost Drivers 
2022,\64\ but do not believe that changes to the HHS-operated risk 
adjustment program are warranted at this time based on this report, as 
the findings do not appear to be applicable to other States. Following 
the release of the report, we analyzed available enrollee-level EDGE 
data to investigate whether the findings of the report were applicable 
in other State markets. We found that the Massachusetts merged market 
exhibits a unique combination of characteristics, including a highly 
segmented market where some issuers serve primarily CSR enrollees while 
other issuers primarily serve off-Exchange enrollees, and a uniquely 
healthy CSR population, that create an environment in which issuers 
that serve low-income communities can be assessed charges in that 
State's market risk pools. In particular, because the HHS-operated risk 
adjustment program is intended to transfer funds from lower-than-
average risk plans to higher-than-average risk plans, a plan with a 
uniquely healthy population, whether because it has a uniquely healthy 
CSR population or a healthy general population, can be assessed a risk 
adjustment charge.
---------------------------------------------------------------------------

    \64\ See Examination of Health Care Cost Trends and Cost Drivers 
2022. Available at https://www.mass.gov/files/documents/2022/11/02/2022-11-2%20COST-TRENDS-REPORT_PUB_DRAFT4_HQ.pdf.
---------------------------------------------------------------------------

    No other State exhibits the same combination of unique 
characteristics discussed in this section as the State of 
Massachusetts. Therefore, we have concerns about proposing changes to 
the HHS-operated risk adjustment program, including changes with regard 
to the use of the Statewide average premium as a scaling factor in the 
State payment transfer formula, based on a report that is Massachusetts 
specific and reflects the unique market conditions of a single State. 
Furthermore, in light of the unique combination of characteristics of 
Massachusetts's CSR population discussed elsewhere in this section, we 
believe that under the existing HHS risk adjustment methodology, the 
transfer charges and payments assessed in the Massachusetts merged 
market risk pool reflect a reasonably accurate estimate for the 
relative risk incurred by issuers in that State. We also reiterate that 
HHS chose to use Statewide average premium and normalize the risk 
adjustment State payment transfer formula to reflect State average 
factors so that each plan's enrollment characteristics are compared to 
the State average and the calculated payment amounts equal calculated 
charges in each State market risk pool.

[[Page 25776]]

Thus, each plan in the risk pool receives a risk adjustment payment or 
charge designed to compensate for risk for a plan with average risk in 
a budget-neutral manner. This approach supports the overall goals of 
the HHS-operated risk adjustment program, which are to encourage 
issuers to rate for the average risk in the applicable State market 
risk pool, to stabilize premiums, and to avoid the creation of 
incentives for issuers to operate less efficiently, set higher prices, 
or develop benefit designs or marketing strategies to avoid high-risk 
enrollees.\65\
---------------------------------------------------------------------------

    \65\ 84 FR 17480 through 17484.
---------------------------------------------------------------------------

    We also appreciate the comments on including SDOH as factors in the 
HHS risk adjustment models. In the 2023 Payment Notice, HHS solicited 
comments on ways to incentivize issuers to design plans that improve 
health equity and health conditions in enrollees' environments, as well 
as sought comments on the potential future collection and extraction of 
z codes (particularly Z55-Z65), a subset of ICD-10-CM encounter reason 
codes used to identify, analyze, and document SDOH, as part of the 
required EDGE data submissions. We continue to review and consider the 
public comments related to the collection and extraction of z codes to 
inform analysis and policy development for the HHS-operated risk 
adjustment program. In the interim, we note that including SDOH in the 
HHS-operated risk adjustment models would require careful consideration 
because doing so could actually increase health disparities rather than 
reduce them. For example, if individuals who have a particular SDOH 
factor in risk adjustment tended to underutilize health care services 
relative to their health status, including that factor in the HHS-
operated risk adjustment models could perpetuate, and possibly 
exacerbate, the under compensation of issuers for enrollees that 
receive that factor in risk adjustment. Such a dynamic may incentivize 
risk selecting behavior among issuers. Furthermore, we have concerns 
about the reliability of existing data for determining if an enrollee 
has SDOH and what documentation would be needed from the issuer to 
verify them.\66\ We continue to analyze data in this area, especially 
as new enrollee-level EDGE data elements become available, and would 
propose any changes to the HHS risk adjustment models or HHS-operated 
risk adjustment program through notice-and-comment rulemaking.
---------------------------------------------------------------------------

    \66\ See, for example, the analysis of z codes at 87 FR 632.
---------------------------------------------------------------------------

4. Repeal of Risk Adjustment State Flexibility To Request a Reduction 
in Risk Adjustment State Transfers (Sec.  153.320(d))
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78237), we proposed to repeal the 
flexibility under Sec.  153.320(d) for prior participant States \67\ to 
request reductions of risk adjustment State transfers under the State 
payment transfer formula in all State market risk pools for the 2025 
benefit year and beyond. We also solicited 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. After reviewing public 
comments, we are approving Alabama's requests for the 2024 benefit year 
and finalizing the proposal to repeal the flexibility for prior 
participant States to request transfer reductions for the 2025 benefit 
year and beyond.
---------------------------------------------------------------------------

    \67\ 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
    In the proposed rule (87 FR 78237 through 78238), we proposed to 
amend Sec.  153.320(d) to repeal the ability for prior participant 
States to request a reduction in risk adjustment State transfers 
beginning with the 2025 benefit year. As part of this repeal, we 
proposed 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 proposed 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. After reviewing public comments, we are finalizing these 
proposals as proposed.
    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.\68\
---------------------------------------------------------------------------

    \68\ 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).
---------------------------------------------------------------------------

    In the 2023 Payment Notice (87 FR 27236), we 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.\69\ 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.\70\ In the 
2023 Payment Notice (87 FR 27239 through 27241), we also finalized 
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

[[Page 25777]]

addition, we indicated our intention to propose in future rulemaking to 
repeal the exception for prior participants beginning with the 2025 
benefit year.\71\
---------------------------------------------------------------------------

    \69\ 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.
    \70\ 87 FR 27239 through 27241. See also 83 FR 16957.
    \71\ Ibid.
---------------------------------------------------------------------------

    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.\72\ In addition, we noted that since 
establishing this framework, we have observed a lack of 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.\73\
---------------------------------------------------------------------------

    \72\ 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.
    \73\ 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).
---------------------------------------------------------------------------

    As discussed in the proposed rule, HHS believes the complete repeal 
of the option for States to request reductions in risk adjustment State 
transfers will 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, we 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 noted that we believe a 
complete repeal of Sec.  153.320(d) will 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 will protect and 
strengthen the ACA and make health care more accessible and affordable. 
For all of these reasons, we proposed to amend Sec.  153.320(d) to 
repeal the flexibility for prior participant States 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. We noted in the proposed rule 
that if these amendments are finalized, no State will 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 summarize and respond to public comments received on the 
proposal to repeal the flexibility for prior participant States 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 below.
    Comment: Several commenters supported the proposal to repeal the 
ability for States to request a reduction in risk adjustment State 
transfers due to concerns that the reduction in transfers would 
contribute to adverse selection, increase premiums, and reduce plan 
options. Commenters stated that reducing risk adjustment State 
transfers incentivizes issuers to ``cherry-pick'' lower-risk enrollees 
as they would not have to contribute the full difference in risk to 
support the cost of higher-risk individuals enrolled by other issuers. 
Commenters also noted that the HHS risk adjustment methodology already 
accounts for differences in State market conditions and that States can 
run their own risk adjustment programs if they do not think the HHS-
operated risk adjustment program works for their State. Some commenters 
expressed concerns about the potential negative impacts, such as 
reduced plan quality and increased risk selection, of allowing transfer 
reductions in the prior participant State's markets. One commenter 
stated that repealing this flexibility would provide stability and 
certainty for the markets.
    Conversely, several commenters opposed the proposal, stating that 
they support the ability for States to make their own decisions about 
how best to address the unique circumstances of their insurance 
markets. Some commenters also noted that HHS has the ability to review 
and reject these requests, indicating that there are appropriate 
guardrails in place such that States should continue to be offered this 
flexibility. Additionally, some commenters asserted that other States 
may develop the same market dynamics as the one prior participating 
State and should have the same ability to request reductions. One 
commenter noted concerns with the ability for States to run their own 
risk adjustment programs, due to the costs to implement such a program 
within a State. Finally, one commenter stated that the prior 
participant State had not observed any of the concerns regarding market 
destabilization or reduced plan offerings as a result of the requests, 
so the prior participant State should continue to be permitted to 
request transfer reductions.
    Response: We agree with the comments submitted in support of this 
proposal and are finalizing as proposed the repeal of the exception for 
prior participant States to request a reduction in risk adjustment 
State transfers of up to 50 percent in any State market risk pool 
beginning with the 2025 benefit year. We reiterate that a strong risk 
adjustment program is necessary to support stability and address 
adverse selection in the individual and small group markets. We are 
concerned that retaining the State flexibility framework could 
undermine these goals in the long-term. As explained in 2023 Payment 
Notice and the proposed rule, our further consideration of prior 
feedback from interested parties, along with consideration of the State 
flexibility framework under E.O. 14009 and the very low level of 
interest from States since the policy was adopted, resulted in an 
evaluation of whether this flexibility should continue and in what

[[Page 25778]]

manner.\74\ In the 2023 Payment Notice, we finalized the proposed 
amendments to Sec.  153.320(d) to repeal the State flexibility 
framework beginning with the 2024 benefit year, with an exception for 
prior participant States.\75\ We also announced our intention to 
propose in future rulemaking to repeal the exception for prior 
participants beginning with the 2025 benefit year to provide impacted 
parties additional time to prepare for the potential elimination of 
this flexibility.\76\ After reviewing public comments on the proposed 
repeal of the exception for prior participant States, we are finalizing 
the repeal of the prior participant exception, as proposed.
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    \74\ See 87 FR 27239 through 27241. Also see 87 FR 78237 through 
78238.
    \75\ 87 FR 27239 through 27241.
    \76\ Ibid.
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    As noted above and in the proposed rule, we believe that a complete 
repeal of the State flexibility framework in Sec.  153.320(d) by 
removing the prior participant exception beginning with the 2025 
benefit year will prevent the potential negative outcomes of States' 
risk adjustment transfer reduction requests identified by several 
commenters, including the possibility of risk selection or ``cherry-
picking'' lower-risk enrollees, market destabilization, increased 
premiums, smaller networks, and less-comprehensive plan options. The 
prevention of these potential negative outcomes would serve to further 
protect and strengthen the ACA, protect enrollees from potential 
``cherry-picking'' practices, and make health care coverage more 
accessible and affordable. As such, despite our ability to review and 
reject risk adjustment transfer reduction requests, we are still of the 
view that the State flexibility framework is inconsistent with policies 
described in sections 1 and 3 of E.O. 14009 and a complete repeal would 
better support the goals of the HHS-operated risk adjustment program 
and ultimately the ACA.
    With respect to the prior participant State, the State experienced 
new entrants to the individual market for the 2022 benefit year, but it 
has seen issuers both entering and exiting its markets for the 2023 
benefit year, so it is not clear that the State has seen market 
stabilization or improved plan quality since its reduction requests 
have been approved. A more detailed discussion of the prior participant 
State's market dynamics appears in the section below regarding 
Alabama's 2024 risk adjustment transfer reduction requests.
    We agree with commenters who noted that States are best able to 
make their own decisions about how to address the unique circumstances 
of their insurance markets and remain the primary regulators of their 
insurance markets. We also understand that it is possible that other 
States may develop the same market dynamics as the one prior 
participating State. At the same time, however, States have shown a low 
level of interest in submitting requests to reduce transfers calculated 
by HHS under the State payment transfer formula. Between the 2020 
benefit year and 2023 benefit year, all States had the opportunity to 
submit reduction requests under Sec.  153.320(d), and yet only one 
State did so.\77\ As discussed in the 2023 Payment Notice (87 FR 
27240), we believed it was appropriate to provide a transition for the 
prior participant State, starting with the policies and amendments 
finalized in the 2023 Payment Notice that apply beginning with the 2024 
benefit year. However, we continue to be concerned about the potential 
long-term impact of allowing reductions to risk adjustment State 
transfers in any State market risk pool, including the potential 
negative impacts on the program's ability to mitigate adverse selection 
and support stability in the individual and small group (including 
merged) markets. We are therefore finalizing a full repeal of the State 
flexibility framework (for all States) beginning in the 2025 benefit 
year in this final rule.
---------------------------------------------------------------------------

    \77\ Alabama is the only State that has requested a reduction in 
risk adjustment transfers through this flexibility and therefore is 
the only State considered a ``prior participant State''.
---------------------------------------------------------------------------

    Furthermore, since the 2014 benefit year, all States have had the 
opportunity to operate their own risk adjustment program and, to date, 
only one State has done so.\78\ Despite a broad range of market 
conditions across the 50 States and the District of Columbia, only two 
States have expressed interest in tailoring risk adjustment to address 
the unique circumstances of their insurance markets, which suggests 
States generally do not want to operate their own risk adjustment 
program. It also offers evidence that the HHS-operated risk adjustment 
program works across a broad range of market conditions to mitigate 
adverse selection in the individual and small group (including merged) 
markets. We also agree with commenters that the HHS risk adjustment 
methodology already accounts for differences in State market 
conditions. For example, the use of the Statewide average premium in 
the risk adjustment State payment transfer formula accounts for 
differences in State market conditions by scaling a plan's transfer 
amount based on the determination of plan average risk within a State 
market risk pool. The State payment transfer formula also includes a 
geographic cost factor (GCF), which adjusts at the rating area level 
for the many costs, such as input prices and medical care utilization, 
that vary geographically and are likely to affect premiums.\79\
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    \78\ Massachusetts operated a State-based risk adjustment 
program for the 2014 through 2016 benefit years.
    \79\ See ``March 31, 2016 HHS-Operated Risk Adjustment 
Methodology Meeting Discussion Paper,'' CMS (2016, March 24), 
available at https://www.cms.gov/cciio/resources/forms-reports-and-
other-resources/downloads/ra-march-31-white-paper-032416.pdf for 
more information on the GCF.
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    Commenters are also correct that States continue to have the option 
to operate their own risk adjustment program if the State believes the 
risk adjustment program for the individual and small group (including 
merged) markets should be tailored to capture its State-specific 
dynamics. At the same time, we appreciate there are a number of 
different factors States consider when weighing whether to operate a 
State-based risk adjustment program, including but not limited to the 
costs associated with establishing and maintaining such a program. We 
stand ready to work with any State that is interested in operating its 
own risk adjustment program for the individual and small group 
(including merged) markets. Furthermore, now that we are collecting and 
extracting additional data elements--like plan ID, Zip Code, and rating 
area--from issuers' EDGE servers, as finalized in the 2023 Payment 
Notice (87 FR 27244 through 27252), we are better equipped to further 
evaluate State market conditions at various levels as we consider 
future changes to the HHS-operated risk adjustment program, as 
applicable. We also remain committed to working with States and other 
interested parties to encourage new market participants, mitigate 
adverse selection, and promote stable insurance markets through strong 
risk adjustment programs.
b. Requests To Reduce Risk Adjustment Transfers for the 2024 Benefit 
Year
    For the 2024 benefit year, HHS received requests from Alabama to 
reduce risk adjustment State transfers for its individual \80\ and 
small group markets by 50 percent. As in previous years, Alabama 
asserted that the HHS-operated risk adjustment program does not work 
precisely in the Alabama market, clarifying that they do not assert

[[Page 25779]]

that the risk adjustment formula is flawed, only that it produces 
imprecise results in Alabama, which has an ``extremely unbalanced 
market share.'' The State reported that its review of 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 reported that its review of 
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.
---------------------------------------------------------------------------

    \80\ 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.
---------------------------------------------------------------------------

    In the proposed rule (87 FR 782378), we sought comment on Alabama's 
requests to reduce risk adjustment State transfers in its individual 
and small group markets by 50 percent for the 2024 benefit year. The 
request and additional documentation submitted by Alabama were posted 
under the ``State Flexibility Requests'' heading at https://www.cms.gov/cciio/programs-and-initiatives/premium-stabilization-programs and under the ``Risk Adjustment State Flexibility Requests'' 
heading at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance#Premium-Stabilization-Programs.
    After reviewing the public comments, we are approving Alabama's 
requests to reduce risk adjustment State transfers in its individual 
and small group markets by 50 percent for the 2024 benefit year. We 
summarize and respond to public comments received on Alabama's 
reduction requests below.
    Comment: A few commenters supported Alabama's requests to reduce 
risk adjustment State transfers in its individual and small group 
markets by 50 percent for the 2024 benefit year. These commenters 
stated that the HHS-operated risk adjustment program is not effective 
in Alabama due to its extreme market dynamics and that the State has 
not seen a loss of broad network, platinum, or gold plans as some 
interested parties had feared would result from the reductions in prior 
years.
    However, other commenters opposed Alabama's 2024 benefit year 
reduction requests, stating that the requested reductions would 
diminish the effectiveness of the HHS-operated risk adjustment program. 
One commenter stated that there was no mathematical reason why the 
presence of one large issuer would preclude the HHS-operated risk 
adjustment program from functioning appropriately in Alabama.
    Some commenters also asserted that the State did not meet its 
burden to substantiate the requests under the criteria established in 
Sec.  153.320(d). These commenters argued that the State did not 
consider in its analysis changes to the risk adjustment models, issuer 
participation, market conditions, benefit design offerings, network 
breadth, premium changes, or consumer behavior. A few of these 
commenters suggested that the State be required to provide more 
detailed analysis with its requests about the impact of transfer 
reductions on premiums and issuer participation. One of these 
commenters provided detailed data it previously submitted in comments 
in response to Alabama's reduction requests for the 2023 benefit year, 
asserting the requested individual market transfer reduction would 
again increase premiums for one impacted Alabama issuer by an amount 
greater than the de minimis threshold (that is, more than 1 percent 
increase in its premiums) for the 2024 benefit year. This commenter 
noted that, based on their experience from the 2022 benefit year (the 
first year for which the State requested and HHS approved a 50 percent 
reduction in risk adjustment State transfers calculated by HHS for the 
individual market), the 50 percent reduction in Alabama individual 
market transfers for 2022 led to an approximately 2 percent increase in 
their premiums for that year, which exceeds the de minimis threshold 
and was approved by the State in the issuer's rate filings.\81\ This 
commenter stated that they anticipated the impact for the 2024 benefit 
year, were HHS to approve Alabama's requests, would be similar.
---------------------------------------------------------------------------

    \81\ Blue Cross and Blue Shield of Alabama Comment Letter. 
(2023, January 27). CMS. https://www.regulations.gov/comment/CMS-2022-0192-0100.
---------------------------------------------------------------------------

    Finally, a few commenters stated that if HHS were to approve 
Alabama's requests, it should approve percentage reductions no higher 
than what it approved for the 2023 benefit year; that is, 25 percent in 
the individual market and 10 percent in the small group market.\82\
---------------------------------------------------------------------------

    \82\ See 87 FR 27208 at 27236 through 27239.
---------------------------------------------------------------------------

    Response: We appreciate the comments in support of HHS's approval 
of Alabama's 2024 benefit year reduction requests and are approving 
Alabama's requests to reduce risk adjustment transfers for the 2024 
benefit year in the individual and small group markets by 50 percent, 
as Alabama met the criteria set forth in Sec.  153.320(d)(4)(i)(B).
    We continue to believe and recognize that risk adjustment is 
critical to the proper functioning of the individual and small group 
(including merged) markets, and we acknowledge commenters' concerns 
that approving requested reductions in risk adjustment transfers could 
impact the effectiveness of the HHS-operated risk adjustment program, 
which is why we are repealing the exception for prior participant 
States to request risk adjustment transfer reductions beginning with 
the 2025 benefit year, as discussed in detail in the preamble section 
above. However, under existing HHS regulations, Alabama was permitted 
to submit a reduction request for the 2024 benefit year,\83\ and they 
did so in the manner set forth in Sec.  153.320(d)(1).\84\ As such, we 
are obligated to consider Alabama's request consistent with the 
regulatory framework applicable for the 2024 benefit year.
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    \83\ As explained in the 2023 Payment Notice, we finalized 
amendments to Sec.  153.320(d), including the creation of the prior 
participant exception following our further consideration of the 
State flexibility framework under E.O, 14009. See 87 FR 27240. We 
also announced our intention to repeal the prior participant 
exception in future rulemaking beginning with the 2025 benefit year 
to provide impacted parties additional time to prepare for this 
change and potential elimination of this flexibility. Ibid.
    \84\ The State's request must also include supporting evidence 
and analysis demonstrating the State-specific factors that warrant 
any adjustment to more precisely account for the differences in 
actuarial risk in the applicable market risk pool, as well as 
identify the requested adjustment percentage of up to 50 percent for 
the applicable market risk pools. See 45 CFR 153.320(d)(1)(i) and 
(ii). In addition, the State must submit the request by August 1 of 
the benefit year that is 2 calendar years prior to the applicable 
benefit year, in the form and manner specified by HHS. See 45 CFR 
153.320(d)(2).
---------------------------------------------------------------------------

    Our review and approval of the risk adjustment State transfer 
reduction requests submitted by Alabama for the 2024 benefit year are 
guided by the framework and criteria established in regulation under 
Sec.  153.320(d) applicable to prior participants. Consistent with 
Sec.  153.320(d)(1)(iv), prior participants are required to demonstrate 
their requests satisfy the de minimis impact standard. Under this 
standard, the requesting State is required to show that the requested 
transfer reduction would not cause premiums in the relevant market risk 
pool to increase by more than 1 percent. For the 2024 benefit year, 
Sec.  153.320(d)(4) provides that we will approve State reduction 
requests if we determine, based on a review of the State's submission, 
along with other relevant factors, including the premium impact of the 
reduction, and relevant

[[Page 25780]]

public comments, that the requested reduction would have a de minimis 
impact on the necessary premium increase to cover the transfers for 
issuers that would receive reduced transfer payments.\85\
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    \85\ HHS is also required to publish State reduction requests 
and to make the State's supporting evidence available to the public 
for the comment, with certain exceptions. See 45 CFR 153.320(d)(3). 
HHS must also publish any approved or denied State reduction 
requests. Ibid.
---------------------------------------------------------------------------

    The evidence provided by Alabama in support of its requests to 
reduce risk adjustment State transfers by 50 percent in its individual 
and small group markets was sufficient to justify its request under the 
de minimis requirement for HHS approval under Sec.  
153.320(d)(4)(i)(B). We further note that Alabama requested that, 
consistent with Sec.  153.320(d)(3), HHS not publish certain 
information in support of its request because it contained trade 
secrets or confidential commercial or financial information. If the 
State requests that HHS not make publicly available certain supporting 
evidence and analysis because it contains trade secrets or confidential 
commercial or financial information within the meaning of the HHS 
Freedom of Information Act (FOIA) regulations at 45 CFR 5.31(d), HHS 
will only make available on the CMS website the supporting evidence 
submitted by the State that is not a trade secret or confidential 
commercial or financial information by posting a redacted version of 
the State's supporting evidence.\86\ Consistent with the State's 
request, we posted a redacted version of the supporting evidence for 
Alabama's request. However, when evaluating the State's reduction 
requests, we reviewed the State's un-redacted supporting analysis, 
along with other data available to HHS and the relevant public comments 
submitted within the applicable comment period for the proposed rule. 
We conducted a comprehensive analysis of the available information and 
found the supporting evidence submitted by Alabama to be sufficient to 
support its 2024 benefit year requests.
---------------------------------------------------------------------------

    \86\ See Sec.  153.320(d)(3).
---------------------------------------------------------------------------

    We recognize there is some level of uncertainty regarding future 
market dynamics, including their potential impact on future benefit 
year transfers. However, to align with the annual pricing cycle for 
health insurance coverage, the applicable risk adjustment parameters 
(including approval or denial of State flexibility reduction requests 
for the 2024 benefit year from prior participants) must generally be 
finalized sufficiently in advance of the applicable benefit year to 
allow issuers to consider such information when setting rates.\87\ As 
such, there will always be an opportunity for some uncertainty 
regarding the precise impact of future methodological changes (such as 
the risk adjustment model changes applicable beginning with the 2023 
benefit year) or unforeseen events (such as unwinding and its impact on 
enrollment and utilization).
---------------------------------------------------------------------------

    \87\ See 45 CFR 153.320(d)(2) and (3). Also see the 2019 Payment 
Notice (83 FR 16955 through 16960), which explained the timing for 
this process was intended to permit plans to incorporate approved 
adjustments in their rates for the applicable benefit year.
---------------------------------------------------------------------------

    With respect to Alabama's 2024 benefit year requests, our review of 
the evidence submitted by Alabama in support of its transfer reduction 
requests was sufficient, along with other information available to HHS 
and timely submitted comments, to confirm the requests meet the 
criteria for approval set forth in Sec.  153.320(d)(4)(i)(B).
    For the individual market, the State provided information in 
support of its 50 percent reduction request, including its analysis 
that the reduction requested would have a de minimis impact on 
necessary premium increases. In alignment with our approach in previous 
years' consideration of the reduction requests, we analyzed the 
information provided by the State in support of its request, along with 
additional data and information available to HHS, separately by market 
and found that the request meets the de minimis regulatory standard in 
the individual market.
    More specifically, we began our review of the State's individual 
market request with consideration of available 2021 EDGE data \88\ and 
the State's submitted analysis. Using the most recent 2021 plan-level 
data available to us,\89\ we estimated transfer calculations as a 
percent of premiums, which indicated that the risk adjustment payment 
recipient would not have to increase premiums by 1 percent or more to 
cover a 50 percent reduction in individual market transfers. Therefore, 
our analysis of the 2021 EDGE data supports the State's submitted 
analysis that the 50 percent reduction in individual market transfers 
for the 2024 benefit year would meet the de minimis regulatory 
standard.
---------------------------------------------------------------------------

    \88\ Similar to our approach in considering Alabama's reduction 
requests in previous years, we considered the most recent EDGE data 
available (for example, for the 2023 benefit year, we considered 
2020 EDGE data as part of the analysis). This included consideration 
of available EDGE premium and risk adjustment transfer data.
    \89\ Issuer specific BY 2021 risk adjustment transfers can be 
found in Summary Report on Permanent Risk Adjustment Transfers for 
the 2021 Benefit Year. (2022, July 19). CMS. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2021.pdf. For BY 2021, the issuer specific 
EDGE premium and enrollment data used for this analysis have not 
been made public. However, plan-level QHP rates are available in the 
Health Insurance Public Use Files. (2021). CMS. https://www.cms.gov/CCIIO/Resources/Data-Resources/marketplace-puf.
---------------------------------------------------------------------------

    We also considered detailed comments that provided evidence of 
changing price and market share positions, using 2021 and 2022 data, 
that raised questions about the impact a 50 percent reduction in 
individual market transfers would have on premiums. One commenter (an 
issuer in Alabama's individual market) stated that the 50 percent 
reduction in individual market transfers approved by HHS for the 2022 
benefit year caused them to increase premiums by more than 2 
percent.\90\ The commenter believed the 25 percent reduction in 
individual market transfers for the 2023 benefit year would also 
violate the de minimis standard but did not provide data to this 
effect. However, as discussed in the prior paragraph, our analysis of 
the 2021 EDGE data did not provide any evidence to support these 
commenters' claims.
---------------------------------------------------------------------------

    \90\ Commenter's analysis available at BCBSAL Comment Letter on 
2024 NBPP AL RA Transfer Flexibility Request. (2023, January 27). 
CMS. https://www.regulations.gov/comment/CMS-2022-0192-0100. Issuer 
specific BY 2021 EDGE data and BY 2023 open enrollment data are not 
publicly available. However, plan-level QHP rates are available in 
the Health Insurance Exchange Public Use Files (2021, 2022, 2023). 
CMS. https://www.cms.gov/CCIIO/Resources/Data-Resources/marketplace-puf.
---------------------------------------------------------------------------

    Therefore, to further consider these comments, including the prior 
year premium analysis from an issuer in Alabama, we analyzed open 
enrollment plan selection and premium data for the individual market in 
Alabama for the 2023 benefit year. However, due to issuers entering and 
exiting the Alabama individual market between the 2022 and 2023 benefit 
years, we found the open enrollment data were not comparable between 
benefit years, and we were unable to reasonably determine the effects 
of the transfer reductions for the 2022 benefit year on the 2023 
benefit year individual market dynamics. Therefore, similar to our 
analysis of the 2021 EDGE data, our analysis of the 2023 benefit year 
open enrollment data did not align with the commenter's analysis or 
otherwise confirm premiums would increase by more than one (1) percent 
and led us to have some concerns about the commenters' estimates using 
a previous year's analysis that did not take into consideration new 
data or recent

[[Page 25781]]

changes in market participation in Alabama's individual market.
    For the small group market, the State provided information in 
support of its 50 percent reduction request, including its analysis 
that the reduction requested would have a de minimis impact on 
necessary premium increases. HHS also analyzed enrollment and plan-
level data for Alabama's small group market for 2023 in reviewing 
Alabama's transfer reduction request for its small group market. Due to 
a lack of robust enrollment data for the small group market,\91\ we 
considered the most recent available EDGE premium and enrollment plan-
level data available for the small group market to further analyze the 
request, as in past years. Similar to the individual market analysis, 
our analysis of the 2021 EDGE data supports the State's submitted 
analysis that the 50 percent reduction in small group market transfers 
for the 2024 benefit year would meet the de minimis regulatory 
standard. Using the most recent 2021 plan-level data available to 
us,\92\ we estimated transfer calculations as a percent of premiums, 
which indicated that the risk adjustment payment recipient would not 
have to increase premiums by 1 percent or more to cover a 50 percent 
reduction in small group market transfers.
---------------------------------------------------------------------------

    \91\ HHS does not have the same open enrollment plan selection 
and premium data on the small group market in Alabama as it does for 
the individual market in Alabama; therefore, EDGE premium and 
enrollment plan-level data were used for the small group market 
assessment.
    \92\ Issuer specific BY 2021 risk adjustment transfers can be 
found in Summary Report on Permanent Risk Adjustment Transfers for 
the 2021 Benefit Year. (2022, July 19). CMS. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2021.pdf. For BY 2021, the issuer specific 
EDGE premium and enrollment data used for this analysis have not 
been made public. However, plan-level QHP rates are available in the 
Health Insurance Public Use Files. (2021). CMS. https://www.cms.gov/CCIIO/Resources/Data-Resources/marketplace-puf.
---------------------------------------------------------------------------

    Therefore, as the review of information has determined that 
Alabama's 2024 benefit year reduction requests for its individual and 
small group markets would not exceed the de minimis threshold, we will 
approve the amount of the reductions requested pursuant to Sec.  
153.320(d)(4)(i)(B). The data and analysis available to us do not 
support a reduction smaller than what was requested by the State.
    In addition, the suggestion that the presence of one large issuer 
would not preclude the HHS-operated risk adjustment program from 
functioning as intended in the State's markets is not pertinent to 
HHS's determination on the reduction requests, as the sole criteria we 
have to evaluate the 2024 benefit year requests is the de minimis 
standard in Sec.  153.320(d)(4)(i)(B).
    Following our consideration of the State's submission and public 
comments, we are approving Alabama's requests to reduce risk adjustment 
State transfers by 50 percent in its individual and small group markets 
for the 2024 benefit year. With the repeal of the prior participant 
exception in Sec.  153.320(d), the 2024 benefit year is the last year 
Alabama will be able to request reductions to HHS calculated transfers 
under the State payment transfer formula.
5. Risk Adjustment Issuer Data Requirements (Sec. Sec.  153.610, 
153.700, and 153.710)
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78238), we proposed, beginning with the 
2023 benefit year, to collect and extract from issuers' EDGE servers 
through 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, and to include this indicator in the enrollee-level EDGE 
Limited Data Set (LDS) made available to qualified researchers upon 
request once available. We also proposed to extract plan ID and rating 
area data elements issuers have submitted to their EDGE servers from 
certain benefit years prior to 2021. We sought comment on these 
proposals. After reviewing public comments, we are finalizing both 
proposals as proposed.
    Section 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 \93\ in States where HHS operates the program on 
behalf of a State.\94\ 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 through a distributed data collection model that 
prevented the transfer of individuals' personally identifiable 
information (PII). Then, in several subsequent rulemakings,\95\ 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,\96\ as 
well as informing policy and improving the integrity of other HHS 
Federal health-related programs.\97\ 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 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.98 99
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    \93\ Also see Sec. Sec.  153.700 through 153.740.
    \94\ 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.
    \95\ See the 2018 Payment Notice, 81 FR 94101; the 2020 Payment 
Notice, 84 FR 17488; and the 2023 Payment Notice, 87 FR 27241.
    \96\ See, for example, 42 U.S.C. 300gg-300gg-28.
    \97\ 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 to the extent such use of the data is 
otherwise authorized by, required under, or not inconsistent with 
applicable Federal law. See 87 FR 27243; 87 FR 630 through 631. 
Examples of other HHS Federal health-related programs include 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. Ibid.
    \98\ 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.
    \99\ 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
    We are finalizing, as proposed, that beginning with the 2023 
benefit year, issuers will be required to collect and submit a QSEHRA 
indicator as part of the required risk adjustment data that issuers 
make accessible to HHS from

[[Page 25782]]

their respective EDGE servers in States where HHS operates the risk 
adjustment program. This new data element will 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.\100\ We are also finalizing, as 
proposed, 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).
---------------------------------------------------------------------------

    \100\ The deadline for submission of 2023 benefit year risk 
adjustment data is April 30, 2024. See Sec.  153.730.
---------------------------------------------------------------------------

    Beginning with the 2023 benefit year, we will 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. HHS will also provide additional 
details on what constitutes a good faith effort to ensure collection 
and submission of the QSEHRA indicator in the future. HHS will 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.\101\
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    \101\ 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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    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. 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.
    In the 2023 Payment Notice (87 FR 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 will 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 will 
capture both on and off Exchange enrollees.
    The same is also true for QSEHRA information and we therefore 
proposed to apply the same approach for the QSEHRA indicator. 
Currently, the FFEs and SBE-FPs collect information about QSEHRAs from 
all applicants to determine whether they are eligible for an SEP, as 
individuals and their dependents who become newly eligible for a QSEHRA 
may be eligible for an 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 proposed 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 will be used to capture whether a particular enrollee's 
health care coverage involves (or does not involve) a QSEHRA, and we 
proposed to structure this data element for EDGE data submissions 
similar to current collections, where possible.
    We also proposed, 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 proposed 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.
    In conjunction with the proposal to collect and extract this new 
data element, we also proposed 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 further noted 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 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.\102\ \103\ In addition, consistent with 
how we created the LDS in prior years, we would continue to exclude 
data from the LDS that could lead to identification of certain 
enrollees.\104\
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    \102\ 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.
    \103\ CMS. (2020, June). Data Use Agreement. (Form CMS-R-0235L). 
https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS-R-0235L.pdf.
    \104\ 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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[[Page 25783]]

    We summarize and respond to public comments received on the 
proposals related to the collection and extraction of a QSEHRA 
indicator below.
    Comment: Several commenters supported the collection and extraction 
of a QSEHRA indicator, including the proposed transition for 
implementation. One commenter, while supporting the proposal, did not 
believe a QSEHRA indicator should factor into risk adjustment analyses 
or calculations, stating that issuers currently have limited 
information about HRA enrollment, and therefore should not be penalized 
for not submitting HRA data.
    Many commenters opposed the proposal to collect and extract a 
QSEHRA indicator, citing significant operational concerns with 
collecting and reporting a QSEHRA indicator, including that the data 
are not currently or routinely collected, are difficult to obtain, are 
inconsistent, unreliable, and complex, and therefore, would provide 
little insight in policy analysis using these data, and would impose a 
significant burden on issuers to determine how to collect and report 
this data and then implement the required changes.
    Response: We are finalizing, as proposed, the collection and 
extraction of a QSEHRA indicator, including the proposed transition for 
implementation. While we understand the concerns raised over the use of 
QSEHRA in risk adjustment, particularly that there is currently limited 
information about the population enrolled in QSEHRA and their 
associated risk, we continue to believe that it is important to collect 
this information to allow us to understand the associated risk profile 
of this population and inform our analysis about whether any 
refinements to the HHS risk adjustment methodology should be examined 
or proposed through notice- and- comment rulemaking. Consistent with 
the established policies governing the permitted uses of the enrollee-
level EDGE data, the additional information collected through the 
QSEHRA indicator will also be used to inform policy analysis and 
potential updates to the AV Calculator, other HHS individual or small 
group (including merged) market programs, the PHS Act requirements 
enforced by HHS that are applicable market-wide, or other HHS Federal 
health-related programs.
    To further explain, similar to the collection and reporting of an 
ICHRA indicator finalized in the 2023 Payment Notice, collection of a 
QSEHRA indicator will allow HHS to examine whether there are any unique 
actuarial characteristics of the QSEHRA population (such as the health 
status of participants), and provide a more thorough picture of the 
actuarial characteristics of the HRA population and how or whether HRA 
participation is impacting individual and small group (including 
merged) market risk pools. A QSEHRA indicator will also allow HHS to 
analyze whether the risk profile of participants in QSEHRAs differs 
from participants in ICHRAs as ICHRAs differ with respect to standards 
related to employer eligibility, employee eligibility, restrictions on 
allowance amounts, and eligibility for PTCs (among others). While data 
that may be used to populate a QSEHRA indicator may be limited or 
incomplete at this time, we continue to believe that collecting this 
information is valuable, will better inform potential refinements to 
the HHS-operated risk adjustment program in future years, and will 
improve our understanding of these markets. As occurs with any new data 
collection requirement, HHS expects that over time, collection and 
submission of a QSEHRA indicator will improve as issuers gain 
experience with and develop processes for collecting and reporting the 
indicator. In addition, we will not use the QSEHRA indicator or any 
analysis that relied upon the indicator to pursue changes to our 
policies until we conduct data quality checks and ensure the response 
rate is adequate to support any analytical conclusions. Therefore, we 
continue to believe that the benefits of finalizing the proposal 
related to the collection and extraction of a QSEHRA indicator outweigh 
potential concerns about reliability and consistency of data reporting.
    Further, we proposed and are finalizing the adoption of a 
transitional approach for collecting the QSEHRA indicator under which 
issuers will be required to populate this new QSEHRA indicator using 
data they already have or collect for the 2023 and 2024 benefit years. 
This approach recognizes issuers may need time to develop processes for 
collection and validation of this new data element. Then, beginning 
with the 2025 benefit year, issuers will be required to populate the 
field using available sources and, in the absence of an existing source 
to populate the QSEHRA indicator for particular enrollees, issuers will 
be required to make a good faith effort to ensure collection of this 
data element. HHS will provide additional details on what constitutes a 
good faith effort to ensure collection and submission of the QSEHRA 
indicator in the future. Any issuers meeting this standard and making a 
good faith effort to ensure collection and submission of the QSEHRA 
indicator beginning with the 2025 benefit year data will not be 
penalized for being unable to submit this information for a particular 
individual. Similarly, HHS does not intend to penalize issuers who are 
unable to populate the QSEHRA indicator with existing data sources 
during the transitional approach for 2023 and 2024 benefit year data 
submissions.
    We acknowledge concerns that the new data collection could impose 
additional administrative burden and may require operational changes to 
develop, test, and validate submission of these data elements. As 
further detailed in the section IV.C of this rule, we have estimated 
the burden and costs associated with this new data collection. 
Currently, all issuers that submit data to their EDGE servers have 
automated the creation of data files that are submitted to their EDGE 
servers for the existing required data elements, and each issuer will 
need to update their file creation process to include the new data 
element, which will require a one-time administrative cost. In addition 
to adding this one-time cost, we also estimate that collection and 
submission of the new data element will require an additional one hour 
of work by a management analyst on an annual basis. This estimate 
recognizes that information to populate the QSEHRA indicator data field 
is not routinely collected by all issuers at this time.
    Because we are adopting a transitional approach, under which 
issuers will be required to populate the QSEHRA indicator data fields 
using data they already have or collect for the 2023 and 2024 benefit 
years, issuers are not required to make any changes to the manner in 
which they currently collect the QSEHRA data element for the 2023 and 
2024 benefit year submissions. This transition period allows additional 
time for issuers to develop processes for collection and validation of 
the data required for the new data fields. We are further mitigating 
the burdens associated with the collection and submission of this new 
data element by structuring it similar to current collections, where 
possible. Similar to the ICHRA indicator, the QSEHRA indicator will 
capture whether a particular enrollee's health care coverage involves 
(or does not involve) a QSEHRA. HHS will provide additional operational 
and technical guidance on how issuers should submit this new data 
element to their respective EDGE servers via the applicable benefit 
year's EDGE Server Business Rules and the

[[Page 25784]]

EDGE Server Interface Control Document, as may be necessary. After 
consideration of comments, we continue to believe that the benefits of 
collecting and extracting this data element outweigh the burdens and 
costs associated with the new requirement.
    Comment: Many commenters requested that HHS obtain QSEHRA 
information from other sources, such as plan administrators and/or 
employers.
    Response: While we understand commenters' requests that we obtain 
QSEHRA information from other sources, such as plan administrators or 
employers, we decline to adopt this recommendation. We are finalizing 
the proposal to collect this new data element through issuers' EDGE 
server data to ensure that the QSEHRA data can be extracted and 
aggregated with other claims and enrollment information data made 
accessible to HHS by issuers of risk adjustment covered plans through 
their respective EDGE servers. This collection and extraction with 
claim data would not be possible if the QSEHRA data were collected from 
other sources, such as from plan administrators or employers.\105\ As 
outlined in the proposed rule, similar to the ICHRA indicator, we 
considered that the FFEs and SBE-FPs collect information about QSEHRA 
from all applicants to determine whether they are eligible for an SEP, 
as individuals and their dependents who become newly eligible for a 
QSEHRA may be eligible for an SEP. We further recognize that SBEs also 
collect similar information from their applicants to determine SEP 
eligibility. However, because the enrollee-level EDGE data uses a 
masked enrollee ID, HHS similarly would not be able to match the QSEHRA 
data collected by Exchanges for SEP purposes and the enrollee-level 
EDGE data set. Relying on QSEHRA information provided by Exchanges also 
would not provide a complete picture of this HRA population as it would 
not include QSHERA enrollment associated with health insurance coverage 
purchased outside of Exchanges.
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    \105\ 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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    In addition, we understand 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 health insurance coverage. We 
proposed and are finalizing the policy 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. Some other sources that an issuer could 
use include information provided directly to issuers by consumers who 
seek to enroll in coverage directly with the issuer, as well as 
information provided to the issuer by employers or plan administrators. 
To limit the burden associated with populating this indicator, we will 
structure this data element for EDGE data submissions similar to 
current collections, where possible, and generally intend to use the 
same structure for the ICHRA and QSEHRA indicators. That is, similar to 
the ICHRA indicator, the QSEHRA indicator will capture whether a 
particular enrollee's health insurance coverage involves (or does not 
involve) a QSEHRA. HHS will provide additional operational and 
technical guidance on how issuers should submit this new data element 
to their respective EDGE servers, as may be necessary.
    Comment: Many commenters indicated that low uptake of QSEHRAs make 
the data unnecessary to collect due to the limited impact these HRAs 
could have on risk adjustment, and that collecting and reporting of a 
QSEHRA indicator was generally inappropriate or unnecessary for risk 
adjustment purposes. Many commenters requested additional information 
on HHS' rationale for collecting QSEHRA data, and additional guidance 
on the collection and extraction of a QSEHRA indicator.
    Response: We disagree with the comments that suggested it is 
inappropriate to consider the impact of the HRA population on the HHS-
operated risk adjustment program, and those that similarly suggested 
low enrollment in QSEHRAs makes this proposal unnecessary. The purpose 
of collecting and extracting the QSEHRA indicator is to allow HHS to 
conduct analyses to examine whether there are any unique actuarial 
characteristics of this enrollee population and to investigate what 
impact (if any) QSEHRA participation is having on State individual and 
small group (including merged) market risk pools to inform risk 
adjustment policy development. As discussed above, the QSEHRA indicator 
will be used to capture whether a particular enrollee's health care 
coverage involves (or does not involve) a QSEHRA and will provide a 
more thorough picture of the actuarial characteristics of the HRA 
population and how or whether HRA participation is impacting individual 
and small group (including merged) market risk pools; and allow HHS to 
investigate whether the risk profile of enrollees with QSEHRAs differ 
from enrollees with ICHRAs. Currently, we do not have data on 
enrollment by individuals with QSEHRAs to analyze the risk associated 
with these enrollees and the impact this population may have on the 
individual and small group (including merged) market or the HHS-
operated risk adjustment program. The rules regarding ICHRAs and 
QSEHRAs both became effective in 2020; thus, there is limited amount of 
data regarding the ICHRA and QSEHRA populations in general. Further, a 
recent report by HRA Council 2022 \106\ highlighted that the number of 
both ICHRAs and QSEHRAs has increased substantially from 2020 to 2022. 
Therefore, including this data as part of the required EDGE data 
submissions will provide HHS with a more accurate and complete view and 
distribution of risk in the individual and small group (including 
merged) markets. The additional information collected through the 
QSEHRA 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, such as examination of the 
risk profile of partial year enrollees with ICHRAs or QSEHRA given the 
potential for those populations to enroll through an SEP. Similarly, 
this information will also help inform policy analysis and potential 
updates to the AV Calculator, other HHS individual or small group 
(including merged) market programs, the PHS Act requirements enforced 
by HHS that are applicable market-wide or other HHS Federal health-
related programs.
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    \106\ For details of this report, see https://hracouncil.wildapricot.org/resources/Documents/2022_HRAC_Data_FullReport_Final.pdf.
---------------------------------------------------------------------------

    We also acknowledge commenters' request for additional information 
on submission of the QSEHRA indicator, and similar to the ICHRA 
indicator, we will 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.
b. Extracting Plan ID and Rating Area
    In addition to collecting and extracting a QSEHRA indicator, we 
proposed to extract the plan ID \107\ and

[[Page 25785]]

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, we determined that to aid in annual model recalibration, as 
well as in our 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, the PHS Act requirements enforced 
by HHS that are applicable market-wide, as well as other HHS Federal 
health-related programs.
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    \107\ 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,\108\ 
we did not believe that this proposal would increase burden on issuers. 
We also did not propose any changes to the accompanying policies 
finalized in the 2023 Payment Notice with respect to these data 
elements and the enrollee-level EDGE Limited Data set (LDS). Although 
we recognized 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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    \108\ 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 summarize and respond to public comments received on the 
proposed extraction of plan ID and rating area data elements for 
certain benefit years prior to 2021 below.
    Comment: Many commenters supported the extraction of plan ID and 
rating area data elements for earlier benefit years of EDGE data and 
their use in risk adjustment. However, many commenters opposed the 
proposal to extract the plan ID and rating area data elements from 
issuers' EDGE servers for certain benefit years prior to 2021, citing 
concerns regarding privacy and security of patients' personally 
identifiable information (PII) and protected health information (PHI). 
One commenter requested that CMS reconsider their extraction 
altogether, as well as the extraction of zip code and subscriber ID 
data as finalized in the 2023 Payment Notice.
    Response: We are finalizing, as proposed, the extraction of plan ID 
and rating area data elements for certain benefit years of EDGE data 
prior to 2021 as we believe that the collection of these additional 
data will allow HHS to better assess actuarial risk in the individual 
and small group (including merged) market risk pools, examine 
historical trends, and consider changes to improve the HHS-operated 
risk adjustment program. Consistent with previously finalized policies 
regarding the permitted uses of the enrollee-level EDGE data, HHS may 
also use these additional data to inform analysis and policy 
development for the AV Calculator and other HHS individual and small 
group (including merged) market programs, the PHS Act requirements 
enforced by HHS that are applicable market-wide, as well as other HHS 
Federal health-related programs.\109\
---------------------------------------------------------------------------

    \109\ See, for example, the 2018 Payment Notice, 81 FR 94101; 
the 2020 Payment Notice, 84 FR 17488; and the 2023 Payment Notice, 
87 FR 27241-27252.
---------------------------------------------------------------------------

    We acknowledge the concerns raised regarding the need to protect 
the privacy and security of patients' PII and PHI, however, we 
generally disagree that the extraction of plan ID and rating area data 
elements for these additional benefit years would increase risk of 
disclosure of enrollee PII, nor do they fall under the category of PHI 
according to the HIPAA Privacy Rule.\110\ As noted in the 2023 Payment 
Notice (87 FR 27245), while we do not believe this data collection 
causes risk to the privacy or security of patients' PII, 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, we continue to believe it is appropriate to exclude these 
data elements (plan ID and rating area) from the LDSs. As such, HHS 
will not include these data elements in the LDS files made available to 
qualified researchers upon request.
---------------------------------------------------------------------------

    \110\ 45 CFR 164.512(a).
---------------------------------------------------------------------------

    HHS remains committed to protecting the privacy and security of 
enrollees' sensitive data as initially outlined in the 2014 Payment 
Notice (77 FR 15434, 15471, 15498, 15500; Sec.  153.720) regarding the 
risk adjustment data collection approach, which encompasses PII. As 
noted above, in the 2014 Payment Notice (78 FR 15497 through 15500; 
Sec.  153.720), we established an approach for obtaining the necessary 
data for risk adjustment calculations in States where HHS operates the 
program through a distributed data collection model that prevented the 
transfer of individuals' sensitive data. We did not propose and are not 
finalizing any changes to the distributed data collection approach 
applicable to the HHS-operated risk adjustment program. As explained in 
the proposed 2014 Payment Notice (77 FR 73118), using a distributed 
data collection model \111\ means HHS does not directly receive data 
from issuers,\112\ which limits transmission of sensitive data.\113\ 
This general framework remains unchanged. Issuers of risk adjustment 
covered plans will continue to provide HHS access to the applicable 
required risk adjustment data elements through the distributed data 
environment (that is, the issuer's secure EDGE server) in the HHS-
specified electronic formats by the applicable deadline.\114\ Issuers 
will continue to retain control over their data assets subject to the 
requirements of the HHS-operated risk adjustment program. HHS will also 
continue to require issuers to use a unique masked enrollee

[[Page 25786]]

identification number for each enrollee that cannot include PII and 
PHI,\115\ along with maintaining the other existing data safeguards to 
protect enrollee PII and PHI.116 117 118 119 The policies 
finalized in this rule regarding the extraction of plan ID and rating 
area for certain benefit years prior to 2021 do not alter the 
distributed data collection approach or otherwise change any of the 
existing protections for enrollee PII and PHI under the HHS-operated 
risk adjustment program.
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    \111\ Under this model, each issuer submits to its EDGE server 
the required data in HHS-specified formats and must make these data 
accessible to HHS for use in the HHS-operated risk adjustment 
program. See 78 FR 15497.
    \112\ 77 FR 73162, 73182 through 73183. This policy was 
finalized in the 2014 Payment Notice final rule. See 78 FR 15497 
through 15500.
    \113\ See 78 FR 15500. We explained that data are particularly 
vulnerable during transmission, and that the distributed data 
collection model eliminates this risk.
    \114\ See 45 CFR 153.610(a). See also 45 CFR 153.700 through 
153.740.
    \115\ See 45 CFR 153.720. See also 78 FR 15509 and 81 FR 94101.
    \116\ As we explained in the 2018 Payment Notice, use of masked 
enrollee-level data safeguards enrollee privacy and security because 
masked enrollee-level data does not include PII. See 78 FR 15500.
    \117\ In addition to use of masked enrollee IDs and masked 
claims IDs, another protection for enrollee PII is the exclusion of 
enrollee date of birth from the data issuers must make accessible to 
HHS on their EDGE servers.
    \118\ The LDS policies are additional examples of protections 
for enrollee PII. Under these policies, HHS makes available only an 
LDS of certain masked enrollee-level EDGE data elements and 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 disclosure of the information and 
prohibits the recipient from identifying the information. See, for 
example, 84 FR 17486 through 17490 and 87 FR 27243 through 27252. 
Also see Data Use Agreement. CMS. https://www.cms.gov/research-statistics-data-and-systems/files-for-order/data-disclosures-data-agreements/overview. Further details on limited data set files 
available at Limited Data Set (LDS) Files. CMS. https://www.cms.gov/research-statistics-data-and-systems/files-for-order/data-disclosures-data-agreements/dua_-_newlds.
    \119\ The final policies to exclude plan ID, rating area and ZIP 
code from the LDS is also part of our commitment to protect enrollee 
PII to mitigate the risk that entities that receive the LDS could 
identify individual members, particularly in areas with a small 
number of issuers. See, for example, 87 FR 27243 through 27252.
---------------------------------------------------------------------------

    We also did not propose and are not finalizing any changes to the 
final policies adopted in the 2023 Payment Notice related to the 
collection and extraction of zip code and subscriber indicator.\120\ 
The collection and extraction of these two data elements will begin 
with the 2023 benefit year. In addition, in the 2023 Payment Notice (87 
FR 27249), we finalized the proposal to extract the plan ID and rating 
area data elements beginning with the 2021 benefit year. Since 
finalizing that proposal, we 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. For example, 
we found HHS collection and extraction of plan ID allows HHS to conduct 
deeper analyses when confronted with minor data anomalies to see if 
these trends are in fact reflective of the market or if targeted 
outreach to specific issuers is necessary to address data errors or 
potential misinterpretation of the EDGE server business rules and other 
applicable data requirements to improve the EDGE data quality for 
future benefit years. After considering comments, we are finalizing the 
proposals related to the collection and extraction of plan ID and 
rating area for the additional prior benefit years beginning with the 
2017 benefit year enrollee-level EDGE data.
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    \120\ See 87 FR 27241 through 27252.
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    As previously explained, the collection and extraction of these 
data elements for the additional prior benefit years will help HHS 
further assess risk patterns and the impact of risk adjustment policies 
by providing valuable insight into historical trends. For example, 
rating area data for these additional benefit years will provide HHS 
with more granular data to examine and assess risk patterns and impacts 
based on geographic differences over time. These data will therefore be 
useful to examine whether changes should be proposed to the HHS risk 
adjustment methodology through notice-and-comment rulemaking, as well 
as to assist with analysis and policy development for the AV Calculator 
and other HHS individual and small group (including merged market) 
programs, the PHS Act requirements enforced by HHS that are applicable 
market-wide, and other HHS Federal health-related programs.
    Comment: Some commenters opposed to the extraction of plan ID and 
rating area data elements questioned the appropriateness of using these 
data elements for purposes beyond the HHS-operated risk adjustment 
program and the AV Calculator.
    Response: We acknowledge commenters concerns regarding use of the 
plan ID and rating area data elements use for purposes beyond the HHS-
operated risk adjustment program and the AV Calculator. However, we 
disagree that the use of these data elements should be limited to only 
the HHS-operated risk adjustment program and the AV Calculator.
    In several prior rulemakings,\121\ we finalized policies for the 
extraction and use of enrollee-level EDGE data beginning with the 2016 
benefit year. HHS began the collection and extraction of enrollee-level 
EDGE data to provide HHS with more granular data to use for 
recalibrating the HHS risk adjustment models and to use actual data 
from issuers' individual and small group (and merged) market 
populations, as opposed to the MarketScan[supreg] commercial database 
that approximates these populations, for model recalibration 
purposes.\122\ We also previously finalized the use of the extracted 
masked enrollee-level EDGE data to inform updates to the AV Calculator 
and methodology,\123\ conduct policy analysis and calibrate HHS 
programs in the individual and small group (including merged) markets 
and the PHS Act requirements enforced by HHS that are applicable 
market-wide,124 125 as well as informing policy and 
improving the integrity of other HHS Federal health-related 
programs.\126\ The finalized policies related to the use of enrollee-
level data extracted from issuers' EDGE servers and summary level 
reports produced from remote command and ad hoc queries enhance our 
ability to develop and set policy and limit the need to pursue 
alternative burdensome data collections from issuers. The use of plan 
ID and rating area from the 2017, 2018, 2019, and 2020 benefit year 
data sets beyond the risk adjustment program and AV Calculator is 
consistent with these previously finalized policies, including the use 
of these two data elements beginning with the 2021 benefit year data 
set for other HHS individual and small group (including merged) market 
programs, the PHS Act requirements enforced by HHS that are applicable 
market-wide, as well as other HHS Federal health-related programs.
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    \121\ See the 2018 Payment Notice, 81 FR 94101; the 2020 Payment 
Notice, 84 FR 17488; and the 2023 Payment Notice, 87 FR 27241.
    \122\ 81 FR 94101.
    \123\ Ibid.
    \124\ See, for example, 42 U.S.C. 300gg-300gg-28.
    \125\ See 81 FR 94101 and 84 FR 17488.
    \126\ As detailed in the 2023 Payment Notice, HHS can use the 
extracted EDGE data and reports 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 to the extent such use of the data is otherwise authorized 
by, required under, or not inconsistent with applicable Federal law. 
See 87 FR 27243; 87 FR 630 through 631. Examples of other HHS 
Federal health-related programs include 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. Ibid.
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    Consistent with the use of these data elements to help further 
assess risk patterns for use in analysis and development of risk 
adjustment and AV Calculator policies, plan ID and rating area will 
also support HHS analysis and policy development for other HHS 
individual and small group (including merged) market programs, the PHS 
Act requirements enforced by HHS that are applicable market-wide, as 
well as other

[[Page 25787]]

HHS Federal health-related programs. In particular, extra benefit years 
of these data will be beneficial for testing policy options over 
multiple years of data. For example, we want to assess whether the 
scope of EHBs are equal to benefits provided under a typical employer 
plan under section 1302(b)(2)(A) of the ACA at the State level, and 
that analysis would benefit greatly from being tested on additional 
benefit years of data. As such, while we acknowledge the comments 
expressing concern over the use of this data for purposes beyond HHS 
risk adjustment and the AV Calculator, we decline to limit the use of 
these data to only those two areas. The utility of the plan ID and 
rating area data elements, along with zip code and subscriber 
indicator, in annual model recalibration and policy analysis to support 
HHS individual and small group (including merged) market programs, the 
PHS Act requirements enforced by HHS that are applicable market-wide, 
and other Federal-health related programs outweighs any gains from not 
finalizing the extraction of plan ID and rating area from certain prior 
benefit years as proposed or repealing the EDGE data extraction and 
permitted use policies finalized in the 2023 Payment Notice.
    Comment: One commenter specifically requested that HHS consider 
releasing the plan ID and rating area data elements as part of the EDGE 
LDS by aggregating the information at the county level to assuage 
privacy and security concerns.
    Response: While we recognize including the plan ID and rating area 
data elements may enhance the usefulness of the LDS for researchers, 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. While aggregating data at the 
county level, as suggested, could mitigate this concern in many cases, 
it would not completely eliminate the possibility that counties with 
small numbers of issuers could be identified by these data elements. We 
also did not propose to release these data as part of the LDS at the 
county level and decline to adopt the suggestion as part of this final 
rule.
6. Risk Adjustment User Fee for 2024 Benefit Year (Sec.  153.610(f))
    HHS proposed a risk adjustment user fee for the 2024 benefit year 
of $0.21 PMPM. We sought comment on this proposal. After review of the 
comments received, we are finalizing the proposed risk adjustment user 
fee for the 2024 benefit year as proposed.
    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 
final 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.\127\ 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.\128\ 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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    \127\ OMB. (1993). OMB Circular No. A-25 Revised, Transmittal 
Memorandum No. https://www.whitehouse.gov/wp-content/uploads/2017/11/Circular-025.pdf.
    \128\ 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 proposed 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 estimated 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 
projected 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, due to the increased PTC subsidies provided for in the 
American Rescue Plan Act of 2021 (ARP).129 130 In light of 
the passage 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 projected increased 2021 
enrollment levels to remain steady through the 2025 benefit year.\131\ 
Because this provision of the IRA is expected to promote continued 
higher enrollment, we proposed a slightly lower risk adjustment user 
fee of $0.21 PMPM.
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    \129\ ARP. Public Law 117-2 (2021).
    \130\ 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.
    \131\ Inflation Reduction Act. Public Law 117-169 (2022).
---------------------------------------------------------------------------

    We summarize and respond to public comments received on the 
proposed 2024 benefit year risk adjustment user fee rate below.
    Comment: We received a few comments in support of the 2024 benefit 
year risk adjustment user fee rate.
    Response: We appreciate the support and are finalizing, as 
proposed, a risk adjustment user fee rate for the 2024 benefit year of 
$0.21 PMPM.
7. Risk Adjustment Data Validation Requirements When HHS Operates Risk 
Adjustment (HHS-RADV) (Sec. Sec.  153.350 and 153.630)
    HHS will conduct HHS-RADV under Sec. Sec.  153.350 and 153.630 in 
any State

[[Page 25788]]

where HHS is operating risk adjustment on a State's behalf.\132\ The 
purpose of HHS-RADV 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 (IVA) entity. The issuer 
provides demographic, enrollment, and medical record documentation for 
a sample of enrollees selected by HHS to its IVA entity 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.\133\
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    \132\ HHS has operated the risk adjustment program in all 50 
States the District of Columbia since the 2017 benefit year.
    \133\ HHS transitioned from a prospective application of HHS-
RADV error rates for non-exiting issuers to apply HHS-RADV error 
rates to the risk scores and risk adjustment State transfers of the 
benefit year being audited for all issuers beginning with the 2020 
benefit year of HHS-RADV. See 85 FR 77002-77005.
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a. Materiality Threshold for Risk Adjustment Data Validation
    Beginning with 2022 benefit year HHS-RADV, we proposed 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.\134\ We are finalizing 
the change to the HHS-RADV materiality threshold definition as 
proposed.
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    \134\ Activities related to the 2022 benefit year of HHS-RADV 
generally began in March 2023, when issuers could start selecting 
their IVA entity, and IVA entities could 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 and the 2022 Benefit Year HHS-RADV 
Timeline (March 1, 2023), available at https://regtap.cms.gov/uploads/library/HRADV_2022_timeline_5CR_022323.pdf.
---------------------------------------------------------------------------

    Consistent with the application of the current materiality 
threshold definition and accompanying exemption under Sec.  
153.630(g)(2), we proposed that 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. We did not propose any changes to the 
regulatory text at Sec.  153.630(g)(2) or to the other accompanying 
policies. We solicited comments on this proposal as well as sought 
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 definition should begin to apply.
    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.\135\ 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.\136\ Issuers below 
the materiality threshold are subject to an IVA approximately every 3 
years, barring any risk-based triggers that warrant more frequent 
audits.
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    \135\ 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 Sec.  153.630(g)(1). Issuers with 
500 or fewer BMM Statewide are not subject to random or targeted 
sampling.
    \136\ 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).
---------------------------------------------------------------------------

    Under the new materiality threshold definition, beginning with the 
2022 benefit year of HHS-RADV, issuers that fall below 30,000 BMM 
Statewide will be exempt from participating in the annual HHS-RADV IVA 
and SVA audit 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 
will warrant more frequent audits). To determine whether an issuer 
falls under the materiality threshold, its BMM will 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.\137\ 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 (for example, if 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 will 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, an issuer that qualifies 
for an exemption under Sec.  153.630(g)(2) from HHS-RADV requirements 
for a particular benefit year will 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 identified as outliers in 
that benefit year of HHS-RADV.
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    \137\ See Sec.  153.620(b) and (c).
---------------------------------------------------------------------------

    We summarize and respond to public comments received on the 
proposed change to the HHS-RADV materiality threshold definition from 
$15 million in total annual premiums Statewide to 30,000 total BMM 
Statewide beginning

[[Page 25789]]

with the 2022 benefit year of HHS-RADV below.
    Comment: Most commenters supported the proposal to change the HHS-
RADV materiality threshold definition from $15 million in total annual 
premiums Statewide to 30,000 total BMM, 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. One commenter agreed that the proposed 
change to the materiality threshold definition will continue to ease 
the administrative burden associated with HHS-RADV audits.
    Many of these commenters asserted that a BMM-based threshold would 
be more consistent over time and across geographies as the threshold 
would not be impacted by premium increases or variation in health care 
costs. Another commenter stated that the proposed BMM-based threshold 
would eliminate the need for the materiality threshold to be updated 
over time. One commenter agreed that shifting the materiality threshold 
to a BMM basis would align with the 500 BMM threshold used to exempt 
very small issuers from HHS-RADV. This commenter also noted that the 
alternative proposal to increase the threshold from $15 million in 
total annual premiums Statewide to $17 million in total annual premiums 
indicates that a non-indexed dollar threshold could increase the number 
of issuers subject to annual HHS-RADV audits over time.
    However, one commenter opposed changing the materiality threshold 
to 30,000 BMM and stated that allowing some issuers to be exempt for 
annual HHS-RADV audit requirements reduces accountability and 
transparency. One commenter encouraged HHS to consider changing the 
materiality threshold for HHS-RADV to a percentage of Statewide member 
months to reduce the burden of HHS-RADV on issuers that do not 
materially impact a State's risk adjustment transfers. Another 
commenter asked that HHS investigate how to balance the frequency of 
issuers randomly sampled each year within a parent company and stated 
that historical random samples have not produced a balanced volume of 
issuers year to year.
    Response: After considering comments, we are finalizing this policy 
as proposed to change the HHS-RADV materiality threshold definition 
from $15 million in total annual premiums Statewide to 30,000 total BMM 
Statewide beginning with the 2022 benefit year of HHS-RADV. Consistent 
with the original adoption of the materiality threshold for HHS-RADV, 
we believe that this policy and updated definition will continue to 
ease the administrative burden of annual HHS-RADV requirements for 
smaller issuers of risk adjustment covered plans that do not materially 
impact risk adjustment transfers. We also continue to believe that this 
exemption will have a minimal impact on HHS-RADV as issuers of risk 
adjustment covered plans below the 30,000 BMM threshold are estimated 
to represent less than 1.5 percent of enrollment in risk adjustment 
covered plans nationally. We believe that continuing to use a threshold 
representing risk adjustment covered plans that cover less than 1.5 
percent of membership nationally promotes the goals of HHS-RADV while 
also considering the burden of such a process on smaller issuers.
    As explained in the proposed rule (87 FR 78242 through 78243), 
since we established the materiality threshold definition of $15 
million in total premiums, 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. Therefore, we 
believe that it is necessary and appropriate to update the materiality 
threshold definition to better align with current costs to complete an 
IVA. We estimated the current cost of the IVA to be approximately 
$170,000 per an issuer. To continue the overall design of the 
materiality threshold policy and effectively limit the proportion of an 
issuer's premiums that will be used to cover IVA costs to one (1) 
percent, we would need to increase the materiality threshold to $17 
million in total annual premiums Statewide. While we considered using 
another dollar value to update the materiality threshold definition, we 
believe that using BMMs instead of a dollar threshold ensures that the 
materiality threshold definition under Sec.  153.630(g)(2) will 
continue to exempt small issuers that face a disproportionally higher 
burden for conducting HHS-RADV audit, even in situations where PMPM 
premiums grow overtime. We therefore proposed and are finalizing a 
materiality threshold of 30,000 BMM Statewide, which translates to 
approximately $17 million in total annual premiums Statewide on average 
across markets.
    Shifting the materiality threshold under Sec.  153.630(g)(2) to a 
BMM basis will 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. As part of this change, we considered 
whether the new BMM-based threshold would significantly impact other 
issuers of risk adjustment covered plans. We analyzed historical data 
on issuers of risk adjustment covered plans and found that the pool of 
issuers falling below a 30,000 BMM Statewide threshold does not 
significantly differ from the current pool of issuers falling below a 
$15 million total annual premiums Statewide threshold.\138\ Therefore, 
we do not anticipate that the new materiality threshold definition will 
change the current estimated burdens of the annual HHS-RADV 
requirements or significantly impact other issuers of risk adjustment 
covered plans. While we would expect the number of issuers falling 
under a premium-dollar-based materiality threshold to decrease overtime 
as PMPM premiums grow, we expect the BMM-based threshold to produce a 
consistent pool of issuers subject to random and targeted sampling over 
time and across State market risk pools.
---------------------------------------------------------------------------

    \138\ See 87 FR 78242 through 78243.
---------------------------------------------------------------------------

    We did not consider using a percentage of Statewide member months 
as the metric for the materiality threshold as that metric does not 
have a relationship with the costs to conduct HHS-RADV. As such, after 
considering comments, we are finalizing the new materiality threshold 
definition of 30,000 BMM as proposed, beginning with the 2022 benefit 
year of HHS-RADV. As noted above, the materiality threshold was 
initially set after considering the fixed costs associated with hiring 
an IVA entity and submitting results to HHS, which may represent a 
large portion of some issuers' administrative costs. We estimated that 
30,000 BMM Statewide translates to approximately $17 million in total 
annual premiums Statewide on average across markets, and therefore 
anticipate that issuers above this threshold will not spend more than 
one (1) percent of their premiums on covering the estimated $170,000 
cost of the initial validation audit.
    Finally, we do not believe that it is necessary to investigate the 
balance of the frequency of issuers randomly sampled each year within a 
parent company. The purpose of conducting random audits is for these 
audits to be random and not controlled to limit the frequency that 
specific issuers, including issuers within a particular parent company, 
are selected. We also note that in addition to conducting

[[Page 25790]]

random audits of issuers of risk adjustment covered plans that fall 
below the materiality threshold definition, issuers that fall below the 
materiality threshold definition can be selected to participate in HHS-
RADV due to the targeted sampling based on the identification of risk-
based triggers that warrant more frequent audits.\139\
---------------------------------------------------------------------------

    \139\ See Sec.  153.630(g)(2).
---------------------------------------------------------------------------

b. HHS-RADV Adjustments for Issuers That Have Exited the Market
    Beginning with 2021 benefit year HHS-RADV, we proposed to remove 
the policy to only apply an exiting issuer's HHS-RADV results if that 
issuer is a positive error rate outlier.\140\ We proposed 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. We 
solicited comments on this proposal. After reviewing the public 
comments, we are finalizing the removal of this policy as proposed.
---------------------------------------------------------------------------

    \140\ 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.
---------------------------------------------------------------------------

    We did not propose any other changes to the policies regarding HHS-
RADV adjustments for issuers that exit the market, and therefore, will 
otherwise maintain the existing framework for determining whether an 
issuer is an exiting issuer. As such, the issuer will 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 will not be 
considered an exiting issuer. 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) will be considered an exiting 
issuer and will be exempt from HHS-RADV under Sec.  153.630(g)(4). 
Individual market issuers offering or selling any new individual market 
coverage in the State in the subsequent benefit year will be required 
to participate in HHS-RADV, unless another exemption applies.
    We summarize and respond to public comments received on the 
proposal to remove the policy to only apply an exiting issuer's HHS-
RADV results if that issuer is a positive error rate outlier beginning 
with the 2021 benefit year below.
    Comment: All commenters who commented on this policy change 
supported the proposal to remove the policy that prevented the 
application of an exiting issuer's HHS-RADV results when the issuer is 
a negative error rate outlier. A few commenters agreed that it is no 
longer necessary to treat exiting issuers differently from non-exiting 
issuers when an issuer is a negative error rate outlier given the 
transition to the concurrent application of HHS-RADV results to the 
risk scores and risk adjustment transfers of the benefit year being 
audited for all issuers.
    Response: We agree with commenters that the policy that limited the 
application of exiting issuers' HHS-RADV results to situations where 
the issuer was identified as a positive error rate outlier in the 
applicable benefit year of HHS-RADV is no longer needed. We are 
finalizing the removal of this policy and will begin adjusting the plan 
liability risk scores for all positive and negative error rate outlier 
issuers (inclusive of exiting and non-exiting issuers) beginning with 
the 2021 benefit year of HHS-RADV.
c. Discontinue Lifelong Permanent Conditions List and Use of Non-EDGE 
Claims in HHS-RADV
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78224), we sought comment on discontinuing 
the use of the Lifelong Permanent Conditions (LLPC) list \141\ and the 
use of non-EDGE claims starting with the 2022 benefit year of HHS-RADV. 
We solicited comment on all aspects of these potential changes, 
including the applicability date. We also requested comment on the 
extent that issuers and their IVA entities have relied on these 
policies and on how these potential changes may impact issuers. After 
reviewing the public comments, we will discontinue the use of the LLPC 
list and the policy that permitted the use of non-EDGE claims beginning 
with the 2022 benefit year of HHS-RADV. We will update the HHS-RADV 
Protocols to capture these changes for the 2022 benefit year and 
beyond.
---------------------------------------------------------------------------

    \141\ 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.\142\ 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 diagnosis 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.\143\ 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 a 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 solicited comments on the 
discontinuance of the use of the LLPC list beginning with the 2022 
benefit year of HHS-RADV.
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    \142\ 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 117.
    \143\ 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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    Similarly, we sought 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

[[Page 25791]]

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.\144\ Under the non-EDGE claims policy, 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.\145\ 
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 solicited comments on discontinuing the use of non-EDGE claims in 
HHS-RADV beginning with the 2022 benefit year.
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    \144\ 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.
    \145\ Under the current policy, 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 claims 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.
---------------------------------------------------------------------------

    We summarize and respond to public comments received on 
discontinuing the use of the LLPC list and the use of non-EDGE claims 
in HHS-RADV below.
    Comment: Several commenters supported discontinuing the use of the 
LLPC list and a few commenters supported discontinuing the use of non-
EDGE claims. Many of these commenters raised data integrity concerns 
created by the allowance of the use of the LLPC and non-EDGE claims in 
HHS-RADV. Some commenters asserted there is a current misalignment 
between EDGE Server Business Rules and HHS-RADV that creates 
opportunities for issuers to submit data to the EDGE server without 
following the EDGE Server Business Rules and then receive credit for 
this data in HHS-RADV. Several commenters supported consistency between 
the EDGE Server Business Rules and what is allowable in HHS-RADV by 
discontinuing the use of the LLPC list and non-EDGE claims in HHS-RADV. 
One of these commenters asserted that the LLPC list creates an 
asymmetry between the rules auditors use for HCC validation and the 
rules issuers use for submitting HCCs to EDGE by granting auditors a 
more permissive set of rules for HCC validation, which thereby allows 
an issuer's risk score to reflect the strength of their compliance 
department. Another of these commenters asserted that ending the policy 
that permitted the use of non-EDGE claims in HHS-RADV will provide 
consistency between the data submission and its validation.
    One commenter stated that discontinuing the LLPC list will level 
the playing field for all issuers. Two commenters expressed concerns 
about the use of dated information to justify diagnoses and upcoding in 
the current benefit year. One of these commenters expressed concern 
that the LLPC list was created as an administrative convenience despite 
there being a wide range of treatments and outcomes within the same 
diagnosis on the LLPC list. Another commenter raised concerns about 
individuals with diagnoses on the LLPC list enrolling in a new plan 
during periods when these diagnoses do not require treatment and the 
issuers of the new plans covering these individuals receiving credit 
for those LLPC HCCs in HHS-RADV. This commenter also suggested that, 
under a concurrent risk adjustment model, issuers should get credit for 
diagnoses that are treated during the benefit year being risk adjusted 
and should not be allowed to rely on historic data or documentation 
from before the applicable coverage period.
    Response: HHS agrees with commenters that supported the 
discontinuation of the LLPC list and non-EDGE claims in HHS-RADV as we 
seek to better align HHS-RADV policies with the EDGE Server Business 
Rules. We also believe that issuers have gained years of experience 
with EDGE data submissions and HHS-RADV activities, such that it is now 
appropriate to discontinue use of the LLPC list and non-EDGE claims in 
HHS-RADV. The LLPC list was not created to supplement or replace the 
EDGE Server Business Rules that issuers must follow to submit diagnoses 
conditions to EDGE with the necessary medical record documentation. 
Instead, HHS created the LLPC list in the early years of HHS-RADV to 
ease the burden of medical record retrieval for lifelong conditions in 
HHS-RADV by simplifying and standardizing coding abstraction for IVA 
and SVA entities. The conditions included in the LLPC list are those 
that require ongoing medical attention and are typically unresolved 
once diagnosed. While a range of treatments and outcomes may exist 
within the same diagnosis on the LLPC list, the HHS-HCC diagnostic 
classification is a key component of the HHS risk adjustment models. 
The basis of the HHS risk adjustment model uses health plan enrollee 
diagnoses to predict medical expenditure risk. To do this, tens of 
thousands of diagnostic codes are grouped into a smaller number of 
organized condition categories that aggregate into HCCs to produce a 
diagnostic profile of each enrollee.\146\ The HCCs in the HHS risk 
adjustment models were selected to reflect salient medical conditions 
and cost patterns for adult, child, and infant subpopulations. The 
models produce coefficients for each HCC that incorporate the range of 
treatments and outcomes for those diagnoses as they represent the 
marginal predicted plan liability expenditures of an enrollee with that 
HCC given that enrollee's other risk markers. The HHS risk adjustment 
models also include interacted HCC counts factors beginning with the 
2023 benefit year that will further capture the range of plan liability 
that may exist within the same diagnoses. For these reasons, we believe 
that continuing the policy to permit use of the LLPC list is no longer 
necessary and its removal will better align HHS-RADV guidance with the 
EDGE Server Business Rules, as well as ensure that audit entities 
follow the same standard coding principles and guidelines for HHS-RADV 
that issuers must follow when submitting data to EDGE. As detailed in 
the HHS-RADV Protocols, issuers and entities should refer to the 
conventions in the ICD-10-CM and ICD10-PCS classification, ICD-10-CM 
Official Coding Guidelines for Coding and Reporting, and the American 
Hospital Association (AHA) Coding Clinic Standard for coding guidance, 
including the coding of chronic conditions.\147\
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    \146\ See The HHS-HCC Risk Adjustment Model for Individual and 
Small Group Markets under the Affordable Care Act, Medicare & 
Medicaid Research Review, Volume 4, Number 3 (2014) available at 
https://www.cms.gov/mmrr/Downloads/MMRR2014_004_03_a03.pdf. Also 
see, for example, Chapter 2: HHS-HCC Diagnostic Classification of 
the March 31, 2016, HHS-Operated Risk Adjustment Methodology Meeting 
Discussion Paper (March 24, 2016) available at https://www.cms.gov/
cciio/resources/forms-reports-and-other-resources/downloads/ra-
march-31-white-paper-032416.pdf.
    \147\ See, for example, Section 9.2.6 Phase 5--Health Status 
Validation of 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.

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[[Page 25792]]

    Although we have no evidence that enrollees with HCCs on the LLPC 
list are switching plans when their conditions are inactive, HHS agrees 
that the LLPC list may create the opportunity, in certain 
circumstances, for issuers to receive credit for HCCs when the enrollee 
did not receive care or require active treatment during the applicable 
enrollment-period. Thus, as outlined above and in the proposed rule, we 
believe that the LLPC list is no longer necessary 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.\148\ Now that issuers have gained sufficient experience with the 
HHS-RADV Protocols and have consistently met data integrity criteria 
for their EDGE data submissions,\149\ HHS will discontinue use of the 
LLPC list and the use of non-EDGE claims beginning with the 2022 
benefit year of HHS-RADV. We will update the HHS-RADV Protocols 
applicable to the 2022 benefit year and beyond to capture these 
changes.
---------------------------------------------------------------------------

    \148\ See Sec.  153.20. Risk adjustment covered plan means, for 
the purpose of the risk adjustment program, any health insurance 
coverage offered in the individual or small group market with the 
exception of grandfathered health plans, group health insurance 
coverage described in Sec.  146.145(b) of this subchapter, 
individual health insurance coverage described in Sec.  148.220 of 
this subchapter, and any plan determined not to be a risk adjustment 
covered plan in the applicable federally certified risk adjustment 
methodology.
    \149\ As noted in the proposed rule (87 FR 78245), all States 
received an interim risk adjustment summary report from the 2017 
benefit year through 2021 benefit year of the HHS-operated risk 
adjustment program. Since issuance of the proposed rule, we released 
the 2022 benefit year interim risk adjustment results. As noted in 
the 2022 benefit year interim risk adjustment report, five States 
were ineligible for inclusion on the basis of one or more credible 
issuers in those markets failing to meet the applicable thresholds 
for data quantity and/or quality evaluations by the applicable 
deadline. See the Interim Summary Report on Permanent Risk 
Adjustment for the 2022 Benefit Year (March 17, 2023), available at 
https://www.cms.gov/cciio/programs-and-initiatives/premium-stabilization-programs/downloads/interim-ra-report-by2022.pdf. 
However, across eligible States, we calculated a data completion 
rate of 91.7 percent in the 2022 benefit year interim risk 
adjustment report, which is an increase from the data completion 
rate of 90.8 percent in the 2021 benefit year interim risk 
adjustment report. Ibid. We therefore continue to believe issuers 
have had sufficient time to gain experience with EDGE data 
submissions, and HHS-RADV activities, such that it is appropriate to 
reconsider and move forward with discontinuing the LLPC list and 
non-EDGE claims policies beginning with the 2022 benefit year of 
HHS-RADV, as proposed.
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    We also generally disagree with concerns of upcoding in the HHS-
operated risk adjustment program. First, the vast majority of enrollees 
in risk adjustment covered plans do not have HCCs, and therefore, there 
are limited opportunities for upcoding to exist in the HHS-operated 
risk adjustment program. As of the 2021 benefit year, over 75 percent 
of enrollees of risk adjustment covered plans in the individual non-
catastrophic risk pool did not have a single HCC.\150\ In addition, 
over time, we have implemented risk adjustment model specifications to 
mitigate the potential for upcoding, such as the HCC coefficient 
estimation groups, which reduce risk score additivity within disease 
groups and limit the sensitivity of the risk adjustment models to 
upcoding, and the interacted HCC counts model specification, which is 
restricted to enrollees with at least one severe illness or transplant 
HCC, and thus, reduces concerns of issuers inflating overall HCC 
counts.151 152 Moreover, the HHS-RADV program serves as an 
additional safeguard for upcoding by auditing the issuer submitted 
data, and we have not seen conclusive evidence of upcoding on EDGE. 
Regardless, we will continue to monitor trends in the HHS-operated risk 
adjustment program and utilize HHS-RADV to validate the accuracy of 
data submitted by issuers for use in calculations under the State 
payment transfer formula in the HHS risk adjustment methodology.
---------------------------------------------------------------------------

    \150\ See Table 4: Percent of Enrollees with HCCs, 2017-21 of 
the Summary Report on Permanent Risk Adjustment Transfers for the 
2021 Benefit Year (July 19, 2022) available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2021.pdf.
    \151\ For example, diabetes diagnosis codes are organized in a 
Diabetes hierarchy, consisting of three CCs arranged in descending 
order of clinical severity and cost, from CC 19 Diabetes with Acute 
Complications to CC 20 Diabetes with Chronic Complications to CC 21 
Diabetes without Complication. A person may have diagnosis codes in 
multiple CCs within the Diabetes hierarchy, but once hierarchies are 
imposed, that enrollee would only be assigned the single highest HCC 
in the hierarchy. To limit diagnostic upcoding by severity in the 
Diabetes hierarchy, we have constrained the three HCCs to have the 
same coefficient in risk adjustment. As such, issuers cannot get 
more credit towards their risk score by upcoding within the Diabetes 
hierarchy.
    \152\ As discussed in the 2021 RA White Paper, one of our 
considerations for proposing the interacted HCC count model 
specifications was our belief that by limiting the interacted HCC 
counts factors to certain severe illness and transplant HCCs, we 
would restrict the scope for coding proliferation and effectively 
mitigate the potential for gaming. Page 59-60 https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------

    Comment: A few commenters supported discontinuing the use of the 
LLPC list and the use of non-EDGE claims due to concerns related to the 
use of the supplemental file. One of these commenters asserted that a 
small number of issuers use the supplemental file for a 
disproportionate share of their plan liability risk scores and 
recommended prohibiting use of the LLPC list and non-EDGE claim 
documentation to validate supplemental diagnoses. This commenter urged 
HHS to limit the use of the supplemental file to a percent of plan 
liability risk score and asked HHS to reevaluate HCCs that are more 
prevalent in the supplemental file or are associated with lower-cost 
individuals when added through the supplemental file. This commenter 
also asked HHS to clarify that discontinuing the use of the LLPC list 
and non-EDGE claims would end the use of documentation for prior-year 
or non-EDGE encounters to support supplemental HCCs on EDGE. Another 
commenter supported the use of the supplemental file and asserted that 
the purpose of the supplemental diagnosis files is to facilitate 
accurate and complete coding.
    Response: We agree with comments that support the use of 
supplemental file and generally clarify that issuers have never been 
allowed to use the LLPC list to support supplemental diagnosis codes in 
supplemental file submissions. The supplemental file allows issuers to 
submit supplemental diagnosis codes for the limited circumstances in 
which relevant diagnoses may be missed or omitted on a claim or during 
an encounter submission, or in which diagnoses requires deletion for a 
claim accepted to the issuer's EDGE server. Issuers are required to 
follow the EDGE Server Business Rules when submitting diagnoses through 
the supplemental file. Supplemental diagnosis codes must be supported 
by medical record documentation and comply with standard coding 
principles and guidelines, be linked to a previously submitted and 
accepted EDGE server medical claim, and be the result of medical 
service(s) that occurred during the data collection period for a given 
benefit year.153 154
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    \153\ To see the complete list of processing rules for the 
supplemental file, see Section 8.4 General Supplemental Diagnosis 
Code File Processing Rules of the EDGE Server Business Rules (ESBR) 
Version 22.0 (November 2022) available at https://regtap.cms.gov/reg_librarye.php?i=3765.
    \154\ While supplemental file diagnosis codes may be linked to 
accepted EDGE server medical claims that are not risk adjustment 
eligible, only supplemental file diagnosis codes that are linked to 
risk adjustment-eligible claims accepted by the EDGE server will be 
used in risk adjustment and HHS-RADV.
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    With these limitations in place, we do not believe that it is 
necessary or appropriate to limit supplemental file submissions to a 
percentage of plan liability risk score. Moreover, in

[[Page 25793]]

response to comments, we analyzed enrollee condition categories by 
diagnosis source in the 2018, 2019 and 2020 HHS-RADV data, and we do 
not have concerns of HCCs that are more prevalent in the supplemental 
file or are associated with lower-cost individuals when added through 
the supplemental file. Our analysis found that issuers mostly use the 
supplemental file as a way to provide more evidence of a condition. We 
also did not propose and are not finalizing any changes to the 
framework applicable to the use or submission of supplemental files to 
issuers' EDGE servers.
    Furthermore, supplemental file diagnoses cannot be linked to non-
EDGE claims as these claims are not on EDGE. The discontinuation of the 
non-EDGE claims policy means issuers will no longer be able to submit 
claims that are not accepted onto EDGE to validate diagnoses for their 
IVA (or SVA, as applicable), and the discontinuation of the LLPC list 
means issuers will no longer be able to submit prior-year documentation 
for their IVA (or SVA, as applicable). Both of these changes will apply 
beginning with the 2022 benefit year of HHS-RADV. In addition, 
consistent with existing requirements, the medical record documentation 
submitted by the issuer for their IVA (or SVA, as applicable) must meet 
standard coding principles and guidelines for abstraction of the 
diagnosis, to support EDGE claims or supplemental diagnosis codes.\155\
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    \155\ 45 CFR 153.630(b)(7). See, for example, Section 9.2.6 
Phase 5--Health Status Validation of 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.
---------------------------------------------------------------------------

    Comment: Several commenters opposed discontinuing the use of the 
LLPC list and non-EDGE claims due to concerns that this would hinder 
issuers' ability to accurately capture health care costs and be 
appropriately compensated for enrollee risk. One commenter stated that 
the discontinuance of the LLPC list and non-EDGE claims will limit 
their ability to identify and coordinate the most appropriate care for 
enrollees with LLPC diagnoses. This commenter also noted that the use 
of non-EDGE claims improves the capture of diagnoses on the LLPC list 
and suggested that the removal of these policies contradicts the 
purpose of the ACA to ensure coverage of pre-exiting conditions. A few 
commenters stated that the LLPC list helps capture diagnoses that might 
otherwise only be reflected in pharmacy costs. One commenter stated 
that plans are already losing out on capturing many chronic conditions 
because the HHS-operated risk adjustment program does not allow a plan 
to code conditions based on medication. Another commenter suggested 
that conditions with high pharmacy costs that are not recognized by the 
RXC model, such as hemophilia, will only be captured by the specialist 
responsible for the condition and not by other provider types like 
primary care physicians. This commenter recommended studying which 
high-cost conditions on the LLPC list are not represented by the RXC 
model, but have high costs associated with them regardless of whether a 
diagnosis is billed directly during the course of a benefit year.
    Response: We agree there are some benefits associated with the LLPC 
list and non-EDGE claims policy, that were developed in the early years 
of HHS-RADV. The 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 as issuers were gaining 
experience with the HHS-RADV Protocols and addressing any lingering 
challenges submitting claims to their EDGE servers. It did not, 
however, supersede or replace the rules for submitting the diagnosis 
codes to EDGE servers that are used to determine enrollee risk. To 
capture enrollee risk, issuers must submit enrollee claims data and 
diagnosis codes to EDGE servers following the EDGE Server Business 
Rules and standard coding principles and guidelines.\156\
---------------------------------------------------------------------------

    \156\ Ibid.
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    Similarly, the use of non-EDGE claims in HHS-RADV allowed issuers 
to submit medical records associated with non-EDGE claims to their IVA 
entity for HCC validation purposes in certain situations. This protocol 
was also designed to ease the burden as issuers were gaining experience 
with the HHS-RADV Protocols and addressing any lingering challenges 
submitting claims to their EDGE servers. As noted in the proposed rule, 
issuers consistently meet data integrity criteria for their EDGE data 
submissions.\157\ Therefore, HHS does not believe that the 
discontinuance of the use of the LLPC list or non-EDGE claims in HHS-
RADV will impact issuers' ability to accurately capture health care 
costs and enrollee risk. Further, HHS believes issuers have now gained 
sufficient experience with the HHS-RADV Protocols such that it is also 
no longer necessary to continue these policies beginning with the 2022 
benefit year of HHS-RADV.
---------------------------------------------------------------------------

    \157\ 87 FR 78245. Also see supra note 14947.
---------------------------------------------------------------------------

    Discontinuing the use of the LLPC list and non-EDGE claims should 
also not impact providers' or issuers' ability to coordinate the most 
appropriate care for enrollees with LLPC diagnoses. If anything, 
enrollees with better-coordinated care should be more likely to have 
their diagnoses documented on a risk adjustment-eligible claim during 
the benefit year, which should then be captured in the issuer's EDGE 
data submission. Further, HHS does not believe the removal of the LLPC 
list will contradict the purpose of the ACA to ensure coverage of pre-
existing conditions. Issuers should continue to follow standard coding 
principles and guidelines, which include guidelines regarding the 
treatment of chronic conditions, to capture diagnoses among enrollees 
with pre-existing conditions. We believe that updating the HHS-RADV 
Protocols to discontinue the use of the LLPC list and non-EDGE claims 
beginning with the 2022 benefit year of HHS-RADV aligns with the goals 
of the HHS-operated risk adjustment program and HHS-RADV, as issuers 
will have a stronger incentive to encourage enrollees to access care 
within the benefit year so the risk can be captured on a risk 
adjustment-eligible claim. These updates to the HHS-RADV Protocols will 
also address concerns raised by some interested parties that issuers 
could passively receive credit for an HCC when the enrollee did not 
receive care or require active treatment during the applicable benefit 
year.
    We also do not agree that discontinuing the use of the LLPC list 
will prevent the capture of diagnoses that are being actively managed 
and are associated with pharmacy costs. If a patient with hemophilia or 
other chronic conditions is receiving care or active treatment, whether 
from a specialist or primary care provider, the diagnosis should be 
documented on a claim submitted to the issuer's EDGE server. 
Additionally, we anticipate the issuer would also be encouraging the 
patient with such chronic conditions to access care during the benefit 
year as part of its general wellness, prevention, or other health 
promotion activities.
    We further note that our purpose for adding RXCs to the risk 
adjustment models was to impute missing diagnoses and to indicate 
severity of illness.\158\ These prescription drug-based classes for the 
HHS risk adjustment adult models were developed using empirical 
evidence on frequencies and predictive power; clinical judgment on 
relatedness, specificity, and severity of RXCs; and

[[Page 25794]]

professional judgment on incentives and likely provider responses to 
the classification system.\159\ We carefully considered the selection 
of high-cost drugs for inclusion to avoid overly reducing the 
incentives for issuers to strive for efficiency in prescription drug 
utilization and the selection of drugs in areas exhibiting a rapid rate 
of technological change, as a drug class that is associated with a 
specific, costly diagnosis in one year may no longer be commonly used 
for that condition the next. As a result, there is a limited number of 
prescription drug classes included in the HHS risk adjustment adult 
models, and the RXCs included are select drug classes (and in some 
cases, specific drugs) that are closely associated with particular 
diagnoses. The same medication may be prescribed for multiple 
conditions, and therefore, a condition cannot be substantiated based 
solely on medication. To receive credit for an HCC in HHS-RADV, the 
condition needs to be linked to a risk adjustment eligible claim that 
has been accepted by the EDGE server with appropriate medical record 
documentation supporting diagnosis or treatment regardless of whether 
that HCC is also represented by an RXC in the HHS risk adjustment adult 
models. We continuously monitor, assess and update the drugs for 
mapping to RXCs in the adult risk adjustment models, and we may further 
investigate drugs associated with high-cost chronic conditions that are 
not currently represented by the RXC model in the future.
---------------------------------------------------------------------------

    \158\ 81 FR 94074 through 94084
    \159\ See, for example, 81 FR 94075 through 94076.
---------------------------------------------------------------------------

    Comment: Several commenters opposed discontinuing the use of the 
LLPC list and non-EDGE claims policy due to concerns of provider coding 
practices. Some of these commenters stated that LLPC diagnoses are 
taken into consideration by providers during medical decision making, 
and are sometimes treated, regardless of whether they separately appear 
on a claim. One commenter shared they have observed an ongoing issue 
where providers are not consistently capturing the care provided for 
conditions diagnosed in prior-year claims.
    Other commenters noted that many LLPCs are captured in medical 
history or surgical history notes and may not be included in any notes 
on current treatment. One commenter asserted that issuers with narrow 
networks or limited out-of-network benefits have a great ability to 
influence provider coding practices and ensure all diagnoses are 
recorded on claims. One commenter urged HHS to consider regulatory 
differences across States, and noted that issuers in their State are 
required by State law to cover behavioral treatment for autism from 
some providers without a referral from a diagnosing provider.
    Response: The LLPC list and the non-EDGE claims policies are part 
of the HHS-RADV Protocols and, as noted above, were adopted in the 
early years of HHS-RADV to streamline and simplify the process while 
issuers gained experience with HHS-RADV activities and EDGE data 
submissions. They do not, however, supplement or replace the data 
submission requirements or EDGE Server Business Rules that issuers must 
follow to submit claims to their EDGE servers, including the rules 
governing the necessary medical record documentation to support each 
condition, diagnosis or treatment on each claim. Consistent with Sec.  
153.710(a) through (c), EDGE Server Business Rules for the HHS-operated 
risk adjustment program that govern EDGE data submissions direct that 
EDGE server data submissions are claim-based and follow standard coding 
principles and guidelines.\160\ EDGE Server Business Rules also require 
that diagnosis codes submitted on risk adjustment-eligible claims to 
the EDGE server be related to medical services performed during the 
patient's visit.\161\
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    \160\ See, for example, Table 49: `Standard Code Sets and 
Sources' of the EDGE Server Business Rules (ESBR) Version 22.0 
(November 2022) available at https://regtap.cms.gov/uploads/library/DDC-ESBR-110122-5CR-110122.pdf, which lists the standard code sets 
and sources the EDGE server uses to verify submitted codes during 
data submission.
    \161\ 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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    It is the issuer's responsibility to submit complete and accurate 
data for each benefit year to their respective EDGE server by the 
applicable deadline.\162\ Issuers are also responsible for helping 
their respective IVA entities retrieve provider medical records and 
documentation sufficient to support the conditions, diagnosis and 
treatment information submitted to the issuer's EDGE server for the 
applicable benefit year.\163\ Issuers should work with their providers 
to ensure they are following correct coding guidelines to support 
acceptance of medical claims and diagnoses submitted to the issuer's 
EDGE server.\164\ We have not seen evidence that issuers with narrow 
networks or limited out-of-network benefits have a greater ability to 
influence provider coding practices. Issuers in the individual and 
small group (including merged) markets are allowed to develop provider 
networks and out of network benefit designs in accordance with 
applicable State and Federal requirements. These types of plans and 
benefit designs are subject to the same rules and requirements of the 
HHS-operated risk adjustment program as all issuers, including but not 
limited to the processes to conduct the HHS-RADV audits. We also note 
that HCCs associated with behavioral diagnoses such as autism are not 
included on the LLPC list. Additionally, we clarify that HHS-RADV does 
consider and accommodate differences across States, such as with 
respect to provider credentialing requirements. For example, medical 
records submitted for HHS-RADV must be from an acceptable physician/
practitioner specialty type licensed to diagnose in that State and must 
be authenticated by the provider.
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    \162\ See 45 CFR 153.610, 153.700, and 153.730.
    \163\ See 45 CFR 153.630(b)(6). Also see 45 CFR 153.620(a) and 
(b).
    \164\ See, for example, Table 49: `Standard Code Sets and 
Sources' of the EDGE Server Business Rules (ESBR) Version 22.0 
(November 2022) available at https://regtap.cms.gov/uploads/library/DDC-ESBR-110122-5CR-110122.pdf, which lists the standard code sets 
and sources the EDGE server uses to verify submitted codes during 
data submission.
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    We continue to consider ways to improve the HHS-RADV audit process 
to address State regulatory differences. In the past, we recognized 
concerns regarding limitations imposed under certain States' medical 
privacy laws that could limit providers' ability to furnish mental and 
behavioral health records for HHS-RADV purposes, and in response, we 
updated Sec.  153.630(b)(6) to permit use of abbreviated mental or 
behavioral health assessments for HHS-RADV in situations where a 
provider is subject to State (or Federal) privacy laws that prohibit 
the provider from providing a complete mental or behavioral health 
record to HHS.\165\ HHS appreciates regulatory differences across 
States being brought to our attention and will continue to consider 
these differences, such as those associated with behavioral diagnoses, 
when developing policies.
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    \165\ See the 2019 Payment Notice, 83 FR 16967 through 16969. 
Also see Section 9.2.6.7--Acceptable Medical Record Source of 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.
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    Issuers should also develop and communicate with providers the 
applicable policies and procedures that providers will need to follow 
to support the issuer's business needs, including the issuer's 
submission of data to their EDGE server and subsequent validation

[[Page 25795]]

of such data in HHS-RADV. If an issuer is aware of incorrect or 
incomplete coding practices by a provider, the issuer should work to 
resolve the incorrect or incomplete coding practices with the provider 
and should not rely on the use of the LLPC list or non-EDGE claims to 
address provider coding concerns.
    We are discontinuing the use of the LLPC list and the non-EDGE 
claims beginning with the 2022 benefit year. As such, beginning with 
the 2022 benefit year of HHS-RADV, issuers will no longer be able to 
submit non-EDGE claims to their IVA entities to supplement EDGE claims 
reviewed during HHS-RADV and the LLPC list will also no longer be 
available for use by the IVA (and SVA) entities in HHS-RADV. We will 
update the HHS-RADV Protocols applicable to the 2022 benefit year and 
beyond to capture these changes. In addition, we continue to encourage 
issuers to examine ways to encourage providers to follow coding 
guidelines and capture all relevant diagnoses on claims and notes 
related to current treatments.
    Comment: Several commenters expressed concern that discontinuing 
the LLPC list and non-EDGE claims policy in HHS-RADV would increase 
issuer dependence on provider's medical document retrieval. Some of 
these commenters disagreed with HHS that issuers' ability to capture 
conditions is based on experience with HHS-RADV or EDGE data 
submissions, and instead asserted that accurately capturing conditions 
depends on documentation received from providers. One of these 
commenters shared that they request thousands of records every year 
that they never receive. A few commenters raised concerns of claims 
processing time impacting issuers' ability to submit diagnoses and 
claims information to their EDGE servers, as well as validate the data 
in HHS-RADV. One of these commenters stated that the inconsistent 
nature of chart retrieval necessitates the continuation of the non-EDGE 
claims policy to allow issuers to submit medical records associated 
with a risk adjustment-eligible claim that missed the deadline for EDGE 
submission. Another one of these commenters stated that a significant 
number of HCCs are contained on facility claims for services that are 
often furnished late in the year, which leaves issuers without enough 
time to include them in EDGE data submissions. Another one of these 
commenters noted that claims data on EDGE is often incomplete due to 
the nature of claims adjudication processes and the use of non-EDGE 
claims in HHS-RADV remedies this by allowing issuers to capture 
conditions in HHS-RADV that may have been missed in EDGE data 
submissions.
    Response: After consideration of comments, HHS is discontinuing of 
the use of the LLPC list and non-EDGE claims in HHS-RADV beginning with 
2022 benefit year HHS-RADV and generally encourages issuers to work 
with providers to improve processes for medical record retrieval. Once 
the LLPC list and non-EDGE claim policy are discontinued, to receive 
credit for an HCC in HHS-RADV, the condition will need to be linked to 
a risk adjustment eligible claim that is accepted by the EDGE server 
with the appropriate medical record documentation supporting the 
diagnosis or treatment on the claim. Issuers should develop and 
communicate with providers the policies and procedures they need to 
comply with to support the issuer's complete submission of data to 
their EDGE server and validation of that data in HHS-RADV. If issuers 
are aware of providers that are unresponsive to documentation requests, 
the issuer should work with those providers to resolve the concerns. To 
assist issuers in medical record retrieval, we created an HHS-RADV 
Provider Medical Record Request Memo on CMS letterhead, available via 
the HHS-RADV Audit Tool, that issuers can use when engaging with 
providers to obtain medical record documentation to support HHS-
RADV.\166\
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    \166\ See Section 9.2.6.2--Medical Record and Chart Retrieval of 
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.
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    Additionally, HHS allows issuers until April 30th of the following 
applicable benefit year, or until the next applicable business day if 
April 30th does not fall on a business day, to submit all final claims, 
supplemental diagnosis codes, and enrollment data for the applicable 
benefit year of risk adjustment to their respective EDGE servers.\167\ 
The purpose of establishing the EDGE data submission deadline several 
months after the close of the benefit year is to give issuers time to 
collect all necessary claims information, including facility claims, as 
we recognize there are often hospital stays that begin at the end of 
the year and cross into the next.\168\
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    \167\ See Sec.  153.730.
    \168\ See, for example, the 2014 Payment Notice, 78 FR 15434 
(explaining the EDGE data submission deadline `` . . . provides for 
ample claims runout to ensure that diagnoses for the benefit year 
are captured, while providing HHS sufficient time to run enrollee 
risk score, plan average risk, and payments and charges calculations 
and meet the June 30 deadline described at the redesignated Sec.  
153.310(e) . . .'')
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    In addition, we recognize that issuers may sometimes experience 
delays in the submission of claims by providers and facilities, as well 
as reprocess claims submitted to their EDGE servers after the 
applicable benefit year's data submission deadline. However, issuers 
are not permitted to submit additional data or correct data already 
submitted to their EDGE servers after the applicable benefit year's 
deadline and remain responsible for ensuring the completeness and 
accuracy of the data submitted to their EDGE servers by the applicable 
data submission deadline.\169\ This deadline is applicable to all 
issuers of risk adjustment covered plans to create a level playing 
field and to create a clear deadline for when the previous benefit year 
needs to be closed out so transfers can be calculated. Given that HHS-
RADV is an audit of data issuers submit to EDGE, claims that miss the 
deadline for EDGE submission should generally not be used to support 
HCC validation in HHS-RADV. As previously explained, the LLPC list and 
use of non-EDGE claims policies were adopted in the early years of HHS-
RADV to help simplify and streamline the process as issuers gained 
experience with the HHS-RADV Protocols and addressed any lingering 
challenges with the EDGE data submission process. HHS believes it is 
now appropriate to end these policies as there is clear evidence that 
issuers are now sufficiently familiar with these operations. In fact, 
HHS rarely observes claims processing times preventing issuers from 
meeting applicable EDGE data submission deadlines, as all States were 
included in interim risk adjustment summary reports for the 2017 
through 2021 benefit years.\170\ This means that, from the 2017 through 
2021 benefit years, all issuers of risk adjustment covered plans with 
0.5 percent or more of market share submitted at least 90 percent of a 
full year of medical claims to their EDGE servers by the applicable 
deadline, as well as met data quality evaluation checks. HHS recognizes 
there can be challenges in the document retrieval process and continues 
to welcome feedback from stakeholders on ways HHS can further support 
issuers with document retrieval for HHS-RADV.
---------------------------------------------------------------------------

    \169\ 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.
    \170\ See supra note 14947.

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[[Page 25796]]

    Comment: Several commenters recommended maintaining the LLPC list 
in HHS-RADV and extending it to also apply to EDGE data submissions. A 
few commenters raised concerns about conflicting rules between HHS-RADV 
Protocols and the standard coding principles and guidelines that 
issuers must follow to submit data to their EDGE servers. One of these 
commenters noted AHA Coding Clinic guidance disallowing abstraction of 
chronic conditions from past medical history and supported HHS 
alignment of the EDGE Server Business Rules and the HHS-RADV Protocols, 
including with respect to the treatment of chronic conditions found in 
the past medical history section of the medical record. Another 
commenter stated the need for greater clarity to ensure consistent 
coding guidelines across providers, issuers and IVA entities, and 
asserted that discontinuing the use of LLPC list would exacerbate 
inconsistent interpretations of standard coding guidelines across 
issuers and IVA entities. This commenter stated that Coding Clinic 
Guidance has increased confusion of the standard coding guidelines and 
urged HHS to intervene with the Coding Clinic process and to not 
relinquish authority to the Coding Clinic.\171\ This commenter also 
noted that the LLPC list is widely appreciated by IVA entities that 
lack coding experience and knowledge.
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    \171\ See, for example, ICD-10-CM/PCS Coding Clinic, Second 
Quarter 2022, Page 30 to 31, Reporting Additional Diagnoses in 
Outpatient Setting.
---------------------------------------------------------------------------

    Response: HHS is discontinuing the use of the LLPC list and non-
EDGE claims in HHS-RADV beginning with the 2022 benefit year HHS-RADV. 
This change does not change coding guidance for the HHS-operated risk 
adjustment program or the EDGE Server Business Rules.\172\ Issuers are 
still required to follow standard coding principles and guidelines when 
submitting data to EDGE.
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    \172\ When abstracting a diagnosis, HHS-RADV interested parties 
should reference, in sequential order, the conventions in the ICD-
10-CM and ICD10-PCS classification, ICD-10-CM Official Coding 
Guidelines for Coding and Reporting, the AHA Coding Clinic. See, for 
example, Section 9.2.6.3--Medical Record Review and Diagnosis 
Abstraction of 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.
---------------------------------------------------------------------------

    As previously explained, HHS created the LLPC list in the early 
years of HHS-RADV to assist with coding abstraction for IVA and SVA 
entities as issuers gained experience with HHS-RADV and addressed any 
lingering EDGE data submission challenges, but the LLPC list was never 
a supplement to or replacement for the EDGE Server Business Rules. As 
such, we do not believe it is appropriate to extend the use of the LLPC 
list to EDGE data submissions. The HHS-operated risk adjustment program 
relies on EDGE server data to identify risk incurred by the issuer, 
measured using the issuer's claims from only the current benefit year. 
Extending the use of the LLPC list to EDGE data submissions could 
result in an issuer receiving credit for risk that they did not incur 
in the benefit year, and thereby create an EDGE server data integrity 
issue. Rather, we believe that issuers have now gained sufficient 
experience with HHS-RADV and EDGE data submission processes such that 
it is appropriate at this time, to promote consistency between the EDGE 
Server Business Rules and the HHS-RADV Protocols, to discontinue the 
use of the LLPC list beginning in the 2022 benefit year of HHS-RADV. 
The EDGE Server Business Rules require issuers to comply with standard 
coding principles and guidelines, which include any guidelines 
regarding the treatment of chronic conditions found in the past medical 
history section of the medical record.\173\
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    \173\ See, for example, Table 49: `Standard Code Sets and 
Sources' of the EDGE Server Business Rules (ESBR) Version 22.0 
(November 2022) available at https://regtap.cms.gov/reg_librarye.php?i=3765, which lists the standard code sets and 
sources the EDGE server uses to verify submitted codes during data 
submission.
---------------------------------------------------------------------------

    We affirm that, with the removal of the LLPC list, IVA entities 
will no longer be permitted to rely on the treatment of chronic 
conditions found in the past medical history section of the medical 
record to validate enrollee health status. This policy change, along 
with the discontinuation of the non-EDGE claims policy, will apply 
beginning with the 2022 benefit year of HHS-RADV. Consistent with the 
IVA requirements in Sec.  153.630(b) and the applicable standards 
established by HHS, IVA entities will continue to be required to follow 
the ICD-10-CM and ICD-10 PCS classifications, Official Guidelines for 
Coding and Reporting and the American Hospital Association (AHA) Coding 
Clinic, along with professional judgment, to abstract diagnoses during 
health status validation.\174\ Advice published in Coding Clinic does 
not replace the instruction in the ICD-10-CM and ICD-10-PCS 
classification or the Official Guidelines for Coding and Reporting. HHS 
cannot provide specific coding guidance for the purposes of HHS-RADV, 
and it is not our role to resolve disputes between coding clinic 
guidance.175 176 We believe that it is important for coding 
clinics to remain independent of HHS' influence to promote consistency 
and ensure diagnosis validation in accordance with industry standards. 
Although the SVA entity performs a second validation audit on a 
subsample of IVA Entity submission data to verify the IVA findings, 
issuers must ensure that their IVA Entities are reasonably capable of 
performing an IVA according to the requirements and standards 
established by HHS, which includes validating the risk score of each 
enrollee in the sample by validating medical records according to 
industry standards for coding and reporting.\177\
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    \174\ See Sec.  153.630(b)(2). Also see, for example, section 
9.2.6 Phase 5--Health Status Validation of the HHS of 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.
    \175\ On behalf of HHS, the Center for Consumer Information and 
Insurance Oversight (CCIIO), a component within CMS, performs 
functions related to the operation of the HHS-RADV program and 
promulgates standards governing the establishment by issuers of the 
EDGE server that is used for the HHS risk adjustment data collection 
process.
    \176\ See Section 9.2.6.11--Medical Record Abstraction of the 
HHS of 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.
    \177\ See Sec.  153.630(b)(2) and (b)(7)(iv).
---------------------------------------------------------------------------

d. HHS-RADV Discrepancy and Administrative Appeals Process
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78245), we proposed to shorten the window 
under Sec.  153.630(d)(2) for issuers to confirm the findings of the 
SVA (if applicable),\178\ or file a discrepancy report, to within 15 
calendar days of the notification by HHS, beginning with the 2022 
benefit year of HHS-RADV. To effectuate this proposed amendment, we 
proposed the following four revisions to Sec.  153.630(d): (1) remove 
the reference to the calculation of the risk score error rate as a 
result of HHS-RADV; (2) revise Sec.  153.630(d)(2) to establish that 
the attestation and discrepancy reporting window for the SVA findings 
(if applicable) will 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; (3) redesignate current paragraph (d)(3) 
as paragraph (d)(4); and (4) add a new Sec.  153.630(d)(3) to

[[Page 25797]]

maintain the current attestation and discrepancy reporting window for 
the calculation of the risk score error rate, which provides 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 proposed 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), to add a reference to paragraph 
(d)(3). We sought comment on this proposal and the accompanying 
conforming amendments.
---------------------------------------------------------------------------

    \178\ 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.
---------------------------------------------------------------------------

    After reviewing the public comments, we are finalizing this 
provision as proposed. We summarize and respond to public comments 
received on the proposal and accompanying proposed amendments to 
shorten the window to 15 calendar days to confirm the SVA findings or 
file a discrepancy report, under Sec.  153.630(d)(2), beginning with 
the 2022 benefit year HHS-RADV below.
    Comment: Some commenters generally supported shortening the window 
to confirm the SVA findings 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. Other commenters stated 
that shortening the window would have a positive impact on reporting 
HHS-RADV adjustments for medical loss ratio (MLR) by supporting more 
timely reporting of these amounts. One commenter stated that, based on 
their experience, 15-calendar days provides sufficient time to respond 
to the SVA findings notification from HHS.
    However, some commenters were opposed to the proposal to shorten 
the SVA attestation and discrepancy reporting timeframe from 30 to 15 
days and instead recommended maintaining the existing 30-calendar day 
window. These commenters stated that they believed that the proposed 
15-day timeline would not provide adequate time for issuers to complete 
a thorough review of the SVA findings. Another commenter suggested that 
the timeframes could be shortened elsewhere in the HHS-RADV process to 
keep the 30-day timeframe for the SVA attestation and discrepancy 
reporting process. This commenter also noted it would be helpful for 
issuers to receive their HHS-RADV error rates sooner for use in 
pricing.
    A few commenters asserted that a 15-calendar day window would 
create internal challenges and operational burden in cases that require 
data extraction or information from clinical staff. One of these 
commenters noted that diverting the attention of Medical Directors to 
reviewing SVA findings would strain care and utilization management 
services, and thus, negatively impact members.
    One commenter stated that shortening the window may cause issuers 
to appeal matters preemptively that would not have otherwise been 
appealed. This commenter also disagreed with HHS' rationale that the 
shortened window is appropriate because the SVA finding attestation and 
discrepancy reporting process is limited to the small number of issuers 
that have insufficient pairwise agreement between the IVA and SVA. The 
commenter indicated when an issuer receives SVA findings, an issuer's 
IVA results may raise material concerns that could impact other issuers 
in HHS-RADV, including the reporting of discrepancies due to 
insufficient pairwise agreement that have the potential of having 
substantial financial impacts and the issuer's risk score error rate 
calculation.
    Response: After consideration of comments received, we are 
finalizing the proposal to shorten the SVA attestation and discrepancy 
reporting window from 30 to 15 calendar days as proposed. We are also 
finalizing the conforming amendments to Sec. Sec.  153.630(d), 
153.710(h)(1) and 156.1220(a)(4)(ii) to implement this change to the 
SVA attestation and discrepancy reporting window as proposed. We agree 
with commenters that this change will help to support timely reporting 
of the HHS-RADV adjustments to risk adjustment State payment transfers 
in issuers' MLR reports.
    We also believe that shortening the attestation and discrepancy 
reporting window related to SVA results will improve HHS' ability to 
finalize SVA findings results prior to release of the applicable 
benefit year HHS-RADV Results Memo and the Summary Report of Risk 
Adjustment Data Validation Adjustments to Risk Adjustment Transfers for 
the applicable benefit year and prior to the MLR Reporting deadline. 
These reports are time-sensitive publications that cannot be developed 
until all SVA discrepancies are resolved and SVA findings are 
finalized. Our experience is also similar to the commenter who shared 
their perspective that a 15-day window is sufficient time to respond to 
the SVA findings notification from HHS. We further note that a 15-
calendar-day SVA 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.
    Although we appreciate the concerns expressed by some commenters, 
especially the potential internal challenges, operational burden, and 
potential downstream impacts on members, we believe the positive 
effects to reporting, combined with experience suggesting the 15-day 
window is feasible, provide sufficient countervailing support to 
shortening the window. HHS continues to believe that shortening the SVA 
window will benefit issuers by facilitating the issuance of more timely 
reports that can be used in pricing, including improving HHS' ability 
to finalize SVA findings results prior to release of the applicable 
benefit year HHS-RADV Results Memo and the Summary Report of Risk 
Adjustment Data Validation Adjustments to Risk Adjustment Transfers for 
the applicable benefit year.
    We appreciate the request to shorten other timeframes in the HHS-
RADV process to maintain the 30-day window for the SVA attestation and 
discrepancy reporting window, and while HHS continually considers 
process improvements to find more efficient ways to conduct HHS-RADV, 
we do not believe there are other areas we could shorten timelines for 
the processes at this time. These comments are also outside the scope 
of this rulemaking as we did not propose shortening any other HHS-RADV 
timelines in the proposed rule.
    Additionally, as previously explained, the shortened window for the 
SVA attestation and discrepancy reporting window generally impacts a 
limited number of issuers. That is, our experience indicates that few 
issuers have insufficient pairwise agreement between the IVA and SVA 
such that they receive SVA findings; therefore, only few issuers would 
even have the option to file an SVA discrepancy. Of the issuers that 
receive SVA findings, our experience is that only a subset will 
actually file a discrepancy, and therefore, based on this experience, 
HHS believes only a very small number of issuers will be impacted by 
this change in future benefit years of HHS-RADV. Because a very small 
number of issuers will be impacted and the SVA discrepancy window will 
still be available for those issuers to raise material concerns, 
including those that could impact other issuers in HHS-RADV, the 
shortened SVA attestation and discrepancy reporting window mitigates 
concerns regarding financial

[[Page 25798]]

impacts and the issuer's risk score error rate calculation.
    We also do not believe that shortening the SVA attestation and 
discrepancy reporting window may cause issuers to appeal matters 
preemptively. Issuers are bound by the requirements of Sec.  156.1220, 
specifically paragraph (a)(4)(ii) which provides that notwithstanding 
Sec.  156.1220(a)(1), 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), it was so identified and remains unresolved.
    Finally, the shortened window also does not change the underlying 
burden for an issuer to attest or file a discrepancy of its SVA results 
as those tasks generally remain the same. Instead, this change only 
relates to the timeframe to complete these activities, but the existing 
overall burden hours to complete these tasks remains unchanged.\179\ We 
recognize this change may have a short-term impact, such as diverting 
the attention of Medical Directors to reviewing SVA findings on a 
shorter timeline, but we expect the same staff and resources would 
generally be involved. Therefore, we do not expect this change will 
result in significant long-term downstream impacts to members. For all 
of the reasons outlined above, we believe the benefits of the shortened 
attestation and discrepancy reporting window for an issuer to attest to 
or file a discrepancy for its SVA findings under new Sec.  
153.630(d)(2) from 30 to 15 calendar days outweigh the reasons to 
maintain the 30-day window.
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    \179\ For information on the associated burdens, see OMB Control 
Number 0938-1155 (CMS-10401--``Standards Related to Reinsurance, 
Risk Corridors, and Risk Adjustment).
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8. EDGE Discrepancy Materiality Threshold (Sec.  153.710)
    We are finalizing, as proposed, the regulatory amendment from the 
HHS Notice of Benefit and Payment Parameters for 2024 proposed rule (87 
FR 78206, 78247) to 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.\180\ We are also 
finalizing, as proposed, the conforming amendment to Sec.  
153.710(h)(1) to add a reference to new Sec.  153.630(d)(3).
---------------------------------------------------------------------------

    \180\ See 86 FR 24194 through 24195.
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    As we explained in the proposed rule, the EDGE discrepancy 
materiality threshold final policy was intended 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. 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 proposed to amend Sec.  153.710(e) to align with 
this final policy. We also proposed to amend Sec.  153.710(h)(1) to add 
a reference to new proposed Sec.  153.630(d)(3) to align with the 
changes discussed in section III.A.7.d. of this preamble (HHS-RADV 
Discrepancy and Administrative Appeals Process), to shorten the SVA 
attestation and discrepancy reporting period. We sought comment on the 
proposed amendments to Sec.  153.710.
    After reviewing the public comments, we are finalizing these 
amendments as proposed. The following is a summary of the comment we 
received and our response.
    Comment: One commenter supported the proposal to update the EDGE 
discrepancy materiality threshold captured in Sec.  153.710(e) 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. This commenter also asked that HHS 
consider applying the same threshold to reporting discrepancies because 
it would allow issuers to discontinue reporting minor discrepancies, 
which requires significant time and resources.
    Response: We are finalizing the amendment to the EDGE discrepancy 
materiality threshold such 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, as 
proposed. We did not propose and are not finalizing a threshold for 
reporting EDGE discrepancies. Issuers must continue to report all 
discrepancies to HHS for HHS to determine whether they are material and 
actionable.\181\
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    \181\ See Sec.  153.710(d)(2). Also see 83 FR 16970 through 
16971. See also, for example, CMS. (2022, October 25). Evaluation of 
EDGE Data Submissions for the 2022 Benefit Year. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/edge_2022_qq_guidance.pdf.
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    We are also finalizing the conforming amendment to add a reference 
to the new Sec.  153.630(d)(3) to the introductory text in Sec.  
153.710(h)(1). For a discussion of the comments related to the 
shortening of the SVA window to confirm, or file a discrepancy for SVA 
findings to 15 days, see the preamble discussion in section III.A.7.d. 
of this rule (HHS-RADV Discrepancy and Administrative Appeals Process).

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

1. Exchange Blueprint Approval Timelines (Sec.  155.106)
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78247), we proposed 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 Exchange, or from an 
SBE-FP to a State Exchange. At Sec.  155.106(a)(3) (for FFE or SBE-FP 
to State Exchange transitions) and (c)(3) (for FFE to SBE-FP 
transitions), we proposed 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 State 
Exchange 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 stated in the proposed rule (87 FR 78206, 78247) that we believed 
the current timeline by which a State must gain Exchange Blueprint 
approval did not sufficiently support States' need to work with HHS to 
finalize and submit an approvable Exchange Blueprint.
    Section 155.106 currently requires States to have an approved or 
conditionally approved Exchange Blueprint 14 months prior to an SBE-FP 
to State Exchange 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 a

[[Page 25799]]

State Exchange, or 3 to 6 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 substantial technical assistance to States 
as they design, finalize, and implement their Exchange operations. The 
transition from a FFE to a SBE-FP or State Exchange, or SBE-FP to State 
Exchange, 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.
    Finalizing our proposal to require Exchange Blueprint approval or 
conditional approval prior to an Exchange's first open enrollment 
period will allow States the additional time and flexibility if needed, 
that, in our experience, is necessary to support the development and 
finalization of an approvable Exchange Blueprint, as well as for 
completion of the myriad of activities necessary to transition QHP 
enrollees in the State to a new Exchange model and operator. We are 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 timeline that 
reflects the realities of the time necessary 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 sought comment on this proposal, including comments related to 
how transitioning State Exchanges could provide greater transparency to 
consumers regarding the Exchange Blueprint approval process.
    After reviewing the public comments, we are finalizing this 
provision as proposed. We summarize and respond to public comments 
received on the proposed Exchange Blueprint approval timelines at Sec.  
155.106 below.
    Comment: Multiple commenters supported the proposal that States 
receive approval on their Blueprint applications to operate a State 
Exchange or SBE-FP prior to their first open enrollment (rather than 14 
months or 3 months before, as previously applicable), noting that the 
additional time for States to obtain approval of its Blueprint 
application will help States better implement State Exchange or SBE-FP 
requirements and prepare for State Exchange or SBE-FP operations.
    Response: We agree that revising the current timelines by which a 
State must have an approved or conditionally approved Exchange 
Blueprint as proposed will permit States additional time to implement 
State Exchange or SBE-FP requirements.
    Comment: One commenter suggested that States transitioning to State 
Exchanges could aim to provide greater transparency to consumers 
regarding the Blueprint approval process by adding information to their 
board meetings and making consumers aware of those meetings.
    Response: We acknowledge this suggestion that States transitioning 
to State Exchanges should aim to provide greater transparency to 
consumers, however, this is outside the scope of this proposal.
    Comment: A few commenters opposed the proposal, stating that 
without assurance of HHS' approval of the transition per current 
timelines, impacted interested parties in States transitioning to State 
Exchanges or SBE-FPs could face associated implementation risks. These 
commenters noted that issuers, as an example, require adequate time to 
implement operational changes necessary to accommodate a State 
transitioning to a State Exchange, such as changes to information 
technology systems, member communications, and marketing materials, 
with the goal of minimizing consumer confusion.
    Response: We recognize the importance of interested parties, such 
as issuers and agents and brokers, in a State's transition to either a 
State Exchange or SBE-FP. The revision to the current timelines in 
Sec.  155.106(a)(3) and (c)(3) does not circumvent the substantial 
technical assistance we provide to States as they design, finalize, and 
implement their Exchange operations. This 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. Moreover, 
as part of a State's transition, States are required to consult on an 
ongoing basis with interested parties, under Sec.  155.130, to make 
them aware of transitioning activities and progress, with the goal of 
maximizing a seamless consumer experience. As such, we expect a State 
transitioning to a State Exchange or SBE-FP to coordinate well in 
advance with interested parties around its progress and the likelihood 
of implementing the applicable Exchange model operations for its 
intended first year of open enrollment.
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
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78248), we proposed 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 
will eliminate barriers to coverage access by maximizing pathways to 
enrollment.
    Section 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, for, among other things, the establishment and operation of 
Exchanges. Under 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.\182\ 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.
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    \182\ At this time, no State Exchanges are funded with section 
1311(a) Exchange Establishment grant funds.
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    Assisters are certified and trusted community partners who provide 
free and impartial enrollment assistance to consumers. They conduct 
outreach and

[[Page 25800]]

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 them 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. We have 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 
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 just beginning to establish operations. 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.\183\
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    \183\ 79 FR 30240.
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    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,\184\ Routine Use No. 1 provides that the FFEs may share 
consumer information with HHS grantees, including Navigators and other 
non-Navigator assistance personnel in FFE States, who have been engaged 
by HHS 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 for 
the Navigators and other non-Navigator assistance personnel to conduct 
outreach to such consumers regarding opportunities for coverage through 
the FFEs.
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    \184\ 78 FR 63211, 63215.
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    Since finalizing the 2015 Market Standards final rule, we have 
enacted a number of measures designed to ensure that Assisters are 
properly safeguarding the personally identifiable information of all 
consumers they assist. As part of their annual certification training, 
we require 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, we believe that our 
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 we have 
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 assistance 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 proposed to 
delete Sec.  155.210(d)(8). The repeal of Sec.  155.210(d)(8) will 
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 proposed 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 in the proposed rule (87 FR 78249), we are 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 will 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 sought comment on this proposal.
    After reviewing the public comments, we are finalizing this 
provision as proposed. We summarize and respond to public comments 
received on the proposed repeal of the provisions that prevent 
Assisters from going on door-to-door or using other unsolicited means 
of direct contact to provide enrollment assistance to consumers below.
    Comment: The vast majority commenters supported this proposal, 
stating that it will help reduce uninsured rates and health 
disparities; improve health literacy in rural and underserved 
communities; and reduce burden on consumers, especially those 
experiencing social determinants of health that negatively affect 
health care

[[Page 25801]]

access and quality (for example, lack of transportation) or have 
inflexible job schedules; and immunocompromised individuals. Commenters 
also frequently noted that Navigators provide a key role in Medicaid 
and CHIP enrollments and have trusted relationships in the community. 
Health Centers commented that they appreciated the increased 
flexibility to go out into the community and reach patients who need 
the most support. Lastly, commenters stated that the proposal was 
particularly important to maintaining health insurance enrollments in 
light of Medicaid unwinding.
    Response: We agree that that door-to-door consumer education, 
outreach, and enrollment can be a useful and effective method for 
addressing the concerns raised by commenters. We appreciate the 
overwhelming support for this proposal and agree that it will help 
Assisters continue to build trusted relationships in the community, 
which may result in an overall reduction in uninsured rates and reduce 
health disparities.
    Comment: Several commenters recommended reinstating previous 
requirements to have two Navigator organizations in each State, with 
one being a local trusted non-profit that maintains a principal place 
of business within their Exchange service area.
    Response: We agree that having two Navigator organizations in each 
State to provide face-to-face assistance could further help consumer 
assistance personnel understand and meet the specific needs of the 
communities they serve, foster trust between consumer assistance 
personnel and community members, and encourage participation in the 
Assister programs by individuals whose backgrounds and experiences 
reflect those of the communities they serve. However, we maintain that 
the two per State requirement may be too restrictive for Assister 
organizations already successfully providing remote assistance. In many 
circumstances, remote assistance may be more effective or practical 
than face-to-face assistance, particularly when an Assister is 
providing services to difficult-to-reach individuals or populations. 
Additionally, during the COVID PHE, usage of alternate methods of 
interactions with consumers, such as through telecommunication and 
digital health care tools, became more widespread. We believe that 
reaching as many consumers as possible is important as we approach 
Medicaid unwinding and strive to continually increase health insurance 
program enrollments. We train and entrust Assisters to help in the 
manner requested by the consumer, when possible.
    Comment: Some commenters had mixed reactions to the proposal, 
supporting the intent but expressing concerns about protecting 
consumers against fraud. Some commenters specifically recommended that 
we withdraw or rewrite this section to protect consumers more 
adequately from fraud, by requiring Assisters going door-to-door to 
provide identification, records of enrollment transactions, and clear 
instructions on how to cancel any completed enrollments, as well as 
additional training to ensure Assisters obtain the consent of the 
household member in charge of financial matters.
    Response: We appreciate the commenters' concerns and agree with 
them about protecting consumers against fraud. We have taken various 
measures to protect consumers against fraud. For example, we have 
recently updated the privacy and security requirements included in all 
Assister organizations agreements in consultation with the CMS security 
and privacy subject matter experts. We will continue to work on 
improving these requirements to ensure we are in alignment with current 
best practices to safeguard consumer privacy and security information.
    We believe that current requirements adequately require Assisters 
to obtain informed consent from consumers. Assisters who complete an 
enrollment transaction must obtain a consent form from the consumer 
before collecting PII to carry out authorized Assister functions. In 
the Standard Operating Procedures Manual for Assisters in the 
Individual Federally-facilitated Marketplaces Consumer Protections: 
Privacy and Security Guidelines \185\ we also encourage Assisters to 
ensure consumers take possession of their enrollment documents during 
in-person appointments (though Assisters can provide postage materials 
and/or mail a paper application on a consumer's behalf as long as the 
consumer consents to the Assister's retaining the application for this 
purpose). Assisters can add a specific consent to the Navigator's or 
certified application counselor's model authorization form so that 
consumers can consent to having their application mailed on their 
behalf.
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    \185\ https://marketplace.cms.gov/technical-assistance-resources/sop-privacy-security-guidelines.pdf.
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    We also have ways for a consumer to verify the legitimacy of 
Assisters such as requesting Assisters furnish a certificate of 
training completion from HHS that contains their name and unique 
Assister ID number, or simply requesting their name and Assister ID 
number, which consumers can verify by calling the Marketplace Call 
Center.
    Lastly, we appreciate the constructive feedback on additional 
measures we may take to protect consumers from fraud and will take 
these into consideration in future rulemaking, training, and policy 
guidance.
    Comment: Some commenters opposing the proposal expressed concerns 
about privacy and unwanted solicitations, and suggested that allowing 
door-to-door enrollments would compromise Assister impartiality and 
create confusion and misunderstanding among consumers. Commenters also 
opined that Assisters do not have the ability to project income for 
consumers with multiple sources of income. Commenters also suggested we 
have argued in the past that educating the public in conjunction with 
marketing creates confusion. Lastly, commenters stated that there is a 
prohibition against door-to-door enrollment by FFE agents and brokers 
which should be applied equally to Assisters.
    Response: We appreciate the commenters' feedback but we have taken 
great strides to ensure the privacy and security of consumers' 
information through a variety of mechanisms. This includes requiring 
Assisters to obtain consumer consent to access their PII to carry out 
authorized Assister functions via an authorization form which must be 
maintained by the Assister organization for six years. Assisters also 
provide the FFE Privacy Policy to consumers they are assisting with 
enrollment, which explains how their PII will be used and safeguarded. 
This is also publicly available at HealthCare.gov/privacy/. 
Additionally, Assisters undergo certification training that includes 
modules on Privacy, Security, and Fraud Prevention Strategies, and 
Assister organizations must have policies and procedures for the 
collection, use, protection, and securing of PII. We also note that 
certification training includes modules that help to build trust from 
consumers by providing best practices for serving vulnerable and 
underserved populations, working with consumers with disabilities, 
providing language access, and doing all these things in a culturally 
sensitive manner.
    We consider Assisters to be able to assist consumers with multiple 
streams of income. Assisters are required to know and understand the 
Exchange-related components of the PTC reconciliation process and 
understand

[[Page 25802]]

the availability of IRS resources on this process. They also are 
required to provide referrals to licensed tax advisers, tax preparers, 
or other resources for assistance with tax preparation and tax advice 
related to the Exchange application and enrollment process and PTC 
reconciliations.
    Lastly, there is no current Federal prohibition on door-to-door 
enrollments by agents and brokers in the FFEs and this comment is 
inaccurate based on current regulations for agents and brokers.
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 or 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 the HHS Notice of 
Benefit and Payment Parameters for 2024 proposed rule (87 FR 78206, 
78249), we proposed 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))
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78249), we proposed 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 the 
suspension of their Exchange agreement(s) or to request reconsideration 
of termination of their Exchange agreement(s), respectively. We are 
finalizing this proposal as proposed, which will 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 (g)(5) to Sec.  
155.220 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.\186\ 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 Exchanges on the Federal platform, including 
utilizing the Classic Direct Enrollment (Classic DE) and Enhanced 
Direct Enrollment (EDE) Pathways, during this 90-day 
period.187 188 As previously explained, immediate 
suspension is critical in these circumstances to stop additional 
potentially fraudulent enrollments through the FFEs and SBE-FPs.\189\ 
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.\190\ 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.191 192
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    \186\ See 81 FR 12258 through 12264. Also see 80 FR 75525 
through 75526.
    \187\ 45 CFR 155.220(g)(5)(iii).
    \188\ The agent, broker, or web-broker must continue to protect 
any personally identifiable information accessed during the term of 
their Exchange agreement(s). See, for example, 45 CFR 
155.220(g)(5)(iii) and 155.260.
    \189\ See, for example, 81 FR 12258 through 12264.
    \190\ See 45 CFR 155.220(g)(5)(i)(B).
    \191\ See 45 CFR 155.220(g)(5)(i)(B).
    \192\ 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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    We 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.\193\ 
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 on the 
Federal platform 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 noncompliance finding(s).194 195 More

[[Page 25803]]

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 Exchanges on the Federal 
platform, and is not permitted to assist individuals in applying for 
APTC and CSRs for QHPs.196 197 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.
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    \193\ See 45 CFR 155.220(g)(1) through (4). Also see, for 
example, 78 FR 37047 through 37048 and 78 FR 54076 through 54081.
    \194\ See 45 CFR 155.220(g)(3)(i).
    \195\ 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.
    \196\ 45 CFR 155.220(g)(4).
    \197\ The agent, broker, or web-broker must continue to protect 
any PII accessed during the term of their Exchange agreements. See, 
for example, 45 CFR 155.220(g)(4) and 155.260.
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    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 noted in the 
proposed rule (87 FR 78250) that we believe allowing HHS additional 
time to complete the review would be beneficial.
    We noted in the proposed rule (87 FR 78250) that we were cognizant 
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 on the 
Federal platform, we noted that 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 
previously, this additional time is warranted to accommodate 
particularly complex situations that require significant resources and 
time. We noted that we expect not all reviews are so complex that they 
will 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 also noted that we believe 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 \198\ to 135 days.\199\
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    \198\ 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, 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 new 
review period (day 45), as finalized in this rule, and lift the 
suspension, that would mean the agent's Exchange agreement(s) would 
have been suspended for only 52 days.
    \199\ For example, 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 new review period (day 45), as finalized in 
this rule, and lift the suspension, that agent's Exchange 
agreement(s) would be suspended for a maximum of 135 days.
---------------------------------------------------------------------------

    We noted that we believe this is not an unreasonable maximum 
timeframe, 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 on the Federal platform. 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 on the Federal platform when the 
misconduct may cause imminent or ongoing harm to consumers or the 
effective and efficient administration of Exchanges. We also further 
emphasized that the proposed extension to allow for up to 45 days for 
HHS to review rebuttal evidence in these situations represents the 
maximum timeframe.\200\ 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.
---------------------------------------------------------------------------

    \200\ 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.
---------------------------------------------------------------------------

    Terminations of Exchange agreement(s) by HHS are also limited,

[[Page 25804]]

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 Sec.  
155.220(g)(1) include, but are not limited to, violations of the 
Exchange privacy and security standards.\201\ 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.\202\ 
As noted in the proposed rule (87 FR 78206, 78251), 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 noted that 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 proposed 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).203 204
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    \201\ 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.
    \202\ Ibid.
    \203\ 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).
    \204\ 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.
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    For these reasons, we proposed 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 
proposed 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 sought comment on this proposal.
    After reviewing the public comments, we are finalizing this 
proposal 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, as proposed. We summarize and respond to public comments 
received on the proposed extension of time to review suspension 
rebuttal evidence and termination reconsideration requests (``extended 
review windows'') below.
    Comment: Multiple commenters expressed their support of these 
extended review windows. These commenters noted they believe the 
extended review windows are necessary to allow for proper review of 
complex cases. However, some of these commenters encouraged HHS to 
attempt to resolve suspension and termination reviews as quickly as 
possible and to not use the extra review time if it is not needed.
    Response: We appreciate these comments and are finalizing the 
amendments to Sec.  155.220(g)(5)(i)(B) and (h)(3) as proposed. As 
previously noted, we expect that not all reviews are so complex that 
they will require the use of this additional time, and that in cases 
where agents, brokers, and web-brokers present compelling evidence to 
rebut allegations of noncompliance, we believe that we will be able to 
resolve the vast majority of those reviews without the use of this 
additional time. We will continue to strive to resolve all suspension 
and termination reviews expeditiously and will not utilize the maximum 
review windows allowed unless necessary.
    Comment: One commenter expressed concern that the extended review 
windows are too lengthy, especially during Open Enrollment.
    Response: We disagree that these extended review windows are too 
lengthy, even during Open Enrollment. While we have acknowledged that 
this additional time could delay the ability of agents, brokers, and 
web-brokers to conduct business, particularly during Open Enrollment, 
we believe extending the review windows will be beneficial when dealing 
with complex cases that involve review of extensive evidence submitted 
by the agent or broker, revisiting multiple consumer complaints, and 
conducting additional outreach. Additionally, as previously stated, we 
believe that these extended review windows will only impact a very 
small percentage of agents, brokers, and web-brokers. This is because 
prior to suspending or terminating an agent or broker's Exchange 
agreement(s), HHS has already conducted a thorough investigation and 
concluded that the agent, broker, or web-broker in question is likely 
involved in fraudulent or noncompliant behavior. Furthermore, these 
extended review windows represent the maximum suspension or termination 
period possible. Therefore, we believe this approach strikes the 
appropriate balance because it maintains the agent's, broker's, or web-
broker's ability to submit additional information for reconsideration 
after a suspension or termination while also protecting consumers from 
potential harm, including during Open Enrollment, and supporting the 
efficient and effective administration of the Exchanges on the Federal 
platform.
b. Providing Correct Information to the FFEs (Sec.  155.220(j))
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78251), we proposed amendments to Sec.  
155.220(j)(2)(ii) to require agents, brokers, or web-brokers assisting 
with and facilitating enrollment in coverage 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

[[Page 25805]]

authorized representative designated in compliance with Sec.  155.227, 
prior to application submission. We proposed 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 proposed 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 agent, 
broker, or web-broker providing assistance. Lastly, we proposed that 
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 
conducted consistent with Sec.  155.220(c)(5), (g), (h) and (k). As 
noted in the proposed rule, these proposed changes would require 
amending Sec.  155.220(j)(2)(ii), creating new Sec.  
155.220(j)(2)(ii)(A), and redesignating current Sec.  
155.220(j)(2)(ii)(A) through (D) without change as Sec.  
155.220(j)(2)(ii)(B) through (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 Exchanges on the Federal 
platform and to assist individuals in applying for APTC 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.\205\ 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.\206\
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    \205\ 45 CFR 155.220(c)(1). Also see, for example, 77 FR 18334 
through 18336.
    \206\ 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. We noted in 
the proposed rule (87 FR 78252) that 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 will 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 
erroneous information, such as U.S. citizens attesting to not having a 
Social Security number (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. 
We noted that 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 will serve as an additional safeguard and procedural 
step to ensure the accuracy of the application information submitted to 
Exchanges on the Federal platform. Thus, we proposed 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 proposed to establish in new proposed Sec.  
155.220(j)(2)(ii)(A) standards for what constitutes adequate 
documentation that eligibility

[[Page 25806]]

application information has been reviewed and confirmed to be accurate 
by the consumer or their authorized representative. First, we proposed 
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 did 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 proposed 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 representative to a communication sent by the agent, 
broker, or web-broker, or other similar means or methods that we 
specify in guidance. We also invited comment on whether there may be 
other acceptable methods of documentation that we 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 noted that we were 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 Exchanges on the 
Federal platform.
    We also proposed 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 proposed 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, would be required to 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, broker, or web-broker assisting them. We noted that 
we believe 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 noted that we believe the 
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 proposed 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 proposed 
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.\207\ 
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.\208\ 
Therefore,

[[Page 25807]]

consistent with other Exchange maintenance of records 
requirements,\209\ we proposed to capture in new proposed Sec.  
155.220(j)(2)(iii)(A)(2) that agents, brokers, and web-brokers would be 
required to 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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    \207\ 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.
    \208\ 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 (for example, compliance reviews) may occur several 
years after the applicable coverage year.
    \209\ See, for example, 45 CFR 155.220(c)(3)(i)(E) and 
156.705(c).
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    We sought comment on these proposals.
    After reviewing the public comments, we are finalizing these 
proposals as proposed. We are making an edit to new Sec.  
155.220(j)(2)(ii) to add a missing comma before the reference to 
section 1411(b) of the ACA. This is a nonsubstantive edit that does not 
impact or otherwise change the new requirements or policies related to 
the obligation for agents, brokers and web-brokers to provide the FFEs 
and SBE-FPs with correct information under Sec.  155.220(j)(2)(ii) that 
are being finalized in this rule, as proposed.
    We summarize and respond to public comments received on the 
proposals 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 and the associated document retention policy 
below.
    Comment: Many commenters supported these proposals, stating they 
would protect consumers by helping prevent incorrect APTC 
determinations, and as a result, consumers potentially owing additional 
money to the IRS when they file their Federal income tax returns. Other 
commenters stated that these proposals would help encourage compliance 
and aid investigations of misconduct by agents, brokers, and web-
brokers.
    Response: We agree with these commenters and appreciate their 
support of these proposals. We are finalizing these proposals as 
proposed.
    Comment: Numerous commenters expressed concerns the proposals would 
impose heavy burdens on agents, brokers, and web-brokers due to the 
additional time that would be required for agents, brokers, and web-
brokers to implement and come into compliance with these new 
requirements. Some of these commenters stated the additional time 
required to meet these new requirements would be more burdensome during 
the Open Enrollment Period. Other commenters stated that they believed 
the additional time associated with implementing and complying with 
these new requirements would discourage consumers from enrolling in 
coverage through the FFEs and SBE-FPs, as well as agents, brokers, and 
web-brokers from assisting consumers in the FFEs and SBE-FPs.
    Response: We recognize these new requirements will likely require 
agents, brokers, and web-brokers to spend more time with each consumer 
to ensure and 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 and that this 
may affect agents, brokers, and web-brokers more so during the Open 
Enrollment Period. However, we believe the benefits of the new 
requirements outweigh any potential negative impact on agents, brokers, 
web-brokers, or consumers. It is imperative that consumers' Exchange 
applications contain accurate information when determining eligibility. 
As discussed in the proposed rule (87 FR 78252), if consumers' income 
determinations are not accurate, they could face serious financial harm 
when reconciling their taxes. In addition, submission of incorrect 
information on an application may lead to a DMI. Some DMIs, if left 
unresolved, can lead to a termination of a consumer's Exchange 
coverage. Ensuring consumers, or their authorized representatives, have 
reviewed their application information and attested to its accuracy 
will help mitigate these issues. Further, these new requirements will 
support the efficient operation of the FFEs and SBE-FPs by helping 
reduce the number of applications with incorrect information, limiting 
the number of DMIs that need to be investigated, and expediting our 
ability to investigate and resolve disputes related to inaccurate 
consumer information being entered on an eligibility application, which 
will also benefit agents, brokers, web-brokers and consumers.
    In addition, as discussed in the proposed rule (87 FR 78252 through 
78253), we did not propose to specify a method for documenting that 
eligibility application information has been reviewed and confirmed to 
be accurate by the consumer or their authorized representative to 
provide agents, brokers, or web-brokers the flexibility to establish 
protocols and methods that will meet their needs in the most efficient 
manner.
    Given this flexibility, and that the fact that these new 
requirements are simply building on existing requirements,\210\ we do 
not believe that they will discourage many agents, brokers, or web-
brokers from assisting consumers in the FFEs and SBE-FPs or that 
Exchange enrollment will drop by a significant percentage, if at all. 
In fact, we believe that these new requirements, which are intended to 
protect consumers, prevent fraud and abusive conduct, and ensure the 
efficient and effective operation of the Exchanges on the Federal 
platform, will encourage more consumers to purchase health insurance 
through the Exchanges. We will, however, monitor Exchange enrollment 
data and agent, broker, and web-broker participation in future years to 
analyze if these new requirements have a noticeable negative impact.
---------------------------------------------------------------------------

    \210\ See Sec.  155.220(j)(2)(ii).
---------------------------------------------------------------------------

    Comment: Some commenters suggested these new requirements would add 
a disproportionate burden on smaller agencies and independent agents, 
brokers, and web-brokers, particularly with regard to the initial costs 
of implementing these new requirements. These commenters stated larger 
agencies are better equipped to implement these new requirements and 
absorb the costs associated with them.
    Response: We acknowledge that larger agencies may be better 
equipped to implement these new requirements. There will be upfront 
costs associated with implementing these new requirements, including 
potentially purchasing recording software, upgrading storage capacity, 
or hiring new personnel. Larger agencies typically have more resources 
to allocate towards meeting new industry standards, as is the case in 
other business fields as well. However, we do not believe these new 
requirements will be cost prohibitive to smaller agencies or 
independent agents, brokers, and web-brokers. As discussed above, we 
are not mandating the method by which agents, brokers, and web-brokers 
must meet these new requirements. Therefore, smaller agencies and 
independent agents, brokers, and web-brokers have the flexibility to 
meet these requirements utilizing the most efficient and cost-effective 
method that meets their business needs. Additionally, as mentioned 
previously, these new requirements are simply building on existing 
requirements,\211\ which we believe will alleviate the burdens and 
costs associated with these new

[[Page 25808]]

requirements for agents, brokers, and web-brokers of all sizes.
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    \211\ See Sec.  155.220(j)(2)(ii).
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    Comment: Multiple commenters stated they believed these new 
requirements would be more difficult to implement over the phone, which 
would negatively impact consumers without internet access (that is, 
lower income) or those who are less proficient with technology.
    Response: We disagree that these requirements will be more 
difficult to implement over the phone than with respect to other 
enrollment methods. As is the case today, consumers will be able to 
enroll in QHPs and apply for APTC and CSRs for such coverage over the 
phone, in-person, and via the internet. The flexibility to choose what 
method is utilized to document that eligibility application information 
has been reviewed and confirmed to be accurate by the consumer or their 
authorized representative will allow agents, brokers, and web-brokers 
to implement these new requirements in a manner that is least 
burdensome to them. Agents, brokers, and web-brokers may also use this 
flexibility to implement different methods to comply with these 
requirements depending on the circumstances of each consumer they are 
assisting. Different implementation methods include, but are not 
limited to, obtaining the signature of the consumer or their authorized 
representative (electronic or otherwise), verbal confirmation by the 
consumer or their authorized representative that is captured in an 
audio recording, where legally permissible, or a written response 
(electronic or otherwise) from the consumer or their authorized 
representative to a communication sent by the agent, broker, or web-
broker.
    As such, to implement these new requirements for over-the-phone 
enrollments, where legally permissible and in accordance with 
applicable requirements,\212\ agents, brokers, and web-brokers can 
record phone conversations with consumers or their authorized 
representatives to comply with Sec.  155.220(j)(2)(ii)(A). For example, 
during these conversations, an agent, broker, or web-broker may ask the 
consumer if they have reviewed their application information, the 
information is accurate, and they understand the attestations involved. 
A recording of the consumer's response to these questions, if it meets 
the requirements in Sec.  155.220(j)(2)(ii)(A), would be sufficient to 
meet these new requirements. We understand that saving recorded 
conversations may be more difficult than other mediums due to the 
digital space requirements and recording software needed, but is not an 
excessive burden as there are numerous recording software options to 
choose from and external hard drives are widely available for purchase. 
Where legally permissible, it will be the choice of the agent, broker, 
or web-broker if recording phone conversations is the best method for 
them to implement these requirements for over-the-phone enrollments. At 
the same time, we recognize there may be reasons agents, brokers and 
web-brokers would also want to have other methods available for over-
the-phone enrollments. For example, in situations where a phone 
recording is not possible, agents, brokers and web-brokers may send the 
consumer or their authorized representative an email or text message 
after talking with them over the phone. The consumer or their 
authorized representative may respond to this email or text message, 
acknowledging they have reviewed the eligibility application 
information and confirmed its accuracy prior to application submission. 
When in-person assistance is provided, the agent, broker or web-broker 
may want to offer the recording methods and other options that it uses 
for over-the-phone enrollments. The agent, broker, or web-broker may 
also want to implement a method for in-person assistance that involves 
obtaining the signature of the consumer or authorized representative 
(electronic or otherwise) given the face-to-face nature of the 
interaction. Similarly, agents, brokers and web-brokers should consider 
what methods meets their business needs, and those of their consumers, 
for enrollments over the internet. While we are not mandating that 
agents, brokers, and web-brokers adopt all of these different 
implementation methods, we encourage agents, brokers and web-brokers to 
exercise this flexibility in a manner that accommodates the various 
enrollment methods they use with their respective consumers. 
Additionally, if an agent, broker, or web-broker is not able to 
accommodate a consumer (for example, the consumer does not have access 
to the internet or is less proficient with technology but the specific 
agent, broker, or web-broker only engages in enrollments via the 
internet), the consumer may find another agent, broker, or web-broker 
that can meet their needs.
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    \212\ We recognize that there are Federal and State laws that 
govern the legality of recording phone calls and conversations that 
may impact an agent, broker, or web-broker's ability to record phone 
or oral communications with consumers or that may require an agent, 
broker, or web-broker to obtain the consumer's consent prior to 
recording such communications (see, for example, 18 U.S.C. 2511).
---------------------------------------------------------------------------

    We believe these new requirements will help protect consumers, 
including those who may be in underserved groups, rather than inhibit 
their enrollment in Exchange coverage, as well as ensure the efficient 
and effective operation of the Exchanges on the Federal platform. 
Further, we frequently see unauthorized enrollments impact underserved 
groups of consumers in greater numbers than other groups. Often, 
agents, brokers, and web-brokers who engage in noncompliant or 
fraudulent behavior target low-income consumers or consumers with 
limited English proficiency. By requiring that agents, brokers, and 
web-brokers document that consumers or their authorized representatives 
have reviewed and verified their application information prior to 
submission, we believe that these consumer harms and the impact on 
underserved groups can be mitigated.
    Comment: Multiple commenters expressed concerns regarding the 
disclosure of consumers' personally identifiable information (PII). 
These commenters stated that they believe these new requirements would 
lead to more improper disclosures of consumer PII as agents, brokers, 
and web-brokers would be storing more consumer PII than in the past.
    Response: We do not believe these new requirements will lead to 
more improper disclosures of consumer PII. These new requirements do 
not require agents, brokers, and web-brokers to record or maintain any 
consumer PII in addition to the consumer PII an agent, broker, or web-
broker currently records and maintains. The new requirements include 
ensuring a consumer or their authorized representative has reviewed and 
attested that their application information is correct prior to 
submission and that this is documented and maintained by the agent, 
broker, or web-broker for a minimum of 10 years. This 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 assisting agent, broker, or web-broker. The only piece of PII 
required for this documentation is the consumer's name, which an agent, 
broker, or web-broker would already be recording and maintaining in 
their files.
    A recorded conversation, during an over-the-phone enrollment or 
otherwise, could potentially contain more consumer PII than what the 
regulations require, as additional consumer

[[Page 25809]]

information may be revealed during the conversation and the enrollment 
process. However, we do not believe this will lead to more improper 
disclosures of consumer PII. Agents, brokers, and web-brokers are 
already required to adhere to applicable State or Federal laws 
concerning the safeguarding of consumer PII, including Sec.  
155.220(g)(4) and (j)(2)(iv), and HIPAA.\213\ These same requirements 
and protections continue to apply. Additionally, an agent, broker, or 
web-broker that elects to implement the phone recording method to meet 
these new requirements would only be required to record the portion of 
the conversation in which the consumer or consumer's representative 
confirms that they have reviewed and attested that their application 
information is correct prior to submission to demonstrate compliance, 
which would reduce the amount of consumer PII in the recorded 
conversation. This would further reduce or eliminate the potential of 
improper disclosures of consumer PII.
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    \213\ See, for example, Sec.  155.260, 45 CFR part 164, subparts 
A and E, and the Health Insurance Portability and Accountability Act 
of 1996, Pub. L. 104-191, H.R. 3103, 104th Cong.
---------------------------------------------------------------------------

    Comment: One commenter suggested the IRS provide the consumer 
income information that is to be entered on each Exchange application.
    Response: We appreciate the commenter's suggestion, but generally 
note the consumer is in the best position to project their future 
income and is the individual generally responsible for providing 
application information, including information regarding income.\214\ 
To determine if a consumer is eligible for financial assistance, such 
as APTC, prior to enrollment, an estimate for income must be entered 
prior to the eligibility determination process. As many consumers 
enroll in health coverage prior to a new calendar year, the income 
amount they enter is an estimate based on available data, including 
income in prior years, as well as what consumers believe their income 
will be in the upcoming plan year. The IRS will not have income data 
for the consumer for the year of coverage until the consumer files a 
tax return for the year of coverage. This typically does not occur 
until the next calendar year. By that time, the year of coverage will 
have ended so this income data from the IRS will not provide a timely 
income projection for the upcoming year of coverage. Recognizing income 
amounts provided by consumers on eligibility applications are 
projections, the statute generally requires HHS to verify income 
information on Exchange applications with the Department of 
Treasury.\215\ As such, the ACA established an approach that collects 
information about estimated income for the upcoming plan year from the 
consumer, the person in the best position to make such projections, 
with a verification of that information from a trusted source, the 
Department of Treasury and IRS.
---------------------------------------------------------------------------

    \214\ See sections 1411(b)(3) and 1412(b)(2) of the ACA and 
redesignated Sec.  155.220(j)(2)(ii)(E).
    \215\ See sections 1411(c)(3) and 1412(b)(2) of the ACA and 
redesignated Sec.  155.220(j)(2)(ii)(E).
---------------------------------------------------------------------------

    Comment: Several commenters stated that we should allow agents, 
brokers, and web-brokers to meet these new requirements under Sec.  
155.220(j)(2)(ii) and the new requirements related to documenting 
consumer consent under Sec.  155.220(j)(2)(iii) during the same 
consumer interaction and/or within the same document.
    Response: Agents, brokers, and web-brokers are not prohibited from 
documenting that eligibility application information has been reviewed 
by and confirmed to be accurate by the consumer or the consumer's 
authorized representative and documenting the receipt of consent from 
the consumer or the consumer's authorized representative pursuant to 
Sec.  155.220(j)(2)(ii) and (iii), respectively, during the same 
conversation with the consumer, or within the same document, as long as 
the documentation complies with the requirements set forth in Sec.  
155.220(j)(2)(ii)(A) and (B) and (j)(2)(iii)(A) through (C).
    Comment: Some commenters stated that we should not take enforcement 
action against agents, brokers, or web-brokers who act in good faith to 
comply with these new requirements and who enter information on a 
consumer's Exchange application that the consumer has attested to be 
true, but that turns out to be inaccurate. Specifically, these 
commenters indicated accurate income projections for consumers who are 
self-employed or work flexible hours are difficult, and thus, can often 
end up being inaccurate. Some commenters also suggested that we should 
only enforce these requirements against agents, brokers, and web-
brokers, and not against issuers, as issuers are not directly involved 
in enrolling consumers in Exchange coverage.
    Response: We do not initiate enforcement actions against agents, 
brokers, and web-brokers who act in good faith to provide the FFEs and 
SBE-FPs with correct information and where there is a reasonable cause 
for the failure to provide correct information.\216\ We understand that 
income projections are purely estimates and a consumer's yearly income 
may be different than projected, especially for those who are self-
employed or work flexible hours. As such, assuming the agent, broker or 
web-broker meets the applicable requirements and maintains the 
necessary documentation, we believe the situation described by these 
commenters is an example in which an agent, broker, or web-broker has 
acted in good faith and there is a reasonable cause for the failure to 
provide correct information such that no enforcement action would be 
taken and no penalties would be imposed. In addition, we note that the 
requirements contained in Sec.  155.220(j)(2)(ii)(A) apply specifically 
to agents, brokers, and web-brokers, and not to issuers.
---------------------------------------------------------------------------

    \216\ See Sec.  155.220(j)(3), which states ``If an agent, 
broker, or web-broker fails to provide correct information, he, she, 
or it will nonetheless be deemed in compliance with paragraphs 
(j)(2)(i) and (ii) of this section if HHS determines that there was 
a reasonable cause for the failure to provide correct information 
and that the agent, broker, or web-broker acted in good faith.''
---------------------------------------------------------------------------

    Comment: A few commenters suggested the proposed record retention 
period of 10 years is too long for agents, brokers, and web-brokers to 
maintain the documentation required by Sec.  155.220(j)(2)(ii)(A). 
Another commenter stated we should have the record retention period 
match align with the required record retention period of the State 
where the consumer is enrolled.
    Response: Please see the accompanying information collection 
section IV.F (ICRs Regarding Providing Correct Information to the FFEs 
(Sec.  155.220(j)) of this final rule for the response to these 
comments.
    Comment: We also received several comments related to agents, 
brokers, and web-brokers switching their National Producer Numbers on 
consumers' applications, a lack of respect towards agents, brokers, and 
web-brokers, and agent, broker, and web-broker commissions, which were 
outside the scope of these proposals.
    Response: Although we appreciate these commenters' interest in the 
policies governing consumer review and attestation of their application 
information prior to submission, given that these comments are out-of-
scope with regard to these specific proposals, we decline to comment on 
them at this time.
c. Documenting Receipt of Consumer Consent (Sec.  155.220(j))
    We proposed to amend Sec.  155.220(j)(2)(iii) to require agents, 
brokers, or web-brokers assisting with and facilitating enrollment in 
coverage through FFEs and SBE-FPs or assisting

[[Page 25810]]

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 proposed 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 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 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 proposed 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 proposed 
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 in coverage 
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. As provided in the 
proposed rule (87 FR 78254), 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 proposed this standard because, as noted in the 
proposed rule (87 FR 78254), we believe that it will 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 
proposed 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 proposed to establish in proposed new Sec.  
155.220(j)(2)(iii)(A) through (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 proposed 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 noted that we did 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 proposed 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. We 
proposed that 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 that the documentation include the date consent was given, 
the name of the consumer or their authorized representative, the 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. We noted that if 
agents, brokers, and web-brokers have already adopted consent 
documentation processes consistent with this proposed framework, no 
changes would be required. We noted in the proposed rule (87 FR 78206, 
78254) that 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 noted that we 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 to 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 proposed 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

[[Page 25811]]

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, as noted in the proposed rule (87 FR 78254 through 
78255), this proposal is intended to ensure individuals are making an 
informed decision when providing their consent 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 noted that we expect the information in 
the consent documentation will 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 proposed 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 its 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.\217\ 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.\218\ Therefore, consistent with other Exchange maintenance of 
records requirements,\219\ we proposed to capture in new proposed Sec.  
155.220(j)(2)(iii)(C) that agents, brokers, and web-brokers would be 
required to 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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    \217\ 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.
    \218\ 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 (for example, compliance reviews) may occur several 
years after the applicable coverage year.
    \219\ See, for example, 45 CFR 155.220(c)(3)(i)(E) and 
156.705(c).
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    We sought comment on these proposals, including whether there are 
other means or methods of documentation that we should consider 
specifying are permissible for purposes of documenting the receipt of 
consent from consumer or their, qualified employers, or qualified 
employees.
    After reviewing the public comments, we are finalizing these 
proposals as proposed. We are making a technical update to Sec.  
155.220(j)(2)(iii)(A) to add in the phrase ``or other similar means or 
methods that HHS specifies in guidance'' to align with and capture the 
proposed policy, as reflected in the preamble of the proposed rule, and 
which is being finalized in this final rule, as proposed.
    We summarize and respond to public comments received on the 
proposals related to the documentation of consumer consent and the 
associated document retention policy below.
    Comment: Multiple commenters expressed their support of these 
proposals. These commenters stated they believed these new requirements 
would help eliminate unauthorized enrollments and protect consumers. 
Many of these commenters recommended that we allow agents, brokers, and 
web-brokers to maintain the flexibility to determine the method by 
which they will meet these requirements.
    Response: We agree with these commenters and are finalizing these 
proposals as proposed. As discussed in the proposed rule, to ensure 
continued flexibility for agents, brokers, and web-brokers, we have not 
mandated a specific method by which agents, brokers, and web- brokers 
must meet these requirements. The technical update we are making to 
Sec.  155.220(j)(2)(iii)(A) to add in the phrase ``or other similar 
means or methods that HHS specifies in guidance'' aligns the regulatory 
text with the preamble and further emphasizes this flexibility, as the 
means or methods by which acceptable documentation may be obtained by 
agents, brokers, and web-brokers are not being mandated and may be 
updated by HHS in guidance.
    Comment: Some commenters expressed concern these new requirements 
would impose heavy burdens on agents, brokers, and web-brokers due to 
the additional time that would be required for agents, brokers, and 
web-brokers to implement and come into compliance with these new 
requirements. Some of these commenters stated the additional time 
required to meet these new requirements would be more burdensome during 
the Open Enrollment Period. Other commenters stated the additional time 
associated with implementing and complying with these new requirements 
would discourage consumers from enrolling in coverage through the FFEs 
and SBE-FPs, as well as agents, brokers, and web-brokers from assisting 
consumers in the FFEs and SBE-FPs.
    Response: We recognize these new requirements will likely require 
agents, brokers, and web-brokers to spend more time with each consumer 
to ensure that consumer consent is documented and that this may affect 
agents, brokers, and web-brokers more so during the Open Enrollment 
Period. However, we believe the benefits of these new requirements

[[Page 25812]]

outweigh any potential negative impact on agents, brokers, web-brokers, 
or consumers. Existing rules require agents, brokers, and web-brokers 
to obtain consumer consent prior to assisting them with Exchange 
enrollment or applying for APTC and CSRs for QHPs.\220\ Therefore, we 
believe that requiring a record of that consent be documented and 
maintained will not add significant burdens on agents, brokers, and 
web-brokers.
---------------------------------------------------------------------------

    \220\ See 45 CFR 155.220(j)(2)(iii).
---------------------------------------------------------------------------

    Additionally, as discussed in the proposed rule (87 FR 78254), we 
believe having a reliable record of consent will help with the 
resolution of 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; the resolution 
of consumer complaints; and minimize the risk of fraudulent activities 
such as unauthorized enrollments. Finally, as discussed in the proposed 
rule (87 FR 78254), we did not propose to specify a method for 
documenting that consumer consent was provided. This flexibility will 
allow each individual agent, broker, or web-broker to establish 
protocols and methods that will meet their needs in the most efficient 
manner. We believe this flexibility, and that the fact that these new 
requirements are simply building on existing requirements,\221\ will 
minimize the burdens associated with implementing these new 
requirements. In fact, we believe that these new requirements, which 
are intended to protect consumers, prevent fraud and abusive conduct, 
and ensure the efficient and effective operation of the Exchanges on 
the Federal platform, will encourage more consumers to purchase health 
insurance through the Exchanges. We will, however, monitor Exchange 
enrollment data and agent, broker, web-broker participation in future 
years to analyze if these new requirements have a noticeable negative 
impact.
---------------------------------------------------------------------------

    \221\ See 45 CFR 155.220(j)(2)(iii).
---------------------------------------------------------------------------

    Comment: Multiple commenters expressed concerns regarding the 
disclosure of consumers' PII. These commenters stated that they believe 
these new requirements would lead to more improper disclosures of 
consumer PII as agents, brokers, and web-brokers would be storing more 
consumer PII than in the past.
    Response: We do not believe these new requirements will lead to 
more improper disclosures of consumer PII. These new requirements do 
not require agents, brokers, and web-brokers to record or keep consumer 
PII beyond what an agent, broker, or web-broker currently records and 
maintains. Section 155.220(j)(2)(iii)(A) requires that agents, brokers, 
and web-brokers document the receipt of consent from a consumer or the 
consumer's authorized representative. Under Sec.  
155.220(j)(2)(iii)(B), such documentation is required to include a 
description of the scope, purpose, and duration of the consent 
provided, the date consent was given, the name of the consumer or their 
authorized representative, the name of the agent, broker, web-broker, 
or agency being granted consent, and a process through which the 
consumer or their authorized representative may rescind the consent. 
The only piece of PII required for this documentation is the consumer's 
name, which an agent, broker, or web-broker would already be recording 
and maintaining in their files.
    A recorded conversation, during an over-the-phone enrollment or 
otherwise, could potentially contain more consumer PII than what the 
regulations require, as additional consumer information may be revealed 
during the conversation and the enrollment process. However, we do not 
believe this will lead to more improper disclosures of consumer PII. 
Agents, brokers, and web-brokers are already required to adhere to 
applicable State or Federal laws concerning the safeguarding of 
consumer PII, including Sec.  155.220(g)(4) and (j)(2)(iv), and 
HIPAA.\222\ These same requirements and protections continue to apply. 
Additionally, an agent, broker, or web-broker that elects to implement 
the phone recording method to meet these new requirements would only be 
required to record the portion of the conversation in which the 
consumer or consumer's representative provides consent to demonstrate 
compliance, which would reduce the amount of consumer PII in the 
recorded conversation. This would further reduce or eliminate the 
potential of improper disclosures of consumer PII.
---------------------------------------------------------------------------

    \222\ See, for example, 45 CFR 155.260, 45 CFR part 164, 
subparts A and E, and the Health Insurance Portability and 
Accountability Act of 1996, Public Law 104-191, H.R. 3103, 104th 
Cong (42 U.S.C. 1320d-2).
---------------------------------------------------------------------------

    Comment: Some commenters suggested these new requirements would add 
a disproportionate burden on smaller agencies and independent agents, 
brokers, and web-brokers, particularly with regard to the initial costs 
of implementing these new requirements. These commenters stated larger 
agencies are better equipped to implement these new requirements and 
absorb the costs associated with them.
    Response: We acknowledge that larger agencies may be better 
equipped to implement these new requirements. There will be upfront 
costs associated with these new requirements, potentially including 
purchasing recording software, upgrading storage capacity, or hiring 
new personnel. Larger agencies typically have more resources to 
allocate towards meeting new industry standards, as is the case in 
other business fields as well. However, we do not believe these new 
requirements will be cost prohibitive to smaller agencies or 
independent agents, brokers, and web-brokers. As discussed above, we 
are not mandating the method by which agents, brokers, and web-brokers 
must meet these new requirements. Therefore, smaller agencies and 
independent agents, brokers, and web-brokers have the flexibility to 
meet these requirements utilizing the most efficient and cost-effective 
method that meets their business needs. Additionally, as mentioned 
previously, these new requirements are simply building on existing 
requirements to obtain consumer consent prior to assisting with or 
facilitating enrollment through an FFE or assisting the individual in 
applying for APTC and CSRs for QHPs,\223\ which we believe will 
alleviate the burdens and costs associated with these new requirements 
for agents, brokers, and web-brokers of all sizes.
---------------------------------------------------------------------------

    \223\ See Sec.  155.220(j)(2)(iii).
---------------------------------------------------------------------------

    Comment: Multiple commenters stated they believed these new 
requirements would be more difficult to implement over the phone, which 
would negatively impact consumers without internet access (that is, 
lower income) or those who are less proficient with technology.
    Response: We disagree that these requirements will be more 
difficult to implement over the phone than with respect to other 
enrollment methods. As is the case today, consumers will be able to 
enroll in QHPs and apply for APTC and CSRs for such coverage over the 
phone, in-person, and via the internet. The flexibility to choose what 
method is utilized to document that consumer consent has been obtained 
will allow agents, brokers, and web-brokers to implement these new 
requirements in a manner that is least burdensome to them. Agents, 
brokers, and web-brokers may also use this flexibility to implement 
different methods to comply with these requirements depending on the 
circumstances of each consumer

[[Page 25813]]

they are assisting. Different implementation methods include, but are 
not limited to, obtaining the signature of the consumer or their 
authorized representative (electronic or otherwise), verbal 
confirmation by the consumer or their authorized representative that is 
captured in an audio recording, where legally permissible, or a written 
response (electronic or otherwise) from the consumer or their 
authorized representative to a communication sent by the agent, broker, 
or web-broker.
    As such, to implement these new requirements for over-the-phone 
enrollments, where legally permissible and in accordance with 
applicable requirements,\224\ agents, brokers, and web-brokers can 
record phone conversations with consumers or their authorized 
representatives to comply with Sec.  155.220(j)(2)(iii)(A) and (B). For 
example, during these conversations, an agent, broker, or web-broker 
may ask the consumer or the consumer's authorized representative if 
they have provided consent. A recording of the consumer's or their 
authorized representative's response to this question, if it meets the 
requirements in Sec.  155.220(j)(iii)(A) and (B), would be sufficient 
to meet these new requirements. We understand that saving recorded 
conversations may be more difficult than other mediums due to the 
digital space requirements and recording software needed, but is not an 
excessive burden as there are numerous recording software options to 
choose from and external hard drives are widely available for purchase. 
Where legally permissible, it will be the choice of the agent, broker, 
or web-broker if recording phone conversations is the best method for 
them to implement these requirements for over-the-phone enrollments. At 
the same time, we recognize there may be reasons agents, brokers and 
web-brokers would also want to have other methods available for over-
the-phone enrollments. For example, in situations where a phone 
recording is not possible, agents, brokers and web-brokers may send the 
consumer or their authorized representative an email or text message 
after talking with them over the phone. The consumer or their 
authorized representative may respond to this email or text message, 
acknowledging they have provided consent. When in-person assistance is 
provided, the agent, broker or web-broker may want to offer the 
recording methods and other options that it uses for over-the-phone 
enrollments. The agent, broker, or web-broker may also want to 
implement a method for in-person assistance that involves obtaining the 
signature of the consumer or authorized representative (electronic or 
otherwise) given the face-to-face nature of the interaction. Similarly, 
agents, brokers and web-brokers should consider what methods meets 
their business needs, and those of their consumers, for enrollments 
over the internet. While we are not mandating that agents, brokers, and 
web-brokers adopt all of these different implementation methods, we 
encourage agents, brokers and web-brokers to exercise this flexibility 
in a manner that accommodates the various enrollment methods they use 
with their respective consumers. Additionally, if an agent, broker, or 
web-broker is not able to accommodate a consumer (for example, the 
consumer does not have access to the internet or is not proficient with 
technology but the specific agent, broker, or web-broker only engages 
in enrollments via the internet), the consumer may find another agent, 
broker, or web-broker that can meet their needs.
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    \224\ We recognize that there are Federal and State laws that 
govern the legality of recording phone calls and conversations that 
may impact an agent, broker, or web-broker's ability to record phone 
or oral communications with consumers or that may require an agent, 
broker, or web-broker to obtain the consumer's consent prior to 
recording such communications (see, for example, 18 U.S.C. 2511).
---------------------------------------------------------------------------

    We believe these new requirements will help protect consumers, 
including those who may be in underserved groups, rather than inhibit 
their enrollment in Exchange coverage. Further, we frequently see 
unauthorized enrollments impact underserved groups of consumers in 
greater numbers than other groups. Often, agents, brokers, and web-
brokers who engage in noncompliant or fraudulent behavior target low-
income consumers or consumers with limited English proficiency. By 
requiring that agents, brokers, and web-brokers document that consumers 
or their authorized representatives have provided their consent, we 
believe that these consumer harms and the impact on underserved groups 
can be mitigated. In addition, requiring agents, brokers, and web-
brokers to document that consumer consent was received and to maintain 
the record for 10 years will provide us with more conclusive evidence 
when pursuing enforcement actions against agents, brokers, or web-
brokers for potentially fraudulent activities.
    Comment: Multiple commenters suggested these new requirements 
related to the documentation of consumer consent are unnecessary as the 
requirement to obtain consumer consent already exists, either under 
Federal or State law or in the agent, broker, or web-broker's Exchange 
agreement(s).
    Response: We disagree that these new requirements related to the 
documentation of consumer consent are unnecessary or duplicative of 
existing requirements. While agents, brokers, and web-brokers are 
currently required to obtain consumer consent prior to providing the 
consumer with assistance pursuant to Sec.  155.220(j)(2)(iii), this 
section does not currently require agents, brokers, or web-brokers to 
document the receipt of consent and maintain such documentation for a 
specified period of time. As discussed in the proposed rule (87 FR 
78254), we believe requiring such documentation of consent is crucial 
for two reasons. First, we believe this requirement will help minimize 
the risk of fraudulent activities, such as unauthorized enrollments. 
Second, it will help us resolve disputes and adjudicate claims related 
to the provision of consumer consent.
    Comment: One commenter suggested that the documentation of consumer 
consent requirement is unnecessary as unauthorized enrollments in 
Exchange coverage do not occur for consumers under the age of 65.
    Response: We have observed numerous unauthorized Exchange 
enrollments that have occurred for consumers under the age of 65. This 
is especially true with regard to consumers with limited English 
proficiency or underserved populations, including unhoused individuals. 
We believe these new requirements will help mitigate the risk of 
unauthorized enrollments for consumers of all ages.
    Comment: Several commenters stated that we should allow agents, 
brokers, and web-brokers to meet these new requirements under Sec.  
155.220(j)(2)(iii) and the new requirements related to documenting that 
eligibility application information has been reviewed by and confirmed 
to be accurate by the consumer or the consumer's authorized 
representative under Sec.  155.220(j)(2)(ii) during the same consumer 
interaction and/or within the same document.
    Response: Agents, brokers, or web-brokers are not prohibited from 
documenting that eligibility application information has been reviewed 
by and confirmed to be accurate by the consumer or the consumer's 
authorized representative and documenting the receipt of consent from 
the consumer or the consumer's authorized representative pursuant to 
Sec.  155.220(j)(2)(ii) and (iii), respectively, during the same 
conversation with the consumer, or within the same document, as long as 
the documentation

[[Page 25814]]

complies with the requirements set forth in Sec.  155.220(j)(2)(ii)(A) 
and (B) and (j)(2)(iii)(A) through (C).
    Comment: Some commenters recommended that we allow consumers to 
grant consent to multiple agents, brokers, or web-brokers 
simultaneously.
    Response: As noted in the proposed rule (87 FR 78254), we are not 
directing agents, brokers, or web-brokers on how to comply with these 
new documentation requirements. In the Model Consent Form \225\ that 
accompanied the proposed rule, we included an option for a consumer to 
provide consent to an agency rather than an individual agent, broker, 
or web-broker. At this time, providing consent to an agency or multiple 
agents, brokers, or web-brokers simultaneously is permitted, provided 
the consent documentation complies with the requirements contained in 
Sec.  155.220(j)(2)(iii).
---------------------------------------------------------------------------

    \225\ CMS. (Dec. 14, 2022). CMS Model Consent Form for 
Marketplace Agents and Brokers. PRA package (CMS-10840, OMB 0938-
XXXX). https://www.cms.gov/regulations-and-guidance/legislation/paperworkreductionactof1995/pra-listing/cms-10840.
---------------------------------------------------------------------------

    Comment: A few commenters suggested the proposed record retention 
period of 10 years is too long for agents, brokers, and web-brokers to 
maintain the documentation required by Sec.  155.220(j)(2)(iii)(C). 
Another commenter stated we should have record retention period align 
with the record retention period of the State where the consumer is 
enrolled.
    Response: Please see the accompanying information collection 
section IV.F. (ICRs Regarding Providing Correct Information to the FFEs 
(Sec.  155.220(j)) of this final rule for the response to these 
comments.
    Comment: One commenter suggested we define what consent is so that 
it may be standardized. This commenter also suggested we delay 
implementation of these documentation requirements until PY 2025, or 
exercise enforcement discretion with regard to those agents, brokers, 
and web-brokers making good-faith efforts to meet these requirements 
during PY 2024.
    Response: After considering these comments, we decline to define 
consent. We believe the term consent is unambiguous and the new 
requirements in Sec.  155.220(j)(2)(iii)(A) through (C) will provide 
agents, brokers, and web-brokers with a clear picture of what obtaining 
and documenting the receipt of consent requires under Sec.  
155.220(j)(2)(iii). In addition, we decline to delay implementation of 
these requirements until PY 2025. As noted in the proposed rule (87 FR 
78254) and above, the goal of these requirements is to prevent 
fraudulent activities such as unauthorized enrollments, to help resolve 
disputes between agents, brokers, and web-brokers and consumers related 
to consumer consent, reduce consumer harm, and support the efficient 
operation of the Exchanges. If we delay implementation of these 
documentation requirements, consumers may be negatively impacted when 
that impact could have been avoided. Additionally, we do not plan on 
targeting agents, brokers, or web-brokers who are acting in good faith 
to meet these new requirements. Our primary goal is to address 
situations involving noncompliance by actors who are not acting in good 
faith, with a particular focus on fraudulent activities in the FFEs and 
SBE-FPs. Our experience shows long-standing patterns of this activity 
with the potential to impact a large number of consumers with 
potentially severe consequences (for example, termination of coverage, 
unanticipated tax liability).
    Comment: We also received several comments that were outside the 
scope of these proposals related to the documentation of consumer 
consent, including the need to have the Exchange(s) obtain and maintain 
consent documentation instead of the agent, broker, or web-broker, as 
well as having the Exchange(s) email consumers when changes on an 
application are made.
    Response: Although we appreciate the commenters' interest in 
policies governing the documentation of consumer consent, given that 
these comments are out-of-scope with regard to these specific 
proposals, we decline to comment on them at this time.
4. Eligibility Standards (Sec.  155.305)
a. Failure To File and Reconcile Process (Sec.  155.305(f)(4))
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78255), we proposed 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 from the IRS will 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 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 section 36B(f) of the Code and its 
implementing regulations 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 operational costs 
of the current policy are significant and can be improved to provide a 
better consumer experience, while also preserving an Exchange's duty to 
protect program integrity. 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), notifies 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 proposed 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 and its implementing regulations, 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

[[Page 25815]]

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, Premium Tax Credit (PTC). 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 (because the Exchange is 
prohibited from sending protected tax information to an individual who 
may not be the tax filer). Notices to the applicant's household contact 
can be confusing because of the multiple reasons listed. Both 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 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.'' \226\ Enrollees who make 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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    \226\ We note that this question was removed from the single 
streamlined application once the FTR process was paused in 2020 for 
the 2021 PY.
---------------------------------------------------------------------------

    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 proposed the changes to Sec.  
155.305(f)(4) described in the proposed rule (87 FR 78255 through 
78257). HHS' and the 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, we 
are 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 
one 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 2 consecutive tax years (specifically, years 
for which tax data will be utilized for verification of household 
income and family size), Exchanges will 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 will 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 will 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.
    We believe in ensuring consumers have access to affordable coverage 
and place high value on consumers maintaining continuity of coverage in 
the Exchange, as we have 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, we 
believe it is imperative that any change to the current FTR operations 
be done carefully and that we 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 health insurance 
coverage for needed medical care.
    Therefore, given these challenges that both Exchanges and consumers 
have faced with the requirement to file and reconcile, we proposed to 
revise Sec.  155.305(f)(4) under which Exchanges will not be required, 
or permitted, to determine consumers ineligible for APTC due to having 
an FTR status for only one year. Given that our experience running FTR 
shows continued issues with compliance with the requirement to file and 
reconcile, we proposed that beginning on January 1, 2024, an 
applicant's FTR status will trigger an Exchange determination that the 
applicant is ineligible for APTC only if the applicant has an FTR 
status for 2 consecutive years (specifically, 2

[[Page 25816]]

consecutive years for which tax data will be utilized for verification 
of household income and family size).
    Due to the COVID-19 PHE starting in 2020, for PYs 2021 and 2022, we 
temporarily paused ending APTC for enrollees with an FTR status due to 
IRS processing delays of 2019 Federal income tax returns.\227\ We then 
extended this pause for the PY 2023 in July 2022 and included 
flexibility for State Exchanges that operate their own eligibility and 
enrollment platforms to take similar action.\228\ As a result of these 
changes, 55 percent of enrollees who were automatically re-enrolled 
during 2021 open enrollment with an FTR status remained enrolled in 
Exchange coverage as of March 2021. In contrast, only 12 percent of 
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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    \227\ 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.
    \228\ 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.
---------------------------------------------------------------------------

    We proposed to continue to pause APTC denials based on a failure to 
reconcile until HHS and the IRS are able to implement the new FTR 
policy. Until the IRS can update its systems to implement the new FTR 
policy, and we can notify the Exchange of an enrollee's consecutive 
two-year FTR status, the Exchange would not determine enrollee's 
ineligible for APTC based on either the one-year or two-year FTR 
status. We believe that removing APTC after 2 consecutive years of an 
FTR status instead of one would help consumers avoid gaps in coverage 
by increasing retention in the Exchange even if they have failed to 
reconcile for one year, and would 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 2 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 2 years, been given 
ample notification of their obligation to file and reconcile and have 
nevertheless failed to do so.
    We sought comment on these proposals, especially from States and 
other interested parties regarding tax burdens on consumers which would 
inform our decision on this proposal.
    After reviewing the public comments, we are finalizing this 
provision as proposed, except that the final rule will become effective 
on the general effective date of the final rule, instead of January 1, 
2024. As detailed in the responses to comments on these policies, some 
commenters sought clarity on when the policy would become effective, 
and others were concerned that changing the FTR policy would threaten 
the integrity of APTC available to eligible consumers. By allowing the 
policy to become generally effective prior to January 1, 2024, we are 
solidifying flexibility for HHS and IRS to resume FTR operations as 
soon as HHS and IRS are ready to begin. HHS will provide at least three 
months' notice to consumers and other interested parties prior to 
resuming FTR operations. We originally proposed a technical correction 
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. 
However, upon further review, this technical correction is not 
necessary because we believe that the original wording of the rule more 
accurately reflected how information is passed through the Federal Data 
Services Hub, and therefore, we are not finalizing this technical 
correction. Finally, we clarify that Exchanges must continue to pause 
APTC denials based on a failure to reconcile for one year under the 
currently effective regulation, or 2 years under the regulation we 
finalize here, until HHS and the IRS are able to implement the FTR 
policy.
    We summarize and respond to public comments received on the 
proposed rule that an applicant's FTR status will result in an Exchange 
finding that the applicant is ineligible for APTC only if the applicant 
has an FTR status for 2 consecutive tax years.
    Comment: Many commenters agreed with the proposal that an 
applicant's FTR status will result in an Exchange determination that 
the applicant is ineligible for APTC only if the applicant has an FTR 
status for 2 consecutive tax years. Commenters agreed that the two-year 
FTR proposal better protects financially vulnerable enrollees compared 
to the current one-year FTR process. Several commenters added that 
Exchanges still face operational challenges, and enrollees should not 
be financially penalized in the case of an unintentional technical 
issue within the Exchange. A commenter also stated the proposed change 
will positively promote continuity of coverage for consumers enrolled 
in Exchange coverage. Additionally, many commenters stated that the 
proposal would allow for more consumer education on the requirement to 
file and reconcile past APTC received and the process for doing so, 
while protecting consumers from accruing large tax liabilities over 
multiple years.
    Response: We agree that the proposed FTR policy will improve 
continuity of coverage for consumers by ensuring that consumers do not 
become uninsured because their Exchange coverage becomes unaffordable 
after losing APTC. Continuity of coverage is especially important for 
consumers with chronic health conditions such as cancer. Additionally, 
the proposed policy would protect consumers from incurring large tax 
liabilities over multiple years, which may especially benefit consumers 
with household incomes over 400 percent of the Federal poverty level 
(FPL), who are not subject to APTC repayment caps, and whose potential 
tax liability from failing to reconcile APTC may be larger. 
Nonetheless, it is still a statutory requirement \229\ that consumers 
file their Federal income taxes and reconcile past APTC received, 
regardless of their FPL level or risk for tax liability, and we will 
continue to implement policies that work towards ensuring that only 
those consumers who are eligible to receive APTC continue to do so. We 
believe that the proposed policy strikes a balance between protecting 
consumers from large tax liabilities, such as those with household 
incomes above 400 percent of the FPL, while also ensuring program 
integrity for all Exchanges.
---------------------------------------------------------------------------

    \229\ Internal Revenue Code section 36B; 26 CFR 1.36B 
4(a)(1)(i); see also https://www.irs.gov/affordable-care-act/individuals-and-families/premium-tax-credit-claiming-the-credit-and-reconciling-advance-credit-payments#Advance.
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    Comment: A few comments from State Exchanges supported the proposal 
but asked that we provide clear and early information about the 
technical specifications and processes that will be required to 
implement the FTR rule as proposed within State Exchange's systems.
    Response: We agree that clear communication about technical 
specifications and the processes that will be required to implement the 
FTR

[[Page 25817]]

rule would be beneficial. As such, we will work with all parties 
involved to make sure the FTR process is explained clearly prior to and 
during implementation.
    Comment: A few commenters, including several State Exchanges, 
supported the policy, but requested clarification on the intended 
implementation timeline of the new FTR proposal. Commenters requested 
adequate time to implement necessary technical changes, allow Medicaid 
unwinding efforts to be completed, and ensure alignment with IRS 
provisions and systems.
    Response: In the proposed rule (87 FR 78256), we stated that policy 
would become effective on January 1, 2024. The proposed FTR regulation 
provided that ineligibility based on FTR status would apply when IRS 
notifies HHS and HHS then notifies the Exchanges that a tax filer or 
their spouse did not comply with the requirement to file an income tax 
return and reconcile APTC for a year for which tax data would be 
utilized for verification of household income and family size. Based on 
information on the availability of data from IRS, we intend to continue 
pausing implementation of the FTR requirement on Exchanges on the 
Federal platform until data from IRS about APTC reconciliation is 
available to HHS, which we expect to be available for eligibility 
determinations for PY 2025, and we expect that State Exchanges are 
doing likewise. Exchanges on the Federal platform expect such 
information to be available, and to first take action to apply the new 
FTR rule, in September 2024, when batch auto re-enrollment (BAR) 
activities begin for PY 2025 eligibility determinations. During BAR, 
the Exchanges on the Federal platform will communicate with IRS to 
check whether enrollees have filed and reconciled for tax years 2022 
and 2023 and set the appropriate FTR status code for enrollees who have 
not filed and reconciled APTC for tax years 2022 and 2023. Exchanges on 
the Federal platform will then send notices to enrollees who have 
either a one-year or two-year FTR status according to their 2022 and 
2023 Federal income tax filings. Under the proposed change, Exchanges 
on the Federal platform will not deny APTC eligibility, but will 
continue to send notices to consumers for the first year in which they 
have failed to reconcile APTC to inform and educate them 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.
    Enrollees in Exchanges on the Federal platform who have been 
notified and have been determined to have a current two-year FTR status 
will no longer be eligible for APTC, consistent with the Exchanges' on 
the Federal platform FTR process, while those enrollees who have 
received the first-year notice will be encouraged to file and reconcile 
to avoid losing APTC eligibility the following year. Given the expected 
timing to resume accurately and timely notifying Exchanges of FTR 
status by September 2024, we believe there is enough time for Medicaid 
unwinding to take place and to ensure alignment with IRS systems. In 
response to commenter concerns regarding adequate notice of when the 
new FTR policy may be applied to deny APTC eligibility, and to provide 
HHS and IRS flexibility to resume FTR operations as soon as they are 
able to implement the policy, HHS will provide at least 3 months' 
notice before Exchanges are required to deny APTC to consumers who the 
IRS reports to have failed to reconcile APTC for 2 consecutive years.
    Comment: Two commenters expressed concern for consumers who might 
experience a greater tax burden or tax liability if they are unable to 
reconcile their APTC after two years rather than one year and suggested 
we find a solution to alleviate this burden. We also received a few 
comments that neither supported nor opposed the proposal but raised 
concerns about consumer protections for enrollees facing high repayment 
effects, especially those with household incomes above 400 percent of 
FPL.
    Response: We agree with the commenters that this proposal could 
place consumers at a risk for increased tax liability. In particular, 
taxpayers who underestimated their annual income when they enrolled in 
an Exchange QHP and are ultimately determined ineligible for APTC 
because of their FTR status, may be required to repay large amounts of 
APTC when they file their Federal income taxes and reconcile past APTC 
received. We agree that taxpayers with incomes above 400 percent of the 
FPL may face the highest repayment burdens if they fail to file and 
reconcile for 2 consecutive tax years as APTC repayments are not capped 
for this group. To mitigate this concern, we intend to continue issuing 
FTR warning notices for enrollees in Exchanges on the Federal platform 
who have not filed and reconciled for one tax year. We believe that 
annual FTR warning notices will remind this population of the potential 
for a large tax liability and prompt them to comply with the 
requirement to file and reconcile if they have not already. We 
encourage State Exchanges to take similar action.
    Despite the potential for a large tax liability, we believe that 
this proposal will have a positive impact on consumers while still 
ensuring program integrity as it will provide better continuity of 
coverage for consumers who may not be aware of the requirement to file 
and reconcile. We are aware that some third-party tax preparers do not 
properly educate consumers on the importance of filing and reconciling 
and, in some instances, these third-party tax preparers are unaware 
that consumers have to file IRS Form 8962 along with their tax return 
to reconcile past APTC received. In implementing the new FTR 
requirement, Exchanges on the Federal platform will provide additional 
education, outreach, and initial warning notices for those consumers 
who are out of compliance with the filing and reconciling requirement 
after one year to avoid those high tax penalties. We will continue to 
monitor the implementation of this new policy including whether certain 
populations continue to experience large tax liabilities and will 
consider whether additional guidance, or any additional policy changes 
in future rulemaking, are necessary.
    Comment: Two commenters supported the proposal and suggested that 
more outreach is needed to both consumers and tax preparers about the 
FTR process, the risk of noncompliance, and the process for determining 
eligibility.
    Response: We agree with the commenter regarding the need for 
education and outreach for consumers, States, tax preparers, and 
interested parties that assist consumers with enrollment decisions, 
such as Assisters, agents, and brokers. As we monitor the 
implementation of this provision, we will consider providing additional 
guidance, education, and other technical assistance to Exchanges to 
adequately prepare consumers, States, tax preparers, and interested 
parties before the implementation is completed and FTR operations are 
resumed.
    Comment: We received various comments regarding potential program 
integrity implications. One commenter fully opposed the proposal of 
removing APTC after an enrollee has been in an FTR status for 2 
consecutive years, citing the risks of increased fraud and abuse by 
consumers who know they can ignore an FTR status for an additional 
year. Similarly, a few commenters neither supported nor opposed the 
proposal but cautioned HHS about

[[Page 25818]]

potential fraud and abuse by enrollees receiving excess premium tax 
credits.
    Response: We understand and appreciate the commenters' concern 
regarding the risk for fraud and abuse with respect to this proposal. 
We acknowledge that there is some risk that enrollees may choose to 
ignore the requirement to file and reconcile, but we anticipate these 
instances will be limited as the majority of enrollees comply with the 
requirement to file and reconcile. Additionally, taxpayers who choose 
to ignore the requirement to file and reconcile may be subject to IRS 
enforcement action, additional tax liability, and possibly interest and 
penalties. We also note that nothing in this regulation changes the 
requirement for enrollees to file their Federal income tax return and 
reconcile the previous year's APTC with the IRS. We will continue to 
monitor the implementation of this policy by reviewing and monitoring 
yearly FTR consumer data and referring any instances of suspected fraud 
or abuse to the appropriate Federal agencies. We will also determine 
whether additional guidance, or any additional policy changes in future 
rulemaking to combat fraud and abuse, are necessary.
    Comment: A few commenters urged HHS to fully repeal the FTR 
process, citing the threat it presents to continuity of coverage for 
consumers who are facing periods of intense care, the punitive nature 
of the FTR process towards consumers who cannot afford coverage, and 
the risk that a two-year FTR process does not sufficiently mitigate the 
unwarranted loss of APTC.
    Response: We considered many factors in our decision to shift from 
a one-year FTR process to a two-year FTR process. We believe that the 
change properly balances consumer protections and program integrity 
concerns, and therefore, we believe we should continue to improve the 
FTR process rather than repeal it entirely.
5. Verification Process Related to Eligibility for Insurance 
Affordability Programs (Sec. Sec.  155.315 and 155.320)
a. Income Inconsistencies
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78257), we proposed 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 proposed 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.\230\ See Sec.  155.320(c)(1)(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).
---------------------------------------------------------------------------

    \230\ 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) through (vi). See section 
1412(b)(2) of the ACA.
    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 section 1412(b)(2) of the ACA. When an applicant or 
enrollee has experienced a change in circumstances as described in 
section 1412(b)(2) of the ACA, 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) 
through (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)(3)(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 proposed 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 proposed 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 because the 
current process is overly punitive to consumers and burdensome to 
Exchanges. There are many reasons for IRS not returning consumer data, 
aside from the consumer's failure to file tax returns, including 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 cause a consumer

[[Page 25819]]

to receive an income DMI. Additionally, the consequence of receiving an 
income DMI and being unable to provide sufficient documentation to 
verify projected household income outweighs program integrity risks as, 
under Sec.  155.320(c)(3)(vi)(G), consumers are determined completely 
ineligible for APTC and CSRs. For 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 proposed 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 section 
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.\231\ It is also consistent 
with the flexibility under section 1411(c)(4)(B) of the ACA to modify 
methods for verification of the information where we determine such 
modifications will reduce the administrative costs and burdens on the 
applicant.
---------------------------------------------------------------------------

    \231\ 42 U.S.C. 18081.
---------------------------------------------------------------------------

    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 section 1411(c)(3) of the ACA, data from the IRS is required 
to be used to determine if income is inconsistent. Exchanges on the 
Federal Platform do not use any other data sources for the purpose of 
generating income DMIs because there are currently no reliable and 
accurate income data sources legally available to such Exchanges that 
would provide quality data for this purpose. For Exchanges using the 
Federal platform, income data from other electronic data sources will 
continue to be used to verify income to avoid setting an income DMI 
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.
    However, we clarify that under Sec.  155.315(h), State Exchanges 
are granted flexibility to modify the methods used for income 
collection and verification, subject to HHS' approval, which can 
include the use of alternative data sources. And, per Sec.  
155.320(c)(3)(vi), these HHS approved electronic data sources must be 
used, where available, in instances where IRS income data is 
unavailable or inconsistent. Accordingly, upon approval from HHS, State 
Exchanges may use alternative electronic data sources to generate 
income DMIs when IRS is unable to return data or if the projected 
household annual income is more than a reasonable threshold less than 
the income amount returned for the household by the alternative 
electronic data source. In order for the alternative electronic data to 
be used to generate an income DMI, the alternative electronic data 
source must maintain the same accuracy of the IRS data in providing an 
income data for verification by returning income data for all members 
of the household who have attested to earning income. If IRS is 
successfully contacted for a household but does not return data, and 
the alternative electronic data source does not provide full income 
data for the household, then the State Exchange must accept the 
applicant's or enrollee's attestation of projected annual household 
income.
    Lastly, we proposed to revise Sec.  155.315 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 their household income DMI. 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 section 
1411(c)(4)(B) of the ACA to modify methods for verification of the 
information where we determine such modifications will 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 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 previously, 
which requires contact from the Exchange and additional document 
submission, often pushing the verification timeline past 90 days. An 
additional 60 days would allow consumers more time to gather multiple 
documents from multiple sources, and would allow time for back and 
forth review with the Exchange. The majority of households with income 
DMIs are comprised of consumers who are low income and 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.
    While we recognize that it raises program integrity concerns to 
provide APTC for an additional 60 days to consumers who may ultimately 
be ineligible, we believe that these concerns are outweighed by the 
benefits of improved health care access and health equity, a stronger 
risk pool, and operational efficiency. The proposed extension would 
provide many consumers who are eligible for APTC with the necessary 
time to gather and submit sufficient documentation to verify their 
eligibility. 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

[[Page 25820]]

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, take into consideration 
the complicated process of obtaining and submitting income documents 
for these households, and provide more opportunity for Exchanges to 
work with consumers to submit the correct documentation to verify their 
projected annual household income. We believe that this extension would 
provide consumers with these benefits because previous extensions 
enabled us to determine eligibility for more consumers who, after 
verifying their eligibility through the DMI process, were determined 
eligible for financial assistance. We continue to study consumer 
behavior in resolving inconsistencies to continue to support accurate 
eligibility determination.
    We have found that income DMIs have a negative impact on access and 
health equity. Upon a review of PY 2022 data, income DMIs 
disproportionately impacted households with lower attested household 
income. Among households with an income DMI in PY 2022, approximately 
60 percent attested to a household income of less than $25,000. In 
households without an income DMI, 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. The proposed changes would promote access 
to more affordable coverage by continuing APTC for many eligible 
consumers.
    Consumers' challenges in submitting documentation to resolve 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 have 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.
    Given the information we have on the negative and disproportionate 
impacts of income DMIs, we proposed to adjust the household income 
verification requirements to treat consumers more equitably, help 
ensure continuous coverage, and strengthen the risk pool. Exchanges 
would utilize only data from the IRS for the purpose of generating an 
income DMI, except for State Exchanges that are approved to utilize 
additional data sources as outlined earlier in this proposal, and 
Exchanges 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 DMI generation and adjudication 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 accurate answers to application questions under 
penalty of perjury. We note that the program integrity risk applies to 
a limited group of consumers, namely those who misreport income and for 
whom IRS indicates that they have no income data after being contacted 
by HHS. Also, we do not believe that individuals for whom IRS cannot 
return income data 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. We will 
continue to engage with partners to evaluate the impact of this 
proposal on the amount of APTC a household receives compared to the 
amount of PTC the household is eligible for when filing taxes.
    After reviewing the public comments, we are finalizing these 
provisions as proposed. We summarize and respond below to public 
comments received on the proposed policies to accept household income 
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 and to provide an automatic 
60-day extension for income DMIs.
    Comment: Multiple commenters requested clarification on the usage 
of State data sources to resolve income inconsistencies, noting a 
desire to continue using those sources for that purpose.
    Response: We agree that State Exchanges can continue to use the 
data sources that they currently use to verify income, and we have 
provided additional information in the preamble to explain when and how 
State Exchanges may use alternative data sources. Exchanges may only 
continue to use income data from other electronic data sources to 
verify income if income is not already verified by the IRS, or if IRS 
data is inconsistent with the projected annual household income, unless 
flexibility is granted and approved by HHS under Sec.  155.315(h). This 
includes income sources that are available to State Exchanges that may 
not be available to other Exchanges, such as information maintained by 
State tax franchise boards or public benefit records.
    Comment: Multiple commenters expressed program integrity concerns, 
as well as tax liability concerns for consumers, particularly for 
consumers who miscalculate their income.
    Response: While data suggests that consumers have a high degree of 
ability to project their income and HealthCare.gov has made recent 
changes to further assist individuals in determining their projected 
income, we will continue to engage with State Exchanges, consumer 
advocates, and other external interested parties on how to increase the 
accuracy of consumer income attestation and subsequent APTC 
determination. Anticipated updates to promote program integrity include 
strengthening accurate income attestation and tax reconciliation 
language in existing consumer-facing materials. Although the program 
integrity risk applies to a limited group of consumers, namely those 
who misreport income and for whom IRS indicates that they have no 
income data after being contacted by HHS, we acknowledge the 
commenter's concerns on program integrity. It is our belief that the 
health care accessibility, health equity, risk pool, and operational 
efficiency benefits outlined in the preamble outweigh these concerns. 
Additionally, households are required to provide true answers to 
application questions under penalty of perjury.

[[Page 25821]]

    Comment: Some commenters suggested asking the applicant for 
additional information on why an applicant projects their income a 
certain way, including why it has changed over time.
    Response: We currently ask consumers for additional information in 
the application, such as the specific reason why their income may have 
changed with the opportunity to provide responses from a pull-down 
menu, including an option for additional information, and we use that 
information as part of our verification of a household's projected 
income. We have found that while sometimes the information provided is 
sufficient to verify household projected income, it often does not help 
thoroughly explain consumers' complicated income streams and household 
changes. Additionally, an applicant or enrollee may not know, and 
therefore may not be able to explain why a DMI is caused by a tax 
household composition change (such as birth, marriage, and divorce), 
name change, or other demographic updates or mismatch.
    Comment: Multiple commenters stated that the 60-day extension was 
not necessary for all consumers and would slow down and burden the 
administrative process, and that the existing 90 days is sufficient. 
Some commenters proposed that we instead offer the 60-day extension on 
a case-by-case basis.
    Response: We do not believe that 90 days is sufficient for many 
applicants. Applicants and enrollees often need to submit multiple 
documents to verify their projected household income, which is often 
difficult to do within 90 days, particularly for those in seasonal work 
or who are self-employed. When given extra time (as currently may be 
provided on a case-by-case basis under Sec.  155.315(f)(3)), over one 
third of consumers resolve their income DMIs after 90 days, 
demonstrating that many consumers are able to provide the required 
information when they are given sufficient time to do so. Finally, the 
90-day extension adjustment would likely not burden the administrative 
process as the additional time could facilitate more DMI resolutions, 
potentially leading to fewer appeals related to the adjustment or 
removal of financial assistance.
    Comment: One commenter mentioned concerns about implementing the 
60-day extension and requested flexibility on the implementation 
timeline for State Exchanges.
    Response: While we acknowledge that this change will require 
implementation effort from the State Exchanges, we have decided not to 
provide flexibility on the implementation timeline for State Exchanges. 
As stated in the preamble, 90 days is often an insufficient amount of 
time for households to collect and submit documents to successfully 
verify their projected household income, and consumers who lose 
eligibility for financial assistance as a result of a failed income 
verification often drop coverage. We believe that this provision must 
be implemented in all Exchanges to account for the complicated process 
of submitting documentation. However, we will be available to conduct 
technical assistance to State Exchanges experiencing difficulty in 
implementing the extension.
    Comment: One commenter noted that the existing income verification 
process is sufficient and that the existing document submission process 
is a small burden on consumers.
    Response: We do not believe that the current income verification 
process is sufficient due to the negative impacts on health care 
access, health equity, the risk pool, and operational efficiency. 
Additionally, the existing document submission process is burdensome on 
consumers and time consuming, as they often have to obtain and submit 
multiple documents before their income inconsistency is resolved, 
particularly if they are self-employed or work seasonal jobs.
6. Annual Eligibility Redetermination (Sec.  155.335)
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78259), we proposed revising Sec.  
155.335(j) to allow the Exchange, beginning in PY 2024, to direct re-
enrollment for enrollees who are eligible for CSRs 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, if 
certain conditions are met (referred to here as the ``bronze to silver 
crosswalk policy''). We also proposed to amend the Exchange re-
enrollment hierarchy to require all Exchanges (Exchanges on the Federal 
platform and State Exchanges) 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.
    After reviewing public comments, we are finalizing these proposals 
with modifications. Specifically, we are amending the proposed 
regulations to clarify that Exchanges implementing the bronze to silver 
crosswalk policy will compare net monthly silver plan premiums for the 
future year with net monthly bronze plan premiums for the future year, 
as opposed to net monthly bronze plan premiums for the current year 
(where net monthly premium is the enrollee's responsible amount after 
applying APTC). For example, when determining whether to automatically 
re-enroll a 2023 bronze plan enrollee who is CSR-eligible into a silver 
plan for 2024, an Exchange will compare the net premium the enrollee 
would pay for the silver plan in 2024 with the net premium that they 
would pay for the bronze plan into which they would otherwise be auto 
re-enrolled in 2024, as opposed to the net premium the enrollee paid 
for their bronze plan in 2023. This clarification ensures that 
Exchanges will make auto re-enrollment determinations based on 
comparable premium information.
    Additionally, we changed the structure and some content of the 
regulation to simplify the regulatory text and to more clearly explain 
that enrollees whose QHP is no longer available as described in 
paragraphs (j)(1) and (2) must be enrolled in a plan that has the most 
similar network compared to their current plan, whereas enrollees 
subject to the bronze to silver crosswalk policy under paragraph (j)(4) 
must be enrolled in a plan with the same network as the bronze plan 
they would have been auto re-enrolled in per requirements in paragraph 
(j)(1) or (2). We made these changes in part based on public comments 
indicating confusion about when an enrollee's issuer, provider network, 
and covered benefits will change as a result of the bronze to silver 
crosswalk policy, compared to the policy regarding network continuity 
for enrollees whose QHP is no longer available.
    The restructured regulation language shifts the provisions related 
to the bronze to silver crosswalk policy into a new paragraph (j)(4) to 
distinguish this policy from other crosswalk scenarios. We also amended 
this language to clarify that, under the bronze to silver crosswalk 
policy, an Exchange may only auto re-enroll a bronze plan enrollee into 
a silver plan if there is a silver plan within the same product and 
with the same provider network as the bronze plan into which the 
enrollee would otherwise have been auto re-enrolled, with a net premium 
that does not exceed that of the bronze plan. In other words, the 
bronze to silver crosswalk policy will not result in enrollment into a 
plan for any enrollee that is in a

[[Page 25822]]

different product or that has a different provider network from the one 
the enrollee would have had absent this bronze to silver crosswalk 
policy. The restructured language deviates from the proposed rule as 
follows. Under the proposed rule (87 FR 78260), we proposed to require, 
with respect to all auto re-enrollments, including those under the 
bronze to silver crosswalk policy now described in paragraph (j)(4), 
that the future year silver plan's provider network be ``the most 
similar network compared to'' an enrollee's current bronze plan network 
because provider networks can change year-to-year within the same plan 
and product. We are finalizing this proposal only with respect to auto 
re-enrollments under paragraphs (j)(1) and (2). Specifically, we are 
finalizing that where an enrollee's plan is no longer available through 
the Exchange under Sec.  155.335(j)(1)(ii) through (iv) and (j)(2), the 
Exchange will be required to compare the future year plan's provider 
network to the current year plan's network and take network similarity 
into account when auto re-enrolling enrollees whose current plan will 
no longer be available. However, we are also finalizing under Sec.  
155.335(j)(4), that the Exchange is permitted to compare the future 
year silver plan's provider network against the future year bronze 
plan's provider network (as opposed to the current year bronze plan's 
network as proposed), which is the plan and network that the enrollee 
would have been auto re-enrolled into absent the bronze to silver 
crosswalk policy, and the Exchange can select the silver plan only if 
the networks are identical. For example, a bronze plan enrollee who is 
auto re-enrolled into the same plan as their current plan will have a 
similar, but not necessarily identical, network to their current plan 
because provider networks may change from year-to-year. If crosswalked 
into a silver plan under the bronze to silver crosswalk policy at Sec.  
155.335(j)(4), the enrollee's future year silver plan network would be 
compared to the network of the future year bronze plan into which they 
would have been auto re-enrolled absent the policy at paragraph (j)(4), 
making for a same year comparison.
    Accordingly, we are finalizing the policy to require Exchanges to 
take into account network similarity to current year plan when re-
enrolling enrollees whose current year plans are no longer available, 
and to permit Exchanges to re-enroll enrollees under the bronze to 
silver crosswalk policy only if the future year silver plan has the 
same network that the future year bronze plan would have absent the 
bronze to silver crosswalk policy.
    For PY 2024, we will implement both policies in Exchanges on the 
Federal platform by incorporating plan network ID into the auto re-
enrollment process, while continuing to take into account enrollees' 
current year product.\232\ We believe that plan network ID will be an 
effective method of network comparison for Exchanges on the Federal 
platform because if specific providers are in-network for some of an 
issuer's products but not others, the issuer must establish separate 
network IDs to enable mapping the plans to the applicable network IDs. 
We will also work closely with issuers and State regulators to ensure a 
mutual understanding of the information we will collect to facilitate 
smooth network data submission and review processes during the QHP 
Certification process. As further discussed in our responses to 
comments, we will also work with issuers and State regulators to learn 
how we may improve methods to analyze and ensure network continuity in 
future years. For example, Exchanges on the Federal platform will rely 
on issuer submissions through the existing crosswalk process, which, 
per Sec.  155.335(j)(2), already requires that the issuer propose a 
plan for the future year that is in the product most similar to the 
current year product if no plans under the same product as an 
enrollee's current year QHP are available for renewal.\233\ Based on 
internal analysis, in many cases we already re-enroll consumers in 
plans for the future year with the same network ID as their current 
year plan through this approach. However, for plan years starting in 
2024, we will incorporate plan network ID into our analysis of 
crosswalk plan information that we receive from issuers, and permit 
them to submit justifications to HHS for review if they believe a 
different network ID in the following plan year has the most similar 
network to the enrollee's current QHP.\234\
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    \232\ As discussed in the proposed rule (87 FR 78262), in 
situations where a non-CSR eligible enrollee would not be auto re-
enrolled into their current QHP because it is no longer available, 
the existing auto re-enrollment process places them into a plan with 
the same product ID as their current QHP, if possible.
    \233\ See Sec.  155.335(j)(2), and see ``Plan Crosswalk'' on the 
QHP Certification Information and Guidance website: https://www.qhpcertification.cms.gov/s/Plan%20Crosswalk for more information 
on the Crosswalk Template.
    \234\ See 87 FR 78261 through 78263.
---------------------------------------------------------------------------

    We believe that these changes in the final rule will help 
distinguish between the enrollment procedures under the bronze to 
silver crosswalk policy and the procedures for when an enrollee's 
current QHP is no longer available.
    Finally, we also made additional revisions for clarity and 
readability that do not substantively change the policy. For example, 
in certain instances we amended passive language to active language to 
specify that ``the Exchange will'' auto re-enroll current enrollees as 
opposed to stating that a consumer ``will be auto re-enrolled.'' We 
also updated rule language to include gender-neutral terms: 
specifically, changing instances of ``he or she'' to ``the enrollee.''
    We summarize and respond below to public comments received on the 
automatic re-enrollment proposals in Sec.  155.335(j).
    Comment: Many commenters supported the bronze to silver crosswalk 
policy proposal, agreeing that it would help limit CSR forfeiture and 
increase the likelihood that more consumers would be enrolled in more 
generous coverage without additional cost. A number of commenters added 
that low-income consumers would be able to use the money that they 
saved for other crucial household expenses such as food and housing, 
and would have improved access to care at the same monthly premium. 
Commenters added that automatically re-enrolling low-income consumers 
into more generous plans for the same or lower monthly premium could be 
especially helpful for individuals and families who do not understand 
the need to actively re-enroll in coverage for a new plan year, those 
who find the plan compare and selection process especially burdensome, 
and those who originally enrolled in coverage prior to availability of 
more generous subsidies provided for in the American Rescue Plan Act of 
2021 (ARP) and extended by the Inflation Reduction Act of 2022 
(IRA).\235\
---------------------------------------------------------------------------

    \235\ ARP, Public Law 117-2 (2021); IRA, Public Law 117-169 
(2022).
---------------------------------------------------------------------------

    Commenters cited examples of similar auto re-enrollment practices 
that State Exchanges have implemented successfully, including the 
Massachusetts Health Connector's auto re-enrollment of about 2,000 
enrollees into a silver plan for the 2023 plan year, and Covered 
California's auto re-enrollment of bronze enrollees with a household 
income no greater than 150 percent of the FPL into silver QHPs for PY 
2022 and PY 2023. One commenter expressed support but suggested that 
the policy could be limited in its impact for individuals and families 
with household incomes above 150 percent FPL because of the difference 
in bronze and silver plans' monthly premiums.

[[Page 25823]]

    Commenters generally agreed with the policy's prioritization of 
network and benefit continuity for consumers who are auto re-enrolled 
in a QHP that is different from their current QHP. One commenter 
appreciated that the proposal incorporated network into the bronze to 
silver crosswalk policy specifically because in their experience, 
enrollees who forgo a $0 net monthly premium silver plan with CSRs in 
favor of a $0 net monthly premium bronze plan (without the ability to 
use CSRs) do so in order to access a specific provider when they cannot 
afford the premiums for the silver plan(s) with networks that include 
the provider. One commenter asked that we clarify the re-enrollment 
hierarchy for consumers who are auto re-enrolled in a silver plan with 
CSRs but become ineligible for CSRs the following year.
    Response: We agree that finalizing this proposal will help to 
ensure that additional enrollees are able to benefit from more generous 
coverage at a lower cost that provides the same benefits and provider 
network. We also agree that this may be especially beneficial for those 
who find the re-enrollment process confusing or who are unaware of the 
benefits of actively re-enrolling in coverage, though we will continue 
to help such consumers understand the plan comparison and selection 
processes. We appreciate evidence from State Exchanges of the success 
of similar practices, and will work with States to understand the 
impact of the policy moving forward. Because bronze plan premiums are 
generally lower than silver plan premiums, we agree with the comment 
that many enrollees who can benefit from the bronze to silver crosswalk 
policy under paragraph (j)(4) will be eligible for a silver plan with a 
$0 net monthly premium because their household income does not exceed 
150 percent of FPL.\236\ However, some enrollees with a household 
income greater than 150 percent of FPL may also qualify for a silver 
plan with a $0 net monthly premium, depending on the premiums of bronze 
and silver plans available to them, and so we will not limit this 
policy based on household income. We strongly agree with the importance 
of ensuring network continuity for re-enrollees as much as possible. 
The policy at Sec.  155.335(j)(4) clarifies that those who are auto re-
enrolled from a bronze to a silver plan will not experience network 
changes that they would not have experienced had they been auto re-
enrolled into a bronze plan.
---------------------------------------------------------------------------

    \236\ Section 9661 of the ARP amended section 36B(b)(3)(A) of 
the Internal Revenue Code for tax years 2021 and 2022 to decrease 
the applicable percentages used to calculate the amount of household 
income a taxpayer is required to contribute to their second lowest 
cost silver plan, which generally result in increased PTC for PTC-
eligible taxpayers. For those with household incomes no greater than 
150 percent of the FPL, the new applicable percentage is zero, 
resulting in availability of one or more available silver-level 
plans with a net premium of $0, if the lowest or second-lowest cost 
silver plan covers only EHBs. The Inflation Reduction Act of 2022 
extended these changes through tax year 2025.
---------------------------------------------------------------------------

    Finally, in response to the comment requesting clarity on the auto 
re-enrollment hierarchy for consumers who are auto re-enrolled in a 
silver plan with CSRs but become ineligible for CSRs the following 
year, we clarify that Exchanges will not be required to take into 
consideration when applying auto re-enrollment rules under Sec.  
155.335(j) whether an enrollee had previously been re-enrolled under 
the new rule at Sec.  155.335(j)(4). That is, a CSR-eligible individual 
who is auto re-enrolled from a bronze to a silver plan for PY 2024 in 
accordance with paragraph (j)(4) and who does not return to select a 
plan for PY 2025, will be auto re-enrolled as otherwise provided for 
under Sec.  155.335(j). However, we also note that we encourage all 
enrollees to return to the Exchange to update their application if they 
experience changes during the plan year, and an enrollee in a silver 
plan with CSRs who updates their application such that they are no 
longer CSR-eligible may qualify for a SEP to change to a plan that is 
one metal higher or lower.\237\
---------------------------------------------------------------------------

    \237\ See Sec.  155.420(a)(4)(ii)(B) and (d)(6)(i) and (ii)
---------------------------------------------------------------------------

    Comment: Some opposing commenters voiced concerns that the bronze 
to silver crosswalk proposal would cause consumer confusion, and they 
cautioned against interpreting consumer inaction as indifference. In 
particular, these commenters noted that consumers sometimes research 
their options and make a decision to allow themselves to be auto re-
enrolled, without taking action on HealthCare.gov. These commenters 
also advocated for HHS to improve decision-making tools on 
HealthCare.gov instead of changing consumers' default plan selections. 
Opposing commenters also noted that consumers select plans for many 
reasons other than monthly premium amount, including provider network, 
benefit structure, and health savings account (HSA) eligibility, and 
raised the concern that auto re-enrolling some consumers from a bronze 
plan to a silver plan would disregard these consumer priorities.
    Some commenters expressed concern that consumers who are auto re-
enrolled into a silver plan could incur unexpected tax liability, 
including consumers aware of their auto re-enrollment, if their APTC 
amount was determined based on inaccurate household income for the 
future year, which is a particular risk for hourly workers. One 
commenter noted that bronze enrollees not using the entire amount of 
the APTC for which they qualify towards their premiums during the year 
have some protection against tax liability in the event of an 
unexpected increase in household income, and that they could lose this 
protection if an Exchange auto reenrolls them into a silver plan 
because the consumer would be likely to use more APTC to cover the 
higher monthly premium.\238\ That is, an enrollee who experiences a 
household increase mid-year that they do not report to the Exchange, 
which results in eligibility for less PTC, may have a larger tax 
liability upon tax filing if they apply more APTC to a monthly silver 
plan premium than to a monthly bronze plan premium to off-set the 
higher premium.
---------------------------------------------------------------------------

    \238\ For example, assume an individual enrolls in a bronze plan 
and the enrollee's APTC covers the entire monthly premium for the 
plan based on projected household income at 150 percent of the FPL. 
Also assume, based on the enrollee's projected income, that APTC 
would have covered the entire amount of the enrollee's premium for a 
silver plan in the same product. If the enrollee's income as a 
percent of FPL ends up higher than projected, it is possible that 
the enrollee's benchmark plan premium minus the enrollee's 
contribution amount (that is, the maximum available premium 
assistance) would still be more than the bronze premium but less 
than the relevant silver plan premium. This would result in a tax 
liability with the silver plan, but not the bronze plan selection, 
in this case. (Note: ``contribution amount'' means the amount of a 
taxpayer's household income that the taxpayer would be responsible 
for paying as their share of premiums each month if they enrolled in 
the applicable second lowest-cost silver plan. See ``Terms You May 
Need To Know'' in Instructions for Form 8962: https://www.irs.gov/pub/irs-pdf/i8962.pdf.)
---------------------------------------------------------------------------

    Some opposing commenters asked that we delay this policy, if 
implemented, to conduct further research to ensure it honors consumer 
preferences and to provide interested parties with additional time to 
develop appropriate consumer messaging. A few commenters raised the 
concern that auto re-enrolling consumers into an alternate plan when 
their current plan remains available violates the guaranteed 
renewability requirements with which issuers must comply, and that the 
limited exceptions to these requirements do not include availability of 
a different plan with lower premiums or cost-sharing.
    Response: We acknowledge that some consumers may choose not to take 
action during an open enrollment period with the expectation that they 
will be auto re-enrolled in their current

[[Page 25824]]

plan, and we anticipate updating current outreach on HealthCare.gov and 
elsewhere and providing technical assistance to promote understanding 
of these changes, and encourage State Exchanges to similarly educate 
their enrollees. Also, as discussed in the proposed rule,\239\ income-
based CSR-eligible enrollees in Exchanges on the Federal platform who 
may be auto re-enrolled under the bronze to silver crosswalk policy 
described in paragraph (j)(4) will 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. These 
enrollees would also see the silver plan highlighted in the online 
shopping experience if they return on or before December 15th to review 
their options.\240\ Also, we agree that we should continue to work to 
improve decision-making tools on HealthCare.gov; however, we do not 
believe that that work is a substitute for auto re-enrolling certain 
consumers in a plan that will provide them with more generous coverage 
for a lower or equal premium.
---------------------------------------------------------------------------

    \239\ See 87 FR 78262.
    \240\ Enrollees who return to their HealthCare.gov account after 
December 15 will see the plan as their enrolled plan, and could 
choose a different plan until January 15 for coverage starting 
February 1.
---------------------------------------------------------------------------

    In response to concerns that enrollees subject to the bronze to 
silver plan crosswalk policy will be auto re-enrolled into a plan with 
a different benefit structure and provider network, we note that the 
policy only applies for consumers who have access to a silver plan in 
their same product with a Network ID that matches that of their future 
year bronze plan, and therefore consumers will not experience network 
changes or benefit changes that they would not otherwise experience had 
they been auto re-enrolled into their bronze plan.
    Also, we will perform additional research to ensure that we are 
able to provide appropriate support and technical assistance to 
enrollees who may have chosen a plan for its HSA eligibility. We also 
encourage State Exchanges, agents and brokers, and Assisters to work 
with these enrollees to ensure they can make informed decisions on this 
matter.
    In terms of potential tax liability for repayment of APTC, we agree 
that it is important for Exchanges to take steps to ensure enrollees 
understand this possibility when applying APTC to premium payments in 
advance. We believe that consumer notices can help to ensure they do, 
and we already convey this information, because the existing auto re-
enrollment process can re-enroll enrollees in a plan with a higher 
monthly premium than their current year plan due to annual increases in 
the cost of coverage, which can increase tax liability. For example, 
the current HealthCare.gov notice for consumers who were auto re-
enrolled in coverage with financial assistance instructs enrollees to 
``Keep your Marketplace application up to date,'' and explains that 
consumers must report changes in circumstance, including changes in 
household income, within 30 days to ``help make sure you get the right 
amount of financial help and don't owe money on your tax return because 
you got the wrong amount.'' This notice also explains that ``The full 
amount of tax credit that you qualify for is now being applied to your 
monthly premium,'' and provides instructions for enrollees who do not 
want to apply the full amount of APTC for which they qualify to their 
monthly premium payments.\241\ State Exchanges should ensure their 
notices are similarly educational. These State Exchange notices will be 
reviewed and approved as part of HHS' annual review of State Exchanges 
alternative eligibility redetermination plans, as specified in Sec.  
155.335(a)(2)(iii).
---------------------------------------------------------------------------

    \241\ See Marketplace Automatic Enrollment Confirmation Messages 
(December 2022); automatic-enrollment-with-financial-help.pdf, at 
https://marketplace.cms.gov/applications-and-forms/notices.
---------------------------------------------------------------------------

    Additionally, when calculating the difference in net premium 
between enrollees' bronze and silver plan options for the future year, 
for the auto re-enrollment process for Exchanges on the Federal 
platform, we will generally take into account the full amount of APTC 
for which enrollees may qualify. However, in cases where a consumer 
opted not to use any of their PTC in advance during the current plan 
year, in keeping with our existing auto re-enrollment practice for 
Exchanges on the Federal platform, we will maintain the enrollee's 
preference not to apply any APTC towards monthly premiums by not taking 
APTC into account when determining the difference between their monthly 
bronze and monthly silver premiums for the future year, and not 
automatically applying APTC to their future year monthly premiums.\242\
---------------------------------------------------------------------------

    \242\ This operational practice is not an Exchange requirement. 
We share this information here as an example of how we plan to 
implement this policy to reflect enrollees' likely intentions. We 
also note that in cases where an enrollee who is auto re-enrolled 
opted to apply some, but not all, of their APTC toward monthly 
premiums during the current year, our current practice is to apply 
any additional APTC for which the enrollee qualifies to cover as 
much of the future year monthly premium as possible. We will 
continue this practice, including for enrollees who qualify for the 
bronze to silver crosswalk.
---------------------------------------------------------------------------

    We also note that enrollees whose expected household income changes 
mid-year such that they no longer qualify for APTC or CSRs may be 
eligible for a SEP that allows them to change to a plan of a different 
metal level. For example, an enrollee whose household income increases 
such that they no longer qualify for CSRs can change from a silver plan 
to a bronze or gold plan, per Sec.  155.420(d)(6)(i) or (ii). We 
believe that this SEP will help protect enrollees who experience 
changes in household income during the year from applying APTC in an 
amount that exceeds the PTC they are ultimately eligible to receive. 
Nevertheless, we will work closely with interested parties to promote 
understanding of potential tax liability for enrollees who are auto re-
enrolled from a bronze to a silver plan under paragraph (j)(4). We will 
also work closely with State Exchanges that implement this policy to 
share best practices for doing so.
    Given the benefits that this policy will provide to consumers who 
are enrolled in more generous coverage for no greater cost, we will not 
delay its effectuation. We will work closely with all interested 
parties to promote smooth implementation and mitigate consumer 
confusion.
    Finally, as discussed in the proposed rule (87 FR 78262 through 
78263), this proposal is consistent with the explanation of the 
guaranteed renewability provisions at Sec.  147.106 provided 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.\243\ 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 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

[[Page 25825]]

under a product offered by the same QHP issuer through the Exchange 
that is different than the enrollee's current plan. Auto re-enrolling 
consumers under Sec.  155.335(j)(4) will not result in the issuer 
violating the guaranteed renewability provisions at Sec.  147.106 as 
long as the issuer gives the enrollee the option to renew coverage 
within their current product, including permitting the enrollee to 
actively re-enroll in their current year plan for the coming year if it 
remains available for renewal.
---------------------------------------------------------------------------

    \243\ See 87 FR 78262-78263 for this discussion.
---------------------------------------------------------------------------

    Comment: Some commenters supported the proposal to give States that 
operate their own Exchange platforms flexibility with whether to 
implement the policy described in final paragraph (j)(4), and requested 
confirmation that the final policy would provide such flexibility.
    Response: We confirm that, as proposed, Exchanges have the option 
to implement the policy at Sec.  155.335(j)(4). For example, an 
Exchange might choose not to implement this policy, or might choose to 
implement it for PY 2025 or a future plan year, instead of PY 2024. 
However, the rule requires all Exchanges to implement changes to the 
requirements under paragraphs (j)(1) and (2) for PY 2024.\244\ We will 
work closely with Exchanges that request any related technical 
assistance regarding implementation of the auto re-enrollment 
hierarchy.
---------------------------------------------------------------------------

    \244\ See Sec.  155.335(j)(1)(ii) through (iv) and (j)(2).
---------------------------------------------------------------------------

    Additionally, we clarify that State regulatory authorities and 
Exchanges have the option to apply the bronze to silver crosswalk 
policy per Sec.  155.335(j)(4) to the approach that they use for cross-
issuer enrollments per Sec.  155.335(j)(3)(i) and (ii). As noted in 
``Section 5. Plan ID Crosswalk'' of Chapter 1 of the PY 2024 Draft 
Letter to Issuers, if this policy was finalized, we would modify the 
2024 cross-issuer auto re-enrollment policy to take into account the 
other changes at Sec.  155.335(j).\245\ Specifically, in Exchanges on 
the Federal platform, when Sec.  155.335(j)(3)(ii) is applicable, we 
will crosswalk enrollees in a bronze plan who are eligible for CSR in 
accordance with Sec.  155.305(g), and who would otherwise be auto re-
enrolled in a bronze plan, to a silver level QHP within the same 
product, with the same provider network, and with a net premium lower 
than or equivalent to that of the bronze level QHP into which the 
Exchange would otherwise re-enroll the enrollee under paragraph (j)(3). 
When Sec.  155.335(j)(3)(i) is applicable, we will defer to the 
applicable State regulatory authority with regard to whether to 
incorporate the bronze to silver crosswalk policy into cross-issuer 
auto re-enrollment.
---------------------------------------------------------------------------

    \245\ See https://www.cms.gov/files/document/2024-draft-letter-issuers-508.pdf.
---------------------------------------------------------------------------

    Comment: Some commenters supported using network ID to determine 
the most similar network for purposes of auto re-enrolling consumers, 
and one commenter noted that the Washington State Exchange already uses 
the network ID as a consideration when cross-walking enrollees from one 
plan to another. Several commenters urged that we work closely with 
States to better understand how networks differ based on ID, because 
States may use different practices for the assignment of network IDs. 
These commenters expressed concerns that overriding an enrollee's prior 
choice of plan level may create disruptions when networks are similar 
but not identical, and they asked that we be transparent in the reasons 
behind auto re-enrolling a consumer into a particular plan.
    One commenter had concerns with using network ID as part of the 
plan crosswalk process because issuers are not required to use a 
distinct ID for each health maintenance organization (HMO), preferred 
provider organization (PPO), and exclusive provider organization (EPO) 
network type, which would make such comparisons incomplete, and added 
that network IDs would not fully explain potential differences in 
delivery systems or providers offered within the same issuer's 
products. Several commenters shared the concerns about preserving plan 
benefit structure for consumers who are not auto re-enrolled into their 
current plan. One commenter stated they supported the proposed policy 
only if enrollees were not moved to a different product.
    Response: We appreciate the additional insight that commenters 
provided about how States and issuers currently use network IDs. Also, 
we note that, all changes to Sec.  155.335(j) require Exchanges to 
continue to account for characteristics of enrollees' current product. 
As noted earlier, Exchanges on the Federal platform will implement the 
similar network policy and the bronze to silver crosswalk policy by 
incorporating network ID into existing requirements for issuer 
submissions through the crosswalk process, which, per existing rules at 
Sec.  155.335(j)(2), already requires that if no plans under the same 
product as an enrollee's current QHP are available for renewal, the 
Exchange will auto re-enroll the enrollee in the product most similar 
to their current product with the same issuer.\246\ As noted earlier in 
preamble for this section, we believe that plan network ID will be an 
effective method of network comparison for Exchanges on the Federal 
platform because QHP Certification Instructions specify that if 
specific providers are available for some of an issuer's products but 
not others, the issuer must establish separate Network IDs to enable 
mapping the plans to the applicable Network IDs. However, reiterating 
what we stated in the proposed rule, we will permit issuers to submit 
justifications for our review if they believe a different network ID in 
the following plan year is better suited as a crosswalk option for 
enrollees in a particular plan.\247\ Further, we will collaborate with 
State regulators in States with FFEs and with SBE-FPs through regularly 
scheduled meetings and other methods to ensure clear and appropriate 
incorporation of network ID into the auto re-enrollment process. We 
will also work closely with State Exchanges to share best practices for 
implementing this policy. Finally, based on experience from past years, 
a majority of enrollees who were crosswalked into a different product 
with the same issuer had the same network ID and product type (for 
example, HMO, PPO), and so we anticipate that this policy will 
reinforce and not disrupt current auto re-enrollment processes.\248\
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    \246\ See Sec.  155.335(j)(2), and see ``Plan Crosswalk'' on the 
QHP Certification Information and Guidance website: https://www.qhpcertification.cms.gov/s/Plan%20Crosswalk for more information 
on the Crosswalk Template.
    \247\ See 87 FR 78261 through 78263.
    \248\ Based on internal CMS analysis, for PY2023 86 percent of 
crosswalks to a different product with the same issuer had the same 
network ID and the same network type (that is, HMO, PPO, EPO).
---------------------------------------------------------------------------

    Comment: Some commenters raised concerns about how consumers who 
are auto re-enrolled from a bronze to a silver plan under paragraph 
(j)(4) would be notified by the Exchange and issuers. Commenters urged 
that we ensure that, if finalized, the new auto re-enrollment rule 
would require Exchanges and issuers to send notification of the plan 
change in time for consumers to make a plan selection if they choose, 
and that the notification include information about key characteristics 
of their new plan and the reasons they were auto re-enrolled into it. 
Some commenters raised concerns that consumers would be confused by 
content in the Federal Standard Renewal and Product Discontinuation 
Notices, which are required to include information about availability 
of the product in which a consumer is currently enrolled and could not 
include targeted information

[[Page 25826]]

about potential auto re-enrollment from bronze into a silver plan 
because issuers do not have access to enrollees' CSR eligibility.\249\ 
One commenter asked whether issuers would be allowed more flexibility 
in terms of the content or the timing for mailing the Federal Standard 
Renewal and Product Discontinuation Notices to account for proposed re-
enrollment changes. Multiple commenters asked that we provide consumers 
who are auto re-enrolled from a bronze to a silver plan under paragraph 
(j)(4) with a SEP to allow them time after their coverage takes effect 
to change plans if they find that the plan's network does not include a 
provider that they need or the coverage does not work well for them in 
some other way.
---------------------------------------------------------------------------

    \249\ See Updated Federal Standard Renewal and Product 
Discontinuation Notices in the Individual Market (Required For 
Notices Provided In Connection With Coverage Beginning In The 2021 
Plan Year) OMB Control No.: 0938-1254, https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Updated-Federal-Standard-Notices-for-coverage-beginning-in-the-2021-plan-year.pdf.
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    Response: As discussed in this rule and in the proposed rule,\250\ 
income-based CSR-eligible enrollees in Exchanges on the Federal 
platform who may be auto re-enrolled from a bronze to a silver plan 
under paragraph (j)(4) will receive messaging 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 that 
they can see the silver plan highlighted in the online shopping 
experience on HealthCare.gov until December 15th. Further, enrollees in 
Exchanges on the Federal platform who do not make an active selection 
on or before December 15th will receive an additional communication 
from the Exchange after December 15th reminding them of their new plan 
enrollment for January 1st, and that they can select a different plan 
by January 15th that would be effective starting February 1st. We 
believe that State Exchanges also have practices in place to notify 
consumers of important changes to their enrollment, and that State 
Exchanges' flexibility in terms of whether or not to implement the 
bronze to silver crosswalk policy, or to implement it in a future plan 
year, allows State Exchanges additional time to further develop 
consumer noticing timing and content in advance of implementation.
---------------------------------------------------------------------------

    \250\ See 87 FR 78262.
---------------------------------------------------------------------------

    In response to comments on the Federal Standard Renewal and Product 
Discontinuation Notices, we note that issuers are required to use the 
Federal standard notices developed by HHS, unless a State develops and 
requires the use of a different form consistent with HHS guidance, in 
which case issuers in that State are required to use notices in the 
form and manner specified by the State. Because issuers are not 
permitted to make modifications to the Federal standard notices, we do 
not believe it is necessary to provide additional flexibility regarding 
timing of the notices.\251\ We are updating the Federal standard 
notices currently approved under OMB control number 0938-1254 (Annual 
Eligibility Redetermination, Product Discontinuation and Renewal 
Notices) and we intend to include language related to the re-enrollment 
hierarchy finalized in this rule in the Federal standard notices as 
part of that process.
---------------------------------------------------------------------------

    \251\ Non-grandfathered, non-transitional plans must provide 
renewal notices before the first day of the next annual open 
enrollment period. In prior years, HHS has provided an enforcement 
safe harbor under which the agency will not take enforcement action 
against an issuer for failing to provide a product discontinuation 
notice with respect to individual market coverage at least 90 days 
prior to the discontinuation, as long as the issuer provides such 
notice consistent with the timeframes applicable to renewal notices. 
We anticipate providing similar relief for PY 2024.
---------------------------------------------------------------------------

    In addition, nothing under Federal law prevents an issuer from 
providing additional information, outside of the standard notices, to 
an enrollee about their re-enrollment options. Also, we will work 
closely with issuers in Exchanges on the Federal platform to coordinate 
and develop strategies to mitigate potential consumer confusion. We 
will also work with State Exchanges that choose to implement the bronze 
to silver crosswalk policy in plan year 2024 or in future years to 
share information on best practices to help ensure smooth transitions 
for impacted consumers.
    Finally, as discussed in the proposed rule,\252\ we did not 
propose, and therefore are not finalizing, any changes to SEP 
eligibility or duration in connection with the proposed changes at 
Sec.  155.335(j). As the proposed rule \253\ also explained, enrollees 
qualify for a loss of MEC SEP under Sec.  155.420(d)(1)(i) when their 
current product is no longer available for renewal, but not when their 
current product is still available, even if they are auto re-enrolled 
from a bronze QHP to a silver QHP within the same product. Therefore, 
enrollees who are auto re-enrolled under Sec.  155.335(j)(2), which 
applies when an enrollee's product is no longer available, may qualify 
for a loss of MEC SEP, but enrollees auto re-enrolled under Sec.  
155.335(j)(1) or (4) will not. Finally, while we agree that a SEP plays 
an important role in ensuring that consumers with a change in 
circumstance can update their coverage accordingly, we do not believe 
that a SEP is necessary in this case because consumers who are auto re-
enrolled into a silver plan will have the same network as if they had 
instead been auto re-enrolled into a bronze plan absent the bronze to 
silver crosswalk policy. Further, notifications before and after auto 
re-enrollment provide them with the information that they need to 
choose a different plan during open enrollment if desired.
---------------------------------------------------------------------------

    \252\ See 87 FR 78263.
    \253\ 87 FR 78263.
---------------------------------------------------------------------------

    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78263-78264), HHS requested information on 
potential future changes to the auto re-enrollment hierarchy. We thank 
commenters for their feedback and will take comments into consideration 
in future rulemaking.
7. Special Enrollment Periods (Sec.  155.420)
a. Use of Special Enrollment Periods by Enrollees
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78264), we proposed 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 clarified 
that only one person in a tax household applying for coverage or 
financial assistance through the Exchange must qualify for a SEP under 
paragraphs (d)(6)(i) and (ii) for the entire household to qualify for 
the SEP.
    After reviewing the public comments, we are finalizing this 
provision as proposed, with a modification to use gender neutral 
language. We also note a correction, that any member of a household, 
rather than any member of a tax household as previously stated in 
preamble, can trigger this SEP for the household. We summarize and 
respond to public comments received on the proposed technical 
corrections below.
    Comment: All commenters strongly supported the proposed technical 
corrections. Commenters noted that this change supports the inclusion 
of households with different family structures and/or access to 
affordable insurance options, which is especially important for 
consumers moving from Medicaid or CHIP to Exchange coverage. Commenters 
also stated that the proposal will reduce administrative burden and 
potential confusion for households applying for coverage or financial 
assistance with a SEP. One

[[Page 25827]]

commenter also asked that we clarify that any member of a household, 
rather than any member of a tax household as stated in preamble to the 
proposed rule (87 FR 78264 through 78265), must qualify for a SEP under 
paragraphs (d)(6)(i) and (ii) for the entire household to qualify for 
the SEP.
    Response: We agree that the proposed technical corrections support 
different types of household compositions and that it will reduce both 
administrative burden and confusion for consumers, which is especially 
important during Medicaid unwinding. We also wish to clarify that any 
member of a household (as opposed to a tax household) must qualify for 
a SEP under paragraphs (d)(6)(i) and (ii) for the entire household to 
qualify for the SEP.
b. Effective Dates for Qualified Individuals Losing Other Minimum 
Essential Coverage (Sec.  155.420(b))
    We proposed 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 under paragraph (d)(1), and also the SEPs at paragraphs 
(d)(6)(iii) and (d)(15), as the eligibility for these SEPs also require 
that the loss of coverage be considered 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 were 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 under the loss of MEC SEP is 
the first day of the month following the date of loss of MEC. We were 
aware in the proposed rule (87 FR 78265) that in some States, Medicaid 
or CHIP is regularly terminated mid-month, so we solicited input on 
whether the proposed change would help consumers, especially those 
impacted by Medicaid 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 SEP under Sec.  155.420(d)(1), 
(d)(6)(iii), and (d)(15) 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 SEP 
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), 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, under 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 2 
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) \254\ 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)(iv). 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. This option has 
been selected for Exchanges on the Federal platform. See Sec.  
155.420(b)(3)(i).
---------------------------------------------------------------------------

    \254\ 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.
---------------------------------------------------------------------------

    Because current regulation at Sec.  155.420(b)(2)(iv) does not 
allow for retroactive or mid-month coverage effective dates, consumers 
who lose MEC mid-month, including consumers who live in States that 
allow mid-month terminations of Medicaid or CHIP coverage, may 
experience a gap in coverage when transitioning to coverage through the 
Exchange. During Medicaid unwinding, we expect to see a higher than 
usual volume of individuals transitioning from Medicaid and CHIP 
coverage to the Exchange from April 1, 2023, through May 31, 2024, as 
States resume Medicaid and CHIP terminations that have been paused due 
to the Medicaid continuous enrollment condition. Consumers who become 
ineligible for Medicaid or CHIP 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.
    Therefore, to ensure that qualifying individuals whose prior MEC 
ends mid-month are able to seamlessly transition from their prior 
coverage to Exchange coverage as quickly as possible with no coverage 
gaps, we proposed revisions to paragraph (b)(2)(iv). Specifically, we 
proposed to add additional language to paragraph (b)(2)(iv) stating 
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 
first 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 day 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 loss of MEC), or at the option of the 
Exchange, on July 1st (the first day of the month in which the 
triggering event occurs).
    We acknowledged in the proposed rule (87 FR 78265 through 78266) 
that this proposed change may have a limited impact because many types 
of coverage typically do not 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

[[Page 25828]]

proactive and attested to a coverage loss as soon as they became aware. 
We noted in the proposed rule (87 FR 78265 through 78266) that we did 
not believe that this proposed change introduces program integrity 
concerns because these concerns would apply to only a very narrow group 
of consumers, specifically: those who report a future loss of MEC 
within their 60-day reporting window, have been determined eligible for 
a SEP and found eligible for an Exchange QHP, and select a plan on or 
before the last day of the month preceding the loss of MEC.
    We stated in the proposed rule (87 FR 78266) that we believed this 
proposal would provide additional flexibilities for Exchanges, as 
Exchanges would have the option to use the current coverage effective 
dates available under current paragraph (b)(2)(iv) and provide earlier 
coverage effective dates for consumers who attest to a future mid-month 
loss of MEC. We also acknowledged that if Exchanges do elect an earlier 
coverage effective date as we proposed, this would result in some 
consumers paying for both an Exchange QHP and their other MEC for a 
short period of dual enrollment.
    We also stated in the proposed rule that the partial-month period 
of dual enrollment would not bar an enrollee from eligibility for APTC 
or CSRs, if otherwise eligible, because PTC would be allowed for such 
month under 26 CFR 1.36B-3(a).\255\ Under this provision, PTC is the 
sum of the premium assistance amounts for each coverage month, and a 
month in which an individual is eligible for MEC for only a portion of 
the month may be a coverage month for the individual. We sought comment 
on whether Exchange regulations at Sec.  155.305(f) should be revised 
to reference the IRS's definition of a coverage month to clarify that a 
consumer who is eligible and enrolled in non-Exchange MEC for only a 
portion of the month is not prohibited from receiving APTC.
---------------------------------------------------------------------------

    \255\ Under section 1412(c)(2) of the ACA, APTC cannot be paid 
for a month if PTC is not allowed for such month under the Code 
section 36B.
---------------------------------------------------------------------------

    We also stated in the proposed rule (87 FR 78266) that we believed 
consumers in States that permit mid-month terminations of Medicaid or 
CHIP coverage would be most impacted by the proposed change. We sought 
comment from interested parties on the frequency of mid-month coverage 
end dates, potential program integrity issues associated with earlier 
effective dates, and 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 
enrollment periods and SEPs described in Sec.  147.104(b)(2) and (3) 
must become effective consistent with the dates described in Sec.  
155.420(b).\256\ Therefore, with the exception of the triggering event 
in Sec.  155.420(d)(6), which is limited to coverage purchased through 
an Exchange, the 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. For 
individual market coverage offered outside of an Exchange, the proposed 
option of the Exchange to specify the effective date would refer to an 
option of the applicable State authority.
---------------------------------------------------------------------------

    \256\ With the exception that, under Sec.  147.104(b)(2), a 
health insurance issuer in the individual market is not required to 
allow enrollment for certain SEPs, including Sec.  155.420(d)(6), 
with respect to coverage offered outside of an Exchange.
---------------------------------------------------------------------------

    While we also considered proposing retroactive coverage effective 
dates for consumers reporting past loss of MEC, we decided in the 
proposed rule (87 FR 78266) 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 noted that we believed 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 limited the affordability of 
coverage given that IRS regulations at 26 CFR 1.36B-3 generally provide 
that PTC is only allowed for a month when, as of the first day of the 
month, the individual is enrolled in a QHP. We sought 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 sought comment on these proposals.
    After reviewing the public comments, we are finalizing this 
provision as proposed, with a modification to section Sec.  
155.305(f)(1)(ii)(B) to state that a tax filer must be determined 
eligible for APTC if the tax filer (or a member of their tax household) 
is not eligible for a full calendar month of MEC (and other criteria 
are met). We summarize and respond to public comments received on the 
proposed policy to permit Exchanges the option to provide earlier 
coverage effective dates for consumers attesting to a future loss of 
coverage below.
    Comment: The majority of commenters expressed their support for the 
proposal, explaining that the proposal would help ensure consumers, 
especially those with HIV or cancer, continue to have access to medical 
care without interruption. Commenters stated that the proposal would 
help consumers maintain adherence to treatment, including access to 
certain prescription drugs, which are a critical component of most 
cancer treatment plans. Several commenters also explained that it is 
important to align Exchange QHP coverage effective dates with Medicaid 
or CHIP termination dates, and that the immediate enactment of the 
proposal is especially important as it will help with coverage 
transitions from Medicaid or CHIP into other forms of coverage, such as 
Exchange coverage, during the Medicaid unwinding period. Other 
commenters said that they supported the flexibility provided to the 
State Exchanges to implement this proposal and urged HHS to keep this 
proposal at the option of Exchanges.
    Response: We agree that this proposal will have a positive impact 
by preventing some consumers losing MEC from experiencing gaps in 
coverage or an inability to access treatment or prescription drugs. We 
agree with the commenter of the importance of aligning Medicaid or CHIP 
coverage mid-month terminations with Exchange QHP effective dates; 
however, we wish to clarify that the intent of this policy is not to 
align Exchange coverage effective dates with Medicaid of CHIP mid-month 
terminations, but rather to provide consumers reporting a future loss 
of MEC with earlier coverage effective dates to ensure continuity of 
coverage. We also agree that the proposal will help further ensure 
during Medicaid unwinding that consumers transitioning from Medicaid or 
CHIP into individual coverage on or off the Exchange are able to 
maintain continuity of coverage. Finally, we agree that State Exchanges 
should have flexibility to implement the proposed changes or not, based 
on their specific enrolled populations.
    Comment: Some commenters supported the proposal, but had various

[[Page 25829]]

concerns and recommendations for HHS regarding coverage effective dates 
and adverse selection. One commenter urged HHS to make this proposal 
mandatory for all Exchanges, while another commenter recommended that 
HHS modify the proposal so that Exchanges give the consumer the option 
to choose an earlier or later Exchange coverage effective date to 
mitigate any complexities related to overlapping coverage. Also due to 
adverse selection risk, some commenters recommended that HHS should 
finalize this policy only in States that allow mid-month terminations 
of Medicaid or CHIP coverage or put into place guardrails for when 
consumers can select these coverage effective dates in cases of 
retroactive enrollments. One commenter supported the policy but shared 
a concern that the proposal may still result in continuity of care 
issues and that HHS should allow coverage effective dates to be closer 
to the loss of MEC date, such as through mid-month coverage effective 
dates. A few commenters also said that HHS should not make any changes 
to allow mid-month or retroactive coverage effective dates due to 
adverse selection risks.
    Response: We appreciate the concerns raised by commenters regarding 
the proposed changes. We considered making this proposal required for 
all Exchanges, however, we believe that Exchanges should continue to 
have flexibility and authority to determine if allowing earlier 
coverage effective dates would benefit their enrolled populations. If 
an Exchange operates in a State that allows mid-month terminations of 
Medicaid or CHIP coverage, that Exchange may want to allow earlier 
coverage effective dates for consumers attesting to a future loss of 
MEC, whereas this change may not be necessary for an Exchange that 
operates in a State that does not allow mid-month terminations of 
Medicaid or CHIP. We rejected the idea to implement this policy only in 
States that allow mid-month terminations of Medicaid or CHIP because, 
due to the demands that both Exchanges and States will face during 
Medicaid unwinding, we believe that States should have the option 
whether or not to devote resources to implement earlier coverage 
effective dates for consumers attesting to a future loss of coverage in 
PY 2023 or 2024. Additionally, we wish to note that there is still the 
possibility that consumers lose non-Medicaid or CHIP coverage mid-
month, such as COBRA coverage. Therefore, limiting this policy only to 
States that have mid-month Medicaid or CHIP termination dates would be 
too restrictive.
    We also considered whether consumers should be able to select their 
own coverage effective dates when selecting a plan but determined this 
would be operationally complex for Exchanges and issuers to implement. 
Exchanges would have to implement application and logic changes to 
permit consumers to select their own coverage effective date through 
new application questions, as well as a way for consumers to reverse 
their decision in cases of error. Nonetheless, we are preserving in the 
final rule some element of consumer choice, as a consumer who knows 
they will be losing MEC in the future still has the option to select a 
plan after the last day of the month preceding the triggering event to 
be subject to the existing coverage effective date rules.
    We also took into consideration operational complexities for both 
Exchanges and issuers of allowing coverage to start retroactively. 
Retroactive coverage would also require application and logic changes, 
and could impact QHP pricing across all Exchanges. Given these 
considerations and the complexities around offering retroactivity, we 
are not finalizing any changes to allow retroactivity for the loss of 
MEC SEP.
    Regarding the comment that we allow QHP coverage to start as close 
as possible to the last day of coverage, we currently lack the 
authority to permit APTC and CSRs to start mid-month and elected not to 
allow consumers to enroll in a QHP mid-month if they could not be 
eligible for APTC or CSRs. IRS regulation at 26 CFR 1.36B-3(c) provides 
that a consumer may only qualify for PTC during a given month if they 
are enrolled in QHP ``as of the first day of the month'' (providing an 
exception only for births and adoptions, and certain other 
circumstances at 26 CFR 1.36B 3(c)(2)). If we were to begin QHP 
coverage mid-month without APTC and CSR, enrolling in Exchange coverage 
might be cost prohibitive for some consumers which may dissuade them 
from enrolling in Exchange coverage at all. Additionally, in the 
Exchanges on the Federal platform, a consumer who did enroll in a QHP 
(without APTC or CSRs) mid-month would need to update their Exchange 
application after the beginning of the month following their loss of 
MEC to be determined eligible for APTC and CSRs going forward (if 
otherwise eligible). This process would be difficult to message and 
burdensome for consumers.
    Finally, we acknowledge the concerns raised by commenters regarding 
the potential risk for adverse selection, however, we believe the risk 
to be low because we are not proposing that coverage may start 
retroactively or that consumers have the option to select their 
preferred coverage start date. Given these concerns and our belief that 
Exchanges should retain flexibility in whether to offer the option for 
earlier coverage effective dates for consumers attesting to a future 
coverage loss, we are finalizing as proposed.
    Comment: A commenter supported the proposal but stated that the 
proposed policy only provides seamless coverage transitions for 
consumers who proactively come to an Exchange to report their future 
loss of Medicaid or CHIP the month before their termination. The 
commenter requested that we consider additional improvements to notices 
to ensure that Medicaid and CHIP beneficiaries receive clear 
instructions about coverage transitions.
    Response: We agree with the need for clear and effective 
communications with Medicaid and CHIP beneficiaries and wish to share 
some of the work we have done. In partnership with States and other 
interested parties, we have developed toolkits and strategies that 
States can implement to support Medicaid unwinding activities to inform 
consumers about renewing their coverage and exploring other available 
health insurance options if they no longer qualify for Medicaid or 
CHIP. The resources emphasize the need for consumers to act quickly to 
enroll in Exchange coverage so they are able to minimize gaps in 
coverage, where possible.\257\
---------------------------------------------------------------------------

    \257\ More information about these efforts is available at 
https://www.medicaid.gov/state-resource-center/downloads/mac-learning-collaboratives/ffm-transfer-message-lc-presentation-deck.pdf.
---------------------------------------------------------------------------

    Comment: One commenter supported the proposal, but also requested 
that HHS maintain the existing special enrollment flexibilities that 
were introduced after COVID-19 was declared a PHE by the President on 
March 13, 2020, including the Exceptional Circumstances SEP for 
consumers who lost qualifying health coverage on or after January 1, 
2020, but missed their 60-day window after their loss of coverage to 
enroll in an Exchange plan due to the COVID-19 PHE. Other commenters 
supported the proposal and HHS' recent announcement of the Unwinding 
SEP,\258\ which temporarily

[[Page 25830]]

provides more time for consumers to report losing Medicaid or CHIP 
coverage during Medicaid unwinding, but recommended HHS also require 
this Unwinding SEP for issuers offering plans in the individual and 
group health insurance markets off-Exchange.
---------------------------------------------------------------------------

    \258\ See CMS. (2023, January 27). Temporary Special Enrollment 
Period (SEP) for Consumers Losing Medicaid or the Children's Health 
Insurance Program (CHIP) Coverage Due to Unwinding of the Medicaid 
Continuous Enrollment Condition--Frequently Asked Questions (FAQ). 
https://www.cms.gov/technical-assistance-resources/temp-sep-unwinding-faq.pdf.
---------------------------------------------------------------------------

    Response: In 2018, we clarified through guidance that an 
Exceptional Circumstances SEP pursuant to 45 CFR 155.420(d)(9) is 
available for individuals seeking coverage on Exchanges on the Federal 
platform and who were prevented from enrolling in Exchange coverage 
during another SEP or during an Open Enrollment period (OEP) by an 
event that Federal Emergency Management Agency (FEMA) declared a 
national emergency or major disaster (FEMA SEP).\259\ This guidance 
also clarified that we would make a FEMA SEP available for only 60 days 
after the date in which a national emergency or major disaster 
officially ends.\260\ Given the recent end of the COVID national 
emergency on April 10, 2023, the current SEP flexibilities due to the 
COVID-19 FEMA national emergency will only be in place until June 9, 
2023.
---------------------------------------------------------------------------

    \259\ See Pate, R. (2018, August 9). Emergency and Major 
Disaster Declarations by the Federal Emergency Management Agency 
(FEMA)--Special Enrollment Periods (SEPs), Termination of Coverage, 
and Payment Deadline Flexibilities, Effective August 9, 2018. 
https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/8-9-natural-disaster-SEP.pdf.
    \260\ https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/8-9-natural-disaster-SEP.pdf.
---------------------------------------------------------------------------

    We appreciate the recommendation that the Unwinding SEP be 
available off-Exchange. However, as specified in 45 CFR 
147.104(b)(2)(i)(D), issuers in the individual market off-Exchange are 
not required to provide Exceptional Circumstances SEPs under Sec.  
155.420(d)(9).\261\ In addition, the Exceptional Circumstances SEP does 
not extend to issuers offering group health insurance coverage outside 
of the Exchange.\262\ As such, issuers in the individual and group 
market off-Exchange are not required to offer an Exceptional 
Circumstances SEP to help with coverage transitions due to Medicaid 
unwinding. Finally, while the Unwinding SEP does not apply to issuers 
in the individual and group health markets off-Exchange, employers may 
still work with their plan or issuer to extend the SEP available to 
consumers losing Medicaid or CHIP for those who need to enroll in 
employer sponsored coverage after the end of the 60-day loss of MEC SEP 
available under applicable law.
---------------------------------------------------------------------------

    \261\ See CMS. (2023, January 27). Temporary Special Enrollment 
Period (SEP) for Consumers Losing Medicaid or the Children's Health 
Insurance Program (CHIP) Coverage Due to Unwinding of the Medicaid 
Continuous Enrollment Condition--Frequently Asked Questions (FAQ). 
https://www.cms.gov/technical-assistance-resources/temp-sep-unwinding-faq.pdf.
    \262\ QHP issuers offering a QHP through a Small Business Health 
Options Program (SHOP) are required to provide the exceptional 
circumstances special enrollment period. 45 CFR 156.286.
---------------------------------------------------------------------------

    Comment: A few commenters neither fully supported or opposed the 
proposed policy but provided some considerations for HHS, specifically 
that the proposal could result in consumers enrolling in a new plan 
earlier than they intended to or were aware of. Commenters also 
recommended that HHS consider whether it could result in confusion or 
misunderstandings among consumers as to when coverage would begin, 
which could have financial implications or lead to issues with billing 
and premium payments. Another commenter noted that the proposed change 
could result in short periods of dual enrollment for consumers, which 
may introduce coordination of benefits issues for consumers.
    Response: We agree that both consumers and issuers will require 
additional guidance to ensure that the policy is implemented as 
intended and that all interested parties assisting consumers with 
enrollment decisions receive education and guidance, especially 
regarding coordination of benefits and potential periods of overlapping 
coverage. Because the earlier coverage effective date will only be 
available when consumers select a QHP in advance of the month in which 
they are losing MEC, consumers who do not want any overlap in coverage 
could choose to wait until the month they lose MEC (and up to 60 days 
after the loss of MEC) before selecting a plan. We encourage any 
Exchanges choosing to implement earlier effective dates to provide 
clear explanations to consumers regarding this option. We will continue 
to monitor the implementation of this policy, including whether 
additional guidance, or any additional policy changes in future 
rulemaking, are necessary.
    Comment: One commenter fully opposed the proposed policy, stating 
that it could further complicate the Medicaid unwinding process, 
especially in light of recent guidance published by HHS on January 27, 
2023, announcing flexibilities for consumers losing Medicaid or CHIP 
due to Medicaid unwinding.\263\ The commenter stated that a more 
narrowly tailored approach, such as allowing mid-month enrollments in 
Exchange QHPs and proration of APTC and premium amounts, similar to the 
SEPs for adoption or birth of a child, is the better solution.
---------------------------------------------------------------------------

    \263\ See CMS. (2023, January 27). Temporary Special Enrollment 
Period (SEP) for Consumers Losing Medicaid or the Children's Health 
Insurance Program (CHIP) Coverage Due to Unwinding of the Medicaid 
Continuous Enrollment Condition--Frequently Asked Questions (FAQ). 
https://www.cms.gov/technical-assistance-resources/temp-sep-unwinding-faq.pdf.
---------------------------------------------------------------------------

    Response: We appreciate and understand the concern that this policy 
could further complicate the Medicaid unwinding process given that 
there is variability amongst States' unwinding plans and activities. 
However, we do believe that the policy still has value given that it 
would facilitate timely coverage transitions, which will be critical 
throughout the entire Medicaid unwinding period. For example, consumers 
who reside in States that allow mid-month terminations of Medicaid or 
CHIP risk gaps in coverage during Medicaid unwinding. A rule that 
allows for earlier QHP effective dates could mitigate these gaps in 
coverage, even more so if consumers do not have access to the 
flexibilities we announced on January 27, 2023, because their State 
Exchange opted to not provide the Unwinding SEP or something similar. 
Regarding the suggestion to allow Exchange QHP coverage to start mid-
month, we also considered and rejected this option for the reasons 
described earlier in this final rule.
    Comment: A commenter supported a review of the regulations to 
ensure that consumers with MEC ending mid-month can be found eligible 
for an earlier coverage effective date not just for QHP, but also for 
APTC and CSR to help pay for their coverage.
    Response: We reiterate that a consumer who is not eligible for or 
enrolled in non-Exchange MEC for a full month, and who is enrolled in a 
QHP on the first day of such month, may be allowed PTC under 26 CFR 
1.36B-3(c)(1). To clarify that such a consumer may be eligible for APTC 
and CSRs, we are adding language to the APTC eligibility regulation at 
Sec.  155.305(f)(1)(ii)(B) to state that a tax filer must be determined 
eligible for APTC if the tax filer (or a member of their tax household) 
is not eligible for a full calendar month of minimum essential coverage 
(and other criteria are met).

[[Page 25831]]

c. Special Rule for Loss of Medicaid or CHIP Coverage (Sec.  
155.420(c))
    To mitigate coverage gaps when consumers lose Medicaid or CHIP 
coverage and to allow for a more seamless transition into Exchange 
coverage, we are finalizing the proposed 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 SEP 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 SEP 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. See 45 CFR 155.420(c)(2). When these qualified individuals 
or their dependents are not renewed into Medicaid or CHIP based on 
modified adjusted gross income following an eligibility 
redetermination, 42 CFR 435.916 requires that the State Medicaid agency 
provide a 90-day reconsideration window, or a longer period elected by 
the State, 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 (or longer period elected by the State) 
following a Medicaid or CHIP non-renewal, 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 SEP 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 renew coverage through Medicaid or CHIP (which they 
must do within 90 days or the longer period elected by a State of the 
consumer's loss of Medicaid or CHIP), they may have missed their window 
to enroll in Exchange coverage through a SEP based on loss of MEC (60 
days after loss of Medicaid or CHIP).
    In further support of this proposal, we explained in the proposed 
rule (87 FR 78266 through 78267) that we are aware that most consumers 
losing Medicaid or CHIP and who are also eligible for Exchange coverage 
may not transition to Exchange coverage in a timely manner. A recent 
report published by the Medicaid and CHIP Payment and Access Commission 
(MACPAC) \264\ 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.\265\ 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 while 
minimizing coverage gaps.
---------------------------------------------------------------------------

    \264\ 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.
    \265\ Ibid.
---------------------------------------------------------------------------

    Therefore, to ensure that qualifying individuals are able to 
seamlessly transition from Medicaid or CHIP coverage to Exchange 
coverage as quickly as possible and to mitigate the risk of coverage 
gaps, we proposed to create new paragraph (c)(6) stating that, 
effective January 1, 2024, at the option of the Exchange, consumers 
eligible for a SEP under Sec.  155.420(d)(1)(i) due to loss of Medicaid 
or CHIP coverage that is considered MEC would have up to 90 days (or 
the longer period elected by a State) after their loss of Medicaid or 
CHIP coverage to enroll in an Exchange QHP. This proposal would align 
the SEP window following loss of Medicaid or CHIP with the 
reconsideration period available under 42 CFR 435.916(a). We also 
proposed adding language to paragraph (c)(2) to clarify that a 
qualified individual or their dependent(s) 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 believed in the proposed rule (87 FR 78267) 
that these proposed changes would have a positive impact on consumers 
while providing flexibility for Exchanges with different enrollment 
trends.
    We sought comment on this proposal.
    After reviewing the public comments, we are finalizing this 
provision as proposed, with two modifications to permit State Exchanges 
some additional flexibilities. As finalized, State Exchanges are 
permitted to provide a qualified individual or their dependent(s) who 
are losing Medicaid or CHIP coverage with more time to select a QHP, up 
to the number of days provided for the applicable Medicaid or CHIP 
reconsideration period if the State Medicaid Agency allows or provides 
a longer Medicaid or CHIP reconsideration period. State Exchanges will 
also have the option to implement this special rule as soon as this 
final rule takes effect, instead of on January 1, 2024, as proposed. We 
summarize and respond to public comments received on the proposed 
special rule for consumers losing Medicaid or CHIP coverage below.
    Comment: Multiple commenters supported the proposal stating that, 
even before the COVID-19 PHE, many Medicaid beneficiaries experienced 
churn due to administrative errors, lost paperwork, and address 
changes. Commenters noted that despite States' best efforts during 
Medicaid unwinding, notices may still not reach consumers in time. 
Commenters also supported the proposal because it would promote 
continuity of care, which helps consumers achieve healthier outcomes, 
helps support the emergency care safety net, and minimizes care 
disruptions, especially for those with serious, chronic medical 
conditions. Commenters also were supportive of the flexibility for 
State Exchanges to determine whether they will adopt the special rule 
or not.
    Response: We agree that the new special rule will have a 
significant impact and will be beneficial for consumers losing Medicaid 
or CHIP coverage, especially those with chronic health conditions, and 
will help ease transitions into Exchange coverage. We also agree that 
State Exchanges should have flexibility to decide whether to offer this 
special rule or not.
    Comment: A few commenters supported the proposal but made 
recommendations for HHS to consider. A few commenters requested that 
HHS make this special rule mandatory instead of at the option of 
Exchanges. A few commenters requested that HHS not delay implementation 
to January 1, 2024, and requested that this special rule go into effect 
immediately or that Exchanges be given explicit authority to offer this 
special rule before January 1, 2024, if desired. Other commenters asked 
that HHS consider extending the window to 120 days or to permit 
Exchanges to extend the attestation window in States where the Medicaid 
or CHIP reconsideration period is longer than 90 days. Finally, a few 
commenters said that HHS should clarify that, under 45 CFR 
155.420(d)(9), Exchanges already have flexibility to offer Exceptional 
Circumstance SEPs, can

[[Page 25832]]

establish Exceptional Circumstance SEPs at any time and/or length, and 
that these lengths can be greater than the 60 or 90-day timeframes as 
discussed in preamble.
    Response: We continue to believe that all Exchanges should have 
flexibility to adopt this special rule or not, based on their 
experiences with their eligible and enrolled populations. Therefore, we 
are not requiring that all Exchanges offer this special rule but we may 
consider this in future rulemaking. We believe that delaying 
implementation until January 1, 2024, will give Exchanges time to 
prepare any system changes for implementation, and update guidance and 
educational materials, which may not be feasible when States are also 
engaged in Medicaid unwinding activities. However, we understand that 
some Exchanges may be ready to implement this special rule earlier than 
January 1, 2024, and therefore, we are modifying our proposal to 
provide State Exchanges the flexibility to implement this policy as 
soon as this rule is finalized. Finally, we understand and appreciate 
States' concerns that the proposed 90-day window for consumers to 
report a past loss of Medicaid or CHIP is not enough time in States 
whose State Medicaid agency allow or provide for a Medicaid or CHIP 
reconsideration window that is 90 days or greater. Given these 
concerns, we are modifying our proposal to permit Exchanges to offer an 
attestation window (for consumers eligible for a SEP under Sec.  
155.420(d)(1)(i) due to loss of Medicaid or CHIP coverage that is 
considered MEC) up to the number of days provided for the applicable 
Medicaid or CHIP reconsideration period, if the State Medicaid agency 
allows or provides for a Medicaid or CHIP reconsideration period 
greater than 90 days.
    Regarding the comment that Exchanges already have flexibility and 
authority under paragraph (d)(9) to set the length of a SEP, we remind 
Exchanges that the exceptional circumstances authority is subject to 
each Exchange's reasonable interpretation of what is ``exceptional.'' A 
misalignment between the Exchange attestation window for consumers 
losing Medicaid or CHIP coverage with the Medicaid or CHIP 
reconsideration period alone does not alone constitute an exceptional 
circumstance. If an Exchange chooses not to adopt this special rule for 
consumers losing Medicaid or CHIP coverage, or if an Exchange receives 
a request from an applicant to enroll in Exchange coverage more than 90 
days after losing Medicaid or CHIP coverage, an Exchange could consider 
that applicant's claim that they experienced an exceptional 
circumstance that prevented them from enrolling in Exchange coverage in 
a timely manner on a case-by-case basis only. We also remind commenters 
that while Exchanges have broad authority to establish a SEP due to an 
exceptional circumstance, the Exceptional Circumstance SEP may not last 
more than 60 days, consistent with 45 CFR 155.420(c)(1). Therefore, we 
are finalizing as proposed.
    Comment: One commenter supported the proposed special rule but also 
recommended that HHS continue to implement other changes to enrollment 
rules to reduce burden on consumers looking to enroll in Exchanges to 
make it more likely that they enroll. For example, the commenter 
suggested offering a SEP to consumers who owe a monthly premium after 
application of APTC, so that they can enroll in Exchange coverage 
throughout the year, similar to the SEP at Sec.  155.420(d)(16) for 
consumers with attested household incomes at or below 150 percent of 
the FPL. The commenter also recommended that HHS consider other SEPs 
once the 150 percent FPL SEP expires at the end of coverage year 2025. 
Finally, one commenter supported automatic coverage transitions for 
consumers needing to transition from Medicaid or CHIP into Exchange 
coverage.
    Response: We appreciate the commenters' concerns regarding 
consumers who have low incomes but are ineligible for the SEP at 
paragraph (d)(16). While any changes to the existing SEP at paragraph 
(d)(16) are out-of-scope for this rule, we will continue to explore 
potential ways to help lower income consumers access and enroll in 
Exchange coverage. We also appreciate the concerns regarding the need 
for automatic coverage transitions and will continue work with internal 
and external interested parties to find ways to improve transitions for 
consumers.
    Comment: Some commenters also expressed concern about the recently 
announced Unwinding SEP available for consumers who submit a new 
application or update an existing application between March 31, 2023, 
and July 31, 2024, and attest to a last date of Medicaid or CHIP 
coverage within the same time period.\266\ Commenters were concerned 
that the Unwinding SEP could invite adverse selection, as impacted 
consumers may delay enrolling into Exchange coverage until they have a 
medical need for health insurance, and because the Unwinding SEP is not 
subject to SEP verification. Commenters also said that they did not 
anticipate the announcement of the Unwinding SEP so that they could 
determine how the Unwinding SEP will impact their 2024 pricing.
---------------------------------------------------------------------------

    \266\ See CMS. (2023, January 27). Temporary Special Enrollment 
Period (SEP) for Consumers Losing Medicaid or the Children's Health 
Insurance Program (CHIP) Coverage Due to Unwinding of the Medicaid 
Continuous Enrollment Condition--Frequently Asked Questions (FAQ). 
https://www.cms.gov/technical-assistance-resources/temp-sep-unwinding-faq.pdf.
---------------------------------------------------------------------------

    Response: The recently announced Unwinding SEP \267\ is out of 
scope for this rulemaking, but we acknowledge and appreciate the 
concerns raised by commenters related to potential adverse selection 
and impact on pricing of premiums.
---------------------------------------------------------------------------

    \267\ See CMS. (2023, January 27). Temporary Special Enrollment 
Period (SEP) for Consumers Losing Medicaid or the Children's Health 
Insurance Program (CHIP) Coverage Due to Unwinding of the Medicaid 
Continuous Enrollment Condition--Frequently Asked Questions (FAQ). 
https://www.cms.gov/technical-assistance-resources/temp-sep-unwinding-faq.pdf.
---------------------------------------------------------------------------

    Comment: A few commenters opposed the proposed special rule. One 
commenter contended that it was unnecessary given that the Consolidated 
Appropriations Act, 2023 \268\ delinked the Medicaid unwinding from the 
end of the COVID-19 PHE. Specifically, the commenter said that 
``beginning April 1, 2023, States can begin Medicaid redeterminations'' 
and because of this, the commenter expects that ``many individuals 
impacted by this will have been redirected to coverage on the Exchange 
by the end of 2023.'' Another commenter stated that the existing SEP at 
Sec.  155.420(d)(1) adequately addresses the situation, and expressed 
concern that HHS is introducing too many new SEPs, which can cause too 
much variation amongst Exchanges and may create more confusion within 
and across markets. The commenter also stated that enrollment data 
shows that consumers submit their applications early during their 60-
day SEP window, and that lengthy, overlapping SEPs create more 
administrative burden for Exchanges and may cause delays or prevent 
consumers from enrolling into coverage.
---------------------------------------------------------------------------

    \268\ Public Law 117-328.
---------------------------------------------------------------------------

    Response: While there may not be a need for this special rule 
during Medicaid unwinding due to our recent announcement of the 
Unwinding SEP, the Unwinding SEP is only temporary and will not address 
the misalignment of the loss of MEC SEP eligibility period and Medicaid 
and CHIP reconsideration periods outside of the exceptional 
circumstances of Medicaid unwinding. We proposed this change due to

[[Page 25833]]

continued concerns from interested parties that consumers transitioning 
from Medicaid or CHIP coverage and into other coverage, like Exchange 
coverage, continue to experience gaps in coverage, which can be 
detrimental to health outcomes. We also appreciate the concern that 
different rules for SEPs may be confusing, and therefore, Exchanges 
have the option of whether or not to offer this special rule.
d. Plan Display Error Special Enrollment Periods (Sec.  155.420(d))
    We are finalizing our proposal to amend 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 proposed amending paragraph (d)(12) by 
changing the subject of the regulation to focus on the affected 
enrollment, not the affected qualified individual, enrollee, or their 
dependents.\269\
---------------------------------------------------------------------------

    \269\ 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, enrollee, and/or their dependents who experiences certain 
qualifying events to enroll in, or change enrollment in, a QHP through 
the Exchange outside of the annual OEP. In 2016, we added warnings on 
HealthCare.gov about inappropriate use of SEPs, and tightened certain 
eligibility rules.\270\ 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.
---------------------------------------------------------------------------

    \270\ February 25, 2016. Fact Sheet: Special Enrollment 
Confirmation Process. Available online at https://www.cms.gov/newsroom/fact-sheets/fact-sheet-special-enrollment-confirmation-process.
---------------------------------------------------------------------------

    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), we codified the plan display error 
SEP at 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, we 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 SEP 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 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, or their 
dependent's, decision to purchase a QHP through the Exchange. However, 
we have found that consumers may benefit when other interested parties 
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, at which point the issuer or State regulator is in the best 
position first to identify the display error. For example, a plan 
display error that influenced a consumer's enrollment can be discovered 
when a consumer enrolls in a QHP, pays the premium amount that was 
submitted by the issuer to be displayed on HealthCare.gov, and the 
enrollment is cancelled by the issuer for non-payment of premiums 
because the premium was incorrectly displayed on HealthCare.gov. 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 and notify the Exchange that the error was 
caused by incorrect premium amounts between the issuer's records and 
data submitted to HealthCare.gov. We can then work with the issuer to 
implement the data correction processes to make the necessary 
corrections to the HealthCare.gov and investigate the error to 
determine if the error was material because it was likely to have 
influenced the consumer's enrollment. In this example, we would likely 
determine that the error impacted the consumer's enrollment if the 
difference between the displayed premium and the actual premium was 
material. 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 proposed 
revising paragraph (d)(12) to remove the burden solely from the 
qualified individual, enrollee, and their dependents. We also proposed 
adding cost-sharing to the list of plan display errors, alongside plan 
benefits, service area, and premiums, as a plan display error with 
respect to cost-sharing could equally influence a consumer's enrollment 
decision. Specifically, we proposed revising Sec.  155.420(d)(12) to 
reflect that a 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 proposed to 
consider a material error to be an error that is likely to have 
influenced a qualified individual's, enrollee's, or their dependent's 
enrollment in a QHP.
    We note that an error related to plan benefits, service area, cost-
sharing or premium does not trigger a SEP when the error is not 
material, which may occur if an error is honored as displayed. Errors 
related to plan

[[Page 25834]]

benefits, service area, cost-sharing or premium include situations 
where coding on HealthCare.gov causes benefits to display incorrectly, 
or where we identified incorrect QHP data submission or discrepancy 
between an issuer's QHP data and its State-approved form filings.\271\ 
If the error involves information that displays on HealthCare.gov, we 
work 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, we will not typically provide the consumers with a 
SEP. The proposed revision to the regulation will be consistent with 
this approach.
---------------------------------------------------------------------------

    \271\ 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.
---------------------------------------------------------------------------

    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. We currently engage with partners and interested parties 
throughout the plan display error SEP process to ensure that issuers 
and States are notified of our 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 SEP if their plan data 
had a significant, material error. We expected that this experience is 
similar on all Exchanges, and therefore are proposing that this 
amendment to the description of the SEP will apply for all Exchanges.
    We requested comment on this proposal.
    After reviewing the public comments, we are finalizing this 
provision as proposed. All comments supported the proposed policy. We 
summarize and respond to public comments received on the proposed plan 
display error SEP below.
    Comment: Multiple commenters supported a SEP for consumers affected 
by a material plan display error related to plan benefits, service 
area, or premium. Specifically, commenters mentioned their support for 
the SEP for consumers whose enrollment in a plan was adversely affected 
by the material plan display error. Additionally, multiple commenters 
supported the proposal to add ``cost-sharing'' to the list of plan 
display error that includes material error related to plan benefits, 
service area, and premiums.
    Response: We agree that this revised plan display error SEP will 
support consumers whose enrollment in a plan was influenced by a 
material plan display error related to plan benefits, service area, or 
premium. We also agree with adding cost-sharing to the list of errors 
that may constitute a plan display, and we are finalizing this as 
proposed.
    Comment: Several commenters supported our proposal to lift the 
burden of proof to additionally allow regulators and other interested 
third parties to demonstrate that a plan display error affected a 
consumer's plan selection. One comment supported expanding the ways in 
which people can prove they have been affected by plan display errors. 
Commenters stated this proposed change encourages the efficient 
operations of the Exchanges while reducing the burden on consumers to 
prove an error occurred. Another commenter supported the proposal as it 
allows consumers to benefit from other interested parties recognizing a 
plan display error including issuers, State regulators, and others.
    Response: We agree that the proposal will remove the burden from 
consumers to solely demonstrate to the Exchange that their enrollment 
was influenced by a material error. We agree that this change will lift 
the burden of proof to allow regulators and other interested parties to 
demonstrate plan display errors. As such, we will finalize this 
proposal to allow plan display errors to be efficiently identified and 
resolved.
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78268), HHS requested information on whether 
consumers affected by a significant change in their plan's provider 
network should be eligible for a SEP, and 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. We thank commenters for their feedback 
and will take this into consideration in future rulemaking.
    Comment: One commenter recommended that the plan display error SEP 
should also include provider directory inaccuracies.
    Response: In the Federally-facilitated Exchange (FFE) and 
Federally-facilitated Small Business Health Options Program (FF-SHOP) 
Enrollment Manual, we state that plan display errors or changes that 
are made to external websites will not be considered triggering events 
for plan display error SEPs.\272\ Since provider directories are 
displayed and maintained outside the Exchange, we did not propose in 
this rulemaking to include provider network inaccuracies as potential 
plan display error triggers under Sec.  155.420(d)(12). Nonetheless, we 
will consider provider directory inaccuracies for future rulemaking.
---------------------------------------------------------------------------

    \272\ 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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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
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78268), we proposed 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 added PHS Act 
section 2714 (implemented at Sec.  147.120) to require that group 
health plans and health insurance issuers offering group or individual 
health insurance coverage that offer dependent child coverage make such 
coverage available for an adult child until age 26. The ACA also added 
section 9815(a)(1) to the Code and section 715(a)(1) to the Employee 
Retirement Income Security Act (ERISA) to incorporate the provisions of 
part A of title XXVII of the PHS Act (including

[[Page 25835]]

section 2714) and make them applicable under ERISA and the Code to 
group health plans and health insurance issuers providing health 
insurance coverage in connection with group health plans. This proposed 
amendment to 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 2590.715-2714. Some States have established 
requirements under which issuers must maintain coverage for dependent 
children beyond age 26, and some issuers adopt higher than legally 
required age limits as a business decision.
    In operationalizing Sec.  155.430 on the Federal eligibility and 
enrollment platform, HHS has required QHP issuers that cover dependent 
children to provide coverage to dependent children until the end of the 
plan year in which they turn 26 (or, if higher, the maximum age under 
State law or the plan's business rules), although this is not required 
under Sec.  147.120. Nevertheless, interested parties requested that 
HHS' policy be codified in regulation for clarity. Doing so by amending 
Sec.  155.430 would reduce uncertainty for issuers on the Exchanges on 
the Federal platform regarding their obligation under Sec.  155.430 to 
maintain coverage for a dependent child who has turned 26 (or, if 
higher, the maximum age under State law or the plan's business rules) 
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, if higher, the 
maximum age under State law or the plan's business rules). This policy 
would codify the current policy on 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, if higher, the maximum age under State law or the 
plan's business rules). This is especially true when comparing 
individual market Exchange coverage to the employer market. In the 
employer market, the employer typically contributes toward the cost of 
child dependent coverage, but only until the child dependent attains 
the maximum dependent age under the group health plan (at which point 
the child dependent's coverage would typically be terminated). Whereas 
in the Exchange, APTC is allowed for the coverage of a 26-year-old 
child who is a tax dependent for the entire plan year because attaining 
age 26 may not, by itself, change tax dependent status. 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 non-tax relationships between applicants. 
Additionally, Exchange eligibility criteria do not prohibit allocation 
of APTC to dependent children enrollees based on age. Every family 
member who is part of the tax household must be listed on the Exchange 
application for coverage, and there is 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, if 
higher, through the end of the plan year in which the dependent reaches 
the maximum age required under State law or the plan's business rules.
    In developing the Federal eligibility and enrollment platform, we 
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, if higher, the maximum age under State law or the 
plan's business rules).
    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, if higher, the maximum age under State law or the 
plan's business rules) 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. We proposed 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 proposed to make implementation 
optional for State Exchanges.
    We requested comments on this proposal.
    After reviewing the public comments, we are finalizing this 
provision as proposed, with the additional clarification that issuers 
who have adopted a higher maximum age than required by State or Federal 
law, as described in their business rules, also must maintain coverage 
for dependent children until the end of the plan year in which they 
reach the maximum age. We summarize and respond to public comments 
received on the proposal below.
    Comment: Multiple commenters supported the proposal, and none 
opposed it. Several commenters stated that this proposal would support 
continuity of coverage and avoid interruptions in coverage for 
dependent children who turn 26 during the plan year (or the maximum age 
under State law). A few commenters noted that this proposal was 
particularly important given health concerns faced by young people, 
such as reproductive health, and given the tendency of young adults to 
have lower rates of health insurance coverage. A few commenters agreed 
that the proposal would help provide clarity to issuers regarding their 
obligation to maintain coverage for dependent children until the end of 
the plan year in which the child turns 26 (or the maximum age under 
State law), and would clarify for dependent child enrollees their 
ability to remain enrolled until the end of the plan year in which they 
turn 26 (or the maximum age under State law). Three commenters, two of 
whom represented State Exchanges, indicated that their State has a 
similar requirement in place. One commenter noted that this proposal 
would align

[[Page 25836]]

with the insurance industry standard of enrollments taking place during 
the annual Open Enrollment Period. Lastly, two commenters stated that 
the proposal would ensure accumulators were not reset mid-plan year for 
enrollees who turn 26.
    Response: We agree that these changes will help provide clarity to 
consumers and issuers regarding the obligation of issuers on Exchanges 
on the Federal platform to maintain coverage for dependent children 
until the end of the plan year in which they turn 26 (or, if higher, 
reach the maximum allowable age under State law or the plan's business 
rules). Although this policy has already been in place on these 
Exchanges, we agree that this requirement promotes continuity of 
coverage, ensures consumers maintain access to needed health services, 
and avoids the reset of accumulators that may occur if their coverage 
was terminated in the middle of the plan year.
    Comment: One commenter supporting the proposal noted that 
implementation would be optional for State Exchanges and requested that 
we encourage States to adopt a policy of prohibiting mid-year plan 
terminations for dependent children who reach the applicable maximum 
age.
    Response: This proposal provides State Exchanges with the option to 
adopt a similar policy, but we do not believe it is appropriate to 
explicitly encourage State Exchanges to do so. We note that this 
requirement applies to all issuers on Exchanges on the Federal 
platform, and as noted in a previous comment, some State Exchanges have 
also indicated they currently have a similar requirement. However, as 
noted in the preamble of this proposal, this policy for the Exchanges 
on the Federal platform is based on Exchange operations and the fact 
that APTC eligibility determinations are made for the entire plan year 
based on tax household, unless replaced by a new determination of 
eligibility. Because State Exchanges may establish their own 
operational practices regarding the maximum age for dependent 
enrollees, including ones that differ from those on the Exchanges on 
the Federal platform, we believe it is appropriate to allow State 
Exchanges to determine whether or not to adopt this proposal.
    Comment: One commenter expressing support for the proposal stated 
that consumers should be informed that some States have higher maximum 
ages for dependent child enrollees, and that Federal law requires that 
individuals with developmental disabilities must be covered as 
insurance dependents regardless of age.
    Response: We agree that it is important for consumers to be aware 
of the maximum age for dependent children required under State law and 
therefore will explore ways in which we can convey this information. 
With respect to plans with business rules that provide a maximum age 
higher than what is required under State or Federal law, we note that 
HHS publishes Public Use Files for the Federally-facilitated Exchange 
which contain information on issuers' business rules, including the 
maximum dependent age.\273\ States, including State Departments of 
Insurance and State Exchanges, may also have resources available to 
inform consumers of the applicable laws regarding maximum age. Finally, 
we note that Federal law requires coverage of dependent children until 
age 26, though States may have higher maximum dependent ages based on 
disability status. The application for Exchanges on the Federal 
platform allows consumers to designate an enrollee with a disability, 
which allows that enrollee to remain enrolled as a dependent past age 
26 if required by applicable State law.
---------------------------------------------------------------------------

    \273\ CMS. (n.d.). Health Insurance Exchange Public Use Files 
(Exchange PUFs). https://www.cms.gov/cciio/resources/data-resources/
marketplace-puf.
---------------------------------------------------------------------------

    Comment: Two commenters expressing support for the proposal noted 
that it was important for enrollees to retain APTC for the full plan 
year. One commenter stated that dependents may be eligible for more 
generous APTC while on their family's coverage than in coverage alone.
    Response: We agree that it is important for Exchange enrollees to 
retain the APTC to which they are entitled for the full plan year. 
However, we note that even if a dependent enrollee enrolls in a 
separate plan prior to the end of the year in which the dependent turns 
26, they are still entitled to the portion of APTC paid on their behalf 
for the tax household in which they are a tax dependent. Enrolling in a 
separate plan does not, in and of itself, reduce the amount of APTC to 
which an enrollee is entitled.
    Comment: One commenter expressed neither support for nor opposition 
to the proposal and stated that enrollees who turn 26 during the plan 
year should not be automatically re-enrolled into their own plan at the 
end of the plan year.
    Response: Although this comment is not within the scope of our 
proposal, we believe it is appropriate for such enrollees to be re-
enrolled into their own plan at the end of the year in which they turn 
26 (or, if higher, reach the maximum age under State law or the plan's 
business rules). This practice avoids disruptions of coverage for 
enrollees transitioning off their parents' plans, and is in line with 
the general Exchange practice of automatically re-enrolling enrollees 
at the end of each plan year.
9. General Eligibility Appeals Requirements (Sec.  155.505)
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78269), we proposed 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 
proposed revising this regulation to acknowledge the ability of the CMS 
Administrator to review Exchange eligibility appeals decisions prior to 
judicial review.
    This change would ensure that accountability for the decisions of 
the HHS appeals entity is vested in a principal officer, as well as 
bring Sec.  155.505(g) of the appeals process to a more similar posture 
as other CMS appeals entities that provide Administrator review.\274\ 
Revising the regulation would also provide appellants and other parties 
with accurate information about the availability of administrative 
review by

[[Page 25837]]

the CMS Administrator if they are dissatisfied with their Exchange 
eligibility appeal decision.
---------------------------------------------------------------------------

    \274\ Examples include: 42 CFR part 405, subpart R (Provider 
Reimbursement Review Board); 42 CFR part 412, subpart L (Medicare 
Geographic Classification Review Board); 42 CFR 430.60 through 
430.104 (Medicaid State Plan Materials/Compliance Determinations); 
42 CFR 423.890 (Retiree Drug Subsidy (RDS) Appeals); 42 CFR 411.120 
through 411.124 (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 sought comment on this proposal.
    After reviewing the public comments, we are finalizing this 
provision as proposed, with the following technical corrections to 
improve understanding of the review process, and with a modified 
effective date. The first technical correction is to the proposed 
language at Sec.  155.505(g). We are modifying the sentence at Sec.  
155.505(g) including its citation to paragraph (b) to clarify that 
review is available for Exchange eligibility appeals decisions issued 
by an impartial official under Sec.  155.535(c)(4). The second 
technical correction is to change the reference found in Sec.  
155.505(g)(1)(i)(A) from paragraph (g)(1)(ii)(B) to paragraph 
(g)(1)(ii)(B)(1) to add specificity regarding voiding the 
Administrator's declination. The third technical correction is to Sec.  
155.505(g)(1)(i)(C), which should cross reference the 30-day period 
described in paragraphs (g)(1)(i)(B)(1) and (3). The fourth is to Sec.  
155.505(g)(1)(ii)(C), which should cross reference the 30-day period 
described in paragraphs (g)(1)(ii)(B)(1) and (3). The fifth technical 
correction is to Sec.  155.505(g)(1)(iii)(A), which should cross-
reference Exchange eligibility appeal decisions final pursuant to 
paragraphs (g)(1)(i)(C) and (g)(1)(ii)(C) in this section.
    With respect to the effective date, under the proposed rule, any 
finalized changes to Sec.  155.505 would be effective 60 days after the 
date of display of the final rule in the Federal Register. While this 
rule acknowledges the ability of the CMS Administrator to review 
Exchange eligibility appeals decisions prior to judicial review, we 
anticipate implementation of the proposed process to apply this 
authority will take some time. Therefore, we are finalizing this rule 
with the new process becoming available for eligibility appeal 
decisions issued on or after January 1, 2024.
    We summarize and respond to public comments received on the 
proposed changes acknowledging the ability of the CMS Administrator to 
review Exchange appeals decisions below.
    Comment: Some commenters expressed support for the proposed 
changes, acknowledging the ability of the CMS Administrator to review 
Exchange eligibility appeals decisions prior to judicial review. One 
commenter cautioned that we should work to make sure that the correct 
decision is made at the lowest level of review.
    Response: We will continue to make every effort to ensure the 
correctness of the initial decision.
    Comment: Two commenters sought clarity around how the proposed 
administrative review process would interact with the State Exchange 
second-tier eligibility appeal process, with one commenter expressing 
concern that the additional level of review may be duplicative and 
burdensome, adding further time before a decision can be implemented.
    Response: We acknowledge the concerns around an additional level of 
review, but reiterate the existing ability of the CMS Administrator to 
review Exchange eligibility appeals decisions prior to judicial review. 
The proposed regulation also describes timeframes for the CMS 
Administrator to review, and for parties to the appeal to request the 
CMS Administrator review, an Exchange eligibility appeal decision, 
which is intended to balance the right of CMS Administrator to review a 
decision with the appellant's desire for finality of an Exchange 
eligibility appeal. We recognize that the Exchange should implement the 
correct decision as expeditiously as feasible and set the timeframes in 
the regulation to achieve that goal. We also clarify that the CMS 
Administrator may review the HHS appeals entity's decision with respect 
to a second-tier appeal of a State Exchange appeals entity's decision, 
but cannot review a decision of a State Exchange appeals entity.
    Comment: A commenter sought clarity around the interaction between 
the administrative review process and the timeliness standards 
prescribed under Sec.  155.545(b).
    Response: The administrative review process will not affect the 
requirement under Sec.  155.545(b) that the HHS appeals entity must 
issue written notice of the appeal decision to the appellant within 90 
days of the date an appeal request is received, as administratively 
feasible. Parties have 14 days to request, and the CMS Administrator 
has 14 days to determine whether to conduct, an administrative review. 
Once either of these actions occurs, the CMS Administrator's review 
will occur within 30 days of the date a party requests review or the 
CMS Administrator determines to review a case. The total additional 
time for administrative review may add up to 44 days before the 
eligibility appeal decision becomes final.
10. Improper Payment Pre-Testing and Assessment (IPPTA) for State-Based 
Exchanges (Sec. Sec.  155.1500 Through 155.1515)
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78270-72), we proposed to establish the 
IPPTA, an improper payment measurement program of APTC, that would 
include State Exchanges. As proposed, the IPPTA would prepare State 
Exchanges for the planned measurement of improper payments of APTC, 
test processes and procedures that support our review of determinations 
of APTC made by State Exchanges, and provide a mechanism for us and 
State Exchanges to share information that will aid in developing an 
efficient measurement process. We proposed to codify the IPPTA 
requirements in a new subpart P under 45 CFR part 155.
    The Payment Integrity Information Act of 2019 (PIIA) \275\ requires 
Federal agencies to annually identify, review, measure, and report on 
the programs they administer that are considered susceptible to 
significant improper payments. We 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 FFE and SBE-FPs were measured and 
reported in the FY22 Annual Financial Report (AFR) as part of the 
Exchange Improper Payment Measurement (EIPM) program. We stated in the 
2023 Payment Notice proposed rule (87 FR 654, 654-655) that we were in 
the planning phase of establishing a State-based Exchange Improper 
Payment Measurement (SEIPM) program. We also stated in the 2023 Payment 
Notice proposed rule that we had intended to implement the proposed 
SEIPM program beginning with the 2023 benefit year. In response to that 
proposed rule, we received several comments 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 needed 
more time and information from us 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). In the 2024 Payment Notice proposed rule (87 FR 78206, 
78270), we proposed IPPTA to provide State Exchanges with more time to 
prepare for the planned measurement of improper

[[Page 25838]]

payments of APTC, to test processes and procedures that support our 
review of determinations of APTC made by State Exchanges, and to 
provide a mechanism for HHS and State Exchanges to share information 
that will aid in developing an efficient measurement process (87 FR 
28270).
---------------------------------------------------------------------------

    \275\ PIIA, 31 U.S.C. 3352 (2020).
---------------------------------------------------------------------------

    In 2019, we developed an initiative to provide the State Exchanges 
with an opportunity to voluntarily engage with us to prepare for future 
measurement of improper payments of APTC. We 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 voluntary State engagement, 
and of those, 2 have participated in the piloting option.
    We stated in the proposed rule that IPPTA would replace the 
voluntary State engagement. We explained that, if finalized, activities 
already completed by State Exchanges as part of the voluntary State 
engagement may be used to satisfy elements of IPPTA. We have determined 
that participation from all State Exchanges is required to test 
processes and procedures to prepare the State Exchanges for the planned 
measurement of improper payments of APTC.
    We proposed 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. We explained that 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.
    After reviewing public comments, we are finalizing our proposals 
relating to the establishment of the IPPTA with the following 
modifications: (1) the final regulations at subpart P will be 
applicable beginning in 2024 with a modification to the definition in 
Sec.  155.1505 that extends the pre-testing and assessment period from 
one calendar year to 2 calendar years; and (2) with a modification to 
Sec.  155.1515(a)(1) that reflects the extension of the pre-testing and 
assessment period such that each State Exchange will be selected to 
participate in the IPPTA for a pre-testing and assessment period of 2 
calendar years, which will begin in either 2024 or 2025. We note that, 
in response to comments regarding burden and resources, we are 
extending the pre-testing and assessment period from one calendar year 
to 2 calendar years without increasing or changing any of the IPPTA 
requirements in order to provide State Exchanges with more time to 
perform and complete all of the IPPTA requirements. The extended pre-
testing and assessment period will also reduce burden to the State 
Exchanges by allowing more time to focus on other Exchange priorities 
instead of meeting the IPPTA requirements in one year. Additionally, 
the burden per State Exchange in estimated hours per year was reduced 
from 530 to 265, and the burden in estimated costs per year was reduced 
from $56,986 to $28,493 by allowing State Exchanges to spread their 
costs over a two-year period. The estimated annualized cost across all 
State Exchanges by extending the pre-testing and assessment period by 
one calendar year to 2 calendar years without changing any of the IPPTA 
requirements was reduced from $1,025,756 to $512,878, saving State 
Exchanges half of their estimated outlays on an annualized basis. We 
will also work with each State Exchange during the IPPTA orientation 
and planning process to address a State Exchange's time and resource 
constraints to allow completion of all review processes and procedures. 
We summarize and respond to public comments received on the proposed 
IPPTA below.
    Comment: Some commenters recommended that prior to the 
implementation of IPPTA or an improper payment measurement program, HHS 
complete the SEIPM voluntary State engagement piloting to incorporate 
lessons learned and best practices into the design of IPPTA and/or a 
future improper payment measurement program. One commenter supported 
IPPTA but was opposed to the mandatory nature of the initiative.
    Response: Throughout the course of the voluntary State engagement, 
we sought State Exchange feedback to improve the structure of the 
planned program and to improve the tools that will be used in IPPTA in 
support of reviewing payments of APTC. We applied the feedback and 
lessons learned to gain a better understanding of State Exchange 
operations, policies, and procedures. Additionally, we were able to 
define necessary data specifications for conducting improper payment 
measurement and to determine data transfer and access mechanisms 
between HHS and State Exchanges.
    We appreciate the voluntary participation of the 10 State Exchanges 
and acknowledge the benefits such participation has provided in our 
development of the planned measurement program. We have determined that 
participation in IPPTA by all the State Exchanges is necessary to help 
State Exchanges prepare for the planned measurement of improper 
payments. In addition, requiring participation in IPPTA will provide us 
with feedback from all 18 State Exchanges on the processes and 
procedures that support our review of APTC determinations made by State 
Exchanges, and therefore will help us maximize the efficiency of the 
measurement process. To achieve that, we have determined that all State 
Exchanges will need to complete the processes described for IPPTA with 
the goal of testing our IPPTA review methodology for each State 
Exchange. In this way, all State Exchanges will have the opportunity to 
collaborate with us and receive feedback on their current processes 
without our IPPTA review contributing to an estimated improper payment 
rate.
    Comment: One commenter said they supported allowing State Exchanges 
to satisfy IPPTA requirements through activities undertaken during 
voluntary State engagements.
    Response: Our general position is that activities that were 
performed by the 10 State Exchanges that participated in voluntary 
State engagement will not be duplicated as part of IPPTA. To achieve 
that, we will evaluate the activities performed by State Exchanges 
during the voluntary State engagements and determine which of those 
satisfy IPPTA requirements. We will also utilize voluntary State 
engagement information as a substitute, thereby, saving time and 
resources needed for the completion of IPPTA. We will accomplish this 
by using the pre-testing and assessment checklist, which will identify 
the IPPTA requirements that have already been fulfilled. The pretesting 
and assessment plan will include the pre-testing and assessment 
checklist that will identify which State Exchange's activities 
satisfied the requirements. We will work with State Exchanges during 
the orientation and planning process to review the checklist and to 
confirm the State Exchange's completed activities. Additional 
information about the process for satisfying certain IPPTA requirements 
as a result of participation in the voluntary State engagements will be 
provided in guidance issued after this rule is finalized. State 
Exchanges that did not participate in voluntary State engagement will 
not have performed activities that satisfy IPPTA requirements and 
therefore must complete all IPPTA processes and procedures.

[[Page 25839]]

    Comment: Some commenters stated that IPPTA would duplicate 
requirements embodied in existing Federal reporting requirements. For 
example, these commenters cited the State-based Marketplace Annual 
Reporting Tool (SMART), annual independent external programmatic 
audits, State Based Marketplace Inbound (SBMI) reporting, performance 
monitoring data reporting, and reconciliation processes including the 
annual IRS PTC reconciliation as Federal requirements that may 
duplicate IPPTA. A few commenters recommended HHS build on existing 
audit requirements (for example, the independent, external programmatic 
audit) rather than create a new IPPTA requirement. One commenter 
recommended State Exchanges make a testing environment for HHS to run 
standard tests rather than create a new data collection process. 
Another commenter stated that both the independent external auditors 
and the IRS PTC reconciliation process already collect data that could 
be used to determine an improper payment rate.
    Response: We appreciate the commenters' concerns that IPPTA would 
be duplicative of existing audits; however, IPPTA is not an audit 
program but instead is designed to test processes and procedures that 
support our review of determinations of APTC made by State Exchanges 
for the planned measurement of improper payments. Additionally, the 
independent external programmatic audits ensure oversight of a host of 
exchange activities beyond the scope of improper APTC payments. 
Moreover, the data collected as part of the Federal reporting 
requirements identified by the commenters do not provide us with 
information required by Sec.  155.1510 such as information that 
verifies citizenship, social security number, residency, and other data 
specified below. This information is needed to review determinations of 
APTC, which is a necessary step to prepare for identifying and 
measuring improper payments of APTC, as required by PIIA.\276\ For 
example, the IRS reconciliation process uses annual enrollment data and 
monthly reconciliation data provided by HHS to calculate the PTC and to 
verify reconciliation of APTC made to the QHP issuers on enrollees' 
individual tax returns. However, these annual enrollment data and 
monthly reconciliation data do not contain data to the level of 
required specificity (such as dates that electronic eligibility 
verifications were made) to address issues related to APTC and its 
calculation, particularly verification of citizenship, social security 
number, residency, MEC, SEP circumstance, income, family size, and DMIs 
related to document authenticity. Moreover, the annual enrollment data 
and the monthly reconciliation data are collected after an applicant 
has been determined eligible for APTC. We need pre-enrollment data that 
were used to verify an applicant's eligibility before the application 
is approved. Examining these areas in detail is necessary to identify 
underlying issues that may lead to improper payments. In contrast, the 
SMART allows State Exchanges to self-attest to their verification 
procedures for eligibility and enrollment transactions without 
submitting supporting data. Similarly, the annual independent external 
programmatic audits require State Exchanges to hire independent, 
external auditors to review eligibility and enrollment information 
collected by State Exchanges to identify deficiencies or errors in 
processes to make eligibility determinations for QHPs and APTC without 
submitting supporting data to HHS. Neither the SMART nor the 
independent, external programmatic audits measure, estimate, or report 
the amounts or rates of improper payments, or the systematic errors 
that may contribute to improper payments and do not provide the 
underlying data that would allow HHS to do so. Finally, these current 
oversight procedures do not allow for standardized comparison or 
analysis of improper payments across all State Exchanges, which will be 
necessary functions of the planned improper payment measurement 
program. For these reasons, we will require State Exchanges to submit 
the data and data documentation specified in the final rule to comply 
with PIIA requirements. We believe that IPPTA will assist State 
Exchanges to prepare for the planned measurement of improper payments, 
an activity with requirements that are distinct from existing Federal 
requirements. IPPTA will provide the data needed to conduct the pre-
testing and assessment review processes in preparation for the planned 
measurement of improper payments. We note that in designing IPPTA, we 
have carefully reviewed the commenters' concerns regarding potential 
duplication of existing audit processes and analyzed the data fields 
used to accomplish existing Federal requirements. We have made every 
effort to minimize the burden on the State Exchanges by limiting the 
amount of data required (that is, application data associated with no 
fewer than 10 tax households).
---------------------------------------------------------------------------

    \276\ In 2016, we conducted a risk assessment of the APTC 
program and determined that the program was susceptible to 
significant improper payments. PIIA requires that Federal agencies 
produce a statistically valid estimate of improper payments for any 
programs deemed susceptible to significant improper payments.
---------------------------------------------------------------------------

    Comment: Some commenters stated that IPPTA would create financial, 
administrative, and staffing burdens for the State Exchanges. A few 
commenters stated that they would incur technology upgrade costs to 
provide information in the format requested by IPPTA and one said HHS 
should wait until after the voluntary State engagement piloting is 
completed to enable State Exchanges to make an accurate assessment of 
technology costs. One commenter was opposed to the overall burden of 
IPPTA but was supportive of our desire to coordinate and consult with 
State Exchanges.
    Response: We received several comments regarding the burden and 
resources (that is, budget, staff, time, technology upgrades) needed to 
prepare for and fulfill IPPTA's requirements. We understand these 
concerns and, therefore, are finalizing the establishment of the IPPTA 
with a modification to extend the pre-testing and assessment period 
from one calendar year to two calendar years without increasing or 
changing any of the IPPTA requirements in order to allow State 
Exchanges more time to perform and complete all IPPTA requirements. By 
doing so, we are extending the timeframes allotted for State Exchanges 
to execute the pre-testing and assessment procedures including the 
timeframes for the submission and review of data and data 
documentation. By extending the pre-testing and assessment period to 
two calendar years and not otherwise expanding the IPPTA requirements, 
we are providing the State Exchanges with the ability to spread their 
staffing, administrative, and other budgetary costs across 24 months of 
activity instead of 12 months as well as providing State Exchanges 
additional time to identify and address staffing capacity and 
technology capabilities.
    The planning and orientation phase will involve collaboration 
between HHS and the State Exchanges to create the IPPTA plan, which 
will include a timeline for completing the required pre-testing and 
assessment processes. There is sufficient flexibility in this process 
that conceivably, the State Exchange could plan to complete, and 
achieve completion of all of the required processes within the span of 
one year if the State Exchange was able to dedicate the time and 
resources that would be so required.

[[Page 25840]]

    We are committed to working with State Exchanges to address burden 
and resources during the orientation and planning processes, which 
would allow State Exchanges to complete the IPPTA. Finally, we 
acknowledge that State Exchanges may incur additional costs depending 
on their technology capabilities. We provided the public with our 
estimate of the burden and costs to State Exchanges in section IV., 
Information Collection Requirements. We are willing to continue to work 
with State Exchanges to help to resolve technology issues during the 
orientation and planning processes.
    Comment: One commenter stated that the review methodology and 
associated data structure used by HHS for the FFE does not uniformly 
align with State Exchange practices. The commenter added that HHS is 
applying a standardized approach despite the flexibility provided to 
State Exchanges under the ACA.
    Response: We note that IPPTA is intended to test processes and 
procedures that support our review of determinations of APTC made by 
State Exchanges. We acknowledge the complexities associated with the 
development of a planned measurement program tailored for each State 
Exchange and that the methodology used for the improper payment 
measurement program for the FFE does not directly translate to 
operationalization for State Exchange measurement. Those complexities, 
which include the State Exchange's mapping their source data to the 
Data Request Form (DRF) and validation and verification of the data by 
HHS, require close collaboration between HHS and each of the State 
Exchanges as described in Sec.  155.1515(e)(2), and in part, form the 
basis for the necessity of the IPPTA program in preparing the State 
Exchanges for an improper payment measurement program. Through 
collaboration with the State Exchanges during IPPTA, we will make every 
attempt to resolve data structure issues that differ between the FFE 
data model and the State Exchanges.
    Comment: A few commenters suggested that HHS provide State 
Exchanges with an exemption from the annual independent, external 
programmatic audit requirement under 45 CFR 155.1200(c) if HHS 
finalized IPPTA, and they suggested that continuing to require the 
audit would be duplicative of activities under IPPTA.
    Response: The annual independent, external programmatic audits are 
one of the primary oversight tools for identifying and addressing State 
Exchange regulatory compliance issues, and the audit reports ensure 
oversight of a variety of exchange-related activities beyond the scope 
of potential improper payments of APTC. As part of the auditing 
process, we require State Exchanges to take corrective actions to 
address non-compliance issues that are identified through the annual 
audits and monitor the implementation of the corrective actions. We 
designed IPPTA to minimize the burden on the State Exchanges by 
limiting the amount of data required to only what is necessary to 
conduct the pre-testing and assessment review processes that will 
prepare State Exchanges for the planned measurement of improper 
payments. Modifying the annual independent, external programmatic audit 
requirement would eliminate a key oversight mechanism over activities 
beyond the scope of the SEIPM program and potentially impact our 
ability to adequately oversee program integrity in the State Exchanges.
    Comment: One commenter requested more information regarding the 
sunsetting of the SEIPM piloting option.
    Response: We appreciate the comment regarding the sunsetting of the 
voluntary State engagement. As stated in the preamble, IPPTA will 
replace the voluntary State engagement. Voluntary State engagement 
activities will cease by the end of 2023. We will provide further 
guidance after the publication of this final rule.
    Comment: Some commenters expressed their position as neutral or did 
not express a position in support or opposition of IPPTA. These 
commenters expressed concerns regarding burden and duplication of 
existing Federal requirements. These commenters also suggested that HHS 
complete the voluntary piloting prior to establishing IPPTA.
    Response: We appreciate those commenters who expressed various 
concerns but remained neutral overall to IPPTA, either expressly 
indicating their neutrality or choosing not to take a position in 
support or opposition of IPPTA. We have addressed the burden, 
duplication of existing Federal requirements, and voluntary State 
engagement in the preamble to this final rule.
a. Purpose and Scope (Sec.  155.1500)
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78270), we proposed to add a new subpart P 
to part 155, which addressed State Exchange and HHS responsibilities. 
We explained that we may use Federal contractors as needed to support 
the performance of IPPTA.
    We proposed to add new Sec.  155.1500 to convey the purpose and 
scope of IPPTA. In the proposed rule, at paragraph (a), we stated the 
purpose and scope of subpart P as setting forth the requirements of the 
IPPTA for State Exchanges. We explained that the proposed IPPTA is an 
initiative between HHS and State Exchanges. We stated in the proposed 
rule that the IPPTA requirements were intended to prepare State 
Exchanges for the planned measurement of improper payments, test 
processes and procedures that support our review of determinations of 
APTC made by State Exchanges, and provide a mechanism for HHS and State 
Exchanges to share information that will aid in developing an efficient 
measurement process.
    We summarize and respond to public comments received on the purpose 
and scope of IPPTA below. After reviewing the public comments, we are 
finalizing this provision as proposed.
    Comment: One commenter stated that consultation with State 
Exchanges is crucial to collecting accurate information and recommended 
HHS retain the proposed regulatory language requiring strong 
coordination and consultation with State Exchanges.
    Response: We appreciate the recommendation to retain the language 
of the proposed rule that we work with State Exchanges including 
coordinating and consulting during the IPPTA period. We are retaining 
the language in the rule pertaining to coordinating with the State 
Exchanges during the IPPTA period. As stated in the preamble to the 
proposed rule (87 FR 78270), IPPTA is intended to be a collaborative 
effort between us and the State Exchanges.
b. Definitions (Sec.  155.1505)
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78270-71) we proposed to add new Sec.  
155.1505, which would codify the definitions of several terms that are 
specific to IPPTA and are key to understanding the processes and 
procedures of IPPTA. Specifically, we proposed to define the following 
terms as set forth below.
     We proposed to define ``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. In the proposed rule we explained that, 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

[[Page 25841]]

any associated APTC would be considered a business rule.
     We proposed to define ``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 proposed to define ``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 proposed to define ``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 proposed to define ``Pre-testing and assessment data 
request form'' to mean the document that specifies the structure for 
the data elements that HHS will require each State Exchange to submit.
     We proposed to define ``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. In the 
proposed rule, we proposed that the pre-testing and assessment period 
would cover one calendar year.
     We proposed to define ``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 proposed to define ``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 Exchanges' 
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 Exchanges to HHS. In the 
proposed rule, we explained, at Sec.  155.1515(g), that we were 
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. We explained that the pre-testing and 
assessment report will not be released to the public by HHS unless 
otherwise required by law.
    We summarize and respond to public comments received on the 
proposed definitions below. We are finalizing the definitions as 
proposed, with the following modification: we are changing the proposed 
definition of ``Pre-testing and assessment period'' to extend the pre-
testing and assessment period from a one calendar year timespan to a 2-
calendar year timespan, during which we will engage in pre-testing and 
assessment procedures with a State Exchange. As discussed earlier in 
this preamble, we are making this modification in response to comments 
received regarding burden and resources (that is, budget, staff, time, 
technology upgrades, etc.). By extending the pre-testing and assessment 
period from one calendar year to two calendar years without increasing 
or changing any of the IPPTA requirements, we are providing State 
Exchanges with more time to perform and complete all IPPTA 
requirements.
    Comment: One commenter requested that HHS clarify the definition of 
``entity relationship diagram.'' The commenter stated they did not 
understand how the diagram would be used to describe data elements, and 
the commenter also requested more information on how sample data would 
be collected.
    Response: An entity relationship diagram is used to document the 
data structure of a database and the relationships of the various data 
elements that are used to align many pieces of data to the individual 
records within a data set. For the purposes of IPPTA, the entity 
relationship diagram would be used to aid in understanding the mapping 
of data from the data structures being used by the State Exchange to 
the structure of data being used for the review, which is collected in 
the data request form (DRF). In addition, an entity relationship 
diagram will provide an understanding of the relationships among State 
Exchange-provided data and can explain the data values provided by the 
State Exchange in the DRF. The properties associated with each entity 
need to be understood by the reviewers to ensure that the mapping of 
data and the population of the DRF have been performed correctly. 
During IPPTA planning, we will work with the State Exchanges to 
determine whether available documentation can satisfy the information 
needs for the entity relationship diagram.
c. Data Submission (Sec.  155.1510)
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206 at 78271), we proposed to add a new Sec.  
155.1510 which would address the data submission requirements to 
support the IPPTA. Consistent with this, we proposed to establish a 
pre-testing and assessment DRF to collect and compile information from 
each State Exchange. As explained below in section IV., Collection of 
Information Requirements, the pre-testing and assessment DRF was 
submitted to OMB for review and approval. We proposed that each State 
Exchange must submit to us 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).
    We summarize and respond to public comments received on the 
proposed pre-testing and assessment DRF below. After reviewing the 
public comments, we are finalizing this provision as proposed.
    Comment: Several commenters stated that they are willing to share 
more data and information with HHS and other Federal partners to ensure 
the effective and efficient operation of State Exchanges.
    Response: We appreciate the willingness of these commenters to 
share more data and information with us and other Federal partners to 
ensure that the State Exchanges operate in an efficient and effective 
manner.
    Comment: A few commenters suggested that HHS not require State 
Exchanges to produce information about their systems, business rules, 
or software. Two commenters recommended that HHS not require new data 
documentation but rather accept a State Exchange's existing data 
documentation. One commenter objected to the comprehensive submission 
of business rules and proposed using identified errors as the basis for 
root cause analysis. One commenter objected generally to the provision 
of system documentation including concerns that some documentation may 
be proprietary. One commenter objected to the detailed review of 
eligibility criteria and examination of associated data. Another 
commenter recommended that HHS allow State Exchanges to submit data 
documentation such as the data dictionary and entity relationship 
diagram in any format.
    Response: We are not requiring State Exchanges to create new data 
documentation, but rather we are requiring State Exchanges provide us 
with existing or available data documentation as described in Sec.  
155.1510, such as business rules and policies used to determine an 
applicant's eligibility for APTC. This data documentation is necessary 
to test

[[Page 25842]]

our processes and procedures that support our review of determinations 
of APTC made by State Exchanges. We are seeking to test all the 
processes associated with IPPTA. Therefore, the information provided by 
State Exchanges regarding their systems and business rules will allow 
us to tailor review procedures to each State Exchange. A detailed 
review of eligibility criteria is necessary to create a measurement 
program that complies with the statutory requirements set forth in 
PIIA. Regarding the submission of the data dictionary and entity 
relationship diagram in any format, we agree with the commenter. We 
will allow State Exchanges to submit their data documentation as 
defined in this final rule in the format currently used by the State 
Exchange.
    We will coordinate with State Exchanges to resolve any issues that 
may arise related to the potential proprietary nature of this data 
documentation and ensure that any such data documentation provided is 
not made publicly available, unless required by law.
     At paragraph (a)(1) in the proposal, we proposed 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) in the proposal, we proposed that the 
State Exchange must use the pre-testing and assessment DRF, 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. We explained that 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, SEP 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). We explained that we understand 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, we proposed that while the application data for 
each tax household does not need to address all the scenarios 
specified, the application data submitted for no fewer than 10 tax 
households should, when taken together as a whole, address all the 
characteristics in all the scenarios specified. We explained that, for 
example, the application data for one tax household may address lawful 
presence inconsistency adjudication but not special enrollment 
eligibility verification. Accordingly, we noted that the application 
data for another tax household should address special enrollment 
eligibility verification. In the proposal we stated that after 
receiving the application data associated with no fewer than 10 tax 
households from the State Exchange, we 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 did not collectively fulfill the scenarios, we 
proposed that we would coordinate with the State Exchange to select 
additional tax households. For the data submitted, we also would 
require the State Exchange to provide digital copies such as PDFs of 
supporting consumer-submitted documentation (for example, proof of 
residency, proof of citizenship).
     We also proposed that for each of the tax households, the 
State Exchange would align and populate the data in the pre-testing and 
assessment DRF with the assistance of HHS. We explained that we would 
require that the State Exchange electronically transmit the completed 
pre-testing and assessment DRF to HHS within the deadline specified in 
the pre-testing and assessment plan. We proposed that once we receive 
the transmission from the State Exchange, we then would execute the 
pre-testing and assessment processes and procedures on the application 
data.
    We summarize and respond to public comments received on submission 
of application data for no fewer than 10 tax households using the pre-
testing and assessment DRF that will be provided to State Exchanges by 
HHS and on the proposed scenarios specified by HHS to allow HHS to test 
all of the pre-testing and assessment processes and procedures below. 
After reviewing the public comments, we are finalizing Sec.  
155.1510(a) as proposed.
    Comment: A few commenters support the sample size of no fewer than 
10 tax households.
    Response: We appreciate support of the no fewer than 10 tax 
household sample size.
    Comment: One commenter agreed with the use of the pre-testing and 
assessment DRF to collect and compile information from each State 
Exchange.
    Response: We appreciate support for collecting information from the 
State Exchanges using the pre-testing and assessment DRF.
     At paragraph (b) in the proposal, we proposed 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.
    We did not receive any comments in response to the proposed 
pretesting and assessment data submission timeline. We are finalizing 
Sec.  155.1510(b) as proposed.
d. Pre-Testing and Assessment Procedures (Sec.  155.1515)
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78271 through 72), we proposed to add a 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 
IPPTA that are, in part, designed to test our review processes and 
procedures that support our review of determinations of the APTC made 
by State Exchanges, to improve the State Exchange's understanding of 
IPPTA, to prepare State Exchanges for the planned measurement of 
improper payments, and to provide us and the State Exchanges with a 
mechanism to share information that will aid in developing an efficient 
measurement process.
    Comment: One commenter supported the need to prepare State 
Exchanges for the planned measurement of improper payments.
    Response: We appreciate recognition of the need to prepare State 
Exchanges for the planned measurement of improper payments.
     At paragraph (a), we proposed the general requirement that 
the State Exchange must participate in IPPTA for a period of one 
calendar year that will occur in either 2024 or 2025, and that the 
State Exchange and HHS would work together to execute IPPTA procedures 
in accordance with

[[Page 25843]]

timelines in the pre-testing and assessment plan.
    We did not receive any comments in response to the proposed 
requirement for State Exchanges to participate in IPPTA for one 
calendar year in either 2024 or 2025. In response to comments regarding 
burden and resources (that is, budget, staff, time, technology 
upgrades), and as previously discussed in the preamble of the rule, we 
are finalizing this provision with the following modification: we are 
extending the pre-testing and assessment period from one calendar year 
to 2 calendar years without increasing or changing any of the IPPTA 
requirements in order to provide State Exchanges with more time to 
perform and complete all IPPTA requirements. We are requiring State 
Exchanges to participate in IPPTA for a pre-testing and assessment 
period of 2 calendar years, which would begin in either 2024 or 2025.
     At paragraph (b), we proposed the requirements for the 
orientation and planning processes.
     At paragraph (b)(1), we proposed that we would provide 
State Exchanges with an overview of the pre-testing and assessment 
procedures as part of the orientation process. We also proposed that, 
during the orientation process, we would identify the documentation 
that a State Exchange must provide to HHS for pre-testing and 
assessment. We explained that, for example, if data use agreements or 
information exchange agreements need to be executed, we would inform 
State Exchanges about that documentation requirement.
    We did not receive any comments in response to the proposed State 
Exchange IPPTA orientation process. We are finalizing these provisions 
as proposed.
     At paragraph (b)(2), we proposed that HHS, in 
collaboration with each State Exchange, would develop a pre-testing and 
assessment plan as part of the orientation process. We explained that 
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. In the proposal, we noted that while we would 
need to meet milestones specified in the schedule and applicable 
deadlines due to the time span allotted for this proposed program, we 
would take into account feedback from the State Exchanges in an effort 
to minimize burden. We stated that the pre-testing and assessment plan 
would take into consideration relevant activities, if any, that were 
completed during voluntary State engagement. We explained that the pre-
testing and assessment plan would include the pre-testing and 
assessment checklist.
    We summarize and respond to public comments received on the 
proposed pre-testing and assessment plan below. After reviewing the 
public comments, we are finalizing this provision as proposed.
    Comment: One commenter said that more information was needed to 
inform State Exchanges of how their activities would satisfy IPPTA 
requirements.
    Response: We appreciate the cooperation and collaboration of State 
Exchanges that have participated in voluntary State engagement. We will 
work with State Exchanges during the IPPTA orientation and planning 
process to review the pre-testing and assessment checklist and confirm 
the State Exchange's completed activities that satisfy certain IPPTA 
requirements. One of the major activities in the voluntary State 
engagements has been the submission of data by the State Exchange, 
which includes the mapping of a State Exchange's source data to the 
data elements in our DRF. The DRF has been used by State Exchanges 
participating in the pilot option of the voluntary State engagement to 
collect and transmit application data for testing. In the scenario that 
a State Exchange submitted data on the DRF during the piloting option 
of voluntary State engagement, and where review processes were not able 
to be completed due to the sunsetting of voluntary State engagement 
activities, we will incorporate the previously submitted data to 
satisfy IPPTA data submission requirements. Similarly, in the scenario 
where data was submitted by a State Exchange, but the data was not 
sufficient to execute the review methodology, we will incorporate the 
previously submitted data into IPPTA and continue working with the 
State Exchange for the purpose of satisfying IPPTA data submission 
requirements. Our general position is that a State Exchange that 
submitted data while participating in the piloting option of voluntary 
State engagement will not be required as part of IPPTA to submit new 
data for a more recent benefit year. State Exchanges that did not 
submit data as part of the voluntary State engagement are required to 
submit data for the benefit year most recent to their designated IPPTA 
period agreed upon as part of the orientation and planning process.
     At paragraph (b)(3), we proposed that we would issue a 
pre-testing and assessment plan specific to a State Exchange at the 
conclusion of the pre-testing and assessment planning process. We 
explained that 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.
    We did not receive any comments in response to the proposal that we 
would issue a pre-testing and assessment plan specific to a State 
Exchange at the conclusion of the pre-testing and assessment planning 
process. We also did not receive any comments in response to the 
proposal that the pre-testing and assessment plan would be used for 
internal use only and would not be made publicly available by HHS 
unless required by law. We are finalizing this provision as proposed.
     At paragraph (c), we proposed the requirements associated 
with notifications and updates.
     At paragraph (c)(1), we proposed the requirements 
associated with our 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.
    We did not receive any comments in response to the proposed 
requirement for HHS to notify State Exchanges of the pre-testing and 
assessment data request period. We are finalizing these provisions as 
proposed.
     At paragraph (c)(2), we proposed 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 
IPPTA during the pre-testing and assessment period. We explained, for 
example, that we 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 proposed 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 proposed this requirement 
because any lack of clarity in how State Exchanges make eligibility 
determinations and payment

[[Page 25844]]

calculations could impact our ability to assist the State Exchange in 
understanding the pre-testing and assessment processes and procedures 
and could affect our recommendations in the pre-testing and assessment 
report.
    We did not receive any comments in response to the proposed 
requirements associated with information that State Exchanges must 
provide to HHS throughout the pre-testing and assessment period 
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 IPPTA during the pre-testing 
and assessment period. We are finalizing this provision as proposed.
     At paragraph (d), we proposed the requirements regarding 
the submission of required data and data documentation by State 
Exchanges, and we stated that, as specified in Sec.  155.1510(a), we 
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.
    We did not receive any comments to the specific proposed 
requirement for HHS to coordinate data documentation tracking and 
management with each State Exchange. We responded to related comments 
regarding the underlying data submission requirements that appear in 
Sec.  155.1510(a)(2). We are finalizing this provision as proposed.
     At paragraph (e), we proposed the general requirements 
regarding coordination between HHS and the State Exchanges to 
facilitate our processing of data and data documentation submitted by 
State Exchanges.
     At paragraph (e)(1), we proposed the requirements 
associated with our 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 (2).
    We did not receive any comments in response to the proposed 
requirement for HHS to coordinate data documentation tracking and 
management with each State Exchange. We are finalizing these provisions 
as proposed.
     At paragraph (e)(2), we proposed the requirements 
associated with our 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 our 
standardized set of data elements.
    We summarize and respond to public comments received on the 
proposed requirement for HHS to assist each State Exchange with data 
alignment to a standardized set of data elements below. After reviewing 
the public comments, we are finalizing this provision as proposed.
    Comment: One commenter stated that HHS should use its own resources 
to map the State Exchange data elements to the pre-testing and 
assessment DRF.
    Response: We considered an alternative to requiring each State 
Exchange to submit their source data using the pre-testing and 
assessment DRF. That alternative would have allowed a State Exchange to 
provide to us the required source data in an unstructured format. We 
would have been required to map the source data to the required data 
elements. The mapping process would have required consultative sessions 
with each State Exchange and a validation process to ensure accurate 
mapping. Some State Exchanges stated during voluntary State engagement 
that they preferred mapping their data to the data elements in the DRF 
in order to ensure accuracy of mapping. We believe that the 
consultative process suggested by the commenter would require more 
frequent and resource-intensive meetings, costing each party more than 
use of standard data fields in the pre-testing and assessment DRF. The 
regulatory alternative was documented in the proposed rule (87 FR 
78206, 78313) and no additional comments were received in favor of that 
option. For these reasons, we are finalizing this provision as 
proposed. We are requiring that HHS coordinate with each State Exchange 
to aid in aligning the data specified in Sec.  155.1510(a)(2) from the 
State Exchange's existing structure to the standardized set of data 
elements required for IPPTA.
     At paragraph (e)(3), we proposed the requirement that we 
will coordinate with each State Exchange to interpret and validate the 
data specified in Sec.  155.1510(a)(2).
    We did not receive any comments in response to the proposed 
requirement for HHS to coordinate with each State Exchange to interpret 
and validate the data specified. We are finalizing this provision as 
proposed.
     At paragraph (e)(4), we proposed the requirement that we 
would use the data and data documentation submitted by the State 
Exchange to execute the pre-testing and assessment procedures.
    We did not receive any comments in response to the proposed 
requirement for HHS to use the data and data documentation submitted by 
the State Exchange to execute the pre-testing and assessment 
procedures. We are finalizing this provision as proposed.
     At paragraph (f), we proposed the requirements that we 
would issue the pre-testing and assessment checklist in conjunction 
with and as part of the pre-testing and assessment plan. We explained 
that the pre-testing and assessment checklist criteria we proposed 
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);
    We did not receive any comments in response to the proposed 
requirement for the pre-testing and assessment checklist criteria to 
include the State Exchange's submission of the data documentation as 
specified. We are finalizing this provision as proposed.
    ++ 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
    We did not receive any comments in response to the proposed 
requirement for the pre-testing and assessment criteria to include the 
State Exchange's submission of the data for processing and testing. We 
are finalizing this provision as proposed.
    ++ At paragraph (f)(3), the State Exchange's completion of the pre-
testing and assessment processes and procedures related to the IPPTA 
program.
    We did not receive any comments in response to the proposed 
requirement for the pre-testing and assessment criteria to include the 
State Exchange's completion of the pre-testing and assessment processes 
and procedures related to the IPPTA program. We are finalizing this 
provision as proposed.
     At paragraph (g), we proposed that, subsequent to the 
completion of a State Exchange's pre-testing and assessment period, we 
will prepare and issue a pre-testing and assessment report specific to 
that State Exchange. We proposed that the pre-testing and assessment 
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 did not receive any comments in response to the proposal that, 
subsequent to the completion of a State Exchange's pre-testing and 
assessment period, we will prepare and issue a pre-testing and 
assessment report specific to that State Exchange. We also did not 
receive any comments in response to the proposal that the report would 
be for HHS and State Exchange internal use only and would not be made 
available

[[Page 25845]]

to the public by HHS unless otherwise required by law. We are 
finalizing this provision as proposed.

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)
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78272 through 78273), for the 2024 benefit 
year, we proposed 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 stated that a 
participating issuer offering a plan through an FFE or SBE-FP must 
remit a user fee to HHS each month that is equal to the product of the 
annual user fee rate specified in the annual HHS notice of benefit and 
payment parameters for FFEs and SBE-FPs for the applicable benefit year 
and the monthly premium charged by the issuer for each policy where 
enrollment is through an FFE or SBE-FP. OMB Circular A-25 established 
Federal policy regarding user fees and what the fees can be used 
for.\277\ 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.
---------------------------------------------------------------------------

    \277\ See Circular No. A-25 Revised, available at https://obamawhitehouse.archives.gov/omb/circulars_a025/.
---------------------------------------------------------------------------

a. FFE User Fee Rates for the 2024 Benefit Year
    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 we stated in the proposed rule, 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).
    As we explained in the proposed rule (87 FR 78273), 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.
    We stated in the proposed rule (87 FR 78273) that the proposed user 
fee rate for all participating FFE issuers of 2.5 percent of total 
monthly premiums was based on estimated costs, enrollment (including 
anticipated establishment of SBEs in certain States in which FFEs 
currently are operating), and premiums for the 2023 PY. We refer 
readers to the proposed rule (87 FR 78273) for a full description of 
how the proposed 2024 benefit year FFE user fee rate was developed.
b. SBE-FP User Fee Rates 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 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. We explained in the proposed rule that 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. We stated that 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. We refer readers to the 
proposed rule (87 FR 78273 through 78274) for a full description of how 
the proposed 2024 benefit year SBE-FP user fee rate of 2.0 percent of 
total monthly premiums was developed.
    We sought comment on the proposed 2024 user fee rates.
    After reviewing the public comments and revising our projections 
based on newly available data that impacted our enrollment projections, 
we are finalizing for the 2024 benefit year a user fee rate for all 
issuers offering QHPs through an FFE of 2.2 percent of the monthly 
premium charged by the issuer for each policy under plans where 
enrollment is through an FFE, and a user fee rate for all issuers 
offering QHPs through an SBE-FP of 1.8 percent of the monthly premium 
charged by the issuer for each policy under plans offered through an 
SBE-FP. We summarize and respond to public comments received on the 
proposed 2024 benefit year FFE and SBE-FP user fee rates below.
    Comment: Some commenters supported the proposed 2024 user fee rates 
by agreeing that a lower user fee rate would exert downward pressure on 
premiums. A few commenters supported user fee rate reduction in future 
years too. One commenter stated that lower user fee rates could 
incentivize additional issuers to participate in the Exchanges, 
providing consumers with additional choice. One supporting commenter 
wanted HHS to monitor whether a reduced user fee rate continued to 
fully serve consumers' needs moving forward. Many commenters 
appreciated the increased funding for consumer outreach.
    Response: We proposed lowering the 2024 user fee rates in the 
proposed rule to 2.5 percent of monthly premiums charged by issuers for 
each policy under plans offered through an FFE and 2.0 percent of 
monthly premiums charged by issuers for each policy under plans offered 
through an SBE-FP based on our enrollment projections at the time. 
After publishing the proposed rule, two major

[[Page 25846]]

events have changed our estimated enrollment for benefit year 2024. The 
first event was the record 2023 Exchange Open Enrollment, with the 
number of plan selections exceeding our enrollment estimates.\278\ The 
second event was the Consolidated Appropriations Act, 2023, signed into 
law of December 29, 2022, which included provisions that provided 
certainty that Medicaid redeterminations would take place beginning in 
2023. These two changes, both of which took place between the 
publication of the proposed rule and the final rule, prompted us to 
reassess the 2024 projected enrollment estimates used in our user fee 
calculations. After additional analysis of increased future expected 
enrollment, we have determined that further reduction to the 2024 user 
fee rates is warranted.
---------------------------------------------------------------------------

    \278\ Biden-Harris Administration Announces Record-Breaking 16.3 
Million People Signed Up for Health Care Coverage in ACA 
Marketplaces During 2022-2023 Open Enrollment Season, available at 
https://www.cms.gov/newsroom/press-releases/biden-harris-administration-announces-record-breaking-163-million-people-signed-health-care-coverage.
---------------------------------------------------------------------------

    FFE and SBE-FP user fees are collected from participating issuers 
as a percentage of total monthly premiums, which is calculated as the 
product of monthly enrollment and premiums. The increased future 
expected enrollment resulting from the record 2023 Open Enrollment and 
the Consolidated Appropriations Act, 2023, increased overall expected 
user fee collections under the proposed user fee rates of 2.5 percent 
of monthly premiums for FFE issuers and 2.0 percent of monthly premiums 
for SBE-FP issuers above levels determined to be necessary to fully 
fund Exchange operation. This increased collection estimate allowed for 
additional reductions of the user fee rates to 2.2 percent of monthly 
premiums for FFE issuers and 1.8 percent of monthly premiums for SBE-FP 
issuers without decreasing total estimated collections below levels 
necessary to fully fund Exchange operations.
    Accordingly, we are finalizing user fee rates of 2.2 percent of 
monthly premiums charged by issuers for each policy under plans offered 
through an FFE and 1.8 percent of monthly premiums charged by issuers 
for each policy under plans offered through an SBE-FP. As discussed in 
the proposed rule (87 FR 78273), we believe that the lower 2024 user 
fee rates will exert downward pressure on premiums when compared to the 
user fee rates from prior years, and ensure adequate funding for 
Federal Exchange operations. We also agree that lower user fee rates 
may incentivize additional issuers to participate in the Exchanges, 
thereby promoting competition and improving consumer choice. HHS will 
continue to calculate the FFE and SBE-FP user fee rate annually in a 
manner that ensures sufficient funding for operations, ensuring that 
consumers' needs are met and consumer outreach is appropriately funded.
    Comment: Many commenters expressed concern about the timing of 
decreased user fee rates considering the high anticipated volume of 
Medicaid redeterminations. These commenters suggested additional 
investment in outreach and enrollment and requested that the user fee 
rates be kept at their current levels. Several commenters stated that 
lower user fee rates could reduce funding for community health workers 
and encourage private navigators that are incentivized to direct 
consumers to certain private products. A few commenters supported using 
the higher pre-2022 user fee rates to improve HealthCare.gov. One 
commenter suggested retaining or increasing user fee rates to devote 
additional resources to hard to reach populations. One commenter 
suggested that reducing user fee rates may undermine the historic 
enrollment gains for 2023. One commenter disagreed that reducing user 
fee rates will result in downward pressure on premiums, citing other 
factors as more impactful drivers of premium increases.
    Response: Although we are reducing the user fee rates, we are not 
reducing our user-fee budget and are considering the additional cost 
for Medicaid redeterminations, including providing consumer outreach 
and education related to unwinding, in our estimated budget. With these 
estimated costs, we are still able to reduce the user fees and retain 
this budget because we anticipate higher Exchange enrollment levels due 
to Medicaid redeterminations, and we expect the projected total 
premiums where the user fee applies to increase, thereby increasing the 
amount of user fee that will be collected. Thus, we are able to reduce 
the user fee rate without reducing the budget. We believe that any 
additional costs associated with Medicaid redeterminations will be 
offset by the higher expected enrollment and, even after accounting for 
the impact of the lower user fee rates, we estimate that we will have 
sufficient funding available to fully fund user-fee eligible Exchange 
activities in 2024, even with increased budget needs.
    To further explain, due to high levels of anticipated enrollment 
through the end of 2025, and the increased total amount of user fees 
that will be collected as a result, we believe that a reduced user fee 
rate will not result in reduced funding to Exchange functions that 
address consumers' needs, including improvements to the HealthCare.gov 
website, outreach and enrollment campaigns, and the Navigator program. 
We understand that this funding is particularly impactful in improving 
coverage for hard to reach and underserved populations, which is why 
our estimated budget continues to estimate fully covering the costs of 
these programs, even with increased budgetary spending on these 
essential activities.
    We also disagree that reducing user fees may undermine the historic 
enrollment gains for 2023, as we do not believe that the user fee rates 
have direct impact on major enrollment trends. Instead, we believe that 
the historic enrollment gains can be attributed to a number of factors 
that are non-user fee rate related, such as the enhanced PTC subsidies 
in section 9661 of the ARP being extended through the 2025 benefit year 
in section 12001 of the IRA.
    Finally, while we acknowledge that there are many factors that 
drive premiums increases, we maintain that reduced user fee rates will 
tend to exert downward pressure on premiums, with issuers passing the 
additional savings from reduced user fees on to Exchange enrollees 
through lower premiums.
    For these reasons, we are finalizing the reduced user fee rates for 
the 2024 benefit year of 2.2 percent of monthly premiums charged by 
issuers for each policy under plans offered through an FFE and 1.8 
percent of monthly premiums charged by issuers for each policy under 
plans offered through an SBE-FP. As always, we will reassess the FFE 
and SBE-FP user fee rates for the 2025 benefit year and propose those 
rates in the proposed 2025 Payment Notice. We also note that we will 
continue to look for opportunities to reduce these user fee rates in 
the future, while ensuring that we will be able to fully fund all 
Exchange activities.
    Comment: A few commenters stated that HHS should adopt a PMPM user 
fee structure, stating that administrative costs do not track with 
premium changes and a PMPM user fee would avoid higher fee amounts 
based solely on premium increases.
    Response: We did not propose any changes to the user fee structure, 
as such the user fee rates will continue to be set as a percent of the 
premium. However, we will continue to engage with interested parties 
regarding how the FFE and SBE-FP user fee policies

[[Page 25847]]

can best support consumer access to affordable, quality health 
insurance coverage through the Exchanges that use the Federal platform. 
We also note that, even if administrative costs do not trend with 
premium changes, we propose and finalize user fee rates each benefit 
year and would have the opportunity to adjust the user fee rates to 
avoid higher fee amounts based solely on premium increases. Therefore, 
even if administrative costs do not trend with premium changes, we do 
not believe that would necessarily justify a PMPM user fee cost 
structure.
    Comment: One commenter appreciated the increased transparency 
around user fees, and encouraged additional transparency in the 
methodology used to set the user fee rates, as well as how user fees 
support HHS' policy goals for the Exchanges. A few other commenters 
recommended greater transparency in how the user fee rates are 
determined and requested enumerated costs of providing Federal 
eligibility and enrollment platform service and infrastructure to each 
State.
    Response: We provided additional information in the proposed rule 
(87 FR 78272 through 78274), explaining the impact of stable contract 
cost estimates, the enhanced PTC subsidies in section 9661 of the ARP 
being extended in section 12001 of the IRA through the 2025 benefit 
year, anticipated effects of the IRA on enrollment, and States 
transitioning from FFEs or SBE-FPs to SBEs, as well as the enrollment 
impacts of section 1332 State innovation waivers. Additionally, we note 
that FFE and SBE-FP user fee costs are not allocated to or provided to 
each State. User fees cover activities performed by the Federal 
government that provide issuers offering a plan in an FFE or SBE-FP 
with a special benefit. As stated, these services are generally IT, 
eligibility, enrollment, and QHP certification services that are more 
efficiently conducted in a consolidated manner across the Federal 
platform, rather than by States, so that the services, service 
delivery, and infrastructure can be the same for all issuers in the 
FFEs and SBE-FPs. For example, all FFE and SBE-FP issuers send their 
834 enrollment transactions to the Federal platform database, which are 
processed consistently regardless of State. Contracts are acquired to 
provide services for the Federal platform. The services do not differ 
by State, and therefore, we do not calculate costs on a State-by-State 
basis. Additionally, because HHS is not permitted to publicly provide 
information that is confidential due to trade secrets associated with 
contracting, there are limits in our ability to provide detailed 
information about our budget.
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, we 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 did not propose to change the 
methodology for these parameters for the 2024 benefit year, and 
therefore, we published these parameters in guidance on December 12, 
2022.\279\
---------------------------------------------------------------------------

    \279\ https://www.cms.gov/files/document/2024-papi-parameters-guidance-2022-12-12.pdf.
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3. Standardized Plan Options (Sec.  156.201)
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78274 through 78279), we proposed to 
exercise our authority under sections 1311(c)(1) and 1321(a)(1)(B) of 
the ACA to make several minor updates to our approach for 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. We refer readers to the 
proposed rule (87 FR 78274 through 78275) for discussion of our prior 
and current standardized plan option policies.
    First, in contrast to the policy finalized in the 2023 Payment 
Notice, we proposed, for PY 2024 and subsequent PYs, to no longer 
include a standardized plan option for the non-expanded bronze metal 
level. Accordingly, we proposed 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 proposed 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 
proposed 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.
    As we explained in the proposed rule (87 FR 78276), we proposed to 
discontinue standardized plan options for the non-expanded bronze metal 
level mainly due to AV constraints. Specifically, we explained that 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, we explained that 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 explained that we believe 
that discontinuing non-expanded bronze standardized plan options would 
minimize burden without causing deleterious consequences. We also 
clarified 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 further clarified 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.
    Consistent with our approach in the 2023 Payment Notice, we did not 
propose 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 
also explained that we would continue to require issuers to offer these 
plan variations for all standardized plan options offered, and we 
proposed 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,

[[Page 25848]]

those plan variations will themselves not be standardized plan options 
based on designs specified in this rulemaking.\280\
---------------------------------------------------------------------------

    \280\ See QHP Certification Standardized Plan Options FAQs, 
https://www.qhpcertification.cms.gov/s/Standardized%20Plan%20Options%20FAQs.
---------------------------------------------------------------------------

    Similar to the approach taken in the 2023 Payment Notice, we 
proposed 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 to 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 proposed to create two sets of standardized plan options at 
the aforementioned metal levels, with the same sets of designs applying 
to the same sets of States as in the 2023 Payment Notice. Specifically, 
we proposed that 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 9 
and Table 10 for the two sets of standardized plan options we are 
finalizing for PY 2024.
    In addition, since SBE-FPs use the same platform as the FFEs, we 
explained that we would continue to apply these standardized plan 
option requirements equally on FFEs and SBE-FPs. We explained that we 
continue to believe that differentiating between FFEs and SBE-FPs for 
the purposes of these requirements would create a substantial financial 
and operational burden that outweighs the benefit of permitting such a 
distinction.
    Also, consistent with our policy in PY 2023, we stated that we 
would continue to apply these requirements to applicable issuers in the 
individual market but not in the small group market. We also explained 
that we 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,\281\ from the requirement to offer the 
standardized plan options included in this rule.
---------------------------------------------------------------------------

    \281\ See Or. Admin. R. 836-053-0009.
---------------------------------------------------------------------------

    In addition, we stated that we would continue to exempt issuers in 
SBEs from these requirements for several reasons. First, we explained 
that we did not wish to impose duplicative standardized plan option 
requirements on issuers in the eight SBEs that already have 
standardized plan option requirements. Additionally, we explained that 
we continue to believe that SBEs are best positioned to understand both 
the nuances of their respective markets and consumer needs within those 
markets. Finally, we explained that we continue to believe that States 
that have invested the necessary time and resources to become SBEs have 
done so 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.
    Furthermore, consistent with the policy finalized in the 2023 
Payment Notice, we explained that 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 further explained that 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 continue to 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. 
Consistent with our PY 2023 policy, we stated that 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 
provided under the requested deviation as is provided on 
HealthCare.gov.
    Consistent with the approach to plan designs in the 2023 Payment 
Notice, we explained that we would 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 stated that we believe the use of four 
tiers of prescription drug cost-sharing in the standardized plan 
options would continue to allow for predictable and understandable drug 
coverage. We further explained that we believe the use of four tiers of 
prescription drug cost-sharing would 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.
    We also explained that the continued use of four tiers would 
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 noted that we would consider 
including additional drug tiers for future years, and invited comment 
on the appropriate number of drug tiers to use in standardized plan 
options in the future. However, we explained that 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.
    In addition, we noted concerns that issuers may not be including 
specific drugs at appropriate cost-sharing tiers for the standardized 
plan options; for example, that 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 explained that 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 proposed 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 all covered brand name drugs in 
either the standardized

[[Page 25849]]

plan options' preferred brand or non-preferred brand drug cost-sharing 
tiers, or the 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 specified 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 proposed the approach described in this section for PY 2024 and 
subsequent PYs for several reasons. To begin, we explained that we were 
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. We explained that 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 stated that 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, we 
explained that with these standardized plan options, consumers would 
continue to be able to take other meaningful factors into account, such 
as networks, formularies, and premiums, when selecting a plan option. 
We stated that we further believe these standardized plan options 
include several distinctive features, such as enhanced pre-deductible 
coverage for several benefit categories, that would continue to play an 
important role in reducing barriers to access, combatting 
discriminatory benefit designs, and advancing health equity. We 
explained that including enhanced pre-deductible coverage for these 
benefit categories would ensure consumers are more easily able to 
access these services without first meeting their deductibles. 
Furthermore, we explained that including copayments instead of 
coinsurance rates for a greater number of benefit categories would 
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 proposed to maintain a high degree of 
continuity for 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 
explained that we believe that 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, we explained that if these 
standardized plan options 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. We stated that, ultimately, we believe that 
consistency in standardized plan options is important to allow both 
issuers and enrollees to become accustomed to these plan designs.
    We sought comment on our proposed approach to standardized plan 
options for PY 2024 and subsequent PYs.
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[GRAPHIC] [TIFF OMITTED] TR27AP23.019


[[Page 25851]]


[GRAPHIC] [TIFF OMITTED] TR27AP23.020

BILLING CODE 4120-01-C
    After reviewing public comments, we are finalizing our proposed 
policies with respect to standardized plan options for PY 2024 and 
subsequent PYs, as proposed, except as follows. First, we are not 
finalizing the proposed requirement 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 all covered 
brand name drugs in either the standardized plan options' preferred 
brand or non-preferred brand drug cost-sharing tiers, or the specialty 
drug tier if there is an appropriate and non-discriminatory basis in 
accordance with Sec.  156.125 for doing so.
    Additionally, we note that both of the standard silver plan designs 
finalized in this rule, as set forth in Tables 9 and 10 above, differ 
slightly from the corresponding plan designs in the proposed rule (87 
FR 78278 through 78279). Specifically, in this final rule, for both of 
these standard silver plans, we are reducing the deductible by $100 
from $6,000 to $5,900, which increases the AV for these plans from 
70.00 percent to 70.01 percent. We are making this change to rectify an 
error in our use of the proposed AV Calculator and Plans and Benefits 
Template. Specifically, the proposed AV Calculator produced an AV 
output of 69.998 percent for both of these standard silver plans.
    However, the proposed AV Calculator rounds to only two decimal 
places, which resulted in the AV output for both of these plans being 
rounded up to 70.00 percent. With a permissible AV de minimis range for 
the standard silver metal level of 70.00 percent to 72.00 percent, 
these standard silver plans (with an unrounded AV of 69.998 percent) 
would have failed the AV de minimis range validation within the Plans 
and Benefits Template, meaning issuers would not have been able to 
successfully submit these plans during QHP certification. We designed 
these plans to have AVs near the floor of each de minimis range to 
ensure competitive premiums for these plans. Slightly modifying the 
deductibles for these plans ensures that they will continue to have 
competitive premiums and AVs within the permissible AV de minimis 
range. All other aspects of these plan designs remain unchanged from 
the corresponding plan designs in the

[[Page 25852]]

proposed rule. Given that the same rounding logic is present in the 
final AV Calculator and the final Plans and Benefits Template, we note 
that this change must also be made in the final versions of each of 
these tools.
    We summarize and respond to public comments received on the 
proposed policies with respect to standardized plan options below.
    Comment: Many commenters expressed support for continuing to 
require FFE and SBE-FP issuers to offer standardized plan options. 
These commenters explained that standardized plan options serve an 
important role in simplifying the plan selection process for consumers 
purchasing health insurance through the Exchanges. These commenters 
also explained that the plan selection process could be further 
simplified if the requirement for issuers to offer standardized plan 
options were paired with the proposed requirements in Sec.  156.202 in 
the proposed rule to reduce the risk of plan choice overload by either 
directly limiting the number of non-standardized plan options that 
issuers can offer through the Exchanges or by implementing a meaningful 
difference standard.
    These commenters explained that the continued emphasis on efforts 
to further simplify the plan selection process is especially important 
given the continued proliferation of available plan choices offered 
through the Exchanges, as was described in greater detail in Sec.  
156.202 of the preamble of the proposed rule (87 FR 78279 through 
78283). Commenters further explained that having an overwhelming number 
of plan choices to consider during the plan selection process 
significantly exacerbates the risk of plan choice overload, which also 
increases the risk of suboptimal plan selection and unexpected 
financial harm. Commenters thus explained that continuing to require 
issuers to offer these standardized plan options would act as one prong 
in a multi-pronged strategy to meaningfully simplify the plan selection 
process, thereby reducing the risk of suboptimal plan selection and 
unexpected financial harm to consumers.
    Commenters who supported continuing to require issuers to offer 
standardized plan options also explained that the standardized plan 
options included in the proposed rule also contain several distinctive 
features, such as enhanced pre-deductible coverage for a wide range of 
benefit categories, including primary care visits, urgent care visits, 
specialist visits, mental health and substance use disorder outpatient 
office visits, speech therapy, occupational therapy, physical therapy, 
and generic drugs. Commenters explained that the enhanced pre-
deductible coverage for these benefit categories would continue to 
serve an important role in reducing barriers to access for services 
critical to health. Commenters supportive of these standardized plan 
options also explained that including copayments instead of coinsurance 
rates as the form of cost sharing for as many benefit categories as 
possible would continue to enhance the predictability of costs for 
consumers enrolled in these plans, thus further reducing the risk of 
unexpected financial harm.
    Conversely, several commenters opposed continuing to require 
issuers to offer these standardized plan options. These commenters 
explained that QHPs are sufficiently standardized due to requirements 
pertaining to EHB, annual limitations on cost sharing, metal tiers, and 
the recently narrowed AV de minimis ranges for each metal tier. These 
commenters also explained that continuing to require issuers to offer 
these standardized plan options would inhibit issuer innovation in plan 
design, reducing the degree of consumer choice. Several commenters also 
noted that requiring issuers to offer standardized plan options in PY 
2023 contributed to the sharp increase in plans offered during this 
past Open Enrollment, which further increased the risk of plan choice 
overload.
    Response: We agree that continuing to require issuers to offer 
these standardized plan options will serve an important role in 
simplifying the plan selection process, especially when done in 
conjunction with reducing the risk of plan choice overload by directly 
limiting the number of non-standardized plan options that issuers can 
offer as well as with further enhancing and optimizing choice 
architecture and the consumer experience on HealthCare.gov. We agree 
with commenters that simplifying the plan selection process will reduce 
the risk of suboptimal plan selection and unexpected financial harm to 
consumers. We also agree that the enhanced pre-deductible coverage and 
the inclusion of copayments instead of coinsurance rates for a broad 
range of benefit categories in these standardized plan options will 
continue to serve as important forms of consumer protection.
    We further believe that this additional degree of standardization--
beyond the existing requirements pertaining to EHB, annual limitations 
on cost sharing, metal tiers, and the recently narrowed AV de minimis 
ranges for each metal tier--for plans offered through the Exchanges is 
warranted given the continued proliferation of available plan choices 
offered through the Exchanges, a stable trend that has continued 
unabated for several years. We believe the overwhelming number of plan 
choices necessitates taking measures to further simplify the consumer 
experience in order to reduce the risk of suboptimal plan selection.
    We acknowledge that requiring issuers to offer these standardized 
plan options contributed to the increase in the total number of plans 
offered through the Exchanges. However, we note that in the 2023 
Payment Notice (87 FR 27318), we encouraged issuers to modify their 
existing non-standardized plan offerings--in accordance with uniform 
modification requirements at Sec.  147.106(e)--to conform with the 
cost-sharing parameters of the standardized plan options finalized in 
the 2023 Payment Notice in order to significantly reduce the number of 
total new plan offerings on the Exchanges. We reiterate this 
encouragement.
    Additionally, since these standardized plan options contain several 
distinctive benefits, such as enhanced pre-deductible coverage and a 
preference for copayments instead of coinsurance rates, and since we 
believe these standardized plan options play an important role in 
simplifying the plan selection process, we believe limiting the number 
of non-standardized plan options that issuers can offer will offset 
this increase in the number of total plan offerings.
    Finally, we disagree that continuing to require issuers to offer 
these standardized plan options will inhibit issuer innovation in plan 
design and reduce consumer choice. First, given that issuers will still 
be permitted to offer two non-standardized plan options per product 
network type, metal level, inclusion of dental or vision benefit 
coverage, and service area, we believe that issuers will continue to 
have sufficient flexibility to innovate and that consumers will 
continue to retain a satisfactory degree of choice.
    Additionally, as is explained in greater detail in the section of 
the preamble to this rule addressing Sec.  156.202, a 2016 report by 
the RAND Corporation reviewing over 100 studies concluded that having 
too many health plan choices can lead to poor enrollment decisions due 
to the difficulty consumers face in processing complex health insurance 
information.\282\ We also referred to a

[[Page 25853]]

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.\283\ As we note in the 
section of the preamble to this rule addressing Sec.  156.202, with the 
limit we are finalizing on the number of non-standardized plans that 
may be offered, we estimate (based on Plan Year 2023 data) that the 
weighted average number of non-standardized plan options (which does 
not take into consideration standardized plan options) available to 
each consumer will be reduced from approximately 89.5 in PY 2023 to 
66.3 in PY 2024, while the weighted average total number of plans 
(which includes both standardized and non-standardized plan options) 
available to each consumer will be reduced from approximately 113.7 in 
PY 2023 to 90.5 in PY 2024, which we believe will still provide 
consumers a satisfactory degree of choice and will continue to allow 
them to select a plan that meets their unique health needs.
---------------------------------------------------------------------------

    \282\ Taylor EA, Carman KG, Lopez A, Muchow AN, Roshan P, and 
Eibner C. Consumer Decisionmaking in the Health Care Marketplace. 
RAND Corporation. 2016.
    \283\ 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.
---------------------------------------------------------------------------

    Altogether, we believe the standardized plan option requirements at 
Sec.  156.201 in conjunction with the non-standardized plan option 
limits at Sec.  156.202 will meaningfully enhance consumer choice by 
allowing consumers to more easily and meaningfully compare available 
plan choices by reducing the risk of plan choice overload.
    Comment: Many commenters supported maintaining a high degree of 
continuity in both the broader policy approach as well as in specific 
plan designs from the previous plan year. These commenters explained 
that maintaining a consistent approach between plan years would 
maintain predictability for consumers currently enrolled in these 
plans. These commenters further explained that introducing drastic 
changes in the plan designs would unnecessarily risk disruption for 
issuers, states, and enrollees.
    Response: We agree that maintaining the highest degree of 
continuity possible in both the broader approach, as well as in the 
specific plan designs from the previous plan year is highly desirable, 
mainly in order to maintain predictability, to minimize the risk of 
disruption for issuers, States and enrollees, and to minimize issuer 
burden.
    Comment: Many commenters expressed concerns about several aspects 
of these plan designs. Specifically, several commenters expressed 
concern about the high deductibles for these plans. These commenters 
explained that having high deductibles acts as a significant barrier 
that makes it more difficult for consumers to obtain the care they 
need. Thus, many commenters recommended lowering the deductibles for 
these plans in order to decrease barriers to access. Commenters also 
emphasized the need to expand pre-deductible coverage to a broader 
range of benefit categories, including laboratory services, x-rays and 
diagnostic imaging, outpatient facility fees, outpatient surgery 
physician fees, and more tiers of prescription drug coverage.
    Response: We agree that high deductibles can act as a barrier to 
obtaining health care services, and that expanding pre-deductible 
coverage to a broader range of benefit categories would help to expand 
access to health care services. However, to ensure these plans have 
design attributes that reflect the most popular plan offerings, to 
maintain reasonable cost sharing amounts, to continue exempting benefit 
categories that contain some of the most frequently utilized health 
care services from the deductible, and to ensure these plans have 
competitive premiums, all the while maintaining an AV within the 
permissible AV de minimis range, we are unable to materially lower the 
deductibles or exempt additional benefit categories from the 
deductibles in these plan designs. We note that we will consider these 
modifications in future PYs.
    Comment: Several commenters supported excluding plan designs for 
standardized plan options at the non-expanded bronze metal level. These 
commenters explained that excluding non-expanded bronze plan designs 
would reduce issuer and State burden, as there would be fewer plans for 
issuers to offer and for States to certify. These commenters also 
explained that the non-expanded bronze plan standardized plan options 
finalized in the 2023 Payment Notice did not include pre-deductible 
coverage for any services, which places consumers at risk of unexpected 
financial harm. Additionally, commenters explained that issuers 
generally chose to offer standardized plan options at the expanded 
bronze metal level instead of the non-expanded bronze metal level in PY 
2023 since these plans included pre-deductible coverage for a range of 
benefit categories.
    Conversely, several commenters opposed excluding plan designs for 
standardized plan options at the non-expanded bronze metal level, 
explaining that consumers currently enrolled in these low-cost plans 
would lose access to their current plan offerings.
    Response: We agree that excluding plan designs for standardized 
plan options at the non-expanded bronze metal level will reduce issuer 
and State burden with minimal consumer harm since these plan designs 
contain no pre-deductible coverage. In addition, as noted in the 
proposed rule, few issuers chose to offer non-expanded bronze 
standardized plan options in PY 2023. We also note that although 
consumers currently enrolled in standardized plan options at the non-
expanded bronze metal level would lose access to their current plan 
offering, these consumers could continue to have access to non-
standardized plan options at the non-expanded bronze metal level, if 
the issuer continues to offer such a plan. We believe non-standardized 
plan options at the non-expanded bronze metal level would be 
appropriate replacements for consumers' current standardized plan 
offerings at that level since there is little material difference 
between a standardized plan option at the non-expanded bronze metal 
level and a non-standardized plan option at the non-expanded bronze 
metal level--primarily due to severe AV constraints.
    Comment: Several commenters supported continuing to include only 
four tiers of prescription drug cost sharing in the formularies of the 
standardized plan options. These commenters generally explained that 
doing so would allow consumers to better understand their drug 
coverage, thereby reducing the risk of unexpected financial harm. These 
commenters also noted that the continuity in this aspect of the plan 
designs is highly desirable for consumers, and that this would further 
minimize the risk of disruption for these consumers.
    Conversely, several commenters supported including more than four 
tiers of prescription drug cost sharing in the formularies of the 
standardized plan options. These commenters instead recommended 
permitting the inclusion of five or six tiers, explaining that this 
formulary structure is common practice in the commercial market. These 
commenters explained that including additional tiers of cost sharing in 
these formularies would promote competition among manufacturers for 
favorable formulary placement, thus reducing costs for consumers.

[[Page 25854]]

    Response: While we acknowledge that the inclusion of five or six 
tiers in formularies is common practice in the commercial market, we 
believe the advantages of maintaining four tiers in these standardized 
plan option formularies outweigh the advantages of permitting 
additional tiers at this time. Specifically, we agree that continuing 
to include only four tiers of prescription drug cost sharing in the 
formularies of these standardized plan options will continue to allow 
for more predictable and understandable drug coverage, thereby reducing 
the risk of unexpected financial harm for consumers enrolled in these 
plans.
    Additionally, we believe that not finalizing the proposed formulary 
tiering placement regulations that would have required issuers to place 
all covered generic drugs in the generic cost-sharing tier and all 
brand drugs in either the preferred or non-preferred brand cost-sharing 
tier (or the specialty cost-sharing tier, with an appropriate and non-
discriminatory basis) (as discussed later in this section) for PY 2024 
will continue to facilitate competition among manufacturers for 
favorable formulary placement, reducing costs for consumers, which we 
believe is especially important given the other significant policies 
finalized in this rule.
    We also note that the four-tier design feature is consistent with 
the plan designs for PY 2023. As noted in the proposed rule (87 FR 
78277), we believe that the use of four tiers plays an important role 
in facilitating the consumer decision making process by allowing 
consumers to more easily compare formularies between plans, and allows 
for easier year-to-year comparison with their current plan. Thus, in 
order to minimize the degree of disruption for enrollees, we will 
continue to include only four tiers of prescription drug cost-sharing 
(excluding the zero-cost share preventive drugs and the medical 
services drugs cost-sharing tiers) in these standardized plan options 
for PY 2024.
    Comment: Several commenters supported requiring issuers to place 
all covered generic drugs in the generic drug cost sharing tier and all 
covered brand drugs in either the preferred brand or non-preferred 
brand drug cost sharing tiers--or the specialty tier, with an 
appropriate and non-discriminatory basis--in the standardized plan 
options. These commenters explained that introducing such a requirement 
would enhance predictability for consumers and allow them to anticipate 
the expected costs for prescription drugs, which would further decrease 
the risk of unexpected financial harm. Commenters further explained 
that this requirement would act as an important step in ensuring that 
patients are not forced to overpay for low-cost generic prescription 
drugs.
    Several commenters further explained that generic drugs are a major 
source of cost savings for patients and systems. These commenters cited 
recent analyses that demonstrated that generics comprise roughly 91 
percent of prescriptions yet only account for 18.2 percent of 
prescription drug spending. These commenters also cited analyses that 
demonstrated that generics save hundreds of billions of dollars in 
prescription drug spending overall, with demonstrated patient savings 
of $373 billion in 2021. These commenters also explained how the number 
of generic drugs covered on generic cost sharing tiers has been 
steadily decreasing over the years. These commenters explained that as 
recently as 2016, 65 percent of generic drugs were covered on generic 
tiers, but in 2022, only 43 percent of generic drugs were covered on 
generic tiers--a decrease of 22 percent in just six years.
    Conversely, several commenters opposed requiring issuers to place 
all covered generic drugs in the generic drug cost sharing tier and all 
covered brand drugs in either the preferred brand or non-preferred 
brand drug cost sharing tiers--or the specialty tier, with an 
appropriate and non-discriminatory basis--in these standardized plan 
options.
    Specifically, commenters explained that there are numerous examples 
of high-cost generic prescription drugs that have lower-cost, 
clinically similar brand-name prescription alternatives. Similarly, 
commenters explained that there are brand-name prescription drugs that 
may offer clinical and financial value that supports tiering lower than 
the preferred brand tier. Thus, commenters explained that the 
traditional viewpoint that generic drugs are the lowest-cost or highest 
value option is not always necessarily the case. Commenters further 
stated that it is commonplace in all market segments to shift generics 
to lower tiers only at the point where they become the most cost-
effective option. Commenters also explained that the purpose of tiered 
formularies is to encourage the use of high value drugs--not to 
encourage the use of generic drugs, per se, especially since generic 
prescription drugs are no longer consistently inexpensive or high-
value.
    In addition, several commenters expressed concern that requiring 
brand prescription drugs to be placed on a higher cost sharing tier 
could result in decreased medication adherence, which would be 
especially detrimental for consumers with chronic conditions that 
require treatment with brand-name prescription drugs (such as asthma 
medications and insulin). Moreover, several commenters noted that this 
policy would force the placement of clinically inappropriate and high-
priced prescription drugs on lower tiers, thus undermining the work of 
Pharmacy & Therapeutics Committees that considers multiple factors when 
deciding the tier on which to place each prescription drug.
    Several commenters also expressed concern that this requirement 
would incentivize manufacturers to take advantage of mandatory tier 
placement by raising the cost of certain drugs. Similarly, several 
commenters expressed concern that this requirement would limit PBM 
flexibility to effectively manage formularies and enrollee drug 
spending, as well as PBM and issuer position in negotiations with 
manufacturers.
    Moreover, these commenters were concerned that this policy could 
lead to more administrative costs and may require issuers to maintain 
two sets of formularies for standardized and non-standardized plan 
options, and that this may lead to more confusion for consumers. 
Ultimately, several commenters noted that this policy may have the 
unintended effect of increasing costs for consumers through the cost of 
each tier with higher out-of-pocket costs, cost-sharing, and the price 
of premiums.
    Response: We agree that requiring generic prescription drugs to be 
placed in the generic drug cost sharing tier and brand drugs in the 
preferred or non-preferred brand drug cost sharing tiers (or the 
specialty tier, with an appropriate and non-discriminatory basis) would 
enhance predictability for consumers and could potentially result in 
patient cost savings. However, comments regarding the changing nature 
of the costs of brand name drugs and generics, flexibility in designing 
formularies, and decreased medication adherence have led us to 
determine that we should further investigate the potential impact of 
this proposed requirement. For example, we believe that there may be 
merit in examining drug tiering more broadly, and not just as related 
to standardized plan options. Furthermore, as noted earlier in this 
section, we value maintaining the highest degree of continuity possible 
in both the broader approach, as well as in the specific plan designs 
from the

[[Page 25855]]

previous plan year and we intend to minimize disruption while still 
improving on our policies. As such, we are not finalizing this 
requirement for PY 2024, but we intend to conduct further investigation 
for future PYs.
    Comment: Several commenters had specific recommendations regarding 
the manner in which these standardized plan options are displayed as 
well as broader aspects of choice architecture and the user experience 
on HealthCare.gov.
    Specifically, several commenters recommended including a more 
granular level of detail to highlight important differences between 
plans, such as by displaying both the product ID and network ID of 
plans. Additionally, several commenters underscored the need to 
streamline the plan selection process by adding more filters and sort 
orders to highlight innovative plan designs and plans with supplemental 
benefits, to prioritize lower deductible plans, or to prioritize plans 
with particular cost sharing types and amounts. Several commenters 
recommended including additional screener questions to assess consumer 
preferences for cost, providers, prescription drugs, utilization, and 
cost-sharing assistance. Several commenters recommended including 
display features that would further facilitate consumer education and 
understanding, such as through pop-ups on screen and accompanying 
explanatory messages clarifying what distinguishes ``Easy Pricing'' 
plans from non-standardized plan options.
    Finally, several commenters explained that enhancing choice 
architecture and the user experience on HealthCare.gov would be a more 
effective and less disruptive method to simplify the plan selection 
process and facilitate consumer decision-making than limiting the 
number of non-standardized plan options that issuers can offer through 
the Exchanges.
    Response: We appreciate the commenters' recommendations and will 
take them into consideration. We agree that enhancing choice 
architecture and the user experience on HealthCare.gov can serve an 
important role in simplifying the plan selection process, but we also 
believe that these enhancements must be made in conjunction with other 
steps--such as enhancing comparability by requiring issuers to offer 
standardized plan options, and by reducing the risk of plan choice 
overload by limiting the number of non-standardized plan options that 
issuers can offer. Ultimately, we believe that multifaceted problems 
such as plan choice overload, suboptimal plan selection, and unexpected 
financial harm are best mitigated through multifaceted approaches.
4. Non-Standardized Plan Option Limits (Sec.  156.202)
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78279), we proposed to exercise the 
authority under sections 1311(c)(1) and 1321(a)(1)(B) of the ACA to add 
Sec.  156.202 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 for, among other things, the offering of QHPs 
through such Exchanges.
    In the proposed rule (87 FR 78279), we explained that under this 
proposed limit, 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, we explained that 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 final rule, we proposed 
to not apply this requirement to issuers in SBEs for several reasons. 
First, we explained that we did not wish to impose duplicative 
requirements on issuers in the SBEs that already limit the number of 
non-standardized plan options. Additionally, we stated that we believe 
that SBEs are best positioned to understand both the nuances of their 
respective markets and consumer needs within those markets. Finally, we 
explained that we believe that States that have invested the necessary 
time and resources to become SBEs have done so to implement innovative 
policies that differ from those on the FFEs, and that we did not wish 
to impede these innovative policies, so long as they comply with 
existing legal requirements.
    Also, consistent with the approach taken for standardized plan 
options in the 2023 Payment Notice and in this this final rule, since 
SBE-FPs use the same platform as the FFEs, we proposed to apply this 
requirement equally on FFEs and SBE-FPs. We explained that we believe 
that proposing a distinction between FFEs and SBE-FPs for purposes of 
this requirement would create a substantial financial and operational 
burden that we believe outweighs the benefit of permitting such a 
distinction.
    Finally, also in alignment with the approach taken with respect to 
standardized plan options in the 2023 Payment Notice and this final 
rule, we proposed that this 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, we explained that 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, we stated that we do not believe the same requirements 
should be applied to these other markets.
    We also explained that we believe 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 we did ultimately choose to limit the number of 
non-standardized plan options that issuers can offer. Thus, we stated 
that 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.

[[Page 25856]]

    We stated in the proposed rule (87 FR 78280) that, under this 
proposed limit, we 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, which we stated 
we believe would still provide consumers with a sufficient number of 
plan offerings.\284\ Furthermore, we estimated that approximately 
60,949 of a total 106,037 non-standardized plan option plan-county 
combinations offered in PY 2022 (amounting to 57.5 percent of non-
standardized plan option plan-county combinations) would be 
discontinued as a result of this limit, a number we stated would still 
provide consumers with a sufficient degree of choice during the plan 
selection process.\285\
---------------------------------------------------------------------------

    \284\ 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.
    \285\ Plan-county combinations are the count of unique plan ID 
and Federal Information Processing Series (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, we stated that if this limit were adopted, we estimated 
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.\286\ We also explained that we 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, we explained that we would ensure that the necessary 
consumer assistance would be made available to affected enrollees as 
part of the expanded funding for Navigator programs.
---------------------------------------------------------------------------

    \286\ These calculations assumed 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, we also 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, we noted that although we 
continue to prioritize competition and choice on the Exchanges, we were 
concerned about plan choice overload, which can result when consumers 
have too many choices in plan options on an Exchange. We 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.\287\ We 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.\288\
---------------------------------------------------------------------------

    \287\ Taylor EA, Carman KG, Lopez A, Muchow AN, Roshan P, and 
Eibner C. Consumer Decisionmaking in the Health Care Marketplace. 
RAND Corporation. 2016.
    \288\ 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, we explained in the 2023 Payment Notice 
that we were interested in exploring possible methods of improving 
choice architecture and preventing plan choice overload. We 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, we 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, or 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, in the proposed rule (87 FR 78280 through 78281), we 
noted that during the standardized plan option interested party 
engagement sessions we 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, we explained in the proposed rule (87 FR 78281) that 
QHP submission data supports the argument that enacting such a limit 
would be beneficial for consumers, noting that there has been a 
sizeable increase in the weighted average number of plans available per 
enrollee and plans offered per issuer in recent years. We refer readers 
to the proposed rule further discussion. With this continued plan 
proliferation for both enrollees and issuers, we explained that we 
believe 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.
    We also stated in the proposed rule (87 FR 78281) that to reduce 
the risk of plan choice overload, we 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. We 
explained that we agree 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, we stated that we made 
several enhancements to HealthCare.gov for the open enrollment period 
for PY 2023. We also explained

[[Page 25857]]

that we intend to continue conducting research to inform further 
enhancements to the consumer experience on HealthCare.gov for PY 2024 
and subsequent PYs.
    That said, we explained that we believe that enhancing choice 
architecture on HealthCare.gov is necessary but, alone, insufficient to 
reduce the risk of plan choice overload for several reasons. First, we 
stated that 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, we noted that 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, we explained that we believe consumers enrolling in 
QHPs through these alternative pathways would not benefit to the same 
degree as those enrolling through HealthCare.gov if we 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, we explained that we believe a more comprehensive 
approach to reducing plan choice overload that would also benefit those 
utilizing these alternative enrollment pathways was required.
    Furthermore, we explained that while making 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, we explained that we believe 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 would continue unless 
limits on the number of these plans are set. We also explained that 
near-duplicate plans are the most difficult to filter and sort out by 
interface improvements, and would therefore be most effectively 
addressed by limiting the number of non-standardized plan options.
    As such, we explained that we believe 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, we explained 
that we believe 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, we explained that we believe limiting the number of non-
standardized plan options that issuers can offer in conjunction with 
enhancing the plan comparison experience on HealthCare.gov would be 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.
    In addition, we proposed, 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 impose a new meaningful difference 
standard for PY 2024 and subsequent PYs, which would be more stringent 
than the previous standard finalized in the 2015 and 2017 Payment 
Notices. 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), we proposed 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.
    We explained that 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 further explained that we 
believe 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 
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 53.2 in PY 2024, which we explained we believe 
would still provide consumers with a sufficient number of plan 
offerings. In addition, we estimated 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, which we stated we believe 
would still provide consumers with a sufficient degree of choice during 
the plan selection process.\289\ We estimated that if this dollar 
deductible difference threshold were adopted, 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.\290\
---------------------------------------------------------------------------

    \289\ Plan-county combinations are the count of unique plan ID 
and FIPS code combinations. This measure was 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.
    \290\ These calculations assumed 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 sought 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 sought 
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 sought comment on the 
advantages and disadvantages of utilizing a phased approach 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 sought comment on the effect that

[[Page 25858]]

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 sought 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). We also sought 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.
    In addition, we sought 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 sought 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 sought 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.
    After reviewing the public comments, we are finalizing Sec.  
156.202 with modification. Specifically, for PY 2024, we are limiting 
the number of non-standardized plan options that issuers of QHPs can 
offer through Exchanges on the Federal platform (including the SBE-FPs) 
to four non-standardized plan options per product network type, metal 
level (excluding catastrophic plans), and inclusion of dental and/or 
vision benefit coverage, in any service area. For PY 2025 and 
subsequent plan years, we are limiting the number of non-standardized 
plan options that issuers of QHPs can offer through Exchanges on the 
Federal platform (including the SBE-FPs) to two non-standardized plan 
options per product network type, metal level (excluding catastrophic 
plans), and inclusion of dental and/or vision benefit coverage, in any 
service area.
    We note that for PY 2024 and subsequent PYs, we are permitting 
additional flexibility specifically for plans with additional dental 
and/or vision benefit coverage. Under this modified requirement for PY 
2024, For example, an issuer will be permitted to offer four non-
standardized gold HMOs with no additional dental or vision benefit 
coverage, four non-standardized gold HMOs with additional dental 
benefit coverage, four non-standardized gold HMOs with additional 
vision benefit coverage, and four non-standardized gold HMOs with 
additional dental and vision benefit coverage, as well as four non-
standardized gold PPOs with no additional dental or vision benefit 
coverage, four non-standardized gold PPOs with additional dental 
benefit coverage, four non-standardized gold PPOs with additional 
vision benefit coverage, and four non-standardized gold PPOs with 
additional dental and vision benefit coverage, in the same service 
area.
    Under this modified requirement, for PY 2025, for example, an 
issuer will be permitted to offer two non-standardized gold HMOs with 
no additional dental or vision benefit coverage, two non-standardized 
gold HMOs with additional dental benefit coverage, two non-standardized 
gold HMOs with additional vision benefit coverage, and two non-
standardized gold HMOs with additional dental and vision benefit 
coverage, as well as two non-standardized gold PPOs with no additional 
dental or vision benefit coverage, two non-standardized gold PPOs with 
additional dental benefit coverage, two non-standardized gold PPOs with 
additional vision benefit coverage, and two non-standardized gold PPOs 
with additional dental and vision benefit coverage, in the same service 
area.
    By finalizing the proposed policy with modifications to increase 
the limit on the number of non-standardized plan options that issuers 
can offer to four instead of two for PY 2024, and to factor the 
inclusion of dental and/or vision benefit coverage into this limit, we 
estimate (based on PY 2023 enrollment and plan offering data) that the 
weighted average number of non-standardized plan options available to 
each consumer will be reduced from approximately 89.5 in PY 2023 to 
66.3 in PY 2024, while the weighted average total number of plans 
(which includes both standardized and non-standardized plan options) 
available to each consumer will be reduced from approximately 113.7 in 
PY 2023 to 90.5 in PY 2024.
    Furthermore, we estimate that approximately 17,532 of the total 
101,453 non-standardized plan option plan-county combinations (17.3 
percent) will be discontinued as a result of this limit in PY 2024. 
Relatedly, we estimate that approximately 0.81 million of the 12.2 
million enrollees on the FFEs and SBE-FPs (6.6 percent) will be 
affected by these discontinuations in PY 2024. Finally, in terms of the 
impact on network availability, for PY 2024, we estimate an average 
reduction of only 0.03 network IDs per issuer, product network type, 
metal level, and service area, meaning we anticipate network IDs to 
remain largely unaffected by this limit for PY 2024.
    We note that, for PY 2025, we are unable to provide meaningful 
estimates at this time for the weighted average number of non-
standardized plan options available to each consumer; the weighted 
average number of total plans available to each consumer; the number of 
plan-county discontinuations; the number of affected enrollees; and the 
average reduction of network IDs per issuer, product network type, 
metal level, and service area under the limit of two non-standardized 
plan options per issuer, product network type, metal level, inclusion 
of dental and/or vision benefit, and service area.
    For these estimates to be meaningful, they will need to be based on 
plan offering and enrollment data for PY 2024, which will not be 
available until the end of the current QHP certification cycle for PY 
2024 and the end of the 2024 OEP, respectively. We anticipate that the 
broader landscape of plan offerings as well as the composition of 
individual issuers' portfolios of plan offerings will undergo 
significant changes as a result of the limit of four non-standardized 
plan options in PY 2024, and that any estimates based on data sourced 
from a plan year before this limit is enacted would not be meaningfully 
predictive of the landscape of plan offerings or individual issuers' 
portfolios of plan offerings for a plan year after this limit is 
enacted.
    Furthermore, these estimates would not be able to take into account 
the exceptions process we intend to propose that would allow issuers to 
offer non-standardized plan options in excess of the limit of two for 
PY 2025 and subsequent plan years, because we intend to propose the 
exceptions

[[Page 25859]]

process, as well as the specific criteria and thresholds to be included 
in this exceptions process, in the 2025 Payment Notice proposed rule, 
and we do not yet know whether or how such a proposal would be 
finalized.
    We also offer further clarification regarding the specific dental 
and/or vision benefit coverage a non-standardized plan option would 
need to include in order to qualify for this additional flexibility, 
which is also reflected in the finalized regulation text at Sec.  
156.202(c). Specifically, we clarify that a non-standardized plan 
option must include any or all of the following adult dental benefit 
coverage in the ``Benefits'' column in the Plans and Benefits Template: 
(1) Routine Dental Services (Adult), (2) Basic Dental Care--Adult, or 
(3) Major Dental Care--Adult. We also clarify that a non-standardized 
plan option must include any or all of the following pediatric dental 
benefit coverage in the ``Benefits'' column in the Plans and Benefits 
Template: (1) Dental Check-Up for Children, (2) Basic Dental Care--
Child, or (3) Major Dental Care--Child. Finally, we clarify that a non-
standardized plan option must include the following adult vision 
benefit coverage in the ``Benefits'' column in the Plans and Benefits 
Template: Routine Eye Exam (Adult).
    We are making these modifications primarily to decrease the risk of 
disruption for both issuers and enrollees, and to provide increased 
flexibility to issuers. Specifically, many commenters supported 
adopting a more gradual approach in which the number of non-
standardized plan options that issuers can offer is gradually decreased 
over a span of several plan years, instead of directly adopting a limit 
of two for PY 2024. Additionally, regarding the modification to factor 
the inclusion of dental and/or vision benefits into this limit, Issuers 
have frequently offered these specific benefit categories as additional 
benefits in otherwise identical plan options, accounting for the vast 
majority of product ID-based variation (approximately 84 percent of 
such variation) offered by issuers within a given metal level, network 
type, and service area in PY 2022.
    We are not finalizing a new meaningful difference standard. We 
summarize and respond to public comments received on the proposed non-
standardized plan option limits and the alternative meaningful 
difference standard below.
    Comment: Many commenters agreed that the number of plan choices 
available through the Exchanges has increased to a point that is beyond 
productive for consumers, and many commenters agreed that additional 
action should be taken to reduce the risk of plan choice overload. As 
such, many of these commenters supported directly limiting the number 
of non-standardized plan options that issuers can offer. These 
commenters explained that adopting this specific approach to reduce the 
risk of plan choice overload would be most effective in further 
simplifying and streamlining the Exchange experience, aligning with 
some of the primary goals of the Exchanges--fostering competition among 
issuers and facilitating a consumer-friendly experience for individuals 
looking to purchase health insurance.
    As commenters further explained, limiting the number of non-
standardized plan options is especially important at this time because 
many consumers currently face an overwhelming number of health plans to 
choose from on the Exchanges, and these consumers must navigate the 
complexity of each of these options to be able to select a health plan 
that meets their unique health care needs and budgetary realities.
    Commenters explained that having an overwhelming number of options 
makes it difficult to easily and meaningfully compare all available 
options, which increases the risk of plan choice overload and 
suboptimal plan selection as well as the risk of unexpected financial 
harm, especially for consumers with a lower degree of health care 
literacy. Commenters thus explained that limiting the number of non-
standardized plan options would allow consumers to more easily and 
meaningfully compare available plan options and select a plan that best 
meets their unique health care needs, which would particularly benefit 
those with lower degrees of health care literacy and those most at risk 
of unexpected financial harm.
    Several commenters also pointed to the fact that several SBEs have 
successfully limited the number of non-standardized plan options that 
issuers can offer as evidence that adopting such a policy would benefit 
consumers in States with an FFE or SBE-FP. Several commenters also 
explained that codifying this requirement would serve as a helpful 
template for consideration by SBEs that do not currently limit the 
number of non-standardized plan options but may be interested in doing 
so in the future.
    Response: We agree that the risk of plan choice overload has 
continued to increase over the last several years and that additional 
action should be taken to reduce this risk. We also agree that limiting 
the number of non-standardized plan options that issuers can offer is 
the most effective strategy to mitigate this risk, especially when done 
in conjunction with requiring issuers to offer standardized plan 
options and enhancing choice architecture on HealthCare.gov.
    Specifically, we agree that these limits will allow consumers to 
more meaningfully compare available plan options and select a health 
plan that best meets their unique health needs. These limits will also 
allow consumers to take more factors into consideration when comparing 
and selecting a health plan--such as providers, networks, formularies, 
and quality ratings. We also agree that these changes would reduce the 
risk of suboptimal plan selection, which would greatly benefit 
disadvantaged populations who can least afford experiencing unexpected 
financial harm.
    Comment: Several commenters opposed limiting the number of non-
standardized plan options that issuers can offer. Several of these 
commenters explained that limiting the number of these plans would 
impose a significant burden on issuers as they develop product 
portfolios for PY 2024. These commenters explained that issuers have 
already made strategic decisions about plan offerings and 
participation, and that finalizing these changes for PY 2024 would 
result in significant operational challenges. These commenters also 
expressed concern that we are proposing the concurrent implementation 
of multiple substantive provisions--such as changes to the re-
enrollment hierarchy and changes to standardized plan option formulary 
tiering--that would be extremely disruptive if finalized 
simultaneously.
    Many commenters also explained that a significant number of 
Exchange enrollees would lose access to the plans they are currently 
enrolled in and would consequently be relegated to enrollment in plans 
they did not choose. Many of these commenters pointed to the estimate 
that this provision would force 2.72 million enrollees on the FFE and 
SBE-FPs (26.6 percent of total enrollees) to change plans due to plan 
discontinuations in PY 2024. Many of these commenters explained that 
these plan discontinuations would put consumers at risk of unexpected 
financial harm, such as from changing the cost-sharing structure, 
formularies, or networks from the plans they are currently enrolled in.
    Many commenters also explained that these plan discontinuations 
would come at a time when issuers will be preparing

[[Page 25860]]

for and processing a deluge of Medicaid redeterminations with the 
unwinding of the Public Health Emergency. Commenters explained that 
approximately 10 million current Medicaid enrollees will be eligible 
for other forms of coverage, including approximately one million of 
these enrollees who are expected to be eligible for Exchange coverage. 
Commenters explained that for this reason, the Exchanges need to be 
prepared for a massive influx of enrollees over the coming months, and 
that major policy changes could cause severe disruption for both 
consumers and issuers at a critical time.
    Commenters also explained that limiting the number of non-
standardized plan options that issuers can offer would inhibit issuer 
innovation and force issuers to drastically reduce the unique plan 
designs they have thoughtfully developed to best serve their members' 
health care needs, which would in turn force consumers into a ``one-
size fits all'' benefit offering.
    Many commenters also explained how limiting the number of non-
standardized plan options that issuers can offer would have unintended 
impacts on provider networks. These commenters explained that many 
issuers would likely drop plans with broader networks to maintain 
competitive plan premiums, which would ultimately move the market in 
the direction of plans with restricted provider networks. Commenters 
further explained that this change could result in further disruption 
and the loss of providers consumers are accustomed to. Commenters also 
explained that there are consumers who are well-served by smaller, less 
expensive networks, and there are consumers who are willing to pay more 
for a larger of pool of providers and facilities--and that both groups 
deserve the same access to plan choice.
    Several commenters also explained that the proposed limit would 
negatively impact HSA-eligible high-deductible health plan (HDHP) 
offerings since issuers would likely discontinue these plan offerings 
due to low enrollment if non-standardized plan options were limited. 
Thus, several commenters recommended that HSA-eligible HDHPs be exempt 
from these limits.
    Several commenters pointed to other health coverage options, such 
as Medicare Advantage, which do not limit the number of plans an issuer 
can offer. These commenters explained that, in 2022, Medicare 
beneficiaries had a choice of 23 stand-alone Medicare Part D plans and 
31 Medicare Advantage plans offering Part D, on average. Similarly, 
these commenters explained that in 2023, Medicare beneficiaries had a 
choice of 43 Medicare Advantage plans, on average.
    Several commenters also explained that although the proposed limits 
may be appropriate for geographic areas with high rates of both issuer 
participation and plan choice proliferation, these limits would not be 
appropriate for geographic areas with lower rates of issuers 
participation and a more restricted range of plan offerings. These 
commenters explained that several States have service areas with only 
one issuer and a limited number of plan offerings, and that these 
limits would severely restrict consumer choice in these counties.
    Several commenters also explained that limiting the number of non-
standardized plan options that issuers can offer could discourage new 
market entrants and disadvantage smaller issuers since larger holding 
companies operating multiple issuers would still be able to have each 
issuer offer its own non-standardized plan options.
    Response: We disagree that issuers will have insufficient time to 
operationalize these changes, as we have regularly issued new 
requirements for the following plan year in that plan year's Payment 
Notice, as we are doing here. Additionally, although we acknowledge 
that the termination of numerous non-standardized plan options would 
entail burden for issuers (such as by affecting issuers' balance of 
enrollment across plans, by affecting the premium rating for each of 
those plans, and by requiring issuers to send discontinuation notices 
for enrollees whose plans are being discontinued), we believe that the 
advantages of enacting these changes outweigh the disadvantages of 
doing so.
    Specifically, with plan proliferation continuing unabated for 
several years, consumers have had to select from among record numbers 
of available plan options. Having such high numbers of plan choices to 
select from makes it increasingly difficult for consumers, especially 
those with lower rates of health care literacy, to easily and 
meaningfully compare all available plan options. This subsequently 
increases the risk of suboptimal plan selection and unexpected 
financial harm for those who can least afford it. Thus, although we 
acknowledge the burden imposed on issuers subsequent to the imposition 
of these limits in PY 2024, we believe these changes align with the 
original intent of the Exchanges--to facilitate a consumer-friendly 
experience for individuals looking to purchase health insurance. We 
believe this change will continue to benefit consumers on the Exchanges 
over numerous years. We further note that we intend to offer the 
necessary guidance and technical assistance to facilitate this 
transition, such as through the 2024 Letter to Issuers and QHP 
certification webinars.
    Furthermore, based on PY 2022 QHP submission and enrollment data, 
we have determined that each issuer's enrollment is predominately 
concentrated among its top several plan offerings per product network 
type and metal level, with the smaller remaining portion of enrollment 
distributed more evenly among several plans. Specifically, we 
determined that, on average, 71 percent of each issuer's enrollment is 
concentrated among its top two plan offerings per product network type 
and metal level, and 83 percent of each issuer's enrollment is 
concentrated among its top three plan offerings per product network 
type and metal level--meaning that the remaining portion of each 
issuer's enrollment is more evenly distributed among issuer's less 
popular offerings. As such, we believe making these changes will simply 
concentrate enrollment among each issuer's top current plan offerings.
    We also acknowledge that, as a result of limiting the number of 
non-standardized plan options, a significant number of consumers will 
have the plans they are currently enrolled in discontinued and will as 
a result be auto-reenrolled into another non-standardized plan option 
or standardized plan option offered by the issuer--similar to how this 
scenario would be handled prior to the imposition of these new 
requirements under the existing reenrollment hierarchy. We believe 
affected enrollees auto-reenrolled into standardized plan options would 
benefit from the several important distinctive features, such as 
enhanced pre-deductible coverage and copayments instead of coinsurance 
rates for a broad range of benefit categories, that serve as important 
forms of consumer protection. Furthermore, these standardized plan 
options were designed to incorporate design features that reflect the 
most popular current QHP offerings that millions of enrollees are 
already accustomed to. As such, we believe affected enrollees auto-
reenrolled into standardized plan options will not experience 
disruption since these standardized plan options will not differ 
substantially from the discontinued plans that the majority of 
consumers are currently enrolled in.

[[Page 25861]]

    Additionally, many commenters explained that a large number of 
current non-standardized plan option offerings differ in only minor 
ways from one another, and that consumers are often unaware of these 
minor differences. Thus, in the scenario that affected enrollees are 
auto-reenrolled into a non-standardized plan option (instead of a 
standardized plan option), we believe that the new plans these affected 
enrollees will be auto-reenrolled into will not differ significantly 
from the plan they are currently enrolled in. Thus, in short, we 
believe that the majority of affected enrollees would not experience 
significant disruption if they were crosswalked into either equivalent 
standardized plan option offerings or other non-standardized plan 
offerings. We also note that enrollees dissatisfied with the plan they 
are re-enrolled in will have the option to actively select a different 
plan offering for PY 2024, if desired.
    We also note that phasing in the reduction in the number of non-
standardized plan options that issuers can offer, beginning with four 
for PY 2024, will also significantly reduce the number of plan 
discontinuations and affected enrollees for PY 2024. Specifically, 
based on PY 2022 data, we originally estimated that a limit of two non-
standardized plan options would result in approximately 60,949 of a 
total 106,037 non-standardized plan option plan-county combinations 
(57.5 percent) being discontinued, and approximately 2.72 million of 
the 10.21 million enrollees in the FFEs and SBE-FPs (26.6 percent) 
being affected. That said, under the limit of four non-standardized 
plan options that we are finalizing in this rule for PY 2024, based on 
PY 2023 data, we estimate that approximately 17,532 of the total 
101,453 non-standardized plan option plan-county combinations (17.3 
percent) will be discontinued as a result of this limit, and 
approximately 0.81 million of the 12.2 million enrollees on the FFEs 
and SBE-FPs (6.6 percent) will be affected by these discontinuations in 
PY 2024.
    We anticipate that reducing the limit on non-standardized plan 
options from four in PY 2024 to two in PY 2025 and subsequent plan 
years will result in additional plan-county discontinuations and 
affected enrollees in PY 2025. That said, as described previously, we 
are unable to provide meaningful estimates for these plan-county 
discontinuations and affected enrollees for PY 2025 at this time due to 
PY 2024 plan offering and enrollment data limitations. In addition, as 
discussed previously, these estimates would not be able to take into 
account the exceptions process we intend to propose that would allow 
issuers to offer non-standardized plan options in excess of the limit 
of two for PY 2025 and subsequent plan years, because we intend to 
propose the exceptions process, as well as the specific criteria and 
thresholds to be included in this exceptions process, in the 2025 
Payment Notice proposed rule, and we do not yet know whether or how 
such a proposal would be finalized.
    We also clarify that the same rules and processes regarding binder 
payments for scenarios unrelated to non-standardized plan option limits 
(for example, scenarios from previous years where a particular plan 
offering is discontinued, and affected enrollees are auto-reenrolled 
from the discontinued plan into a different plan offered by the same 
issuer) apply to non-standardized plan option limit scenarios. 
Specifically, we clarify that for such renewals of effectuated 
coverage, a binder payment is not required, as the renewal is a 
continuation of effectuated coverage, and no new effectuation is 
required. The Exchanges on the Federal platform also do not require a 
binder payment for passive re-enrollments that continue effectuated 
coverage in another plan within the same product (or to a different 
plan in a different product offered by the same issuer, if the current 
product will no longer be available to the enrollee, consistent with 
the hierarchy for reenrollment specified at Sec.  155.335(j)(2)) for 
the same subscriber.
    This means, when consumers are auto-reenrolled into another non-
standardized plan option or standardized plan option as a result of 
limiting the number of non-standardized plan options, no binder payment 
is required when subscribers in already effectuated policies are auto-
reenrolled into coverage offered by the same issuer. If, however, the 
enrollee were to be moved into a plan from a different issuer, a binder 
payment would be required. Alternate enrollments, for QHP enrollees 
whose current year coverage is no longer available through the Exchange 
and for whom a plan offered by a different issuer is selected, are new 
enrollments, not renewals, and thus require a binder payment to 
effectuate.
    We also acknowledge that a significant number of consumers will be 
affected by Medicaid eligibility redeterminations and will likely seek 
Exchange coverage as a result in PY 2024. We believe this timing offers 
a unique opportunity to help ensure that these consumers are able to 
meaningfully compare available plan options, select a health plan that 
best meets their health needs, and weigh standardized plan design 
features such as enhanced pre-deductible coverage for a greater number 
of benefits, enhanced price predictability in the form of copayments 
over coinsurance for a range of benefit categories, and copayments for 
all tiers of prescription drug coverage--including the non-preferred 
brand and specialty tiers, which are several relatively uncommon plan 
design features.
    We disagree that these limits will inhibit issuer innovation and 
unnecessarily constrain consumer choice. In PY 2024, issuers will still 
retain the ability to offer at least five plans per product network 
type, metal level, and service area--four non-standardized plan options 
and at least one standardized plan option--such that issuers will 
continue to retain the ability to innovate in plan designs. This figure 
does not include the additional flexibility permitted for plans that 
include dental and/or vision benefit coverage, nor does it include 
catastrophic plans, which will allow issuers to offer additional plans 
beyond the five per product network type, metal level, and service 
area.
    Under our incremental approach to phasing in limits to non-
standardized plan options, in PY 2025 and subsequent plan years, 
issuers will retain the ability to offer at least three plans per 
product network type, metal level, and service area--two non-
standardized plan options and at least one standardized plan option--
such that issuers will continue to retain the ability to innovate in 
plan designs. Similar to PY 2024, this figure does not include the 
additional flexibility permitted for plans that include dental and/or 
vision benefit coverage, nor does it include catastrophic plans, which 
would allow issuers to offer additional plans beyond the three per 
product network type, metal level, and service area. As noted, we also 
intend to propose an exceptions process in the 2025 Payment Notice 
proposed rule that could, if finalized, further expand this range of 
possible plan offerings in PY 2025 and subsequent plan years.
    Moreover, we reiterate that issuers are not limited in the number 
of standardized plan options that they can offer and thus retain the 
ability to innovate in their standardized plan options, so long as this 
innovation conforms with the required cost-sharing specifications. As 
previously discussed, we also believe that limiting the number of non-
standardized plan options reduces the risk of plan choice overload, 
which actually enhances the plan selection process by making it easier 
to

[[Page 25862]]

more meaningfully compare available options.
    Furthermore, we believe that, even with the limit on the number of 
non-standardized plan options an issuer may offer, the expected 
weighted average number of plan offerings available to each enrollee 
will remain sufficiently high to permit a satisfactory degree of 
choice. The limit being finalized in this rule is estimated to reduce 
the weighted average number of total plan offerings (which includes 
both standardized and non-standardized plan options offerings) from 
approximately 113.7 in PY 2023 to 90.5 in PY 2024, meaning consumers 
will continue to have more than enough plan choices to select from 
among. Even under the originally proposed limit of two non-standardized 
plan options per issuer, product network, type, metal level, inclusion 
of dental and/or vision benefits, and service area (which will be the 
limit for PY 2025 and subsequent plan years), we estimate that the 
weighted average number of total plan offerings available to each 
consumer will be 65.3--which will still permit a sufficient degree of 
consumer choice.
    Similarly, we believe this flexibility will ensure that enrollees 
continue to have access to a sufficiently wide range of networks, 
ranging from broader and more encompassing networks with larger pools 
of providers and facilities to narrower and less expansive networks 
with smaller pools of providers and facilities. Additionally, as 
previously described, for PY 2024, we estimate an average reduction of 
only 0.03 network IDs per issuer, product network type, metal level, 
and service area combination, meaning we anticipate network IDs to 
remain largely unaffected by this limit for PY 2024. Furthermore, we 
once more reiterate that issuers are not limited in the number of 
standardized plan options that they can offer and thus retain the 
ability to continue to offer these network variations in their 
standardized plan options, if so desired.
    While we acknowledge that this limit may affect HSA-eligible HDHP 
offerings, we do not believe that an exception to the limit is 
warranted for these plan offerings as there has been a steady decrease 
in both the proportion of HSA-eligible HDHP offerings and enrollment in 
these plan offerings (especially at the silver, gold, and platinum 
metal levels) over the past several years. The proportion of total plan 
offerings that are HSA-eligible HDHPs has decreased from 7 percent in 
PY 2019 to 3 percent in PY 2023. Most of these remaining plans are 
offered at the bronze metal level, with HSA-eligible HDHP offerings 
constituting 14 percent of plan offerings at the bronze metal level in 
PY 2023 (and 2 percent, 1 percent, and 0 percent at the non-CSR silver, 
gold, and platinum metal levels in the same year, respectively).
    Total enrollment in these plans has decreased from 8 percent in PY 
2019 to 5 percent in PY 2022. Similar to the PY 2023 plan offering 
data, most of this enrollment is concentrated at the bronze metal 
level, with HSA-eligible HDHPs constituting 14% of enrollment at the 
bronze metal level in PY 2022 (and 2 percent, 2 percent, and 0 percent 
at the non-CSR silver, gold, and platinum metal levels in the same 
year, respectively). We believe the fact that there is a steadily 
decreasing number of issuers choosing to offer these plans, as well as 
a steadily decreasing number of consumers choosing to enroll in these 
plans, reflects both issuer and consumer preference evolving away from 
these types of plan offerings.
    Furthermore, due to severe AV constraints at the bronze metal 
level, issuers are significantly constrained in how they are able to 
design their plan offerings at this metal level. This is especially 
true for the non-expanded bronze metal level, in which it is not 
possible to include any pre-deductible coverage while maintaining an AV 
inside the permissible AV de minimis range--which is also the main 
reason we excluded a standardized plan design for the non-expanded 
bronze metal level in each set of the plan designs for PY 2024 
finalized in this rule. This means that issuers of plans at the bronze 
metal level do not have as much leeway to vary their plan offerings 
compared to offering plans at other metal levels that do not have as 
severe AV constraints--such as the silver, gold, and platinum metal 
levels.
    With issuers subject to these severe AV constraints at the bronze 
metal level in particular, and with the ability of issuers to vary plan 
designs at the bronze metal level significantly limited, we believe the 
four-plan limit in PY 2024 and the two-plan limit in PY 2025 and 
subsequent plan years (per product network type, metal level, inclusion 
of dental and/or vision benefit, and service area) will satisfactorily 
accommodate the full scope of plans that issuers wish to offer, 
including HSA-eligible HDHPs (at the bronze metal level, where the 
majority of these plans are offered). We encourage issuers to offer an 
HSA-eligible HDHP at the bronze metal level as one of their plan 
designs, if so desired.
    We also acknowledge that issuers that offer Medicare Advantage 
plans are not limited in the number of plans they can offer. That said, 
the average number of plans that Medicare beneficiaries had access to 
in PY 2023 is still lower than the estimated weighted average number of 
total plan offerings that Exchange consumers would have to choose from 
with the limit we are finalizing on non-standardized plan options for 
both PY 2024 and PY 2025 and subsequent plan years.
    In addition, we acknowledge that different States and counties have 
differing rates of issuer participation, and thus, differing rates of 
plan choice proliferation. Thus, we acknowledge that the risk of plan 
choice overload is more pronounced in certain counties than others. 
That said, we believe the limit of four non-standardized plan options 
for PY 2024 and the limit of two non-standardized plan options for PY 
2025 and subsequent years (with additional flexibility permitted for 
plans with additional dental and vision benefits, and subject to a 
potential exceptions process for the limit of two non-standardized plan 
options beginning in PY 2025--which we intend to propose in the 2025 
Payment Notice proposed rule) strikes an appropriate balance in 
reducing the risk of plan choice overload and preserving a sufficient 
degree of consumer choice, even for consumers in counties with lower 
rates of issuer participation.
    For example, even in counties that have only two issuers, with each 
issuer seeking to offer the maximum number of plans possible under the 
limit we are finalizing, consumers in PY 2024 would still theoretically 
have the ability to select from at least five plans per issuer, product 
network type, and metal level--four of which would be non-standardized, 
and at least one of which would be standardized. In this scenario, if 
both of these issuers offered both PPO and HMO versions of these plans, 
they could each theoretically offer at a minimum, ten expanded bronze 
plans, ten silver plans (not including CSR silver plans), ten gold 
plans, and ten platinum plans, if desired, meaning the total number of 
plan offerings available to consumers in that county will be 20 per 
metal level, and 80 altogether. In this scenario, the number of plans 
could conceivably be higher if both issuers offered more than one 
standardized plan option per product network type and metal level, 
higher yet if issuers offer additional plan variations of non-
standardized plan options with dental and/or vision benefit coverage, 
and higher yet if issuers choose to also offer catastrophic plans.
    Similarly, under a non-standardized plan option limit of two, 
consumers in PY 2025 will still theoretically have the

[[Page 25863]]

ability to select from at least three plans per issuer, product network 
type, and metal level--two of which will be non-standardized, and at 
least one of which will be standardized. In this scenario, if both of 
these issuers offered both PPO and HMO versions of these plans, they 
could each theoretically offer at a minimum, six expanded bronze plans, 
six silver plans (not including CSR silver plans), six gold plans, and 
six platinum plans, if desired, meaning the total number of plan 
offerings available to consumers in that county would be 12 per metal 
level, and 48 altogether. Similar to PY 2024, In this scenario, the 
number of plans could conceivably be higher if both issuers offered 
more than one standardized plan option per product network type and 
metal level, higher yet if issuers offer additional plan variations of 
non-standardized plan options with dental or vision benefit coverage, 
and higher yet if issuers choose to also offer catastrophic plans.
    We also acknowledge that there could potentially be scenarios in 
which counties have a single issuer not seeking to offer the maximum 
number of plans possible under this limit and instead chooses to offer 
no non-standardized plan options (since these plans are not required to 
be offered). In this scenario, an issuer could theoretically choose to 
only offer plans of one product network type at only the required metal 
levels (silver and gold), which would mean that there would only be two 
plan offerings in that particular county (for example, standardized 
silver HMO and standardized gold HMO). This will be true for both PY 
2024 (when the limit is four non-standardized plan options) and for PY 
2025 (when the limit is two non-standardized plan options), since the 
issuer in this scenario would be offering the bare minimum number of 
plans, and will therefore not be affected by the maximum limit on the 
number of non-standardized plan options, whether four or two.
    Though we discourage such an approach, we believe this scenario 
would not differ substantially from the scenario before standardized 
plan option requirements were introduced. For example, if that same 
issuer, prior to the imposition of the standardized plan option 
requirements, chose to offer the minimum number of plans in a 
particular service area (specifically, one non-standardized silver HMO 
and one non-standardized gold HMO), then in PY 2023 also began to offer 
one standardized silver HMO and one standardized gold HMO, then in PY 
2024 discontinued the non-standardized silver and gold HMOs, then 
consumers would have access to the same number of plans they did in PY 
2022, before either standardized plan option requirements and non-
standardized plan option limits were enacted. Similar to the previous 
discussion, this would also be true whether the limit on the number of 
non-standardized plan options is four in PY 2024 or two in PY 2025.
    Furthermore, we disagree that limiting the number of non-
standardized plan options that issuers can offer will discourage new 
market entrants and disadvantage smaller issuers since larger holding 
companies operating multiple issuers would still be able to have each 
issuer offer its own non-standardized plan options. To the contrary, we 
believe that limiting non-standardized plan options--in conjunction 
with requiring issuers to offer standardized plan options--can serve to 
even the playing field between larger and more well-established issuers 
and smaller issuers newer to the market, because all issuers will be 
required to offer plans with standardized cost sharing for a key set of 
EHB, and issuers will no longer be permitted to flood the market with 
plans with only minor differences between them.
    Comment: Several commenters supported a limit of either two or four 
non-standardized plan options per product network type, metal level, 
and service area, while others recommended adopting a slightly looser 
or stricter limit, including for only particular metal levels. Several 
commenters recommended not permitting additional variation only for 
specific benefits such as adult dental and adult vision benefits 
because doing so would likely cause confusion for consumers as to their 
options to obtain such benefits through medical QHPs or stand-alone 
dental or vision plans. Several other commenters recommended taking 
additional factors into account for any limit, such as particular 
networks (instead of product network types) and particular benefit 
packages (in the form of product IDs)--such that issuers would be 
permitted to offer two non-standardized plan options per product ID, 
network ID, metal level, and service area, for example.
    Response: We believe that finalizing a limit for PY 2024 of four 
non-standardized plan options and a limit for PY 2025 and subsequent 
plan years of two non-standardized plan options per product network 
type, metal level, inclusion of dental and/or vision benefit coverage, 
and service area strikes an appropriate balance between simplifying the 
plan selection process and maintaining a sufficient degree of consumer 
choice. We believe that adopting this more gradual approach, as opposed 
to directly limiting the number of non-standardized plan options to two 
in PY 2024, also facilitates this transition and reduces the risk of 
disruption for both issuers and enrollees.
    We also believe that providing advance notice of the eventual 
transition to the limit of two non-standardized plan options in PY 2025 
and subsequent plan years will allow issuers additional time to prepare 
for the two-plan limit. We further believe that permitting additional 
variations specifically for non-standardized plan options with the 
inclusion of dental and/or vision benefit coverage--instead of, for 
example, permitting additional variation for any single change in the 
product package, however small--decreases the likelihood that these 
limits will be circumvented. Permitting additional flexibility for any 
single change in the product package (such as only including one 
additional infrequently utilized benefit) would allow issuers to 
continue to offer as many non-standardized plan options as desired 
simply by adding a single benefit to these additional plans, which 
would run counter to the goal of reducing the risk of plan choice 
overload.
    We also believe that permitting issuers to offer a total of at 
least five plans in PY 2024--four non-standardized and at least one 
standardized--per product network type, metal level, and inclusion of 
dental and/or vision benefit coverage, in any service area will allow 
issuers to offer at least five different networks per product network 
type, metal level, and inclusion of dental and/or vision benefit 
coverage, in any service area, a number we believe provides a 
sufficient degree of flexibility for issuers and choice for consumers.
    Similarly, we believe that permitting issuers to offer a total of 
at least three plans in PY 2025 and subsequent plan years--two non-
standardized and at least one standardized--per product network type, 
metal level, and inclusion of dental and/or vision benefit coverage, in 
any service area will allow issuers to offer at least three different 
networks per product network type, metal level, and inclusion of dental 
and/or vision benefit coverage, in any service area, a number we 
believe provides a sufficient degree of flexibility for issuers and 
choice for consumers.
    Comment: Several commenters recommended either applying limits to 
non-standardized plan options or imposing a meaningful difference 
standard to issuers in SBEs in addition

[[Page 25864]]

to issuers in the FFEs and SBE-FPs. However, one commenter opposed 
applying limits to the number of non-standardized plan options and 
imposing a meaningful difference standard to issuers in SBE-FPs, 
explaining that SBE-FPs are similarly positioned to SBEs and should 
thus also be exempt from these requirements.
    Response: Similar to our approach with respect to standardized plan 
options in the 2023 Payment Notice, we did not propose to limit the 
number of non-standardized plan options that issuers can offer through 
SBEs for several reasons, including that several SBEs already impose 
such limits. As such, we believe imposing duplicative requirements on 
issuers in SBEs that are already limited in the number of non-
standardized plan options they can offer could create contradictory 
requirements that misalign with existing State requirements.
    We also believe that SBEs are uniquely positioned to best 
understand the nature of their respective markets as well as the 
consumers in these markets. Furthermore, as we explained in the 
proposed rule, as well as in the 2023 Payment Notice, we believe States 
that have invested the necessary time and resources to become SBEs have 
done so in order to implement innovative policies that differ from 
those on the FFEs. We explained that we do not wish to impede these 
innovative policies so long as they comply with existing legal 
requirements.
    However, as we explained in the proposed rule, as well as in the 
2023 Payment Notice, because we impose this requirement in the FFEs, 
and because the SBE-FPs use the same platform as the FFEs, we believe 
it is appropriate to apply these requirements equally on FFEs and SBE-
FPs. We believe that changing the platform to permit distinction on 
this policy between FFEs and SBE-FPs would require a very substantial 
financial and operational burden to HHS that we believe outweighs the 
benefit of permitting such a distinction. Finally, States with SBE-FPs 
that do not wish to be subject to these requirements may investigate 
the feasibility of transitioning to an SBE.
    Comment: Many commenters who were concerned with the proliferation 
of seemingly similar plans and the consequent increased risk of plan 
choice overload but were opposed to limits on non-standardized plan 
options recommended implementing a meaningful difference standard. 
These commenters explained that implementing a meaningful difference 
standard would strike a more appropriate balance in reducing the risk 
of plan choice overload while simultaneously preserving a sufficient 
degree of consumer choice. These commenters also explained that 
adopting this approach would be a more effective mechanism in ensuring 
that plans are not duplicative and are instead meaningfully different 
from one another without inhibiting issuer innovation in plan design.
    Commenters also had a range of recommendations for a meaningful 
difference standard. Several commenters suggested decreasing the 
deductible dollar difference threshold from the proposed $1,000 to 
$500, explaining that requiring a deductible difference of $1,000 would 
be too high to account for consumer preference. Several commenters 
recommended adopting a version of the meaningful difference standard 
more closely aligned with the previous iteration of the meaningful 
difference standard. Several commenters recommended taking more factors 
into account when determining whether plans are meaningfully different 
from one another, such as differences in covered specific benefits 
(such as dental or vision benefits), differences in product packages, 
differences in cost-sharing (such as the percentage of pre-deductible 
services), differences in provider network (such as if there is a 
reasonable difference in the size of the network or a reasonable 
percentage of providers who are different between networks), 
differences in network ID, differences in product network type, and 
HSA-compatibility.
    Response: We believe that directly limiting the number of non-
standardized plan options to four for PY 2024 and two for PY 2025 and 
subsequent years per issuer, product network type, metal level, and 
inclusion of dental and/or vision benefit coverage, in any service 
area, is a more effective mechanism at this particular time to reduce 
plan choice proliferation and to reduce the risk of plan choice 
overload for several reasons.
    First, we believe the increased complexity associated with a 
meaningful difference standard that effectively reduces duplicative 
plan offerings as well as the risk of plan choice overload would be 
more difficult for issuers to understand and operationalize. We believe 
that direct limits on the number of non-standardized plan options that 
issuers can offer is a more straightforward approach. We also believe 
that the increased complexity associated with creating and 
operationalizing a meaningful difference standard (that takes multiple 
factors into account when determining whether plans are meaningfully 
different from one another) creates the risk of unintentionally 
allowing circumvention, which would decrease the efficacy of this 
mechanism.
    Furthermore, we do not wish to cause unintended consequences to 
plan designs by requiring plans to have deductible differences of 
$1,000 or more--which would influence issuers to systematically 
increase cost-sharing for particular benefits to meet such meaningful 
difference standards or to systematically subject particular benefits 
to the deductible, which could potentially increase the risk of 
discriminatory benefit designs. That said, we note that we intend to 
further investigate the feasibility and appropriateness of employing 
this mechanism in a future year.
    Comment: Several commenters requested clarification that any 
product or plan mapping necessary due to non-standardized plan option 
discontinuations would satisfy the exception to guaranteed renewability 
for uniform modifications of coverage at renewal due to modification in 
Federal requirements under Sec. Sec.  147.106(e)(2) and 148.122(g)(2).
    Response: The guaranteed renewability requirements at section 2703 
of the PHS Act and Sec.  147.106 (as well as parallel provisions at 
Sec. Sec.  146.152 and 148.122) generally require an issuer that offers 
health insurance coverage in the individual or group market to renew or 
continue in force such coverage at the option of the plan sponsor or 
individual, as applicable. These provisions also establish requirements 
for issuers that decide to discontinue offering a particular product in 
the individual or group market and for issuers that modify coverage at 
the time of coverage renewal. These requirements apply at the 
``product'' level, and the terms ``product'' and ``plan'' are defined 
in Sec.  144.103.
    Removing a plan(s) from a product will not result in a product 
discontinuation, unless by removing the plan(s), the issuer exceeds the 
scope of a uniform modification of coverage at Sec.  147.106(e).\291\ 
If an individual's product remains available for renewal, including a 
product with uniform modifications, the issuer generally must provide 
the individual the option to renew coverage under that product 
(including any plan within the product) to satisfy the guaranteed 
renewability

[[Page 25865]]

requirements. Further, issuers on the Exchange must adhere to the re-
enrollment hierarchy at Sec.  155.335(j) when auto re-enrolling 
enrollees in coverage through the Exchange.
---------------------------------------------------------------------------

    \291\ Center for Consumer Information and Insurance Oversight, 
Uniform Modification and Plan/Product Withdrawal FAQ (June 15, 
2015), available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/uniform-mod-and-plan-wd-FAQ-06-15-2015.pdf.
---------------------------------------------------------------------------

    The guaranteed renewability regulations provide that, in the 
individual and small group markets, modifications made pursuant to 
Federal or State requirements are a uniform modification of coverage. 
However, as nothing in this final rule requires an issuer to cease 
generally offering non-standardized plans (that is, outside the 
Exchange), a non-standardized plan discontinuation is not a change made 
pursuant to a Federal requirement.
    Comment: Several commenters requested clarification that State-
mandated plan designs would be excluded from the proposed limit on the 
number of non-standardized plan options.
    Response: State-mandated plan designs will not be excluded from the 
limit of four non-standardized plan options in PY 2024 or two non-
standardized plan options in PY 2025 and subsequent years per issuer, 
product network type, metal level, and inclusion of dental and/or 
vision benefit coverage, in any service area. We do not believe that 
State-mandated plan designs differ sufficiently from other non-
standardized plan options and did not receive comments with substantive 
examples of such plan designs. Furthermore, we believe that if all 
issuers in a particular State are required to offer State-mandated plan 
designs through the Exchanges in that State, these limits will apply to 
these issuers equally. Finally, we believe that the flexibility 
permitted in this framework (in which issuers will have the ability to 
offer four non-standardized plan options per product network type, 
metal level, and inclusion of dental and/or vision benefit coverage, in 
any service area for PY 2024, and two for PY 2025) will allow issuers 
to comply with both these State-mandated plan designs and the limits 
finalized in this rule.
    Comment: Several commenters requested that HHS clarify its 
definition of ``service area'' in the limit on the number of non-
standardized plan options.
    Response: We clarify that the ``service area'' component of the 
limit on non-standardized plan options refers to Federal Information 
Processing Series (FIPS) code.\292\ A FIPS code is a five-digit code 
that is unique to every county in the country. The first two digits are 
the State code (for example, Georgia's State code is 13), and the 
remaining three digits identify the county. We are defining ``service 
area'' with FIPS codes in order to provide a standardized, widely 
utilized, comprehensive, and mutually exclusive geographic unit for 
assessing consumer choice overload and adherence to non-standardized 
plan option limits.
---------------------------------------------------------------------------

    \292\ https://www.census.gov/library/reference/code-lists/ansi.html#county.
---------------------------------------------------------------------------

5. QHP Rate and Benefit Information (Sec.  156.210)
a. Age on Effective Date for SADPs
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78283), we proposed 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 proposed that this requirement apply to Exchange-certified 
SADPs, whether sold on- or off-Exchange. We clarify that an SADP, as 
noted at section 1302(d)(2)(B)(ii) of the ACA, is a type of QHP, which 
is Exchange-certified, and offers the pediatric dental EHB as specified 
at section 1302(b)(1)(J) of the ACA.
    We explained in the proposed rule (87 FR 78283) that since PY 2014, 
the process the FFEs use in QHP certification allows SADP issuers 
seeking certification to enter multiple options to explain how age is 
determined for rating and eligibility purposes. We explained that 
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 use the age as of the 
date of policy issuance or renewal for purposes of identifying the 
appropriate age rating adjustment, 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.\293\
---------------------------------------------------------------------------

    \293\ 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.
---------------------------------------------------------------------------

    We stated in the proposed rule that 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. We added that 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, and the rate will not 
change on the basis of age until the next plan year, even if the 
enrollee's age changes mid-plan year.
    As further explained in the proposed rule (87 FR 78283), allowing 
SADPs to rate by other methods imposes unnecessary complexity, not only 
to us 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. Thus, we stated that we believe 
requiring SADP issuers to use the age on effective date methodology, 
and consequently removing the less commonly used and more complex age 
calculation methods, would reduce consumer confusion and promote 
operational efficiency.
    We stated that, 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 stated that 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 sought 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 received one comment on the anticipated challenges this proposal 
could present for SBEs, which we address later in this section.
    We sought comment on the proposal to require SADP issuers, as a 
condition of Exchange certification, 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. We refer readers to the proposed rule (87 FR 78283) for further 
discussion of our proposal. After reviewing the public comments, we are 
finalizing this provision at new Sec.  156.210(d)(1) as proposed. We 
summarize and respond to public comments received on the

[[Page 25866]]

proposed age on effective date policy below.
    Comment: All commenters who commented on this provision supported 
the proposal. A few commenters expressed their general support of CMS's 
efforts to standardize the age calculation method and to select age on 
effective date as the only method for calculating the enrollee's age 
for rating and eligibility purposes. A majority of commenters supported 
the proposal because it would reduce or eliminate confusion among 
consumers and improve consumer understanding of SADPs. One commenter 
agreed this policy would eliminate unnecessary complexity for both 
consumers and the Navigators and assisters who help them.
    Response: We agree with commenters that requiring SADP issuers to 
use age on effective date as the sole method to calculate an enrollee's 
age for rating and eligibility purposes will help reduce or eliminate 
confusion among consumers, improve consumer understanding of SADPs, and 
eliminate unnecessary complexity for consumers and those who assist 
them. As we mentioned in the proposed rule (87 FR 78283), not only is 
age on effective date the most commonly used age rating method, but it 
is also the most straightforward methodology for consumers to 
understand. Since consumers can more easily understand the premium rate 
they are charged when the age on effective date method is used, it 
reduces consumer confusion. As we also mentioned, allowing SADPs to 
rate by other methods imposes unnecessary complexity, not only to HHS 
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. From the consumer standpoint, the 
more complicated alternative age calculation methods currently in use 
make it more difficult to understand the premium rate they are charged. 
Therefore, we believe requiring SADP issuers to use age on effective 
date as the sole age rating method, and removing the less commonly used 
and more complex age calculation methods, will reduce consumer 
confusion and promote operational efficiency.
    Comment: Several commenters supported this proposal because it 
promotes consistency between issuers, as well as between medical QHPs 
and QHPs that are SADPs. One commenter agreed with CMS that standards 
for medical QHPs and QHPs that are SADPs should be aligned wherever 
possible, including rating methodologies. Similarly, one commenter 
supported the proposal because it aligns with consumer expectations and 
current industry practices. Another commenter noted that the other age 
reporting options are not widely used, and therefore, they agreed it is 
appropriate for CMS to no longer offer issuers the ability to choose 
the less common age reporting methods. Lastly, one commenter noted that 
SBEs that do not currently use the age on effective date method may 
need more time for implementation.
    Response: We agree with commenters that requiring SADP issuers to 
use age on effective date as the sole age calculation method promotes 
consistency between issuers and between medical QHPs and QHPs that are 
SADPs as well. We also agree that this policy aligns with consumer 
expectations and industry practices. As we mentioned in the proposed 
rule (87 FR 78283), the vast majority of individual market SADP issuers 
have used the age on effective date method since PY 2014. Given that 
most SADP issuers are already using this method, and based on the 
current availability of such plans in all service areas, we anticipate 
that most consumers or other Exchange-certified plans will not 
experience notable changes. As we also mentioned, market rules at Sec.  
147.102(a)(1)(iii) require medical QHP issuers to use the age as of the 
date of policy issuance or renewal for purposes of identifying the 
appropriate age rating adjustment, however, SADP issuers were not 
subject to the same requirement. Implementing this policy change will 
help align the requirements for SADPs with the requirements applicable 
to other QHPs. We also acknowledge that the SADP issuers that do need 
to implement this change will need time for implementation, but we do 
not anticipate this will be a significant operational burden and 
believe this is feasible to implement for QHP certification in PY 2024.
b. Guaranteed Rates for SADPs
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78284), we proposed 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 proposed that this requirement apply to 
Exchange-certified SADPs, whether they are sold on- or off-Exchange.
    In the proposed rule (87 FR 78284), we explained that 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.\294\ In particular, because issuers of Exchange-certified 
SADPs are not required to comply with the premium rating requirements 
under section 2701 of the PHS Act applicable to non-grandfathered 
individual and small group health insurance coverage, we have permitted 
issuers of Exchange-certified SADPs in the FFEs and SBE-FPs to comply 
with the rate information submission requirements at Sec.  156.210 
under a modified standard.\295\ Specifically, we have historically 
granted issuers of SADPs 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.
---------------------------------------------------------------------------

    \294\ See PHS Act sections 2722(b) and (c) and 2763(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.
    \295\ 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.
---------------------------------------------------------------------------

    This flexibility for SADPs to offer estimated rates was effective 
for SADP issuers beginning with PY 2014. We explained in the proposed 
rule that 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. We noted that 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 the accurate collection of dental rating 
rules without forced operational limits in most reasonable 
circumstances.
    In the proposed rule (87 FR 78284), we stated that 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. We explained that if SADP issuers 
submit estimated rates and

[[Page 25867]]

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. 
We also noted that since low-income individuals may qualify for APTC, 
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.
    We acknowledged in the proposed rule that requiring guaranteed 
rates presents a small risk that SADP issuers that offer estimated 
rates could cease offering SADPs on the Exchanges. While we recognized 
this risk, we stated that we believe the benefits of this proposal far 
exceed the disadvantages. Specifically, as discussed previously, we 
stated that 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.
    As we explained in the proposed rule, because we believe this 
proposed policy would significantly benefit enrollees by ensuring that 
enrollees in SADPs 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 sought 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 did not receive any comments on the 
anticipated challenges this proposal could present for SBEs, or whether 
or to what extent we should limit or delay this proposed certification 
requirement.
    We sought comment on 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. We refer readers to the 
proposed rule (87 FR 78284) for further discussion of our proposal. 
After reviewing the public comments, we are finalizing this provision 
at new Sec.  156.210(d)(2) as proposed. We summarize and respond to 
public comments received on the proposed policy to require guaranteed 
rates below.
    Comment: All commenters addressing this provision supported the 
policy proposal. A few commenters expressed their general support of 
CMS's efforts to require the submission of guaranteed rates for SADPs. 
More specifically, a few commenters supported this proposal because it 
promotes consumer understanding and helps reduce or eliminate consumer 
confusion. One commenter stated that requiring SADPs to submit 
guaranteed rates promotes consumer understanding by ensuring that 
consumers and those who assist them will better understand their 
coverage and the actual premium costs they will incur. Another 
commenter noted that this proposal will help people make informed 
decisions when shopping for their health coverage. Another commenter 
explained that guaranteed rates add transparency and clarity for 
consumers.
    Response: We agree with the commenters that requiring SADP issuers 
to submit guaranteed rates will benefit consumers by promoting consumer 
understanding and helping to reduce or eliminate consumer confusion. We 
prioritize the development and implementation of consumer-centric 
policies, and will continue to direct our efforts towards promoting 
consumer understanding and improving consumer transparency.
    Comment: A few commenters supported this proposal because it 
results in a better consumer experience and helps eliminate complexity. 
One commenter noted requiring SADP issuers to submit guaranteed rates 
will eliminate the practice of providing estimated rates to consumers, 
which typically requires the enrollee to contact the insurance issuer 
directly to determine a final rate.
    Response: We agree with the commenters that requiring guaranteed 
rates will result in an improved consumer experience. We also agree 
that eliminating the practice of providing estimated rates, which 
requires the enrollee to contact the insurance issuer directly to 
determine a final rate, is beneficial because it helps eliminate 
complexity and reduces the burden on the consumer. As we noted in the 
proposed rule (87 FR 78284), by indicating a guaranteed rate, the SADP 
issuer commits to charging the consumer the approved premium rate, 
which has been calculated using the consumers' geographic location, 
age, and other permissible rating factors. Therefore, a guaranteed rate 
provides consumers with more certainty, resulting in a more positive 
consumer experience.
    Comment: A few commenters supported the guaranteed rates proposal 
because it is consistent with current industry practices. In 
particular, one commenter stated that since the estimated rate option 
is not widely used by SADP issuers, it is appropriate for CMS to no 
longer offer this option.
    Response: We agree with the commenters that the guaranteed rates 
proposal aligns with current industry practices. As we mentioned in the 
proposed rule (87 FR 78284), the vast majority of issuers offering on-
Exchange and off-Exchange Exchange-certified SADPs already elect to 
submit guaranteed rates. Therefore, the majority of SADP issuers are 
unlikely to be impacted by this policy.
    Comment: A few commenters supported the guaranteed rates proposal 
because it allows for accurate APTC calculation of the pediatric dental 
EHB portion of premiums, and protects consumers from both unexpected 
costs and unnecessary financial burden. One commenter explained that 
because the portion of APTC attributable to pediatric dental coverage 
can be applied to SADPs, after-purchase rate information changes could 
affect APTC calculation, resulting in unnecessary financial burden and 
uncertainty for enrollees selecting SADPs. Another commenter also 
emphasized that guaranteed rates protect consumers from unnecessary tax 
reconciliation.
    Response: We agree with the commenters that requiring guaranteed 
rates will promote accurate APTC calculation of the pediatric dental 
EHB portion of premiums, and protect consumers from unnecessary 
financial burden and uncertainty. As we explained in the proposed rule 
(87 FR 78284), if an SADP issuer submits an estimated rate and 
subsequently modifies their actual rate, the Exchanges, including SBEs, 
SBE-FPs, and FFEs, could incorrectly calculate APTC for the pediatric 
dental EHB portion of a consumer's premium,\296\ which could result in 
consumer harm. This may also disproportionately impact low-income 
individuals who may qualify for APTC, who are already 
disproportionately impacted by limited access to affordable health 
care. Therefore, we believe this policy will also help advance health 
equity by ensuring that low-income individuals who qualify for APTC are 
charged the

[[Page 25868]]

correct premium amount when enrolling in SADPs on the Exchange.
---------------------------------------------------------------------------

    \296\ Consistent with Sec. Sec.  156.440(b) and 156.470, APTC 
may be applied to the pediatric dental EHB portion of SADP premiums.
---------------------------------------------------------------------------

    Comment: One commenter requested clarity on whether the proposed 
policy also applies to small group SADPs. This commenter explained that 
as a State, it does not have the authority to review dental rates for 
small group issuers on- or off-Exchange, and thus it cannot enforce 
this proposed certification requirement for such issuers. The commenter 
further explained that if plans cannot be certified without meeting 
this requirement, that CMS should certify the off-Exchange-only SADPs.
    Response: We clarify that the guaranteed rates policy does not 
apply to SADPs that are not Exchange-certified. SADPs that are not 
seeking Exchange certification, in either an individual market Exchange 
or SHOP, will not need to use guaranteed rates under this policy. 
States will therefore not need to enforce this requirement, but State 
Exchanges will be required to only certify SADPs that comply with the 
requirement.
6. Plan and Plan Variation Marketing Name Requirements for QHPs (Sec.  
156.225)
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78284 through 78285), we proposed to add a 
new paragraph (c) to Sec.  156.225 to require that QHP plan and plan 
variation \297\ marketing names include correct information, without 
omission of material fact, and do not include content that is 
misleading. We stated that, if this policy is finalized, we would 
review plan and plan variation marketing names during the annual QHP 
certification process in close collaboration with State regulators in 
States with Exchanges on the Federal platform.
---------------------------------------------------------------------------

    \297\ 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).
---------------------------------------------------------------------------

    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. As we stated 
in the proposed rule (87 FR 78285), 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. 
We also stated that in PY 2022, we received complaints from consumers 
in multiple States who misunderstood cost-sharing information in their 
QHP's marketing name. We also stated that upon further investigation, 
CMS and State regulators determined that language in a number of plan 
and plan variation marketing names was 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.\298\
---------------------------------------------------------------------------

    \298\ 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.
---------------------------------------------------------------------------

    As we explained in the proposed rule (87 FR 78285), CMS' review of 
QHP data for PY 2023 indicates continued use of cost-sharing 
information in plan and plan variation marketing names. We explained in 
the proposed rule that this proposed policy would address the issues we 
observed during PY 2022 and again in PY 2023 by requiring all 
information in plan and plan variation marketing names that relates to 
plan attributes to align with 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. Also, we stated that 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. 
We refer readers to the proposed rule (87 FR 78284 through 78285) for 
further discussion of this proposed requirement, including examples 
illustrating the kinds of information in plan and plan variation 
marketing names that could mislead consumers through inaccurate 
information or omission of material facts.
    We sought comment on this proposal and whether there are additional 
methods of preventing consumer confusion and market disruption related 
to this issue. In particular, we sought comment on the potential to 
identify components of plan and plan variation marketing names that 
could be uniformly structured and defined across QHPs for consistency 
and to 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 sought comment on whether, to address this, we 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.
    After reviewing the public comments, we are finalizing, as 
proposed, Sec.  156.225(c) to require that QHP plan and plan variation 
marketing names include correct information, without omission of 
material fact, and not include content that is misleading. We will 
review plan and plan variation marketing names during the annual QHP 
certification process in close collaboration with State regulators in 
States with Exchanges on the Federal platform. We summarize and respond 
to public comments received on the proposed policy below.
    Comment: Almost all commenters supported the proposal. A number of 
commenters agreed that requiring marketing names to be accurate and not 
misleading would help consumers make more informed plan selections, and 
choose a QHP that they are ultimately satisfied with. Some commenters 
added that, like HHS and States, they also heard concerns and 
complaints from consumers applying for Exchange coverage about 
inaccurate or misleading marketing names, or marketing names that 
included extensive detail that they found confusing. One commenter 
noted that while confusion about marketing names has not been an issue 
in all States, it would be helpful to have clear Federal policy should 
the issue arise. Many commenters expressed strong support for continued 
collaboration between HHS and States in plan and plan variation 
marketing name oversight. Some commenters requested that HHS not impose 
any requirements on marketing names in excess of what States already 
require, or that HHS not make requirements that contradict requirements 
already in place within a State.
    Response: We agree with commenters that requiring plan and plan 
variation marketing names to be accurate and not misleading will help 
applicants for Exchange coverage make more informed

[[Page 25869]]

decisions, and have greater confidence that they are choosing the plan 
that is best for themselves and their families. Moving forward, we will 
continue working closely with States to review plan and plan variation 
marketing names by providing information and technical assistance and 
regularly scheduled calls and coordinating shared review of marketing 
names during the annual QHP certification process. We will also take 
existing State requirements into account when overseeing marketing 
names to prevent contradictory requirements and ensure an efficient 
plan and plan variation marketing name review process.
    Comment: A few commenters opposed the proposal, stating that they 
generally supported its intent, but disagreed that additional 
regulation was necessary to achieve its purpose. One commenter stated 
that States are in a better position than HHS to regulate marketing 
names, and voiced concern that there could be conflicting 
recommendations between State and Federal regulators. Another commenter 
stated that issuers should continue to have the ability to uniquely 
position their plans in a market through plan marketing names, noting 
that this practice is often descriptive in nature, and therefore, is 
not possible to do through other methods of data submission. As 
examples, the commenter cited terms like ``Freedom plans,'' implying 
broad access or ``Virtual plans,'' implying enhanced telehealth 
benefits. This commenter added that they offered Exchange plans with 
the same marketing convention for the past ten years, and expressed 
concern about any requirements to change it. Other commenters 
supportive of the proposal made similar points. For example, other 
commenters cited terms like ``elite'' or ``premium'' as being important 
marketing tools to convey advantages of a particular plan. Another 
recommended exempting marketing names that have been used for three or 
more years from required correction, with the exception of changes to 
cost-sharing amounts. The commenter noted that many plans have been 
offered for five or more years under the same name, and it would be 
confusing for enrollees to see a new marketing name for the same plan.
    Response: We agree with commenters that States are well-positioned 
to oversee plan and plan variation marketing names. However, based on 
other public comments and our experiences over the last several years, 
we believe that Federal partnership is helpful and necessary to ensure 
that marketing names include only information that is accurate and not 
misleading. As noted earlier, we will continue to work closely with 
States to prevent contradictory requirements and ensure State input. We 
note that certain Federal requirements may exceed those that States 
currently have in place, such as prohibiting a plan from including in 
its marketing name ``$0 cost-sharing'' without specifying that it only 
applies to a limited number of visits, or listing ``$0 deductible'' for 
a plan that offers a $0 medical deductible but a greater than $0 drug 
deductible. However, we believe such requirements are important to 
address the more recent marketing name practices causing problems and 
we do not anticipate that any such requirements will contradict 
existing State rules.
    We also acknowledge that some issuers have consistently offered 
plans and plan variations with marketing names that are clear and 
include correct information. This policy applies to all plan and plan 
variation marketing names. We will not exempt any marketing names that 
include errors, such as contradictions with plan benefit information, 
from required corrections. However, our goal is not to prevent issuers 
from using marketing names that have not proven problematic in the 
past. Because inclusion of detailed and sometimes incorrect or 
misleading plan benefit information in marketing names is a relatively 
recent practice, we do not anticipate issuers needing to make extensive 
changes to marketing names already in use for a number of years.
    Finally, this policy does not prohibit the use of descriptive 
language including the terms the commenter cited, such as ``Freedom 
Plans'' and ``Virtual Plans''; because these terms do not directly 
correlate with or intend to describe a specific service or benefit, it 
is unlikely that they would be considered incorrect. However, we 
encourage issuers to consider this language carefully to ensure it is 
not misleading. In particular, we encourage issuers to ensure that a 
plan or plan variation marketing name does not mislead consumers 
regarding the nature and cost-sharing for telehealth services and in 
person services, when there are differences between the two.
    Comment: Multiple commenters shared concerns about the specific 
types of inaccurate or confusing marketing name information, some of 
which we identified in the proposed rule (87 FR 78285). One commenter 
recommended that issuers not be required to include the term 
``deductible'' in marketing names that included a deductible dollar 
amount, because issuers had long included these dollar amounts in 
marketing names, and adding an additional term could cause confusion. 
Some commenters expressed general concerns about lengthy, detailed 
marketing names, stating that they cause confusion because they are 
difficult for consumers to understand. One of these commenters made 
several recommendations to decrease the length of marketing names, such 
as prohibiting issuers from including the company name in the marketing 
name because it is already displayed in the HealthCare.gov plan compare 
section, and imposing a character limit to prevent issuers from 
creating long and complicated plan names. Another commenter recommended 
limiting marketing names to including only one cost-sharing feature to 
avoid overwhelming consumers with too much information. One commenter 
raised the concern that some marketing names advertise features 
available under all QHPs, such as no restrictions for consumers with 
pre-existing conditions or full coverage of preventive care free of 
charge, which increases the length of the marketing name without 
providing valuable information.
    Some commenters also expressed concern about using terms like 
``choice'' or ``star'' network to refer to a narrow network, based on 
the belief that these terms implied an enhanced benefit when the 
reality was that the plan might provide access to fewer providers than 
a plan with a broader network that it did not advertise. Commenters 
also expressed concern about including information in a marketing name 
that leads consumers to believe that one of more benefits will be 
covered free of charge, when in fact certain conditions and limitations 
apply and enrollees cannot access such benefits without incurring 
significant cost sharing. Commenters also observed that marketing names 
for CSR variants of silver plans often retain the dollar amount of the 
deductible or copay of the non-CSR variant plan. In addition, 
commenters noted that some consumers find it difficult to confirm 
benefit information with a Summary of Benefits and Coverage (SBC); they 
cannot determine which SBC corresponds to a plan they have or are 
considering, because plan and plan variation marketing names do not 
match the plan name used in the SBC. This commenter recommended that 
HHS require plan and plan variation marketing names to match the plan 
name in the corresponding SBC at the level of individual CSR 
variations.
    Response: We appreciate the comments regarding the concerns we 
cited in the proposed rule about specific

[[Page 25870]]

types of incorrect or misleading marketing name information, and 
appreciate additional issues that commenters raised. We confirm that 
under this policy, at minimum, we will generally flag for revision plan 
and plan variation marketing names that include the issues listed in 
the proposed rule (87 FR 78285) to help ensure consumers are not misled 
about plans' cost-sharing and coverage implications. However, while we 
suggested in the proposed rule that dollar amounts that do not specify 
what they refer to (for example, deductible, maximum out-of-pocket, or 
something else) could be misleading, based on comments that cited the 
importance of allowing issuers to continue using longstanding plan and 
plan variation marketing names, and that encouraged us not to require 
issuers to include the term ``deductible'' in marketing names that 
include a deductible dollar amount, we will not require issuers to 
include cost-sharing terms such as deductible in marketing names that 
list numbers or dollar amounts. Specifically, while we believe that 
some consumers might benefit from additional detail about what numbers 
in a marketing name reference, we are aware that requiring issuers to 
label all numbers in a marketing name could be counterproductive by 
lengthening an otherwise concise plan marketing name and requiring that 
some issuers change marketing names that have long been in use and that 
comply with existing State rules. Nevertheless, we strongly encourage 
issuers to carefully consider the information that numbers and dollar 
amounts are meant to convey. Further, in cases where marketing names 
specify the type of cost sharing that a number or dollar amount refers 
to, our review will confirm that this information is accurate. For 
example, plan and plan variation marketing names that list a deductible 
amount must be clear whether that amount refers only to medical, drug, 
or another type of benefit, or simply lists a deductible amount that is 
inclusive of all these categories to ensure that potential enrollees 
understand the full cost-sharing requirement.
    Additionally, we share concerns that consumers are not always able 
to fully understand a plan's benefits because of inconsistencies 
between a plan name used in an SBC and the corresponding plan or plan 
variation marketing name displayed on HealthCare.gov. Moving forward, 
we will require that these names be consistent and clearly resemble 
each other, even if a plan or plan variation marketing name includes 
cost-sharing or other benefit detail that the plan name listed in the 
SBC does not. This requirement exemplifies the intent of the final 
policy that we discussed in the proposed rule: by requiring marketing 
names to be correct, not omit material fact, and not include content 
that is misleading, we expect that consumers will be able to refer to 
marketing names as a source of information that supports them in their 
plan selection process by facilitating their ability to learn more 
about a potential plan, which includes being able to look up 
information in other plan materials, instead of exacerbating confusion 
or making it more difficult to understand plan benefit details. We will 
also prohibit marketing names from advertising benefits that the ACA 
requires all Exchange plans to cover as though they were unique to that 
plan to prevent this information from unnecessarily extending marketing 
names' length and from implying that certain plans are uniquely 
advantageous because they provide benefits that in fact all QHPs are 
required to cover. This requirement mirrors requirements in widely 
adopted North American Industry Classification (NAIC) model 
regulations, and therefore, reflects longstanding rules and 
practice.\299\
---------------------------------------------------------------------------

    \299\ See ADVERTISEMENTS OF ACCIDENT AND SICKNESS INSURANCE 
MODEL REGULATION, Section 6.A(14), which prohibits ``An 
advertisement that exaggerates the effects of statutorily mandated 
benefits or required policy provisions or that implies that the 
provisions are unique to the advertised policy.''
---------------------------------------------------------------------------

    Additionally, we have also observed cases of incorrect information 
in plan variation marketing names for CSR variations that occur because 
the marketing name retains cost-sharing information from the non-CSR 
variation plan. Our goals moving forward as part of our review of plan 
and plan variation marketing names will include making sure that this 
does not happen. We strongly encourage issuers to proactively update 
cost sharing information in marketing names to accurately reflect 
information for CSR plan variations to ensure that their initial QHP 
application includes accurate information.
    We share concerns about the use of potentially misleading terms to 
refer to narrow networks; while we do not currently plan to prohibit 
use of general descriptive terms in marketing names, we encourage 
issuers to carefully consider whether in certain instances, use of 
these terms could cause or exacerbate existing consumer confusion or 
mislead consumers regarding a particular plan benefit. We also do not 
currently plan to prohibit inclusion of issuer names because this could 
prevent continuity in some marketing names that are not otherwise 
problematic. We note that current QHP certification instructions 
already impose a character limit on plan and plan variation marketing 
names of 255 characters.\300\ Moving forward, we will consider whether 
decreasing this character limit starting in PY 2024 would help to 
reduce consumer confusion and improve plan data accuracy and the 
efficiency of the QHP certification process. For example, a character 
limit of 150 would have permitted more than 90 percent of plan and plan 
variation marketing names in plan year 2022, while providing a cap to 
shorten some of the lengthiest marketing names and reduce the risk of 
unnecessary and confusing information. Finally, we will consider for 
future PYs the additional recommendations to limit confusion related to 
plan and plan variation marketing names.
---------------------------------------------------------------------------

    \300\ See PY2023 QHP Issuer Application Instructions: Plans & 
Benefits, Section 4.10: page 2D-17: https://www.qhpcertification.cms.gov/s/Plans%20and%20Benefits.
---------------------------------------------------------------------------

    Comment: Some commenters supported the proposal but expressed 
concern or confusion about the extent and nature of its requirements. 
Multiple commenters expressed concern about language in the proposed 
rule noting that information in plan and plan variation marketing names 
should correspond to benefit information in other plan documents, 
including the Plans & Benefits Template, HealthCare.gov plan selection 
information, and other applicable QHP certification materials. Some 
commenters, including several that supported the proposal and one that 
did not, noted that not all plan information that issuers include in 
plan marketing names is included in the Plans & Benefits Template. 
Multiple commenters cited examples of information on benefits that they 
noted may help to mitigate negative impacts of certain Social 
Determinants of Health, such as medical transportation and telehealth 
coverage. One commenter requested that the Plans & Benefits Template 
not be used as a marketing name generator. Several commenters requested 
that HHS release guidance on specific requirements for plan and plan 
variation marketing names under this policy, to mitigate issuer 
confusion and ensure efficient submission of plan information during 
the QHP certification process for the coming PY.
    Response: We clarify that this policy does not restrict plan and 
plan variation marketing name content to information only from the 
Plans & Benefits

[[Page 25871]]

Template, or any other template that issuers submit as part of the QHP 
certification process. However, information about benefits or any other 
plan attribute included in a marketing name should not be the sole 
source of information about that benefit, and it must not conflict with 
information that appears in other plan documents. In other words, 
issuers must only include benefit or other plan attribute information 
in a marketing name that is from other plan documents, such as the 
Plans & Benefits Template, the SBC, or the plan policy document. For 
example, references to telehealth coverage, a medical transportation 
benefit, or to any other plan information in a plan marketing name 
should be based on, correspond to, and not imply that they are more 
generous than, information about that benefit from plan policy 
documents. Further, as previously discussed, information in the plan 
marketing name should not imply more generous coverage or lower cost 
sharing than what is true in practice for that plan, including by 
omitting key benefit details or related restrictions. For example, we 
have received complaints about plan and plan variation marketing names 
advertising ``free'' or ``$0'' primary care provider visits, when in 
fact only virtual or telehealth visits are free of charge. Omission of 
that limitation on the type of visits that are free can mislead 
consumers and make it less likely that they will choose a plan based on 
an accurate understanding of its benefits. Finally, we understand the 
need for guidance on permitted plan and plan variation marketing name 
characteristics, and strongly support issuer efforts to ensure that 
marketing name content is accurate prior to submitting an application 
for QHP certification.
    Comment: One commenter suggested that because applicants for 
Exchange coverage can view plan and benefit information in a 
standardized format on the HealthCare.gov website, there is no need for 
standardizing plan and plan variation marketing names. Other commenters 
stated that because plan and benefit information is available on 
HealthCare.gov, there is no need for plan or plan variation marketing 
names to include benefit information at all, and CMS should prohibit 
doing so. Other commenters recommended that rather than impose overly 
restrictive standards on plan and plan variation marketing names, CMS 
should work to improve the consumer shopping experience on 
HealthCare.gov to maximize consumer understanding of benefits available 
through and cost sharing required by different QHP options.
    Response: We agree that characteristics of the consumer shopping 
experience in HealthCare.gov's Plan Compare section play an important 
role in helping consumers to choose a plan that is best for themselves 
and their family. We also agree that consumers are generally better 
served by comparing plan benefit information on HealthCare.gov Plan 
Compare, because Plan Compare displays corresponding information for 
different plans in a comparable way (for example, plan deductibles and 
other cost sharing information is listed in the same format for each 
available plan). We disagree that the consistency that Plan Compare 
offers makes it unnecessary to require that plan and plan variation 
marketing names be correct and not misleading, because incorrect or 
misleading information has the potential to harm consumers regardless 
of whether accurate information is also available. In fact, information 
from a marketing name that conflicts with or does not match 
corresponding information on HealthCare.gov or another Exchange 
enrollment platform could create consumer confusion that an Exchange 
could mitigate with a standard marketing name format designed to 
complement information from HealthCare.gov Plan Compare or another 
Exchange's enrollment platform. With regard to the suggestion that 
availability of plan and benefit information on HealthCare.gov means 
there is no need for issuers to include this information in marketing 
names, we will not prohibit that practice at this time, because our 
goal for PY 2024 is to ensure that marketing names are accurate and not 
misleading while permitting issuers, to the extent possible, to 
continue using marketing names that they have in prior years in order 
to mitigate issuer burden and avoid consumer confusion. Further, we 
know that some State rules related to plan and plan variation marketing 
names include some cost sharing information, and we want to establish 
rules that complement and do not contradict State policy. Relatedly, as 
further discussed below, we do not plan to require a specific plan 
marketing name format for PY 2024, but do view it as a useful potential 
tool to improve the consumer shopping experience wherever possible, 
which we will continue to work to do.
    Comment: Many commenters supported developing specific standards 
for plan and plan variation marketing names either for PY 2024 or in 
future plan years. Some offered suggestions for information that 
issuers should be permitted or required to include. Commenters also 
supported establishing a defined format that all marketing names would 
be required to follow, several citing examples of issuers and States 
that had already adopted specific formats with success. For example, 
one commenter noted that Washington's Exchange requires issuers to 
follow a naming format for standard plans, known as ``Cascade Care'' 
plans. Specifically, Washington adopted the standard plan naming format 
of ``[Issuer Name] + Cascade + [Metal Level]'' when implementing 
standard plans for PY 2021, and found it simplified comparisons for 
consumers by making it easier for them to use standard plans' 
comparable plan designs to evaluate the distinctions. Commenters that 
recommended standardizing plan and plan variation marketing names and 
that recommended specific types of information generally recommended 
all or some combination of issuer name, plan metal level, limited cost-
sharing information, network type, and HSA eligibility if applicable. 
Some commenters offered specific suggestions about network information 
in marketing names with several recommending requiring issuers to 
include network information in marketing names for similar plans with 
different networks. Others emphasized that network information in 
marketing names should not be misleading, and one stated that 
availability and relative cost of out-of-network benefits is important 
to some consumers and an indication in the plan name would be a 
prominent way to signal plan differences in this area.
    However, other commenters opposed the development of specific 
standards, based on concerns that this would limit issuers' ability to 
convey important plan information about plan characteristics through a 
marketing name and uniquely position products in the market based on 
this information. Some commenters raised further concerns that a 
standard format for plan marketing names that specified permitted types 
of information could result in the same marketing name for multiple 
plans, which would cause consumer confusion. Other commenters added 
that requirements for issuers to offer standardized plan options made 
it especially important for issuers to be able to use marketing names 
to illustrate what makes a particular QHP unique in a context of many 
available options, and that many issuers offer more than one network 
within a single product network type and use marketing names to make 
this distinction clear to consumers.

[[Page 25872]]

    Response: We agree that clear and comparable information is most 
helpful for consumers during the plan selection process, and we 
appreciate recommendations on how to design plan marketing names to 
support consumer decision-making. However, we will not apply a required 
format for plan and plan variation marketing names for PY 2024, because 
we want to achieve a balance between overseeing plan marketing names to 
ensure that they are accurate and not misleading and providing issuers 
with flexibility to create plan marketing names with information they 
believe will be useful to consumers. Further, we want to continue to 
work with interested parties to understand the best methods for 
ensuring that a marketing name is accurate and clear, but also accounts 
as needed for distinctions between different plans. For example, we 
appreciate comments related to helping to ensure that consumers 
understand plans' provider network information, and will continue to 
investigate how to improve consumers' experiences in this area. 
Additionally, we agree with comments that it is important to prevent 
different plans from having the same plan variation marketing name, and 
will take this concern into account if we develop standardized 
requirements for plan and plan variation marketing names.
7. Plans That Do Not Use a Provider Network: Network Adequacy (Sec.  
156.230) and Essential Community Providers (Sec.  156.235)
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78285), we proposed 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 Payment Notice (86 FR 6138), we 
added paragraph (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).
    We stated in the proposed rule (87 FR 78286) that since 2016, only 
a single issuer has sought certification on an FFE for a plan that does 
not use a network. As we explained in the proposed rule, 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 proposed to revisit this policy.
    Section 1311(c)(1) 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 
include within health insurance plan provider networks those ECPs that 
serve predominantly low income, medically underserved individuals. We 
explained in the proposed rule (87 FR 78286) that HHS carries out this 
directive in part through establishing network adequacy and ECP 
requirements.
    We stated in the proposed rule (87 FR 78286) that when we added 
paragraph (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. We explained that 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 providers to 
obtain certification, even though they are not currently subject to 
Sec. Sec.  156.230 and 156.235. We also noted that whether a plan that 
does not use a network provides a sufficient choice of providers is a 
more nuanced inquiry than a simple assertion that an enrollee can 
receive benefits for any provider. We explained that 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 the care for a specific health 
condition from a single provider without incurring additional out-of-
pocket costs. We stated that 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 and noted 
that 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.
    We stated in the proposed rule (87 FR 78286) that to ensure more 
effectively 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). We explained that consistent standards also would allow for 
easier comparison across all QHPs in a more comprehensible manner for 
prospective enrollees. The benefits of easier comparison among 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 6154), and it is true 
that the ACA includes no standalone network requirement. However, we 
explained in the proposed rule (87 FR 78286) that, after revisiting the 
statute, we now

[[Page 25873]]

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 
explained that 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 
noted that 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 stated that we now 
understand the statute's text to best support a reading that access to 
ECPs will be provided ``within health insurance networks.''
    Additionally, we noted in the proposed rule (87 FR 78286) that 
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. We further noted that Sec.  155.1000 provides Exchanges 
with broad discretion to certify health plans that may otherwise meet 
the QHP certification standards specified in 45 CFR part 156. We 
explained that 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). We also explained in the proposed rule (87 FR 
78286), that we believe 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.\301\ For example, we stated that 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 comparison of standardized 
plan options. Furthermore, we noted that 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.302 303
---------------------------------------------------------------------------

    \301\ As discussed below, some commenters asserted that the 
requirement to use a network of providers to obtain certification 
contravenes section 1311(e)(1)(B)(i) of the ACA, which states that 
an ``Exchange may not exclude a health plan . . . on the basis that 
such plan is a fee-for-service plan,'' and that ``fee-for-service 
plans'' are understood to be ``a type of non-network plan.'' While 
we respond to this comment in more detail below, we clarify that our 
reference here to section 1311(e)(1)(B)(i) of the ACA specifically 
pertains to our finding that--at least in an FFE that the agency 
operates--using a network of providers is generally in the interests 
of qualified individuals. It does not address whether fee-for-
service plans are in the interests of qualified individuals.
    \302\ 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.
    \303\ 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.
---------------------------------------------------------------------------

    We stated in the proposed rule (87 FR 78286 through 78287) that the 
proposed revision would assure HHS that all plans certified as QHPs 
offer sufficient choice of providers in compliance with a consistent 
set of criteria for easier comparison across all QHPs and better ensure 
substantive consumer protections afforded by the ACA without undue 
barriers to access those protections. We explained that 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. We stated that this would 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, under the authority delegated to HHS to establish 
criteria for the certification of health plans as QHPs, we proposed 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. We explained in the proposed rule (87 FR 78287) 
that under this proposal, an Exchange could not certify as a QHP a 
health plan that does not use a network of providers. However, we 
solicited 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.
    We explained in the proposed rule (87 FR 78287) that this proposed 
requirement would also generally apply to SADPs. We stated that since 
2014, the FFEs have received, and approved, QHP certification 
applications for SADPs that do not use a provider network in every PY. 
However, we explained that the number of SADPs that do not use a 
provider network has never accounted for a significant number of 
Exchange-certified SADPs on the FFEs. We noted that at their most 
prevalent in PY 2014, only 50 of the 1,521 Exchange-certified SADPs on 
the FFEs were plans that do not use a provider network. We also noted 
that in PY 2022, only 8 of the 672 Exchange-certified SADPs on the FFEs 
were plans that do not use a provider network.
    We further explained in the proposed rule (87 FR 78287) that the 
number of SADPs on the FFEs that did not use a provider network appears 
to be limited since 2017 to fewer and fewer States; while 9 FFE States 
had Exchange-certified SADPs that do not use a provider network in PY 
2014, only 2 FFE States still had Exchange-certified SADPs that do not 
use a provider network in PY 2022. We noted that since PY 2021, only 85 
counties in Alaska and Montana still have Exchange-certified SADPs that 
do not use a provider network. We stated that we assumed 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 further 
explained that 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 invited 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 25874]]

[GRAPHIC] [TIFF OMITTED] TR27AP23.021

    We explained in the proposed rule (87 FR 78288) that, 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 stated that 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 explained in the proposed rule (87 FR 78288 through 
78289) that we were cognizant that it can be more challenging for SADPs 
to establish a network of dental providers based on the availability of 
nearby

[[Page 25875]]

dental providers, and we were aware this proposal could result in no 
SADPs offered through Exchanges in States like Alaska and Montana, 
which have historically offered SADPs without provider networks (see 
Table 11). We also expressed our awareness that having no Exchange-
certified SADPs offered through an Exchange in an area would impact all 
non-grandfathered individual and small group health plans in such 
areas. We noted that 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 noted 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.
    As we explained that in the EHB Rule (78 FR 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. We further explained in the proposed rule (87 
FR 78289) that 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, we stated in the proposed rule that 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 solicited comment to confirm 
this understanding.
    As we stated in the proposed rule (87 FR 78289), to prevent a 
situation where this proposal would require health plans in those areas 
to cover the pediatric dental EHB, we solicited 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; we also 
clarified that this exception would not be applicable to health plans. 
We explained that 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. 
We stated that other factors could include an attestation from the 
issuer about extreme difficulties in developing a dental provider 
network, or data provided in the ECP/network adequacy (NA) template or 
justification forms during the QHP application submission process that 
reflect such extreme difficulties. We sought 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 sought comment on this proposal, as well as on other topics 
included in this section.
    After reviewing the public comments, for the reasons set forth in 
this final rule and those we explained in the proposed rule, subject to 
the exception discussed below, we are finalizing the proposal to revise 
the network adequacy and ECP standards at Sec. Sec.  156.230 and 
156.235 to require all individual market QHPs, including individual 
market SADPs, and all SHOP QHPs, including SHOP SADPs, across all 
Exchanges to use a network of providers that complies with the 
standards described in those sections. In addition, as proposed, we are 
also removing from the regulation text the exception at Sec.  
156.230(f) that these sections do not apply to plans that do not use a 
provider network. Finally, we are finalizing a limited exception at 
Sec.  156.230(a)(4) for certain SADP issuers that sell plans in areas 
where it is prohibitively difficult for the issuer to establish a 
network of dental providers. Specifically, under this exception, an 
area is considered ``prohibitively difficult'' for the SADP issuer to 
establish a network of dental providers based on attestations from 
State departments of insurance in States with at least 80 percent of 
their counties classified as Counties with Extreme Access 
Considerations (CEAC) that at least one of the following factors exists 
in the area of concern: a significant shortage of dental providers, a 
significant number of dental providers unwilling to contract with 
Exchange issuers, or significant geographic limitations impacting 
consumer access to dental providers.
    We summarize and respond to public comments received on this 
proposal below.
    Comment: A majority of commenters supported the proposal to require 
plans to use a network of providers that complies with the standards in 
Sec. Sec.  156.230 and 156.235. Commenters agreed that such a 
requirement is consistent with statutory requirements at section 
1311(c)(1)(B) and (C) of the ACA. Some commenters indicated that the 
proposal would allow easier comparison across all QHPs in a more 
comprehensible manner for prospective enrollees. Commenters agreed that 
the proposal would ensure consumer choice and access to care, as it 
would ensure that QHPs do not impose excessive burden on enrollees to 
understand whether they would incur additional out-of-pocket costs by 
their plan or to identify which providers within a reasonable distance 
from their residence accept the plan's benefit amount as payment in 
full. Other commenters agreed with the proposal, asserting that health 
plans that do not use a network of providers are not in consumers' 
interests, as they are more likely to subject consumers to increased 
medical costs. Other commenters agreed that this requirement should 
apply to SADPs. Some commenters supported the proposal, stating that 
plans that do not use a provider network have historically presented a 
barrier to consumers' ability to access care and control their health 
care costs, unnecessarily expose people to potential medical debt, and 
are not in the interests of consumers shopping for QHPs.
    Response: Subject to a limited exception described below applicable 
to SADPs, we are revising the network adequacy and ECP standards at 
Sec. Sec.  156.230 and 156.235 to state that all individual market 
QHPs, including individual market SADPs, and all SHOP QHPs, including 
SHOP SADPs, across all Exchanges must use a network of providers that 
complies with the standards described in those sections, and to remove 
the exception at Sec.  156.235(f) that these sections do not apply to 
plans that do not use a provider network. We are finalizing this 
requirement, agreeing with commenters that subjecting all plans that 
apply for certification to the network adequacy and ECP standards at 
Sec. Sec.  156.230 and 156.235 allows for proper oversight of the 
statutory requirements at section 1311(c)(1)(B) and (C) of the ACA. As 
discussed below, while plans that use a network of providers may 
present certain access issues for consumers,

[[Page 25876]]

their compliance with Sec. Sec.  156.230 and 156.235 ensures that 
consumers have reasonable access to a set of providers that accept the 
plan's payment as payment in full, which limits consumers' out-of-
pocket costs. In addition, we are not aware of any administrable 
regulatory standard that would ensure that plans that do not use a 
network comply with those sections of the ACA. Commenters responding to 
this proposal also did not identify a regulatory standard that we 
believe that we could administer to ensure compliance with the ACA, as 
further discussed below.
    Comment: A minority of commenters, including one health insurance 
issuer, opposed the proposal and asserted that the exception at Sec.  
156.230(f) should be retained. These commenters asserted that the 
proposal to require QHPs to utilize a provider network contravenes 
section 1311(e)(1)(B)(i) of the ACA, which states that an ``Exchange 
may not exclude a health plan . . . on the basis that such plan is a 
fee-for-service plan,'' and they state that ``fee-for-service plans'' 
are understood to be ``a type of non-network plan.'' Commenters also 
asserted that HHS impermissibly justifies the requirement that QHPs 
must use a network of providers because only plans with networks can 
satisfy section 1311(c)(1)(C) of the ACA regarding the ECP requirement 
for certification. One commenter stated that HHS should develop 
alternative regulatory standards for plans that do not use a network to 
demonstrate compliance with section 1311(c)(1)(B) and (C) of the ACA, 
recommending that HHS should look to Medicare Advantage program 
standards as an example.
    Response: We do not agree that the requirement for QHPs to utilize 
a provider network conflicts with section 1311(e)(1)(B)(i) of the ACA. 
Section 1311(e)(1) and (e)(1)(B)(i) of the ACA states that an Exchange 
may certify a health plan as a QHP if such plan meets the requirements 
for certification as promulgated by the Secretary under section 
1311(c)(1) of the ACA and the Exchange determines that making available 
such health plan through such Exchange is in the interests of qualified 
individuals and qualified employers in the State in which such Exchange 
operates, except that the Exchange may not exclude a health plan, among 
other reasons, on the basis that such plan is a fee-for-service (FFS) 
plan. In requiring all plans to use a network, we are exercising the 
authority granted to the Secretary at section 1311(c)(1)(A) of ACA to 
establish requirements for the certification of health plans as QHPs, 
though we are also informed by the requirement for certification at 
section 1311(e) of the ACA, which states that an Exchange must 
determine that making available such health plan through such Exchange 
is in the interests of qualified individuals and qualified employers in 
the State or States in which such Exchange operates, and which we 
determine when evaluating plans for QHP certification on an FFE.
    In so doing, we are not excluding FFS plans from obtaining 
certification on the basis that such plans are FFS plans and 
categorically not in the interests of qualified individuals and 
qualified employers. We are establishing that plans that do not use a 
network of providers are inherently unable to comply with the statutory 
requirement at section 1311(c)(1)(C) of the ACA because that section 
requires health plans certified as QHPs to ``include [ECPs] within 
health insurance plan networks.'' That health plans must include ECPs 
within health insurance plan networks as one of the criteria for 
certification is a straightforward reading of the language at section 
1311(c)(1)(C) of ACA. This statutory language does not provide an 
exception for plans that do not use a network of providers or FFS 
plans; it simply states, ``. . . to be certified, a plan shall, at a 
minimum--(C) include [ECPs] within health insurance plan networks . . 
.'' Our interpretation that this language requires health plans to use 
a network of providers to obtain certification is supported by statute. 
We believe that section 1311(c)(1)(B)'s requirement that plans must 
provide a ``sufficient choice of providers'' on which the commenter 
relies in fact provides additional legal support for our regulation. As 
discussed below, section 1311(c)(1)(B) of the ACA encompasses the 
burden of accessing providers, and our experience with health plans 
that do not use a network of providers seeking QHP certification 
suggests that such plans impose significant burdens on enrollees 
seeking access to providers.
    Commenters' suggestion is based on equating FFS plans to plans that 
do not use a network of providers. We disagree that FFS plans never use 
a network of providers. For example, while commenters rely on the 
Office of Personnel Management's subregulatory definition of ``non-
PPO'' FFS plans--which are indeed FFS plans that do not involve a 
network--they overlook the definition of ``Fee-for-Service (FFS) with a 
Preferred Provider Organization (PPO)'' plan that follows, which 
acknowledges that there are FFS plans that use a network.\304\ 
Similarly, the commenters' citation to our 1997 statement in the 
Federal Register suggesting that Medicare private FFS plans often 
lacked networks overlooks that even then, section 1852(d) of the Social 
Security Act (the Act) allowed private FFS plans to include a network 
\305\--and that provision has since been amended to encourage and 
sometimes require that Medicare private FFS plans use a network.\306\ 
Because FFS plans include plans with and without networks of providers, 
we disagree that a statutory prohibition on not certifying plans based 
on the fact that they are FFS plans impliedly prohibits not certifying 
plans on the basis that they lack a provider network.
---------------------------------------------------------------------------

    \304\ https://www.opm.gov/healthcare-insurance/healthcare/plan-
information/plan-types/
#:~:text=Fee%2Dfor%2DService%20(FFS)%20Plans%20with%20a%20Preferred,t
o%20file%20claims%20or%20paperwork.
    \305\ See Public Law 105-33, section 4001, 111 Stat. 290-91 
(1997).
    \306\ See Public Law108-173, section 211, 117 Stat. 2180 (2003); 
Pub. L. 110-275, section 162, 122 Stat. 2569-70 (2008).
---------------------------------------------------------------------------

    Thus, we find that commenters are incorrect that FFS plans never 
use a network of providers. However, even if the commenters' assertions 
were accurate, section 1311(e)(1)(B)(i) of the ACA would not prevent 
finalization of this requirement. First, we principally proposed this 
rule under our authority to set requirements under section 1311(c) of 
the Act, and we do not believe section 1311(e)(1)(B)(i) of the ACA--
directed at the authority of Exchanges--necessarily limits our general 
rulemaking authority under section 1311(c) of the ACA. Nor does section 
1311(e)(1)(B)(i) of the ACA override our interpretation of the 
requirement at section 1311(c)(1)(C) of the ACA that all plans must use 
a network as a requirement for certification. In addition, even if 
section 1311(e)(1)(B)(i) of the ACA also limited section 1311(c) of the 
ACA, the prohibition at section 1311(e)(1)(B)(i) of the ACA is based on 
how the plan pays providers for services rendered, and not on the 
absence or presence of a network of providers.
    In addition, even if we did not interpret the ACA to require the 
use of a network of providers for certification, we are not aware of 
any administrable regulatory standard to assess whether a plan that 
does not use a network of providers ensures a sufficient choice of 
providers, including ECPs, as required by sections 1311(c)(1)(B) and 
(C) of the ACA. While it may be true that enrollees in plans that do 
not use a network may visit any provider (and thus all ECPs)

[[Page 25877]]

and receive some reimbursement from the plan, the possibility of the 
enrollee receiving some reimbursement for any benefit from any provider 
is not the same as the plan providing enough reimbursement for those 
benefits, such that the enrollee has reasonable access to sufficient 
providers that would accept the plan's payment amount as payment in 
full. As discussed in the proposed rule (87 FR 78286), for a 
prospective enrollee, the analysis of whether a plan ensures a 
sufficient choice of providers, and thus provides sufficient protection 
against additional out-of-pocket costs, involves factors like the 
burden of accessing those providers, including whether there are 
providers nearby that they can see without unreasonable delay that will 
accept such a plan's benefit amount as payment in full. Thus, we cannot 
conclude that such a plan de facto complies with these statutory 
requirements simply because it provides some reimbursement to its 
enrollees for any benefit.
    Further, we are unaware of an administrable regulatory standard 
that would allow us to determine whether such a plan's benefit amount 
would be accepted as payment in full by any provider, such that an 
enrollee's out-of-pocket costs may be limited by receiving services 
from that provider. Such a plan cannot impose on providers any 
obligation to set a certain price for a specific service, and there is 
no requirement imposed by the plan on providers to accept the plan's 
payment as payment in full. The plan cannot prevent a provider from 
changing the price for a specific service, nor can it require that a 
provider communicate the price change to the enrollee or their plan. 
Likewise, no Federal requirements prohibit such individual market plans 
from changing the amount the plan pays for a given service or require 
the plan to communicate the change to the enrollee or their provider, 
even mid-plan year. As a result, the enrollee is subject to a plan that 
can change its benefit amount, and there is no assurance that any 
provider will actually accept the payment amount as payment in full; 
these changes could occur frequently and without any notice to the 
enrollee. To attempt to ascertain whether there are sufficient 
providers (including ECPs) who will accept the plan's benefit amount as 
payment in full, one would need to accurately understand what services 
are medically necessary, continuously contact every provider in the 
State to determine what services they perform and what amount they 
charge for every specific service, and continuously contact the plan to 
determine the amount they pay for every specific service. Such an 
exercise is prohibitively difficult for a consumer to perform, and we 
have been unable to devise an administrable regulatory standard to 
ensure compliance with the ACA's network adequacy and ECP requirements.
    Further, even if it were theoretically possible to devise such a 
requirement, we are not aware of any statutory authority to require 
providers continuously to report what amount they would accept as 
payment in full, either to an Exchange, a plan, or individuals--
significantly inhibiting an Exchange's ability to enforce such a 
standard. And, even if we had such statutory authority, there is 
insufficient demand that HHS dedicate the significant resources 
necessary to devise a regulatory standard for plans that do not use a 
network to demonstrate compliance with section 1311(c)(1)(C) of the 
ACA. We are aware of a single health plan that does not use a network 
of providers in one State that seeks to obtain certification for the 
State's Exchange. No other issuer has expressed interest to us in 
obtaining certification for such a plan, and the majority of comments 
on this rule supported the proposal to require health plans to use a 
network to obtain certification.
    One commenter suggested that we consider implementing a regulatory 
standard that considers Medicare Advantage private FFS plan 
requirements. We do not find Medicare Advantage private FFS plans to be 
comparable to plans without networks seeking QHP certification under 
the ACA. Section 1852(d) of the Act requires Medicare Advantage private 
FFS plans to demonstrate to the Secretary that the organization has 
sufficient number and range of health care professionals and providers 
willing to provide services under the terms of the plan. Further, 
Medicare Advantage private FFS plans are defined in section 1859(b)(2) 
of the Act as a plan that, among other things, ``does not restrict the 
selection of providers among those who are lawfully authorized to 
provide the covered services and agree to accept the terms and 
conditions of payment established by the plan.'' As a result, in the 
Medicare Advantage context, private FFS enrollees are more protected 
from unexpected out-of-pocket costs.\307\ This may not hold true in the 
Exchange context. The one issuer that has previously sought QHP 
certification for a plan that did not use a network of providers would 
not have required any provider to agree to any particular terms or 
conditions of payment. Unlike Medicare Advantage private FFS plans, 
then, we are concerned that Exchange plans without networks leave 
uncertainty as to whether any provider accepts a plan's benefit amount 
as payment in full and potentially opens up the enrollee to additional 
out-of-pocket costs.
---------------------------------------------------------------------------

    \307\ Because sections 1852(k)(1) and 1866(a)(1)(O) of the Act 
require health care providers and hospitals to accept Medicare-
established amounts as payment in full, Medicare Advantage private 
FFS plans can rely on the availability of providers that accept 
Medicare as one way to demonstrate access to services for their 
enrollees. In addition, since 2011, Medicare Advantage (MA) private 
FFS plans that are offered in areas where there are at least two 
other MA plans that are network-based plans, must use contracts or 
agreements with providers as the only way to demonstrate that the 
private FFS plan provides adequate access to services. See 42 CFR 
422.114.
---------------------------------------------------------------------------

    Comment: Some commenters asserted that the proposed rule fails to 
provide a balanced discussion of the data on provider network strengths 
and weaknesses or acknowledge the merits of plans that do not use a 
provider network.
    Response: In requiring plans to use a network of providers to 
obtain QHP certification, we are not representing that plans that use a 
network of providers do not present certain access issues. For example, 
we recognize that such plans place the burden on enrollees to ensure 
that specific providers are in-network, while a plan that does not use 
a network of providers does not place a such a burden on its enrollees 
to receive some benefit under the plan. We also recognize that some 
networks are narrower than some enrollees may prefer, which can result 
in enrollees needing to travel further or wait longer to receive care 
from an in-network provider, while enrollees in a plan that does not 
use a network of providers may not need to travel as far or wait as 
long to receive some benefit under their plan. However, unlike plans 
that do not use a network of providers, there is an administrable 
regulatory standard to ensure that plans that use a network of 
providers comply with sections 1311(c)(1)(B) and (C) of the ACA; to 
that end, since 2014, we have required that plans that use a network of 
providers comply with the network adequacy and ECP standards at 
Sec. Sec.  156.230 and 156.235. Plans that comply with these standards 
ensure that their enrollees have access to sufficient providers who are 
contractually obligated to accept the plan's payment amount as payment 
in full. This is a consumer protection that plans that do not use a 
network cannot provide to its enrollees, and one that we believe is 
consistent with core tenets of the ACA--

[[Page 25878]]

that consumers have access to a plan that provides a reasonable method 
to limit their out-of-pocket costs for health care to the annual 
limitation on cost sharing.
    Comment: One commenter requested that HHS clarify whether the 
definition of ``provider'' includes pharmacies in the context of 
network adequacy and ECP standards.
    Response: While we have not defined the term ``provider'' in the 
context of the network adequacy standards, we provide a list of the 
individual provider and facility specialty types that are included in 
the network adequacy reviews within the `Specialty Types' tab of the 
respective plan year ECP/NA template. If an issuer does not see a 
specific specialty type listed in the `Specialty Types' tab, it should 
refer to the `Taxonomy Codes' tab of the ECP/NA template to select the 
correct specialty type to which the taxonomy code crosswalks. If a 
specific taxonomy code is not listed in the `Taxonomy Codes' tab, such 
as in the case of pharmacies, the provider type has not been included 
in the FFE network adequacy reviews. In the context of the ECP 
standards, although we have not defined the term ``provider,'' we list 
the provider types that are included in the ECP categories at Sec.  
156.235(a)(2)(ii)(B), which does not include pharmacies.
    Comment: Some commenters, including two State departments of 
insurance (Alaska and Montana), were in favor of a limited exception to 
this requirement for SADPs that sell plans in areas where it is 
prohibitively difficult for the issuer to establish a network of dental 
providers. These commenters confirmed our analysis that it may be 
currently prohibitively difficult for SADP issuers to establish a 
network of dental providers in Alaska and Montana, and that without an 
exception to the proposed requirement, consumer access to any SADP 
would be in jeopardy. Commenters supported the use of the list of non-
exhaustive factors that we would consider in determining whether it is 
prohibitively difficult for SADP issuers to establish a network of 
dental providers, 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. In addition, 
commenters specifically mentioned as barriers geographic barriers and 
providers' unwillingness to enter into provider contracts. A handful of 
commenters suggested that State regulators should decide whether to 
allow non-network plans to be certified as QHPs on an Exchange. One 
commenter recommended that we implement this ``prohibitively 
difficult'' approach for allowing certain SADPs to not use a provider 
network with a pre-approved form for SADPs to request the exception and 
permit an abbreviated filing for subsequent years if a SADP filed the 
full request in a prior year. This commenter also requested 
clarification that the ``prohibitively difficult'' exception does not 
require an attestation, as well as clarification as to the meaning of 
``extreme difficulties'' in developing a dental provider network.
    Response: We are finalizing this proposal with a limited exception 
for SADPs that sell plans in areas where it is prohibitively difficult 
for the issuer to establish a network of dental providers. This limited 
exception follows logically from how the requirements in sections 
1311(c)(1)(B) and (C) of the ACA that plans ensure a sufficient choice 
of providers, including ECPs, apply in the unique SADP context. As 
commenters point out, if creating a network of dental providers is 
prohibitively difficult for SADPs in certain areas, it is foreseeable 
that there may be some areas where SADPs could not be Exchange-
certified (in Alaska and Montana, for example). That risks there being 
no SADPs in that area and thus no choice of dental providers through 
SADPs at all. Thus, in this limited context, requiring a network would 
defeat the purpose of sections 1311(c)(1)(B) and (C) the ACA to ensure 
that enrollees have a sufficient choice of providers.
    We find additional support for this exception in section 
1302(b)(4)(F) of the ACA, which states that if 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 for pediatric services, including pediatric dental 
benefits. Without an Exchange-certified SADP available on the Exchange 
in those areas, all non-grandfathered individual and small group health 
insurance plans in impacted areas would be required to cover the 
pediatric dental EHB, and would be required to develop a network of 
pediatric dental providers in accordance with the policy finalized in 
this rule. Imposing this certification requirement on these health 
plans would likely cause health plans in the area to fail this 
certification requirement, as SADPs would have already established the 
difficulty in creating pediatric dental networks in this area. The 
ultimate result would be that QHPs may not be available on the 
respective Exchange in those areas, as all non-grandfathered individual 
and small group health insurance plans in the State would not be 
permitted to omit coverage of the pediatric dental EHB.
    This limited exception will be codified at Sec.  156.230(a)(4). 
Under this exception, we will consider an area to be one where it is 
``prohibitively difficult'' for the SADP issuer to establish a network 
of dental providers based on attestations from State departments of 
insurance in States with at least 80 percent of their counties 
classified as CEAC that at least one of the following factors exists in 
the area of concern: a significant shortage of dental providers, a 
significant number of dental providers unwilling to contract with 
Exchange issuers, or significant geographic limitations impacting 
consumer access to dental providers. For purposes of its network 
adequacy standards, CMS uses a county type designation method that is 
based on the population size and density parameters of individual 
counties. These parameters are foundationally based on approaches used 
by the U.S. Census Bureau in its classification of ``urbanized areas'' 
and ``urban clusters,'' and by the Office of Management and Budget 
(OMB) in its classifications of ``metropolitan'' and ``micropolitan.'' 
The CEAC county type designation is based on a U.S. Census Bureau 
population density estimate of fewer than 10 people per square mile.
    This approach was informed by comments submitted in response to our 
solicitation for comments regarding if and/or how we should design a 
limited exception for SADP issuers. The States of Alaska and Montana 
were the only two States that expressed a need for this limited 
exception in their public comments, and are the only two States with 
FFEs that have had SADPs without a provider network for the past two 
years. The State of Alaska noted that out of the 2,200 people in the 
country enrolled in SADPs without provider networks in 2021, 
approximately 1,000 of those individuals resided in Alaska. The State 
of Alaska requested in its public comment that if HHS proceeds with 
requiring SADPs to use a provider network that we include a limited 
exception for SADPs in areas where it is prohibitively difficult to 
establish a network, noting that 90 percent of counties in Alaska with 
Exchange-certified SADPs without provider networks have no Exchange-
certified SADPs with provider networks. Furthermore, the State of 
Montana stated in its public comment that they have unique challenges 
as it pertains to health care delivery and access, including geographic 
barriers to care and a limited number of dentists

[[Page 25879]]

practicing in Montana who are willing to contract with issuers. The 
State of Montana strongly supported HHS establishing an exception to 
the provider network requirement for SADPs in areas where it is 
difficult for issuers to establish SADPs with provider networks based 
on information supporting such an exception, including data provided in 
an issuer's ECP/NA template.
    These comments submitted by the States of Alaska and Montana, 
combined with data provided in issuers' ECP/NA templates or 
justification forms, demonstrate that in States with 80 percent or more 
of their counties classified as CEAC (that is, Alaska, Montana, North 
Dakota, and Wyoming), it is prohibitively more difficult for issuers to 
establishing a network of dental providers compared with issuers in 
States with fewer than 80 percent of their counties classified as CEAC, 
as evidenced by the limited availability of SADPs that use a provider 
network in these States and/or the limited number of contracted 
dentists. Given that our network adequacy time and distance standards 
allow for an issuer to receive credit for a provider across county/
State lines so long as the provider is within the requisite time and 
distance of consumers in the respective county, issuers operating in 
States with fewer than 80 percent of their counties classified as CEAC 
have performed better overall with respect to meeting network adequacy 
standards than issuers in Alaska, Montana, North Dakota, and Wyoming, 
demonstrating that States with fewer than 80 percent of their counties 
classified as CEAC are not in need of this exception. Therefore, 
limiting this SADP exception to States with 80 percent or more of their 
counties classified as CEAC aligns with our solicitation for comments 
regarding whether we should consider the availability of other SADPs 
that use a provider network in the service area and prior years' 
network adequacy data submitted in issuers' ECP/NA templates or 
justification forms to identify counties in which SADP issuers have 
struggled to meet standards due to a shortage of dental providers.
    We expect that States, in determining whether an area has been 
impacted by at least one of the above factors to the degree of being 
considered ``prohibitively difficult'' for SADP issuers to establish a 
network of dental providers, will take 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 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, and geographic barriers. Where we have determined that an 
area is one where it is ``prohibitively difficult'' for the SADP issuer 
to establish a network of dental providers based on attestations from 
State departments of insurance, all SADPs that are seeking Exchange 
certification and that are offering coverage in that area will be 
exempt from the requirement to use a provider network. In areas for 
which we have not made such a determination, SADP issuers may still 
avail themselves of the written justification process at Sec.  
156.230(a)(2)(ii).
    We also believe that this limited exception is justified for SADPs 
in part because, unlike health plans, dental-only coverage constitutes 
an excepted benefit under section 2791(c)(2)(A) of the PHS Act. In 
addition, there is limited exposure to unanticipated out-of-pocket 
costs for pediatric dental EHB in SADPs that do not use a network of 
providers, and there are a relatively small number of pediatric dental 
EHBs that are covered by such a plan. Collectively, these factors 
significantly limit the potential that those receiving pediatric dental 
EHB will experience excessive out-of-pocket costs. Thus, we are not 
extending this limited exception to health plans. No commenters 
indicated that it is prohibitively difficult for health plans to 
establish a network of providers that complies with Sec. Sec.  156.230 
and 156.235 (or sections 1311(c)(1)(B) or (C) of the ACA) or that such 
a requirement may result in the inability for health plans to be 
certified as QHPs in specific areas. As a result, we are codifying the 
limited exception for SADPs only at this time.
    We will operationalize this limited exception beginning with 
certification for PY 2024 and anticipate that States will apply for 
this exception and include a justification for requiring an exception. 
We envision providing SADP issuers and States ample guidance in advance 
of PY 2024, and in any event, envision working closely with State 
regulators in these areas. We considered allowing issuers to apply for 
an exception, but we believe that State regulators are better 
positioned to make recommendations to HHS, as they know the challenges 
of their markets. We also believe that the conditions for granting or 
not granting an exception would not exist at an issuer level, but 
instead at a county or service area level, such that issuer-specific 
applications would be inappropriate.
Compliance With Appointment Wait Time Standards
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78289), we noted that in the 2023 Payment 
Notice, we finalized the requirement that issuers demonstrate 
compliance with appointment wait time standards via attestation, 
beginning in PY 2024.
    We received numerous comments in response to the finalized policy 
from the 2023 Payment Notice raising concerns regarding the 
implementation of appointment wait time standards for QHP issuers 
beginning in PY 2024. In response to the public comments, we are 
amending Sec.  156.230(a)(2)(i)(B) to delay applicability of this 
standard until PY 2025. We summarize and respond to public comments 
received below.
    Comment: Most commenters opposed applying appointment wait time 
standards beginning in PY 2024 and requested delayed implementation to 
PY 2025. Several commenters highlighted the need for HHS to issue 
additional guidance necessary for issuers to comply with appointment 
wait time standards, and to allow the industry time to comment on that 
guidance. Many commenters noted the lack of specificity around how 
appointment wait times would be assessed and how issuers could attest 
without a standard metric. Other commenters were concerned that States 
do not have the tools to assess compliance or additional resources to 
conduct compliance activities. A few commenters were concerned with the 
following barriers to implementation: the burden on providers to report 
data to issuers; the operational challenges in monitoring contracted 
providers; the difficulty in receiving accurate wait time data from 
providers; and fluctuations in appointment wait times during the PY. 
Other commenters noted workforce staffing, recruiting, and retention 
challenges as additional barriers. By contrast, a few commenters 
supported implementing the appointment wait time policy on the 
finalized schedule so that consumers have access to timely necessary 
care. Others supported the standard but requested that the methodology 
for assessing compliance include additional methodologies other than 
issuer attestation.
    Response: As noted above, we agree with the many commenters that 
implementation of the appointment wait

[[Page 25880]]

time standards should be delayed by one PY. We are amending the 
regulation to delay the applicability of the appointment wait time 
standards until PY 2025. We are also aware of other HHS initiatives to 
define and implement appointment wait times standards for other program 
areas. The additional PY delay will allow HHS to ensure that these wait 
time standards are implemented in a holistic, logical way across 
programs. Accordingly, QHP issuers in FFEs will have one additional PY 
before being required to attest to meeting appointment wait time 
standards.
    As we noted in the 2023 Payment Notice, specific guidelines for 
complying with appointment wait time standards will be released in 
later guidance. This will allow us additional time to develop specific 
guidelines for how issuers should collect the requisite data from 
providers, how the metrics should be interpreted, and for public 
comment on the proposed guidance. Issuers that do not yet meet the 
appointment wait time standards once implemented in PY 2025, will be 
able to use the justification process to update HHS on the progress of 
their contracting efforts for the respective plan year.
    We encourage issuers that have implemented monitoring and data 
collection of provider appointment wait times to continue to do so. 
However, under this new timeline, we will not be actively collecting or 
requiring submission of any data or attestations for compliance with 
the standards for purposes of QHP certification for PY 2024.
    Comment: Some commenters noted the proposed rule would require QHPs 
on all Exchanges to comply with network adequacy standards but that 
appointment wait time criteria would only apply to issuers in FFEs. 
Others requested that HHS establish Federal appointment wait time 
standards that would be applicable to issuers in all Exchanges, 
including State Exchanges.
    Response: As we noted in the 2023 Payment Notice (87 FR 27334), we 
appreciate these comments and understand that there are diverse 
opinions regarding the appropriate regulator for network adequacy 
standards in State Exchanges. We will monitor existing network adequacy 
standards in State Exchanges relative to the Federal standards and will 
consider whether applying Federal standards to issuers in State 
Exchanges in future PYs is warranted.
    Comment: One commenter requested revisions to the wait time 
standards for dental issuers and to reduce the required wait time 
standard compliance percentage from 90 percent to 80 percent during the 
first 3 years. A few commenters requested that the appointment wait 
time standards be applicable to pediatric providers separately.
    Response: We appreciate the detailed recommendations around 
appointment wait times and we will take these comments under advisement 
as we continue to specify the Federal appointment wait time standards.
8. Essential Community Providers (Sec.  156.235)
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78289), we proposed 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 proposed 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 SUD 
Treatment Centers) would be recategorized within these new proposed 
stand-alone ECP categories. We proposed 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 proposed to add Rural Emergency Hospitals 
(REHs) as a provider type in the Other ECP Providers ECP category (87 
FR 78289). We stated in the proposed rule that this addition would 
reflect the fact that on or after January 1, 2023, REHs may begin 
participating in the Medicare program. As we noted in July 2022, 
``[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.'' \308\ We stated in the proposed rule that we believe the 
inclusion of REHs on the ECP List may increase access to needed care 
for low-income and medically underserved consumers in rural 
communities.
---------------------------------------------------------------------------

    \308\ https://www.cms.gov/newsroom/fact-sheets/rural-emergency-hospitals-proposed-rulemaking.
---------------------------------------------------------------------------

    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 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. 
We explained in the proposed rule (87 FR 78289) that each plan year, we 
release 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. We noted 
that the list is not exhaustive and does not include every provider 
that participates or is eligible to participate in the 340B Drug 
Pricing 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. We explained that we endeavor to continue 
improving the ECP list for future years and that 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 noted in the proposed rule (87 FR 78289) 
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, we stated that 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 
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

[[Page 25881]]

Substance Use Disorder Treatment Centers, Community Mental Health 
Centers, Rural Health Clinics, Black Lung Clinics, Hemophilia Treatment 
Centers, Sexually Transmitted Disease Clinics, and Tuberculosis 
Clinics).
    We stated in the proposed rule (87 FR 78290) that the 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.
    As we explained in the proposed rule (87 FR 78290), given that the 
ECP standard is facility-based, 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) or CMS as providing such services, in 
addition to fulfilling other ECP qualification requirements as 
specified at Sec.  156.235(c).
    We stated in the proposed rule (87 FR 78290), that if this proposal 
is 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 12 (as discussed below, we are finalizing these as 
proposed).
[GRAPHIC] [TIFF OMITTED] TR27AP23.022

    In addition, we proposed 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, we proposed 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, we proposed 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 noted that we 
would retain the 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.
    We proposed that only two ECP categories, FQHCs and Family Planning 
Providers, be subject to the additional 35 percent threshold in PY 2024 
and beyond. We stated in the proposed rule (87 FR 78291) that these two 
categories were selected, in part, because they represent the two 
largest ECP categories; together, these two categories comprise a 
significant majority of all facilities on the ECP List. As we explained 
in the

[[Page 25882]]

proposed rule, 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. We stated that we 
may consider applying a specified threshold to other ECP categories in 
future rulemaking, if we find 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.
    We explained that, 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, 
we stated that 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. We further stated that 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.
    In the proposed rule (87 FR 78291), we acknowledged challenges 
associated with a general shortage and uneven distribution of SUD 
Treatment Centers and Mental Health Facilities. However, we noted that 
the ACA requires that a QHP's network include ECPs where available. As 
such, we explained that 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, we explained that, 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. We noted that, as a result, issuers 
are not disadvantaged if their service areas contain fewer ECPs. We 
explained that we anticipate 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. We stated that 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 sought comment on these proposals.
    After reviewing the public comments, we are finalizing, as 
proposed, for PY 2024 and subsequent PYs, the establishment of two 
additional stand-alone ECP categories at Sec.  156.235(a)(2)(ii)(B), 
Mental Health Facilities and SUD Treatment Centers, and the addition of 
REHs as a provider type in the Other ECP Providers category. In 
addition, we are finalizing, as proposed, revisions to 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, we are finalizing 
that QHPs must 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 for PY 2024 and subsequent PYs. Furthermore, we are 
finalizing, as proposed, revisions to Sec.  156.235(a)(2)(i) to clarify 
that these threshold requirements will be in addition to the existing 
provision that QHPs must satisfy the overall 35 percent ECP threshold 
requirement in the plan's service area. As stated earlier, we noted in 
the proposed rule (87 FR 78289) that the proposal establishing two 
additional ECP categories and the proposed threshold requirements 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), but we stated that 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). However, 
we omitted corresponding regulation text amendments in the proposed 
rule. We are including regulation text amendments at Sec.  
156.235(b)(2)(i) to codify this policy as proposed.
    We summarize and respond to public comments received on the 
proposed policies, below.
    Comment: The majority of commenters supported the proposal to 
create the standalone ECP categories for SUD Treatment Centers and 
Mental Health Facilities, noting that the new categories will expand 
access to mental health services and SUD treatment. One commenter urged 
HHS to further define what types of facilities are included in the SUD 
Treatment Centers and Mental Health Facilities categories. One 
commenter recommended that HHS use the language ``mental health 
organizations'' because ``mental health organizations'' is a broader 
term and can include peer-run organizations and other community-based 
mental health centers. They indicated that these organizations receive 
funding and technical assistance from SAMHSA and that they would be 
able to service more individuals if they were ECPs. Two commenters 
requested that HHS establish an additional ECP category for ``pediatric 
mental health facility.''
    Response: We are finalizing the creation of standalone ECP 
categories for SUD Treatment Centers and Mental Health Facilities as 
proposed. As noted by commenters and explained in the proposed rule (87 
FR 78290), we believe that establishing these new standalone categories 
will expand access to mental health services and SUD treatment. 
Regarding the suggestion to use the broader term ``mental health 
organizations,'' the commenter noted that this term can include the use 
of peer-run organizations. CMS partners with SAMHSA to ensure that a 
range of providers providing mental health and SUD care appear on the 
HHS ECP list in order to increase access for all consumers who need 
these types of care. HHS may consider additional ECP categories or 
provider types, including pediatric mental health providers and other 
types of mental health organizations, in future rulemaking, if analysis 
suggests that there is a sufficient number and distribution of such 
providers.
    Comment: Two commenters opposed HHS' proposal to establish these 
ECP categories. One of these comments urged HHS to delay implementation 
of the standalone categories until PY 2025 to allow issuers more time 
to prepare and to evaluate the impact of the proposal. One commenter 
did not

[[Page 25883]]

specifically state whether they supported or opposed the proposal but 
stated that regulation should be left to the States. Two commenters 
recognized that issuers may have difficulty meeting the requirements 
due to inadequate provider supply. One of these two commenters 
recommended delaying the implementation of the two categories until 
further analysis can be conducted to determine the best way to contract 
with quality SUD treatment and mental health providers.
    Response: In response to concerns raised about potential 
difficulties meeting the increased standard because of a provider 
supply shortage, we note that the standard does not penalize issuers 
that lack certain types of ECPs within a service area. First, section 
1311(c)(1)(C) of the ACA requires that a QHP's network include those 
ECPs, where available, that serve predominantly low income and 
medically-underserved populations. As such, as we explained in the 
proposed rule (87 FR 78291), 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. In addition, 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.\309\ As a result, issuers are not disadvantaged if their 
service areas contain fewer ECPs. Further, as in prior years, there 
will be mechanisms in place to assist issuers who encounter difficulty 
meeting any element of the ECP standard during certification, including 
the ECP Justification Form and the ECP Write-in Worksheet.\310\ We 
reflect this in our regulations (Sec.  156.235(a)(3) and (b)(3)) by 
permitting issuers that cannot meet the contracting standards to 
satisfy the QHP certification standard by submitting a justification. 
Therefore, the standard does not penalize issuers that cannot meet the 
ECP standard because of a lack of certain types of ECPs within a 
service area. Moreover, we anticipate implementing these categories for 
PY 2024 will increase consumer access to vitally important mental 
health and SUD care, enhancing health equity for low-income and 
medically underserved consumers. Thus, we are not delaying 
implementation until PY 2025.
---------------------------------------------------------------------------

    \309\ HHS also endeavors to continue improving the ECP list for 
future plan years, and invites issuers to encourage any mental 
health or SUD provider in that issuer's service area to submit an 
ECP petition for potential inclusion on the list.
    \310\ See https://www.qhpcertification.cms.gov/s/ECP%20and%20Network%20Adequacy and https://www.qhpcertification.cms.gov/s/Essential%20Community%20Providers%20and%20Network%20Adequacy%20FAQs 
for more information.
---------------------------------------------------------------------------

    Comment: One commenter supported the proposal but expressed patient 
access concerns, as many mental health and SUD facilities are religious 
in nature, and LGBTQIA+ and racial and ethnic minority groups have 
frequently expressed discomfort with religiously affiliated programs. 
The commenter urged HHS to ensure that the ECP list also includes 
secular mental health and SUD facilities.
    Response: We acknowledge the commenter's concern and remain 
committed to continuously improving the ECP list such that it includes 
a wide range of providers that can provide care for all consumers, 
recognizing that diverse patient populations may have varying needs and 
preferences for their care, including mental health and SUD care.
    Comment: Several commenters supported the proposal to add REHs to 
the Other ECP Providers category, citing expanded access to care in 
rural areas.
    Response: We agree that including REHs in the Other ECP Providers 
category may increase access to needed care for low-income and 
medically underserved consumers in rural communities, and are 
finalizing the addition of REHs to the Other ECP Providers category as 
proposed. As we noted in the proposed rule (87 FR 78289), REHs are a 
new provider type established to address the growing concern over 
closures of rural hospitals, and as such, there may initially be few 
REHs on the ECP list. We anticipate that the number of REHs on the ECP 
list will grow in future years as some current ECPs, such as critical 
access hospitals, may potentially convert to REHs to avoid closure.
    Comment: Two commenters opposed the addition of REHs to the Other 
ECP Providers category. They recommended that HHS delay the proposal 
until PY 2025 to allow more time for issuers to prepare and because 
States, hospitals, providers, and other interested parties are in the 
process of implementing new REH standards.
    Response: We are finalizing our proposal to add REHs to the ``Other 
ECP Providers'' category. This will increase the likelihood that 
issuers will include REHs in their networks, thereby increasing access 
to needed care for low-income and medically underserved consumers in 
rural communities. However, we note that issuers will often have the 
option to satisfy the ECP requirement by contracting with another 
provider type. If no REHs are available in a service area, the issuer 
will not be penalized.
    Comment: Many commenters supported the proposal to apply the 35 
percent threshold to FQHCs and Family Planning Providers, citing 
enhanced access to care for low-income, medically underserved 
consumers. One commenter stated that its support for the extension of 
the 35 percent requirement threshold to FQHCs was contingent on HHS' 
ECP justification process remaining the same.
    Response: We agree that the application of the 35 percent threshold 
to FQHCs and Family Planning Providers will enhance access to care for 
low-income, medically underserved consumers, and are finalizing the 35 
percent thresholds for FQHCs and Family Planning Providers as proposed. 
As we stated in the proposed rule, these thresholds will apply to all 
issuers regardless of whether they are subject to the General ECP 
standards under Sec.  156.235(a) or the Alternate ECP Standards under 
Sec.  156.235(b). We note that SADP issuers will 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). Apart from some 
enhancements to the ECP Justification Form to facilitate issuers' 
reporting to CMS when provider facilities have closed or are no longer 
interested in contracting, or when issuers have encountered other 
contracting barriers beyond their control, the justification process 
remains broadly the same as in PY 2023.
    Comment: Some commenters opposed the proposed categorical threshold 
requirements (that is, the proposed threshold requirements that would 
apply to specific categories of ECPs), stating that they do not account 
for regional variations in provider availability, enrollee needs, and 
geographic features. Commenters also stated that categorical thresholds 
may lead to inflexibility in contracting with high-quality providers 
and increased administrative costs. Two of the opposing commenters 
expressed concerns about not being given enough time to negotiate new 
contracts with providers. However, one commenter acknowledged that 
issuers that fall short of the requirement could submit ECP write-ins 
and justification forms.
    Response: We recognize commenters' concerns given that issuer 
network participation negotiations are a tool that issuers use to 
manage costs, which are

[[Page 25884]]

generally reflected in lower premium rates. Reducing issuers' ability 
to limit the scope of their networks could reduce the utility of that 
cost management tool and potentially cause premiums to increase. In 
considering these factors, we elected not to propose to extend the 35 
percent threshold to each of the major ECP categories. Rather, we 
proposed that only two major 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 a significant majority 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. As we explained in 
the proposed rule (87 FR 78291), because there is already a robust 
number of these two types of facilities on the ECP list, we do not 
anticipate that it will be unduly burdensome for issuers to contract 
with 35 percent of available providers of these types in the plan's 
service area. We acknowledge that extending the 35 percent threshold to 
those ECP categories that contain fewer total providers, on the other 
hand, could potentially lead to decreased contracting flexibility for 
issuers.
    If issuers encounter difficulty meeting the 35 percent thresholds 
for FQHCs and/or Family Planning Providers due to insufficient time, 
provider availability, or flexibility to carry out contracting 
activities, we remind issuers that the ECP Justification Form, the ECP 
Write-in Worksheet, and the ECP/NA Post-certification Compliance 
Monitoring (PCM) program are available as tools to assist issuers with 
their good faith efforts toward compliance with the applicable ECP 
standard.
    Comment: Several commenters noted support for HHS' proposal to 
increase the contracting threshold for FQHCs from 30 to 35 percent.
    Response: We did not make such a proposal in the proposed rule. We 
proposed, and are finalizing, the application of a 35 percent ECP 
threshold to both FQHCs and Family Planning Providers (in addition to 
the existing overall 35 percent ECP threshold requirement in the plan's 
service area). In prior years, the threshold percentage applied overall 
across categories and did not apply specifically to any individual ECP 
category.
9. Termination of Coverage or Enrollment for Qualified Individuals 
(Sec.  156.270)
a. Establishing a Timeliness Standard for Notices of Payment 
Delinquency
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78291), we proposed to amend Sec.  
156.270(f) by adding a timeliness standard to the requirement for QHP 
issuers in Exchanges to send enrollees notice of payment delinquency. 
Specifically, we proposed to revise Sec.  156.270(f) to require issuers 
to send notice of payment delinquency promptly and without undue delay.
    We stated in the proposed rule that 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. We noted in the proposed rule (87 FR 78291) 
that enrollees who are not receiving APTC may also be entitled to a 
grace period under State law, if applicable.
    As we explained in the proposed rule (87 FR 78291), we have an 
interest in helping enrollees maintain coverage by establishing basic 
standards of communication between the QHP issuer and enrollees 
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, we 
stated that 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.\311\ At Sec.  
156.270(f), we have also regulated on communicating to an enrollee when 
they have become delinquent on premium payment and when their coverage 
has been terminated. But we noted that while the regulation at Sec.  
156.270(f) requires that issuers notify enrollees when they become 
delinquent on premium payments, we currently set no timeliness 
requirements for issuers. We stated that, in conducting oversight of 
issuers, we are aware that in some instances, issuers have delayed 
notifying enrollees of delinquency, and are 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. We noted that in extreme cases, an enrollee may not become 
aware that they have become delinquent until termination of coverage 
has already occurred. For example, we noted that 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 will not have an opportunity to 
restore it. We acknowledged that there may also be uncertainty among 
issuers regarding their requirement to send notices of delinquency, 
since we have not provided guidance on when this notice must be sent.
---------------------------------------------------------------------------

    \311\ See Sec.  155.400(e).
---------------------------------------------------------------------------

    As we explained in the proposed rule (87 FR 78292), modifying Sec.  
156.270(f) to require issuers operating in Exchanges 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). We noted that it would also 
provide clarity to issuers regarding their obligation to send a notice 
when an enrollee becomes delinquent on premium payment. Finally, we 
stated that 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. We sought comments on 
this proposal.
    In addition, to further help ensure that notices are sent in a 
timely and uniform manner, we stated that we believe 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. 
Thus, we also solicited comment on what a reasonable timeframe would be 
for sending notices of delinquency to enrollees.
    After reviewing the public comments, we are finalizing our proposal 
to revise Sec.  156.270(f) to require QHP issuers in

[[Page 25885]]

Exchanges on the Federal platform to send notices of payment 
delinquency promptly and without undue delay. We are also finalizing 
that such notices must be sent within 10 business days of the date the 
issuer should have discovered the delinquency. In addition, we clarify 
that this timeliness requirement only applies to QHP issuers operating 
in Exchanges on the Federal platform. We summarize and respond below to 
public comments received on the proposal to require issuers to send 
notice of payment delinquency promptly and without undue delay, and on 
the comment solicitation regarding a reasonable timeframe for sending 
notices of delinquency to enrollees.
    Comment: Most commenters who addressed the proposal to add a 
timeliness standard for sending notices supported it, stating that the 
proposal would help better ensure continuity of coverage and access to 
health care services for enrollees. One commenter stated that the 
proposal would help ensure issuers do not arbitrarily terminate 
coverage without providing the enrollee a chance to make a payment that 
may be needed to maintain their coverage.
    Response: We agree with commenters that adding the timeliness 
standard will help ensure continuity of coverage and access to health 
care services, as well as help ensure issuers do not arbitrarily 
terminate coverage without providing the enrollee a chance to make a 
payment that may be needed to maintain their coverage. As discussed 
further below, we are finalizing the timeliness standard with 
modification.
    Comment: One commenter opposed the proposal, stating that such 
rules are already included and enforced at the State level. In 
addition, one commenter who supported the proposal suggested that HHS 
could deem issuers compliant with the policy in States that have 
existing time frames for sending notices to enrollees with premiums in 
arrears.
    Response: While we acknowledge some States have their own rules, as 
we noted in the proposed rule (87 FR 78291), HHS has observed instances 
in which issuers significantly delayed sending delinquency notices, 
limiting enrollees' ability to pay past due premium prior to 
termination of coverage. It is thus important to establish a minimum 
standard for when issuers must send notices of payment delinquency so 
that enrollees consistently receive such notices in a timely manner. 
Under this approach, in States that do not have requirements or that 
have less stringent requirements, issuers of QHPs in Exchanges on the 
Federal platform would at least be required to meet this new Federal 
standard, though States may establish a timeliness standard that is 
more protective. However, we clarify that this timeliness requirement 
does not apply to SBEs. Unlike the Exchanges on the Federal platform, 
some SBEs collect and aggregate premium on behalf of issuers, or send 
delinquency notices to consumers, and thus it is appropriate to avoid 
extending this requirement to issuers in SBEs.
    Comment: Two commenters supported adding a timeliness standard to 
the requirement for QHP issuers to send enrollees notice of payment 
delinquency but did not recommend including a specific timeframe for 
this requirement. These commenters encouraged CMS to allow issuers to 
maintain their best practices for sending delinquency payment notices, 
and cautioned that issuers need sufficient time to process enrollee 
payments received in the few days before and after a payment due date 
to ensure consumers do not unnecessarily receive a notice of payment 
delinquency.
    Response: We acknowledge that issuers have historically had a 
variety of practices for sending delinquency notices, and that they 
need sufficient time to process enrollee payments to ensure consumers 
do not unnecessarily receive a notice of payment delinquency. However, 
we also believe it is important that enrollees are given adequate time 
to make payments before any applicable grace period expires. To balance 
providing issuers sufficient time to process payments around the 
payment due date and ensuring that enrollees timely receive notice of 
payment delinquency, we are finalizing a standard that requires issuers 
to send delinquency notices within 10 business days of the date the 
issuer should have discovered the delinquency.
    Comment: One commenter recommended that taglines (including large 
print taglines) be added to delinquency notices to address the needs of 
consumers with LEP and/or sight issues.
    Response: Although this comment is not within the scope of our 
proposals on the timeliness standard presented in the proposed rule, we 
appreciate that consumers with disabilities may have a need for 
reasonable accommodations with regard to the notices they receive. 
Issuers are required to provide such accommodations under State and 
Federal law. Regulation on meaningful access to qualified health plan 
information can be found at Sec.  156.250, and on accessibility 
requirements at Sec.  155.205(c). Enrollees who need a particular 
accommodation should reach out to their issuer to make the request.
    Comment: Twenty commenters suggested time frames for sending 
notices of delinquency to enrollees. One commenter recommended the 
earliest timeframe that is reasonably possible and most protective of 
enrollees. Nine commenters recommended insurers send notice of payment 
immediately after the deadline. Two commenters recommended that issuers 
send delinquency notices to enrollees within 5 business days following 
the due date of the unpaid premium. One commenter recommended one week, 
and another commenter recommended 7 calendar days, both following the 
due date of the premium. Two commenters recommended 10 business days 
after the discovery of the delinquency, with one commenter adding that 
this would provide flexibility for situations in which an issuer is not 
initially aware that an enrollee has become delinquent on premium 
payments. This commenter also noted that there were cases in which 
issuers did not receive notice of insufficient funds until 20 days 
after payment was due.
    One commenter recommended 12 days, with no specification of when 
that time period would begin, or whether they meant business or 
calendar days. One commenter recommended a minimum of 12 business days 
or 15 calendar days, with no specification of when that time period 
would begin. One commenter recommended that an issuer send an initial 
delinquency notice within two calendar weeks of the initial 
delinquency. One recommended that 30 days from the original payment due 
date would be a sufficient timeline for sending such notices, but did 
not specify whether they meant business or calendar days.
    Response: We agree with the two commenters who suggested that 10 
business days would be a reasonable timeframe for sending notices of 
payment delinquency. However, in order to ensure that issuers are 
promptly sending notices, we are finalizing a time frame of 10 business 
days from when the issuer ``should have'' discovered the delinquency. 
This means that there is an expectation that issuers will promptly send 
notices of delinquency once they discover the delinquency. We believe 
that requiring notice to be sent within 10 business days of the date an 
issuer should have discovered the enrollee's delinquency appropriately 
balances the need to ensure enrollees receive timely notice of 
delinquency, while providing issuers with adequate time to send the 
notices. Adopting a standard of 10 business days also allows time for

[[Page 25886]]

issuers to ensure information regarding enrollee delinquency is 
accurate and to communicate with enrollees. In addition, as some 
commenters noted, there are situations in which an issuer is not 
initially aware that an enrollee has entered delinquency. For example, 
one commenter noted that there were cases in which issuers did not 
receive notice of insufficient funds until 20 days after payment was 
due. Thus, the standard we are finalizing in this rule requires issuers 
to send notice to enrollees within 10 business days of the date the 
issuer should have discovered the delinquency so that issuers are not 
required to send the notices until they should have become aware that 
an enrollee is delinquent on payment.
    Other timeframes suggested by commenters, such as 30 days after the 
payment due date or immediately after the deadline for payment, are 
either too long to ensure that enrollees are timely notified of 
delinquency and have an opportunity to rectify it, or too short to give 
issuers time to process an enrollee's delinquency and send a notice. We 
believe that defining ``promptly without undue delay,'' as 10 business 
days of the date the issuer should have discovered the delinquency 
provides issuers with the flexibility to process premium payments that 
arrive late, and enough time for enrollees to make late payments before 
the expiration of a grace period.
    Comment: One commenter recommended that HHS institute a minimum 
requirement that issuers include notice of delinquency on their monthly 
invoices as soon as the first missed payment and allow issuers to 
continue to send additional notices using additional methods.
    Response: Issuers have flexibility to implement additional notices, 
and nothing prevents issuers from sending additional notices if they 
would like to do so.
10. Final Deadline for Reporting Enrollment and Payment Inaccuracies 
Discovered After the Initial 90-Day Reporting Window (Sec.  
156.1210(c))
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78292), we proposed to amend Sec.  
156.1210(c) to remove, beginning with adjustments to APTC and user fee 
payments and collections for 2015 PY coverage, 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 for the PY to which 
such inaccuracy relates has been completed, for these data inaccuracies 
to be eligible for resolution.
    In the proposed rule (87 FR 78292), we proposed to revise Sec.  
156.1210(c) to provide that to be eligible for resolution under Sec.  
156.1210(b), 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 PY to which the inaccuracy relates. As we 
stated in the proposed rule, under this proposal, beginning with the 
2020 PY 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. Additionally, we 
proposed 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 PY coverage that are reported after December 31, 2023, 
which means an issuer must describe all inaccuracies identified in a 
payment and collections report for PYs 2015 through 2019 before January 
1, 2024. We stated that this proposal would allow issuers some 
additional time after this rule is finalized to submit any inaccuracies 
for the 2015 through 2019 PY coverage, for which submissions would no 
longer be permitted upon the effective date of this rule if this 
proposal were effective upon finalization.
    We did not propose 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 proposed 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).
    For issuers in State Exchanges, we further affirmed that this 
proposal would not change the requirement that issuers promptly 
identify and report data inaccuracies to the State Exchange.\312\ We 
stated that under the proposed revisions, 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 proposed that HHS would not make any 
payments to issuers in State Exchanges on data inaccuracies or payment 
errors for 2015 through 2019 PY coverage that are reported after 
December 31, 2023. In addition, we explained that issuers in State 
Exchanges would also remain subject to the existing requirement to 
report data inaccuracies identified at any time when related to 
overpayments.
---------------------------------------------------------------------------

    \312\ As previously noted, the requirements captured in Sec.  
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 
24258.
---------------------------------------------------------------------------

    We refer readers to the proposed rule for further discussion of 
these proposals (87 FR 78292 through 78293). We sought comment on these 
proposals.
    After reviewing the public comments, we are finalizing our 
proposals without modification. Specifically, we are finalizing as 
proposed, removing the alternate deadline at Sec.  156.1210(c)(2) 
beginning with the 2015 PY coverage,\313\ so that issuers are required 
to describe all inaccuracies identified in a payment and collections 
report within 3 years of the end of the applicable PY to which the 
inaccuracy relates to be eligible to receive an adjustment to correct 
an underpayment.\314\ Additionally, as proposed, we are finalizing at 
Sec.  156.1210(c) that, for PYs 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, thus allowing issuers additional time to submit any 
inaccuracies for the 2015 through 2019 PY coverage. We summarize and 
respond below to public comments received on the proposed provisions.
---------------------------------------------------------------------------

    \313\ The 2014 PY is excluded because the alternate deadline for 
reporting inaccuracies closed upon completion of the 2014 audits. 
See CMS. (2019, April 1). CMS Issuer Audits of Advanced Payments of 
the Premium Tax Credit. https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/2014-CMS-APTC-Audits.PDF.
    \314\ Underpayment in this section 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.
---------------------------------------------------------------------------

    Comment: A few commenters supported the proposal to remove the 
alternate deadline at Sec.  156.1210(c)(2) to resolve data inaccuracies 
and report payment adjustments to HHS. Removal of the alternate 
deadline requires issuers to describe all inaccuracies in a payment and 
collections report within three years of the end of the applicable PY 
to which the inaccuracy relates. One of these commenters was concerned 
about permitting waiver of any user fees owed to an SBE-FP if 
inaccuracies are discovered after the deadline and indicated that some 
State-imposed user fees are determined by State law and HHS does not 
have the authority to waive them.
    Response: We are finalizing these changes as proposed and clarify 
that

[[Page 25887]]

this policy is not intended to waive the collection of user fees owed 
to SBE-FPs. Only payments to issuers to address underpayments that are 
identified several years after the applicable plan year are constrained 
under these changes--not incoming user fee or APTC overpayments owed by 
the issuer to either HHS or a State. As explained in the proposed rule 
and 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) states 
that if a payment error is discovered after the reporting deadline, the 
issuer is obligated to notify HHS and the State Exchange (as 
applicable) and repay any overpayment.
    Comment: One commenter stated that removing the alternate deadline 
at Sec.  156.1210(c)(2) puts issuers in a position in which they will 
be expected to return overpayment of APTCs but will not be reimbursed 
for underpayments when identified through an audit process, asserting 
that this is unnecessarily punitive to issuers. That commenter stated 
that audits are time-consuming, resource-heavy obligations to ensure 
accurate payments are made and paying issuers what they owed is a 
reasonable expectation.
    Response: We believe the benefits of requiring inaccuracies 
identified in a payment and collections report to be described within 3 
years of the end of the applicable plan year to which the inaccuracy 
relates outweigh any perceived inequities associated with establishing 
a deadline for receiving an adjustment to correct discovered 
underpayments but not for payment of amounts owed to the Federal 
government. First, 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. In addition, finalizing these changes ensures that HHS 
and Exchange processes for handling payment and enrollment disputes for 
discovered underpayments are completed before the existing IRS 
limitation on amending a Federal income tax return. Second, prompt 
reporting 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. The 3-year window is intended to result in accurate 
reporting and timely resolution of data inaccuracies, and will 
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. Further, 
we believe that requiring issuers to adhere to the 3-year deadline to 
submit all disputes and address all errors will incentivize proactive 
reporting of inaccuracies that will increase data integrity, and will 
discourage a reactive approach of utilizing the audit process to 
identify inaccuracies and utilizing the end of the audit process as an 
alternative timeframe to receive additional APTC or reimbursement of 
user fee payments. For all of these reasons, we therefore generally 
disagree that this approach is unnecessarily punitive.
    This policy requires that issuers describe all inaccuracies 
identified in a payment and collections report within three years of 
the end of the applicable PY to which the inaccuracy relates to be 
eligible to receive an adjustment to correct an underpayment. We will 
continue to take action that results in an outgoing payment on data 
inaccuracies or payment errors identified through an audit process when 
those errors are identified within the 3 years of the end of the 
applicable PY to which the inaccuracy relates. However, under this new 
framework, we will not accept or take action that results in an 
outgoing payment on data inaccuracies or payment errors for the 2015 
through 2019 PY coverage that are not reported before January 1, 2024.
    To assist in the transitioning to this new framework, we are 
affording issuers additional time to report data inaccuracies or 
payment errors for the 2015 through 2019 PY coverage for discovered 
underpayments, providing at Sec.  156.1210(c) that all such 
inaccuracies must be reported before January 1, 2024. This one-time 
window is intended to afford issuers time to address concerns with 
their submissions and any discovered underpayments for these PYs before 
full implementation of this policy change. We will make outgoing 
payments for additional APTC or reimbursement of user fee overpayments 
associated with reported errors during this one-time window, which we 
believe affords ample opportunity for issuers to report any data 
inaccuracies or payment errors related to discovered underpayments for 
2015 through 2019 PY coverage.
    Finally, we note that it is the False Claims Act (31 U.S.C. 3729, 
et seq.) \315\ that obligates issuers to notify HHS and repay improper 
``payments made by, through, or in connection with an Exchange . . . if 
those payments include any Federal funds,'' and prohibits an issuer 
from knowingly and improperly avoiding the obligation to pay. 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. The requirement at Sec.  
156.1210(c) that the issuer notify HHS and the State Exchange (as 
applicable) and repay any overpayment (regardless of when the payment 
error is discovered), aligns with obligations under the False Claims 
Act. Further, we reiterate that safeguarding Federal funds is a primary 
reason for APTC and user fee audits (78 FR 65087 through 65088),\316\ 
even if a historic, ancillary benefit under the prior framework had 
been providing issuers a mechanism to receive additional outgoing 
payments after the 3-year reporting deadline in situations involving 
late discovery and identification of underpayments. After consideration 
of comments, we are finalizing the amendments to Sec.  156.1210(c) as 
proposed.
---------------------------------------------------------------------------

    \315\ ACA section 1313(a)(6) explicitly subjects payments made 
by, through, or in connection with an Exchange to the False Claims 
Act, if the payments include any Federal funds.
    \316\ The 2014 Payment Notice that included financial oversight, 
maintenance of records and reporting requirements, ``safeguard[s] 
the use of Federal funds provided as cost-sharing reductions and 
advance payments of the premium tax credit and provide[s] value for 
taxpayers' dollars.'' See 78 FR 65088; see also CMS. The Center for 
Consumer Information & Insurance Oversight: Audit Reports. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/AuditReports (``The goals of [APTC] audits are to: Safeguard 
Federal Funds'').
---------------------------------------------------------------------------

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 are finalizing the 
amendments to Sec.  156.1220(a)(4)(ii) to add a reference to new 
proposed Sec.  153.630(d)(3) to align with the changes to shorten the 
SVA attestation and discrepancy reporting period. As discussed in 
section III.A.7.d of this preamble, under new Sec.  153.630(d)(3), we 
are retaining 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. The cross-reference to Sec.  153.630(d)(2) in 
Sec.  156.1220(a)(4)(ii)

[[Page 25888]]

will be maintained and will capture the new proposed 15-calendar-day 
window to confirm, or file a discrepancy, for SVA findings (if 
applicable).
    In addition, in the HHS Notice of Benefit and Payment Parameters 
for 2024 proposed rule (87 FR 78206, 78293), we proposed 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 by 
extending the deadline to request an informal hearing to the next 
applicable business day. We solicited comment on this proposed 
amendment.
    After reviewing the public comments, we are finalizing the 
amendment to Sec.  156.1220(b)(1), as proposed, to extend the deadline 
to request an informal hearing to the next applicable business day in 
situations when the last day of the period to request an informal 
hearing does not fall on a business day. We summarize and respond below 
to the public comment received on the proposed amendment to Sec.  
156.1220(b)(1).
    Comment: One commenter supported the proposal to clarify that when 
the last day to request an informal hearing does not fall on a business 
day, the deadline is the next business day.
    Response: We are finalizing the amendment to Sec.  156.1220(b)(1), 
as proposed, extending the deadline to request an informal hearing to 
the next applicable business day when the last day to request an 
informal hearing does not fall on a business day. As we noted in the 
proposed rule (87 FR 78293), this provision is consistent with our 
policy for other risk adjustment deadlines that do not fall on a 
business day.\317\
---------------------------------------------------------------------------

    \317\ See, for example, Sec.  153.730.
---------------------------------------------------------------------------

    For a discussion of the comments related to the shortening of the 
SVA window to confirm, or file a discrepancy for SVA findings to 15 
days, see the preamble discussion in section III.A.7.d. of this rule 
(HHS-RADV Discrepancy and Administrative Appeals Process).

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 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 solicited public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements (ICRs). The public comments and our responses appear in 
the applicable ICR sections that follow.

A. Wage Estimates

    To derive wage estimates, we generally use 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.\318\ Table 13 in this final rule 
presents the mean hourly wage, the cost of fringe benefits and 
overhead, and the adjusted hourly wage.
---------------------------------------------------------------------------

    \318\ 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] TR27AP23.023

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

    We are finalizing the repeal of the ability for 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 are finalizing several amendments to Sec.  153.320(d).
    The burden currently associated with this option is the time and 
effort for the State regulator to submit its request(s), supporting 
evidence, and analysis to HHS. Burden for this option is currently 
approved under OMB control number: 0938-1155. In that Paperwork 
Reduction Act (PRA) package, we estimate that it will take a business 
operations specialist 40 hours (at a rate of $76.20 per hour) to 
prepare the request, supporting evidence, and analysis, and 20 hours 
for a senior

[[Page 25889]]

operations manager (at a rate of $110.82 per hour) to review the 
request, supporting evidence, and analysis and transmit it 
electronically to HHS. In that PRA package, we further estimate that 
each State seeking a reduction will incur a total burden of 60 hours at 
a cost of approximately $5,264.40 per State to comply with this 
reporting.
    Since this policy will eliminate the ability of the one prior 
participating State (Alabama) to request a reduction in risk adjustment 
transfers beginning with benefit year 2025, we proposed to rescind this 
information collection and the associated burden beginning with the 
2025 benefit year in the proposed rule. Therefore, there will be a 
reduction in burden on States seeking reductions of 60 hours at a cost 
of approximately $5,264.40 per State due to the repeal of this policy.
    We sought comment on the information collection requirements 
related to this policy and the proposed rescission of this information 
collection beginning with the 2025 benefit year. We did not receive any 
comments. Therefore, we are finalizing this information collection as 
proposed, and HHS will rescind the associated information collection 
once the policy is no longer in effect.

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

    We are finalizing a requirement for issuers to collect and make 
available for HHS' extraction from issuers' EDGE servers a new data 
element, a QSEHRA indicator. To implement this policy, we are adopting 
the same transitional approach and schedule for the QSEHRA indicator as 
was finalized for the ICHRA indicator in the 2023 Payment Notice. Under 
this approach, for the 2023 and 2024 benefit years, issuers will be 
required to populate the QSEHRA indicator using 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 will be required to 
make a good faith effort to collect and submit the QSEHRA indicator for 
these enrollees. We are also finalizing the proposed extraction of this 
data element beginning with the 2023 benefit year and are also 
finalizing the inclusion of the QSEHRA indicator in the enrollee-level 
EDGE limited data sets available to qualified researchers upon request, 
once available.
    We will begin collection of the QSEHRA indicator with the 2023 
benefit year, and we estimate that approximately 650 issuers of risk 
adjustment covered plans will be subject to this data collection. We 
will 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 will 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 associated with collecting this new 
data element for issuers, we are adopting 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.\319\ For successful 
EDGE server data submission, each issuer will need to update their file 
creation process to include the new data element, which will 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.
---------------------------------------------------------------------------

    \319\ 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.
---------------------------------------------------------------------------

    Based on these estimates, we estimate $62,829 in total annual labor 
costs for 650 issuers (650 total hours per year for all issuers). We 
believe that this 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 extraction 
of the new 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. As this policy is being 
finalized in this rule, we will revise the information collection 
request to account for the burden associated with this policy, and will 
provide the applicable comment periods.\320\
---------------------------------------------------------------------------

    \320\ Standards Related to Reinsurance, Risk Corridors, and Risk 
Adjustment (OMB control number 0938-1155).
---------------------------------------------------------------------------

    We are also finalizing the amendment to 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, we estimate that the extraction of these 
data elements will 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 is to limit the burden on issuers for us 
to collect and extract the plan ID and rating area data elements from 
these additional prior benefit year data. Therefore, while we broadly 
solicited comment on these data collections, we specifically solicited 
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.
    We did not receive any comments in response to the information 
collection requirements related to these policies. We are finalizing 
these requirements as proposed.

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-

[[Page 25890]]

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 are finalizing, 
beginning with 2022 benefit year HHS-RADV, a change to 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 policy will not significantly impact issuer 
burden relative to previous estimates for HHS-RADV and the current 
materiality threshold. In particular, the new threshold will not 
significantly alter the anticipated number of issuers that will 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. 
Assuming one-third of issuers below the materiality threshold will 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 
will remain fairly constant. We believe that the number of issuers 
participating in HHS-RADV for any given benefit year under the 
finalized 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. We will 
revise the information collection currently approved under OMB control 
number: 0938-1155 to account for the changes to the HHS definition for 
the materiality threshold in Sec.  153.630(g)(2).
    We did not receive any comments in response to the information 
collection requirements related to this policy. We are finalizing these 
requirements as proposed.

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

    We are finalizing amendments to Sec. Sec.  155.210 and 155.225 to 
permit enrollment assistance on initial door-to-door outreach by 
Navigators, non-Navigator assistance personnel, or certified 
application counselors. This policy will not impose any new information 
collection requirements, that is, reporting, recordkeeping or third-
party disclosure requirements. Though we require Navigator grantees to 
track enrollment numbers on weekly, monthly, and quarterly progress 
reports, burden is already accounted for under OMB control number: 
0938-1205, and grantees are not required to specifically track 
enrollments completed for door-to-door enrollments.
    We did not receive any comments in response to the information 
collection requirements related to this policy. We are finalizing these 
requirements as proposed.

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

    We are finalizing 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 policy will 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 will 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 policy, including 
those related to documenting, maintaining, and producing the 
documentation. This policy will 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 will be up to the agents, brokers, and web-
brokers to determine the best way to meet these regulatory 
requirements.
    Costs related to requiring the agent, broker, or web-broker 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 and to maintain that 
documentation for a period of 10 years are as follows. We estimate it 
will 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 $5.56 additional cost associated with it based on extra 
time commitment. In PY 2022, agents submitted 4,947,909 policies. This 
makes the yearly total cost associated with the extra 412,326 hours of 
burden approximately $27,493,898 (412,326 total hours x $66.68 per 
hour).
    Costs associated with maintaining consumer's or their authorized 
representative's documentation will 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 will be incurred. If an agent, 
broker, or web-broker opts to use paper for documentation, they will 
bear the costs of paper, ink and filing cabinets to store the 
paperwork.
    HHS will 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, we 
typically request documentation associated with approximately 10 
different applications, generally from the past 2 to 3 years. We 
estimate it will take an agent approximately 2 hours to gather consumer 
documentation for 10 applications. Each year, we generally investigate 
approximately 120 agents, brokers, or web-brokers. Therefore, we 
estimate the yearly cost of producing documentation for HHS to be 
approximately $16,002 (($66.68 hourly rate x 2 hours) x 120). The 
documentation will be able to be mailed electronically, so there will 
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, we will request that the agency produce 
a certain number of records from the past 10 years. As this policy is 
being finalized in this rule, we will request to account for the 
associated information collection burden under OMB control number: 
0938-NEW--(CMS-10840--Agent/Broker Consent Information Collection).

[[Page 25891]]

    After a review of the comments received, we are finalizing this 
information collection requirement as proposed. We summarize and 
respond to public comments received on the burden estimates associated 
with the proposal 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 and to maintain that 
documentation for a period of 10 years.
    Comment: One commenter suggested we did not estimate these costs 
properly. This commenter believed we underestimated these burden 
estimates by as much as six times. Specifically, the commenter asserted 
the time to produce client specific documentation for each client and 
unique factors such as individuals with limited English proficiency or 
without means to sign electronically and the estimated 30 minutes the 
process takes for Medicare applications is indicative the burden may be 
underestimated.
    Response: After reviewing the regulatory changes and potential 
costs associated, we disagree with this commenter's suggestion that we 
underestimated these costs. We believe 5 minutes per enrollment 
interaction is a reasonable timeframe to meet these requirements. Under 
current Sec.  155.220(j)(2)(ii), agents, brokers, and web-brokers must 
``Provide the Federally-facilitated Exchanges with correct information 
. . .'' As such, these new requirements are simply building on the 
existing requirement to provide the FFEs with correct information, 
which we believe will alleviate the burdens and costs associated with 
these new requirements for agents, brokers, and web-brokers.\321\ 
Requesting that a consumer respond to a text message, email, verbal 
question posed by the assisting agent, broker, or web-broker, etc., 
stating they have reviewed their application information and it is 
accurate should not add a significant amount of time to the enrollment 
process. As discussed in the proposed rule (87 FR 78252), we did not 
propose to specify a method for documenting that eligibility 
application information has been reviewed and confirmed to be accurate 
by the consumer or their authorized representative. This flexibility 
will allow each individual agent, broker, or web-broker to establish 
protocols and methods that will meet their needs in the most efficient 
manner. We believe this flexibility will allow agents, brokers, and 
web-brokers to meet the requirements of Sec.  155.220(j)(2)(ii) within 
the estimated 5 minutes per enrollment interaction instead of the 30 
minutes associated with Medicare applications.
---------------------------------------------------------------------------

    \321\ See Sec.  155.220(j)(2)(ii).
---------------------------------------------------------------------------

    Additionally, we only plan on requesting this documentation when 
investigating potentially fraudulent or noncompliant behavior. As 
agents, brokers, and web-brokers establish storage methods that best 
suit their needs, the costs associated with obtaining and submitting 
such documentation to HHS should be minimal. We believe that a 2-hour 
time window for submitting requested documentation is a reasonable 
assumption.
    Comment: A few commenters suggested the proposed record retention 
period of 10 years is too long for agents, brokers, and web-brokers to 
maintain the documentation required by Sec.  155.220(j)(2)(ii)(A). 
Another commenter stated HHS should have the record retention period 
align with the required record retention period of the State where the 
consumer is enrolled.
    Response: We have considered these comments but continue to believe 
10 years is an appropriate length of time to maintain the documentation 
required by Sec.  155.220(j)(2)(ii)(A). As discussed in the proposed 
rule (87 FR 78253), this aligns with other Exchange maintenance of 
records requirements, including Sec.  155.220(c)(3)(i)(E), which states 
internet websites of web-brokers used to complete QHP selections must 
``[m]aintain audit trails and records in an electronic format for a 
minimum of ten years and cooperate with any audit under this section.'' 
We believe being consistent within the regulation and with other 
Exchange maintenance of records requirements is important. Enforcement 
actions may encompass non-compliance with different parts of the 
regulations making standardized timeframes for retention important for 
relevant document collection and review during investigations. 
Additionally, we do not agree that aligning with State record retention 
requirements is beneficial in this instance given the variability in 
retention periods that this approach would introduce. Many agents, 
brokers, and web-brokers assist consumers in multiple States and as a 
result, we often speak with consumers from multiple States during the 
course of a single investigation into potential noncompliance by an 
agent, broker, web-broker. If these agents, brokers, and web-brokers 
were retaining documents based on State laws, investigations may be 
hindered by one State's record retention law being shorter than 
another's due to records being legally discarded by the agent, broker, 
or web-broker under investigation. Mandating a standard 10-year 
retention period for all agents, brokers, and web-brokers assisting 
consumers in the FFEs and SBE-FPs will help mitigate these concerns 
when reviewing agent, broker, or web-broker responses to monitoring, 
audit, and enforcement activities conducted consistent with Sec.  
155.220(c)(5), (g), (h), and (k).
    Comment: Some commenters stated this documentation should be part 
of the application process and maintained by the Federal government, 
making the documentation readily accessible and minimizing burden on 
agents, brokers, and web-brokers.
    Response: We appreciate commenter's suggestions and agree there is 
merit to these ideas. However, it is not currently feasible to 
implement systematic changes of this nature. There are no plans to 
create a system that would allow the Federal government to store 
documentation for all enrollees. This type of systematic change would 
likely take years to implement, which would mean the protections we 
hope to implement with these new requirements would be severely 
delayed. Delaying these requirements means a longer time period during 
which consumers may be vulnerable to potentially fraudulent behavior by 
agents, brokers, and web-brokers. 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 attested to be accurate will help avoid these 
situations, which is why we are requiring the consumer or their 
authorized representative to take an action to produce a record that is 
retained by the assisting agent, broker, or web-broker. We believe the 
consumer is in the best position to project their future income. To 
determine if a consumer is eligible for financial assistance, such as 
APTC, prior to enrollment, an estimate for income must be entered prior 
to the eligibility determination process. As many consumers enroll in 
health coverage prior to a new calendar year, the income amount they 
enter is an estimate based on available data, including income in prior 
years, as well as what consumers believe their income will be in the 
upcoming plan year. If we remove the consumer action from this process, 
which may happen if the system is changed in ways these commenters are 
suggesting, it may circumvent the

[[Page 25892]]

purpose of these new requirements (that is, consumers reviewing their 
information to ensure accuracy).

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

    We are finalizing amendments to Sec.  155.220(j)(2)(iii) to require 
agents, brokers, and web-brokers to document the receipt of consumer 
consent prior to facilitating enrollment in coverage through the FFEs 
or SBE-FPs or assisting an individual in applying for APTC and CSRs for 
QHPs. This policy will require the consumer or their authorized 
representative to take an action that produces a record that they 
provided consent. Agents, brokers, and web-brokers will be required to 
maintain the documentation for a minimum of 10 years and produce it 
upon request in response to monitoring, audit, and enforcement 
activities.
    We estimate costs will be associated with this policy, including 
those related to documenting, maintaining, and producing the records of 
consumer consent. This policy does not mandate any method or prescribe 
a template for documenting receipt of consumer consent. It will be up 
to the agents, brokers, and web-brokers to determine the best way to 
meet these regulatory requirements.
    Costs related to requiring that agents, brokers, and web-brokers 
document the receipt of consumer consent and maintain such 
documentation for a period of 10 years are as follows. We estimate it 
will take about 5 minutes for an enrolling agent, broker or web-broker 
to obtain a consumer's, or their authorized representative's, record of 
their consent. Using the adjusted hourly wage rate of $66.68 for an 
Insurance Sales Agent, each enrollment will have approximately $5.56 in 
additional cost associated with it based on the extra time commitment 
from these proposed policy changes. In PY 2022, agents submitted 
4,947,909 policies. Based on this number of enrollments, the total 
annual burden is approximately 412,326 hours with a total annual cost 
of approximately $27,493,898.
    We will 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, we 
typically request consent records of approximately 10 different 
applications, generally from the past 2 to 3 years. We estimate it will 
take an agent, broker, or web-broker approximately 2 hours to gather 
consent documentation for 10 applications.\322\ Each year, we generally 
investigate approximately 120 agents, brokers, or web-brokers. 
Therefore, we estimate the yearly cost of producing consumer consent 
documentation to HHS to be approximately $16,002 (($66.68 hourly rate x 
2 hours) x 120). These records are able to be mailed electronically, so 
there will be no cost associated with printing or mailing the records. 
Agency-wide audits are not completed often by HHS but may become more 
widespread. In those instances, we will request that the agency produce 
a certain number of records from the past 10 years.
---------------------------------------------------------------------------

    \322\ We note that we generally expect that producing retained 
documentation of consumer consent and documentation that a consumer 
has reviewed and confirmed the accuracy of their application 
information will occur as part of a single audit in most cases, so 
the estimate for this activity in section IV.F is inclusive of the 
costs for this activity in this ICR.
---------------------------------------------------------------------------

    The estimated total annual cost of documenting of consumer consent 
is $27,493,898 and the estimated total cost of producing the retained 
consent records is $16,002. This cost is captured in the new 
information request related to requiring 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. Therefore, 
the total annual cost of the information collection requirements 
associated with this policy is $27,493,898. As this policy is being 
finalized in this rule, we will request to account for the associated 
information collection burden under OMB control number: 0938-NEW (CMS-
10840--Agent/Broker Consent Information Collection).
    After a review of the comments received, we are finalizing the 
information collection requirements as proposed. We received similar 
comments on this proposal as we did on the policy 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 and to maintain that documentation for a period of 10 years. 
There were no comments that were unique to the documentation of 
consumer consent. Therefore, we request that you please see the prior 
information collection section for our responses to these comments.

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

    We are finalizing amendments to Sec.  155.305(f)(4) to provide that 
an Exchange must determine an enrollee ineligible for APTC if the 
enrollee has FTR status is for two consecutive tax years as opposed to 
one tax year (specifically, years for which tax data will be utilized 
for verification of household income and family size). This change will 
ensure that consumers are complying with the requirement to file their 
Federal income tax returns and reconcile past years' APTC, while also 
ensuring continuity of coverage in Exchange QHPs. The finalized FTR 
rule will impact APTC eligibility determinations for PY 2025 and 
beyond.
    On Exchanges on the Federal platform, FTR will be conducted in the 
same as manner it had previously been conducted with respect to 
collection of information, with minimal changes to the language of the 
Exchange application questions necessary to obtain relevant 
information; as such, we anticipate that the finalized amendment will 
not impact the information collection OMB control number: 0938-1191 
burden for consumers.
    We did not receive any comments in response to the information 
collection requirements related to this policy. We are finalizing these 
information collection requirements as proposed, with a correction that 
there is not an option for Exchanges to remove APTC after a consumer 
has been in an FTR status for 1 year.

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

    We are finalizing amendments to Sec.  155.320 to require Exchanges 
to accept attestations, and not set an Income DMI, 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 will 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 
revisions to Sec.  155.320 will 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

[[Page 25893]]

eligibility support staff, the change will 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 will decrease burden on consumers by 1.2 million hours 
per year.
    We will revise the information collection currently approved under 
OMB control number: 0938-1207 to account for this decreased burden.
    We did not receive any comments in response to the information 
collection requirements related to this policy. We are finalizing these 
information collection requirements as proposed.

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

    As described in the preamble to Sec.  155.1510, IPPTA will replace 
the previous voluntary State engagement initiative with mandatory 
participation and related requirements. 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 state that State 
Exchanges will 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 
will be no more than 22 hours.
    In the preamble to Sec.  155.1510(a)(2), we state that HHS will 
provide State Exchanges with the pre-testing and assessment data 
request form. We will 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 will be the time it will 
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 sought 
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) 
will take 265 hours per respondent at an estimated cost of $28,493.24 
per respondent on an annualized basis. To compile our estimates, we 
referenced our experience collecting data in our FFE pilot initiative 
and in working with State Exchanges in the previous voluntary State 
engagement initiative. We identified specific personnel and the number 
of hours that will 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 4,770 hours for a total cost of up to $512,878 on an 
annualized basis. As this policy is being finalized in this rule, we 
will request to account for the associated information collection 
burden under OMB control number: 0938-1439 (CMS-10829--Improper Payment 
Pre-Testing and Assessment (IPPTA)).
    We did not receive any comments specific to the collection of 
information and are finalizing these requirements as proposed. We did 
receive and respond to related general comments of financial burdens in 
the earlier preamble section associated with this policy.

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

a. Age on Effective Date for SADPs
    We are finalizing requiring 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 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 will create 
any additional costs or burdens for issuers seeking QHP certification. 
This information collection is currently approved under OMB control 
number: 0938-1187.
    We did not receive any comments in response to the information 
collection requirements related to this policy. We are finalizing these 
requirements as proposed.
b. Guaranteed Rates for SADPs
    The policy 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.
    We did not receive any comments in response to the information 
collection requirements related to this policy. We are finalizing these 
requirements as proposed.

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

    The policy to add a timeliness standard to the requirement for QHP 
issuers to send enrollees notice of payment delinquency will 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 policy will not require 
any additional information collection. We are merely finalizing the 
addition of a requirement that issuers in the Exchanges on the Federal 
platform send these notices promptly and without undue delay, within 10 
business days of the date the issuer should have discovered the 
delinquency. This information collection is currently approved under 
OMB control number: 0938-1341.
    After a review of the comments received, we are finalizing the 
information collection requirements as proposed. We summarize and 
respond below to public comments received on the information collection 
requirements

[[Page 25894]]

related to the proposed addition of the timeliness standard to the 
requirement for QHP issuers to send enrollees notice of payment 
delinquency.
    Comment: One commenter was neutral on the proposal as long as it 
did not require another letter to be sent to consumers.
    Response: To clarify, this policy adds a timeliness requirement to 
the existing required notice of payment delinquency, so issuers will 
not be required to send another letter to consumers.

M. Summary of Annual Burden Estimates for Finalized Requirements
[GRAPHIC] [TIFF OMITTED] TR27AP23.024

    This final rule includes one policy--repealing the ability of 
States to request a reduction in risk adjustment transfers (Sec.  
153.320(d))--with information collection requests being rescinded. HHS 
will rescind the associated information collection once the policy is 
no longer in effect.
    The following information collection requests will be submitted for 
OMB 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 policies do not impact any of the information 
collections under the following OMB control numbers: 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: 0938-1187; and Establishment of Qualified Health 
Plans and American Health Benefit Exchanges, OMB control number: 0938-
1156. After a review of the comments received, we are finalizing the 
information collection requirements as proposed. We summarize and 
respond to public comments received on information collection 
requirements for the proposals related to agent/broker standards in the 
ICR sections earlier in this rule (sections IV.F and IV.G).

V. Regulatory Impact Analysis

A. Statement of Need

    This rule finalizes improvements to risk adjustment and HHS-RADV 
policies to use more recent data to recalibrate the risk adjustment 
models and to refine operational HHS-RADV processes, and to update 
Navigator standards to permit door-to-door and other unsolicited means 
of direct contact. The rule also finalizes requirements that agents, 
brokers, and web-brokers provide correct consumer information and 
document consumer consent; and requirements that Exchanges on the 
Federal platform accept an applicant's or enrollee's attestation of 
projected annual household income when IRS data is not available and 
determining 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 finalizes the implementation of 
the IPPTA, reduced 2024 user fee rates of 2.2 percent of premiums for 
FFE issuers and 1.8 percent of premiums for SBE-FP issuers, and minor 
updates to standardized plan options and limiting the number of non-
standardized plan options issuers can offer. Finally, the rule 
finalizes requirements for QHP plan marketing names to include correct 
information, without omission of material fact, and to not include 
content that is misleading; revisions to the network adequacy and ECP 
standards at Sec. Sec.  156.230 and 156.235 to state that all QHP 
issuers, including SADPs, subject to limited exceptions, must use a 
network of providers that complies with the standards described in 
those sections; expanded access to care for low-income and medically 
underserved consumers by strengthening ECP standards for QHP 
certification; revisions to the Exchange re-enrollment hierarchy; the 
addition of a timeliness standard to the requirement for QHP issuers to 
send enrollees notice of payment delinquency; and revisions to the 
final deadline for issuers to report data inaccuracies identified in 
payment

[[Page 25895]]

and collections reports for discovered underpayments of APTC to the 
issuer and user fee overpayments to HHS, requiring that issuers 
describe all such inaccuracies within three years of the end of the 
applicable plan year to which the inaccuracy relates to be eligible to 
receive an adjustment.

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), and the 
Congressional Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). The April 
6, 2023 Executive order on Modernizing Regulatory Review \323\ amends 
section 3(f) of Executive Order 12866 to define a ``significant 
regulatory action'' as an action that is likely to result in a rule 
that may: (1) have an annual effect on the economy of $200 million or 
more (adjusted every 3 years by the Administrator of the Office of 
Information and Regulatory Affairs (OIRA) for changes in gross domestic 
product), or adversely affect in a material way the economy, a sector 
of the economy, productivity, competition, jobs, the environment, 
public health or safety, or State, local, territorial, or tribal 
governments or communities; (2) create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) materially alter the budgetary impacts of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raise legal or policy issues for which centralized 
review would meaningfully further the President's priorities or the 
principles set forth in the Executive order, as specifically authorized 
in a timely manner by the Administrator of OIRA in each case.
---------------------------------------------------------------------------

    \323\ Available at https://www.govinfo.gov/content/pkg/FR-2023-04-11/pdf/2023-07760.pdf.
---------------------------------------------------------------------------

    A regulatory impact analysis (RIA) must be prepared for rules that 
are significant under section 3(f)(1) of the Executive order. Based on 
our estimates, OMB's Office of Information and Regulatory Affairs has 
determined this rulemaking is ``significant'' as measured by the $200 
million threshold under section 3(f)(1). 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 final 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 15 showing the classification of the impact associated with the 
provisions of this final rule.
    This final rule finalizes standards for programs that will have 
numerous effects, including providing consumers with access to 
affordable health insurance coverage, reducing the impact of adverse 
selection, and stabilizing premiums in the individual and small group 
health insurance markets and in an Exchange. We are unable to quantify 
all benefits and costs of this final rule. The effects in Table 15 
reflect qualitative assessment of impacts and estimated direct monetary 
costs and transfers resulting from the provisions of this final rule 
for health insurance issuers and consumers.
    We are finalizing the risk adjustment user fee of $0.21 PMPM for 
the 2024 benefit year to operate the risk adjustment program on behalf 
of States,\324\ which we estimate will 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.
---------------------------------------------------------------------------

    \324\ As noted previously in this final 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 finalizing FFE and SBE-FP user fee 
rates of 2.2 and 1.8 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 the implementation of the IPPTA program, we estimate 
recordkeeping costs for data submission to be approximately $1,025,756 
beginning in PY 2024.
BILLING CODE 4120-01-P

[[Page 25896]]

[GRAPHIC] [TIFF OMITTED] TR27AP23.025


[[Page 25897]]


[GRAPHIC] [TIFF OMITTED] TR27AP23.026

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 25898]]

spending, revenue collections, and insurance enrollment. Table 16 
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 final rule discussed in this RIA. We do not 
expect the provisions of this final rule to significantly alter CBO's 
estimates of the budget impact of the premium stabilization programs 
that are described in Table 16.
[GRAPHIC] [TIFF OMITTED] TR27AP23.027

1. Data for Risk Adjustment Model Recalibration for 2024 Benefit Year
---------------------------------------------------------------------------

    \325\ Reinsurance collections ended in FY 2018 and outlays in 
subsequent years reflect remaining payments, refunds, and allowable 
activities.
---------------------------------------------------------------------------

    We proposed 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 proposed 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. However, we are finalizing that we will use the 2018, 2019, 
and 2020 benefit year enrollee-level EDGE data to recalibrate the 2024 
benefit year risk adjustment models, for all coefficients without 
exception, including the adult age-sex coefficients. Consistent with 
the approach outlined in the 2020 Payment Notice to no longer rely upon 
MarketScan[supreg] data for recalibrating the risk adjustment models, 
as finalized in this rule, we will continue to recalibrate the risk 
adjustment models for the 2024 benefit year using only enrollee-level 
EDGE data, and will continue to use blended, or averaged, coefficients 
from the 3 years of separately solved models for the 2024 benefit year 
model recalibration. This approach seeks to maintain stability in the 
markets by capturing some degree of year-to-year cost shifting without 
over-relying on any factors unique to one particular year. 
Additionally, we anticipate that the recalibration of the HHS risk 
adjustment models using 2018, 2019, and 2020 EDGE data for the blending 
of all HHS risk adjustment model coefficients will have a minimal 
impact on risk scores and transfers for issuers in the individual and 
small group (including merged) markets because our analysis found that 
the 2020 enrollee-level EDGE data is largely comparable to previous 
years' data sets.
    We did not receive any comments in response to the burden estimates 
associated with the proposed policy or any of the alternatives 
presented in the proposed rule. We are finalizing these estimates with 
the modification discussed in the above paragraph. We note that 
although the age-sex coefficients for the adult risk adjustment models 
differ slightly from their proposed values, we anticipate that these 
changes will have a 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 are finalizing the elimination of the ability for 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 
will have a minimal impact as only one State, Alabama, is considered a 
prior participant State and will no longer be able to request 
reductions in risk adjustment transfers beginning with the 2025 benefit 
year.
    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
3. Risk Adjustment Issuer Data Requirements (Sec. Sec.  153.610, 
153.700, and 153.710)
    We are finalizing 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 
will 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 will end, and issuers will 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 will provide additional guidance 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.C of this final 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 are finalizing the extraction of the plan ID and 
rating area data elements from issuers' EDGE servers that issuers 
already make

[[Page 25899]]

accessible to HHS as part of the required risk adjustment data for 
additional prior benefit years of data. Specifically, we are finalizing 
an amendment to 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.
    We did not receive any comments in response to the burden estimates 
for these policies. We are finalizing these estimates as proposed.
4. Risk Adjustment User Fee for 2024 Benefit Year (Sec.  153.610(f))
    For the 2024 benefit year, HHS will operate risk adjustment 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 are using the same methodology to 
estimate our 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 \326\ and section 12001 of the IRA,\327\ which 
extended the enhanced PTC subsidies in section 9661 of the ARP through 
the 2025 benefit year. We estimate that the total cost for HHS to 
operate the risk adjustment program on behalf of all 50 States and the 
District of Columbia for the 2024 benefit year will be approximately 
$60 million, and therefore, the proposed risk adjustment user fee will 
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 risk adjustment user fee for the 2024 benefit year to reduce 
the transfer amounts collected or paid by issuers of risk adjustment 
covered plans.
---------------------------------------------------------------------------

    \326\ Public Law 117-2.
    \327\ Public Law 117-169.
---------------------------------------------------------------------------

    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
5. Risk Adjustment Data Validation Requirements When HHS Operates Risk 
Adjustment (HHS-RADV) (Sec.  153.630)
    We are finalizing, beginning with 2022 benefit year HHS-RADV, 
changes to 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 initial validation audit (IVA) over 
the years and to ensure the materiality threshold is not eroded as 
costs increase. We quantified this increase in IVA cost in the 
Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment 
PRA package (OMB Control Number 0938-1155), which we updated in 
2022.\328\ We believe the number of issuers exempt from HHS-RADV for 
any given benefit year under the new 30,000 BMM materiality 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 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.
---------------------------------------------------------------------------

    \328\ Available at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202207-0938-001.
---------------------------------------------------------------------------

    We are finalizing, beginning with 2021 benefit year HHS-RADV, the 
removal of 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. With this 
policy, exiting and non-exiting outlier issuers are treated the same, 
and HHS is applying 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 the number of negative error rate outlier exiting issuers in 
any given benefit year will be very small, and therefore, we believe 
changing this policy will not significantly increase burden.
    We are also finalizing a change to the attestation and discrepancy 
reporting window to file a discrepancy report or confirm second 
validation audit (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 will improve our ability to finalize SVA findings 
results prior to release of the HHS Risk Adjustment Data Validation 
(HHS-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. This change will 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). The shortened window also 
does not change the underlying burden for an issuer to attest or file a 
discrepancy of its SVA results as those tasks generally remain the 
same. Instead, this change only relates to the timeframe to complete 
these activities. Although there may be a potential increase in 
administrative burden to issuers resulting from the need to reallocate 
staffing or resources to attest or file a discrepancy of its SVA within 
the compressed 15-day window, the existing overall burden hours and 
associated resource expenditures to complete this task remains 
unchanged. Further, we believe that this shortened reporting window 
will not be overly burdensome to the few impacted issuers, and that any 
disadvantages of this shortened reporting window will be outweighed by 
the benefits of timely resolution of any discrepancies before the 
release of the applicable benefit year HHS RADV Results Memo and the 
Summary Report of Risk Adjustment Data Validation Adjustments to Risk 
Adjustment Transfers for the applicable benefit year.
    After reviewing the public comments, we are finalizing the burden 
estimates as proposed. We summarize and respond to public comments 
received regarding the impact of the change to the HHS-RADV materiality 
threshold definition below.
    Comment: One commenter agreed that the proposed materiality 
threshold of 30,000 BMM will continue to ease the administrative burden 
associated with HHS-RADV audits. Another commenter encouraged HHS to 
consider changing the materiality threshold for HHS-RADV participation 
to a percentage of Statewide member months to reduce the burden of HHS-
RADV on issuers that do not materially impact risk adjustment 
transfers.

[[Page 25900]]

    Response: As explained in section III.A.7 of this final rule, we 
believe that a materiality threshold of 30,000 BMM appropriately 
balances the goals of the HHS-RADV process and the burden of the 
process on smaller issuers. As stated above, we do not anticipate that 
a materiality threshold of 30,000 BMM will change the current estimated 
burden of the annual HHS-RADV requirements on issuers. The burden of 
annual HHS-RADV requirements may decrease over time as a materiality 
threshold of 30,000 BMM will result in a more consistent pool of 
issuers subject to random and targeted sampling than a threshold of $15 
million in total annual premiums, which could increase the number of 
issuers subject to annual HHS-RADV audits over time as premiums grow. 
We did not consider or propose using a percentage of Statewide member 
months as the metric for the materiality threshold as that metric does 
not have a relationship with the costs to conduct the audit. We 
therefore decline to adopt use of such a metric as part of this final 
rule.
6. EDGE Discrepancy Materiality Threshold (Sec.  153.710)
    We are finalizing an amendment to 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 or exceed $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 updated 
materiality threshold definition for EDGE discrepancies will 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).
    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
7. Exchange Blueprint Approval Timelines (Sec.  155.106)
    As discussed in section III.B.1 of this final rule, the proposed 
regulatory amendments will not eliminate the requirement for States 
seeking to transition to a different Exchange operational model (FFE to 
SBE-FP or State Exchange, or SBE-FP to State Exchange) to submit an 
Exchange Blueprint or for HHS to approve, or conditionally approve, a 
State's Exchange Blueprint. It will only impact the timeline, by 
providing additional time for HHS to provide approval, or conditional 
approval.
    We do not anticipate any additional burden associated with this 
policy 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 did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
8. Navigator, Non-Navigator Assistance Personnel, and Certified 
Application Counselor Program Standards (Sec. Sec.  155.210 and 
155.225)
    As discussed in section III.B.2, new rules will 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 change will 
not impose any new or additional opportunity costs on Assisters, and we 
do not anticipate any estimated burden associated with this proposal. 
The benefits of this proposal will 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 will 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 sought comment on these assumptions, specifically about any 
reduction in costs, benefits, or burdens on Assisters and consumers as 
related to this policy.
    After reviewing the public comments, we are finalizing the burden 
estimates as proposed. We summarize and respond to public comments 
received regarding the impact of the proposed change to repeal the 
provisions that currently prohibit Assisters from going door-to-door or 
using other unsolicited means of direct contact to provide enrollment 
assistance to consumers below.
    Comment: We received many comments expressing appreciation that we 
are striving to build-in more flexibility for Assisters to go into the 
community and reach the patients who need the most support. These 
commenters stated that Assisters being able to travel to an enrollee's 
residence enhances the opportunity to get more people enrolled in 
health insurance coverage and that this provision will allow Navigators 
and other types of Assisters to better meet patients where they are, 
hopefully allowing more people to receive health coverage.
    Response: We agree that additional flexibility will help reduce 
burden not only for Assisters but for consumers experiencing chronic 
illness, inflexible schedules, lack of child care, lack of 
transportation, and other adverse social determinants of health.
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 section III.B.3 of this final rule, the regulatory 
amendments we are finalizing will 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 these amendments, 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 noncompliance 
against them or who have exhibited a pattern of noncompliance or abuse 
that may pose imminent consumer harm will be impacted.
    As discussed in the preamble, this policy will 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

[[Page 25901]]

the FFEs. This process will not change. While we will be increasing the 
amount of potential time the review process will 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 will 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 policy.
    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
10. Providing Correct Information to the FFEs and Documenting Receipt 
of Consumer Consent (Sec.  155.220(j))
    As discussed in section III.B.3 of this final rule, the regulatory 
amendments we are finalizing will require agents, brokers, and web-
brokers assisting with and facilitating enrollment in coverage 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. The policy will require the consumer 
or their authorized representative to take 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 upon request in response to monitoring, audit, and enforcement 
activities.
    In addition, we are finalizing regulatory amendments that will 
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 policy will 
require the consumer or their authorized representative to take an 
action that produces a record of consent that must be maintained by the 
assisting agent, broker, or web-broker and produced upon request in 
response to monitoring, audit, and enforcement activities. As we 
anticipate these two documentation processes will likely be occurring 
as part of the same consumer interaction,\329\ the two policies are 
discussed together below.
---------------------------------------------------------------------------

    \329\ 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 and prior to 
application submission. However, we generally expect that the 
documentation that will be required before and after the completion 
of the application, will occur as part of a single interaction in 
most cases.
---------------------------------------------------------------------------

    A potential cost to consider is the additional time it will take to 
process and submit each consumer's eligibility application. It 
currently takes approximately 30 minutes for an assisting agent, 
broker, or web-broker to submit a consumer's eligibility application. 
These finalized requirements may add approximately five minutes 
additional time, per the new requirement, to each application, making 
each application submission take 40 minutes under the new finalized 
policies. This means that for every six policies submitted under the 
new finalized 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.\330\ 
Therefore, the finalized regulatory text may result in $66.68 lost per 
day per agent, broker, or web-broker ($16.67 x 4 fewer applications 
submitted).
---------------------------------------------------------------------------

    \330\ 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 will 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 \331\ submitted 1,159,608 policies during 
PY 2021, which equals approximately 7 submitted policies per day.\332\ 
As it was determined under the new policies that an agent could submit 
approximately 12 applications per day, there is no clear impact 
associated with these policies as far as the number of applications 
being submitted. However, this could be different during the Open 
Enrollment Period (OEP) as there is generally more enrollment activity 
during OEP than regular business days. During PY 2022 Open Enrollment, 
agents submitted 2,572,341 applications, which translates to 38 
applications per agent. The top selling 1 percent of agents submitted 
689,146 applications during Open Enrollment, which is approximately 18 
applications per day.\333\ Under the finalized 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 week 
for 8 hours per day, an agent may 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). For the 668 agents in the top selling 1 
percent, the total potential commission loss may be approximately 
$3,674,735 (668 agents x $5,501.10). It is likely these agents are 
working more hours than we accounted for, meaning the 330 fewer 
applications and $3,674,735 in lost commissions is an estimate such 
that the actual loss of commission will be less than we estimated.
---------------------------------------------------------------------------

    \331\ The current number of agents registered with the Exchange 
is 66,893. We looked at data from the 668 top-selling agents.
    \332\ This assumed an agent worked 250 days per year (50 weeks 
at 5 days per week).
    \333\ This assumed an agent worked 5 days per week at 8 hours 
per day, which is likely a low estimate.
---------------------------------------------------------------------------

    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
11. Failure To File and Reconcile Process (Sec.  155.305)
    We are finalizing a requirement that Exchanges 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 policy will benefit both Exchanges and 
consumers by ensuring that consumers are complying with the requirement 
to file their Federal income tax returns and reconcile past years' 
APTC, while also providing continuity of coverage for consumers who 
might otherwise go uninsured after losing ATPC.

[[Page 25902]]

    We anticipate that this policy will increase APTC expenditures by 
promoting continuous enrollment of consumers with APTC, who, absent 
this policy, would likely choose to terminate their coverage altogether 
after losing their APTC eligibility due to having an FTR status. Based 
on our 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 without APTC. Assuming 
the same enrollment numbers for Open Enrollment 2025 with the new 2-
year FTR policy, if the 102,000 enrollees who ended their QHP coverage 
after losing APTC were given another year of APTC eligibility to 
confirm compliance or come into compliance with the requirement to file 
and reconcile, we estimate that all 102,000 likely enrollees would have 
retained coverage for another coverage year. However, based on our 
experience running FTR since 2015, we anticipate that about 20,400 (20 
percent) of these enrollees would have likely received a second, 
consecutive FTR flag and would be re-enrolled into coverage without 
APTC due to their failure to file and reconcile for two consecutive tax 
years. Therefore, we estimate that this 2-year FTR policy is likely to 
increase APTC expenditures by approximately $373 million per year 
beginning in plan year 2025 for those consumers who have not filed and 
reconciled for only one tax year (approximately 81,600) and retain 
their APTC eligibility (using average APTC amount of approximately $508 
per month multiplied by the average retention rate in an Exchange QHP 
of 9 months).
    We are 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 PHE. 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 the annual 
costs to maintain FTR operations to be approximately $10 million.
    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
12. Income Inconsistencies (Sec. Sec.  155.315 and 155.320)
    We anticipate that the finalized revision to Sec.  155.315 will 
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 change to grant a 60-
day extension to applicants with income DMIs will 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 will be $9 million to comply with 
the requirement to grant the 60-day extension, and the total cost to 
the Federal Government will be $500,000.
    We anticipate that the revisions to Sec.  155.320 will 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 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 will 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 policy, due to applicants remaining 
enrolled through the end of the plan year instead of losing eligibility 
for APTC for failing to provide sufficient documentation to verify 
their projected household income.
    However, we do anticipate that the revisions to Sec.  155.320 will 
also result in some decreases in ongoing administrative costs for the 
Exchanges using the Federal platform and State Exchanges. The change 
will 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, based on historical DMI data, we anticipate 
that this will result in 1.2 million fewer households receiving an 
income DMI, which will result in $66 million in annual cost savings to 
the Federal Government. Additionally, State Exchanges using their own 
platform will also experience annual cost savings of $37 million due to 
this change.
    We do not anticipate that these changes will impose a cost or 
regulatory burden on issuers. However, the changes will have a 
financial impact on issuers via the continued enrollment of consumers 
who otherwise would have experienced APTC adjustment and thus would 
have been likely to disenroll.
    After reviewing the public comments, we are finalizing the burden 
estimates as proposed. We summarize and respond to public comments 
received regarding the impact of the change to accept household income 
attestation when IRS is contacted but does not return data and to 
provide an automatic 60-day extension for Income DMIs below.
    Comment: One commenter noted concerns that these calculations would 
result in increased spending for the Federal Government.
    Response: We agree that Federal Government spending will increase, 
but this will be primarily due to more consumers appropriately 
maintaining eligibility for financial assistance that they need to stay 
enrolled in coverage, which positively impacts health equity, 
continuous coverage, and the risk pool. We note that these consumers 
are still subject to the reconciliation process when filing their 
taxes, which may result in repayment of APTC and help account for any 
potential excess financial assistance beyond what they were eligible 
for. Additionally, households are required to provide true answers to 
application questions under penalty of perjury.
13. Annual Eligibility Redetermination (Sec.  155.335(j))
    In the HHS Notice of Benefit and Payment Parameters for 2024 
proposed rule (87 FR 78206, 78259), we proposed changes to allow 
Exchanges, beginning in PY 2024, to direct re-enrollment for enrollees 
who are eligible for CSRs in accordance with Sec.  155.305(g) from a 
bronze QHP to a silver QHP, if certain conditions are met (``bronze to 
silver crosswalk policy''), and to require all Exchanges (Exchanges on 
the Federal platform and State Exchanges) to incorporate provider 
network considerations into the re-enrollment hierarchy. After 
reviewing public comments, we are finalizing proposed changes to the 
re-enrollment hierarchy with modifications. Specifically, we are 
amending the proposed regulations to clarify that Exchanges 
implementing the bronze to silver crosswalk policy will compare net 
monthly silver plan premiums for the future year with net monthly 
bronze plan premiums for the future year, as opposed to net monthly 
bronze plan premiums for the current year (where net monthly premium is 
the enrollee's responsible amount after

[[Page 25903]]

applying APTC). Additionally, we changed the structure and some content 
of the regulation to simplify the regulatory text and to clearly 
characterize the rule's provider network continuity protections for 
enrollees whose QHP is no longer available, compared to enrollees 
eligible for the bronze to silver crosswalk policy under paragraph 
(j)(4).\334\
---------------------------------------------------------------------------

    \334\ Please see the preamble for Sec.  155.335(j) at section 
III.B.6. for a full description of and explanation for these 
modifications.
---------------------------------------------------------------------------

    As discussed in the proposed rule, we anticipate that the inclusion 
of additional criteria in the auto re-enrollment process will increase 
costs and burden for issuers and Exchanges, although we are unable to 
quantify this increase. However, we believe initially limiting the 
scope of the bronze to silver crosswalk policy to only CSR-eligible 
enrollees who are currently in a bronze QHP and have a lower or 
equivalent after APTC cost silver QHP available will allow issuers and 
Exchanges to incrementally update their processes, as opposed to 
including 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 plans with lower or equivalent 
premium after APTC will facilitate enrollment into silver CSR plans and 
help reduce CSR forfeiture. Notwithstanding these burdens, we believe 
changes to the re-enrollment process finalized in this rule, in 
combination with improved consumer notification, will 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 cost of an enrollee's 
current plan. 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 will be 
promoting consumer access to affordable, quality coverage.
    We sought 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 policy. We summarize and respond in 
preamble and below to public comments received regarding the impact of 
the changes to the auto re-enrollment policy.
    Comment: Some commenters raised concerns that implementing this 
policy for the 2024 plan year would be difficult for issuers and cause 
confusion for consumers. Some commenters with this concern requested 
that HHS delay the policy if it were finalized, and that HHS not change 
the auto re-enrollment system until after the implementation of other 
proposed policies including the proposals to require plan and plan 
variation marketing accuracy and to limit the number of non-
standardized plan options that issuers may offer through the Exchanges. 
These commenters expressed concerns that auto re-enrolling consumers 
into a different plan than their current QHP would exacerbate potential 
confusion related to these other policies. They requested that HHS wait 
to implement any changes related to auto re-enrollment until issuers 
have finalized their product decisions in accordance with new plan 
variation marketing requirements so that plan and plan variation 
marketing names are accurate, consistent, and understood by consumers 
before consumers are mapped into new plans they are unfamiliar with.
    Response: As noted in section III.B.6. of the preamble, Exchanges 
on the Federal platform will implement the new policy at Sec.  
155.335(j)(4) by incorporating network ID into existing requirements 
for issuer submissions through the crosswalk process, which, per 
existing rules at Sec.  155.335(j)(2), already requires that if no 
plans under the same product as an enrollee's current QHP are available 
for renewal, the Exchange will auto re-enroll the enrollee in the 
product most similar to their current product with the same 
issuer.\335\ We believe that plan network ID will be an effective 
method of network comparison for Exchanges on the Federal platform 
because QHP Certification Instructions specify that if specific 
providers are in-network for some of an issuer's products but not 
others, the issuer must establish separate network IDs to enable 
mapping the plans to the applicable network IDs. We will also work 
closely with State Exchanges to share best practices for implementing 
this policy. Further, based on experience from past years, a majority 
of enrollees who were crosswalked into a different product with the 
same issuer had the same network ID and product type (for example, HMO, 
PPO), and so we anticipate that this policy will reinforce and not 
disrupt current auto re-enrollment processes.\336\ Finally, we believe 
that issuer implementation burden will be mitigated because, as 
discussed in the proposed rule, Exchanges, not issuers, will be 
responsible for identifying enrollees eligible for the bronze to silver 
crosswalk policy under paragraph (j)(4).\337\ Given the benefits that 
this policy will provide to consumers who will be enrolled in more 
generous coverage for no greater cost, we will not delay its 
effectuation. We will work closely with all interested parties to 
ensure smooth implementation and mitigate any adverse effects such as 
consumer confusion.
---------------------------------------------------------------------------

    \335\ See Sec.  155.335(j)(2), and see ``Plan Crosswalk'' on the 
QHP Certification Information and Guidance website at https://www.qhpcertification.cms.gov/s/Plan%20Crosswalk for more information 
on the Crosswalk Template.
    \336\ Based on internal CMS analysis, for the 2023 plan year, 86 
percent of crosswalks to a different product with the same issuer 
had the same network ID and the same network type (that is, HMO, 
PPO, EPO).
    \337\ See 87 FR 78263.
---------------------------------------------------------------------------

    Comment: As also discussed in the preamble, many commenters 
supported this proposal, agreeing that it would help limit CSR 
forfeiture and increase the likelihood that more consumers would be 
enrolled in more generous coverage without additional cost. One 
commenter expressed support but suggested that the policy could be 
limited in its impact for individuals and families with household 
incomes above 150 percent FPL because of the difference in bronze and 
silver plans' monthly premiums. Commenters also raised concerns that 
auto re-enrolling consumers into a different plan for the coming year 
could disrupt consumers' provider network, prescription drug 
availability, and HSA eligibility that had informed their original 
choice of plan selection.
    Response: We agree that this policy will help to prevent CSR 
forfeiture. Also, we agree with the comment that most enrollees who 
Exchanges can crosswalk from a bronze to a silver plan under paragraph 
(j)(4) will be those who have access to a silver plan with a $0 monthly 
net premium because their household income does not exceed 150 percent 
of the FPL. Nevertheless, we believe that the importance of auto re-
enrolling enrollees in a plan within the same product and with the same 
provider network that they would have if they were auto re-enrolled 
under Sec.  155.335(j)(1) or (2) outweighs concerns that this will 
result in fewer bronze enrollees being crosswalked to a silver plan. In 
response to concerns that Exchanges will be shifting CSR eligible 
consumers auto re-enrolled from a bronze to a silver plan under 
paragraph (j)(4) into different benefits and provider networks, we note 
that by making this change only for consumers who have a

[[Page 25904]]

plan in their same product with a network ID that matches that of their 
future year bronze plan, the policy ensures that consumers will not 
experience network changes that they would not otherwise experience had 
they been auto re-enrolled into their bronze plan. Also, we will 
perform additional research to ensure that we are able to provide 
appropriate support and technical assistance to enrollees who may have 
chosen a bronze plan HSA, and we encourage State Exchanges, agents and 
brokers, and enrollment assisters to do the same.
14. Coverage Effective Dates for Qualified Individuals Losing Other 
Minimum Essential Coverage (Sec.  155.420(b))
    We are finalizing the amendment to paragraph (b)(2)(iv) to Sec.  
155.420 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, and select a 
plan between 60 days before such loss of MEC and the last day of the 
month preceding the month in which the loss of MEC occurs. 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 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 at section 
III.B.7.a., ensuring smooth and quick transitions into Exchange 
coverage will be especially critical during Medicaid unwinding when a 
large number of consumers are expected to lose their Medicaid or CHIP 
coverage and transition to Exchange coverage.
    Based on our 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 on 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. 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 
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 occurs assuming a 
similar volume of consumers will choose to enroll in an Exchange QHP 
based on PY 2021 data. We estimated this amount by multiplying the 
number of consumers in PY 2021 who attested to a future loss of MEC and 
chose not to enroll (approximately 45,000) and multiplied this by 
average APTC (about $508 per month for PY 2021 and assuming an average 
enrollment of 7 months). However, the actual number could be lower, 
given that we are unable to estimate what proportion of consumers will 
still elect to not enroll in an Exchange QHP. We also anticipate 
additional costs for consumers whose monthly premium after APTC (if 
applicable) is greater than $0, as they would likely have to pay 
premiums for both MEC and Exchange coverage in the month over 
overlapping coverage, depending on the type of prior MEC involved. 
Conversely, our estimate may also be low because it does not account 
for the one additional month of coverage and APTC that consumers may 
receive if they would have already chosen to enroll in Exchange 
coverage under the existing policy, but may do so earlier under the new 
rule. We note that, to mitigate adverse selection and the related 
burden on issuers, we did not propose that Exchanges permit consumers 
to select a coverage date such as the first of the month following plan 
selection. We sought comment on this policy, specifically about any 
additional costs, benefits, or burdens on State Exchanges, issuers, and 
consumers as related to this policy. We also sought comment from 
issuers regarding any additional or remaining risk regarding mid-month 
coverage effective dates.
    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
15. Special Rule for Loss of Medicaid or CHIP Coverage (Sec.  
155.420(c))
    We are finalizing the addition of paragraph (c)(6) to Sec.  155.420 
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. 
In addition, if a State Medicaid Agency allows or provides for a 
Medicaid or CHIP reconsideration period greater than 90 days, then the 
Exchange in that State may elect to provide a qualified individual or 
their 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 additional time to select a QHP, up to the number of days 
provided for the applicable Medicaid or CHIP reconsideration period. We 
believe that this change is necessary to ensure that qualifying 
individuals are able to seamlessly transition from Medicaid or CHIP 
into Exchange coverage as quickly as possible with minimal coverage 
gaps.
    Based on our own analysis, in plan year 2019, about 60,000 
consumers seeking coverage on Exchanges using the Federal platform 
attested to a Medicaid or CHIP loss or denial between 60 to 90 days 
prior to submitting or updating a HealthCare.gov application. We 
estimate that this 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 will increase APTC 
expenditures by approximately $98 million per year. This number may be 
slightly higher given the additional flexibilities for State Exchanges, 
but we are unable to estimate that because we do not know which State 
Exchanges may choose to implement this special rule earlier than 
January 1, 2024, or which State Exchanges operate in States whose State 
Medicaid Agency allows or provides for a Medicaid or CHIP 
reconsideration period greater than 90 days whereby the Exchange in 
that State may elect to provide more than 90 days to select a QHP under 
Sec.  155.420(c)(6).
    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
16. Plan Display Error Special Enrollment Periods (Sec.  155.420(d))
    We anticipate that revisions to Sec.  155.420(d)(12) will maintain 
current regulatory burden and cost on issuers. As discussed earlier in 
preamble at section III.B.7.d., these revisions will make necessary 
changes to the text of Sec.  155.420(d)(12) 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. This policy will 
have minimal operational impact, as interested parties such as issuers, 
States,

[[Page 25905]]

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 in 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.
    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
17. Termination of Exchange Enrollment or Coverage (Sec.  155.430)
    We do not anticipate any burden related to the policy to expressly 
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, or the issuer's business rules. Because this prohibition has 
already been operationalized 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 
policy and have not previously done so, but we do not have adequate 
data to estimate these costs.
    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
18. Improper Payment Pre-Testing and Assessment for State-Based 
Exchanges (Sec.  155.1500)
    This policy will prepare HHS to implement the Payment Integrity 
Information Act of 2019 (PIIA) requirements for State Exchanges. As 
described in the preamble in this final rule, the PIIA requires that 
agencies measure the improper payments rate for programs susceptible to 
significant improper payments. We already undertake annual measurements 
for Medicare, Medicaid, FFEs, and SBE-FPs. This final rule will 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 policy will test State Exchanges' readiness to provide the 
information necessary to measure the rate of improper payments. Even 
slight decreases in this rate will accrue large taxpayer savings. As 
discussed in section IV.J, the IPPTA incurs approximately $28,500 in 
annual costs per State Exchange for a total annual cost of $512,878 for 
all 18 State Exchanges. Nevertheless, we believe that the potential 
benefits of this regulatory action justify the present costs.
    This policy will 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 
policy. Neither this IPPTA nor any follow-on program should affect 
transfers between parties.
    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
19. FFE and SBE-FP User Fee Rates for the 2024 Benefit Year (Sec.  
156.50)
    We are finalizing an FFE user fee rate of 2.2 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 are also finalizing an SBE-FP user fee rate of 1.8 percent 
of monthly premium 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, increased Open Enrollment numbers and 
anticipated Medicaid redeterminations), premiums for the 2024 benefit 
year, and user fee rates, we are estimating that FFE and SBE-FP user 
fee transfers from issuers to the Federal Government will be $404 
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.
    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
20. Standardized Plans
    a. Standardized Plan Options (Sec.  156.201)
    At Sec.  156.201, for PY 2024 and subsequent PYs, we are finalizing 
minor updates to our approach to standardized plan options. 
Specifically, in contrast to the policy finalized in the 2023 Payment 
Notice, we are finalizing, for PY 2024 and subsequent PYs, to no longer 
include a standardized plan option for the non-expanded bronze metal 
level. Accordingly, we are finalizing 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.
    As we explained in the proposed rule, we believe 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. We also explained that we believe 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, we explained that if these standardized plan options 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 that 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, we 
are finalizing standardized plan options that continue to resemble the 
most popular QHP offerings that millions of consumers are already 
enrolled in. Accordingly, these standardized plan options are based on 
refreshed PY 2022 cost-sharing and enrollment data to ensure that these 
plans continue to reflect the most popular offerings in the Exchanges.
    We are maintaining an approach to standardized plan options that is 
similar to that taken in the 2023 Payment Notice, such that issuers 
will 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 we are finalizing 
requirements that QHP issuers 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 for which 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 will not be required to 
extend plan offerings

[[Page 25906]]

beyond service areas and metal levels in which they currently offer 
plans.
    Furthermore, as discussed earlier in the preamble, we will continue 
to differentially display standardized plan options on HealthCare.gov 
per the existing authority at Sec.  155.205(b)(1). Since we will 
continue to assume the burden for differentially displaying 
standardized plan options on HealthCare.gov, FFE and SBE-FP issuers 
will not be subject to this burden.
    In addition, as noted in the preamble, we will 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. We believe that continuing the enforcement of these 
differential display requirements will 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 \338\ or when enforcement of these 
requirements resumed beginning with the PY 2023 open enrollment period.
---------------------------------------------------------------------------

    \338\ These differential display requirements were first 
effective and enforced beginning with PY 2018. See 81 FR 94117 
through 94118, 94148.
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    Furthermore, since we will 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 will continue to be minimized. We intend 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).
    Finally, since we are not finalizing the proposed requirement for 
issuers to place all covered generic prescription drugs in the generic 
prescription drug cost-sharing tier and all covered brand drugs in the 
preferred or non-preferred brand prescription drug cost sharing tiers 
(or the specialty prescription drug tier, with an appropriate and non-
discriminatory basis) in these standardized plan options, issuers of 
these plans will not be subject to this additional burden.
    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
b. Non-Standardized Plan Option Limits (Sec.  156.202)
    At Sec.  156.202, we are finalizing limiting the number of non-
standardized plan options that issuers of individual market medical 
QHPs can offer through the FFEs and SBE-FPs to four in PY 2024 and two 
in PY 2025 and subsequent plan years per product network type, metal 
level, and inclusion of dental and/or vision benefit coverage, in any 
service area.
    By finalizing the proposed policy with modifications to increase 
the limit on the number of non-standardized plan options that issuers 
can offer to four instead of two for PY 2024, and to also factor the 
inclusion of dental and/or vision benefit coverage into this limit, we 
estimate (based on PY 2023 enrollment and plan offering data) that the 
weighted average number of non-standardized plan options available to 
each consumer will be reduced from approximately 89.5 in PY 2023 to 
66.3 in PY 2024, while the weighted average total number of plans 
(which includes both standardized and non-standardized plan options) 
available to each consumer will be reduced from approximately 113.7 in 
PY 2023 to 90.5 in PY 2024.
    We also note that phasing in the reduction in the number of non-
standardized plan options that issuers can offer, beginning with four 
for PY 2024, will also significantly reduce the number of plan 
discontinuations and affected enrollees for PY 2024. Specifically, 
based on PY 2022 data, we originally estimated that a limit of two non-
standardized plan options would result in the discontinuation of 
approximately 60,949 of a total 106,037 non-standardized plan option 
plan-county combinations (57.5 percent), and would affect approximately 
2.72 million of the 10.21 million enrollees in the FFEs and SBE-FPs 
(26.6 percent). That said, under the limit of four non-standardized 
plan options we are finalizing for PY 2024, based on PY 2023 data, we 
estimate that approximately 17,532 of the total 101,453 non-
standardized plan option plan-county combinations (17.3 percent) will 
be discontinued as a result of this limit, and approximately 0.81 
million of the 12.2 million enrollees on the FFEs and SBE-FPs (6.6 
percent) will be affected by these discontinuations in PY 2024. 
Finally, in terms of the impact on network availability, we estimate an 
average reduction of only 0.03 network IDs per issuer, product network 
type, metal level, and service area, meaning we anticipate network IDs 
will remain largely unaffected by this limit for PY 2024.
    As discussed in the preamble to this rule, we note that we are 
unable to provide meaningful estimates at this time for the weighted 
average number of non-standardized plan options available to each 
consumer; the weighted average number of total plans available to each 
consumer; the number of plan-county discontinuations; the number of 
affected enrollees; and the average reduction of network IDs per 
issuer, product network type, metal level, and service area under the 
limit of two non-standardized plan options per issuer, product network 
type, metal level, inclusion of dental and/or vision benefit, and 
service area for PY 2025 and subsequent plan years.
    This is because for these estimates to be meaningful, they would 
need to be based on plan offering and enrollment data for PY 2024, 
which will not be available until the end of the current QHP 
certification cycle for PY 2024 and the end of the 2024 OEP, 
respectively. We anticipate that the broader landscape of plan 
offerings as well as the composition of individual issuers' portfolios 
of plan offerings will undergo significant changes as a result of the 
limit of four non-standardized plan options in PY 2024, and that any 
estimates based on data sourced from a plan year before this limit is 
enacted would not be meaningfully predictive of the landscape of plan 
offerings or individual issuers' portfolios of plan offerings for a 
plan year after this limit is enacted.
    Furthermore, as we discussed in the preamble to this rule, we note 
that in the 2025 Payment Notice proposed rule, we intend to propose an 
exceptions process, as well as the specific criteria and thresholds 
that would be included in this exceptions process, that would, if 
finalized, allow issuers to offer non-standardized plan options in 
excess of the limit of two for PY 2025 and subsequent plan years.
    Regardless, we acknowledge that the termination of these non-
standardized plan options would entail burden in several forms, such as 
by affecting issuers' balance of enrollment across plans, by affecting 
the premium rating for each of those plans, and by requiring issuers to 
send discontinuation notices for enrollees whose plans are being 
discontinued. We are unable to quantify this burden, as the costs of 
discontinuing plans, reallocating enrollment among existing plans, and

[[Page 25907]]

recalculating the premium rating for each of these plans after these 
discontinuations and enrollee reallocations vary considerably due to a 
range of factors, including the current number of plan offerings per 
issuer, the number of plans that would be discontinued per issuer, the 
number of enrollees in those discontinued plans that would have to be 
re-enrolled in a different plan, and the composition of these remaining 
plan offerings.
    That said, we believe that the advantages of enacting these changes 
outweigh the disadvantages of doing so. Specifically, with plan 
proliferation continuing unabated for several years, consumers have had 
to select from among record numbers of available plan options. Having 
such high numbers of plan choices to select from makes it increasingly 
difficult for consumers, especially those with lower rates of health 
care literacy, to easily and meaningfully compare all available plan 
options.
    This subsequently increases the risk of suboptimal plan selection 
and unexpected financial harm for those who can least afford it. Thus, 
although we acknowledge the burden imposed on issuers subsequent to the 
imposition of a limit of four non-standardized plan options in PY 2024 
and two non-standardized plan options in PY 2025 and subsequent plan 
years, we believe these changes align with the original intent of the 
Exchanges--to facilitate a consumer-friendly experience for individuals 
looking to purchase health insurance. We believe this change will 
continue to benefit consumers on the Exchanges over numerous years. We 
further note that we intend to offer the necessary guidance and 
technical assistance to facilitate this transition, such as through the 
2024 Letter to Issuers and QHP certification webinars.
    Relatedly, although issuers will be required to select another QHP 
to which to crosswalk affected enrollees from discontinued non-
standardized plan options, we note that the existing discontinuation 
notices and process as well as the current re-enrollment hierarchy and 
corresponding crosswalk process outlined at Sec.  155.335(j) will 
accommodate crosswalking these affected enrollees, and that no 
additional modification to these processes or to this re-enrollment 
hierarchy will be required. Finally, we note that no additional action 
will be required on behalf of consumers to complete this crosswalking 
process.
    Finally, we believe burden is further meaningfully reduced given 
that we are phasing in the reduction in the number of non-standardized 
plan options that issuers can offer, beginning with four in PY 2024, 
which significantly reduces the number of necessary discontinuations in 
PY 2024 and subsequently reduces the number of affected enrollees that 
will need to be crosswalked.
    We explained in the proposed rule that we did not have sufficient 
data to estimate the costs associated with these changes. As such, we 
sought comment from interested parties regarding cost estimates and 
data sources.
    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
21. QHP Rate and Benefit Information (Sec.  156.210)
a. Age on Effective Date for SADPs
    We are finalizing standards related to the rate submission process 
for Exchange-certified SADPs during QHP certification. Specifically, we 
are finalizing modifications to 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 Classic DE and EDE partners) by promoting operational 
efficiency.
    This 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 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 Classic DE and EDE partners). 
Therefore, this policy helps facilitate more informed enrollment 
decisions and enrollment satisfaction.
    We also do not anticipate any negative financial impact as a result 
of this policy, given that it will be a small operational change. If 
anything, this policy has the potential to reduce financial burden on 
issuers and HHS, as removing the other age rating methods will reduce 
the added expense and slower development times that must account for 
test cases in the rating engine for the less commonly used and more 
complex methods.
    Additionally, this policy change will not create any additional 
information submission burden, as it will apply to information that 
Exchange issuers already submit as part of the QHP certification 
process.
    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
b. Guaranteed Rates for SADPs
    We are finalizing standards related to the rate submission process 
for Exchange-certified SADPs during QHP certification. Specifically, we 
are finalizing modifications to 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 will 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 policy 
change will 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 policy 
will also reduce the burden placed on consumers because it will 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.
    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
22. Plan and Plan Variation Marketing Name Requirements for QHPs (Sec.  
156.225)
    We are finalizing the addition of a new paragraph (c) to Sec.  
156.225 as proposed, to require that QHP plan and plan variation \339\ 
marketing names include correct information, without omission of 
material fact, and do not include content that is misleading. We will 
review plan and plan variation marketing names during the annual

[[Page 25908]]

QHP certification process in close collaboration with State regulators 
in States with Exchanges on the Federal platform.
---------------------------------------------------------------------------

    \339\ 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).
---------------------------------------------------------------------------

    By providing standards that help ensure plan and plan variation 
marketing names are clear and accurate, we anticipate this 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 policy will 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. We acknowledge that the policy might require 
additional effort during the QHP certification process on the part of 
Exchange issuers to comply with new plan marketing name standards, but 
believe it will 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.
    Finally, we also believe that the policy will 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.
    We sought comment on the burden that this policy would impose, and 
on the burden reduction it could provide. We also sought comment on how 
HHS can further alleviate any burden associated with this policy, such 
as through technical assistance to Exchange interested parties, 
including issuers and enrollment assisters.
    We summarize and respond to public comments received regarding the 
impact of the policy below.
    Comment: Many commenters supported the proposal and agreed that 
ensuring plan and plan variation marketing name accuracy would reduce 
burden on consumers, assisters, agents and brokers, and other 
stakeholders. Some commenters supported the policy but cautioned 
against imposing name requirements that were too detailed or 
restrictive, or that contradicted existing State requirements. A few 
commenters opposed the policy based on concerns that it would restrict 
issuers' ability to market unique characteristics of their plans.
    Response: We respond to these public comments in the final rule 
preamble.
    Comment: Several commenters recommended steps for CMS to take to 
reduce burden on issuers if this policy were finalized. One commenter 
requested that CMS delay the policy to 2025 because issuers would have 
already begun plan filings when the final rule is expected to be 
issued, and because marketing names are used in multiple materials, 
issuers would benefit from additional implementation time and more 
specific guidance regarding permitted naming practices to prevent 
having to revise consumer-facing materials. This commenter also 
suggested that this proposal be implemented prior to the proposed 
changes to the auto re-enrollment hierarchy to ensure that marketing 
names are first accurate, consistent, and understood by consumers, 
before some consumers are auto re-enrolled into a different plan than 
their current plan. Another commenter raised concerns about including 
additional requirements during the QHP certification process, stating 
that new requirements would add significant administrative burden 
during a time when issuers are working to implement several new 
standards and requirements.
    Response: Given that the primary intent of this policy is to ensure 
that information in plan and plan variation marketing names is accurate 
and does not conflict with information included in other plan 
documents, we disagree that it is necessary or appropriate to delay it. 
In response to concerns about issuer burden, we expect that this rule, 
and the related requirements discussed in preamble, will permit the 
continued use of most plan and plan variation marketing names and that 
this will help mitigate burden on issuers. Further, the rule and 
related review process will likely result in improved stability in this 
area because it will allow us to work with issuers and States during 
the QHP Certification process to address marketing name errors prior to 
Open Enrollment, as opposed to addressing problems with and requiring 
changes to plan and plan variation marketing names based on consumer 
complaints during and after Open Enrollment. Over the past several 
years, the need to make changes to plan and plan variation marketing 
names after Open Enrollment to address incorrect or misleading 
information in marketing names has resulted in significant time and 
effort on the part of HHS and issuers. We expect that the requirement 
to make these corrections prior to Open Enrollment will result in a net 
reduction in burden, especially in cases where a marketing name error 
would otherwise have resulted in offering an SEP to enrollees whose 
plan selection may have been impacted by the incorrect or misleading 
marketing name information. The availability of accurate and clear 
marketing names during Open Enrollment will also reduce burden for 
consumers who would otherwise have to reassess their decisions based on 
information that was not clear when they enrolled.
    For a discussion of why we do not plan to delay implementation of 
changes to the re-enrollment hierarchy, see the RIA section for annual 
eligibility redeterminations (Sec.  155.335(j)). We also note that as 
discussed in the preamble for this section, we will work with States to 
review plan and plan variation marketing names in advance of Open 
Enrollment, which will result in improved accuracy of marketing names 
prior to the auto re-enrollment process for PY 2024. Additionally, as 
we discussed in the proposed rule (87 FR 78309), we will proactively 
address 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.
    Comment: Multiple commenters agreed that this policy would promote 
health equity by reducing the likelihood that consumers might 
misunderstand or be confused about QHP benefits based on information in 
marketing names. These commenters agreed that these challenges were 
especially burdensome for consumers with low health literacy, which is 
disproportionately experienced among low-income, underserved, and 
vulnerable populations.
    Response: We agree with commenters and look forward to continuing 
to work with interested parties to advance health equity in the 
individual and small group health insurance markets.
23. Network Adequacy (Sec.  156.230)
    HHS is finalizing the proposal to revise Sec. Sec.  156.230 and 
156.235 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, subject 
to a limited exception for certain SADPs as discussed previously in 
this final rule. 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

[[Page 25909]]

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.340 341 
We expect any initial increased issuer costs to differ from the costs 
experienced once such provider contractual relationships have been 
established or pre-existing networks associated with their other plans 
have been leveraged. We requested comment on whether and how to 
extrapolate from literature on voluntary network formation for purposes 
of assessing impacts of this regulatory provision.
---------------------------------------------------------------------------

    \340\ 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.
    \341\ 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.
---------------------------------------------------------------------------

    For SADPs that do not use a provider network, this policy will 
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, and we expect that a similarly small number of Exchange-certified 
SADPs that do not use a provider network would be affected on State 
Exchanges and SBE-FPs. As discussed further in Table 11 in the preamble 
for part 156, over the last few years, fewer than 100 counties on the 
FFEs 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 will 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.
    As discussed previously in this final rule, these impacts will be 
mitigated, as we are finalizing 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 (we refer readers to 
section III.C.7 of the preamble of this final rule for further 
discussion of this exception).
    Finally, we do not anticipate any impact as a result of this policy 
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 we 
solicited comment to inform that understanding.
    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
24. Essential Community Providers (Sec.  156.235)
    We are finalizing the proposal to strengthen the ECP standards 
under Sec.  156.235(a)(2)(i) and (b)(2)(i) by requiring 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, we are 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 as proposed. 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 
will 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.
    We are also finalizing the proposal to strengthen the ECP standards 
under Sec.  156.235(a)(2)(ii)(B) by establishing two additional stand-
alone ECP categories--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 policy 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

[[Page 25910]]

(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 will be 
required to include as part of its application for QHP certification a 
satisfactory justification.
    We did not receive any comments in response to the burden estimates 
for these policies. We are finalizing these estimates as proposed.
25. Termination of Coverage or Enrollment for Qualified Individuals 
(Sec.  156.270)
    We are finalizing an amendment to Sec.  156.270(f) to add a 
timeliness standard to the requirement for QHP issuers operating in 
Exchanges on the Federal platform to send enrollees notice of payment 
delinquency. Specifically, we are revising Sec.  156.270(f) to require 
such issuers to send notice of payment delinquency promptly and without 
undue delay, within 10 business days of the date the issuer should have 
discovered the delinquency. We anticipate that this policy will 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 will 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 timeliness standard, but do not have adequate data 
to estimate these costs.
    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.
26. Final Deadline for Reporting Enrollment and Payment Inaccuracies 
Discovered After the Initial 90-Day Reporting Window (Sec.  
156.1210(c))
    We are finalizing an amendment to 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 PY to which such inaccuracy relates has been completed, 
in order for these data inaccuracies to be eligible for resolution. We 
are retaining 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 PY to 
which the inaccuracy relates to be eligible to receive an adjustment to 
correct an underpayment of APTC or overpayment of user fees to HHS. 
Beginning with the 2020 plan year coverage, HHS will not pay additional 
APTC payments or reimburse user fee payments for FFE, SBE-FP, and State 
Exchange issuers for data inaccuracies reported after the 3-year 
deadline. For PYs 2015 through 2019, to be eligible for resolution 
under Sec.  156.1210(b), an issuer must describe all inaccuracies 
identified in a payment and collections report before January 1, 2024. 
We anticipate that this change will 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 will be minimal, if any, as issuers have several opportunities 
to submit data inaccuracies prior to this 3- year deadline. Therefore, 
we anticipate no significant financial impact for this policy.
    We did not receive any comments in response to the burden estimates 
for this policy. We are finalizing these estimates as proposed.

27. Regulatory Review Cost Estimation

    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this 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 assumed that the total number of unique 
commenters on last year's final rule (465) will be the number of 
reviewers of this final 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 will 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 recognized that different types of entities are in many 
cases affected by mutually exclusive sections of this final rule, and 
therefore, for the purposes of our estimate we assume that each 
reviewer reads approximately 50 percent of the rule. We sought comments 
on this assumption.
    Using the wage information ($57.61 per hour) from the Bureau of 
Labor Statistics (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 a 100 percent increase for other indirect 
costs.\342\ Assuming an average reading speed of 250 words per minute, 
we estimate that it will take approximately 6.67 hours for the staff to 
review half of this final rule (no more than 100,000 words). For each 
entity that reviews the rule, the estimated cost is $768.13 (6.67 hours 
x $115.22). Therefore, we estimate that the total cost of reviewing 
this regulation is approximately $357,180 ($768.13 x 465).
---------------------------------------------------------------------------

    \342\ https://www.bls.gov/oes/current/oes_nat.htm.
---------------------------------------------------------------------------

D. Regulatory Alternatives Considered

    For 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 that 
were detailed in the proposed rule (87 FR 78216 through 78218). 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 
fourth option, which was the proposed option, 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. 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

[[Page 25911]]

benefit year recalibration--only 2018 and 2019 data.
    Our analyses found that the 2019 and 2020 enrollee-level EDGE 
recalibration data were largely comparable, however, there were 
observed anomalous decreases in the unconstrained age-sex coefficients 
for the 2020 enrollee-level EDGE. Specifically, whether a coefficient 
increased or decreased between the 2019 and 2020 enrollee-level EDGE 
data seemed to be related to the age and sex values for the age-sex 
factor, with older female enrollees being observed to have a greater 
likelihood of a decrease in their age-sex factor coefficient than other 
age and sex groups. However, we have noted that the magnitude of these 
coefficient changes is within the range of year-to-year changes that we 
have previously observed. Additionally, we agree with commenters to the 
proposed rule that removing only the 2020 enrollee-level EDGE data set 
age-sex factors from the blending of the coefficients may have 
disadvantages in that all coefficients in the model are interrelated 
and the removal of a subset of coefficients from blending as described 
in the proposed option 4 would not address any related coefficients 
that remained in the blending step. Therefore, although option 1 will 
not address the identified anomalous trend in the direction of changes 
to the age-sex factors, the small magnitude of the changes and the 
disadvantages of the proposed option have resulted in our decision to 
finalize option 1 in lieu of the proposed option. As such, we will 
maintain current policy, recalibrating the risk adjustment models using 
2018, 2019, and 2020 enrollee-level EDGE data (without any adjustment).
    We continue to believe the other options we considered are less 
appropriate than either the proposed option or the option finalized in 
this rule. For example, the second option we considered in the proposed 
rule represented a compromise between those who wish to include 2020 
enrollee-level EDGE 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 are concerned this approach will require finding an 
appropriate weighting methodology, and we are further concerned that 
broadly dampening the effect of the 2020 enrollee-level EDGE data in 
the models defeats the purpose of adding the next available benefit 
year of data as part of model recalibration, because doing so will 
prevent the models from reflecting changes in utilization and cost of 
care that are unrelated to the impact of the COVID-19 PHE. We have 
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 enrollee-level EDGE data. We do 
not believe that such a broad dampening is necessary because the 
anomalous coefficient changes identified from the 2020 enrollee-level 
EDGE data were largely limited to which adult model age-sex 
coefficients increased or decreased, and including an additional prior 
benefit year of data will dampen the impact of the 2020 data on other 
factors, preventing 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 involve the 
complete exclusion of 2020 enrollee-level EDGE data, because both of 
these options will result in reliance on data that may not be the most 
reflective data set of current utilization and spending trends. 
Furthermore, there are questions 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 as our analysis showed 2020 enrollee-level EDGE data to be 
largely comparable to 2019 benefit year enrollee-level EDGE data. 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) will 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 solicited 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 and responded to comments in the above 
preamble section entitled ``Data for Risk Adjustment Model 
Recalibration for 2024 Benefit Year''.
    In developing the updated materiality threshold for HHS-RADV 
finalized in this rule, we sought to ensure the materiality threshold 
will 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 proposed 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 will fail to 
capture small issuers overtime as PMPM premiums grow and will require 
more regular updates to the materiality threshold to maintain the 
current balance. The use of a BMM threshold avoids this issue. We 
invited 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 invited comment on the applicability date for when the new 
materiality threshold should begin to apply. Based on comments received 
and discussed in the preamble section titled ``Materiality Threshold 
for Risk Adjustment Data Validation,'' we are finalizing this provision 
as proposed and are using the new materiality threshold beginning with 
the 2022 benefit year HHS-RADV.
    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

[[Page 25912]]

are filing and reconciling remain eligible to receive APTC. Because of 
this, we amended our proposal and are finalizing as proposed a 
requirement 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, the policy we are finalizing will 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 IRS data would have their household income adjusted 
based on that data as opposed to those without IRS data who would lose 
eligibility for financial assistance.
    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 believed this may 
slightly reduce operational complexity, we believed income-based CSR-
eligible enrollees who have a de minimis or non-zero-dollar premium 
will 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 believed 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 will help issuers and Exchanges 
diligently and appropriately adjust their re-enrollment operations. We 
solicited comment on all aspects of the re-enrollment proposal at Sec.  
155.335(j) and responded to comments received in the associated 
preamble section. As discussed in that preamble section, we are 
finalizing this policy with minor modifications.
    We 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, we believed 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 finalized 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 the revisions to 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 
will benefit from this finalized 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 will 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 will 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 the addition of new 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 finalized change, 
especially during the period of unwinding the Medicaid continuous 
enrollment condition, 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

[[Page 25913]]

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.\343\ Additionally, for other exceptional circumstances, 
there is flexibility under Sec.  155.420(d)(9) that we 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 in a new application for enrollment (instead of losing 
eligibility for existing 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 the preamble.
---------------------------------------------------------------------------

    \343\ https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/8-9-natural-disaster-SEP.pdf.
---------------------------------------------------------------------------

    We considered taking no action regarding the modifications to 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, and we are therefore finalizing this 
policy as proposed.
    In developing the IPPTA policies contained in this final rule 
(Sec.  155.1500), we requested to meet individually with each State 
Exchange that participated in the voluntary State engagement initiative 
in order to gather State-specific information regarding options for 
data collection that will 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 data collection option 
requests that the State Exchange provide no fewer than 10 sampled tax 
households that we proposed the State Exchange will 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 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 invited comment on this data collection option and potential 
alternative data collection options. We did not receive any comments on 
the data collection alternative option. We are finalizing the data 
collection option as proposed.
    For standardized plan options, we considered a range of options for 
the 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 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 of the standardized 
plan options from PY 2023, as well as by increasing the maximum out-of-
pocket (MOOP) values for these plan designs. We explained in the 
proposed rule that we believe this approach will strike the greatest 
balance in providing enhanced pre-deductible coverage while ensuring 
competitive premiums for these standardized plan options.
    We invited comment on this proposed approach. As further discussed 
in the associated preamble section, we are finalizing the proposed 
standardized plan options policy, but with one modification. 
Specifically, we are not finalizing the proposed requirement for 
issuers to include all covered generic drugs in the generic 
prescription drug cost-sharing tier and all covered brand drugs in 
either the preferred brand or non-preferred brand prescription drug 
cost-sharing tiers (or the specialty tier, with an appropriate and non-
discriminatory basis) in these standardized plan options, as is further 
discussed in the associated preamble section.
    For non-standardized plan option limits, we considered a range of 
options for the 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.\344\ 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.
---------------------------------------------------------------------------

    \344\ 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.
---------------------------------------------------------------------------

    In the proposed rule, we proposed to add Sec.  156.202 to limit the 
number of non-standardized plan options that issuers of QHPs can offer 
through Exchanges on the Federal platform (including SBE-FPs) to two 
non-

[[Page 25914]]

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. We explained that we believed this 
would be the most effective mechanism to reduce the risk of plan choice 
overload, streamline the plan selection process, and enhance choice 
architecture for consumers on the Exchanges.
    We invited comment on this proposed approach. As discussed further 
in the associated preamble section of this final rule, we are 
finalizing this policy with a modification. Specifically, we are 
finalizing a phased in approach to limiting the number of non-
standardized plan options such that a QHP issuer in an FFE or SBE-FP in 
PY 2024 is limited to offering four non-standardized plan options per 
product network type, as the term is described in the definition of 
``product'' at Sec.  144.103, metal level (excluding catastrophic 
plans), and inclusion of dental and/or vision benefit coverage, in any 
service area. For PY 2025 and subsequent plan years, a QHP issuer in an 
FFE or SBE-FP 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, metal level (excluding catastrophic 
plans), and inclusion of dental and/or vision benefit coverage, in any 
service area.
    We believe this policy strikes an appropriate balance in reducing 
the risk of plan choice overload and preserving a sufficient degree of 
consumer choice. As we explain in the corresponding section of the 
preamble to this final rule, we believe that permitting additional 
variations specifically for non-standardized plan options with the 
inclusion of dental or vision benefit coverage--instead of, for 
example, permitting additional variation for any single change in the 
product package, however small--decreases the likelihood that these 
limits will be circumvented.
    For plan and plan variation marketing names, we considered issuing 
sub-regulatory guidance in lieu of rulemaking to require that marketing 
names include correct information, without omission of material fact, 
and not include content that is misleading. However, as explained in 
the proposed rule, given the important role that plan and plan 
variation marketing names play in facilitating plan competition through 
consumer education on Exchanges, we proposed this requirement in 
regulation to allow interested parties the opportunity to comment. As 
discussed in that preamble section, we are finalizing this policy as 
proposed.
    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. In the proposed rule, we invited 
comment on these proposed changes and respond to those comments in the 
associated preamble section of this final rule. As discussed in that 
preamble section, we are finalizing these changes as proposed.
    We considered not proposing to require all QHP issuers, including 
SADPs, 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. In the proposed 
rule, we invited comment on this proposal and respond to those comments 
in the associated preamble section of this final rule. As discussed in 
that preamble section, we are finalizing this policy but providing 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 (we refer readers to section III.C.7 of the preamble of this 
final rule for further discussion of this exception).
    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, as we stated in the 
proposed rule, 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 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 declined to propose such a 
regulation, 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. As discussed in the associated 
preamble section of this final rule, we are finalizing this timeliness 
standard with modifications, such that beginning in PY 2024, QHP 
issuers in Exchanges operating on the Federal platform will be required 
to send notices of payment delinquency promptly and without undue 
delay, within 10 business days of the date the issuer should have 
discovered the delinquency.

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 will 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 will 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 will be $35 million or less.\345\ 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 2021 MLR 
reporting year, approximately 78 out of 480 issuers of health insurance 
coverage nationwide had total premium revenue of $41.5 million or 
less.\346\ 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

[[Page 25915]]

small companies are likely to have non-health lines of business that 
will result in their revenues exceeding $41.5 million.
---------------------------------------------------------------------------

    \345\ https://www.sba.gov/document/support--table-size-standards.
    \346\ Available at https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html.
---------------------------------------------------------------------------

    In this final rule, we are finalizing 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 did not 
believe that an initial regulatory flexibility analysis is required for 
such firms and therefore do not believe a final regulatory flexibility 
analysis is required. 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 final rule. Therefore, the Secretary has 
certified that this final rule will not have a significant economic 
impact on a substantial number of small entities.
    In addition, section 1102(b) of the Act requires 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 rule 
will not affect small rural hospitals. Therefore, the Secretary has 
certified that this final 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 2023, that 
threshold is approximately $177 million. Although we have not been able 
to quantify all costs, we expect that 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 final rule will not impose substantial 
direct requirement costs on State and local governments, this 
regulation has federalism implications due to potential direct effects 
on the distribution of power and responsibilities among the State and 
Federal Governments relating to determining standards relating to 
health insurance that is offered in the individual and small group 
markets. For example, the repeal of the ability for States to request a 
reduction in risk adjustment State transfers 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 policies in this rule related to IPPTA 
will 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 final 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 this final rule should not conflict with State law, HHS does 
not anticipate any preemption of State law. We invited State Exchanges 
to submit comments on this section of the proposed rule if they believe 
it will conflict with State law and did not receive any such comments.
    In addition, we believe this final rule does have federalism 
implications due to the finalized policy that Exchanges offer earlier 
effective dates for consumers attesting to future mid-month coverage 
losses. However, the federalism implications are mitigated as Exchanges 
will have the flexibility to continue offering the current coverage 
effective dates as described at Sec.  155.420(b)(2)(iv) or the new 
finalized 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 earlier coverage 
effective dates for consumers attesting to a future loss of MEC will be 
applicable market-wide at the option of the applicable State authority.
    Additionally, we believe this final rule does have federalism 
implications due to the finalized policy 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 new special rule providing consumers with 60 days 
before or 90 days after their loss of Medicaid or CHIP to enroll in QHP 
coverage. State Exchanges will also have

[[Page 25916]]

additional flexibility to implement this special rule earlier than 
January 1, 2024, if they so choose, and are permitted to offer a longer 
attestation window up to the number of days provided for the applicable 
Medicaid or CHIP reconsideration period, if the State Medicaid agency 
allows or provides for a Medicaid or CHIP reconsideration period 
greater than 90 days.

H. Congressional Review Act

    This final rule is subject to the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801, et seq.), which specifies that before a rule can 
take effect, the Federal agency promulgating the rule shall submit to 
each House of the Congress and to the Comptroller General a report 
containing a copy of the rule along with other specified information. 
The Office of Information and Regulatory Affairs in OMB has determined 
that this final rule is a ``major rule'' as that term is defined in 5 
U.S.C. 804(2), because it is likely to result in an annual effect on 
the economy of $100 million or more.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on April 12, 2023.

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, 
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, Youth.

45 CFR Part 156

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

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

PART 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. Section 153.320 is amended 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, 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) * * *
    (i) * * *
    (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

[[Page 25917]]

corridors and medical loss ratio (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 a State-based 
Exchanges on the Federal platform (SBE-FP), in accordance with HHS 
rules in this chapter, as a State Exchange utilizing the Federal 
platform;
* * * * *


Sec.  155.210  [Amended]

0
7. Section 155.210 is amended by:
0
a. Removing the period at the end of paragraph (c)(6) and adding a 
semicolon in its place;
0
b. Adding the word ``or'' following the semicolon at the end of 
paragraph (d)(7); and
0
c. 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
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, or other similar means or methods 
specified by HHS in guidance.
    (B) The documentation required under paragraph (j)(2)(iii)(A) of 
this section must include a description of

[[Page 25918]]

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:
0
a. Adding the word ``or'' following the semicolon in paragraph (g)(4); 
and
0
b. Removing and reserving paragraph (g)(5).

0
10. Section 155.305 is amended by revising paragraphs (f)(1)(ii)(B) and 
(f)(4) to read as follows.


Sec.  155.305  Eligibility standards.

* * * * *
    (f) * * *
    (1) * * *
    (ii) * * *
    (B) Is not eligible for minimum essential coverage for the full 
calendar month for which advance payments of the premium tax credit 
would be paid, with the exception of coverage in the individual market, 
in accordance with 26 CFR 1.36B-2(a)(2) and (c).
* * * * *
    (4) Compliance with filing requirement. The Exchange may not 
determine a tax filer eligible for advance payments of the premium tax 
credit (APTC) if HHS notifies the Exchange as part of the process 
described in Sec.  155.320(c)(3) that APTC payments were made on behalf 
of either the tax filer or 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 the tax filer's 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 
in 26 CFR chapter I, and reconcile APTC for that period.
* * * * *

0
11. Section 155.315 is amended by adding paragraph (f)(7) to read as 
follows:


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) Acceptance of attestation. 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 paragraph (c)(1)(i)(A) of this section 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--
0
a. Revising paragraphs (j)(1) introductory text, (j)(1)(i) and (ii), 
(j)(1)(iii)(A) and (B), (j)(1)(iv), (j)(2), and (j)(3) introductory 
text; and
0
b. Adding paragraph (j)(4).

    The revisions and addition read as follows:


Sec.  155.335  Annual eligibility redetermination.

* * * * *
    (j) * * *
    (1) The product under which the QHP in which the enrollee is 
enrolled remains available through the Exchange for renewal, consistent 
with Sec.  147.106 of this subchapter, the Exchange will renew the 
enrollee in a QHP under that product, unless the enrollee terminates 
coverage, including termination of coverage in connection with 
voluntarily selecting a different QHP, in accordance with Sec.  
155.430, or unless otherwise provided in paragraph (j)(1)(iii)(A) or 
(j)(4) of this section, as follows:
    (i) The Exchange will re-enroll the enrollee in the same plan as 
the enrollee's current QHP, unless the current QHP is not available 
through the Exchange;
    (ii) If the enrollee's current QHP is not available through the 
Exchange, the Exchange will re-enroll the enrollee in a QHP within the 
same product at the same metal level as the enrollee's current QHP 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 the 
enrollee's current product and that has the most similar network 
compared to the enrollee's current QHP. 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; or
    (B) 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; 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 and that has the 
most similar network compared to the enrollee's current QHP.
    (2) No plans under the product under which the QHP in which the 
enrollee is enrolled are available through the Exchange for renewal, 
consistent with Sec.  147.106 of this subchapter, the Exchange will 
enroll the enrollee in a QHP under a different product offered by the 
same QHP issuer, to the extent permitted by applicable State law, 
unless the enrollee terminates coverage, including termination of 
coverage in connection with voluntarily selecting a different QHP, in 
accordance with Sec.  155.430, as follows, except as provided in 
paragraph (j)(4) of this section.
    (i) The Exchange will re-enroll the enrollee in a QHP 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 
and that has the most

[[Page 25919]]

similar network compared to the enrollee's current QHP;
    (ii) 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
    (iii) 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 and that has the most similar network compared to the 
enrollee's current QHP in the product that is most similar to the 
enrollee's current product.
    (3) No QHPs from the same issuer are available through the 
Exchange, the Exchange may enroll the enrollee in a QHP issued by a 
different issuer, to the extent permitted by applicable State law, 
unless the enrollee terminates coverage, including termination of 
coverage in connection with voluntarily selecting a different QHP, in 
accordance with Sec.  155.430, as follows:
* * * * *
    (4) The enrollee is determined upon annual redetermination eligible 
for cost-sharing reductions, in accordance with Sec.  155.305(g), is 
currently enrolled in a bronze level QHP, and would be re-enrolled in a 
bronze level QHP under paragraph (j)(1) or (2) of this section, then to 
the extent permitted by applicable State law, unless the enrollee 
terminates coverage, including termination of coverage in connection 
with voluntarily selecting a different QHP, in accordance with Sec.  
155.430, at the option of the Exchange, the Exchange may re-enroll such 
enrollee in a silver level QHP within the same product, with the same 
provider network, and with a lower or equivalent premium after the 
application of advance payments of the premium tax credit as the bronze 
level QHP into which the Exchange would otherwise re-enroll the 
enrollee under paragraph (j)(1) or (2) of this section.
* * * * *

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);
0
c. Removing the heading from paragraph (d)(6); and
0
d. 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 their dependents become newly eligible for 
cost-sharing reductions in accordance with paragraph (d)(6)(i) or (ii) 
of this section and the enrollee or their dependents are not enrolled 
in a silver-level QHP, the Exchange must allow the enrollee and their 
dependents to change to a silver-level QHP if they elect to change 
their QHP enrollment; or
    (B) Beginning January 2022, if an enrollee or their 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 their 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 paragraph (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) with 
respect to losses of coverage as described at paragraphs (d)(1), 
(d)(6)(iii), and (d)(15) of this section, 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 day of the month in which the 
triggering event occurs.
* * * * *
    (c) * * *
    (2) Advanced availability. A qualified individual or their 
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 their 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 they 
newly satisfy 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, or earlier, at the option of the Exchange, a qualified 
individual or their 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. If a State Medicaid or CHIP Agency allows or provides 
for a Medicaid or CHIP reconsideration period greater than 90 days, the 
Exchange in that State may elect to provide a qualified individual or 
their 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 additional time to select a QHP, up to the number of days 
provided for the applicable Medicaid or CHIP reconsideration period.
* * * * *
    (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,

[[Page 25920]]

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, if higher, the maximum age a QHP issuer is required 
to make available dependent coverage of children under applicable State 
law or the issuer's business rules), 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. Review of 
appeal decisions issued by an impartial official as described in Sec.  
155.535(c)(4) is available 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)(1) 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 must:
    (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 impartial official's 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 paragraphs (g)(1)(i)(B)(1) and (3) of this section.
    (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:
    (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 paragraphs 
(g)(1)(i)(B)(1) and (3) 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)(i)(C) 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 impartial 
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 (g)(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 decision. 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.
    (3) Implementation date. The administrative review process is 
available for eligibility appeal decisions issued on or after January 
1, 2024.
* * * * *

0
17. Add subpart P, consisting of Sec. Sec.  155.1500 through 155.1515, 
to read as follows:
Subpart P--Improper Payment Pre-Testing and Assessment (IPPTA) for 
State-based 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-based 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-based Exchanges. These 
requirements are intended to:
    (1) Prepare State-based Exchanges for the planned measurement of 
improper payments.
    (2) Test processes and procedures that support HHS's review of 
determinations of advance payments of the premium tax credit (APTC) 
made by State-based Exchanges.
    (3) Provide a mechanism for HHS and State-based 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-based Exchange's internal directives 
defining, guiding, or constraining the State-based 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-based Exchanges 
for the planned measurement of improper payments of APTC.
    Pre-testing and assessment checklist means the document that 
contains

[[Page 25921]]

criteria that HHS will use to review a State-based 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-based Exchange to submit.
    Pre-testing and assessment period means the two calendar year 
timespan during which HHS will engage in pre-testing and assessment 
procedures with a State-based Exchange.
    Pre-testing and assessment plan means the template developed by HHS 
in collaboration with each State-based 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-based Exchange at the end of the State-based 
Exchange's pre-testing and assessment period that will include, but not 
be limited to, the State-based 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-based Exchange 
to HHS.


Sec.  155.1510  Data submission.

    (a) Requirements. For purposes of the IPPTA, a State-based Exchange 
must submit the following information in a form and manner specified by 
HHS:
    (1) Data documentation. The State-based Exchange must provide to 
HHS the following data documentation:
    (i) The State-based 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-based 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-based 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-based Exchanges are required to 
participate in the IPPTA for a period of two calendar years. The State-
based 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-based Exchanges with an 
overview of the pre-testing and assessment procedures and identify 
documentation that a State-based Exchange must provide to HHS for pre-
testing and assessment.
    (2) As a part of the planning process, HHS, in collaboration with 
each State-based Exchange, will develop a pre-testing and assessment 
plan that takes into consideration relevant activities, if any, that 
were completed during a prior, 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-based Exchange. The pre-testing and assessment plan will be 
for HHS and State-based 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-based 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-based 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-based 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-based Exchanges 
about the form and manner for State-based 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-based 
Exchange to track and manage the data and data documentation submitted 
by a State-based Exchange as specified in Sec.  155.1510(a)(1) and (2).
    (2) HHS will coordinate with each State-based Exchange to provide 
assistance in aligning the data specified in Sec.  155.1510(a)(2) from 
the State-based Exchange's existing data structure to the standardized 
set of data elements.
    (3) HHS will coordinate with each State-based 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-based 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-based Exchange's submission of the data documentation 
as specified in Sec.  155.1510(a)(1).
    (2) A State-based Exchange's submission of the data for processing 
and testing as specified in Sec.  155.1510(a)(2); and
    (3) A State-based 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-based Exchange's pre-testing and assessment period, HHS will 
issue a pre-testing and assessment report specific to that State-based 
Exchange. The pre-testing and assessment report will be for HHS and 
State-based 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
18. 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
19. Section 156.201 is revised to read as follows:


Sec.  156.201  Standardized plan options.

    A qualified health plan (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

[[Page 25922]]

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).

0
20. Section 156.202 is added to read as follows:


Sec.  156.202  Non-standardized plan option limits.

    A QHP issuer in a Federally-facilitated Exchange or a State-based 
Exchange on the Federal platform:
    (a) For plan year 2024, is limited to offering four 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, metal level (excluding catastrophic plans), and inclusion 
of dental and/or vision benefit coverage (as defined in paragraph (c) 
of this section), in any service area.
    (b) For plan year 2025 and subsequent plan years, 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, metal level (excluding catastrophic plans), and 
inclusion of dental and/or vision benefit coverage (as defined in 
paragraph (c) of this section), in any service area.
    (c) For purposes of paragraphs (a) and (b) of this section, the 
inclusion of dental and/or vision benefit coverage is defined as 
coverage of any or all of the following:
    (1) Adult dental benefit coverage as defined by the following in 
the ``Benefits'' column in the Plans and Benefits Template:
    (i) Routine Dental Services (Adult);
    (ii) Basic Dental Care--Adult; or
    (iii) Major Dental Care--Adult.
    (2) Pediatric dental benefit coverage as defined by the following 
in the ``Benefits'' column in the Plans and Benefits Template:
    (i) Dental Check-Up for Children;
    (ii) Basic Dental Care--Child; or
    (iii) Major Dental Care--Child.
    (3) Adult vision benefit coverage as defined by the following in 
the ``Benefits'' column in the Plans and Benefits Template: Routine Eye 
Exam (Adult).

0
21. Section 156.210 is amended by adding paragraph (d) to read 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
22. Section 156.225 is amended by--
0
a. Revising the section heading;
0
b. In paragraph (a), removing ``and'' from the end of the paragraph;
0
c. In paragraph (b), removing the period and adding in its place ``; 
and''; and
0
d. Adding paragraph (c).
    The revision and addition read 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 do not include content that is misleading.

0
23. Section 156.230 is amended by--
0
a. Revising paragraphs (a)(1) introductory text and (a)(2)(i)(B);
0
b. Adding paragraph (a)(4);
0
c. Revising paragraph (e) introductory text; and
0
d. Removing and reserving paragraph (f).

    The revisions and addition read as follows:


Sec.  156.230  Network adequacy standards.

    (a) * * *
    (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:
* * * * *
    (2) * * *
    (i) * * *
    (B) For plan years beginning on or after January 1, 2025, meeting 
appointment wait time standards established by the Federally-
facilitated Exchange. Such appointment wait time standards will be 
developed for consistency with industry standards and published in 
guidance.
* * * * *
    (4) A limited exception to the requirement described under 
paragraph (a)(1) of this section that each QHP issuer use a provider 
network is available to stand-alone dental plans issuers that sell 
plans in areas where it is prohibitively difficult for the issuer to 
establish a network of dental providers; this exception is not 
available to medical QHP issuers. Under this exception, an area is 
considered ``prohibitively difficult'' for the stand-alone dental plan 
issuer to establish a network of dental providers based on attestations 
from State departments of insurance in States with at least 80 percent 
of counties classified as Counties with Extreme Access Considerations 
(CEAC) that at least one of the following factors exists in the area of 
concern: a significant shortage of dental providers, a significant 
number of dental providers unwilling to contract with Exchange issuers, 
or significant geographic limitations impacting consumer access to 
dental providers.
* * * * *
    (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
24. Section 156.235 is amended by revising paragraphs (a)(1), 
(a)(2)(i), (a)(2)(ii)(B), and (b)(2)(i) 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) * * *

[[Page 25923]]

    (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 (a)(2)(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 preferred provider organizations (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.
* * * * *
    (b) * * *
    (2) * * *
    (i) The number of its providers that are located in Health 
Professional Shortage Areas or five-digit zip codes in which 30 percent 
or more of the population falls below 200 percent of the Federal 
poverty level satisfies a minimum percentage, specified by HHS, of 
available ECPs in each plan's service area collectively across all ECP 
categories defined under paragraph (a)(2)(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 would be counted towards 
ECP standards; and
* * * * *

0
25. 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. Issuers offering QHPs in Exchanges 
on the Federal platform must provide such notices promptly and without 
undue delay, within 10 business days of the date the issuer should have 
discovered the delinquency.
* * * * *

0
26. 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 (c), the issuer must notify 
HHS, the State Exchange, or State-based Exchanges on the Federal 
platform (SBE-FP) (as applicable) and repay any overpayments to HHS.
* * * * *

0
27. 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) and 153.710(d)(2) of this 
subchapter and Sec.  156.430(h)(1), 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: April 17, 2023.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2023-08368 Filed 4-19-23; 4:15 pm]
BILLING CODE 4120-01-P