Federal Register, Volume 88 Issue 225 (Friday, November 24, 2023)

[Federal Register Volume 88, Number 225 (Friday, November 24, 2023)]
[Proposed Rules]
[Pages 82510-82655]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-25576]

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Vol. 88

Friday,

No. 225

November 24, 2023

Part II

Department of the Treasury

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31 CFR Part 33

Department of Health & Human Services

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Centers for Medicare & Medicaid Services

Office of the Secretary

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42 CFR Parts 435 and 600

45 CFR Parts 153, 155, and 156

Patient Protection and Affordable Care Act, HHS Notice of Benefit and
Payment Parameters for 2025; Updating Section 1332 Waiver Public Notice
Procedures; Medicaid; Consumer Operated and Oriented Plan (CO-OP)
Program; and Basic Health Program; Proposed Rule

Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 /
Proposed Rules

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DEPARTMENT OF THE TREASURY

31 CFR Part 33

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 435 and 600

Office of the Secretary

45 CFR Parts 153, 155, and 156

[CMS-9895-P]
RIN 0938-AV22

Patient Protection and Affordable Care Act, HHS Notice of Benefit
and Payment Parameters for 2025; Updating Section 1332 Waiver Public
Notice Procedures; Medicaid; Consumer Operated and Oriented Plan (CO-
OP) Program; and Basic Health Program

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule includes payment parameters and provisions
related to the HHS-operated risk adjustment program, as well as 2025
user fee rates for issuers offering qualified health plans (QHPs)
through Federally-facilitated Exchanges (FFEs) and State-based
Exchanges on the Federal platform (SBE-FPs). This proposed rule also
includes proposed requirements related to the auto re-enrollment
hierarchy; essential health benefits; failure to file and reconcile;
non-standardized plan option limits and an exceptions process;
standardized plan options; special enrollment periods (SEPs); direct
enrollment (DE) entities; Insurance Affordability Program enrollment
eligibility verification process; requirements for agents, brokers,
web-brokers, and DE entities assisting Exchange consumers; network
adequacy; public notice procedures for section 1332 waivers;
prescription drug benefits; updates to the Consumer Operated and
Oriented Plan (CO-OP) Program; State flexibility on the financial
methodology used for Medicaid eligibility determinations for non-
modified adjusted gross income (MAGI) populations; and State
flexibility on the effective date of coverage in the Basic Health
Program (BHP). A summary of this proposed rule may be found at https://www.regulations.gov/.

DATES: To be assured consideration, comments must be received at one of
the addresses provided below, by January 8, 2024.

ADDRESSES: In commenting, please refer to file code CMS-9895-P.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-9895-P, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-9895-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT:
Jeff Wu, (301) 492-4305, Rogelyn McLean, (301) 492-4229, Grace
Bristol, (410) 786-8437, for general information.
Joshua Paul, (301) 492-4347, Jackie Wilson, (301) 492-4286, or John
Barfield, (301) 492-4433, for matters related to HHS-operated risk
adjustment.
John Barfield, (301) 492-4433, or Leanne Scott, (410) 786-1045, for
matters related to user fees.
Brian Gubin, (410) 786-1659, for matters related to agent, broker,
and web-broker guidelines.
Marisa Beatley, (301) 492-4307, for matters related to the
verification process related to eligibility for insurance affordability
programs and current sources of income.
Carolyn Kraemer, (301) 492-4197, for matters related to auto re-
enrollment in the Exchanges.
Nicholas Eckart, (301) 492-4452, for matters related to enrollment
of qualified individuals into QHPs and termination of Exchange
enrollment or coverage for qualified individuals.
Hollynd Boyden, (667) 414-0105, for matters related to the monthly
150 percent Federal poverty level special enrollment period.
Alexandra Gribbin, (667) 290-9977, for matters related to dental
coverage.
Nikolas Berkobien, (667) 290-9903, for matters related to
standardized plan options and non-standardized plan option limits.
LeAnn Brodhead, (667) 290-8805, for matters related to the
essential health benefits prescription drug benefit.
Carolyn Sabini, (667) 290-9750, for matters related to the
essential health benefits benchmark plan policy.
Agata Pelka, (667) 290-9979, for matters related to mandates in
addition to the essential health benefits.
Emily Martin, (301) 492-4423, or Deborah Hunter, (443) 386-3651,
for matters related to network adequacy and ECPs.
Shilpa Gogna, (301) 492-4257, or Jenny Chen, (301) 492-5156, for
matters related to approval of a State Exchange and State Exchange
Blueprint requirements.
Lina Rashid, (443) 902-2823, or Kimberly Koch (202) 381-6934, for
matters related to section 1332 waivers.
Jacquelyn Rudich, (301) 492-5211, for matters related to netting of
payments.
Kevin Kendrick, (301) 509-6612, for matters related to the CO-OP
program.
Carrie Grubert, (410) 786-8319, for matters related to the Basic
Health Program (BHP) provision.
Gene Coffey, (410) 786-2234, for matters related to Medicaid
eligibility.
Arshdeep Dhanoa, (301) 492-4400, for matters related to
incarceration verification for QHP eligibility and periodic data
matching for dual and deceased enrollees.

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. 31 CFR Part 33 and 45 CFR Part 155--Section 1332 Waivers
B. 42 CFR Parts 435 and 600--Medicaid Eligibility for the
States, District of Columbia, the Northern Mariana Islands and
American Samoa, and Administrative Practice and Procedure, Health
Care, Health insurance, Intergovernmental Relations, Penalties,
Reporting and Recordkeeping Requirements.
C. 45 CFR Part 153--Standards Related to Reinsurance, Risk
Corridors, and HHS Risk Adjustment
D. 45 CFR Part 155--Exchange Establishment Standards and Other
Related Standards Under the Affordable Care Act
E. 45 CFR Part 156--Health Insurance Issuer Standards Under the
Affordable Care Act, Including Standards Related to Exchanges

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IV. Collection of Information Requirements
A. Wage Estimates
B. ICRs Regarding Proposed Amendments to Normal Public Notice
Requirements (31 CFR 33.112, 31 CFR 33.120 and 45 CFR Part 155.1312,
and 45 CFR 155.1320)
C. ICRs Regarding Basic Health Program Regulations (42 CFR
600.320)
D. ICRs Regarding Election To Operate an Exchange After 2014 (45
CFR 155.106)
E. ICRs Regarding Adding and Amending Language To Ensure Web-
Brokers Operating in State Exchanges Meet Certain Requirements
Applicable in the FFEs and SBE-FPs (45 CFR 155.220)
F. ICRs Regarding Establishing Requirements for DE Entities
Mandating HealthCare.gov Changes To Be Reflected on DE Entity Non-
Exchange Websites Within a Notice Period Set by HHS (45 CFR
155.221(b)(6))
G. ICRs Regarding Adding and Amending Language To Ensure DE
Entities Operating in State Exchanges Meet Certain Standards
Applicable in the FFEs and SBE-FPs (45 CFR 155.221)
H. ICRs Regarding Failure To File and Reconcile Process (45 CFR
155.305(f)(4))
I. ICRs Regarding Verification Process Related to Eligibility
for Enrollment in a QHP Through the Exchange (45 CFR 155.315(e))
K. ICRs Regarding Eligibility Redetermination During a Benefit
Year (45 CFR 155.330(d))
L. ICRs Regarding Establishment of Exchange Network Adequacy
Standards (45 CFR 155.1050)
M. ICRs Regarding the State Selection of EHB-Benchmark Plans for
Plan Years Beginning on or After January 1, 2027 (45 CFR 156.111)
N. ICRs Regarding Non-Standardized Plan Option Limits (45 CFR
156.202)
O. Summary of Annual Burden Estimates for Proposed Requirements
P. Submission of PRA-Related Comments
V. Response to Comments
VI. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Impact Estimates of the Payment Notice Provisions and
Accounting Table
D. Regulatory Alternatives Considered
E. Regulatory Flexibility Act (RFA)
F. Unfunded Mandates Reform Act (UMRA)
G. Federalism

I. Executive Summary

We propose changes to the provisions and parameters implemented
through prior rulemaking to implement the Patient Protection and
Affordable Care Act (ACA).\1\ These proposals are published under the
authority granted to the Secretary by the ACA and the Public Health
Service (PHS) Act.\2\ In this proposed rule, we propose changes related
to some of the ACA provisions and parameters we previously implemented
and propose to implement new provisions. We also propose a change to
Medicaid financial eligibility provisions to provide States with
greater flexibility to extend Medicaid eligibility to specific
populations based on the State's circumstances. Our goal with these
proposals is providing quality, affordable coverage to consumers while
minimizing administrative burden and ensuring program integrity. The
changes proposed in this rule are also intended to help advance health
equity and mitigate health disparities.
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\1\ The Patient Protection and Affordable Care Act (Pub. L. 111-
148) was enacted on March 23, 2010. The Health Care 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, 1332, 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 Public Health Service
Act (PHS Act) to establish various reforms to the group and individual
health insurance markets.
These provisions of the PHS Act were later augmented by other laws,
including the ACA.
Subtitles A and C of title I of the ACA reorganized, amended, and
added to the provisions of part A of title XXVII of the PHS Act
relating to group health plans and health insurance issuers in the
group and individual markets. The term ``group health plan'' includes
both insured and self-insured group health plans.
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 qualified
health plans (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 Actuarial Value (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 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

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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.
Section 1312(f)(1)(B) of the ACA provides that an individual shall
not be treated as a qualified individual for enrollment in a QHP if, at
the time of enrollment, the individual is incarcerated, other than
incarceration pending the disposition of charges.
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 public.
Section 1321(d) of the ACA provides that nothing in title I of the
ACA must be construed to preempt any State law that does not prevent
the application of title I of the ACA. Section 1311(k) of the ACA
specifies that Exchanges may not establish rules that conflict with or
prevent the application of regulations issued by the Secretary.
Section 1322 of the ACA establishes the Consumer Operated and
Oriented Plan (CO-OP) program, which is a loan program that funds the
establishment of private, non-profit, consumer-operated, consumer-
oriented health plan issuers of QHPs. The ACA requires, among other
requirements, that substantially all of a CO-OP's activities consist of
issuing QHPs in the individual and small group markets, and that a CO-
OP be governed by a board of directors where a majority is elected by
members covered by policies issued by the CO-OP.
Section 1331 of the ACA provides States with the option to operate
a Basic Health Program (BHP).
Section 1332 of the ACA provides the Secretary of HHS and the
Secretary of the Treasury (collectively, the Secretaries) with the
discretion to approve a State's proposal to waive specific provisions
of the ACA, provided the State's section 1332 waiver plan meets certain
requirements. Section 1332(a)(4)(B) of the ACA requires the Secretaries
to issue regulations regarding procedures for the application and
approval of section 1332 waivers.
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 charges collected from those issuers 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 HHS
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 purpose of, and to the extent necessary for
ensuring 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 1413 of the ACA directs the Secretary to establish, subject
to minimum requirements, a streamlined enrollment process for
enrollment in

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QHPs and all insurance affordability programs.
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 aged 30 and above qualify to
enroll in catastrophic coverage under Sec. Sec. 155.305(h) and
156.155(a)(5).
Section 1902(r)(2)(A) of the Social Security Act (the Act), which
permits States to apply less restrictive methodologies than cash
assistance program methodologies in determining eligibility for certain
eligibility groups.
1. Premium Stabilization Programs
The premium stabilization programs refer to the HHS 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 (HHS
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 risk adjustment 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 to address
how an enrollee's age for the risk score calculation would be
determined under the HHS 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
establish 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 HHS-operated
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 establish 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
establish 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
the 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 error rate methodology
for HHS-RADV adjustments to transfers.
In the May 11, 2018 Federal Register (83 FR 21925), we
published a correction to the 2019 HHS risk adjustment coefficients in
the 2019 Payment Notice.
On July 27, 2018, consistent with 45 CFR 153.320(b)(1)(i),
we updated the 2019 benefit year final HHS 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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In the July 30, 2018 Federal Register (83 FR 36456), we
adopted the 2017 benefit year HHS risk adjustment methodology as
established in the final rules published in the March 23, 2012 (77 FR
17220 through 17252) and March 8, 2016 (81 FR 12204 through 12352)
editions of the Federal Register. The final rule set forth an
additional explanation of the rationale supporting the use of Statewide
average premium in the State payment transfer formula for the 2017
benefit year, including the reasons why the program is operated by HHS
in a budget-neutral manner. The final rule also permitted HHS to resume
2017 benefit year HHS 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 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 State
payment transfer formula for the 2018 benefit year, including the
reasons why the program is operated by HHS 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
the 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 HHS 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 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
the 2021 benefit year, as well as adopted updates to the HHS risk
adjustment models' hierarchical condition categories (HCCs) to
transition to ICD-10 codes, approved the request from Alabama to reduce
HHS risk adjustment transfers by 50

[[Page 82514]]

percent in the 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 HHS 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) (part 2
of the 2022 Payment Notice), we finalized a subset of proposals from
the 2022 Payment Notice proposed rule, including policy and regulatory
revisions related to the HHS-operated risk adjustment program,
finalization of the benefit and payment parameters for the 2022 benefit
year, and approval of the request from Alabama to reduce HHS 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 HHS risk adjustment adult model
coefficients.\7\
---------------------------------------------------------------------------

\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.
---------------------------------------------------------------------------

In the May 6, 2022 Federal Register (87 FR 27208) (2023
Payment Notice), we finalized revisions related to the HHS-operated
risk adjustment program, including the benefit and payment parameters
for the 2023 benefit year, HHS risk adjustment model recalibration, and
policies related to the 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 HHS risk
adjustment State transfers starting with the 2024 benefit year. In
addition, we approved a 25 percent reduction to 2023 benefit year HHS
risk adjustment transfers in Alabama's individual market and a 10
percent reduction to 2023 benefit year HHS risk adjustment 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.
---------------------------------------------------------------------------

\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.
---------------------------------------------------------------------------

In the April 27, 2023 Federal Register (88 FR 25740) (2024
Payment Notice), we finalized the benefit and payment parameters for
the 2024 benefit year, amended the EDGE discrepancy materiality
threshold and data collection requirements, and reduced the risk
adjustment user fee. For the 2024 benefit year, we repealed the State
flexibility policy, including for prior participant States, and
approved 50 percent reductions to HHS risk adjustment transfers for
Alabama's individual and small group markets. In addition, we finalized
several refinements to HHS-RADV program requirements, such as
shortening the window to confirm SVA findings or file a discrepancy
report, changing the HHS-RADV materiality threshold for random and
targeted sampling, and no longer exempting exiting issuers from
adjustments to risk scores and HHS risk adjustment transfers when they
are negative error rate outliers. We also announced the discontinuance
of the Lifelong Permanent Condition List (LLPC) and Non-EDGE Claims
(NEC) in HHS-RADV beginning with the 2022 benefit year.
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 final rule (2019 Program Integrity
Rule) published in the December 27, 2019 Federal Register (84 FR
71674).
In the April 27, 2023 Federal Register (88 FR 25740) (2024 Payment
Notice), we finalized a policy to implement improper payment pre-
testing and assessment (IPPTA) requirements for State Exchanges to
ensure adherence to the Payment Integrity Information Act of 2019. In
addition, we finalized allowing additional time for HHS to review
evidence submitted by agents and brokers to rebut allegations
pertaining to Exchange agreement suspensions or terminations. We also
introduced consent and eligibility documentation requirements for
agents and brokers.
3. Market Rules
For past rulemaking related to the market rules, we refer readers
to the following rules:
In the April 8, 1997 Federal Register (62 FR 16894), HHS,
with the Department of Labor and Department of the Treasury, published
an interim final rule relating to the HIPAA health insurance reforms.
In the February 27, 2013 Federal Register (78 FR 13406) (2014 Market
Rules), we published the health insurance market rules.
In the May 27, 2014 Federal Register (79 FR 30240) (2015
Market Standards Rule), we published the exchange and insurance market
standards for 2015 and beyond.
In the December 22, 2016 Federal Register (81 FR 94058),
we provided additional guidance on guaranteed availability and
guaranteed renewability.
In the April 18, 2017 Federal Register (82 FR 18346)
(Market Stabilization final rule), we further interpreted the
guaranteed availability provision.
In the April 17, 2018 Federal Register (83 FR 17058) (2019
Payment Notice), 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.

[[Page 82515]]

In part 2 of the 2022 Payment Notice, 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), 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 18310) (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 essential community provider (ECP) certification
standards.
In the August 17, 2011, Federal Register (76 FR 51201) we published
a proposed rule regarding eligibility determinations, including the
regulatory requirement to verify incarceration status. In the March 27,
2012, Federal Register (77 FR 18309) we finalized the regulatory
requirement to verify incarceration attestation using an approved
electronic data source that is current and accurate, and when
attestations are not reasonably compatible with information in an
approved data source, to resolve the inconsistency.
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, published in the December 22, 2016
Federal Register (81 FR 94058).
In the Market Stabilization final rule, published in the April 18,
2017 Federal Register (82 FR 18346), we amended standards relating to
special enrollment periods and QHP certification. In the 2019 Payment
Notice, 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 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) (part 1 of
the 2022 Payment Notice), we 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.
In the September 27, 2021 Federal Register (86 FR 53412) (part 3 of the
2022 Payment Notice), in conjunction with the Department of the
Treasury, we finalized amendments to certain policies in part 1 of the
2022 Payment Notice.
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.
In the April 27, 2023 Federal Register (88 FR 25740) (2024 Payment
Notice), we revised Exchange Blueprint approval timelines, lowered the
user rate fee for QHPs, and amended re-enrollment hierarchies for
enrollees. We also finalized policies to update standardized plan
options, reduce the risk of plan choice overload by limiting the number
of non-standardized plan options that issuers can offer, and ensure
correct QHP information. In addition, to prevent gaps in coverage, we
amended coverage effective date rules, lengthened the special
enrollment period from 60 to 90 days to those who lose Medicaid
coverage, and prohibited QHPs on the Federal platform from mid-year
coverage terminations for dependent children who reach the applicable
maximum age. We also finalized policies on verifying consumer income
and permitting door-to-door assisters to solicit consumers. To ensure
provider network adequacy, we finalized provider network and ECP
policies for QHPs.
5. Essential Health Benefits
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 year (PY) 2020 and
subsequent plan years. In the 2023 Payment Notice, published in the May
6, 2022 Federal Register (87 FR 27208), we revised Sec. 156.111 to
require States to notify HHS of the selection of a new EHB-benchmark
plan by the first Wednesday in May of the year that is 2 years before
the effective date of the new EHB-benchmark plan, otherwise the State's
EHB-benchmark plan for the applicable plan year will be that State's
EHB-benchmark plan applicable for the prior year. We displayed the
Request for Information; Essential Health Benefits (EHB RFI), published
in the December 2, 2022 Federal Register (87 FR 74097) to solicit
public comment on a variety of topics related to the coverage of
benefits in health plans subject to the EHB requirements of the ACA.
6. State Innovation Waivers
In the March 14, 2011 Federal Register (76 FR 13553), HHS and the
Department of the Treasury (collectively, the Departments)

[[Page 82516]]

published the ``Application, Review, and Reporting Process for Waivers
for State Innovation'' proposed rule to implement section 1332(a)(4)(B)
of the ACA.
In the February 27, 2012 Federal Register (77 FR 11700), the
Departments published the ``Application, Review, and Reporting Process
for Waivers for State Innovation'' final rule (2012 Final Rule).
In the October 24, 2018 Federal Register (83 FR 53575), the
Departments issued the 2018 Guidance, which superseded the previous
guidance published in the December 16, 2015 Federal Register (80 FR
78131) (2015 Guidance) and set forth requirements that States must meet
for waivers, application review procedures, pass-through funding
determinations, certain analytical requirements, and operational
considerations.
In the November 6, 2020 Federal Register (85 FR 71142), the
Departments issued an interim final rule (November 2020 IFC), which set
forth flexibilities for waivers under section 1332 during the COVID-19
Public Health Emergency.
In the December 4, 2020 Federal Register (85 FR 78572), the
Departments published the ``Patient Protection and Affordable Care Act;
HHS Notice of Benefit and Payment Parameters for 2022 and Pharmacy
Benefit Manager Standards; Updates to State Innovation Waiver (Section
1332 Waiver) Implementing Regulations'' proposed rule (2022 Payment
Notice proposed rule) which proposed to codify certain policies and
interpretations of the 2018 Guidance.
In the January 19, 2021 Federal Register (86 FR 6138), the
Departments published the ``Patient Protection and Affordable Care Act;
HHS Notice of Benefit and Payment Parameters for 2022; Updates to State
Innovation Waiver (Section 1332 Waiver) Implementing Regulations''
final rule (part 1 of the 2022 Payment Notice) which codified many of
the policies and interpretations of the 2018 Guidance.
In the September 27, 2021 Federal Register (86 FR 53412), part 3 of
the 2022 Payment Notice, the Departments published the ``Patient
Protection and Affordable Care Act; Updating Payment Parameters,
Section 1332 Waiver Implementing Regulations, and Improving Health
Insurance Markets for 2022 and Beyond'' final rule, which superseded
and rescinded the policies and interpretations outlined in the 2018
Guidance and repealed the previous codification of the interpretations
of statutory guidelines in part 1 of the 2022 Payment Notice. The
Departments also finalized flexibilities in the public notice
requirements and post-award public participation requirements for
section 1332 waivers under certain emergent situations and processes
and procedures for amendments and extensions for approved waiver plans.
7. Consumer Operated and Oriented Plans (CO-OPs)
In the December 13, 2011 Federal Register (76 FR 77392), we
published the ``Patient Protection and Affordable Care Act;
Establishment of Consumer Operated and Oriented Plan (CO-OP) Program''
final rule (2011 CO-OP Rule), which established the rules governing the
CO-OP program to make loans to capitalize eligible prospective CO-OPs.
In the May 11, 2016 Federal Register (81 FR 29146), we amended several
CO-OP standards related to governance requirements to provide greater
flexibility, and to facilitate private market transactions that would
assist efforts of CO-OPs to arrange access to new sources of needed
capital.
8. Basic Health Program (BHP)
In the March 12, 2014, Federal Register (79 FR 14111), we published
a final rule entitled ``Basic Health Program: State Administration of
Basic Health Programs; Eligibility and Enrollment in Standard Health
Plans; Essential Health Benefits in Standard Health Plans; Performance
Standards for Basic Health Programs; Premium and Cost Sharing for Basic
Health Programs; Federal Funding Process; Trust Fund and Financial
Integrity,'' implementing section 1331 of the ACA, which governs the
establishment of BHPs.
9. State Flexibility in the Use of Income and Resource Disregards in
Medicaid Eligibility
In the January 19, 1993 Federal Register (58 FR 4929), we published
a final rule with comment period entitled ``Medicaid Program;
Eligibility and Coverage Requirements,'' in which we prescribed, at 42
CFR 435.601, the financial methodologies State Medicaid agencies must
apply in determining eligibility for Medicaid, with options to apply
less restrictive income and resource methodologies for the eligibility
groups specified in section 1902(r)(2) of the Act.
In the August 22, 1994 Federal Register (59 FR 43052), we published
a final rule entitled ``Medicaid Program; Eligibility and Coverage
Requirements,'' in which we amended 42 CFR 435.601(f)(1) to delete
cross-references to other regulatory provisions that had been removed
from the CFR.
In the November 30, 2016 Federal Register (81 FR 86456), we
published a final rule entitled ``Medicaid and Children's Health
Insurance Programs: Eligibility Notices, Fair Hearing and Appeal
Processes for Medicaid and Other Provisions Related to Eligibility and
Enrollment for Medicaid and CHIP,'' in which we amended 42 CFR
435.601(b) to confirm that its provisions govern only individuals who
are excepted from application of modified adjusted gross income
financial methodologies (MAGI) in accordance with 42 CFR 435.603(j)
(relating to ``Eligibility Groups for which MAGI-based methods do not
apply''). We also established in 42 CFR 435.601(d)(1) the authority for
States to apply less restrictive methodologies for medically needy
individuals whose income eligibility is determined under 42 CFR
435.831(b)(1) (including medically needy individuals whose eligibility
is determined under MAGI-based methodologies that comply with certain
rules relating to the financial responsibility of relatives and other
individuals described in 42 CFR 435.602).

B. Summary of Major Provisions

The regulations outlined in this proposed rule would be codified in
31 CFR part 33, 42 CFR parts 435 and 600, and 45 CFR parts 153, 155,
and 156.
1. 31 CFR Part 33 and 45 CFR Part 155
This proposed rule would amend section 1332 Waivers for State
Innovation (referred to throughout this proposed rule as section 1332
waivers) implementing regulations regarding State public notice and
comment procedures. The Departments propose changes in 31 CFR part 33
and 45 CFR part 155 that would allow States the flexibility to hold a
State public hearing or post-award forum in a virtual format (that is,
one that uses telephonic, digital, and/or web-based platforms), or
hybrid format (that is, one that provides for both in-person and
virtual attendance), which would be considered as the equivalent of
holding an in-person meeting. Specifically, the Departments propose
changes to 31 CFR 33.112(c) and 45 CFR 155.1312(c) and 31 CFR 33.120(c)
and 45 CFR 155.1320(c). The Departments propose that these changes go
into effect upon finalization of this rule. Because these changes would
relieve a regulatory restriction, the Departments anticipate that they
would be made effective immediately upon publication of a final rule.

[[Page 82517]]

2. 42 CFR Part 435
We propose to amend 42 CFR 435.601(d) to remove paragraph (d)(4),
which would provide States with greater flexibility to adopt income
and/or resource disregards in determining Medicaid financial
eligibility for individuals excepted from application of financial
methodologies based on MAGI (``non-MAGI'' methodologies). States are
permitted to expand eligibility for individuals who are subject to non-
MAGI methodologies by disregarding income and/or resources that would
otherwise be required to be considered in the individual's eligibility
determination. However, under current rules, States must apply such
income and/or resource disregards to all individuals within each
Medicaid eligibility group. Removing paragraph (d)(4) would allow
States, when considering expanding eligibility for non-MAGI
individuals, to target disregards at discrete members of individuals
within an eligibility group.
3. 42 CFR Part 600
We propose to amend 42 CFR 600.320(c) to allow States a third
option when choosing the effective date of eligibility for BHP
applicants. Under current rules, States have the option to choose
between following: either the Medicaid rules at 42 CFR 435.915 or the
Exchange rules at 45 CFR 155.420(b)(1). We propose to add an option to
the effective date of coverage rules that would allow States to start
coverage on the first day of the month following the date of
application.
4. 45 CFR Part 153
In accordance with the OMB Report to Congress on the Joint
Committee Reductions for Fiscal Year 2024, the HHS-operated risk
adjustment program is subject to the fiscal year 2024 sequestration.\9\
Therefore, the HHS-operated risk adjustment program will be sequestered
at a rate of 5.7 percent for payments made from fiscal year 2024
resources (that is, funds collected during the 2024 fiscal year).
---------------------------------------------------------------------------

\9\ OMB. (2023, March 13). OMB Report to the Congress on the
BBEDCA 251A Sequestration for Fiscal Year 2024. https://www.whitehouse.gov/wp-content/uploads/2023/03/BBEDCA_Sequestration_Report_and_Letter_3-13-2024.pdf.
---------------------------------------------------------------------------

We propose to recalibrate the 2025 benefit year HHS risk adjustment
models using the 2019, 2020, and 2021 benefit year enrollee-level EDGE
data. For the 2025 benefit year, we propose to continue applying a
market pricing adjustment to the plan liability associated with
Hepatitis C drugs in the HHS risk adjustment models (see, for example,
84 FR 17463 through 17466). We propose a modification to the adjustment
for the receipt of CSRs in the HHS risk adjustment models to improve
predictive accuracy for the American Indian and Alaska Native (AI/AN)
subpopulation who are enrolled in zero and limited cost-sharing plans
and to retain the other CSR adjustment factors in the HHS risk
adjustment models. We also propose a risk adjustment user fee for the
2025 benefit year of $0.20 per member per month (PMPM). Additionally,
we propose that in certain cases we may require a corrective action
plan to address an observation identified in an HHS risk adjustment
audit.
5. 45 CFR Part 155
In part 155, we propose to amend Sec. 155.105(b) to require that a
State seeking to operate a State Exchange must first operate an SBE-FP
for at least one plan year, including its open enrollment period. We
believe this requirement would give States sufficient time to create,
staff, and structure a State Exchange that could transition to
operating its own platform and establish relationships with interested
parties critical to a State Exchange's success in operating a Navigator
and consumer outreach program, assuming plan management
responsibilities, and communicating effectively with consumers to
support enrollment and avoid health care coverage gaps.
We propose to revise Sec. 155.106(a)(2) as it pertains to Exchange
Blueprint requirements for States transitioning to a State Exchange.
Specifically, we propose to add that we may require that a State
submitting a Blueprint Application seeking to operate a State Exchange
provide upon request, supplemental documentation to HHS detailing the
State's implementation of its State Exchange functionality as laid out
in the State Exchange Blueprint. This could include a State submitting
detailed plans regarding its State Exchange consumer assistance
programs and activities, such as information on its direct outreach
plans. Further, we propose to require that a State applying to
transition to a State Exchange must provide the public with a notice
and copy of its State Exchange Blueprint Application, as well as
conduct periodic public engagements whereby interested parties can
learn about the status of a State's transition to a State Exchange and
provide input on that transition.
We propose to amend Sec. 155.170(a)(2) to codify that benefits
covered in a State's EHB benchmark plan would not be considered in
addition to EHB, even if they had been required by State action taking
place after December 31, 2011, other than for purposes of compliance
with Federal requirements. Under this proposal, there would be no
obligation for the State to defray the cost of a State mandate enacted
after December 31, 2011 that requires coverage of a benefit if that
benefit is included in the State's EHB-benchmark plan. Benefits that
are covered in a State's EHB-benchmark plan would not be considered in
addition to EHB and would remain subject to the various rules
applicable to the EHB, including the prohibition on discrimination in
accordance with Sec. 156.125, limitations on cost sharing in
accordance with Sec. 156.130, and restrictions on annual or lifetime
dollar limits in accordance with Sec. 147.126. We believe that this
change would promote consumer protections and facilitate compliance
with the defrayal requirement by making the identification of benefits
in addition to EHB more intuitive.
At Sec. 155.205(a), we propose to establish additional minimum
standards for Exchange call center operations. Specifically, we propose
to require that all Exchange call centers, other than those of SBE-FPs
and Small Business Health Options Program (SHOP) Exchanges that do not
provide for enrollment in SHOP coverage through an online SHOP
enrollment platform, provide consumer access to a live call center
representative during an Exchange's published hours of operation to
assist with submitting their QHP application. We believe speaking to a
live representative would help troubleshoot consumer QHP application
issues, provide in real time an opportunity for a live representative
to explain QHP application terminology to a consumer, provide a live
representative to ensure the consumer provides the most correct
information to the QHP application--alleviating unnecessary follow-up,
and provide greater overall consumer satisfaction.
We propose to amend Sec. 155.205(b)(4) to require that an Exchange
operate a centralized eligibility and enrollment platform on the
Exchange's website (or, for an SBE-FP, the Federal eligibility and
enrollment platform) such that the Exchange allows for the submission
of the single, streamlined application for enrollment in a QHP and
insurance affordability programs through the Exchange's website and
performs eligibility determinations for all consumers based on
submissions of the single, streamlined application. Further, we propose
to amend Sec. 155.302(a)(1) to clarify that the Exchange, through the
centralized eligibility and enrollment platform operated on the
Exchange's

[[Page 82518]]

website (or, for an SBE-FP, the Federal eligibility and enrollment
platform), is the entity that is responsible for making all
determinations regarding the eligibility for QHP coverage and insurance
affordability programs regardless of whether an individual files an
application for enrollment in a QHP on the Exchange's website (or, for
SBE-FPs, on the Federal eligibility and enrollment platform), or on a
website operated by a non-Exchange website allowed for under Sec.
155.220 or Sec. 155.221. We also clarify that only entities that an
Exchange elects to contract with to operate its centralized eligibility
and enrollment platform can perform this function on behalf of an
Exchange, such that Exchanges would not be able to solely rely on non-
Exchange entities, including a web-broker (defined at Sec. 155.20) or
other entities under Sec. 155.220 or Sec. 155.221, from making such
eligibility determinations on behalf on the Exchanges.
We also propose to amend Sec. 155.205(b)(5) to require that an
Exchange operate a centralized eligibility and enrollment platform on
the Exchange's website (or, for an SBE-FP, the Federal eligibility and
enrollment platform) so that the Exchange (or, for an SBE-FP, the
Federal eligibility and enrollment platform) meets the requirement
under Sec. 155.400(c) to maintain record of all effectuated
enrollments in QHPs, including changes in effectuated QHP enrollments.
We propose to amend Sec. 155.220(h) to specify that the HHS
reconsideration entity is the CMS Administrator, who is a principal
officer. This proposal would ensure agents, brokers, and web-brokers
utilizing the FFEs and SBE-FPs can submit a request to the CMS
Administrator to reconsider HHS' decision to terminate their Exchange
agreement(s) for cause.
We propose changes to Sec. Sec. 155.220 and 155.221 to apply
certain standards to web-brokers and Direct Enrollment (DE) entities
assisting consumers and applicants across all Exchanges, including in
States with State Exchanges. We seek to ensure that certain current
minimum Federal standards applicable in the FFEs and SBE-FPs, related
to web-broker website display of standardized QHP comparative
information, disclaimer language, information on eligibility for APTC/
CSRs, operational readiness, and access by downstream agents and
brokers, also apply to web-brokers in States with State Exchanges. We
similarly propose to extend certain DE entity requirements applicable
in the FFEs and SBE-FPs related to marketing and display of QHPs,
providing consumers with correct information and refraining from
certain conduct, marketing of non-QHPs, website disclaimer language,
and operational readiness to DE entities across all Exchanges, to newly
apply to DE entities in States with State Exchanges. These proposals
would help establish greater general uniformity with respect to these
requirements for web-brokers and DE entities operating in the Exchanges
and establish minimum Federal consumer protections in all States,
regardless of the Exchange model.
We propose to update regulations in Sec. 155.221(b) to mandate
HealthCare.gov changes be reflected on DE entity non-Exchange websites
within a notice period set by HHS. We also propose requiring that DE
entities make these display changes in a manner consistent with what is
adopted by HHS for display on HealthCare.gov by meeting standards
defined by HHS, unless HHS approves a deviation from those standards.
This proposal would codify our existing practice of communicating
important changes to the HealthCare.gov display to EDE entities, expand
our existing change request processes to permit entities to request
deviations from the required display changes, and require DE entities
that do not participate in EDE to comply with these practices.
Additionally, this proposal would also require that all display changes
which affect the visual aspects of the website that users see and
interact with must be prominently displayed on the non-Exchange website
such that the changes are clear, noticeable, and understandable to
consumers. Finally, this proposal would also require State Exchanges to
require their DE entities to implement and prominently display changes
adopted for display on the State Exchanges' websites on their non-
Exchange websites for purposes of assisting consumers with DE in QHPs
offered through the Exchange.
We propose in connection with the failure to file and reconcile
process at Sec. 155.305(f)(4) that Exchanges be required to send
notices to tax filers for the first year in which they have been
determined to have failed to reconcile APTC as an initial warning to
inform and educate tax filers 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 year. Currently, the regulation does
not describe notification procedures for tax filers who have failed to
reconcile for 1 year. We propose to require that all Exchanges be
required to send informative notices at least annually to tax filers
who have failed to reconcile.
We propose to amend Sec. 155.315(e) to provide that all Exchanges
can accept applicant incarceration status attestations without further
verification, and Exchanges may verify applicant incarceration status
using an HHS-approved verification data source. HHS would approve an
alternative electronic data source for State Exchanges to use for
incarceration verification if it provides data that are current and
accurate, and if its use minimizes administrative costs and burdens.
We propose to reinterpret State Exchange and State Medicaid and
Children's Health Insurance Program (CHIP) agency use of the Federal
Data Services Hub to access and use the income data provided by the
Verify Current Income (VCI) Hub service as a State Exchange or a State
Medicaid and CHIP agency function because these State entities use this
optional service to implement eligibility verification requirements
applicable to them. More specifically, State Exchanges and State
Medicaid and CHIP agencies have the option to use this information to
verify a tax household's annual income attestation for Exchange QHP
eligibility and the Medicaid applicant's current household income as
required to make insurance affordability program eligibility
determinations. We propose to amend Sec. 155.320(c) to reflect this
reinterpretation for the Exchanges but are not proposing to amend the
Medicaid regulations as the Medicaid regulations already address
Medicaid agency verification requirements and are not typically used to
delineate Medicaid agency operations in this manner.
We propose to revise Sec. 155.330(d) to require Exchanges to
conduct periodic checks for deceased enrollees twice yearly and
subsequently end deceased enrollees' QHP coverage. Additionally, we
propose to revise Sec. 155.330(d)(3) to grant the Secretary the
authority to temporarily suspend the periodic data matching (PDM)
requirement during certain situations (for example, a declared national
public health emergency). These proposals would align Sec. 155.330(d)
with current Federal Exchange policy and operations, prevent
overpayment of QHP premiums, and accurately capture household QHP
eligibility based on household size.
We propose to amend Sec. 155.335(j)(1) and (2) to require
Exchanges to re-enroll individuals who are enrolled in catastrophic
coverage, as defined in section 1302(e) of the ACA, into a new

[[Page 82519]]

QHP for the coming plan year. Incorporating these individuals enrolled
in catastrophic coverage into the auto re-enrollment hierarchy rules at
Sec. 155.335(j) would help ensure continuity of coverage in cases
where the issuer does not continue to offer a catastrophic plan for the
new plan year, or these individuals are no longer eligible for
enrollment in a catastrophic plan for the new year, and these
individuals do not actively select a different QHP. We also propose to
add a new paragraph (j)(5) to Sec. 155.335 to establish that an
Exchange may not newly auto re-enroll into catastrophic coverage an
enrollee who is currently enrolled in coverage of a metal level as
defined in section 1302(d) of the ACA. This change reflects our current
practice for Exchanges on the Federal platform.
We propose to amend Sec. 155.400(e)(2) to codify that the
flexibility for issuers experiencing billing or enrollment problems due
to high volume or technical errors is not limited to extensions of the
binder payment.
We propose to amend Sec. 155.410(e)(4)(ii) to revise parameters
around the adoption of an alternative open enrollment period by a State
Exchange. Specifically, we propose for benefit years beginning on or
after January 1, 2025, State Exchanges must adopt an open enrollment
period that begins on November 1 of the calendar year preceding the
benefit year and ends no earlier than January 15 of the applicable
benefit year, with the option to extend the open enrollment period
beyond January 15 of the applicable benefit year. We believe this
proposal would ensure consumers are not subjected to plan cost
increases that they may not be notified about until after open
enrollment ends, give Navigators, certified application counselors, and
agents and brokers ample time to assist all interested applicants,
provide State Exchanges with additional flexibility, reduce consumer
confusion, and improve access to health coverage.
At Sec. 155.420(b), we propose to align the effective dates of
coverage after selecting a plan during certain special enrollment
periods across all Exchanges, including State Exchanges. We would
require all State Exchanges to provide coverage that is effective on
the first day of the month following plan selection, if a consumer
enrolls in a QHP during certain special enrollment periods. This
proposal would prevent coverage gaps, particularly for consumers
transitioning between different Exchanges or from other insurance
coverage.
We propose to amend paragraph Sec. 155.420(d)(16) to revise the
parameters around the availability of a special enrollment period for
APTC-eligible qualified individuals with a projected household income
no greater than 150 percent of the Federal Poverty Level (FPL).
Specifically, we are proposing to remove the limitation that this
special enrollment period is only available during periods of time when
APTC benefits are available such that the applicable taxpayers'
applicable percentage is set to zero and that Exchanges have the option
to permanently provide this special enrollment period. We believe this
proposal would provide affordable coverage available to more uninsured
people and additional enrollment opportunities to low-income consumers.
We propose to add Sec. 155.430(b)(1)(iv)(D) to permit an enrollee
to retroactively terminate the enrollee's enrollment in a QHP through
an Exchange on the Federal platform when the enrollee enrolls in
Medicare Parts A or B, and the termination date would be retroactively
effective to the day before Medicare coverage begins. This proposal
would allow consumers to avoid overlapping coverage and paying
unnecessary premiums. State Exchanges would have the option of
implementing this proposal, and we seek comment on whether this
proposal should instead be mandatory for State Exchanges.
We propose to revise Sec. 155.1050 to require that State Exchanges
and SBE-FPs establish and impose quantitative time and distance network
adequacy standards for QHPs that are at least as stringent as the FFEs'
network adequacy standards established for QHPs under Sec. 156.230. We
also propose that State Exchanges and SBE-FPs be required to conduct
quantitative network adequacy reviews prior to certifying any plan as a
QHP, consistent with the reviews conducted by the FFEs under Sec.
156.230. We further propose to require State Exchanges and SBE-FPs to
permit issuers that are unable to meet the specified network adequacy
standards to participate in a justification process after submitting
their initial network adequacy data to account for variances and
potentially earn QHP certification. Finally, we propose to mandate that
State Exchanges and SBE-FPs require all issuers seeking QHP
certification to submit information to the State Exchange or SBE-FP
about whether network providers offer telehealth services. These
proposals would be effective for plan years beginning on or after
January 1, 2025.
6. 45 CFR part 156
In part 156, we propose user fee rates for the 2025 benefit year
for all issuers participating on the Exchanges using the Federal
platform. For the 2025 benefit year, we propose an FFE user fee rate of
2.2 percent of total monthly premiums and an SBE-FP user fee rate of
1.8 percent of total monthly premiums. We will issue the 2025 benefit
year premium adjustment percentage index and related payment parameters
in guidance, consistent with the policy finalized in part 2 of the 2022
Payment Notice.
For benefit years beginning on or after January 1, 2027, we propose
three revisions to the standards for State selection of EHB-benchmark
plans at Sec. 156.111. First, we propose to consolidate the options
for States to change EHB-benchmark plans at Sec. 156.111(a) to reduce
the burden on States to decide between three functionally identical
choices. Second, we propose to revise the typicality standard at Sec.
156.111(b)(2) so that, in demonstrating that a State's new EHB-
benchmark plan provides a scope of benefits that is equal to the scope
of benefits of a typical employer plan in the State, the scope of
benefits of a typical employer plan in the State would be defined as
any scope of benefits that is as or more generous than the scope of
benefits in the State's least generous typical employer plan
(supplemented by the State as necessary to provide coverage within each
EHB category at Sec. 156.110(a)), and as or less generous than the
scope of benefits in the State's most generous typical employer plan
(supplemented by the State as necessary to provide coverage within each
EHB category at Sec. 156.110(a)), among the typical employer plans
currently defined at Sec. 156.111(b)(2)(i)(A) and (B). We also propose
to remove the generosity standard at Sec. 156.111(b)(2)(ii) and to
make a technical revision to the language regarding supplementation at
Sec. 156.111(b)(2)(i). Third, we propose to revise Sec. 156.111(e)(3)
to require States to submit a formulary drug list as part of their
application to change EHB-benchmark plans only if the State is seeking
to change their prescription drug EHB.
We propose to remove the regulatory prohibition at Sec. 156.115(d)
on issuers from including routine non-pediatric dental services as an
EHB, which would provide States the option to add routine adult dental
services as an EHB by updating their EHB-benchmark plans pursuant to
Sec. 156.111.

[[Page 82520]]

We propose to amend Sec. 156.122 to codify that prescription drugs
in excess of those covered by a State's EHB-benchmark plan are
considered EHB. As a result, they would be subject to requirements
including the annual limitation on cost sharing and the restriction on
annual and lifetime dollar limits, consistent with Sec. 156.130,
unless the coverage of the drug is mandated by State action and is in
addition to EHB pursuant to Sec. 155.170, in which case the drug would
not be considered EHB. In addition, for plan years beginning on or
after January 1, 2026, we propose to amend Sec. 156.122 to provide
that the Pharmacy & Therapeutics (P&T) committee must include a
consumer representative. We also seek comment on a possible future
policy proposal to replace the United States Pharmacopeia (USP)
Medicare Model Guidelines (MMG) with the USP Drug Classification system
(DC) to classify the prescription drugs required to be covered as EHB
under Sec. 156.122(a)(1). In particular, we seek public comment to
confirm or further expand our understanding of the risks and benefits
associated with replacing the USP MMG with the USP DC in this context.
For PY 2025, we propose to follow the approach finalized in the
2024 Payment Notice concerning standardized plan option metal levels,
and to otherwise maintain continuity with our approach to standardized
plan options finalized in the 2023 and 2024 Payment Notices.\10\ We
propose to make only minor updates to the plan designs for PY 2025 to
ensure these plans have AVs within the permissible de minimis range for
each metal level. Our proposed updates to plan designs for PY 2025 are
detailed in Sec. 156.201 of the preamble of this proposed rule,
specifically in Tables 12 and 13.
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\10\ This includes continuation of the differential display of
standardized plan options on HealthCare.gov and 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.
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In the 2024 Payment Notice (88 FR 25858), we announced our intent
to propose an exceptions process that would allow issuers to offer non-
standardized plan options in excess of the limit of two per product
network type, metal level, inclusion of dental and vision benefit
coverage, and service area for PY 2025 and subsequent years. We propose
an exceptions process at Sec. 156.202 that would allow issuers to
offer more than two non-standardized plan options per product network
type, metal level, inclusion of dental and vision benefit coverage, and
service area for PY 2025 and subsequent plan years, if the issuer can
demonstrate that these additional non-standardized plans have specific
design features that would substantially benefit consumers with chronic
and high-cost conditions.
We propose a new regulatory provision that would permit us to allow
a CO-OP loan recipient to voluntarily terminate its loan agreement with
us and cease to constitute a qualified non-profit health insurance
issuer (QNHII), for the purpose of pursuing innovative business plans
that are not otherwise consistent with the governance requirements and
business standards applicable to a CO-OP borrower. Under the proposed
new regulatory provision, we would be able to consider a request by a
CO-OP to voluntarily terminate its loan agreement for reasons other
than financial viability, provided all outstanding CO-OP loans issued
to the loan recipient are repaid in full prior to termination, and we
believe granting the request would meaningfully enhance consumer access
to quality, affordable, member-focused, non-profit health care options
in affected markets.
We propose conforming amendments to the payment and collections
process set forth at Sec. 156.1215 to align with the policies and
regulations proposed in the Federal Independent Dispute Resolution
Operations proposed rule (88 FR 75744). This proposal would provide
that administrative fees for utilizing the No Surprises Act Federal
independent dispute resolution (IDR) process for health insurance
issuers that participate in financial programs under the ACA would be
subject to netting as part of HHS' integrated monthly payment and
collections cycle. Additionally, we propose to amend Sec. 156.1215 to
provide that any amount owed to the Federal government by an issuer and
its affiliates for unpaid administrative fees due to the Federal
government from these issuers and their affiliates for utilizing the
Federal IDR process in accordance with Sec. 149.510(d)(2), after HHS
nets amounts owed by the Federal government under these programs, would
be the basis for calculating a debt owed to the Federal government.

III. Provisions of the Proposed Regulations

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

1. Background
Section 1332 of the ACA permits States to apply for a section 1332
waiver to pursue innovative strategies for providing their residents
with access to higher value, more affordable health insurance coverage.
To allow for greater flexibility in communicating with the public, we
are proposing updates to the public hearing process requirements for
section 1332 waivers.
Under section 1332(b) of the ACA, the Secretary of HHS and the
Secretary of the Treasury (collectively, the Secretaries) may exercise
their discretion to approve a request for a section 1332 waiver only if
the Secretaries determine that the proposal for the section 1332 waiver
meets the following four requirements, referred to as the statutory
guardrails: (1) the proposal will provide coverage that is at least as
comprehensive as coverage defined in section 1302(b) of the ACA and
offered through Exchanges established under title I of the ACA, as
certified by the Office of the Actuary of CMS, based on sufficient data
from the State and from comparable States about their experience with
programs created by the ACA and the provisions of the ACA that would be
waived; (2) the proposal will provide coverage and cost-sharing
protections against excessive out-of-pocket spending that are at least
as affordable for the State's residents as would be provided under
title I of the ACA; (3) the proposal will provide coverage to at least
a comparable number of the State's residents as would be provided under
title I of the ACA; and (4) the proposal will not increase the Federal
deficit. The Secretaries retain their discretionary authority to deny
requested section 1332 waivers when appropriate given consideration of
the application, as a whole, even if a proposal for a section 1332
waiver meets the four statutory guardrails.
The Departments are responsible for monitoring an approved section
1332 waiver's compliance with the statutory guardrails and for
conducting evaluations to determine the impact of the section 1332
waiver. Specifically, section 1332(a)(4)(B)(v) of the ACA requires the
Secretaries to promulgate regulations that provide for a process for
the periodic evaluation of approved section 1332 waivers. The
Secretaries must also promulgate regulations that provide for a process
under which States with approved section 1332 waivers submit to the
Secretaries periodic reports concerning the implementation of the
State's waiver program.\11\
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\11\ See ACA section 1332(a)(4)(B)(iv).

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[[Page 82521]]

2. Proposed Amendments to Normal Public Notice Requirements (31 CFR
33.112, 31 CFR 33.120, 45 CFR 155.1312, and 45 CFR 155.1320)
Sections 1332(a)(4)(B)(i) and (iii) of the ACA provide that the
Secretaries shall promulgate regulations that provide for a process for
public notice and comment at the State level, including public
hearings, and a process for providing public notice and comment at the
Federal level after the section 1332 waiver application is received by
the Secretaries, respectively, that are both sufficient to ensure a
meaningful level of public input. Current regulations at 31 CFR 33.112
and 45 CFR 155.1312 specify State public notice and comment period and
participation requirements for proposed section 1332 waiver requests,
and 31 CFR 33.116(b) and 45 CFR 155.1316(b) specify the public notice
and comment period and approval requirements under the accompanying
Federal process.
In the November 2020 interim final rule (85 FR 71142), the
Departments revised regulations to set forth flexibilities in the
public notice requirements and post-award public participation
requirements for section 1332 waivers during the COVID-19 PHE. In the
September 2021 final rule (86 FR 53502), the Departments extended those
changes beyond the COVID-19 PHE to allow similar flexibilities in the
event of future natural disasters; PHEs; or other emergent situations
that threaten consumers' access to health insurance coverage,
consumers' access to health care, or human life. Currently, in such an
event, States may submit a request to the Departments to modify, in
part, the State public notice requirements specified in 31 CFR
33.112(a)(1), (b), (c), and (d) and 45 CFR 155.1312(a)(1), (b), (c),
and (d), and the Federal public notice requirement specified in 31 CFR
33.116(b) and 45 CFR 155.1316(b), pursuant to 31 CFR 33.118(a) and 45
CFR 155.1318(a).
The criteria to request a modification from the normal public
notice requirements during an emergent situation are set forth in 31
CFR 33.118(b)(1) through (5) and 45 CFR 155.1318(b)(1) through (5).
Pursuant to 31 CFR 33.118(b)(3) and 45 CFR 155.1318(b)(3), the State's
request to modify normal public notice procedures is required to
include: the justification for the requested modification from the
State public notice procedures as it relates to the emergent situation
and the alternative public notice procedures, including public
hearings, that it proposes to implement at the State level and that are
designed to provide the greatest opportunity for and level of
meaningful public input from impacted interested parties that is
practicable given the emergent circumstances motivating the State's
request for a modification.
Since the finalization of the flexibilities in 31 CFR 33.118(b)(1)
through (5) and 45 CFR 155.1318(b)(1) through (5), almost all States
with approved section 1332 waivers (``section 1332 waiver States'')
submitted requests that were granted by the Departments to conduct
their annual post-award forums virtually instead of in-person during
the COVID-19 PHE to reduce the risk of transmission of COVID-19.
Similarly, during the COVID-19 PHE, States submitting new section 1332
waiver applications, waiver extension requests, or waiver amendment
requests also requested to host their State public hearings virtually
and these requests were also granted by the Departments. However, with
the recent expiration of the Federal COVID-19 PHE \12\ (and many State
COVID-19 PHEs) \13\ and in line with the requirements of 31 CFR
33.120(c) and 45 CFR 155.1320(c) and 31 CFR 33.112(c) and 45 CFR
155.1312(c), the Departments have ceased granting States' requests to
hold public hearings or post-award forums virtually instead of in-
person on the basis of the Federal COVID-19 PHE.
---------------------------------------------------------------------------

\12\ The Federal COVID-19 PHE ended on May 11, 2023. https://
www.hhs.gov/about/news/2023/05/09/fact-sheet-end-of-the-covid-19-
public-health-
emergency.html#:~:text=That%20means%20with%20the%20COVID,the%20expira
tion%20of%20the%20PHE.
\13\ For example, in Alaska the State's PHE ended on July 1,
2022 (https://health.alaska.gov/PHE/Pages/default.aspx); in Colorado
the Disaster Recovery Order ended on April 27, 2023 (https://hcpf.colorado.gov/covid-19-phe-planning); in Georgia the State of
Emergency ended on May 11, 2023 (https://dph.georgia.gov/press-releases/2023-05-11/dph-news-release-end-public-health-emergency-declaration); and in Rhode Island the State's COVID-19 Disaster
Emergency ended on May 11, 2023 (https://governor.ri.gov/executive-orders/executive-order-23-05).
---------------------------------------------------------------------------

Upon review and consideration of the lessons learned during the
COVID-19 PHE, the Departments have determined that some current
provisions regarding normal State public notice procedures are outdated
given the increased accessibility that technology has provided for
virtual and telephonic meetings. States have shared that their
residents benefitted from the States' opportunity to host public
hearings and post-award forums virtually, and that they would like to
continue doing so to facilitate attendance. States have also reported
to the Departments that hosting meetings virtually during the COVID-19
PHE did not decrease the amount or quality of meaningful input
received. States' experience during this time demonstrated that
interested parties were able to virtually attend meetings and submit
public comments verbally or in-writing, and States did not report any
significant issues relating to virtual platforms that impeded public
attendance or participation. States continued to share with the
Departments summaries of their post-award forums, as well as all public
comments received and actions taken in response to concerns or
comments, in accordance with section 1332 waiver annual reporting
requirements. In States' new waiver applications, waiver extension
requests, and waiver amendment requests, States also shared with the
Departments summaries of virtually conducted hearings from their State
public comment periods and addressed public comments or concerns
received.
Beyond mitigating the spread of COVID-19, information shared by
section 1332 waiver States has demonstrated that the opportunity to
host post-award forums and public hearings on virtual platforms
facilitated comparable or higher levels of public attendance when
compared to previously held in-person meetings. For example, at
Maryland's annual post-award forums held in 2019 (in-person) and 2020-
2022 (virtual), the State saw comparable participation across the years
from interested parties. Minnesota also reported comparable attendance
at its post-award forums across the years: 4 attendees in 2018 (in-
person), 1 in 2019 (in-person), 4 in 2020 (virtual), 9 in 2021
(virtual),\14\ and 2 in 2022 (virtual). Likewise, Wisconsin had 6
attendees at its post-award forum in 2019 (in-person), 24 in 2020
(virtual),\15\ 11 in 2021 (virtual), and 7 in 2022 (virtual). Wisconsin
noted that using a virtual format has allowed individuals who would
otherwise not be able to attend in-person to view the State's
presentation and that this has proven to be a convenient means for
individuals to attend the forum.
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\14\ Note that this post-award hearing was also a hearing for
the State's waiver extension application, which likely increased
attendance.
\15\ Note that attendance was relatively higher in 2020 likely
due to the forum following the State's first full year of
implementing its reinsurance program.
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States that began waiver implementation after the start of the
COVID-19 PHE have also reported successfully hosting virtual post-award
forums. For example, Colorado conducted its first post-award forum
entirely virtually in 2020 and reported

[[Page 82522]]

79 attendees.\16\ Pennsylvania had 2 attendees at its first post-award
forum in 2021 (virtual) and 4 in 2022 (virtual). Pennsylvania noted
that due to the expansiveness of the State's geography, there has
historically been low in-person attendance, as observed at its in-
person public hearings in 2019 for its waiver application, where no
members of the public attended the first meeting, and two members of
the public attended the second meeting.
---------------------------------------------------------------------------

\16\ Note that this post-award forum was also a hearing for the
State's waiver extension application, which likely increased
attendance.
---------------------------------------------------------------------------

States submitting new waiver applications, waiver extension
requests, or waiver amendment requests during the COVID-19 PHE also
reported successfully conducting their public hearings on virtual
platforms. For example, in January 2022, Alaska held a combined post-
award forum and State public hearing for its waiver extension
application both in-person and with a telephonic option, which 3
members of the public attended either in-person or virtually. In April
2022, Washington held two State public hearings virtually, in which 9
representatives from organizations attended and shared public comments.
There are other Federal programs and agencies that permitted a
virtual option in place of in-person public hearings prior to the
COVID-19 PHE or that have more recently amended their policies for
public input to continue virtual and telephonic options that were first
implemented during the COVID-19 PHE. For example, States that are
applying for Medicaid section 1115 demonstrations are permitted to use
telephonic and web-based conference capabilities for public meetings.
In fact, per 42 CFR 431.408(a)(3), a State must use telephonic and/or
web conference capabilities for at least one of the two required public
hearings to ensure statewide accessibility to the public hearing,
unless it can document it has afforded the public throughout the State
the opportunity to provide comment, such as holding the two public
hearings in geographically distinct areas of the State.
As another example, during the COVID-19 PHE, the Internal Revenue
Service (IRS) began holding public hearings on notices of proposed
rulemaking telephonically instead of in-person. Following the end of
the Federal COVID-19 PHE, the IRS recently announced that, for proposed
regulations published in the Federal Register after May 11, 2023,\17\
public hearings would be conducted in-person but that a telephonic
option would remain available for those who prefer to attend or testify
by telephone.
---------------------------------------------------------------------------

\17\ Internal Revenue Service, Public Hearings on Proposed
Regulations to Be Conducted in Person with Telephone Options
Available, Announcement 2023-16. Accessed at https://www.irs.gov/pub/irs-drop/a-23-16.pdf.
---------------------------------------------------------------------------

The Departments considered whether to propose requiring States to
hold at least one of the required public hearings for waiver
applications in-person. However, as explained above, States have
successfully hosted post-award forums and public hearings for section
1332 waiver applications virtually to allow for meaningful public input
over the last several years. Furthermore, by allowing States the
ability to hold all of their meetings virtually, States may better
allow for input across different geographies, communities, and
populations. We also considered proposing the standard under section
1115 demonstrations where one hearing is required to be done virtually.
However, given the successful hosting of virtual meetings with public
participation by States for section 1332 waivers, it does not seem
necessary to continue to require in-person meetings to solicit public
input on section 1332 waivers.
The Departments believe that by allowing States the opportunity to
hold post-award forums and public hearings virtually and through
digital platforms, States would be able to continue facilitating
attendance and participation from interested parties and the public to
provide meaningful input. As such, the Departments are of the view that
updating the State public notice procedures would enhance public
participation in the section 1332 waiver review and monitoring process.
This approach would help remove barriers to participation and increase
opportunities for engagement in policymaking for communities and local
partners who may face barriers to in-person participation (for example,
those in rural areas). This approach is also consistent with Executive
Order 14094, Executive Order on Modernizing Regulatory Review, as it
would proactively engage interested or affected parties, including
members of underserved communities, and promote best practices for
information accessibility and engagement with interested or affected
parties through the use of alternative platforms and media for engaging
the public.\18\ Further, this approach may improve States' ability to
understand and eliminate barriers experienced by underserved or under-
represented communities, and identify opportunities to advance health
equity, while diminishing administrative burden related to the
integration of in-person and virtual formats.
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\18\ 88 FR 21879. https://www.govinfo.gov/content/pkg/FR-2023-04-11/pdf/2023-07760.pdf.
---------------------------------------------------------------------------

Therefore, we propose that a virtual (that is, one that uses
telephonic, digital, and/or web-based platforms) or hybrid (that is,
one that provides for both in-person and virtual attendance) public
hearing or forum be considered as the equivalent of holding an in-
person meeting. In the 2012 final rule (77 FR 11700), the Departments
noted that as set forth in 31 CFR 33.112(c)(1) and 45 CFR
155.1312(c)(1), a State must hold at least two public hearings in
distinct locations. Under the proposal in this rule to modify the
normal public notice procedures, States would still need to hold at
least two public hearings in distinct locations. For example, the
Departments clarify that under this rule's proposal to allow
flexibility to host these meetings virtually, a State would not be
permitted to count a public hearing in which there is simultaneously an
in-person location and virtual platform as two hearings (or two
locations). Instead, one virtual or hybrid meeting would still count as
one public hearing, and two virtual or hybrid meetings would count as
two public hearings.
To codify these new proposed policies, we propose to amend 31 CFR
33.112(c) and 45 CFR 155.1312(c) and 31 CFR 33.120(c) and 45 CFR
155.1320(c). More specifically, the Departments propose to amend 31 CFR
33.112(c) and 45 CFR 155.1312(c) to permit States to conduct public
hearings in a virtual (that is, one that uses telephonic, digital, and/
or web-based platforms) or hybrid (that is, one that provides for both
in-person and virtual attendance) format in lieu of conducting an in-
person meeting. The Departments also propose to amend 31 CFR 33.120(c)
and 45 CFR 155.1320(c) to provide that for a State's annual post-award
forum, the public forum shall be conducted in an in-person, virtual
(that is, one that uses telephonic, digital, and/or web-based
platforms), or hybrid (that is, one that provides for both in-person
and virtual attendance) format. The Departments propose that these
changes go into effect upon finalization of this rule. Because these
changes would relieve a regulatory restriction, the Departments
anticipate that they would be made effective immediately upon
publication of a final rule.
This proposal is limited to allowing flexibility to host required
meetings virtually. States would be required to continue to abide all
other public notice requirements, including public notice

[[Page 82523]]

procedural requirements for waiver applications, waiver extension and
waiver amendment requests, and post-award forums. For example, States
would still be required to have a process to consult and collaborate
with Federally-recognized tribes,\19\ as applicable, as well as take
reasonable steps to provide meaningful access for individuals with
limited English proficiency and appropriate steps to ensure effective
access for and communication with individuals with disabilities,
including accessibility of information and communication
technology.\20\ States should recognize that virtual meetings may
present additional accessibility challenges for people with
communications and mobility disabilities, as well as to those who lack
broadband access. Complying with the requirement to ensure effective
communication may entail providing American Sign Language
interpretation and real-time captioning and ensuring that the virtual
platform is interoperable with assistive technology for those with
mobility difficulties.
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\19\ See 31 CFR 33.112(a)(2) and 45 CFR 155.1312(a)(2).
\20\ See Title VI of the Civil Rights Act of 1964 (42 U.S.C.
2000d, 45 CFR part 80), Section 1557 of the ACA (42 U.S.C. 18116),
Section 504 of the Rehabilitation Act of 1973 (29 U.S.C 794, 45 CFR
part 84), and Title II of the Americans with Disabilities Act (42
U.S.C. 1213 et seq., 28 CFR part 35). The HHS Office for Civil
Rights enforces applicable Federal civil rights laws that prohibit
discrimination on the basis of race, color, national origin, sex,
age, or disability, as well as laws protecting the exercise of
conscience and religious freedom, including the Religious Freedom
Restoration Act (Pub. L 103-141) (42 U.S.C. 2000bb through 2000bb-
4).
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Finally, the Departments clarify that under this proposal, States
should have a process by which members of the public can request in-
person meetings for the annual post-award forum or State public
hearings on waiver applications, waiver extension requests, or waiver
amendments requests, and that States should accommodate those requests
whenever possible. In addition, States with approved section 1332
waivers and States seeking approval for proposed waivers would continue
to have flexibility to submit requests to the Departments during
emergent situations to modify certain public participation requirements
as set forth in 31 CFR 33.118(b)(1) through (5) and 45 CFR
155.1318(b)(1) through (5).
The Departments seek comment on these proposals.

B. 42 CFR Parts 435 and 600

1. Increase State Flexibility in the Use of Income and Resource
Disregards for Non-MAGI Populations (42 CFR 435.601)
We propose to provide States with greater flexibility to adopt
income and/or resource disregards in determining financial eligibility
under section 1902(r)(2) of the Act for individuals excepted from
application of financial methodologies based on modified adjusted gross
income (``MAGI-based methodologies'').
Section 1902(r)(2) of the Act requires that States, in determining
Medicaid financial eligibility, apply a methodology that may be less
restrictive, but which may not be more restrictive, than in the case of
individuals seeking eligibility on the basis of being 65 years old or
older, having blindness or a disability, under the supplemental
security income (SSI) program. In the case for other individuals, the
methodology may be less restrictive, but may not be more restrictive
than the methodology applied to determine eligibility ``under the State
plan most closely categorically related.'' For the latter populations,
prior to the enactment of the ACA, the aid to families with dependent
child AFDC program methodologies were generally used (42 CFR
435.601(a), (b), and (d)(2)(ii)). However, section 2002(a) of the ACA
amended section 1902(e) of the Act which, at paragraph (14)(A),
requires that, notwithstanding section 1902(r)(2) of the Act (or any
other provision of title XIX of the Act), States use MAGI-based
methodologies in determining individuals' Medicaid eligibility unless
the individual is excepted from such methodologies under section
1902(e)(14)(D) of the Act.\21\ Implemented in our regulations at 42 CFR
435.603(j), these exceptions include, but are not limited to,
individuals who are age 65 years old or older; have blindness or a
disability; are being evaluated for coverage as medically needy; or
request need for coverage of long-term services and supports (LTSS).
This means, for example, that in determining financial eligibility for
an optional eligibility group in which being at least 65 years old is a
requirement, SSI-based methodologies (as the most closely related cash
assistance program) and not MAGI-based methodologies apply, and States
must apply a methodology no more restrictive than the methodology of
the SSI program. Similarly, in determining eligibility for a medically
needy group of parents and caretaker relatives, States must apply a
methodology no more restrictive than the methodology of the former AFDC
program.\22\
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\21\ MAGI-based methodologies are the rules described in section
36B(d)(2)(B) of the U.S. Internal Revenue Code.
\22\ Because the AFDC program no longer exists, we have
permitted States, where AFDC methodologies otherwise apply, to use
MAGI-like methodologies instead of AFDC methodologies in determining
eligibility for the medically needy. 42 CFR 435.831(b)(1)(ii).
Disregards under section 1902(r)(2)(A) of the Act may be applied to
individuals whose eligibility is determined using these ``MAGI-
like'' methodologies. For a discussion of MAGI-like methodologies,
see 81 FR 86382, 86415-86418 (November 30, 2016). We have proposed
that States have the option to apply MAGI-like methodologies in all
circumstances in which AFDC methodologies otherwise apply. 87 FR
54842.
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Importantly, for any group to which SSI, AFDC, or MAGI-like
methodologies apply, States may utilize the authority under section
1902(r)(2)(A) of the Act to apply a ``less restrictive'' methodology;
that is, they may elect to disregard income and/or resources that would
otherwise be countable under the relevant methodology. For example,
under SSI methodologies, $20 of an individual's otherwise countable
monthly income is disregarded in determining income eligibility. A
State Medicaid agency, using the authority under section 1902(r)(2)(A)
of the Act, could adopt an additional monthly income disregard of $100
for an eligibility group to which SSI methodologies apply.\23\
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\23\ Section 1902(r)(2) of the Act does not limit the amount of
an income or a resource disregard. States could, for example,
disregard all countable income and/or resources for an eligibility
under the authority of section 1902(r)(2) of the Act. Under 42 CFR
435.1007(e), the Federal financial participation (FFP)-related
income limits are applied after application of cash assistance
income deductions and any disregards in the State plan authorized
under section 1902(r)(2) of the Act.
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In 1993, we implemented the less-restrictive methodology authority
in section 1902(r)(2)(A) of the Act at 42 CFR 435.601(d)(4) (58 FR
4908-01, 4929-4930 (January 19, 1993)). We confirmed in the regulation
the eligibility groups to which States may apply less restrictive
methodologies, which include: optional categorically needy groups
described in section 1902(a)(10)(A)(ii) of the Act; medically needy
groups described in section 1902(a)(10)(C) of the Act; the mandatory
group serving individuals 65 years old or older; who have blindness or
disabilities in States that have exercised the option in section
1902(f) of the Act to apply more restrictive criteria to these
populations than SSI (so-called ``section 209(b) States''); and
Qualified Medicare Beneficiaries described in sections

[[Page 82524]]

1902(a)(10)(E) and 1905(p) of the Act. Additionally, the current
regulation requires that any less restrictive methodologies elected by
a State must be ``comparable for all persons within each category of
assistance within an eligibility group.'' As further explained in 42
CFR 435.601(d)(4): ``For example, if the agency chooses to apply less
restrictive income or resource methodology to an eligibility group of
aged individuals, it must apply that methodology to all aged
individuals within the selected group.''
In 2001, we issued guidance on the use of less restrictive
methodologies by States (``Medicaid Eligibility Groups and Less
Restrictive Methods of Determining Countable Income and Resources
Questions and Answers,'' May 11, 2001 (May 2001 guidance)). As
explained in the May 2001 guidance, an ``eligibility group'' under
section 1902(a)(10)(A)(ii) of the Act for purposes of less restrictive
methodologies is created by applying the eligibility requirements
described in any of the clauses of section 1902(a)(10)(A)(ii) of the
Act (for example, section 1902(a)(10)(A)(ii)(I) of the Act) to one of
the categorical populations described in section 1905(a) of the Act
(for example, individuals under the age of 21, or at the option of a
State, under the age of 20, 19, or 18, as described in section
1905(a)(i) of the Act).
For example, a State could elect to apply the eligibility criteria
described in section 1902(a)(10)(A)(ii)(V) of the Act (relating to
individuals in medical institutions for at least 30 consecutive days
whose incomes do not exceed 300 percent of the SSI Federal benefit
rate) to individuals 65 years old or older (the population described in
section 1905(a)(iii) of the Act). A State similarly could apply the
eligibility criteria described in section 1902(a)(10)(A)(ii)(V) of the
Act to other categorical populations described in section 1905(a) of
the Act, such as individuals who have blindness or disabilities
(section 1905(a)(vii) of the Act) or individuals under age 21 (section
1905(a)(i) of the Act). As explained in the May 2001 guidance, the
election of the optional eligibility category at section
1902(a)(10)(A)(ii)(V) of the Act and a population in section 1905(a) of
the Act (for example, individuals 65 years old or older) forms a
singular eligibility group.\24\
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\24\ As also explained in the May 2001 guidance, medically needy
groups are created in the same manner; for example, a State that has
adopted the medically needy category in section 1902(a)(10)(C) of
the Act (that is, the medically needy) and elects to include the
population described in section 1905(a)(ii) of the Act (parents and
caretaker relatives) forms a singular medically needy group. Section
1902(a)(10)(C) of the Act requires that States that select the
medically needy category must adopt a medically needy group for
children under 18 and a medically needy group for pregnant
individuals.
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Thus, consistent with 42 CFR 435.601(d)(4), if a State that covers
an eligibility group of individuals 65 years old and older who have
been in a medical institution for at least 30 consecutive days wants to
adopt a resource disregard of $5,000 of otherwise countable resources,
the State must apply the disregard to all 65 and older individuals who
are seeking coverage under the group; the State could not target the
disregard at only certain 65 and older individuals seeking eligibility
in the group, for example individuals age 65 and older with a diagnosed
cognitive impairment.
Section 1902(r)(2)(A) of the Act does not expressly impose, and we
did not identify a specific legal rationale in the proposed or final
rule requiring, the ``comparability'' mandate that we incorporated into
42 CFR 435.601(d)(4). 54 FR 39421, 39433 (September 26, 1989); 58 FR
4908, 4919 (January 19, 1993). Section 1902 of the Act contains two
separate provisions which are commonly referred to as ``comparability''
rules: section 1902(a)(10)(B) of the Act, which requires that the
amount, duration, and scope of the medical assistance available to any
categorically needy individuals must not be less than the medical
assistance available to any other categorically needy individuals
(subject to express exceptions in the statute); and section 1902(a)(17)
of the Act, which requires that eligibility standards, subject to
certain exceptions, must be ``comparable for all groups.''
Upon further analysis, we conclude that neither section
1902(a)(10)(B) of the Act nor section 1902(a)(17) of the Act requires
that a State adopting a less restrictive methodology for a given
eligibility group apply such methodology to all individuals seeking
coverage under the group. First, a State's use of a less restrictive
methodology for an eligibility group would never alter the amount,
duration, and scope of medical assistance available within the group,
which means the comparability mandate in section 1902(a)(10)(B) of the
Act would never be implicated by a less restrictive methodology.
Second, the comparability mandate in section 1902(a)(17) of the Act
refers to standards, not methodologies, which are different terms and
which we have in the past expressly defined differently. ``Standard''
refers to the dollar level that a person's income or resources cannot
exceed to qualify for Medicaid; ``methodology'' refers to the rules for
determining what sources and amounts of income and resources will be
counted in determining whether a person's income exceeds the income and
resource standard. 54 FR 39421-01, 39430 (September 26, 1989). Thus, we
conclude that the incorporation of a comparability mandate into 42 CFR
435.601(d)(4) was a policy choice that was not mandated by Federal law.
In addition, section 3(b) of the Sustaining Excellence in Medicaid
Act (Pub. L. 116-39, enacted in 2019) directed that nothing in section
1902(a)(17) of the Act should be construed as prohibiting a State from
adopting income or resource disregards under section 1902(r)(2) of the
Act exclusively for people who need home and community-based services
(HCBS) authorized under various authorities. In other words, section
3(b) of the Sustaining Excellence in Medicaid Act confirmed that, at
least with regard to the use of section 1902(r)(2)-related authority to
target income and/or resource disregards at people who need HCBS, the
comparability mandate in section 1902(a)(17) of the Act does not impose
a bar. We believe that this provides further support for the view that
the comparability mandate in section 1902(a)(17) of the Act should not
be considered to require comparability in the use of less restrictive
methodologies under section 1902(r)(2)(A) of the Act.\25\
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\25\ For further information, see CMS State Medicaid Director
Letter 21-004, ``State Flexibilities to Determine Financial
Eligibility for Individuals in Need of Home and Community-Based
Services.'' https://www.medicaid.gov/sites/default/files/2021-12/smd21004_0.pdf.
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Over the years, a number of States also have sought to target
income and/or resource disregards to other populations within an
eligibility group without applying the disregard to all, including, for
example, individuals with disabilities who have accumulated resources
through saving their earned income. Under this example, the eligibility
group serving individuals with disabilities who have earned income has
comparatively higher resource standard than other eligibility groups
with a resource standard to allow these individuals to save their
earned income. When these individuals stop working and must qualify in
a separate eligibility group to maintain their Medicaid, most typically
one with a much lower resource standard, they may be faced with the
choice of forgoing Medicaid coverage or exhausting the savings they
were effectively incentivized to accumulate in their

[[Page 82525]]

original eligibility group in order to retain their Medicaid
eligibility. States cannot address this predicament without effectively
increasing the resource standard for everyone in the new group because
States currently cannot, consistent with the comparability mandate in
42 CFR 435.601(d)(4), target a resource disregard at applicants for a
particular eligibility group based on their previous eligibility in a
separate group.
For these reasons, we are proposing to eliminate paragraph (d)(4)
from 42 CFR 435.601, which would allow States to target income and/or
resource disregards at discrete subpopulations in the same eligibility
group, provided the subpopulation is reasonable and does not violate
other Federal statutes (for example, it does not discriminate based on
race, gender, sexual orientation or disability). We believe this would
increase State flexibility and provide States more options to extend
eligibility to specific populations based on the State's circumstances.
As noted above, this proposed regulatory change would not be applicable
to eligibility groups to which MAGI-based financial methodologies apply
but could be applied to most non-MAGI eligibility groups. In enacting
the Sustaining Excellence in Medicaid Act, Congress recognized that the
ability to target income and resource disregards at people who need
HCBS provides States a critical tool in their efforts to ``rebalance''
their LTSS programs and move institutionalized individuals to
community-based care. We similarly believe that more broadly
eliminating the comparability rule in the use of income and/or resource
disregards would enable States to achieve targeted expansions of
coverage that best meet their needs, in contrast to the all-or-nothing
approach that is effectively required by the current regulation.
It is possible that, in eliminating the comparability rule from 42
CFR 435.601(d), a State might narrow an existing disregard that is
broadly available to an eligibility group to discrete members of the
group. However, CMS has not received inquiries from States on the
feasibility of such an approach to the same extent that we have
received questions from States on whether they may use income and/or
resource disregards to expand eligibility in a targeted manner. CMS
believes that, in the absence of a comparability rule in 42 CFR
435.601(d), States would on the whole utilize disregard-related
authority to expand eligibility instead of contracting it.
Consistent with 42 CFR 435.601(f)(2), under the proposed revisions
to 42 CFR 435.601(d), States would continue to be required to submit a
State plan amendment describing any new less restrictive methodologies
the State seeks to apply and the groups to which it seeks to apply such
methodologies. We also confirm that eliminating paragraph (d)(4) from
42 CFR 435.601 would not mean that States would be required to target
any new income or resource disregards or modify any existing ones. The
proposed change simply provides States with additional flexibility to
do so.
We propose to amend 42 CFR 435.601 to: eliminate the current
language of paragraph (d)(4); and redesignate the current paragraph
(d)(5) as paragraph (d)(4). We seek comment on our proposal.
2. Changes to the Basic Health Program Regulations (42 CFR 600.320)
Section 1331 of the Patient Protection and Affordable Care Act, as
amended by the Health Care and Education Reconciliation Act of 2010
(Pub. L. 111-152, enacted March 30, 2010), provides States with the
option to operate a Basic Health Program (BHP). In the States that
elect to operate a BHP, the State's BHP makes affordable health
benefits coverage available for lawfully present individuals under age
65 with household incomes between 133 and 200 percent of the Federal
poverty level (FPL) (or in the case of a lawfully present non-citizen,
ineligible for Medicaid or the Children's Health Insurance Program
(CHIP) due to immigration status, with household incomes between zero
and 200 percent of the FPL) who are not eligible for Medicaid, CHIP, or
other minimum essential coverage. As of the date of this proposed rule,
only New York and Minnesota have implemented a BHP.
Under current 42 CFR 600.320(c), States must establish a uniform
method of determining the effective date of eligibility for enrollment
in a standard health plan following either the Medicaid process at 42
CFR 435.915 exclusive of Sec. 435.915(a) or the Exchange standards at
45 CFR 155.420(b)(1).
Under the Medicaid rules at Sec. 435.915, the effective date of an
individual's eligibility is also the effective date of coverage. Under
the Exchange rules at 45 CFR 155.420(b)(1), an individual must first be
determined to be a qualified individual (that is, eligible to enroll in
a QHP through an Exchange). After that determination is made, the
individual can make a plan selection. The Exchange coverage effective
date is then determined based on when the qualified individual selects
their plan. If the plan selection is made between the first and
fifteenth day of the month, coverage will be effective the first day of
the month following the plan selection month. If the plan selection is
made between the sixteenth and the last day of the month, coverage will
be effective the first day of the second month following the plan
selection month.
In States selecting the Medicaid process at 42 CFR 435.915
exclusive of Sec. 435.915(a), eligibility for enrollment in a standard
health plan in the BHP can be effective on either the date the
application was submitted or the first day of the month of such month.
In States selecting the Exchange standards at 45 CFR 155.420(b)(1), an
individual is eligible to enroll in a standard health plan in the BHP
on the first day of the month following the month of application if
that individual is found eligible to enroll in a standard health plan
between the first and the fifteenth of such month. Furthermore, under
the Exchange standards if an individual is found eligible to enroll in
a standard health plan between the sixteenth and the last day of any
month, the individual will have an eligibility effective date of the
first day of the second following month. A State operating a BHP may
require an eligible individual to select a plan and/or pay a premium
prior to the coverage.
Although the current BHP regulation provides States with some
flexibility in establishing an effective eligibility date, it does not
permit a State to select a standard in which all applicants who meet
all requirements are eligible to enroll in a standard health plan in
the BHP effective the first day of the month following the month of
application or eligibility determination regardless of when they apply
or are found eligible to enroll in a standard health plan in the BHP.
As an example, to help to illustrate this point, if an individual
applied on July 7, Medicaid rules would allow a BHP to determine an
individual eligible for enrollment in a standard health plan on July 1
or July 7. If an individual applied on July 7 and was determined BHP-
eligible on July 15, in a State that follows Exchange rules, the
individual would be eligible for enrollment in a standard health plan
on August 1. If the individual was determined BHP-eligible on July 23
in a State that follows Exchange rules, the individual would be
eligible for enrollment in a standard health plan on September 1; the
State could not choose to have coverage start on August 1, regardless
of the date of application.

[[Page 82526]]

Even in a State with real-time eligibility determinations, if the State
follows Exchange rules and the application is on July 23, the
individual would be eligible for enrollment in a standard health plan
on September 1.
We believe eligible individuals should have access to coverage as
soon as is feasible. Since the BHP and Exchange standards were first
established, HHS has taken steps to provide further flexibility for
States to reduce barriers to enrollment and eliminate coverage gaps.
Additionally, system improvements have provided faster and more
accurate eligibility determinations. For example, in practice, all
special enrollment periods on the FFEs now allow coverage to start at
the beginning of the month after the qualifying individual's triggering
event regardless of the plan selection date.
While the Medicaid process at 42 CFR 435.915, exclusive of Sec.
435.915(a), allows for a State operating a BHP to have the earliest
possible effective date for its enrollees, we understand that some
States may have operational or regulatory constraints that do not allow
them to follow the Medicaid process, but may be able to implement an
effective date for all eligible applicants the first day of the month
after the month in which the eligibility determination is made,
regardless of which day of the month such determination occurs.
Therefore, we propose to revise Sec. 600.320(c) to add a third
option at paragraph (c)(iii) that would allow a State operating a BHP
to follow an effective date of eligibility for all enrollees on the
first day of the month following the month in which BHP eligibility is
determined. Because States can require individuals to pay their first
month's premium prior to enrolling in a standard health plan, Sec.
600.320(c)(iii) also reflects this State option. Under Sec.
600.320(c)(i), States will continue to have the option to follow the
Exchange standards at 45 CFR 155.420(b)(1) and under Sec.
600.320(c)(ii), a State may follow Medicaid standards at 42 CFR 435.915
exclusive of Sec. 435.915(a).
We considered an alternative option of whether to instead allow a
State to establish its own uniform effective date policy, outside of
following the three options in this proposed rule, subject to CMS
approval and as long as it is no later than the first day of the second
month following the date that an individual has been determined BHP-
eligible. This alternative option, however, may cause delays in
coverage even further. We seek comment on the proposed additional
option for determining the effective date of eligibility for enrollment
in a standard health plan as well as the alternative option.

C. 45 CFR Part 153--Standards Related to Reinsurance, Risk Corridors,
and HHS 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.\26\ We did not receive any
requests from States to establish and operate a risk adjustment program
for the 2025 benefit year. Therefore, HHS will operate risk adjustment
in every State and the District of Columbia for the 2025 benefit year.
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\26\ See also 42 U.S.C. 18041(c)(1).
---------------------------------------------------------------------------

1. Sequestration
In accordance with the OMB Report to Congress on the Joint
Committee Reductions for Fiscal Year 2024, the HHS-operated risk
adjustment program is subject to the fiscal year 2024
sequestration.\27\ The Federal Government's 2024 fiscal year began on
October 1, 2023. Therefore, the HHS-operated risk adjustment program
will be sequestered at a rate of 5.7 percent for payments made from
fiscal year 2024 resources (that is, funds collected during the 2024
fiscal year).
---------------------------------------------------------------------------

\27\ OMB. (2023, March 13). OMB Report to the Congress on the
BBEDCA 251A Sequestration for Fiscal Year 2024. https://www.whitehouse.gov/wp-content/uploads/2023/03/BBEDCA_Sequestration_Report_and_Letter_3-13-2024.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,\28\ as amended, and the underlying authority for the HHS-operated
risk adjustment program, the funds that are sequestered in fiscal year
2024 from the HHS-operated risk adjustment program will become
available for payment to issuers in fiscal year 2025 without further
Congressional action. If Congress does not enact deficit reduction
provisions that replace the Joint Committee reductions, the program
would be sequestered in future fiscal years, and any sequestered
funding would become available in the fiscal year following that in
which it was sequestered.
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\28\ Public Law 99-177 (1985).
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Additionally, we note that the Infrastructure Investment and Jobs
Act \29\ amended section 251A(6) of the Balanced Budget and Emergency
Deficit Control Act of 1985 and extended sequestration for the HHS-
operated risk adjustment program through fiscal year 2031 at a rate of
5.7 percent per fiscal year.^{30 31}
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\29\ Public Law 117-58, 135 Stat. 429 (2021).
\30\ 2 U.S.C. 901a.
\31\ The Infrastructure Investment and Jobs Act (Pub. L. 117-58)
extended sequestration for the HHS-operated risk adjustment program
through 2031 at a rate of 5.7 percent per fiscal year.
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2. HHS Risk Adjustment (Sec. 153.320)
The HHS risk adjustment models predict plan liability for an
average enrollee based on that person's age, sex, and diagnoses (also
referred to as hierarchical condition categories (HCCs)), producing a
risk score. The HHS risk adjustment methodology utilizes separate
models for adults, children, and infants to account for clinical and
cost differences in each age group. In the adult and child models, the
relative risk assigned to an individual's age, sex, and diagnoses are
added together to produce an individual risk score. Additionally, to
calculate enrollee risk scores in the adult models, we added enrollment
duration factors

[[Page 82527]]

beginning with the 2017 benefit year,\32\ and prescription drug
categories (RXCs) beginning with the 2018 benefit year.\33\ Starting
with the 2023 benefit year, we removed the severity illness factors in
the adult models and added interacted HCC count factors (that is,
additional factors that express the presence of a severity or
transplant HCC in combination with a specified number of total payment
HCCs or HCC groups on the enrollee's record) to the adult and child
models \34\ applicable to certain severity and transplant HCCs.\35\
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\32\ 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.
\33\ 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 models. See, for example, 83 FR 16941.
\34\ See Table 1 for a list of factors in the adult models, and
Table 2 for a list of factors in the child models.
\35\ See 87 FR 27224 through 27228.
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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)
adjustment 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 State payment transfer formula,\36\
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 for a given benefit year. Thus, the HHS risk
adjustment models predict average group costs to account for risk
across plans, in keeping with the Actuarial Standards Board's Actuarial
Standards of Practice for risk classification.
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\36\ The State payment transfer formula refers to the part of
the Federally certified risk adjustment methodology that applies in
States where HHS is responsible for operating the program. The
formula 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). See, for example, 81 FR 94080.
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a. Data for HHS Risk Adjustment Model Recalibration for the 2025
Benefit Year
We are proposing to recalibrate the 2025 benefit year HHS risk
adjustment models with the 2019, 2020, and 2021 enrollee-level EDGE
data. Consistent with the approach outlined in the 2020 Payment Notice
to no longer use MarketScan[supreg] data for recalibrating the HHS risk
adjustment models, we propose to recalibrate the HHS risk adjustment
models for the 2025 benefit year using only enrollee-level EDGE data,
and we would continue to use blended, or averaged, coefficients from
the 3 years of separately solved models for the 2025 benefit year model
recalibration.\37\ Additionally, as outlined in the 2022 Payment Notice
(86 FR 24140, 24152), we propose to use the 3 most recent consecutive
years of enrollee-level EDGE data that are available at the time we
incorporate the data in the draft recalibrated coefficients published
in the proposed rule for the applicable benefit year,\38\ and would not
update the coefficients between the proposed and final rules if an
additional year of enrollee-level EDGE data becomes available for
incorporation. We believe this promotes stability, better meets the
goal of the HHS-operated risk adjustment program and allows issuers
more time to incorporate this information when pricing their plans for
the upcoming benefit year.
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\37\ 84 FR 17463 through 17466.
\38\ Although we do receive the next year of enrollee-level EDGE
data prior to the proposed rule, that data must go through several
quality and analysis checks before it is useable for HHS risk
adjustment model recalibration.
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In the 2024 Payment Notice (88 FR 25740 through 25749), we
finalized the use of 2018, 2019 and 2020 benefit year enrollee-level
EDGE data for recalibration of the 2024 benefit year HHS risk
adjustment models for all model coefficients, with no exceptions. As
explained in the 2024 Payment Notice proposed rule \39\ and final
rule,\40\ we analyzed the 2020 benefit year data to identify possible
impacts of the COVID-19 PHE and 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
HHS 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.
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\39\ 87 FR 78215 through 78216.
\40\ 88 FR 25749 through 25753.
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Considering that the COVID-19 PHE was still in effect throughout
the 2021 benefit year,\41\ we recognize that some interested parties
may continue to be concerned about the use of either the 2020 or 2021
enrollee-level EDGE data for the purposes of HHS risk adjustment model
recalibration. In this regard, we conducted additional analyses to
determine whether any anomalies in the 2021 benefit year enrollee-level
EDGE data were present beyond expected year-to-year variation and
whether the use of two years of PHE-impacted data presented any
additional concerns. We did not identify any such anomalies and note
that all draft coefficients for the 2025 benefit year HHS risk
adjustment models in this proposed rule vary from their values in the
2024 HHS risk adjustment models within the range of previous year-to-
year coefficient changes.
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\41\ See, for example, the Renewal of Determination that a
Public Health Emergency Exists dated February 9, 2023. https://aspr.hhs.gov/legal/PHE/Pages/COVID19-9Feb2023.aspx.
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As such, we propose to determine coefficients for the 2025 benefit
year based on a blend of separately solved coefficients from the 2019,
2020, and 2021 benefit years' enrollee-level EDGE data, with the costs
of services identified from the data trended between the relevant year
of data and the 2025 benefit year.\42\ The draft coefficients listed in
Tables 1 through 6 reflect the use of trended 2019, 2020, and 2021
benefit year enrollee-level EDGE data, as well as other HHS risk
adjustment model updates proposed in this proposed rule (including, for
example, the proposed pricing adjustment for Hepatitis C drugs).
However, we note that the draft coefficients could change between the
proposed and final rules if we identify an error after publication of
this proposed rule or if any proposed model parameters are modified in
response to comments. In addition, consistent with

[[Page 82528]]

Sec. 153.320(b)(1)(i), if we are unable to finalize the final
coefficients in time for publication in the final rule, we would
publish the final coefficients for the 2025 benefit year in guidance
soon after the publication of the final rule.
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\42\ As described in the 2016 Risk Adjustment White Paper
(https://www.cms.gov/cciio/resources/forms-reports-and-other-resources/downloads/ra-march-31-white-paper-032416.pdf) and the 2017
Payment Notice (81 FR at 12218), we subdivide expenditures into
traditional drugs, specialty drugs, medical services, and preventive
services and determine trend factors separately for each category of
expenditure. In determining these trend factors, we consult our
actuarial experts, review relevant Unified Rate Review Template
(URRT) submission data, analyze multiple years of enrollee-level
EDGE data, and consult National Health Expenditure Accounts (NHEA)
data as well as external reports and documents published by third
parties. In this process, we aim to determine trends that reflect
changes in cost of care rather than gross growth in expenditures. As
such, we believe the trend factors we used for each expenditure
category for the 2025 benefit year are appropriate for the most
recent changes in cost of care that we have seen in the market.
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We seek comment on the proposal to determine 2025 benefit year
coefficients for the HHS risk adjustment models based on a blend of
separately solved coefficients from the 2019, 2020, and 2021 enrollee-
level EDGE data.
b. Pricing Adjustment for the Hepatitis C Drugs
For the 2025 benefit year, we propose to continue applying a market
pricing adjustment to the plan liability associated with Hepatitis C
drugs in the HHS risk adjustment models.\43\ Since the 2020 benefit
year HHS 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.\44\ The purpose of this market pricing adjustment is to account
for significant pricing changes between the data years used for
recalibrating the models and the applicable benefit year of HHS risk
adjustment as a result of the introduction of new and generic Hepatitis
C drugs.\45\
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\43\ See for example, 84 FR 17463 through 17466.
\44\ 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.
\45\ Silseth, S., & Shaw, H. (2021). Analysis of prescription
drugs for the treatment of hepatitis C in the United States.
Milliman White Paper. https://www.milliman.com/-/media/milliman/pdfs/2021-articles/6-11-21-analysis-prescription-drugs-treatment-hepatitis-c-us.ashx.
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We have committed to reassessing this pricing adjustment with
additional years of enrollee-level EDGE data, as data becomes
available. As part of the 2025 benefit year model recalibration
analysis, we reassessed the cost trend for Hepatitis C drugs using
available enrollee-level EDGE data (including 2021 benefit year data)
to consider whether the adjustment was still needed and if it is still
needed, whether it should be modified. We found that the data for the
Hepatitis C RXC that would be used for the 2025 benefit year
recalibration still do not account for the significant pricing changes
due to the introduction of new and generic Hepatitis C drugs, and
therefore, do not precisely reflect the average cost of Hepatitis C
treatments applicable to the benefit year in question.
Specifically, although generic Hepatitis C drugs became available
on the market in 2019,\46\ and therefore were available for all 3 years
of data proposed to be used for the 2025 benefit year model
recalibration, our analysis of the data continued to observe that costs
for Hepatitis C drugs are not increasing at the same rate as other drug
costs between the data years and the applicable benefit year of HHS
risk adjustment, likely due to continued increases in the proportion of
Hepatitis C drug prescriptions for generic versions of the drugs. As
such, 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 2025 benefit year. Therefore, we
continue to believe a market pricing adjustment specific to Hepatitis C
drugs in the HHS risk adjustment models for the 2025 benefit year is
necessary to account for the lack of growth in Hepatitis C drug prices
relative to other prescription drugs in the market between the data
years used for recalibrating the models and the applicable benefit year
of HHS risk adjustment due to the introduction of new and generic
Hepatitis C drugs in recent years. We intend to continue to assess this
pricing adjustment as part of future benefit year model recalibrations
using available additional years of enrollee-level EDGE data.
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\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 MAVYRET^TM (glecaprevir/pibrentasvir) for the
Treatment of Chronic Hepatitis C in All Major Genotypes (GT 1-6) in
as Short as 8 Weeks. Abbvie. https://news.abbvie.com/news/abbvie-receives-us-fda-approval-mavyret-glecaprevirpibrentasvir-for-treatment-chronic-hepatitis-c-in-all-major-genotypes-gt-1-6-in-as-short-as-8-weeks.htm.
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We seek comment on our proposal to continue applying a market
pricing adjustment to the plan liability associated with Hepatitis C
drugs for the 2025 benefit year.
c. Proposed List of Factors To Be Employed in the HHS Risk Adjustment
Models (Sec. 153.320)
The proposed 2025 benefit year HHS risk adjustment model factors
resulting from the equally weighted (averaged) blended factors from
separately solved models using the 2019, 2020, and 2021 enrollee-level
EDGE data are shown in Tables 1 through 6. The adult, child, and infant
models have been truncated to account for the high-cost risk pool
payment parameters by removing 60 percent of costs above the $1 million
threshold.\47\ Table 1 contains proposed 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
proposed factors for each child model, including the age-sex, HCCs, and
interacted HCC counts coefficients. Table 3 lists the proposed HCCs
selected for the interacted HCC counts factors that would apply to the
adult and child models. Table 4 contains the proposed 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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\47\ We are not proposing changes to the high-cost risk pool
parameters for the 2025 benefit year. Therefore, we would maintain
the $1 million threshold and 60 percent coinsurance rate.

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d. Cost-Sharing Reduction Adjustments
We propose to recalibrate the CSR adjustment factors for AI/AN zero
cost sharing and limited cost sharing CSR plan variant enrollees for
the 2025 benefit year, and to retain these proposed AI/AN CSR
adjustment factors, if finalized, for all future benefit years unless
changed through notice-

[[Page 82546]]

and-comment rulemaking. We also propose to maintain the current CSR
adjustment factors for silver plan variant enrollees (70 percent, 73
percent, 87 percent, and 94 percent AV plan variants) \48\ for the 2025
benefit year and beyond, unless changed through notice-and-comment
rulemaking.
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\48\ See 83 FR 16930 at 16953; 84 FR 17478 through 17479; 85 FR
29190; 86 FR 24181; 87 FR 27235 through 27236; and 88 FR 25772
through 25774.
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Since the beginning of the HHS-operated risk adjustment program in
the 2014 benefit year, we included CSR adjustment factors in the
calculations under the State payment transfer formula to account for
anticipated increased demand for health care services due to lower cost
sharing for CSR enrollees.\49\ At that time, we did not have data
available on the individual and small group (including merged) markets'
use of services, and therefore, we based the CSR adjustment factors on
the available large group market MarketScan[supreg] data.\50\ We have
proposed and finalized the same CSR adjustment factors since they were
first established to maintain stability and certainty for issuers.\51\
At the same time, we have continued to study these issues and have
explored a range of options to update the CSR adjustments to improve
prediction.\52\ Interested parties have also repeatedly requested that
HHS re-analyze the CSR adjustment factors and consider making
updates.\53\
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\49\ 78 FR 15410 at 15421 through 15422.
\50\ See 77 FR 73117 at 73127 and 78 FR 15410 at 15419 through
15420. See also HHS-Operated Risk Adjustment Technical Paper on
Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf. Section
A.3.1.
\51\ See 83 FR 16930 at 16953; 84 FR 17478 through 17479; 85 FR
29190; 86 FR 24181; 87 FR 27235 through 27236; and 88 FR 25772
through 25774.
\52\ See, for example, the 2024 Payment Notice, 88 FR 25772-
25774. Also see Appendix A, HHS-Operated Risk Adjustment Technical
Paper on Possible Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\53\ Id.
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Because our prior analysis of the current CSR adjustment factors
was based on the extraction and use of national enrollee-level EDGE
data without issuer or geographic markers,\54\ we did not previously
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). However, with policies finalized in the 2023 Payment Notice (87
FR 27241 through 27243) and the 2024 Payment Notice (88 FR 25784
through 25787), we can now extract and use multiple years of enrollee-
level EDGE data with plan ID and rating area markers. This allowed for
further study of the CSR populations at a more granular level to inform
potential proposed changes to these factors, including, for example,
whether certain issuers, States, or rating areas have a high percentage
of AI/AN enrollment. We have now reconsidered the current CSR
adjustment factors using several years of EDGE data available to HHS,
including 2021 benefit year enrollee-level EDGE data with plan ID and
rating area markers, and analyzed potential changes to the CSR
adjustment factors at the State market risk pool level.
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\54\ The 2021 Risk Adjustment Technical Paper provided initial
analysis on the CSR adjustment factors and their performance with
the geographical indicators. See Appendix A, HHS-Operated Risk
Adjustment Technical Paper on Possible Model Changes. (2021, October
26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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Based on further analysis of all CSR adjustment factors, HHS is not
proposing changes to the CSR adjustment factors, with the exception of
the AI/AN CSR plan variant factors.\55\ Our continued study of these
issues found that adjustments to the CSR adjustment factors for AI/AN
CSR plan variant enrollees were needed and would be appropriate. As
described in the 2021 Risk Adjustment Technical Paper,\56\ AI/AN CSR
plan variant enrollees experienced higher expenditures than non-CSR
silver enrollees, which may reflect increased demand associated with
enrollee receipt of the AI/AN zero cost sharing or limited cost sharing
CSR plan variants or risk characteristics specific to the AI/AN
population which are not specifically captured by HCCs or other model
factors. Given these findings, we conducted additional analysis using
additional benefit years of available enrollee-level EDGE data,
including the 2021 benefit year data with the plan ID and rating area
markers, and found that AI/AN CSR plan variant enrollees were
meaningfully underpredicted in the HHS risk adjustment models.
Specifically, we evaluated the predictive accuracy of the current AI/AN
CSR plan variant adjustment factors using the risk term PRs in Table 7
to measure the accuracy of the entire risk term (including PLRS, metal
IDFs, CSR adjustment factors, and geographic cost factors) in
predicting plan liability for this cohort, as measured by actual paid
PMPM claims. Table 7 shows that in 2021 EDGE data, the risk term PRs
demonstrate underprediction for AI/AN zero cost sharing and limited
cost sharing bronze plan variants under the CSR adjustment factors for
the 2024 benefit year relative to the proposed CSR adjustment factors
for the 2025 benefit year and beyond.\57\ The risk term PRs demonstrate
similar underprediction for AI/AN zero cost sharing and limited cost
sharing bronze plan variants in other EDGE data years.\58\
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\55\ In the 2021 Risk Adjustment Technical Paper, we concluded
that, in aggregate, most of the current CSR adjustment factors
contribute to a reasonable prediction of what plans are paying for
CSR enrollees, with the exception of CSR adjustment factors for AI/
AN enrollees. Our continued study of these issues, including the
more recent analysis of 2021 benefit year data, affirmed these
initial conclusions. Therefore, we propose in this rulemaking to
update the CSR adjustment factors for AI/AN zero-cost sharing and
limited cost sharing plan variants and propose to maintain the
existing CSR adjustment factors for other enrollees. See Appendix A,
HHS-Operated Risk Adjustment Technical Paper on Possible Model
Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\56\ 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.
\57\ Almost 90 percent of total billable member months in AI/AN
zero-cost sharing and limited cost sharing CSR plan variants are in
bronze plans.
\58\ HHS-Operated Risk Adjustment Technical Paper on Possible
Model Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.

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To address concerns about the observed underprediction among AI/AN
CSR plan variant enrollees, we propose to update the CSR adjustment
factors for AI/AN zero-cost sharing and limited cost sharing plan
variants and use the proposed factors for these enrollees as shown in
Table 8. We recalibrated these factors such that the risk term PRs for
each CSR plan variant category equals 1.00 (accurate prediction \59\)
but constrained each CSR adjustment factor so that no CSR adjustment
factor would be less than 1.00 to avoid creating incentives for issuers
to avoid enrolling AI/AN CSR recipients. As shown in Table 7, the risk
term PRs were demonstrated through simulation to improve under the
proposed AI/AN CSR adjustment factors for the zero-cost sharing and
limited cost sharing plans.
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\59\ A subpopulation that is predicted perfectly would have a PR
of 1.0.
[GRAPHIC] [TIFF OMITTED] TP24NO23.020

We believe that these proposed changes to AI/AN CSR adjustment
factors are important to our efforts to continuously improve the HHS
risk adjustment models with incremental changes to improve model
prediction by updating the AI/AN adjustment factors to more accurately
predict plan liability for this subpopulation. We also believe that
these proposed changes would increase the incentives for issuers to
engage the AI/AN population, whose communities have been historically
underserved and who face significant health disparities. We also
believe this proposed change would help advance the agency's health
equity goals and align with the policy objectives in the January 20,
2021 Executive Order on Advancing Racial Equity and Support for
Underserved Communities Through the Federal Government.\60\
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\60\ 86 FR 7009.

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[[Page 82548]]

We also propose to retain the proposed 2025 benefit year CSR
adjustment factors, if finalized, for future benefit years (that is,
the 2026 benefit year and beyond) \61\ unless changed through notice-
and-comment rulemaking. Although we could analyze and consider
potential updates to the CSR adjustment factors every year as part of
the annual recalibration of the HHS risk adjustment models, we have
found that the implied CSR adjustment factors calculated from 2018
through 2022 plan data were stable across each year of data. We also
want to balance our approach to making changes as part of the annual
recalibration of the HHS risk adjustment models in future benefit years
with the desire to maintain stability and predictability for issuers.
With the proposed changes to the AI/AN CSR adjustment factors, we
believe the models would better predict risk for AI/AN CSR plan variant
enrollees such that we do not expect to update the CSR factors on an
annual basis.\62\ However, if we were to pursue changes to any of the
CSR adjustment factors in future benefit years, we would propose those
updates through notice-and-comment rulemaking.
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\61\ This includes the CSR adjustment factors in Table 8.
\62\ As outlined previously in this rule, the proposed changes
to the CSR adjustment factors focus on the AI/AN CSR plan variants
because our analysis found the CSR adjustment factors for other
enrollees to be adequate.
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Lastly, separate from the proposal pertaining to AI/AN CSR
adjustment factors, we note that for all plan liability risk score
calculations under the State payment transfer formula, we use the CSR
adjustment factors that align with the AV of the applicable plan for
the enrollee. Thus, for unique State-specific plans, we apply the CSR
adjustment factors that correspond to each plan's AV. Specifically,
when we identify unique State-specific plans that have higher plan
liability than the standard plan variants, we utilize the corresponding
CSR adjustment factor in the plan liability risk score calculation that
maps to the plan's AV. For example, we use a CSR adjustment factor of
1.12 for all Massachusetts wrap-around plans with AVs above 94 percent
in the plan liability risk score calculation.^{63 64} This
approach does not apply in the case of States whose State-specific
plans take the form of Medicaid expansion plans offered on the Exchange
(for example, Arkansas), because these plans are identical in all their
parameters, including AV and degree of plan liability, to other plans
offered on the Exchange in those States and are differentiated from
their comparable plans only in eligibility criteria and sources of
funding.\65\ As we identify unique State-specific plans that have
higher plan liability than the standard plan variants, such as those in
Massachusetts, we work with the relevant State Department of Insurance
and other relevant State institutions to identify the applicable CSR
adjustment factor that corresponds to the unique State-specific plan's
AV.\66\ We would continue to follow this approach, working with the
State to identify the applicable CSR adjustment factor that corresponds
to that State's unique State-specific plan's AV, unless changed through
notice-and-comment rulemaking.
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\63\ See, for example, 81 FR 12203 at 12228, 85 FR 29164 at
29190 and 29191, and 88 FR 25740 at 25772 through 25774.
\64\ Massachusetts Cost Sharing Subsidies in ConnectorCare:
Design, Administration, and Impact (2021 Aug.). https://www.mahealthconnector.org/wp-content/uploads/MA-Cost-Sharing-Subsidies-in-ConnectorCare-Brief-083021.pdf.
\65\ The structure of wrap-around plans in some States, such as
Massachusetts, differs from the coverage in States who offer
Medicaid expansion plans on the Exchange. For example, in
Massachusetts, the higher cost sharing wrap-around plans are
variations of lower cost sharing plans. As such, the Massachusetts
wrap-around plans do not have the same AVs as their comparable
plans. That is why we use a CSR adjustment factor of 1.12 for all
Massachusetts wrap-around plans with AVs above 94 percent. In
contrast, in Arkansas, its Medicaid expansion plans are identical to
other 94 percent and 100 percent AV CSR plan variants offered on the
Exchange and are distinguished from these identical plans only in
their sources of funding and eligibility criteria. As such, we
presently direct issuers in Arkansas who provide Medicaid expansion
plans with AVs of 94 percent and 100 percent to use specified plan
variant codes for their Medicaid expansion plans only to
differentiate the sources of funding and to differentiate between
populations eligible for the Medicaid expansion plans from those who
are eligible for standard 94 percent and 100 percent AV CSR plan
variants. Because the Arkansas Medicaid expansion plans are
identical to other 94 percent and 100 percent AV CSR plan variants
available in Arkansas and therefore have the same AVs, we would use
the proposed CSR adjustment factor of 1.12 for Arkansas 94 percent
AV Medicaid-expansion plans and the proposed CSR adjustment factor
that corresponds to the silver metal level zero cost sharing
variants (that is, the proposed 1.46 CSR adjustment factor for zero
cost sharing variants) for Arkansas 100 percent AV Medicaid-
expansion plans in the plan liability risk score calculation. See
CMS approval of Arkansas's section 1115(a) demonstration, ``Arkansas
Health and Opportunity for Me.'' https://www.medicaid.gov/sites/default/files/2021-12/ar-arhome-ca.pdf.
\66\ For a list of the unique State-specific CSR levels that
have higher plan liability than the standard plan variants, for
which we utilize the corresponding CSR adjustment factor that maps
to the plan's AV, refer to the applicable benefit year's DIY
Software on the CMS website. See, for example, the Draft 2023
Benefit Year DIY Software on the CMS website (August 22, 2023).
https://www.cms.gov/files/document/cy2023-diy-instructions-08222023.pdf.
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We seek comment on these proposals.
e. Model Performance Statistics
Each benefit year, to evaluate the HHS 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 models is the ratio of the weighted mean predicted plan
liability for the model sample population to the weighted mean actual
plan liability for the model sample population. The PR represents how
well the model does on average at predicting plan liability for that
subpopulation.
A subpopulation that is predicted perfectly would have a PR of 1.0.
For each of the current and proposed HHS risk adjustment models, the R-
squared statistic and the PRs are in the range of published estimates
for concurrent HHS risk adjustment models.\67\ Because we propose to
blend the coefficients from separately solved models based on the 2019,
2020, and 2021 benefit years' enrollee-level EDGE data, we are
publishing the R-squared statistic for each model separately to verify
their statistical validity. The R-squared statistics for the proposed
2025 benefit models are shown in Table 9.
---------------------------------------------------------------------------

\67\ Hileman, G., & Steele, S. (2016). Accuracy of Claims-Based
Risk Scoring Models. Society of Actuaries. https://www.soa.org/4937b5/globalassets/assets/files/research/research-2016-accuracy-claims-based-risk-scoring-models.pdf.

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3. Overview of the HHS Risk Adjustment Methodology (Sec. 153.320)
In part 2 of the 2022 Payment Notice (86 FR 24183 through 24186),
we finalized the proposal to continue to use the State payment transfer
formula finalized in the 2021 Payment Notice for the 2022 benefit year
and beyond, unless changed through notice-and-comment rulemaking. We
explained that under this approach, we will no longer republish these
formulas in future annual HHS notice of benefit and payment parameter
rules unless changes are being proposed. We are not proposing any
changes to the formula in this rule, and therefore, are not
republishing the formulas in this rule. We therefore would continue to
apply the formula as finalized in the 2021 Payment Notice (86 FR 24183
through 24186) \68\ in the States where HHS operates the risk
adjustment program in the 2025 benefit year. Additionally, as finalized
in the 2020 Payment Notice (84 FR 17466 through 17468), we will
maintain the high-cost risk pool parameters for the 2020 benefit year
and beyond, unless amended through notice-and-comment rulemaking. We
are not proposing any changes to the high-cost risk pool parameters for
the 2025 benefit year; therefore, we would maintain the $1 million
threshold and 60 percent coinsurance rate.\69\
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\68\ Discussion provided an illustration and further details on
the State payment transfer formula.
\69\ See 81 FR 94081. See also 84 FR 17467.
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4. HHS Risk Adjustment User Fee for the 2025 Benefit Year (Sec.
153.610(f))
We propose an HHS risk adjustment user fee for the 2025 benefit
year of $0.20 PMPM. Under Sec. 153.310, if a State is not approved to
operate, or chooses to forgo operating, its own risk adjustment
program, HHS will operate risk adjustment on its behalf. For the 2025
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. 45 CFR
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.\70\ 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
associate with potential adverse risk selection.\71\ The HHS-operated
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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\70\ See Circular No. A-25 Revised. https://www.whitehouse.gov/wp-content/uploads/2017/11/Circular-025.pdf.
\71\ Id.
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In the 2024 Payment Notice (88 FR 25740), we calculated the Federal
administrative expenses of operating the HHS risk adjustment program
for the 2024 benefit year to result in a risk adjustment user fee rate
of $0.21 PMPM based on our estimated costs for HHS risk adjustment
operations and estimated Billable Member Months (BMM) for individuals
enrolled in risk adjustment covered plans. For the 2025 benefit year,
HHS proposes to use the same methodology to estimate our administrative
expenses to operate the HHS 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 HHS-operated risk adjustment program activities. To
calculate the HHS risk adjustment user fee, we divided HHS' projected
total costs for administering the HHS 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 2025 benefit year.
We estimate that the total cost for HHS to operate the risk
adjustment program on behalf of States for the 2025 benefit year will
be approximately $65 million, which is more than the approximately $60
million estimated for the 2024 benefit year. We are projecting
increased costs due to increased

[[Page 82550]]

contracting costs combined with increased labor costs.
We also project higher enrollment than our prior estimates in the
2024 and 2025 benefit years based on the increased enrollment, as
measured by BMM, between the 2021 and 2022 benefit years in the
individual non-catastrophic market risk pool in most States, likely due
to the increased PTC subsidies provided for in the American Rescue Plan
Act of 2021 (ARP).^{72 73} 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 project there will continue to be increased enrollment
levels through the 2025 benefit year.\74\ Because we project an
increased budget to operate the HHS-operated risk adjustment program
and estimated higher enrollment through the end of the 2025 benefit
year, we propose a HHS risk adjustment user fee of $0.20 PMPM for the
2025 benefit year.
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\72\ ARP. Public Law 117-2 (2021).
\73\ CMS. (2023, June 30). Summary Report on Permanent Risk
Adjustment Transfers for the 2022 Benefit Year. (p. 8). https://www.cms.gov/files/document/summary-report-permanent-risk-adjustment-transfers-2022-benefit-year.pdf.
\74\ Inflation Reduction Act. Public Law 1217-169 (2022).
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We seek comment on the proposed HHS risk adjustment user fee for
the 2025 benefit year.
5. Audits and Compliance Reviews of Risk Adjustment Covered Plans
(Sec. 153.620(c))
We propose amending Sec. 153.620(c)(4) to require issuers of risk
adjustment covered plans to complete, implement, and provide to HHS
written documentation of any corrective action plans when required by
HHS if a high-cost risk pool audit results in the inclusion of a
finding \75\ or certain observations \76\ in the final audit report.
Currently, under Sec. 153.620(c)(4), the completion, implementation,
and submission of documentation of a corrective action plan to HHS is
only required if the audit results in the inclusion of a finding in the
final audit report. Upon completion of the first benefit year of high-
cost risk pool audits (2018 benefit year audits), HHS found that some
issuers of risk adjustment covered plans made data submission errors to
their EDGE servers that constituted instances of noncompliance but did
not result in a financial impact and were therefore only recorded as
observations in the final audit report. For example, many issuers
failed to provide adequate documentation of their policies and
procedures that demonstrate that they are in compliance with the data
submission requirements for the HHS-operated risk adjustment program,
such as the applicable benefit year's EDGE Server Business Rules.\77\
While such instances of noncompliance did not cause a financial impact,
and therefore were not identified as audit findings, fully compliant
policies and procedures, and documentation thereof, are critical to
ensuring issuer adherence to HHS requirements and the submission of
accurate data to an issuer's EDGE server.
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\75\ In the context of high-cost risk pool audits, a ``finding''
results from cases of confirmed non-compliance or discovery of
evidence suggesting noncompliance with applicable Federal
requirements related to high-cost risk pool payments, which require
a recoupment of these payments. Centers for Medicare & Medicaid
Services, Center for Consumer Information and Insurance Oversight
(CCIIO). (Dec. 2022). Best Practices Overview: Benefit Year (BY)
2018 HCRP Payment Audits and General EDGE Server Requirements.
https://regtap.cms.gov/reg_library_openfile.php?id=4234&type=l
(Login Required).
\76\ In the context of high-cost risk pool audits, an
``observation'' results from the identification of areas for
improvement when there is no evidence of actual non-compliance with
applicable Federal requirements or when there may be evidence of
non-compliance with applicable Federal requirements that does not
require recoupment of these payments. Centers for Medicare &
Medicaid Services, Center for Consumer Information and Insurance
Oversight (CCIIO). (Dec. 2022). Best Practices Overview: Benefit
Year (BY) 2018 HCRP Payment Audits and General EDGE Server
Requirements. https://regtap.cms.gov/reg_library_openfile.php?id=4234&type=l (Login Required). This
proposal is limited to observations where there may be evidence of
non-compliance with applicable Federal requirements.
\77\ Centers for Medicare & Medicaid Services, Center for
Consumer Information and Insurance Oversight (CCIIO). (Nov. 2022).
EDGE Server Business Rules (ESBR) Version 22.0. https://regtap.cms.gov/reg_library_openfile.php?id=3765&type=l (Login
Required).
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Furthermore, in these situations, noncompliance may result from
unintentional negligence where issuers lack proper documentation or the
ability to locate data due to improper record maintenance and retention
procedures. In these cases, the accuracy of the issuer's EDGE data may
still be impacted, as EDGE claims data submission is incremental. For
example, if an issuer identified an error in one file that does not
have a financial impact and subsequently corrects the error in that
file only during the submission period, but does not perform an impact
analysis to review the accuracy of all claims file submissions and
correct all claims file submissions that included the same error, the
issuer's EDGE data will be incorrect even though there may be no
financial impact with respect to the calculation of HHS risk adjustment
State transfers or high-cost risk pool amounts. However, since
enrollee-level data that HHS extracts from issuers' EDGE servers is
also used for HHS risk adjustment model recalibration, updates to the
AV methodology and calculator, and other analyses for the commercial
individual and small group market HHS programs and other Federal HHS
related programs (for example, Medicaid expansion QHP population and
non-Federal governmental plans),\78\ it is important that issuers of
risk adjustment covered plans also take corrective action to address
instances of noncompliance, including those that result from audit
findings and audit observations, to ensure that all instances of
noncompliance identified through audits do not result in unaddressed
material impact to the enrollee-level data that HHS extracts from
issuers' EDGE servers and are not repeated in future benefit year data
submissions. As Sec. 155.620(c)(4) currently only requires corrective
action plans for findings, instances of noncompliance that result in
audit observations may be unaddressed by issuers. We are concerned that
allowing these instances of noncompliance to be unaddressed may impact
EDGE data integrity in future benefit years, and by requiring these
corrective action plans, we also intend to help prevent EDGE data
discrepancies in the future.
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\78\ See, for example, 84 FR at 17488 and 87 FR at 27243.
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For these reasons, HHS is proposing to require corrective action
plans for observations identified through HHS risk adjustment
(including high-cost risk pool) audits when there is evidence of non-
compliance with applicable Federal requirements if required by HHS to
improve program and data integrity for accurate data submissions to
issuer EDGE servers. HHS would communicate to the issuer, as part of
the final audit report, which findings and observations require
corrective action. Under this proposal, consistent with the existing
framework in Sec. 155.620(c)(4), HHS would require an issuer of a risk
adjustment covered plan to provide, within 45 calendar days of the
issuance of the final audit report, a written corrective action plan
for any audit findings, as well as audit observations when there is
evidence of non-compliance with applicable Federal requirements, to HHS
for approval, implement that plan, and provide to HHS written
documentation of the corrective actions taken to resolve the root cause
of the noncompliance identified. This is the same timeline and
framework that currently applies to corrective action plans that are
required as a result of findings included in the

[[Page 82551]]

final audit report.\79\ We propose that this change would be applicable
beginning with 2020 benefit year audits, which we anticipate beginning
in early 2024.\80\
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\79\ See 45 CFR 153.620(c)(4). Also see 86 FR at 24192 through
24194.
\80\ If 2020 benefit year audits begin in early 2024, we
anticipate the final audit reports would be completed, with findings
and observations identified, in late 2024.
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We seek comment on this proposal.

D. 45 CFR Part 155--Exchange Establishment Standards and Other Related
Standards

1. Approval of a State Exchange (Sec. 155.105)
We propose to amend Sec. 155.105(b) to require that, in addition
to meeting all other approval standards under Sec. 155.105(b), a State
seeking to operate a State Exchange must first operate a State-based
Exchange using the Federal platform (SBE-FP), meeting all requirements
under Sec. 155.200(f), for at least one plan year, including its open
enrollment period. This proposal is intended to give States sufficient
time to create, staff, and structure a State Exchange that could
transition to operating its own platform and establish relationships
with interested parties critical to a State Exchange's success in
operating a Navigator and consumer outreach program, assuming plan
management responsibilities, and communicating effectively with
consumers to support enrollment and avoid health care coverage gaps.
Sections 1311(b) and 1321(b) of the Affordable Care Act (ACA) allow
States to elect to operate their own health insurance Exchanges to
provide individuals and employers with health insurance coverage.
Section 1321(a)(1)(A) of the ACA directs the Secretary to issue
regulations setting standards with respect to the establishment and
operation of those Exchanges. Section 155.106 describes different
Exchange models that States may utilize. A State's choice of model may
depend on the State's specific needs. State Exchanges offer States the
ability to maintain more authority over policy and operational
decisions, including health insurance issuer relationships, plan
certification, and consumer assistance. However, building and
maintaining a consumer-oriented, technology-driven marketplace platform
requires extensive start-up resources, as well as investment of time
and resources in the establishment of relationships with consumers,
consumer assisters, partners in the coordination of eligibility
functions, issuers, and other interested parties.
To encourage more State authority over Exchange functions, we
provided States with the flexibility to operate a State Exchange while
relying on the Federally-facilitated Exchange (FFE) eligibility
enrollment technology and infrastructure (known as the ``Federal
platform'') to perform certain Exchange functions. Specifically, as
finalized in the 2017 Payment Notice (81 FR 12244 through 12246), the
SBE-FP model allows States to maintain their Exchange's legal status as
a State Exchange while relying on the Federal platform to perform
eligibility and enrollment functions and associated consumer call
center and casework functions. Under the SBE-FP model, States retain
authority and primary responsibility for plan management functions,
including QHP certification, and consumer support functions, such as
operating an informational website and toll-free telephone hotline.
Under this model, States are also primarily responsible for operating a
Navigator program. We charge issuers on the SBE-FPs a user fee
calculated as a percentage of the user fee charged to issuers on the
FFEs. HHS' Payment Notice final rules set forth the user fee for
issuers participating in SBE-FPs every year. SBE-FPs may assess an
additional State-level user fee on issuers for the purposes of
operating the Exchanges. For Plan Year 2023, three States operated
Exchanges under the SBE-FP model.
Over the past several years, we have observed the benefits of
States first operating an SBE-FP for at least one plan year prior to
transitioning fully from an FFE to a State Exchange. Operating an SBE-
FP for at least one plan year, including its open enrollment period,
prior to transitioning to a State Exchange gives States an opportunity
to focus on investing time and resources needed to implement key
Exchange functions that involve the establishment of critical and
necessary relationships with consumers, consumer assisters, partners in
the coordination of eligibility functions, issuers, and other
interested parties. Operating an SBE-FP for at least one plan year
prior to transitioning to a State Exchange also affords States time to
implement eligibility and enrollment functions which require
information technology platforms, call centers, and coordination with
partners, such as State Medicaid agencies. In addition, operating an
SBE-FP for at least one plan year prior to transitioning to a State
Exchange gives States more time to engage with partners and interested
parties to develop various consumer-facing content and consumer
outreach strategies, all while establishing and gaining experience
operating a consumer assistance program. Further, when States operate
an SBE-FP for at least one plan year before operating a State Exchange,
they are more likely to have the time and resources needed to
coordinate with the State Department of Insurance to establish policies
and procedures associated with carrying out plan management functions,
engage with the issuer community, and develop QHP certification
requirements and processes. Finally, operating an SBE-FP for at least
one plan year before transitioning to a State Exchange allows States
time to familiarize consumers, consumer assisters, partners in the
coordination of eligibility functions, issuers, and other interested
parties with operations of the new State Exchange organization ahead of
engaging with that Exchange, and it mitigates the risks and disruption
associated with a transition to a State Exchange and simultaneous
replacement of HealthCare.gov as the eligibility and enrollment pathway
for those parties.
We propose to amend Sec. 155.105(b)(4) to require that a State
seeking to operate a State Exchange must first operate an SBE-FP for at
least one plan year, including its first open enrollment period, for
the reasons explained previously in this section.
We seek comment on this proposal, including the duration of time
that a State must operate an SBE-FP prior to transitioning to a State
Exchange.
2. Election To Operate an Exchange After 2014 (Sec. 155.106)
We propose changes to the Exchange Blueprint (OMB control number:
0938-1172) requirements for States seeking to operate a State Exchange.
At Sec. 155.106(a)(2), we propose to add that, as part of a State's
activities for its establishment of a State Exchange, we would require
that the State provide supporting documentation demonstrating progress
toward meeting State Exchange Blueprint requirements, or documentation
that details a State's plans for how it intends to implement and meet
the Exchange functional requirements as laid out in the State Exchange
Blueprint. This could include a State submitting detailed plans
regarding its State Exchange consumer assistance programs and
activities, such as information on its direct-to-consumer outreach
plans, for HHS to assess comparability to the FFEs' consumer assistance
programs and activities while allowing for State flexibility in its
approach to best serve the State's

[[Page 82552]]

consumers. Over the past few years, several States have transitioned
off the Federal platform to establish and operate State Exchanges. In
our experience providing technical assistance and oversight to States
that are establishing State Exchanges, we have observed that requesting
additional detail from States on various aspects of their State
Exchange implementation plans is imperative to a successful
establishment of a State Exchange. Ultimately, we seek to support the
establishment of a successful State Exchange, and the ability to
request additional detail on a State's State Exchange implementation
plans is crucial to identifying areas the State may need to reconsider
or further develop.
The current State Exchange Blueprint Application provides that we
may require live demonstrations of Exchange functionality on the State
Exchange's platform, and/or supporting documentation from a State, as
evidence of its progress toward meeting State Exchange Blueprint
Application requirements.\81\ We propose to codify in our regulations
in order to set a clear expectation for a State establishing a State
Exchange that, as part of the State's submission of a State Exchange
Blueprint Application, we have the authority to request any evidence we
determine necessary for the State to detail its implementation of the
required State Exchange functionality. This could include HHS requiring
a State to submit detailed plans regarding its State Exchange consumer
assistance programs and activities, such as information on its direct
outreach plans. We would provide guidance and direction to each State
regarding requests for evidence, so that each State understands the
purpose of our requests as they relate directly to how the State meets
the functional requirements for operating a State Exchange. We would
request supporting documentation from States with the goal of imposing
minimal burden on States' ability to meet its State Exchange Blueprint
requirements, while maintaining the objective that our requests would
provide us with the ability to sufficiently assess a State's readiness
to operate a State Exchange and ensure that a State is sufficiently
implementing and scaling policies, procedures, operations, technology,
and administrative capacities to meet the needs of the State's
consumers. We would use the information in a State's Exchange Blueprint
Application, as well as any supporting documentation and evidence, to
make a determination of whether to grant approval for a State's
establishment and operation of a State Exchange for its intended first
open enrollment period.
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\81\ CMS. (2021, November 30). Blueprint For Approval of State-
Based Health Insurance Exchanges, Coverage Years Beginning on or
After 2019. CMS. Section I, p. iii. https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/CMS-Blueprint-Application.pdf.
---------------------------------------------------------------------------

We also propose to add new Sec. 155.106(a)(2)(i) and (ii) to
require that when a State submits its State Exchange Blueprint
application to HHS for approval, the State must provide the public with
notice and a copy of its State Exchange Blueprint application. To
facilitate such public notice, HHS would post a State Exchange
Blueprint application submitted by a State to its public-facing website
within 90 calendar days of receipt. Further, we propose to require that
at some point following a State's submission of its State Exchange
Blueprint application to HHS, a State must conduct at least one public
engagement (such as a townhall meeting or public hearing) in a timeline
and manner (for instance, considering whether to conduct in-person and/
or virtually) considered effective by the State, with concurrence from
HHS, at which interested parties can learn about the State's intent to
establish a State Exchange and the State's progress toward executing
that transition. We also propose to require that while a State is in
the process of establishing a State Exchange and until HHS has approved
or conditionally approved the State Exchange Blueprint application, a
State must conduct periodic public engagements at which interested
parties would continue to learn about the State's progress towards
establishing a State Exchange, in a timeline and manner considered
effective by the State with concurrence from HHS.
As we explained previously, sections 1311(b) and 1321(b) of the ACA
allow States to elect to operate their own health insurance Exchanges
to provide individuals and employers with health insurance coverage,
and section 1321(a)(1)(A) of the ACA directs the Secretary to issue
regulations setting standards with respect to the establishment and
operation of those Exchanges. The Exchange Blueprint serves as a
vehicle for a State to document its progress toward implementing its
intended Exchange operational model. Section 155.106(a)(2) requires
States to submit an Exchange Blueprint application for HHS approval at
least 15 months prior to the date on which the Exchange proposes to
begin open enrollment with a State Exchange. 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 as a State Exchange. HHS' review and approval of the
Exchange Blueprint involves providing substantial technical assistance
to States as they design, finalize, and implement their Exchange
operations. Further, the establishment of a State Exchange involves
significant collaboration between HHS and States to develop plans and
document readiness for the State to transition from an Exchange that
uses the Federal platform to one that operates its own eligibility and
enrollment platform. State activities as part of this transition
process include completing key milestones, meeting established
deadlines, and implementing contingency measures.
Certain parties, such as consumers or advocate groups, who may be
interested in a State's establishment of a State Exchange may not know
if a State applied to HHS to establish a State Exchange or is in the
process of establishing a State Exchange. A mandatory process whereby
States notify the public of their plans to establish State Exchanges
and provide an opportunity to meet with interested parties to provide
updates would help ensure that interested parties are aware these
activities are occurring and can provide input on how States can
successfully establish State Exchanges. Based on our experience
supporting and providing oversight to States in their establishment of
State Exchanges, we believe that States would benefit from having a
more transparent process to facilitate input from interested parties,
especially given the impacts of a State Exchange transition on
interested parties, including consumers and issuers. We believe that
for a State to maximize consumer gains following its establishment of a
State Exchange, its interested parties, including consumers, must have
trust in its State Exchange. Providing opportunities for consumers to
learn more about a State's planned State Exchange establishment process
and plans can build that trust and help support a State's enrollment
goals. We believe that all States that have established a State
Exchange since PY 2020 conducted public events, such as town halls or
hearings, where State Exchange establishment activities were discussed.
States planning to establish State Exchanges could use such public
events as opportunities to meet the requirements for public engagements
being proposed. Our goal of the proposed changes at Sec.
155.106(a)(2)(ii) is to clearly state, for States who are seeking to
establish State Exchanges,

[[Page 82553]]

our expectations of the States engaging with the public regarding their
transition to State Exchanges, thus strengthening the transparency
requirements of the State Exchange Blueprint review and approval
process. Finally, we believe this proposal would help States that
establish State Exchanges meet the consultation requirements with
interested parties in Sec. 155.130 during the period when the States
are establishing State Exchanges, by formalizing a process whereby
States and interested parties communicate about the States'
establishment of State Exchanges throughout the transition process.
We seek comment on this proposal, including comments related to
additional ways States seeking to establish State Exchanges could
provide greater transparency to interested parties, including
consumers, regarding the process for establishing State Exchanges.
3. Additional Required Benefits (Sec. 155.170)
We propose to amend Sec. 155.170(a)(2) to provide that benefits
covered in a State's EHB-benchmark plan would not be considered in
addition to EHB and thus would not be subject to defrayal by the State
beginning with PY 2025.
Section 1311(d)(3)(B) of the ACA permits a State to require QHPs
offered in the State to cover benefits in addition to EHB, but requires
the 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.
In the EHB final rule (78 FR 12838), we finalized a standard at
Sec. 155.170(a)(2) that specifies that State-required benefits enacted
on or before December 31, 2011, even if not effective until a later
date, are considered EHB and therefore the costs of these benefits are
not required to be defrayed by the State. In the 2017 Payment Notice
(81 FR 12242 through 12244), we revised Sec. 155.170(a)(2) to make
clear that benefits required by State action taking place on or before
December 31, 2011, are considered EHB to reflect that this section
applies not only when benefits are mandated through State legislative
action but also through regulation, guidance, or other State action. We
also amended Sec. 155.170(a)(2) to provide that benefits required
after December 31, 2011, are in addition to EHB unless enactment is
directly attributable to State compliance with Federal requirements.
Under our current policy, benefits mandated after December 31,
2011, other than for compliance with Federal requirements, are
considered in addition to EHB (and thus not EHB) without regard as to
whether the mandated benefits are embedded in the State's EHB-benchmark
plan. Specifically, under Sec. 155.170, a State mandate is considered
``in addition to EHB'' if it: is a State action taken after December
31, 2011; \82\ requires coverage of benefits specific to care,
treatment, and services; \83\ requires QHPs to cover the benefits; \84\
and was not enacted to comply with Federal requirements. As a result,
States must defray the associated costs of QHP coverage of such
benefits, and those costs may not be included in the percentage of
premium attributable to coverage of EHB for purpose of calculating
APTC. In addition, because the benefits are not EHB, they are not
subject to EHB nondiscrimination rules at Sec. 156.125, the annual
limitation on cost sharing at Sec. 156.130, and restrictions on annual
or lifetime dollar limits at Sec. 147.126.
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\82\ EHB Rule (78 FR 12838). A State action can be by statute,
regulation, guidance, or other State action. 2017 Payment Notice (81
FR 12242).
\83\ Requirements related to provider types, cost sharing,
benefit delivery methods, or reimbursement methods are not specific
to care, treatment, and services. EHB Rule (78 FR 12838).
\84\ If a State action applies to the individual and small group
markets, it applies to QHPs; if a State allows for the sale of large
group plans as QHPs, a State-mandated benefit for the large group
market applies to QHPs. EHB Proposed Rule (77 FR 70647 through
70648) (finalized without modification in the EHB Rule (78 FR
12838)).
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In the years since we finalized Sec. 155.170, we have received
feedback from States and other interested parties that we should
reconsider this provision, including in comments submitted to the EHB
RFI that we issued in 2022. This feedback indicates that States
struggle to understand and operationalize Sec. 155.170, and that
States that seek to mandate coverage of benefits are unintentionally
removing EHB protections from benefits already included in the State's
EHB-benchmark plan.
Therefore, we propose to amend Sec. 155.170(a)(2) to codify that
``a covered benefit in the State's EHB-benchmark plan'' is considered
an EHB. Under this proposal, there would be no obligation for the State
to defray the cost of a State mandate enacted after December 31, 2011,
that requires coverage of a benefit covered in the State's EHB-
benchmark plan. Benefits that are covered in a State's EHB-benchmark
plan would not be considered in addition to EHB and would remain
subject to the various rules applicable to the EHB, including the
prohibition on discrimination in accordance with Sec. 156.125,
limitations on cost sharing in accordance with Sec. 156.130, and
restrictions on annual or lifetime dollar limits in accordance with
Sec. 147.126. We believe that this change would promote consumer
protections and facilitate compliance with the defrayal requirement by
making the identification of benefits in addition to EHB more
intuitive.
Under the proposal, if a State mandates coverage of a benefit that
is in its EHB-benchmark plan at the time the mandate is enacted, the
benefit would continue to be considered EHB and the State would not
have to defray the costs of that mandate. However, if at a future date
the State updates its EHB-benchmark plan under Sec. 156.111 and
removes the mandated benefit from its EHB-benchmark plan, the State may
have to defray the costs of the benefit under the factors set forth at
Sec. 155.170 as it would no longer be an EHB after its removal from
the EHB-benchmark plan. In addition, starting in PY 2025, a State that
is defraying the costs of a benefit required by a mandate that is in
addition to EHB under Sec. 155.170 would be permitted to cease
defraying the costs of that benefit if the benefit is included in its
EHB-benchmark plan or upon updating its EHB-benchmark plan in the
future to include such benefit coverage.
We acknowledge that there are States that may have been defraying
the costs of benefits under the current policy that would be able to
stop defraying those costs if this proposal is finalized. We propose
this change to be effective starting in PY 2025 to allow for issuers to
make necessary modifications to their plan designs and plan filings to
reflect any possible changes in designation of benefits as EHB as a
result of this proposal, if finalized. For example, if we finalize this
proposal and a State ceases defraying the costs of a State-mandated
benefit to issuers because it is covered in its EHB-benchmark plan,
issuers should update their plan filings accordingly beginning in PY
2025 to reflect that the benefit is covered as an EHB and should be
included in the percentage of premium attributable to coverage of EHB
for the purpose of calculating APTC. We also note that those States
would not be able to recoup the cost of benefits they have already
defrayed. In addition, we acknowledge that the start and end dates of
State legislative sessions vary greatly by State, and that this change,
if finalized, may occur during State legislative sessions that are
considering State actions that would be impacted by the change.
We note that this proposal may impact health plans that are not
directly subject to the EHB requirements, such as self-insured group
health plans and fully-insured group health plans in the

[[Page 82554]]

large group market that are required to comply with the annual
limitation on cost sharing and restrictions on annual or lifetime
dollar limits in accordance with applicable regulations with respect to
such EHBs.\85\ Sponsors of such plans would be affected by this
proposal, if finalized, only to the extent a State changes benefits in
its EHB-benchmark plan and such plan selects that State's EHB-benchmark
plan for purposes of complying with sections 2707 and 2711 of the PHS
Act. It may also impact State Basic Health Programs (BHPs) established
under section 1331 of the ACA and Medicaid Alternative Benefit Plans
(ABPs) implemented pursuant to section 1937 of the Act.
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\85\ See parallel requirements to Sec. 147.126 at 26 CFR
54.9815-2711, and 29 CFR 2590.715-2711. Additionally, section
2707(b) of the PHS Act, as added by the ACA, was incorporated by
reference into section 9815 of the Code and section 715 of the
Employee Retirement Income Security Act (ERISA).
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We solicit comment on the proposal.
4. Consumer Assistance Tools and Programs of an Exchange (Sec.
155.205)
At Sec. 155.205(a), we propose to establish additional minimum
standards for Exchange call center operations. Currently, Sec.
155.205(a) requires that Exchanges provide for operation of a consumer-
accessible, toll-free call center that addresses the needs of consumers
requesting assistance. For a State requesting to establish a State
Exchange, we review its plans to implement and meet call center
requirements under Sec. 155.205(a) as described in the State Exchange
Blueprint Application. Through the Blueprint process, we review and
assess a State's call center operational plan for consistency with
standards governing its hours of operation, staffing levels, and
service level goals (including wait times and abandonment rates), as
well as for consistency with best practices utilized by existing
Exchanges, including the FFEs' call center. Once a State Exchange has
been established and is operating, HHS monitors Exchange call center
operations through the annual collection of performance monitoring
data, as specified at Sec. 155.1200(b)(3). The data collected includes
call center volume, wait times, calls abandoned, and average call
center handle time.\86\
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\86\ OMB Control Number: 0938-1119.
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We recognize the value in each Exchange being able to tailor
customer service level expectations based on their experience in the
areas they serve, including setting hours of operation that meet the
needs of their consumers. As such, we are not proposing to establish
minimum standards for customer service staffing levels. We will
continue to assess and monitor Exchanges' compliance with Sec.
155.205(a) through the Blueprint process and annual collection of
compliance reports, as specified at Sec. 155.1200(b)(2). We also
intend to utilize, if finalized, the proposed requirement that
transitioning States submit documentation through their Blueprint
application, which would strengthen our review of Exchange call center
plans.
In this proposed rule, we are proposing to require that all
Exchanges, other than SBE-FPs and SHOP Exchanges that do not provide
for enrollment in SHOP coverage through an online SHOP enrollment
platform, meet the following additional requirements: their call center
must provide consumers with access to a live call center representative
during the Exchanges' published hours of operation; and their live call
center representatives must be able to assist consumers with their QHP
application, which includes providing consumers information on their
APTC and CSR eligibility, helping consumers understand their QHP
options, helping consumers select a QHP, and helping consumers submit
QHP enrollment applications to the Exchange.
Sections 1311(d)(4)(B) and 1321 of the ACA require that Exchanges
provide for the operation of a toll-free telephone hotline to respond
to requests for assistance, and section 1413(b)(1)(A)(ii) of the ACA
requires that a consumer's application for QHP coverage can be filed by
telephone. We believe that our proposal would support the intent of
these statutory requirements by codifying the requirement that
consumers have access to live representatives with Exchange call
centers who can assist consumers with their QHP applications, including
helping them submit QHP enrollment applications to the Exchange.
Similarly, requiring that Exchange call centers provide consumers with
a reliable window for live representative support would support
compliance with sections 1311(d)(4)(B) and 1413(b)(1)(A)(ii) of the
ACA.
We believe that all State Exchange call centers already meet the
minimum standards being proposed, and we know that the call center for
the Exchanges on the Federal platform is meeting them. As such, this
proposal seeks to standardize and strengthen Exchange consumer
assistance capabilities without imposing additional burden on current
Exchanges or hindering Exchanges' ability to be innovative in their
call center functions. The changes being proposed here would ensure
that regardless of where a consumer is in the United States, the
consumer would be able to speak to a live representative who can assist
the consumer with the QHP application process during the hours of
operation for that State's call center. We also want to ensure that a
State does not solely rely on an automated telephone system for QHP
application assistance because we believe speaking to a live
representative would help troubleshoot consumer QHP application issues,
provide in real time an opportunity for a live representative to
explain QHP application terminology to a consumer, provide a live
representative to ensure the consumer provides the most correct
information in the QHP application to alleviate unnecessary follow-up,
and provide greater overall consumer satisfaction. We believe that call
centers should have a basic level of customer service especially as
they relate to hours and operations and staffing levels to limit wait
times for QHP application assistance. We also know based on our work
with State Exchanges and the Exchanges on the Federal platform that the
Exchanges have created and continue to maintain robust call centers.
We seek comment on this proposal.
5. Requirement for Exchanges To Operate a Centralized Eligibility and
Enrollment Platform on the Exchange's Website (Sec. Sec. 155.205(b);
155.302(a)(1))
We propose to amend Sec. 155.205(b)(4) to require that an Exchange
operate a centralized eligibility and enrollment platform on the
Exchange's website (or, for an SBE-FP, the Federal eligibility and
enrollment platform), such that the Exchange allows for the submission
of the single, streamlined application for enrollment in a QHP and
insurance affordability programs by consumers, in accordance with Sec.
155.405, through the Exchange's website and the Exchange performs
eligibility determinations for all consumers based on submissions of
the single, streamlined application. Further, we propose to amend Sec.
155.302(a)(1) to clarify that the Exchange, through the centralized
eligibility and enrollment platform operated on the Exchange's website
(or, for an SBE-FP, the Federal eligibility and enrollment platform),
is the entity responsible for making all determinations regarding the
eligibility for QHP coverage and insurance affordability programs
regardless of whether an individual files an application for enrollment
in a QHP on the Exchange's website or on a non-Exchange website
operated by an entity described under Sec. 155.220, such as a web-
broker defined at Sec. 155.20, or a DE entity or QHP issuer described
under

[[Page 82555]]

Sec. 155.221. As we believe the eligibility determination function is
inherently a function that should only be performed by the Exchange,
the proposed amendment to Sec. 155.302(a)(1) would also clarify that
only the private vendors or State entities that an Exchange contracts
with to operate its centralized eligibility and enrollment platform can
perform this function on behalf of an Exchange, and would prohibit an
Exchange from solely relying on non-Exchange entities, including a web-
broker (defined at Sec. 155.20) or other entities under Sec. Sec.
155.220 or 155.221, to make such eligibility determinations on behalf
on an Exchange.
We also propose to amend Sec. 155.205(b)(5) to require that an
Exchange operate a centralized eligibility and enrollment platform on
the Exchange's website (or, for an SBE-FP, by relying on the Federal
eligibility and enrollment platform) so that the Exchange (or, for an
SBE-FP, the Federal eligibility and enrollment platform) meets the
requirement under Sec. 155.400(c) to maintain records of all
effectuated enrollments in QHPs, including changes in effectuated QHP
enrollments.
As background for these proposed amendments, Sec. 155.205(b)
states that an Exchange must maintain an up-to-date website that allows
consumers to receive eligibility determinations for QHPs and insurance
affordability programs and provides standardized comparative
information on each available QHP and a calculator to facilitate the
comparison of available QHPs after the application of any APTC and any
CSRs. Section 1413(c)(1) of the ACA also requires that Exchanges
develop a secure electronic interface that allows consumers to apply
for health insurance coverage online and electronically receive an
eligibility determination and that Exchanges conduct verifications of
eligibility through electronic data interfaces. However, currently,
there is no explicit regulatory or statutory requirement that Exchanges
operate a centralized eligibility and enrollment platform on their
website for performing all eligibility determinations for QHPs and
insurance affordability programs. Nonetheless, all Exchanges currently
provide access to a centralized eligibility and enrollment platform and
process for consumers that they serve, and all Exchanges also currently
perform all eligibility determinations through the operation of a
centralized eligibility and enrollment platform on their websites. In
order to codify existing policy and practices and help set clear
expectations for existing Exchanges and States that may seek to operate
State Exchanges in the future, we propose these amendments to require
that Exchanges may not allow eligibility determinations to be made
outside of the Exchanges' own centralized eligibility and enrollment
platform by another entity for applications for QHP coverage nor for
selections for enrollment in a QHP.
We also propose to amend Sec. 155.302(a) to codify the Exchange's
obligation and role as the sole entity responsible for conducting
eligibility determinations. For example, if an Exchange permits an
eligible web-broker to operate a non-Exchange website that interfaces
with an Exchange to assist consumers with DE in QHPs offered through
the Exchange as described in Sec. Sec. 155.220(c)(3) and 155.221, the
Exchange must ensure that the Exchange continues to maintain
responsibility for conducting all eligibility determinations for
applications submitted for QHP coverage and related insurance
affordability programs. While HHS has not delegated these functions to
DE entities in FFE and SBE-FP States, currently, Exchanges may allow
entities described in Sec. 155.220, among others that meet applicable
requirements, to be able function as an eligible contracting entity
under Sec. 155.110(a) that can carry out determinations regarding QHP
coverage eligibility and eligibility for related insurance
affordability programs on behalf of the Exchange. This proposed
amendment to Sec. 155.302(a) would prohibit Exchanges from delegating
the responsibility to conduct eligibility determinations to any non-
Exchange entities, besides entities that the Exchanges have elected to
contract with to operate the centralized eligibility and enrollment
platform. Consistent with these amendments, we propose to maintain the
current requirement under Sec. 155.302(a) that SBE-FPs rely on HHS,
through the operation of the centralized HealthCare.gov eligibility and
enrollment platform, to carry out all eligibility determinations for
their Exchanges.
This proposal would tie together the disparate, but related,
requirements that exist across 45 CFR part 155 that speak to the real-
time and tightly integrated nature of the online eligibility functions
that Exchanges are required to perform (specifically the tight
integration needed between the Exchange-operated website, single
streamlined application, and back-end automated eligibility
verifications based on information provided by applicants to arrive at
an eligibility determination), by clearly stating the principle that
Exchanges are solely responsible for conducting eligibility
determinations, and that Exchanges would need to meet the required
eligibility functions that exist across 45 CFR part 155 through
operating a centralized eligibility and enrollment platform on their
website, regardless of whether an application is submitted through the
Exchanges' website or through eligible non-Exchange entities that are
assisting an individual in enrolling in a QHP.
We believe the lack of a clear statement in the regulations at 45
CFR part 155 affirming the requirement that the Exchange must make all
determinations regarding eligibility for QHP coverage and related
insurance affordability programs through a centralized eligibility and
enrollment platform on the Exchange's website are oversights, as other
sections of the regulations implementing the ACA in title 45 of the CFR
allude to a requirement or expectation that an Exchange operates in
this way already, or the regulations are written in a way such that it
would be difficult to fulfill their requirements if an Exchange did not
operate as proposed in these amendments.
As an example of an implementing regulation of the ACA that would
require an Exchange to operate in this manner, Sec. 155.220 permits
qualified individuals to be enrolled in a QHP through the Exchange with
the assistance of a web-broker, while Sec. 155.220(c)(3)(ii)(A), and
by reference Sec. 155.220(c)(3)(i)(F), require that if the non-
Exchange website of a web-broker is used to complete an Exchange
eligibility application, that web-broker's website must also provide
consumers with the ability to withdraw from the process and use the
Exchange's website described in Sec. 155.205(b) instead at any time.
If an Exchange did not provide an ability on its website for a consumer
to complete an eligibility application, then it would not be possible
to fulfill the requirements of Sec. Sec. 155.220(c)(3)(ii)(A) and
(c)(3)(i)(F).
To ensure that the requirements of Sec. Sec. 155.220(c)(3)(ii)(A)
and (c)(3)(i)(F), and 155.205(b) are fulfilled, we believe it is
important that Exchanges allow a consumer to continue the application
process through the centralized eligibility and enrollment platform
operated on the Exchange's own website should the consumer chose to
withdraw from the application process that was begun on a web-broker's
non-Exchange website; or, if the Exchange is an SBE-FP, allow the
consumer to continue the application process through the website of the
Federal platform.

[[Page 82556]]

As another example, QHP issuers that assist consumers with
enrollment in QHPs are currently required under Sec. 156.265(b)(2) to
either direct the consumer to the Exchange's website to file an
eligibility application or ensure that the consumer's eligibility
application is completed through the Exchange website or submitted
through Exchange-approved web services in order for the Exchange to
conduct an eligibility determination. To align with these requirements,
we believe that it is important to amend Sec. 155.302(a)(1) to provide
that an Exchange must perform all eligibility determinations through
operating a centralized eligibility and enrollment platform on the
Exchange's website, and that only those entities that an Exchange
chooses to enter into an agreement with to operate its centralized
eligibility and enrollment platform, as allowed for under Sec.
155.110(a), can carry out this function on behalf of the Exchange.
In addition to these examples of how current regulations may
require an Exchange to operate according to the proposed amendments to
Sec. Sec. 155.205 and 155.302, we believe that consumers may be harmed
if these proposals are not adopted. If an entity other than the
Exchange conducted eligibility determinations, consumers might receive
incorrect or inconsistent eligibility determinations, as entities other
than the Exchange may not update their systems with the same
eligibility determination rules or logic as the Exchange itself when
Federal or State policies or regulations impacting eligibility for QHP
coverage and insurance affordability programs come into effect or are
updated, including the implementation and maintenance of State-specific
eligibility rules and logic for Medicaid and CHIP programs. As a
result, a non-centralized eligibility system model would introduce
increased program integrity risk as to the accuracy of eligibility
determinations, which would introduce increased risk of inaccurate APTC
payments to QHP issuers and increased risk to consumers of potential
tax liability when filing taxes and reconciling their PTC.
In addition, the websites and eligibility platforms provided by
non-Exchange entities may not include the same informational content
for consumers that an Exchange provides to consumers through the
Exchange's website, such as information related to Medicaid and CHIP
programs or the availability of special enrollment periods before or
after the open enrollment period. As a result, some consumers might not
provide information in their application in such a manner as to receive
a correct eligibility determination and thus, enroll in the wrong
coverage or not enroll in any coverage. Lastly, consumers may prefer to
enroll directly through the eligibility and enrollment platform hosted
and operated on an Exchange's website because they are more comfortable
with sharing their personal information through a platform hosted by
the Exchange.
In light of these considerations, we propose to amend Sec. Sec.
155.205(b)(4) and (5) and 155.302(a)(1) to address these gaps. Since
all Exchanges currently provide access to a centralized eligibility and
enrollment platform and process for consumers that they serve, and all
Exchanges also currently perform all eligibility determinations through
the operation of a centralized eligibility and enrollment platform on
their websites, we believe the impact of these proposals would be
minimal.
We seek comment on these proposals.
6. 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(h))
We propose to amend Sec. Sec. 155.220(h)(2) and (3) by deleting
the current references to ``the HHS reconsideration entity'' and
replacing them with ``the CMS Administrator'' and by specifying that,
instead of the HHS reconsideration entity, the CMS Administrator, who
is a principal officer,\87\ would be the entity responsible for
handling these reconsideration decisions. Agents, brokers, and web-
brokers whose Exchange agreement(s) to participate in the FFEs or SBE-
FPs have been terminated for cause would continue to have the ability
to request a reconsideration of such action in the manner and form
established by HHS by requesting a reconsideration within 30 calendar
days of the date of the written termination notice from HHS. We propose
that the request for reconsideration would be made to the CMS
Administrator. This proposal would improve transparency by specifying
who would review reconsideration requests under Sec. 155.220(h).
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\87\ A principal officer is an individual nominated by the
President and confirmed by the Senate.
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Exchange agreement suspensions and terminations play a critical
role in stopping potentially fraudulent enrollments or other fraudulent
behavior in the FFEs and SBE-FPs. Currently, Sec. 155.220(g)
establishes the framework for suspension and termination of an agent's,
broker's, or web-broker's Exchange agreement(s) for cause in four
instances.\88\ First, Sec. 155.220(g)(1) allows HHS to terminate an
agent's, broker's, or web-broker's Exchange agreement(s) when there is
a specific finding of noncompliance or pattern of noncompliance that is
sufficiently severe. Second, Sec. 155.220(g)(3)(ii) enables HHS to
terminate an agent's or broker's Exchange agreement(s) when an agent or
broker fails to maintain the appropriate license in every State in
which the agent or broker actively assists consumers with applying for
APTC and CSRs or with enrolling in QHPs through the FFEs and SBE-FPs.
Third, HHS will terminate an agent's, broker's, or web-broker's
Exchange agreement(s) under Sec. 155.220(g)(5)(ii) when there is a
finding or determination by a Federal or State entity that an agent,
broker, or web-broker engaged in fraud or abusive conduct that may
result in imminent or ongoing consumer harm using personally
identifiable information (PII) of Exchange enrollees or applicants or
in connection with an Exchange enrollment or application. Fourth, under
Sec. 155.220(g)(5)(i)(B), HHS may terminate an agent's, broker's, or
web-broker's Exchange agreement(s) following a suspension of the
agreement(s) under Sec. 155.220(g)(5)(i)(A) if the agent, broker, or
web-broker submitted rebuttal evidence that 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.
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\88\ Section 155.220(f) establishes the framework for an agent,
broker, or web-broker to terminate an agent's, broker's, or web-
broker's Exchange agreement(s) with HHS. We are not proposing any
changes with respect to the terminations under Sec. 155.220(f).
These terminations are not eligible for reconsideration under Sec.
155.220(h) because they are agent, broker, or web-broker initiated
actions.
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If an agent's, broker's, or web-broker's Exchange agreement(s) has
been terminated for cause, under Sec. 155.220(h)(1), the agent,
broker, or web-broker can request reconsideration of such action in the
manner and form established by HHS. The agent, broker, or web-broker
must submit the reconsideration request to the HHS reconsideration
entity within 30 calendar days of the date of the written termination
notice from HHS.\89\ Current regulations also require the HHS
reconsideration entity to notify the agent, broker, or web-broker of
its decision, in writing, within 60 calendar days of the date it
receives the request for reconsideration.\90\ Currently,

[[Page 82557]]

Sec. 155.220(h)(3) further provides that this decision constitutes
HHS' final determination.
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\89\ 45 CFR 155.220(h)(2).
\90\ 45 CFR 155.220(h)(3).
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The current framework in Sec. 155.220(h) does not define or
identify ``the HHS reconsideration entity'' responsible for making
these decisions. As noted earlier in this rule, we propose revising
Sec. Sec. 155.220(h)(2) and (3) by deleting the existing references to
``the HHS reconsideration entity'' and replacing them with ``the CMS
Administrator.'' This proposal would ensure that authority to review
requests for reconsideration of decisions to terminate an agent's,
broker's, or web-broker's Exchange agreement(s) for cause are vested in
a principal officer. We seek comments on this proposal.
7. Adding and Amending Language To Ensure Web-Brokers Operating in
State Exchanges Meet Certain HHS Standards Applicable in the FFEs and
SBE-FPs (Sec. 155.220)
We propose to amend Sec. 155.220 to apply certain existing HHS
standards for Exchanges that use the Federal platform that apply to
web-brokers \91\ assisting the FFEs' and SBE-FPs' \92\ consumers and/or
applicants with enrolling in QHPs and assisting consumers with applying
for APTC/CSRs in State Exchanges, for both the State Exchange's
Individual Exchange and SHOP. Specifically, our proposals would ensure
that minimum HHS standards governing web-broker non-Exchange website
display of standardized QHP comparative information, disclaimer
language, information on eligibility for APTC/CSRs, operational
readiness, standards of conduct, and access by web-broker downstream
agents and brokers apply to web-brokers across all Exchanges.\93\ We
believe that extending these standards across all Exchanges, to newly
apply to State Exchanges, is important given the increased interest
from State Exchanges in using web-brokers to assist consumers with
enrollment, as to maximize enrollment opportunities. The ability of
consumers and applicants to have consistent, reliable information from
web-brokers who, to the extent permitted by the State and the
applicable Exchange, assist consumers with enrolling and applying for
QHPs offered on the Exchange, with or without APTC and CSRs, in a
manner that constitutes enrollment through the Exchange \94\ is an
important consumer safeguard, particularly given that web-brokers may
operate across Exchange models. These proposals are intended to ensure
that certain HHS standards are extended to protect State Exchange
consumers as minimum requirements while also providing State Exchanges
with continued flexibility and discretion to decide whether and how to
utilize web-brokers to assist State Exchange consumers and applicants
with enrolling in QHPs and applying for APTC/CSRs. Finally, these
proposals align with our other proposals as described later in this
proposed rule to extend certain existing HHS standards at Sec. 155.221
that currently apply to DE entities \95\ assisting the FFEs' and SBE-
FPs' consumers and applicants with direct enrollment in QHPs and
applying for APTC/CSRs to also apply in State Exchanges. These
proposals, if finalized, would be effective on the date of publication
of the final rule.
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\91\ Web-broker is defined at 45 CFR 155.20 as ``an individual
agent or broker, group of agents or brokers, or business entity
registered with an Exchange under Sec. 155.220(d)(1) that develops
and hosts a non-Exchange website that interfaces with an Exchange to
assist consumers with direct enrollment in QHPs offered through the
Exchange as described in Sec. 155.220(c)(3) or Sec. 155.221. The
term also includes an agent or broker direct enrollment technology
provider.''
\92\ See Sec. 155.220(l).
\93\ The amendments to Sec. 155.220 we are proposing would not
impact how agents, brokers, or web-brokers may assist consumers and
applicants in SBE-FP States. Section 155.220(l) currently provides
that an agent, broker or web-broker who enrolls qualified
individuals, qualified employers, or qualified employees in coverage
in a manner that constitutes enrollment through an SBE-FP or assists
individual market consumers with submission of applications for APTC
and CSRs through an SBE-FP, must comply with all applicable FFE
standards in Sec. 155.220. We are not proposing any changes to this
existing framework for agents, brokers, or web-brokers who provide
assistance in SBE-FP States.
\94\ See 77 FR 18334 through 18336.
\95\ DE entities permitted to participate in the FFEs and SBE-
FPs include, to the extent permitted by applicable State law: (1)
QHP issuers that meet the applicable requirements in Sec. Sec.
155.221 and 156.1230, and (2) web-brokers that meet the applicable
requirements in Sec. Sec. 155.220 and 155.221. 45 CFR 155.221(a).
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Section 1312(e) of the ACA provides that the HHS Secretary shall
establish procedures under which a State may allow agents, brokers, and
web-brokers to enroll individuals and small employers in QHPs offered
through an Exchange and to assist individuals in applying for APTC/CSRs
for QHPs sold through an Exchange. The Secretary also has authority
under section 1321(a) of the ACA to promulgate regulations with respect
to the establishment and operation of Exchanges, the offering of QHPs
through such Exchanges, and such other requirements as the Secretary
determines appropriate.\96\ HHS previously leveraged these authorities
to establish the existing agent, broker, and web-broker standards
applicable in FFE and SBE-FP States codified in Sec. 155.220.\97\
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\96\ Section 1321(a)(1)(A), (B), and (D) of the ACA.
\97\ See 77 FR 18444, as amended at 78 FR 15533; 78 FR 54134; 79
FR 13837; 81 FR 12338; 81 FR 94176; 84 FR 17563; 85 FR 37248; 86 FR
24288; 87 FR 27388; and 88 FR 25917.
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In new proposed paragraph (n), we propose to apply the web-broker
standardized QHP comparative information and the accompanying
Enrollment Support disclaimer requirements in Sec. 155.220(c)(3)(i)(A)
to web-brokers operating in State Exchanges, and consequently to these
State Exchanges. Consistent with Sec. 155.220(c)(3)(i)(A)(1) through
(6), web-broker non-Exchange websites used to complete the QHP
selection must disclose and display the standardized comparative QHP
information provided by the Exchange or directly by QHP issuers,
consistent with the requirements of Sec. 155.205(c) for all QHPs,
including Qualified Dental Plans (QDPs),\98\ offered through the
Exchange. The standardized comparative information on each available
QHP that must be displayed by the web-broker on its non-Exchange
website is the following information provided by the Exchange or
directly by QHP issuers: (1) premium and cost-sharing information
(total and net premium based on APTC and CSR, if applicable); \99\ (2)
the summary of benefits and coverage; (3) identification of whether the
QHP is a bronze, silver, gold or platinum level plan, or a catastrophic
plan; (4) the results of the enrollee satisfaction survey; (5) quality
ratings assigned by HHS; and (6) the provider directory made available
to the Exchange. The results of the enrollee satisfaction survey should
be displayed in accordance with instructions in the CMS Quality Rating
Information Bulletin.\100\ As described in the CMS

[[Page 82558]]

Quality Rating Information Bulletin, State Exchanges already have some
flexibility to customize the display of quality ratings assigned by HHS
for their respective QHPs.\101\ For example, State Exchanges can make
some State-specific customizations, such as to incorporate additional
State or local quality information or to modify the display names of
the quality ratings assigned by HHS. Under this proposal, web-brokers
in State Exchanges should use the same consumer-facing labels for the
quality ratings that HHS displays on HealthCare.gov (that is, ``Overall
Rating,'' ``Medical Care,'' ``Member Experience,'' and ``Plan
Administration'') unless the State Exchange modified the display names
for these labels. If the State Exchange has modified the display names,
web-brokers operating in State Exchanges should use the display names
used on the State Exchange website. Web-brokers operating in State
Exchanges should also align their display of the quality ratings to
reflect any permitted State-specific customizations, such as the
addition of State or local quality information. Additionally,
consistent with the approach for display of quality ratings by web-
brokers in the FFEs and SBE-FPs and by State Exchanges, if a QHP was
not eligible to receive a rating or did not receive a rating for other
reasons, web-brokers participating in State Exchanges would need to
display ``New plan--Not Rated'' or ``Not Rated'' in place of the
quality ratings.\102\ When displaying the quality rating assigned by
HHS on their non-Exchange websites, web-brokers operating in State
Exchanges would be required to prominently display the disclaimer
language specified in the CMS Quality Rating Information Bulletin,
which mirrors the language that web-brokers in the FFEs and SBE-FPs
must display on their non-Exchange websites.\103\
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\98\ With some limited exceptions, QDPs are considered a type of
QHP. See 77 FR at 18315. Web-brokers participating in the FFEs and
SBE-FPs are expected to follow the same requirements for QDPs as for
QHPs, including display of all applicable QDPs offered through the
Exchange and all available information specific to each QDP on their
websites. However, because it is not possible to enroll in QDPs
through DE unless also enrolling in medical QHPs, web-brokers are
permitted to modify their QDP displays accordingly (for example,
display QDPs after medical QHPs to ensure a consumer has first
selected a medical QHP). See CMS. (2023, July 12). Federally-
facilitated Exchange (FFE) Enrollment Manual. CMS. Section 4.3, p.47
and Section 4.4.2, p. 52. https://www.cms.gov/files/document/ffe-enrollment-manual-2023-5cr-071323.pdf. Under this proposal, these
same standards governing QDPs would also apply to web-brokers in
State Exchanges.
\99\ See CMS. (2023, July 12). Federally-facilitated Exchange
(FFE) Enrollment Manual. CMS. Section 4.4.2, p. 52. https://www.cms.gov/files/document/ffe-enrollment-manual-2023-5cr-071323.pdf.
\100\ See CMS. (2023, May 2). Quality Rating Information
Bulletin. CMS. Section III, p. 3. https://www.cms.gov/files/document/py2024-qrs-display-bulletin.pdf. See Exchange and Insurance
Market Standards for 2015 and Beyond; Final Rule, 79 FR 30240 at
30310-30311 (May 27, 2014).
\101\ Sec. Sec. 155.1400 and 155.1405. Also see 85 FR at 29214
through 29216.
\102\ See CMS. (2023, May 2). Quality Rating Information
Bulletin. CMS. Section III, p. 3. https://www.cms.gov/files/document/py2024-qrs-display-bulletin.pdf.
\103\ See CMS. (2023, May 2). Quality Rating Information
Bulletin. CMS. Section III, p. 3. https://www.cms.gov/files/document/py2024-qrs-display-bulletin.pdf.
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State Exchanges are also currently required to display the quality
ratings assigned by HHS and the results of the enrollee satisfaction
survey, in the form and manner specified by the Secretary.\104\ This
includes prominently displaying the same disclaimer language on the
State Exchange website or a static website when displaying the quality
ratings assigned by HHS and the results of the enrollee satisfaction
survey.\105\ Web-brokers would be able to access QHP quality rating
information for a State Exchange they are operating in, including the
quality ratings assigned by HHS and enrollee satisfaction survey
results,\106\ from the State Exchange.
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\104\ See Sec. Sec. 155.1400 and 155.1405. Also see Sec.
155.205(b)(1)(iv) and (v). Exchanges can satisfy the requirement to
display the enrollee satisfaction survey results by displaying the
quality ratings assigned by HHS (which incorporate member experience
data from the survey). See 79 FR at 30310 through 30311.
\105\ See CMS. (2023, May 2). Quality Rating Information
Bulletin. CMS. Section III, p. 3. https://www.cms.gov/files/document/py2024-qrs-display-bulletin.pdf.
\106\ Consistent with the approach for Exchanges, for purposes
of compliance with the Federal minimum standards, web-brokers would
be able to satisfy the requirement to display the enrollee
satisfaction survey results by displaying the quality ratings
assigned by HHS (which incorporate member experience data from the
survey).
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This list of standardized QHP comparative information that web-
brokers must disclose and display on their non-Exchange websites used
to complete QHP selection in FFE and SBE-FP States mirrors the
information that Exchanges are required to disclose and display on
their respective websites.\107\ This approach ensures consumers have
access to the same QHP comparative information whether they elect to
enroll through the Exchange's website or through a web-broker's non-
Exchange website. We propose to extend these same standardized
comparative information requirements, as minimum Federal standards,
that would need to be met by web-brokers participating in State
Exchanges and consequently to these State Exchanges. We similarly
propose to extend the Enrollment Support disclaimer referenced in Sec.
155.220(c)(3)(i)(A) beyond FFE and SBE-FP States to also extend to web-
brokers participating in State Exchanges and consequently to these
State Exchanges. The goal of this disclaimer is to ensure consumers are
clearly informed about any enrollment limitations on a web-broker's
non-Exchange website and similarly have clear instructions for
accessing the Exchange website if they wish to enroll in those QHPs. In
particular, when a website of a web-broker is used in FFE or SBE-FP
States to complete the QHP selection, but it does not support
enrollment for a QHP,\108\ the web-broker's website must prominently
display the standardized Enrollment Support disclaimer \109\ provided
by HHS, as follows:
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\107\ See Sec. 155.205(b)(1). Also see 87 FR at 642 (explaining
that ``(i)ncluding this [list of] information within Sec. 155.220,
instead of through a cross-reference to Sec. 155.205(b)(1), would
provide better clarity and ease of reference . . .'').
\108\ A web-broker's non-Exchange website may not support
enrollment in a QHP if a web-broker does not have an appointment
with a QHP issuer and therefore is not permitted under State law to
enroll consumers in coverage offered by that issuer.
\109\ CMS. (2023, July 12). Federally-facilitated Exchange (FFE)
Enrollment Manual. CMS. Section 4.4.2, p. 52. https://www.cms.gov/files/document/ffe-enrollment-manual-2023-5cr-071323.pdf.
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``(Name of Company) does not support enrollment in this Qualified
Health Plan at this time. To enroll in this Qualified Health Plan,
visit the Health Insurance Marketplace[supreg] website at
HealthCare.gov.''
We propose to require web-brokers assisting consumers in State
Exchanges to comply with these same requirements, while also providing
these State Exchanges some flexibility regarding the disclaimer
language required to be displayed by their web-brokers. First, to
prominently display the disclaimer, it must be written in a font size
no smaller than the majority of text on the website page and must be
noticeable in the context of the website by (for example) using a font
color that contrasts with the background of the website page.\110\ In
addition, the Enrollment Support disclaimer must appear on the web-
broker's non-Exchange website in close proximity to where the QHP
information is displayed if the web-broker does not support enrollment
in any such QHP, so it is noticeable to the consumer.\111\ Web-brokers
can also meet this prominent display requirement if a visual cue is
displayed where the enrollment button (or another similar mechanism)
would otherwise appear for a particular QHP that clearly directs the
consumer to the required disclaimer on the same website page or
otherwise displays the required disclaimer (for example, in a pop-up
bubble that appears while hovering over the visual cue).\112\
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\110\ See 78 FR at 27260. Also see CMS. (2023, July 12).
Federally-facilitated Exchange (FFE) Enrollment Manual. CMS. Section
4.4.1, p. 49-50 and Section 4.4.2, p. 54-55. https://www.cms.gov/files/document/ffe-enrollment-manual-2023-5cr-071323.pdf.
\111\ See 78 FR at 27260. Also see CMS. (2023, July 12).
Federally-facilitated Exchange (FFE) Enrollment Manual. CMS. Section
4.4.2, p. 52. https://www.cms.gov/files/document/ffe-enrollment-manual-2023-5cr-071323.pdf.
\112\ Id.
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With respect to State flexibility, under this proposal, the HHS-
provided disclaimer language must be used as a minimum starting point,
but State Exchanges may add State-specific language to the Enrollment
Support

[[Page 82559]]

disclaimer, provided the additional language does not conflict with the
HHS-provided standardized disclaimer. This would permit a State
Exchange to replace references and links to the Health Insurance
Marketplace[supreg] and HealthCare.gov in the HHS-provided disclaimer
language with the appropriate reference or links to the State
Exchange's website for the Enrollment Support disclaimer that web-
brokers assisting consumers in the State Exchange would be required to
prominently display on their non-Exchange websites. Additionally, State
Exchanges may require web-brokers operating in their State to translate
the disclaimer text into languages appropriate for the State as this
type of additional requirement would not conflict with the HHS-provided
disclaimer language or minimum standards. As with all informational
materials, standard plain language practice is to write at or near a
fourth grade reading level and not to exceed an eighth grade reading
level. We expect that any additional State-specific customizations to
this disclaimer would be written accordingly. We would be available to
provide technical assistance to State Exchanges that want to add State-
specific language. We propose to codify this State flexibility in new
proposed paragraph (n)(1).
In addition, consistent with Sec. 155.220(c)(3)(i)(G), when used
to assist FFE consumers, the web-broker's non-Exchange website must
also prominently display a standardized disclaimer \113\ provided by
HHS, referred to as the General non-FFE disclaimer, that informs
consumers and applicants that the web-broker's website is not the
Exchange website, notes that the web-broker's non-Exchange website may
not support enrollment in all QHPs, and provides a web link to the
Exchange's website. This same requirement extends beyond the FFEs and
also applies to SBE-FPs today.\114\ In new paragraph (n), we propose to
extend this disclaimer requirement to also apply to web-brokers
operating in State Exchanges, and consequently to these State
Exchanges, while providing these State Exchanges some flexibility to
add State-specific language to this disclaimer, provided the additional
language does not conflict with the HHS-provided disclaimer language.
We propose to codify this State flexibility in new proposed paragraph
(n)(1). Similar to the adoption of this disclaimer for consumers in an
FFE or an SBE-FP,\115\ we continue to believe this additional standard
is in the best interest of consumers, as it would help them distinguish
between the Exchange website and web-broker non-Exchange websites. We
therefore also identified it as an important baseline consumer
protection that should extend to consumers across all Exchanges.
---------------------------------------------------------------------------

\113\ CMS. (2023, July 12). Federally-facilitated Exchange (FFE)
Enrollment Manual. CMS. Section 4.4.2, p. 54. https://www.cms.gov/files/document/ffe-enrollment-manual-2023-5cr-071323.pdf.
\114\ 45 CFR 155.220(l).
\115\ 78 FR 37046.
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The General non-FFE disclaimer provided by HHS that must be
prominently displayed by web-brokers participating in the FFEs and SBE-
FPs reads:
``Attention: This website is operated by (Name of Company) and is
not the Health Insurance Marketplace[supreg] website. In offering this
website, (Name of Company) is required to comply with all applicable
Federal law, including the standards established under 45 CFR
155.220(c) and (d) and standards established under 45 CFR 155.260 to
protect the privacy and security of personally identifiable
information. This website may not support enrollment in all Qualified
Health Plans (QHPs) being offered in your State through the Health
Insurance Marketplace[supreg] website. For enrollment support in all
available QHP options in your State, go to the Health Insurance
Marketplace[supreg] website at HealthCare.gov.
Also, you should visit the Health Insurance Marketplace[supreg]
website at HealthCare.gov if:
You want to select a catastrophic health plan. (This only
needs to be included if the web-broker does not offer catastrophic
plans.)
You want to enroll members of your household in separate
QHPs. (This only needs to be included if the web-broker does not allow
multiple enrollment groups for its Classic DE pathway; note that EDE
Entities are required to support multiple enrollment groups.)
You want to enroll members of your household in dental
coverage. The plans offered here do not offer pediatric dental coverage
and you want to choose a QHP offered by a different issuer that covers
pediatric dental services or a separate dental plan with pediatric
coverage. (This only needs to be included if the web-broker does not
offer assistance with enrollment in adult coverage or pediatric dental
coverage.)
(Name of web-broker's website) offers the opportunity to enroll in
either QHPs or off-Marketplace coverage. Please visit HealthCare.gov
for information on the benefits of enrolling in a QHP. Off-Marketplace
coverage is not eligible for the cost savings offered for coverage
through the Marketplaces. (This final paragraph must be displayed if
the web-broker offers consumers assistance with off-Marketplace
coverage options.)''
To prominently display this disclaimer, it must be written in a
font size no smaller than the majority of text on the website page and
must be noticeable in the context of the website by (for example) using
a font color that contrasts with the background of the website
page.\116\ In addition, the disclaimer must be prominently displayed on
both the initial user landing page and on the landing page displaying
QHP options that appear before the applicant makes a decision to
purchase coverage (QHP selection page). In FFE and SBE-FP States, the
disclaimer must use the exact language provided by HHS, must include a
functioning web link to HealthCare.gov, and must be viewable without
requiring the user to select or click on an additional link. The
disclaimer must also be displayed in the same non-English language as
any language(s) the web-broker maintains screens for on its
website.\117\ The web-broker may change the font color, size, or
graphic context of the information to ensure that it is noticeable to
the user in the context of its website or the other written material.
---------------------------------------------------------------------------

\116\ See 78 FR at 27260. Also see CMS. (2023, July 12).
Federally-facilitated Exchange (FFE) Enrollment Manual. CMS. Section
4.4.1, p. 49-50 and Section 4.4.2, p. 54-55. https://www.cms.gov/files/document/ffe-enrollment-manual-2023-5cr-071323.pdf.
\117\ See 45 CFR 155.205(c)(2)(iv)(C).
---------------------------------------------------------------------------

Consistent with the proposed approach for the extension of the
Enrollment Support disclaimer to State Exchanges and their web-brokers,
under this proposal, the HHS-provided disclaimer language must be used
as a minimum starting point, but State Exchanges may add State-specific
language, provided the additional language does not conflict with the
HHS-provided standardized disclaimer.
This would permit State Exchanges to replace references and links
to the Health Insurance Marketplace[supreg] and HealthCare.gov in the
HHS-provided disclaimer language with the appropriate reference or
links to the State Exchange's website for the disclaimer under Sec.
155.220(c)(3)(i)(G) that web-brokers assisting consumers in State
Exchanges would be required to prominently display on their non-
Exchange websites. Additionally, while web-brokers assisting consumers
in State Exchanges must specify in their disclaimer that they are
subject to applicable Federal requirements, under this proposal, we
anticipate State

[[Page 82560]]

Exchanges would leverage this flexibility to direct their web-brokers
to omit citations to Federal requirements included in the HHS-provided
language to the extent those provisions do not apply, such as Sec.
155.220(d). State Exchanges would also be permitted under this proposal
to modify the disclaimer required under Sec. 155.220(c)(3)(i)(G) to
specify applicable provisions of State law. Further, to the extent that
web-brokers in State Exchanges may offer off-Exchange coverage options,
we would require them to include the HHS-provided disclaimer language
that distinguishes between such coverage options and QHPs sold through
the Exchange, noting in particular that such off-Exchange coverage
options are not eligible for cost savings offered with a QHP sold
through the Exchange, and providing a link to the State Exchange
website for more information. Similar to the approach adopted for web-
brokers participating in FFE and SBE-FP States, bracketed language
included in the HHS-provided disclaimer language would not be required
for web-brokers assisting consumers in State Exchanges to comply with
the Federal minimum standards unless applicable or otherwise required
by the State Exchange. State Exchanges may also require web-brokers
operating in their State to translate the disclaimer text required
under Sec. 155.220(c)(3)(i)(G) into languages appropriate for the
State as this type of additional requirement would not conflict with
the HHS-provided disclaimer language or minimum standards. As with all
informational materials, standard plain language practice is to write
at or near a fourth grade reading level and not to exceed an eighth
grade reading level. HHS expects that any State-specific additions or
customizations to this disclaimer would be written accordingly. We
would be available to provide technical assistance to State Exchanges
that want to add State-specific language to this disclaimer that a web-
broker in a State Exchange would be required to prominently display on
its non-Exchange website to distinguish it from the State Exchange
website.
In new proposed paragraph (n), we also propose to extend the
requirement in Sec. 155.220(c)(3)(i)(I), which requires the prominent
display by web-brokers of the information provided by HHS pertaining to
a consumer's eligibility for APTC or CSRs on the web-broker's non-
Exchange website, to web-brokers operating in State Exchanges and
consequently to these State Exchanges. We established this requirement
for web-brokers in FFE and SBE-FP States to increase the likelihood
that consumers understand their potential eligibility for APTC and CSRs
and potential liability for excess APTC repayment and can factor those
determinations into their QHP selection and the amount of APTC they
elect to take.\118\ We identified this as another important consumer
protection that should be part of the Federal minimum web-broker
standards in Sec. 155.220 that also extends to web-brokers in State
Exchanges. Consistent with the proposals described above to extend the
requirements at Sec. 155.220(c)(3)(i)(A) and (G), we propose to also
extend the display obligations in Sec. 155.220(c)(3)(i)(I) to apply to
web-brokers in State Exchanges. As such, to prominently display this
information, it must appear in a font size no smaller than the majority
of text on the website page and must be noticeable in the context of
the website by (for example) using a font color that contrasts with the
background of the website page.\119\ We similarly propose to require
web-brokers in State Exchanges to display information provided by, and
as specified by, the State Exchange regarding a consumer's eligibility
for APTC or CSRs. Additionally, we propose flexibility in how consumer
eligibility information for APTC or CSRs is displayed on websites by
web-brokers in State Exchanges, at the direction of the State Exchange
on the display of that information. This flexibility is intended to
provide State Exchanges the ability to define how consumer education
information about the State Exchanges, including the consumer
eligibility information for APTC or CSRs, is customized and presented
on their web-brokers' websites. For example, we recognize that State
Exchanges may wish to require their web-brokers include additional
consumer educational information or State-specific content to meet the
particular needs of their consumers and applicants. We believe allowing
the flexibility for State Exchanges and their web-brokers to customize
consumer-facing educational information with the HHS minimum standard
requiring the prominent display of the consumer eligibility information
for APTC or CSRs as provided by the applicable Exchange that must be
adopted by web-brokers across all Exchanges would provide a necessary
baseline. Meeting these standards would also provide consistency for
all Exchange consumers receiving assistance from web-brokers through
their non-Exchange websites and would ensure that all Exchange
consumers are provided accurate and sufficient information on potential
eligibility for APTC and CSRs and the potential liability for excess
APTC repayment. We propose to codify this State flexibility in new
proposed paragraph (n)(1).
---------------------------------------------------------------------------

\118\ 81 FR 61499.
\119\ See 78 FR 27260. Also see CMS. (2023, July 12). Federally-
facilitated Exchange (FFE) Enrollment Manual. CMS. Section 4.4.1, p.
49-50 and Section 4.4.2, p. 54-55. https://www.cms.gov/files/document/ffe-enrollment-manual-2023-5cr-071323.pdf.
---------------------------------------------------------------------------

We also propose to add new Sec. 155.220(c)(4)(iii) to extend
certain downstream agent and broker requirements at Sec.
155.220(c)(4)(i) that currently apply to web-brokers in FFE and SBE-FP
States and govern the use of the web-broker's non-Exchange website by
other agents or brokers assisting Exchange consumers to also apply to
web-brokers, and their downstream agents and brokers in States with
State Exchanges, and consequently to these State Exchanges. Under the
proposed new provision, web-brokers that permit other agents or
brokers, through a contract or other arrangement, to use the web-
broker's non-Exchange website to help an applicant or enrollee complete
a QHP selection or complete the Exchange eligibility application would
be required to meet the standards at Sec. 155.220(c)(4)(i)(A), (B),
(D), and (F) when assisting consumers in States with a State Exchange.
As noted in proposed new Sec. 155.220(c)(4)(iii) and described further
below, to extend this framework to also apply in State Exchanges, we
propose that all references to ``HHS'' and ``Federally-facilitated
Exchange'' in Sec. 155.220(c)(4)(i)(A), (B), (D), and (F) would be
understood to mean and be replaced with a reference to the applicable
State Exchange.
The goal of the downstream agent and broker framework codified in
Sec. 155.220(c)(4)(i) is to ensure that agents or brokers who utilize
a web-broker's non-Exchange website to help applicants complete a QHP
selection or complete the Exchange eligibility application comply with
necessary safeguards related to transparency, oversight, and consumer
support. It ensures appropriate oversight by the web-broker and allows
for closer monitoring by the applicable Exchange. For example, the
proposed extension of Sec. 155.220(c)(4)(i)(A) to web-brokers
operating in State Exchanges would require these web-brokers to provide
the State Exchanges in which it they are operating a list of all agents
or brokers utilizing the web-broker website to facilitate enrollment of
a consumer. The proposed extension of

[[Page 82561]]

Sec. 155.220(c)(4)(i)(B) would also offer a basic consumer protection
that all agents or brokers utilizing a web-broker website to facilitate
enrollment of a consumer in a manner that constitutes enrollment
through the State Exchange are licensed in the State in which the
consumer is selecting the QHP, have completed training and
registration, and have signed all required agreements with the State
Exchange. Finally, the proposed extension of Sec. 155.220(c)(4)(i)(F)
to also apply to web-brokers operating in State Exchanges that make
their non-Exchange website available to other agents and brokers would
require the web-brokers to obtain approval from the State Exchanges
verifying that all applicable requirements are met.
The proposed extension of the Sec. 155.220(c)(4)(i)(A), (B), (D),
and (F) framework to State Exchanges and their web-brokers would equip
the State Exchanges with information needed to oversee their web-
brokers and the use of web-broker non-Exchange websites by other web-
brokers. Ultimately, the application of Sec. 155.220(c)(4)(i)(A), (B),
(D), and (F) would extend these safeguards to the State Exchange and
their consumers when web-brokers participating in the State Exchanges
permit downstream agents and brokers to utilize their non-Exchange
websites to help applicants or enrollees complete their QHP selection
or complete their Exchange eligibility applications in a manner that
constitutes enrollment through the State Exchanges. In particular,
requiring compliance with the HHS minimum standards at Sec.
155.220(c)(4)(i)(A), (B), (D), and (F) for web-brokers participating in
State Exchanges that contract with or enter into arrangements with
downstream agents and brokers to provide applicants or enrollees with
assistance when selecting QHPs or completing Exchange eligibility
applications through their non-Exchange websites would maximize
transparency and provide necessary safeguards to applicants or
enrollees who rely on those downstream agents and brokers to enroll in
coverage. We believe the extension of these HHS minimum standards is
especially important since some agents, brokers, and web-brokers
operate in multiple States and would benefit from a standardized
framework and set of requirements. As part of the State Exchanges'
oversight of the use of web-broker non-Exchange websites, we also
encourage State Exchanges adopt a temporary suspension framework
similar to Sec. 155.220(c)(4)(ii) that applies in FFE and SBE-FP
States. This provision permits HHS to temporarily suspend the ability
of a web-broker to make its non-Exchange website available to its
downstream agents and brokers to transact information with HHS if HHS
discovers a security or privacy incident or breach. The suspension
extends for the period in which HHS begins to conduct an investigation
and until the incident or breach is remedied to HHS' satisfaction. It
is another important feature of HHS' oversight of the use of web-broker
non-Exchange websites in FFE and SBE-FP States that protects consumers
data and safeguards Exchange operations and systems. State Exchanges
that choose to permit web-brokers to host non-Exchange websites to
assist consumers with QHP selections and submission of Exchange
eligibility applications should consider adoption of similar measures.
In addition, in new paragraph (n)(2), we propose to extend web-
broker operational readiness requirements to State Exchanges and their
web-brokers. Under this proposal, web-brokers operating in State
Exchanges would be required to demonstrate operational readiness to the
applicable State Exchange prior to the web-broker's website being used
to complete an Exchange eligibility application or a QHP selection. The
standards under Sec. 155.220(c)(6) applicable to operational readiness
reviews performed by HHS of web-brokers' non-Exchange websites used to
assist the FFEs' and SBE-FPs' consumers to apply and enroll in QHP
coverage through the Exchange, with or without APTC and CSRs, is a
critical part of the oversight framework for HHS' Direct Enrollment
(DE) program (including both Classic DE and Enhanced Direct Enrollment
(EDE)). DE is a service that allows approved web-brokers to enroll
consumers in Exchange coverage, with or without the assistance of an
agent/broker, directly from their non-Exchange websites.\120\ In
Classic DE, consumers start on a web-broker's website by indicating
they are interested in Exchange coverage. The web-broker redirects
users to HealthCare.gov to complete the eligibility application portion
of the process. After completing their eligibility application,
HealthCare.gov redirects users back to the web-broker website to shop
for a plan and enroll in Exchange coverage. EDE is a service that
allows approved EDE web-brokers to provide a comprehensive consumer
experience including the eligibility application, Exchange enrollment,
and post-enrollment year-round customer service capabilities for
consumers and agents/brokers working on behalf of consumers, directly
on web-broker websites. Through EDE, approved web-broker EDE entities
\121\ build and host a version of the HealthCare.gov eligibility
application directly on their non-Exchange websites that securely
integrates with a back-end suite of FFE application programing
interfaces (APIs) to support application, enrollment and more.
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\120\ QHP issuers are also eligible to become approved DE
entities and participate in HHS' DE program. See 45 CFR
155.221(a)(1).
\121\ QHP issuers are also eligible to become approved EDE
entities. See 45 CFR 155.221(a)(1).
---------------------------------------------------------------------------

In the 2018 Payment Notice final rule, we adopted rules to capture
operational readiness requirements applicable to web-brokers that host
non-Exchange websites to complete QHP selection.\122\ In the 2020
Payment Notice final rule, we finalized amendments that moved the
parallel operational readiness requirements for web-brokers and QHP
issuers to Sec. 155.221(b)(4), accounting for the fact that DE
entities participating in EDE in the FFEs and SBE-FPs host the
Eligibility application in addition to QHP selection.\123\ In the 2022
Payment Notice final rule, we finalized amendments to codify more
detail describing the operational readiness reviews applicable to web-
brokers participating in FFE and SBE-FP States by adding a new Sec.
155.220(c)(6).\124\ This included codifying requirements for a web-
broker to demonstrate operational readiness and compliance with
applicable requirements prior to the web-broker's non-Exchange website
being used to complete an Exchange eligibility application or a QHP
selection, which may include submission or completion, in a form and
manner specified by HHS,\125\ of certain information, data, or testing
results. As part of these reviews, HHS may request a web-broker submit
a number of artifacts or documents or complete certain testing
processes to demonstrate the operational readiness of its non-Exchange
website. The required documentation may include operational data
including licensure information, points of contact, and third-party
relationships; security and privacy assessment documentation, including
penetration testing results, security and

[[Page 82562]]

privacy assessment reports, vulnerability scan results, plan of action
and milestones, and system security and privacy plans; and an agreement
between the web-broker and HHS documenting the requirements for
participating in the applicable DE pathway.\126\ The required testing
may include enrollment testing, prior to approval or at the time of
renewal, and website reviews performed by HHS to evaluate prospective
web-brokers' compliance with applicable website display requirements
prior to approval.\127\ We identified these operational readiness
requirements as necessary safeguards to protect consumer data and the
efficient and effective operation of the Exchange while also supporting
innovation and the creation of additional approved pathways for FFE and
SBE-FP consumers to enroll in QHP coverage in a manner that constitutes
enrollment through the Exchange.
---------------------------------------------------------------------------

\122\ 81 FR 94120.
\123\ 84 FR 17522 through 17525.
\124\ 86 FR 24208 through 24209.
\125\ For additional information, including technical
specifications on, the HHS web-broker operational readiness reviews,
see CMS. (2023, March 1). Third-party Auditor Operational Readiness
Reviews for the Enhanced Direct Enrollment Pathway and Related
Oversight Requirements. CMS. https://www.cms.gov/files/document/guidelines-enhanced-direct-enrollment-audits-year-6-final.pdf.
\126\ See 45 CFR 155.220(c)(6)(i),(iv), and (v).
\127\ See 45 CFR 155.220(c)(6)(ii) and (iii).
---------------------------------------------------------------------------

As part of the proposal to extend an operational readiness review
requirement to State Exchanges and their web-brokers, we propose in new
paragraph (n)(2) to require these State Exchanges to establish the form
and manner for their web-brokers to demonstrate operational readiness,
which may include submission or completion of the same items addressed
in Sec. 155.220(c)(6)(i)-(v) to the State Exchanges, in the form and
manner specified by the applicable State Exchanges. These standards,
which apply in FFE and SBE-FP States, ensure operational readiness and
compliance with all applicable requirements prior to the web-broker's
non-Exchange website being used to complete Exchange eligibility
application or a QHP selection. They make sure consumers and applicants
are not able to enroll in Exchange coverage nor submit an Exchange
application via a web-broker's non-Exchange website that is not
operationally ready. Websites that have not been tested to see if they
are operationally ready may not provide consumers and applicants with
proper eligibility determinations or may have security flaws that could
make a breach involving consumer PII more likely. Mandating that web-
brokers participating in State Exchanges meet standards set by the
applicable State Exchange to demonstrate operational readiness would
help reduce this risk in all Exchanges. We encourage State Exchanges to
adopt operational readiness review standards consistent with the
requirements captured in Sec. 155.220(c)(6)(i)-(v) and also consider
leveraging the audits that web-brokers use to demonstrate compliance
with the operational readiness review requirements applicable in FFE
and SBE-FP States. Such an approach would promote standardization
across Exchanges in terms of operational readiness requirements
applicable for web-brokers while building in flexibility for State
Exchanges. We recognize it is important to provide State Exchanges
flexibility to tailor the operational readiness review process to best
serve their operational and business needs. For example, State
Exchanges may have the need to structure their operational readiness
reviews to emphasize or prioritize different web-broker functionalities
that meet State-specific needs. Therefore, we are proposing to
establish a general requirement that State Exchanges must establish
operational readiness requirements for their web-brokers to demonstrate
compliance with applicable requirements and technological readiness
prior to the web-broker's website being used to complete an Exchange
eligibility application or a QHP selection, while providing these State
Exchanges with flexibility to define the contours of those
requirements. We propose to capture at the end of the new paragraph (n)
the accompanying proposed requirement that web-brokers in States with
State Exchanges comply with the applicable State Exchanges' operational
readiness standards under paragraph (n)(2).
Finally, we propose in new paragraph (n)(1) to extend the current
web-broker FFE standard of conduct established at Sec.
155.220(j)(2)(i) to also apply to web-brokers assisting consumers in
State Exchanges, and consequently to these State Exchanges. Section
155.220(j)(2)(i) requires 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 assist individuals in
applying for APTCs and CSRs for QHPs sold through an FFE, must provide
consumers with correct information, without omission of material fact,
regarding the FFEs, QHPs offered through the FFEs, and insurance
affordability programs,\128\ and refrain from marketing or conduct that
is misleading (including by having a DE website that HHS determines
could mislead a consumer into believing they are visiting
HealthCare.gov), coercive, or discriminates based on race, color,
national origin, disability, age, or sex. This FFE standard already
extends to web-brokers SBE-FP States.\129\ As proposed to be applied in
State Exchanges, web-brokers would be required to provide consumers
with correct information, without omission of material fact, regarding
the applicable State Exchange, QHPs offered through the applicable
State Exchange, and insurance affordability programs.\130\ In addition,
web-brokers who assist with or facilitate enrollment of qualified
individuals, qualified employers, or qualified employees, in coverage
in a manner that constitutes enrollment through a State Exchange, or
assist individuals in applying for APTCs and CSRs for QHPs sold through
a State Exchange, would also be required to refrain from marketing or
conduct that is misleading (including by having a website that the
State Exchange determines could mislead a consumer into believing they
are visiting the State Exchange's website), coercive, or discriminates
based on race, color, national origin, disability, age, or sex. As
noted in the last sentence of proposed new paragraph (n), to extend
this FFE standard of conduct to State Exchanges, we propose that all
references to ``HHS'' and ``the Federally-facilitated Exchanges'' in
Sec. 155.220(j)(2)(i) would be understood to mean and be replaced with
a reference to ``the applicable State Exchange, applied to web-
brokers,'' and the reference to ``HealthCare.gov'' in Sec.
155.220(j)(2)(i) would be understood to mean and be replaced with a
reference to ``the State Exchange website, applied to web-brokers.''
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\128\ See 42 CFR 435.4 for the definition of insurance
affordability programs.
\129\ See 45 CFR 155.220(l). A parallel requirement also applies
to QHP issuer DE entities in FFE and SBE-FP States. See 45 CFR
155.221(a)(1) and (i), and 156.1230(b)(2). As discussed below, in
this rulemaking, we propose to extend the parallel QHP issuer DE
entity requirement to State Exchanges and their QHP issuer DE
entities.
\130\ See 42 CFR 435.4 for the definition of insurance
affordability programs.
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We seek comment on these proposals, especially from States
operating, or seeking to operate, State Exchanges. We also seek comment
on which of the other current provisions at Sec. 155.220 should or
should not apply to State Exchanges and web-brokers that assist
consumers in State Exchanges.
8. Establishing Requirements for DE Entities Mandating HealthCare.gov
Changes Be Reflected on DE Entity Non-Exchange Websites Within a Notice
Period Set by HHS (Sec. 155.221(b))
We propose to revise Sec. 155.221(b) to require that
HealthCare.gov changes be reflected and prominently displayed on

[[Page 82563]]

DE entity non-Exchange websites within a specific notice period \131\
set by HHS. We conduct various DE entity monitoring programs, including
website display reviews, and routinely identify areas where DE entity
non-Exchange websites can improve the user experience and more closely
align with HealthCare.gov. The changes that we propose to require DE
Entities to make to their non-Exchange websites include changes that
enhance the consumer experience, simplify the plan selection process,
and increase consumer understanding of plan benefits, cost-sharing
responsibilities, and eligibility for financial assistance. This
proposal would codify our existing practice of communicating important
changes to the HealthCare.gov display to EDE entities to ensure their
EDE websites conform to those changes and provide the same vital
information to consumers, expand our existing change requests processes
to permit entities to request deviations from required display changes,
require DE entities that do not participate in EDE to comply with this
practice, and require State Exchanges that choose to implement a DE
program to require their DE entities to implement and prominently
display changes adopted for display on the State Exchanges' websites on
their non-Exchange websites for purposes of assisting consumers with DE
in QHPs offered through the Exchange in a manner that constitutes
enrollment through the Exchange.
---------------------------------------------------------------------------

\131\ ``Notice period'' refers to the time period that DE
entities have to reflect and prominently display HealthCare.gov
changes communicated to them by HHS pursuant to this proposal.
---------------------------------------------------------------------------

Section 1312(e) of the ACA directs the Secretary to establish
procedures under which a State may permit agents and brokers to enroll
qualified individuals and qualified employers in QHPs through an
Exchange and to assist individuals in applying for financial assistance
for QHPs sold through an Exchange. In addition, section 1413 of the ACA
directs the Secretary to establish, subject to minimum requirements, a
streamlined enrollment process for enrollment in QHPs and all insurance
affordability programs. At Sec. 155.221(a) and (i), we established
that the FFEs and SBE-FPs will permit QHP issuers, which meet the
applicable requirements of Sec. 155.221 and Sec. 156.1230, and web-
brokers, which meet the applicable requirements of Sec. 155.220 and
Sec. 155.221, to assist consumers with DE in QHPs offered through the
Exchange in a manner that is considered to be through the Exchange and
to the extent permitted by applicable State law.\132\ Collectively, QHP
issuers and web-brokers that meet the applicable requirements to assist
Exchange consumers with DE in QHPs are referred to as ``DE entities.''
DE entities may assist consumers with DE in QHPs offered through an
Exchange by redirecting consumers from the non-Exchange website to
HealthCare.gov to complete the eligibility application and obtain an
eligibility determination, referred to as ``Classic DE.'' DE entities
may also assist consumers with DE in QHPs offered through an Exchange
by hosting an eligibility application on their non-Exchange website and
allowing consumers to complete the eligibility application and obtain
an eligibility determination from the Exchange without being redirected
to HealthCare.gov, referred to as ``Enhanced Direct Enrollment (EDE).''
Section 155.221(b) establishes requirements that DE entities must meet
to assist consumers in FFE and SBE-FP States.\133\ Additional
requirements that apply to web-brokers and QHP issuers that assist
consumers with enrollment in coverage offered through the FFEs and SBE-
FPs are captured in Sec. Sec. 155.220, 156.265, and 156.1230.\134\
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\132\ 84 FR 17523 through 17524, 86 FR 6176 and 6177.
\133\ In this rulemaking, we propose to extend certain Federal
minimum standards under Sec. 155.221(b) to State Exchanges and
their DE entities.
\134\ In this rulemaking, we propose to extend certain Federal
minimum standards under Sec. Sec. 155.220 and 156.1265 to State
Exchanges, their web-brokers, and their QHP issuer DE entities.
---------------------------------------------------------------------------

The display requirements for DE entity non-Exchange websites are
captured in Sec. Sec. 155.220, 155.221, 156.265, and 156.1230. The
website display requirements are often technical in nature and can
require subsequent release of guidance to provide technical and
operational details to support their implementation. When HHS makes
changes to the HealthCare.gov display, we notify EDE entities
participating in the FFEs and SBE-FPs of these changes and require that
they make them to their non-Exchange websites via the HHS-initiated
change request process outlined in the Third Party Auditor Operational
Readiness Reviews for the Enhanced Direct Enrollment Pathway and
Related Oversight Requirements guidance document referred to as the
``Third Party Auditor Guidelines.'' \135\ This process helps ensure
consumers receive vital information they need in a timely fashion.
---------------------------------------------------------------------------

\135\ CMS. (2023, March 1). Third-party Auditor Operational
Readiness Reviews for the Enhanced Direct Enrollment Pathway and
Related Oversight Requirements. CMS. Section IX.B., pp. 72-74.
https://www.cms.gov/files/document/guidelines-enhanced-direct-enrollment-audits-year-6-final.pdf.
---------------------------------------------------------------------------

This proposal would codify and expand this existing, HHS-initiated
change request practice for EDE entities' non-Exchange websites and
support consistency as to the timing of display changes across
enrollment platforms, which would help ensure all Exchange consumers
have timely access to accurate, clear information as they navigate the
QHP selection and enrollment processes. Most DE partners in FFE and
SBE-FP States participate in EDE and therefore are already familiar
with and complying with this proposal because it is part of the
existing requirements, as outlined in the Third Party Auditor
Guidelines. However, the requirements of this proposal would be new for
some DE partners, such as those that only participate in Classic DE,
because they are not currently subject to these requirements, which
currently only apply to DE entities that participate in EDE. It is
especially important that changes to the HealthCare.gov display are
reflected on non-Exchange websites, including websites used for both
Classic DE and EDE, as a steadily increasing number of the FFEs' and
SBE-FPs' consumers enroll in Exchange plans via these DE pathways. This
proposal would help ensure consumers using these DE pathways benefit
from the policies we introduce to improve the HealthCare.gov website
display by enhancing the consumer experience, increasing consumer
understanding, and simplifying the plan selection process.
We recognize that the technical details necessary to implement
website display changes must be communicated to DE entities with
sufficient notice for development prior to implementation. As such,
this proposal provides that HHS would provide DE entities with advance
notice to give them time to implement the changes on their non-Exchange
websites. We intend for the duration of the advance notice period to
correspond to the complexity of the change and the urgency with which
the change must be reflected on the DE entity's non-Exchange website
(that is, we intend to provide a longer advance notice period for
implementation of changes requiring more complex website-development
work, or for lower-urgency changes). We would categorize display
changes as simpler versus more complex based on a combination of
factors, including, but not limited to, consideration of the following:
number of website pages affected; number of data fields affected;
nature of the change (that is, text-based versus data-based); whether
the change

[[Page 82564]]

is static or dynamic based on user input; whether the change updates
QHP data provided by us \136\ or involves the display of new data not
previously provided by us (that is, new data types would be considered
a more complex change due to the web-development work required to
integrate a new PUF data field or MAPI data variable); and whether the
change may affect backend algorithms for plan sorting, filtering, or
recommendations. The complexity of the change would be the primary
factor determining the length of the advance notice period. Generally,
we would expect to provide approximately 30 calendar days' advance
notice of simpler display changes and up to 90 or more calendar days'
advance notice for more complex changes. However, in situations where
we have determined that it is urgent that HealthCare.gov display
changes are similarly made to DE entities' non-Exchange websites to
communicate necessary information to consumers regarding their plan
selection or enrollment, we may provide fewer than 30 days' advance
notice, but not less than 5 business days' advance notice. When
considering the urgency of a display change, we would consider a number
of factors, including, but not limited to, the following: potential to
impact the consumers' understanding of plan benefits and cost-sharing
responsibilities; potential for consumers to receive an incorrect
eligibility determination; potential impact to the consumer's
understanding of their eligibility for financial assistance (that is,
APTC or CSR); proximity to the Open Enrollment period (with changes
becoming more urgent as Open Enrollment nears, as implementing changes
prior to Open Enrollment is critical for ensuring the greatest number
of consumers are able to benefit from the changes); and whether failure
to implement the change may result in a display that is misleading or
confusing to consumers.
---------------------------------------------------------------------------

\136\ We provide DE entities with the QHP comparative
information that must be displayed in accordance with Sec.
155.220(c)(3)(i)(A) and Sec. 156.1230(a)(1)(ii). We provide this
data via the Public Use Files (PUF) (https://www.cms.gov/cciio/resources/data-resources/marketplace-puf) and through non-Exchange
website integration with the Marketplace Application Program
Interface (MAPI) (https://developer.cms.gov/marketplace-api/). In
this context, website integration refers to connecting the non-
Exchange website with Exchange data by using the MAPI.
---------------------------------------------------------------------------

We propose to amend Sec. 155.221 to add new paragraph (b)(6),
which would require DE entities to implement and prominently display
website changes in a manner consistent with what is adopted by HHS for
display on HealthCare.gov by meeting standards communicated and defined
by HHS within a time period set by HHS, unless HHS approves a deviation
from those standards. Consistent with Sec. 155.221(i), this new
proposed DE entity non-Exchange website display requirement would also
apply to DE entities that enroll qualified individuals in coverage in a
manner that constitutes enrollment through an SBE-FP or assist
individual market consumers with submission of applications for APTC
and CSRs through an SBE-FP.
We are cognizant of, and support, DE entity non-Exchange websites'
use of innovative decision-support tools and user interface design for
consumers to help them shop for and select QHPs that best fit their
needs. This proposal is not intended to prohibit or otherwise stand in
the way of DE entities' development of such tools and consumer
interfaces. Consistent with the existing approach for implementation of
HHS-initiated changes described in the Third Party Auditor Guidelines,
we would implement this requirement with a focus on requiring DE
entities in FFE and SBE-FP States to mirror any display changes made to
HealthCare.gov that impact a consumer's understanding of plan benefits,
cost-sharing responsibilities, and eligibility for financial
assistance. For each required change, DE entities in FFE and SBE-FP
States would need to implement on their non-Exchange websites
conforming changes that meet standards defined by HHS for display in a
manner consistent with that adopted by HHS for display on
HealthCare.gov. We would provide DE entities flexibility in their user
interface graphic design, provided that their design complies with the
standards defined by HHS in the notification of required change(s). As
part of this proposal, we would require that all front-end website
changes (that is, website changes that would affect the visual aspects
of the website that users see and interact with) be prominently
displayed on DE entity non-Exchange websites. ``Prominently displayed''
means that text must be written in a font size no smaller than the
majority of the text on the web page, text must be displayed in the
same non-English language as any language(s) the DE entity maintains
translations for on its website,\137\ and any display changes must be
noticeable in the context of the website (that is, DE entity non-
Exchange websites must use a font or graphic color that contrasts with
the background of the web page and ensure any graphics and iconography
that they are required to display are readable without requiring the
user to increase their magnification percentage greater than 100
percent). The DE entity may change the font color, size, or graphic
context of the information to ensure that it is noticeable to the user
in the context of its website or other written material.
---------------------------------------------------------------------------

\137\ 45 CFR 155.205(c)(2)(iv).
---------------------------------------------------------------------------

For example, in a scenario where HealthCare.gov is updated to
display new help text communicating educational content to consumers
that is designed to help a consumer better understand plan benefits,
cost-sharing responsibility, or eligibility for financial assistance,
we would require the DE entity's non-Exchange website to display that
help text or similar text. When notifying DE entities about the
required change, we would establish and communicate the standards that
must be met for display of the required change, such as the new help
text that must be prominently displayed on their websites. If the
standards allow the DE entity to display similar text to the language
used on HealthCare.gov (for example, when information must be
communicated but there is a low risk of misinterpretation of the
information such that we would not require DE entities to display the
exact language used on HealthCare.gov), we would provide DE entities
with information on how the help text is displayed on HealthCare.gov,
along with the standards that must be met, while also outlining the
flexibility for DE entities to adapt the language to reflect their own
entity branding if it generally conveys the same information and
meaning as the help text displayed on HealthCare.gov. In this example,
we would also allow flexibility as to the location of the help text if
it adheres to the prominent display requirements discussed earlier in
this proposal. In this scenario, DE entities would be able to adjust
the language and decide on the location of the help text on the QHP
selection page(s) without seeking prior approval from us. However, we
would monitor implementation through existing periodic website review
monitoring per Sec. 155.220(c)(5) and, as described in the Third Party
Auditor Guidelines,\138\ may notify the DE entity if we find that their
language does not convey the same meaning as the help text displayed on
HealthCare.gov or if we find the help text is not prominently
displayed. Such notification would occur via a letter that would
provide the DE entity with feedback explaining the

[[Page 82565]]

noncompliance and required corrective actions (such letter is referred
to as ``Technical Assistance''). If Technical Assistance fails, we may
potentially take enforcement action to address the identified instances
of non-compliance, which could include temporarily suspending the DE
entity's ability to transact information with the Exchange if we
discover circumstances that pose unacceptable risk to eligibility
determination, Exchange operations, or Exchange systems, if
warranted.\139\
---------------------------------------------------------------------------

\138\ CMS. (2023, March 1). Third-party Auditor Operational
Readiness Reviews for the Enhanced Direct Enrollment Pathway and
Related Oversight Requirements. CMS. Section X.F., p. 69. https://www.cms.gov/files/document/guidelines-enhanced-direct-enrollment-audits-year-6-final.pdf.
\139\ 45 CFR 155.221(e).
---------------------------------------------------------------------------

Additionally, we recognize that some DE entities may have system
constraints that prevent them from precisely mirroring the
HealthCare.gov display approach, and so we propose that if a DE entity
is unable to implement the standards defined by HHS, or the DE entity
has an idea for implementation that does not meet the standards but
would effectively communicate the same information to consumers, we may
permit a deviation. We propose that DE entities that are interested in
pursuing a deviation must submit deviation requests to HHS and propose
that such requests would be subject to review by HHS in advance of
implementation of any alternative display approaches. Deviation
requests must include a proposed alternative display and accompanying
rationale. The rationale must explain why the DE entity is unable to
implement the standards or the DE entity's idea for implementation that
does not meet the standards but would effectively communicate the same
information to consumers. Therefore, similar to the differential
website display requirements for standardized plans applicable to web-
broker and QHP issuer DE entities at Sec. Sec. 155.220(c)(3)(i)(H) and
156.265(b)(3)(iv) and the HHS-initiated change request process, we
propose to allow DE entities to request a deviation from the standards
communicated by HHS for required display changes to align with
HealthCare.gov by submitting a proposed alternative display and
accompanying rationale or explanation for why a deviation is necessary.
In reviewing deviations, HHS would consider whether the same level of
differentiation and clarity is being provided under the deviation
requested by the DE entity as is provided on HealthCare.gov. Other
factors and criteria HHS would consider include, but are not limited
to, whether the proposed alternative website display adheres to the
standards for prominent display described in this proposal and whether
the display provides correct information, without omission of material
fact, that does not have the potential to be misleading to consumers.
Under this proposed approach, the deviation request would have to
be submitted and approved by HHS before DE entities would be permitted
to implement any alternative website displays. Deviation requests would
not toll the advance notice period. This deviation request process
described in this paragraph is separate and distinct from the
flexibilities in user interface graphic design that we would allow
without preapproval as long as the design and display otherwise meets
the applicable standards defined and communicated by HHS for the
display change. DE entities would only need to request a deviation from
the requirements of the standards communicated by HHS if the DE entity
seeks to deviate from those standards or specifications when it
implements a display change to its Non-Exchange website that is
required by HHS pursuant to this proposal.
Pursuant to proposed new Sec. 155.221(j)(3), we also propose to
extend this new proposed DE entity non-Exchange website display
requirement to require State Exchanges that choose to implement a DE
program to require their DE entities to implement and prominently
display changes adopted for display on the State Exchanges' websites on
their non-Exchange websites for purposes of assisting consumers with DE
in QHPs offered through the Exchange in a manner that constitutes
enrollment through the Exchange. We believe it is necessary for
consumers utilizing DE entities in State Exchanges to have access to
the same vital information pertaining to their plan selection and
enrollment process as they would have if they were enrolling via the
State Exchanges' websites. Under this proposal, we would require State
Exchanges to establish and communicate standards for required display
changes and to set the time period within which display changes must be
implemented on DE entities' non-Exchange websites. State Exchanges
would also be required to review deviation requests submitted by DE
entities and establish their own deviation request process if the State
Exchange wants to permit deviations. We would provide flexibility for
State Exchanges to develop their own process for communicating those
standards, setting advance notice periods, and establishing a deviation
request process as needed to meet the business needs of the State
Exchange. We would encourage State Exchanges to consider the same
factors described above (that is, urgency and complexity of the change)
when determining the advance notice period. Similarly, we would
encourage State Exchanges to provide their DE entities with examples of
the State Exchange website display change and technical assistance,
including technical implementation guidance, to ease the burden of
implementing and prominently displaying required changes. We would
require State Exchanges to apply HHS's standard for ``prominently
display,'' explained earlier in this section of this proposed rule, to
help ensure that important enrollment, eligibility, and other
information is as noticeable and clear to consumers using DE entities'
websites in State Exchanges as it is to consumers using State Exchange
websites or HealthCare.gov, which we believe would enhance the user
experience, increase understanding, and simplify the plan selection
process for all consumers.
As part of this proposal to extend the requirement for DE entities
to reflect Exchange website changes on their non-Exchange websites to
State Exchanges and their DE entities, we would rely on State Exchanges
that choose to implement a DE program to enforce compliance with these
requirements and take enforcement action when their DE entities fail to
comply and update their non-Exchange websites to mirror changes made to
the State Exchange website. We would be available to provide technical
assistance to support the State Exchanges' efforts to take appropriate
enforcement action as needed to ensure compliance with applicable
requirements. There may exist scenarios where the website display
requirements may differ between the FFEs or SBE-FPs versus the State
Exchanges (for example, in scenarios where a State Exchange uses the
HealthCare.gov disclaimer language and adds State-specific information
such as replacing a HealthCare.gov hyperlink with the State Exchange
hyperlink). In such scenarios, DE entities must tailor their non-
Exchange website display to the requirements of the State the consumer
is seeking assistance in. Based on our experience providing oversight
of DE entity website displays, we understand that many DE entities are
familiar with and have the capability to tailor website displays based
on different scenarios and, as such, we anticipate DE entities would
have the capability to tailor website displays to mirror the Exchange
website of the State the consumer is shopping for coverage in.
With an increasing number of consumers utilizing the DE pathways to

[[Page 82566]]

enroll in coverage through the Exchanges, we believe it is important to
codify a requirement to mandate changes adopted by HealthCare.gov (or
for State Exchanges, the State Exchanges' websites) be implemented on
DE entity non-Exchange websites within a timeframe specified by HHS
(or, for DE entities participating in State Exchanges, within a
timeframe specified by the State Exchange). These proposals would
ensure consumers using DE entity non-Exchange websites have a similar
user experience, with access to the same information in a similar
manner as provided on HealthCare.gov and State Exchange websites.
We seek comment on all aspects of this proposal.
9. Adding and Amending Language To Ensure DE Entities Operating in
State Exchanges Meet Certain Standards Applicable in the FFEs and SBE-
FPs (Sec. 155.221)
We propose to amend Sec. 155.221 to extend certain existing HHS
standards for Exchanges that use the Federal platform that apply to DE
entities assisting the FFEs' and SBE-FPs' \140\ consumers and
applicants with direct enrollment in QHPs and applying for APTC/CSRs to
DE entities operating in State Exchanges, for both the State Exchanges'
Individual Exchange and SHOP. These proposals would extend certain
Federal DE program standards to DE entities operating in State
Exchanges, and consequently to those State Exchanges that, to the
extent permitted by applicable State law, permit DE entities to assist
their consumers and applicants with direct enrollment in QHPs and
applying for APTC/CSRs in a manner that constitutes enrollment through
an Exchange.\141\ These proposals would also ensure that certain
minimum Federal standards--those governing DE entity marketing and
display of QHPs and non-QHPs, providing consumer with correct
information and refraining from certain conduct, marketing of non-QHPs,
website disclaimer language, and operational readiness--would apply to
DE entities across all Exchanges. These proposals, if finalized, would
be effective on the date of publication of the final rule.
---------------------------------------------------------------------------

\140\ 45 CFR 155.221(i).
\141\ See 78 FR at 37065 through 37066 and 78 FR at 54124
through 54126.
---------------------------------------------------------------------------

Notably, our regulations do not currently address whether and how
DE entities may assist consumers and applicants with DE in QHPs and
submission of applications for APTC/CSRs in a manner that constitutes
enrollment in State Exchanges. We believe that current and future State
Exchanges may seek to implement DE programs similar to the FFEs and
SBE-FPs. As such, we believe that DE entities seeking to assist State
Exchange consumers with DE in QHPs and submission of applications for
APTC/CSRs in a manner that constitutes enrollment through an Exchange
should meet the same or, at a minimum, similar standards as are
required in the FFEs and SBE-FPs to protect consumers. These safeguards
focus on mitigating the potential for confusion between QHPs and non-
QHPs (including the eligibility for APTC and/or CSR as it relates to
QHPs versus non-QHPs) and as to which products are available through
the Exchange and what products are not, ensuring proper eligibility
determinations, protecting against security breaches or incidents
through implementation of operational readiness reviews (as websites
that have not been tested to see if they are operationally ready may
provide improper eligibility determinations or may have security flaws
that could make a breach involving consumer PII more likely) and
through the other minimum Federal standards in Sec. 155.221 that we
propose to extend to State Exchanges and their DE entities.\142\ We
recognize that to date, no State Exchanges have implemented DE
programs; however, as stated, we anticipate that there may be growing
interest in doing so. As such, we recognize a potential burden on State
Exchanges that would newly be subject to the standards being proposed,
if they choose to implement DE programs. This would include drafting
new policies, updating standards, and potentially hiring additional
staff to perform functions not currently being performed by the State
Exchanges, including providing technical assistance during development
and implementation of DE programs in the State Exchanges, creating the
framework for and conducting operational readiness reviews, including
developing and maintaining documentation needed to complete the
operational readiness reviews, as well as conducting ongoing oversight
and taking appropriate enforcement action for DE entity non-compliance
with applicable requirements. It would also include requiring and
overseeing web-development and the hosting of non-Exchange websites by
DE entities participating in these State Exchanges to ensure compliance
with the proposed minimum standards outlined in this rulemaking.
---------------------------------------------------------------------------

\142\ The amendments to Sec. 155.221 we are proposing would not
impact how DE entities may assist consumers and applicants in SBE-FP
States. Section 155.221(i) provides that a DE entity that enrolls
qualified individuals in coverage in a manner that constitutes
enrollment through an SBE-FP or assists individual market consumers
with submission of applications for APTC and CSRs through an SBE-FP,
must comply with all applicable FFE standards in Sec. 155.221. We
are not proposing any changes to this existing framework for DE
entities who assist consumers and applicants in SBE-FP States.
---------------------------------------------------------------------------

Section 1312(e) of the ACA provides that the HHS Secretary shall
establish procedures under which a State may allow agents, brokers, and
web-brokers to enroll individuals in QHPs. The Secretary also has
authority under section 1321(a) of the ACA to promulgate regulations
with respect to the establishment and operation of Exchanges, the
offering of QHPs through such Exchanges, and such other requirements as
the Secretary determines appropriate.\143\ As explained earlier, HHS
previously leveraged these authorities to establish the existing agent,
broker, and web-broker standards applicable in FFE and SBE-FP States,
which are currently codified in Sec. Sec. 155.220 and 155.221.\144\ In
addition, section 1413 of the ACA directs the Secretary to establish,
subject to minimum requirements, a streamlined enrollment process for
enrollment in QHPs and all insurance affordability programs. This
authority, along with the Secretary's rulemaking authority under
section 1321(a) of the ACA, was previously leveraged to establish the
existing QHP issuer DE Entity requirements applicable in FFE and SBE-FP
States, which are currently codified in Sec. Sec. 155.221, 156.265,
and 156.1230.\145\
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\143\ Section 1321(a)(1)(A), (B) and (D) of the ACA.
\144\ See 77 FR 18334-18336; 78 FR 15533; 78 FR 54134; 79 FR
13837; 81 FR 12338; 81 FR 94176; 83 FR 16981-16982; 84 FR 17563; 85
FR 37248; 86 FR 24288; 87 FR 27388; and 88 FR 25917.
\145\ See 77 FR 18425-18246; 78 FR 54124-54126; 81 FR 12309-
12310; 81 FR 94152; 81 FR 94184; 83 FR 16981-16982, 17030; 84 FR
17521-17525, 17546-17547; and 86 FR 24209-24214.
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Similar to the agent, broker and web-broker requirements in Sec.
155.220, currently Sec. 155.221 only applies to DE entities assisting
consumers and applicants in the FFEs and SBE-FPs. Section 155.221(a)
provides that the FFEs will permit the following entities to assist
consumers with DE in QHPs offered through the Exchange in a manner that
is considered to be through the Exchange, to the extent permitted by
applicable State law: (1) QHP issuers that meet the applicable
requirements in Sec. Sec. 155.221 and 156.1230, and (2) web-brokers
that meet the applicable requirements in Sec. Sec. 155.220 and
155.221. These same entities are permitted to

[[Page 82567]]

assist consumers with DE in QHPs offered through the Exchange in a
manner that is considered to be through the Exchange, to the extent
permitted by applicable State law, in SBE-FP States.\146\ As explained
above, DE allows approved entities to enroll consumers in Exchange
coverage, with or without the assistance of an agent/broker, directly
from their non-Exchange websites. The HHS DE Program includes two DE
pathways: Classic DE and EDE. In Classic DE, consumers start on a DE
entity's website by indicating they are interested in Exchange
coverage. The DE entity's website redirects users to HealthCare.gov to
complete the eligibility application portion of the process. After
completing their eligibility application, HealthCare.gov redirects the
users back to the DE entity's non-Exchange website to shop for a plan
and enroll in Exchange coverage. EDE allows approved EDE entities to
provide a comprehensive consumer experience including the eligibility
application, Exchange enrollment, and post-enrollment year-round
customer service capabilities for consumers and agents/brokers working
on behalf of consumers, directly on the DE entities' non-Exchange
websites. Through EDE, approved EDE entities build and host a version
of the HealthCare.gov eligibility application directly on their
websites that securely integrates with a back-end suite of FFE
application programing interfaces (APIs) to support application,
enrollment, and more. References to ``Direct Enrollment'' or ``DE''
within Sec. 155.221 include both the Classic DE and EDE pathways.
Similarly, the proposal to extend certain existing HHS standards
applicable to DE entities participating in FFE and SBE-FP States to
State Exchanges and their DE entities would also apply to the operation
of Classic DE and/or EDE within these State Exchanges. That is, under
this proposal, State Exchanges that choose to implement DE programs in
their States would be permitted to adopt the same pathways or tailor
their configuration in a manner best suited to their operational and
business needs, so long as their DE programs meet the proposed Federal
minimum standards in Sec. 155.221 that we propose in this rulemaking
to extend to State Exchanges and their DE entities. We would be
available to provide extensive technical assistance to State Exchanges
that choose to implement DE programs.
---------------------------------------------------------------------------

\146\ 45 CFR 155.221(i).
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As detailed further below, we propose to add a new paragraph (j) to
Sec. 155.221 to extend certain Federal minimum DE entity standards in
Sec. 155.221 to DE entities operating in State Exchanges, and
consequently, to these State Exchanges that choose to implement DE
programs in their States. We seek to ensure that DE entities assisting
these State Exchanges' consumers with DE in QHPs and applying for APTC/
CSRs in a manner that constitutes enrollment through the Exchange meet
Federal minimum standards governing DE entity marketing and display of
QHPs, providing consumers with correct information and refraining from
certain conduct, marketing of non-QHPs, website disclaimer language,
and operational readiness. We also encourage State Exchanges to require
DE entities to engage a third-party auditor to perform the operational
readiness review audits of their DE entities, consistent with the
operational readiness framework adopted by HHS for the FFEs and SBE-
FPs. As stated earlier, we recognize that there may be a growing
interest from State Exchanges to operate DE programs, and we seek to
establish a set of Federal minimum standards to ensure appropriate
safeguards are in place, regardless of the Exchange model. Further, the
proposed approach to establish a minimum set of Federal standards that
would apply to DE entities across all Exchanges would support
efficiency in DE entity operations across all Exchanges, including
State Exchanges, while also providing flexibility for State Exchanges
to tailor their DE program and establish their own standards with
respect to operational readiness demonstrations by their DE entities,
including whether to require third-party audits of DE entities and to
impose additional requirements beyond the proposed Federal minimum
standards as they determine may be appropriate based on their
operational or business needs. As described above, if they choose to
implement DE programs, the State Exchanges would be required to draft
policies, update standards, and potentially hire additional staff to
perform functions and activities not currently being performed by the
State Exchanges in order to comply with these proposals.
We propose to update Sec. 155.221(a), which identifies the
entities permitted to be DE entities in FFE and SBE-FP States, to apply
across all Exchanges, including State Exchanges. Under this proposal,
State Exchanges that choose to implement a DE program may permit QHP
issuers and web-brokers that meet applicable requirements to assist
consumers with submitting applications for APTC/CSRs and DE in QHPs
offered through the Exchange in a manner that is considered to be
through the Exchange. Under the framework proposed in this rulemaking,
the applicable requirements that would extend to web-brokers DE
entities in States with State Exchanges would include certain
subparagraphs of Sec. Sec. 155.220(c) and (j) and 155.221(a), (b),
(c), (d), and (j). We describe above the proposed extension of certain
FFE web-broker standards in Sec. 155.220(c) and (j) to State Exchanges
and their web-brokers and detail below the FFE web-broker DE entity
standards in Sec. 155.221(a), (b), (c), (d), and (j) we propose
extending to web-broker DE entities in State Exchanges. As described
further below, we propose the applicable requirements that would apply
to QHP issuer DE entities in State Exchanges would be certain FFE QHP
issuer DE entity standards in Sec. Sec. 155.221(a), (b), (c), (d), and
(j) and 156.1230(b). The proposals to extend certain FFE requirements
in Sec. 155.221 to these State Exchanges' web-broker DE entities are
intended to align with the proposals described above to extend certain
FFE standards and consumer protections in Sec. 155.220 to these State
Exchanges' web-brokers.\147\ The proposals to extend certain FFE
requirements to QHP issuer DE entities are similarly intended to
establish a minimum set of standards and consumer protections, with the
HHS requirements generally serving as a floor, for State Exchanges that
choose to implement DE programs. As detailed further below, as part of
these proposals to extend certain FFE requirements to DE entities, we
would rely on State Exchanges to enforce compliance with these
requirements and take enforcement action as needed when a DE entity
fails to comply with applicable requirements. However, we would provide
technical assistance to support State Exchange efforts to take
appropriate enforcement action as needed to ensure compliance with
applicable requirements.
---------------------------------------------------------------------------

\147\ As previously noted, the FFE requirements for web-brokers
in Sec. Sec. 155.220 and 155.221 also currently extend to web-
brokers participating in SBE-FPs. See 45 CFR 155.220(l) and
155.221(i).
---------------------------------------------------------------------------

First, consistent with the cross-reference in Sec. 155.221(a)(1),
we propose to extend the FFE requirements of Sec. 156.1230(b)
governing QHP issuer DE entities to also apply to QHP issuer DE
entities assisting consumers with submitting applications for APTC/CSRs
and DE in QHPs offered through the Exchange in States with State
Exchanges. As reflected in new section Sec. 155.221(a)(1)(i), for
purposes of extending the FFE requirements of

[[Page 82568]]

Sec. 156.1230(b) to these States Exchanges and their QHP issuer DE
entities, references in Sec. 156.1230(b) to ``Federally-facilitated
Exchange'', ``HHS'', and ``HealthCare.gov'' would be understood to mean
``the applicable State Exchange'', ``the applicable State Exchange'',
and ``the applicable State Exchange website'', respectively. Consistent
with Sec. Sec. 156.1230(b)(1) and (2), to directly enroll consumers in
a manner that is considered to be through the Exchange, QHP issuer DE
entities are required to comply with the applicable requirements in
Sec. 155.221 and provide consumers with correct information, without
omission of material fact, regarding the Exchanges, QHPs offered
through the Exchanges, and insurance affordability programs,\148\ and
refrain from marketing or conduct that is misleading (including by
having a DE website that HHS determines could mislead a consumer into
believing they are visiting HealthCare.gov), coercive, or discriminates
based on race, color, national origin, disability, age, or sex. This
FFE standard already extends to QHP issuer DE entities in SBE-FP
States.\149\ In this rulemaking, we propose to extend these FFE
requirements to also apply them to QHP issuer DE entities in State
Exchanges. As proposed to be applied in these State Exchanges, QHP
issuer DE entities would similarly be required to provide consumers
with correct information, without omission of material fact, regarding
the Exchanges, QHPs offered through the Exchanges, and insurance
affordability programs.\150\ In addition, QHP issuer DE entities in
State Exchanges would also be required to refrain from marketing or
conduct that is misleading (including by having a DE website that the
State Exchange determines could mislead a consumer into believing they
are visiting the Exchange's website), coercive, or discriminates based
on race, color, national origin, disability, age, or sex. We solicit
comments on whether Sec. 156.1230 should also be amended to affirm its
applicability to these State Exchanges and their QHP issuer DE
entities.\151\
---------------------------------------------------------------------------

\148\ See 42 CFR 435.4 for the definition of insurance
affordability programs.
\149\ See 45 CFR 155.221(a)(1) and (i).
\150\ Id.
\151\ If Sec. 156.1230 is amended to affirm its applicability
to these State Exchanges and their QHP issuer DE entities, parallel
revisions may be made to Sec. 156.1230 in the final rule to also
capture and affirm its applicability to SBE-FPs and their QHP issuer
DE entities.
---------------------------------------------------------------------------

In addition, we propose that all Exchanges, including State
Exchanges that choose to implement DE programs must require their DE
entities, both web-broker and QHP issuer DE entities, to meet the
Federal standards under Sec. 155.221(b)(1) governing plan display and
marketing for QHPs and any other products offered on the Exchange.
These Federal standards governing plan display and marketing for QHPs
and any other products offered on the Exchange currently apply today to
approved web-broker and QHP issuer DE entities in FFE and SBE-FP
States.\152\ As such, in new paragraph (j), we propose to extend Sec.
155.221(b)(1), including the exceptions in Sec. 155.221(c), to DE
entities participating in State Exchanges, and consequently to these
State Exchanges. Under this proposal, DE entities participating in
State Exchanges would be required to display and market QHPs offered
through the Exchange, individual health insurance coverage as defined
in Sec. 144.103 offered outside the Exchange (including QHPs and non-
QHPs other than excepted benefits) and any other products, such as
excepted benefits, on at least three separate website pages on its non-
Exchange website, except as permitted under Sec. 155.221(c). Pursuant
to the exception under Sec. 155.221(c)(1), a DE entity operating in a
State Exchange would be permitted to display and market individual
health coverage offered outside the Exchange (including QHPs and non-
QHPs other than excepted benefits) on the same website pages when
assisting individuals who have communicated receipt of an offer of an
individual coverage health reimbursement arrangement as described in
Sec. 146.123(c), as a standalone benefit, or in addition to an offer
of an arrangement under which the individual may pay the portion of the
premium for individual health insurance coverage that is not covered by
an individual coverage health reimbursement arrangement using a salary
arrangement pursuant to a cafeteria plan under section 125 of the Code,
but would be required to clearly distinguish between the QHPs offered
through the Exchange and individual health insurance coverage offered
outside the Exchange (including QHPs and non-QHPs other than excepted
benefits), and prominently communicate that APTCs and CSRs are
available only for QHPs purchased through the Exchange, that APTCs are
not available to individuals who accept an offer of an individual
coverage health reimbursement arrangement or who opt out of an
individual coverage health reimbursement arrangement that is considered
affordable, and that a salary reduction arrangement under a cafeteria
plan may only be used toward the cost of premiums for plans purchased
outside the Exchange. Pursuant to the exception in Sec. 155.221(c)(2),
DE entities operating in States with State Exchanges would be permitted
to display and market Exchange-certified stand-alone dental plans
offered outside the Exchange and non-certified stand-alone dental plans
on the same website pages.
---------------------------------------------------------------------------

\152\ 45 CFR 155.221(b)(1) and (i).
---------------------------------------------------------------------------

In new proposed paragraph (j), we also propose to extend the
Federal marketing standard at Sec. 155.221(b)(3) to DE entities
participating in State Exchanges and consequently to State Exchanges
that choose to implement a DE program, such that these DE entities
would also be required to limit marketing of non-QHPs during the
Exchange eligibility application and QHP selection process in a manner
that minimizes the likelihood that consumers would be confused as to
which products and plans are available through the Exchange and which
products and plans are not, except as permitted under Sec.
155.221(c)(1). Refer to the discussion above regarding the exception in
Sec. 155.221(c)(1) pertaining to DE entities assisting individuals who
have communicated receipt of an offer of an individual coverage health
reimbursement arrangement as described in Sec. 146.123(c), as a
standalone benefit, or in addition to an offer of an arrangement under
which the individual may pay the portion of the premium for individual
health insurance coverage that is not covered by an individual coverage
health reimbursement arrangement using a salary arrangement pursuant to
a cafeteria plan under section 125 of the Code.
We believe requiring DE entities participating in all Exchanges to
meet the plan display and marketing requirements in Sec. 155.221(b)(1)
and (3) adopted by HHS for FFE and SBE-FP States would provide
necessary safeguards for consumers who may participate in DE programs
across all Exchange models, including in State Exchanges. Requiring DE
entities across all Exchanges to meet these Federal plan display and
marketing requirements would protect consumers by minimizing their
confusion regarding which products and plans are available through the
Exchange, which products and plans are not, and which products and
plans are eligible for APTC and CSRs. Further, the adoption of uniform
requirements across Exchanges in this regard can also alleviate burden
on DE entities from having to build different programs and comply with
disparate requirements for each State Exchange

[[Page 82569]]

that chooses to implement a DE program, as well as burden on a State
Exchange from having to develop different requirements than what HHS
has already found to be beneficial and effective for FFE and SBE-FP
States. We recognize that elsewhere in this rulemaking, we have built
in more operational flexibility for State Exchanges to tailor certain
aspects of their programs or oversight processes to best suit their
operational and business needs (for instance, the operational readiness
review requirements for web-brokers and DE entities in States with
State Exchanges). In this case, however, we believe that the benefits
to consumers of uniformly applying the plan display and marketing
requirements in Sec. 155.221(b)(1) and (3) to ensure they apply to all
Exchanges as minimum standards outweigh the potential drawbacks of
reducing discretion and flexibility to State Exchanges with respect to
modifying these baseline requirements. We solicit comments on whether
State Exchanges should instead be provided with broader discretion and
flexibility to establish their own plan display and marketing
requirements tailored to their consumers or local needs.
In new proposed paragraph (j), we also propose to extend the
existing standardized disclaimer requirement in Sec. 155.221(b)(2) to
apply to DE entities participating in States with State Exchanges and
consequently to these State Exchanges. Pursuant to Sec. 155.221(b)(2)
and (i), DE entities in FFE and SBE-FP States are required to
prominently display a standardized disclaimer in the form and manner
provided by HHS.\153\ This disclaimer is separate from the Enrollment
Support and General non-FFE standardized disclaimers under Sec.
155.220(c)(3)(i)(A) and (G), respectively, that web-brokers are
required to display when their non-Exchange websites are used to
complete a QHP selection or complete the Exchange eligibility
application.\154\ The standardized disclaimer required under Sec.
155.221(b)(2) instead is intended to help consumers understand the
difference between QHPs and non-QHPs, and that financial assistance is
only available for QHPs. Under this proposal, DE entities in State
Exchanges, and DE entities in FFEs and SBE-FPs under existing Sec.
155.221(b)(2), would also be required to prominently display a
standardized disclaimer that similarly informs consumers about the
differences between QHPs and non-QHPs, and that financial assistance is
only available for QHPs. Its purpose is to assist consumers in
distinguishing between DE entity website pages that display QHPs and
those that display non-QHPs, and for which products APTC and CSRs are
available. Consistent with the current practice for the other
standardized disclaimers provided by HHS under Sec. Sec. 155.220 and
156.1230, we will provide further details on the text and other display
details for the standardized disclaimer in technical guidance.
---------------------------------------------------------------------------

\153\ See 84 FR 17523.
\154\ As detailed above, we propose to extend the Enrollment
Support and General non-FFE standardized disclaimers to State
Exchanges and web-brokers participating in those State Exchanges.
---------------------------------------------------------------------------

This proposal requires that the disclaimer must be displayed
prominently on a DE entity's website in State Exchanges, and in FFEs
and SBE-FPs under existing Sec. 155.221(b)(2), when a consumer
navigates away from any website page that markets or displays QHPs
offered through the Exchange (that is, on-Exchange QHPs) to any website
page that markets or displays QHPs offered outside the Exchange (that
is, off-Exchange QHPs) or non-QHPs. DE entities would be required to
display this disclaimer on its own interstitial website page or on a
pop-up window.
We propose in paragraph (j)(1) to provide State Exchanges with
flexibility regarding the standardized disclaimer language that would
be required to be displayed by their DE entities, provided that the
additional language does not conflict with the HHS-provided
standardized disclaimer. This proposed flexibility is similar to the
proposed flexibility for State Exchanges to modify the web-broker
Enrollment Support and General non-FFE standardized disclaimers under
Sec. 155.220(c)(3)(i)(A) and (G) described above, such that the HHS-
provided language for the standardized disclaimer under Sec.
155.221(b)(2) must be used as a minimum starting point, but State
Exchanges may add State-specific information to the disclaimers,
provided the additional language does not conflict with the HHS-
provided standardized disclaimer. This would permit State Exchanges to
replace references to the Exchange or Marketplace with the appropriate
reference to the State-specific Exchange name. State Exchanges may also
require web-brokers and QHP issuers operating as DE entities in their
States to translate the disclaimer text into languages appropriate for
the States as this type of additional requirement would not conflict
with the HHS-provided disclaimer language or minimum standards. As with
all informational materials, standard plain language practice is to
write at or near a fourth grade reading level and not to exceed an
eighth grade reading level. We expect that any State-specific additions
or customizations to this disclaimer would be written accordingly. We
would be available to provide technical assistance to State Exchanges
that want to add State-specific language to the standardized disclaimer
under Sec. 155.221(b)(2). In using HHS-provided disclaimer language as
a minimum starting point, DE entities in State Exchanges would be
required to display a disclaimer that provides information to assist
consumers in distinguishing between DE entity website pages that
display QHPs and those that display non-QHPs and for which products
APTC and CSRs are available, all during a single shopping experience
for consumers.
We believe establishing the HHS language as a minimum standard for
the standardized disclaimer under Sec. 155.221(b)(2) that DE entities
must display across all Exchanges would provide a necessary baseline,
and meeting these standards would ensure consumers and applicants are
receiving sufficient information to help consumers distinguish between
DE entity website pages displaying QHPs versus pages displaying non-
QHPs and provide general uniformity among the different Exchange models
when enrollment or enrollment information is provided outside of the
Exchange through a DE entity's non-Exchange website.
Similar to the proposed requirement to extend operational readiness
requirements to web-brokers in States with State Exchanges, we also
propose to extend operational readiness requirements to DE entities in
State Exchanges and consequently to these State Exchanges. DE entities
that participate in FFE and SBE-FP States are required, pursuant to
Sec. 155.221(b)(4) and (i), to demonstrate to HHS operational
readiness and compliance with applicable requirements prior to the DE
entity's non-Exchange website being used to complete an Exchange
eligibility application or a QHP selection. In new paragraph (j)(2), we
propose to extend DE entity operational readiness requirements to State
Exchanges. Under this proposal, DE entities participating in State
Exchanges would be required to demonstrate operational readiness and
compliance with applicable requirements to the State Exchange prior to
the DE entity's website being used to complete an Exchange eligibility
application or a QHP selection. We also propose in new paragraph (j)(2)
to require these State

[[Page 82570]]

Exchanges to establish the form and manner for their DE entities to
demonstrate operational readiness and compliance with applicable
requirements, which may include submission or completion of the same
items business audit documentation or security and privacy audit
documentation in Sec. 155.221(b)(4)(i) and (ii) to the State Exchange,
in the form and manner specified by the applicable State Exchange.
Pursuant to Sec. 155.221(b)(4)(i) and (ii), HHS may request a DE
entity submit a number of documents to demonstrate compliance with
applicable requirements, as well as the operational readiness of its
non-Exchange website. The required documentation may include privacy
questionnaires, privacy policy statements, and terms of services,
business audit reports, interconnection security agreements, security
and privacy controls assessment and plans, security and privacy
assessment reports, plans of action and milestones, privacy impact
assessments, system security and privacy plans, incident response
plans, and vulnerability scan results. We propose to codify these
documentation standards in new paragraphs (j)(2)(i) and (ii) as
illustrative examples of the type of requirements that we encourage
State Exchanges that choose to implement a DE program to adopt as part
of their operational readiness and compliance reviews of DE entities
non-Exchange websites.
This proposal would require DE entities participating in State
Exchanges to meet operational readiness requirements established by the
State Exchanges, and State Exchanges would have the flexibility to
decide which particular operational readiness requirements to implement
to support their respective DE programs, potentially leveraging the
items in Sec. 155.220(b)(4)(i) and (ii) as the starting point for
their operationally readiness reviews. Similar to the web-broker
operational readiness reviews under Sec. 155.220(c)(6), the standards
under Sec. 155.221(b)(4) governing the HHS operational readiness
reviews of DE entity non-Exchange websites are also a critical part of
the oversight framework for HHS' DE program (including both Classic DE
and EDE) available in the FFEs and SBE-FPs. These standards as they
apply to DE entities participating in FFE and SBE-FP States help ensure
operational readiness and compliance with applicable requirements prior
to the DE entity's non-Exchange website being used to complete Exchange
eligibility application or a QHP selection and help ensure consumers
would not be able to enroll via a DE entity's website that is not
operationally ready. Websites that have not been tested to see if they
are operationally ready may not provide consumers with proper
eligibility determinations or may have security flaws that could make a
breach involving consumer PII more likely. Mandating DE entities that
participate in State Exchanges meet minimum standards set by the State
Exchanges for operational readiness would help reduce this risk in all
Exchanges.
We recognize that some State Exchanges that choose to implement a
DE program may seek to utilize DE entities already participating in DE
in the FFEs or SBE-FPs. We specifically encourage those State Exchanges
to consider adopting the same operational readiness requirements
established by HHS, including the third-party auditor framework adopted
by HHS pursuant to Sec. 155.221(f) and (g), as well as accept HHS'
review of those third-party audits and determinations made as to the DE
entities' operational readiness without conducting additional review,
unless there are other unique State specific requirements that warrant
further targeted review. This approach would permit DE entities to also
participate in State Exchanges when HHS determined that those DE
entities demonstrated operational readiness and compliance with
applicable requirements as they apply to FFE and SBE-FP States would
minimize burden of the operational readiness reviews on the State
Exchanges and on their DE entities. For example, if the DE entity is
using the single streamlined application described in Sec. 155.405 and
has already been approved to participate in the FFEs or SBE-FPs, we
encourage State Exchanges to accept HHS' review of and determinations
made as to the DE entity's audit documentation without conducting
further review to confirm compliance with the Federal minimum
standards. However, we also recognize that it is important to provide
these State Exchanges with flexibility to adopt their own operational
readiness requirements in a manner that is tailored to best meet the
operational and business needs of the State Exchanges since State
Exchanges are best positioned to make that judgement. We therefore
encourage, but do not propose to require, these State Exchanges to
adopt the same operational readiness requirements and third-party
auditor framework that HHS adopted under Sec. 155.221(b)(4), (f) and
(g) for DE entities assisting FFE and SBE-FP consumers.
We encourage State Exchanges that choose to implement a DE program
to consider requiring their DE entities to engage a third-party
auditor, consistent with standards adopted by HHS at Sec. 155.221(f)
and (g) that apply in FFE and SBE-FP States, to perform the operational
readiness reviews, for example, to provide an unbiased confirmation
that the DE entities are able to appropriately conduct eligibility
determinations. However, we do not propose to mandate these State
Exchanges require their DE entities to perform such third-party audits
as we recognize that State Exchanges may want to adopt their own
mechanisms or impose State-specific requirements to confirm DE entity
operational readiness and compliance with applicable requirements
(which may include additional State-specific standards), and we want to
ensure State Exchanges have the flexibility to establish operational
readiness review requirements that are tailored to support their
respective DE programs. For example, as noted above, if the State
Exchange uses an alternative to the single streamlined application
described in Sec. 155.405, we would not recommend leveraging HHS'
eligibility application audit under Sec. 155.221(b)(4)(iii), as the
HHS audit results may not be applicable to the State Exchange's
alternative eligibility applications. However, if the State Exchange
requires the use of the single streamlined application described in
Sec. 155.405, for DE entities that have already been approved to
participate in the FFEs or SBE-FPs, we would encourage the State
Exchange to use the same third-party auditor framework and requirements
that HHS adopted for FFE and SBE-FP States, as well as accept HHS'
review of the third-party audits and determinations made as to the DE
entity's operational readiness and compliance with applicable
requirements without conducting further review, unless there are other
unique State specific requirements that warrant further targeted
review.
As State Exchanges establish DE programs, it may be in their
interest to permit a DE entity to provide consumers with access to DE
entity application assisters, as defined at Sec. 155.20, to provide
assistance with applying for a determination or redetermination of
eligibility for individual market coverage through the Exchange and
insurance affordability programs. As such, in new proposed paragraph
(j), we propose to also extend Sec. 155.221(d) to State Exchanges and
their DE entities to allow DE entity application assisters, when
permitted by the applicable State Exchange and only to the extent
permitted by applicable State law, to

[[Page 82571]]

assist individuals in the individual market with applying for a
determination or redetermination of eligibility for coverage through
the Exchange and for insurance affordability programs, provided that
such DE entities ensure that each of its DE entity application
assisters meets the requirements in Sec. 155.415(b). Section
155.415(b) establishes minimum standards for QHP issuer and DE entity
application assisters regarding required training on QHP options and
insurance affordability programs, eligibility, and benefits rules and
regulations at paragraph (b)(1), compliance with the Exchange's privacy
and security standards at paragraph (b)(2), and compliance with
applicable State laws related to the sale, solicitation and negotiation
of insurance products; licensure; confidentiality and conflict of
interest at paragraph (b)(3). Although Sec. 155.415(b) is generally
applicable to all Exchanges, paragraph (b)(1) establishes required
training on QHP options and insurance affordability programs,
eligibility, and benefits rules and regulations with respect to
providing assistance in the FFEs or SBE-FPs. As proposed to be applied
in State Exchanges, DE entities and their application assisters would
be required at new paragraph (j) to complete appropriate State-required
training and registration in a manner specified by the State Exchange
consistent with Sec. 155.415(b)(1), which should similarly include
training on QHP options and insurance affordability programs,
eligibility, and benefits rules and regulations as training on this
content is necessary to ensure consumers are provided with vital
information about these topics if DE entities and their application
assisters would be permitted to assist consumers with QHP shopping and
DE in coverage offered through State Exchanges.
In addition, under this proposal, to meet the requirements of Sec.
155.415(b)(2) and (3), DE entities that participate in a State Exchange
and want to use DE entity application assisters would be required to
coordinate with the State Exchange and appropriate State agencies to
ensure they are meeting the Exchange privacy and security standards at
Sec. 155.260 consistent with Sec. 155.415(b)(2), as well as complying
with State law related to the sale, solicitation, and negotiations of
health insurance products consistent with Sec. 155.415(b)(3).
As part of their establishment of DE programs, we also encourage
the State Exchange to adopt an immediate suspension framework, similar
to Sec. 155.221(e) that applies in FFE and SBE-FP States, that
provides for the immediate suspension of a DE entity's ability to
transact information with the State Exchange if the State Exchange
discovers circumstances that pose unacceptable risk to the accuracy of
the State Exchange's eligibility determinations, operations, or
information-technology systems until the incident or breach is remedied
or sufficiently mitigated to the State Exchange's satisfaction. This
provision is an important feature of HHS' oversight of the use of DE
entity non-Exchange websites in FFE and SBE-FP States that protects
consumers data and safeguards Exchange operations and systems. State
Exchanges that choose to establish a DE program and permit DE entities
to use non-Exchange websites to assist consumers with QHP selections
and submission of Exchange eligibility applications should consider
adoption of similar measures.
Finally, at new proposed Sec. 155.221(j)(3), we propose to extend
the new proposed requirement that would be applicable in FFE and SBE-FP
States to mandate HealthCare.gov changes be reflected on DE entity
websites in a manner consistent with that adopted for display on
HealthCare.gov within a notice period set by HHS by conforming with
display changes defined and communicated as standards by HHS, at new
proposed Sec. 155.221(b)(6), to apply to DE entities operating in
State Exchanges and consequently to these State Exchanges. As reflected
in the last clause of new proposed Sec. 155.221(j)(3), for the
purposes of extending this requirement to DE entities operating in the
State Exchanges, references to an FFE website would be understood to
mean the State Exchange website and references to HHS would be
understood to mean the State Exchange. Refer to the discussion in the
proposal for new Sec. 155.221(b)(6) for additional details on how
State Exchanges would implement the extension of this proposal to their
DE entities.
We seek comment on these proposals, especially from States
operating, or seeking to operate, State Exchanges. We are particularly
interested in comments regarding which of the other current Federal
standards at Sec. 155.221 should or should not apply to State
Exchanges that choose to implement a DE program.
10. Failure To Reconcile (FTR) Process (Sec. 155.305(f)(4))
We are proposing in connection with the FTR process described in
Sec. 155.305(f)(4), to require all Exchanges, including State
Exchanges, to send notices to tax filers for the first year in which
they failed to reconcile APTC starting in PY 2025 as an initial warning
to inform and educate tax filers 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 year. As part of the 2024 Payment
Notice (88 FR 25814 through 25816), we changed the FTR process such
that an Exchange may only determine enrollees ineligible for APTC after
a tax filer (or a tax filer'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).
However, in that rule, we did not impose a requirement for Exchanges to
notify enrollees during the first year that the applicable tax filer
failed to file and reconcile.
We are proposing to require that all Exchanges be required to send
informative notices at least annually to tax filers who have failed to
file and reconcile. Since Exchanges are prohibited from sending
protected Federal tax information (FTI) to an individual who may not be
the tax filer, only the FTR Open Enrollment notices sent directly to
the tax filer may directly state that the IRS data indicates the tax
filer failed to file and reconcile, consistent with standards
applicable to the protection of FTI. An Exchange may not always be able
to send FTR Open Enrollment notices directly to the tax filer because
Exchange notices are sent to the household contact or subscriber on the
household's Exchange account or insurance policy, and this person is
not necessarily the tax filer. Therefore, to comply with the
prohibition on sending FTI (including information about failing to file
and reconcile) in cases where the household contact is not the tax
filer, the Exchange may send notices that contain broad, general
language regarding FTR referred to as ``combined notices.'' For
example, an Exchange can send the same Exchange Open Enrollment Notice
to multiple groups of consumers at risk for APTC discontinuation in the
upcoming coverage year such as those flagged as FTR, those for whom the
Exchange has received updated income information that suggests the
consumers may have income too high to qualify for APTC, and those who
did not permit the Exchange to check IRS data. Because the combined
notices apply and are sent to some consumers who are currently
unaffected by FTR, and not exclusively to individuals who are affected
by FTR, these notices are generally not considered FTI under IRS rules
may be

[[Page 82572]]

sent using the standard notice functionality.
As background, Exchange enrollees whose tax filer fails to comply
with current Sec. 155.305(f)(4) are referred to as having failed to
``file and reconcile.'' These individuals are referred to as having FTR
status, and the Exchanges conduct the FTR process to identify such
individuals. In the 2024 Payment Notice (88 FR 25814 through 25816), we
finalized a new process for Exchanges to conduct FTR to address
concerns that the pre-existing FTR process requiring Exchanges to
determine an enrollee ineligible for APTC after one year of having an
FTR status could be overly punitive. Under the previous policy,
enrollees occasionally had their APTC ended due to delayed data
processing, in which case their only remedy was to appeal to get their
APTC reinstated. Enrollees or their tax filers also may have been
confused by or received inadequate education on the requirement to file
and reconcile. HHS' and the State Exchanges' experiences with running
FTR operations showed that Exchange enrollees often do not understand
the requirement that their tax filer 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 both the single,
streamlined application used by Exchanges on the Federal platform and
the QHP enrollment process require a consumer to attest to
understanding the requirement to file and reconcile. Note, the updated
policy in the 2024 Payment Notice does not relieve tax filers from
their requirement to reconcile each year nor any potential tax
liability. By making these changes to the FTR processes in the 2024
Payment Notice and requiring Exchanges to determine an enrollee
ineligible for APTC only after having an FTR status for two consecutive
years (specifically, years for which tax data will be utilized for
verification of household income and family size), Exchanges now have
more opportunity to conduct outreach to tax filers for whom data
indicate they have failed to file and reconcile and to prevent
erroneous terminations of APTC, as well as to provide access to APTC
for an additional year even when APTC would have been correctly
terminated under the original FTR process.
There are limitations to these notices; notices that are sent
directly to the tax filers and explicitly describe their FTR status
must be compliant with IRS requirements for disclosing FTI, which can
be a complex process and untenable with some Exchanges' infrastructure.
Alternatively, combined notices, which do not contain FTI, have
limitations in that they do not explicitly inform the recipients that
they are at risk of losing APTC due to the household tax filer being
found to have failed to file and reconcile. However, both types of
notices will create an opportunity for State Exchanges to educate
enrollees or their tax filers on the requirement to reconcile their
PTC. This will address the consumer confusion and knowledge gaps that
were identified by both HHS and State Exchanges, which were key
considerations in making the changes to the FTR process described in
the 2024 Payment Notice, wherein tax filers now must be identified as
FTR for two years prior to having their APTC removed. With this
additional year for tax filers to correct their FTR status, consumers
will be better able to take appropriate action prior to losing their
APTC and file and reconcile in response to these notices.
Under this proposal, Exchanges on the Federal platform would
continue to send notices to tax filers 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. Our proposal to codify this practice and
require it of all Exchanges, including the State Exchanges, would
ensure that tax filers who have been determined to have FTR status for
one year are adequately educated on the file and reconcile requirement,
and have ample opportunity to address the issue and file and reconcile
their APTC before they are determined to have FTR status for two
consecutive years. This proposal would support compliance with the
filing and reconciling requirement 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), 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. Additionally, this proposal would better align State
Exchanges' Failure to Reconcile processes with that of the Exchanges on
the Federal platform.
We seek comment on this proposal.
11. Verification Process Related to Eligibility for Enrollment in a QHP
Through the Exchange (Sec. 155.315(e))
We are proposing to amend Sec. 155.315(e) by revising paragraph
(e)(1) to permit all Exchanges to accept an applicant's attestation of
incarceration status and paragraph (e)(2) to allow Exchanges to
electronically verify a consumer's current incarceration status using
an HHS-approved verification data source. We are also proposing to
amend the reference in paragraph (e)(3) to reflect that if an Exchange
verifies an applicant's attestation of incarceration status using an
approved data source and the attestation is not reasonably compatible
with the information provided from the said data source or other
information provided by the applicant or in the records of the
Exchange, then the Exchange must follow the data matching issue (DMI)
process set forth in Sec. 155.315(f). If this proposed policy is
finalized, Exchanges using the Federal eligibility and enrollment
platform, including SBE-FPs, that currently use the incarceration
verification data source offered through the Federal Data Services Hub
(the ``Hub'') would be able to accept consumer attestation of
incarceration status without further verification of incarceration
status.
As background, section 1312(f)(1)(B) of the ACA states that an
individual shall not be treated as a qualified individual for
enrollment in a QHP if, at the time of enrollment, the individual is
incarcerated, other than incarceration pending the disposition of
charges. Sections 155.315(e) and (e)(1) currently state that Exchanges
must verify incarceration status with a data source approved by HHS and
deemed accurate, current, and offering less administrative complexity
than paper verification. When an individual's incarceration attestation
conflicts with information from an approved data source or other
information provided by the applicant or in the records of the
Exchange, Sec. 155.315(e)(3) requires Exchanges to create a DMI as
outlined in Sec. 155.315(f). However, if an approved data source is
unavailable, an Exchange may accept attestation of incarceration
without further verification under Sec. 155.315(e)(2).
Under proposed paragraphs (e)(1) and (2), an Exchange would be able
to accept a consumer's attestation of incarceration status or propose
an electronic data source for incarceration verification to HHS for
approval and use that approved source to verify incarceration status.
Should a State Exchange choose to propose use of an alternative
electronic data source for verifying incarceration status, HHS would
review such proposals in accordance with the process under Sec.
155.315(h), through which HHS would make a determination based on the
proposed

[[Page 82573]]

use of the alternative data source and whether it minimizes
administrative costs and burdens on individuals while it maintains
accuracy and minimizes delay. Proposed paragraph (e)(3) would provide
that if an Exchange verifies an applicant's attestation of
incarceration status using an approved data source as provided under
proposed paragraph (e)(2), to the extent that the applicant's
attestation is not reasonably compatible with information from the
approved data source or other information provided by the applicant or
in the records of the Exchange, the Exchange would be required to
follow the DMI procedures at Sec. 155.315(f).
In the Exchange Establishment Rule (77 FR 18362), we recognized
that there may be challenges in the availability of electronic
incarceration verification data but believed that so long as an
incarceration verification data source existed that has been approved
by HHS, it should be used to verify incarceration status. We also
recognized that requesting consumer attestation of incarceration status
and accepting such attestation without further verification when an
accurate data source was unavailable is necessary since incarceration
status is a statutory standard for eligibility to enroll in a QHP.
Exchanges using the Federal eligibility and enrollment platform,
including SBE-FPs, currently verify whether an applicant is
incarcerated through the Hub by using the Social Security
Administration's (SSA) Prisoner Update Processing System (PUPS). PUPS
is currently maintained by SSA and is the only national database that
reflects information from Federal, State, and local correctional
records. Our experience administering the Federal eligibility and
enrollment platform, along with the experience from the State Exchanges
that have used the PUPS data, have demonstrated that verifying
incarceration data using PUPS has resulted in a high number of DMIs,
few of which identify QHP applicants who are incarcerated. For example,
we conducted an internal study and found that out of 110,802
incarceration DMIs generated between PYs 2018 to 2019, 96.5 percent of
them were resolved in favor of the applicant. More importantly of those
3,878 applicants whose DMIs were not resolved in their favor (3.5
percent of 110,802), we found that only a total of 2,469 applied for
QHP coverage during PYs 2018 and 2019. Of these 2,469 ineligible
applicants, 950 applicants were released from either prison or jail
within 90 days after the application submission date. Excluding these
individuals leaves 1,519 QHP-ineligible individuals, of which 921
applicants effectuated coverage (that is, made the binder payment),
which is allowed while awaiting DMI clearance, thus resulting in an
improper APTC payment. An average annual APTC per individual of $1,569
was estimated for the 921 QHP ineligible applicants with effectuated
policies.\155\ This yields potential improper payments of approximately
$361,262.25 over 3 months. Because only a very small number of
incarcerated individuals apply to enroll in QHPs, verifying
incarceration status using PUPs and conducting the DMI process outlined
at Sec. 155.315(f) results in Exchanges saving only a fraction of
improper overpayment of APTC, and those savings are dwarfed by the
administrative costs imposed by using PUPs and conducting the DMI
process.
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\155\ This per-person per-year estimate was calculated by
multiplying the monthly APTC benefit that each ineligible and
effectuated applicant was estimated to receive in their FFE
application by the maximum number of months the applicant could have
been enrolled in a QHP while still incarcerated and pending DMI
clearance. For open enrollment applications, an enrollment start
date of January 1 was used (45 CFR 155.410). For special enrollment
period applicants, the previous coverage effective date rules were
used where if the applicant applied between the 1st and 15th of the
month, an enrollment start date of the 1st of the following month
was used. If the applicant applied after the 16th of the month, an
enrollment start date of the 1st of the month 2 months following the
application month was used. 45 CFR 155.420.
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We conducted a cost-benefit assessment and determined that the cost
to verify incarceration status electronically far exceeds potential
savings. Should the Exchange conduct an electronic incarceration
verification check, such as a verification check of a consumer's
attestation using PUPS data, it would cost more than $4 million to
operate yearly, along with a one-time implementation startup cost of
approximately $200,000. Furthermore, connecting to an alternative
incarceration data source, such as PUPS, and conducting the DMI process
outlined at Sec. 155.315(f) can be very costly to Exchanges. In PY
2019, nearly 38,000 out of 78,000 applicants with an incarceration DMI
submitted documents to attempt to resolve the incarceration DMI. To
process DMIs, the Exchange incurs costs for the eligibility-
verification contractor on a fixed-price basis totaling about $0.57
million per year for verification of incarceration. This figure does
not include other costs related to sending notices to consumers,
processing appeals, and handling call center transactions. Our 2019
study concluded that those who receive an incarceration DMI are
statistically likely to be eligible to enroll in a QHP as the
applicants were released from either prison or jail within 90 days
after the application submission date. However, an unresolved
incarcerated DMI can result in a complete loss of coverage.
The processes of notifying consumers of their DMIs and resolving
them have been burdensome and has negatively impacted the consumer
experience. When an incarceration DMI is generated, applicants are
required to provide documentation to show that they are no longer
incarcerated.\156\ This creates a significant enrollment burden for
formerly incarcerated individuals, a population comprised of a
significant number of people with disabilities.\157\ Many documents
that can prove incarceration status cannot be obtained without an
unexpired proof of identity document, and most cannot be obtained
without submitting non-refundable payments. Incarceration may inhibit
one's financial savings, and formerly incarcerated individuals are less
likely to secure employment.\158\
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\156\ HealthCare.gov. (n.d.) How do I resolve a Data Matching
Issue. Dept. of Health and Human Services. https://www.healthcare.gov/help/how-do-i-resolve-an-inconsistency/#incarceration-status.
\157\ Apel, R., and Sweeten, G. (2010, Aug. 1). The Impact of
Incarceration on Employment during the Transition to Adulthood.
Social Problems, 57(3), 448-479. https://doi.org/10.1525/sp.2010.57.3.448.
\158\ Id.
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These findings support our beliefs that incarcerated individuals
apply for QHP coverage at very low rates, and that their applications
are considered to be a very low program integrity risk for Exchanges,
which do not warrant always conducting an extensive incarceration
verification check. We also believe that previous guidance to conduct
incarceration status verification \159\ may have contributed to
inequity in the Exchange population, as Black adults were imprisoned at
five times the rate for White adults \160\ and are more likely to face
systemic obstacles hindering their ability to secure employment post
incarceration.\161\
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\159\ 45 CFR 155.315(e).
\160\ Nellis, A. (2021). The Color of Justice: Racial and Ethnic
Disparity in State Prisons. The Sentencing Project. https://www.sentencingproject.org/app/uploads/2022/08/The-Color-of-Justice-Racial-and-Ethnic-Disparity-in-State-Prisons.pdf; Sabol, W.J., and
Johnson, T.L. (2022). Justice System Disparities: Black-White
National Imprisonment Trends, 2000 to 2020. Council on Criminal
Justice. https://secure.counciloncj.org/np/viewDocument?
\161\ Sirios, C., and Western, B. (2017, Feb.). Racial
Inequality in Employment and Earnings after Incarceration. Harvard
University. https://scholar.harvard.edu/files/brucewestern/files/racial_inequality_in_employment_and_earnings_after_incarceration.pdf.

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Given these concerns, we propose to amend Sec. 155.315(e) by
revising

[[Page 82574]]

paragraph (e)(1) to permit all Exchanges to accept consumer attestation
of incarceration status without further electronic verification. We
also propose to revise paragraph (e)(2) to permit Exchanges to verify
consumer incarceration status using an HHS-approved verification data
source that is current, accurate, and minimizes administrative costs
and burdens. We believe these proposed changes would improve the
Exchange enrollment process, reduce operational challenges for
Exchanges, and reduce burdens on applicants, all while maintaining
program integrity and ensuring that the alternative incarceration
verification data source that may be used by Exchanges is not unduly
burdensome or costly to administer.
We also propose changes to paragraph (e)(3) to reflect that if an
Exchange verifies an applicant's attestation of incarceration status
using an approved data source, and the attestation is not reasonably
compatible with the information from the approved data source or other
information provided by the applicant or in the records of the
Exchange, the Exchange must then follow the DMI process set forth in
Sec. 155.315(f).
We seek comment on this proposal, particularly from State Exchanges
and other users of PUPS data through the Hub. We are also particularly
interested in comments about whether State Exchanges intend to continue
using PUPS data to verify incarceration status. We are also seeking
input from any State Medicaid agency that uses PUPS data available
through the Hub.
12. Verification Process Related to Eligibility for Insurance
Affordability Programs (Sec. 155.320)
We propose to reinterpret State Exchange and State Medicaid and
Children's Health Insurance Program (CHIP) agency use of the Federal
Data Services Hub (Hub) to access and use the income data provided by
the optional Verify Current Income (VCI) Hub service as a State
Exchange or a State Medicaid and CHIP agency function, because these
State entities use this optional service to implement eligibility
verification requirements applicable to them. While we propose to
redesignate use of the VCI Hub service by State Exchanges and State
Medicaid and CHIP agencies as a State function, HHS would continue to
maintain contracts that make this service available through the Hub for
State Exchange and State Medicaid and CHIP agency use as part of its
ongoing implementation of sections 1411 and 1413 of the ACA. We propose
to amend Sec. 155.320(c) to reflect this reinterpretation for the
Exchanges. Under this proposal, States would pay annually in advance
for the State Exchanges and Medicaid and CHIP agencies' anticipated
utilization of the optional VCI Hub service. State Exchanges and
Medicaid and CHIP agencies would be required to reconcile with HHS on
an annual basis the anticipated utilization of CSI data provided by the
VCI Hub service with the actual utilization. In the alternative, HHS
would invoice States on a monthly basis for their actual utilization of
CSI data provided by the VCI Hub service after that utilization occurs.
State Medicaid and CHIP agencies would be eligible for Federal matching
for the cost of this service, as described in this section.
To operationalize application and verification processes related to
eligibility for health insurance affordability programs and to make
eligibility determinations as accurate as possible, in accordance with
sections 1411 and 1413 of the ACA, we developed the Hub, which is a
secure, electronic interface that facilitates the exchange of
information used by Exchanges and State Medicaid and CHIP agencies and
provides access to authoritative, trusted data sources for various
types of information, including income. The Hub serves as the mechanism
described in 45 CFR 155.315 and 155.320 that Exchanges are required to
use to perform eligibility verifications by transmitting applicant data
to HHS, which then submits the data to specific trusted data sources
for verification. For State Medicaid and CHIP agencies, the Hub serves
as a mechanism for accessing both required and optional trusted data
sources to verify eligibility at application or renewal as described at
42 CFR 435.949 and 42 CFR 457.380(g). These trusted data sources
include Federal agencies, such as the IRS for Federal income tax data
and the SSA for Social Security benefits.
For example, the ACA requires that Exchanges and State Medicaid and
CHIP agencies use data from the SSA to verify applicants' U.S.
Citizenship, Social Security number (SSN), and Social Security
Disability Insurance (SSDI) income, if any, and data from the
Department of Homeland Security to verify applicants' naturalized
citizenship or immigration status, both available through the Hub. In
addition to mandatory data to verify eligibility, Exchanges and State
Medicaid and CHIP agencies may also use optional data available through
the Hub, including Medicare enrollment data to verify an applicant's
eligibility for minimum essential coverage, and the VCI Hub service,
which provides an access point for Exchanges and State Medicaid and
CHIP agencies to request and receive an applicant's current income data
from a private company, referred to as Current Sources of Income (CSI)
data. Consistent with the requirements at sections 1411 and 1413 of the
ACA (related to establishment and participation in a coordinated
eligibility and enrollment system for all insurance affordability
programs), in order to facilitate Exchange and State Medicaid and CHIP
agency access to optional data, HHS will continue to provide free
access to States for certain optional data, such as Medicare enrollment
data, and will provide access to the CSI data to States that pay for
their use of it in advance. However, we propose to re-reinterpret
Exchange and State Medicaid and CHIP agency use of the Hub to access
the optional data sources as an Exchange or a State Medicaid and CHIP
agency function. We propose to amend Sec. 155.320(c) to reflect this
reinterpretation.
As additional background, the ACA requires the use of a single,
streamlined application to determine Exchange eligibility and collect
information.\162\ The application is used to determine eligibility for
enrollment in a QHP, and, as applicable, for insurance affordability
programs such as APTC, CSR, Medicaid, CHIP, and, if applicable, the
BHP. Eligibility for these programs is determined using an income
standard based on an applicant's modified adjusted gross income (MAGI)
and the process for verifying income depends on the insurance
affordability program.\163\ The income verification process that an
Exchange uses to verify income depends on whether an applicant is being
evaluated for eligibility for APTC and CSRs for a QHP or eligibility
for Medicaid, CHIP, or the BHP. For example, Medicaid eligibility is
determined using ``point-in-time'' income, or current monthly income,
while eligibility for APTC and CSRs is determined using projected
annual income.\164\ An Exchange must follow a verification process for
household income that includes requesting data

[[Page 82575]]

through the Hub to verify income \165\ using IRS and SSA income
data.\166\
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\162\ See 42 U.S.C. 18083 and 45 CFR 155.405(a).
\163\ Section 1902(e)(14)(A) of the Act requires that States
determine financial eligibility for Medicaid based on MAGI except in
the case of individuals identified in section 1902(e)(14)(D) of the
Act. For example, States do not determine financial eligibility
based on MAGI for individuals who are being evaluated for
eligibility on the basis of living with a disability or blindness or
being age 65 or older.
\164\ See section 1902(e)(14)(H) of the Act, as added by section
2002 of the ACA.
\165\ See Sec. 155.320(c).
\166\ See Sec. 155.320(a)(1) and (c)(3)(ii)(B). Section
155.320(c)(2) outlines the verification process that Exchanges are
also required to follow when evaluating eligibility for Medicaid or
CHIP.
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For these applications, regulations require 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 Federal income tax
return data regarding income and family size from the IRS as well as
data from SSA regarding Social Security Benefits.\167\ 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 CSRs based on the IRS income tax data.\168\ However, when
the Exchange requests income tax return data from the IRS and the IRS
returns data reflecting 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. This change in circumstance allows HHS to establish
procedures for determining eligibility for APTC and CSRs on information
other than the IRS income tax return data as described in Sec.
155.320(c)(3)(iii)-(vi).\169\
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\167\ See Sec. 155.320(c)(i)(A).
\168\ See Sec. 155.320(c)(3)(ii)(C).
\169\ See section 1412(b)(2) of the ACA.
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In these situations, where government sources of income are
unavailable, or the applicant(s)' attested income is significantly
different from what the IRS returns, data on current income may be used
for eligibility determinations and redeterminations for financial
assistance, including the CSI data that HHS makes available to
Exchanges and State Medicaid and CHIP agencies via the optional VCI Hub
service. HHS holds a contract with a private, commercial company to
provide the CSI data through the VCI Hub service. Exchanges and State
Medicaid and CHIP agencies have been able to use the VCI Hub service as
an optional secondary, trusted data source for income verification but
are not required to do so and may use other data sources. The VCI Hub
service provides current income data that is sourced from employer-
reported income and job status data that is provided and updated for
each employer payroll period (that is, weekly, bi-weekly, monthly,
etc.). Under Sec. 155.315(h), State Exchanges may seek HHS approval to
use other sources of additional income data for verification of
applicant-attested annual household income.
For Medicaid and CHIP, section 2201 of the ACA, codified at section
1943 of the Act, requires State Medicaid and CHIP agencies to
participate in and comply with the eligibility and enrollment system
requirements under section 1413 of the ACA. This requires State
Medicaid and CHIP agencies to use a single streamlined application and
rely primarily on electronic data to verify income and other
eligibility criteria. The ACA and the Act specify several data sources
that State Medicaid and CHIP agencies must use in verifying
eligibility. These agencies may also elect to use other optional
electronic data sources to improve the efficiency and accuracy of the
eligibility determination process. They may use the VCI Hub service for
initial applications, redeterminations, changes in circumstance, and
periodic data matching for their Medicaid and CHIP populations. State
Medicaid agencies are required by 42 CFR 435.948(a) to verify financial
eligibility with certain financial data sources. If a State does not
accept self-attestation of income in determining eligibility for a
separate CHIP, it similarly must verify financial eligibility with
certain data sources in accordance with 42 CFR 435.948(a), which is
incorporated into the CHIP regulations by cross reference at 42 CFR
457.380. CSI data is not among the data sources which State Medicaid
agencies are required to access under this requirement. States also are
given latitude to determine the usefulness of these data sources and
must only access data sources determined to be useful to them. For
initial applications and redeterminations for Medicaid or CHIP
eligibility, income data accessed through the VCI Hub service provides
real time, current income information for States to determine Medicaid
or CHIP financial eligibility. Because other financial data sources,
such as State quarterly wage data, provide data that is from a quarter
to six months old, some States prefer to use the CSI income data
available through the VCI Hub service, which is the only data source in
the Hub used to verify and redetermine current and annual income
outside of the IRS or SSA data, as their primary source of data to
verify income prior to accessing other financial data sources. Some
States also utilize the VCI Hub service to verify income information
when a beneficiary reports a change in circumstance for financial
eligibility.
Under our proposal, Exchanges and State Medicaid and CHIP agencies
may opt to continue to use the VCI Hub service to support their
eligibility verification processes for Exchange QHP coverage or
Medicaid and CHIP if they pay in advance for the cost of their use of
the service. For instance, Exchanges would still be able to use this
current income information to verify a tax household's annual income
attestation if they are unable to verify income using SSA, IRS income
tax data, or a combination of both SSA and IRS data, in determining
eligibility for APTC. Because Exchanges and State Medicaid and CHIP
agencies are permitted, but not required to use the VCI Hub service to
fulfill the mandatory eligibility determination requirements imposed on
them, accessing the CSI data via the VCI Hub service would be properly
characterized as an Exchange or State Medicaid and CHIP agency
function.
Consistent with section 1413 of the ACA, HHS would continue to
provide access to optional data sources through the Hub to support the
streamlined application processes. However, as these functions would be
considered Exchange or State Medicaid and CHIP agency functions, and
not HHS functions, HHS would no longer fund Exchange or State Medicaid
and CHIP agency use of these sources and would only provide access to
States who paid in advance for their use of the service. For all but
one of the optional data sources available through the Hub, HHS does
not bear a cost for Exchange or State Medicaid and CHIP agency use of
the various Hub services that provide these data. However, HHS does
bear a cost for Exchange and State Medicaid and CHIP agency use of the
CSI data accessed through the VCI Hub service. If finalized as
proposed, under this interpretation, State Exchanges and State Medicaid
and CHIP agencies would be required to pay for their use of the VCI Hub
service in advance of their usage of the service. However, where
applicable, State costs for State Medicaid and CHIP agencies may be
eligible for Federal matching funds, where HHS will match 75 percent of
the cost of a State Medicaid agency's utilization of the VCI Hub
service and match CHIP costs at a State's enhanced Federal Medical
Assistance Percentage (FMAP).
Since the VCI Hub service was established in 2013 for use by both
Exchanges and State Medicaid and CHIP agencies, utilization of the VCI
Hub service has grown significantly over time, both in the number of
State

[[Page 82576]]

Exchanges and State Medicaid and CHIP agencies using the service, and
the number of applicants and beneficiaries that require income
verification as Exchange populations have increased over time. During
the first Open Enrollment in 2013, only the Exchanges on the Federal
platform, two State Exchanges, and eight State Medicaid agencies used
data from the VCI Hub service for eligibility determinations. In that
first year, the Exchanges on the Federal platform initiated about 88
percent of all requests, or ``pings'' to the VCI Hub service for income
verification. In the past decade, more State Medicaid agencies and
State Exchanges have started using the VCI Hub service; as of June
2023, 34 States, including the District of Columbia and Puerto Rico,
use the VCI Hub service for their State Medicaid and CHIP programs, and
10 of those States also use the service to verify QHP eligibility for
their State Exchanges. Our analysis shows that as of March 2023, over
70 percent of monthly pings to the VCI Hub service were from State
Medicaid applications, including renewals of eligibility for Medicaid
or CHIP coverage, and the Exchanges on the Federal platform now account
for less than 10 percent of the total volume.
If new State Medicaid agencies or State Exchanges are permitted to
request access to the VCI Hub service, we forecast that in the next 5
years, transaction volume to the VCI Hub service would increase by over
17 percent. These trends in utilization have provided us with a clear
picture of the primary uses and utilizers of the VCI Hub service.
Specifically, we have learned that the queries submitted by States to
the VCI Hub service have been for income verification by State Medicaid
agencies to determine Medicaid and CHIP eligibility, and by State
Exchanges to assess or determine Medicaid and CHIP eligibility and
determine APTC eligibility. Accordingly, we now believe this activity
that has been categorized as an HHS function would be better
categorized as: (1) a State Medicaid and CHIP agency eligibility
determination function under title XIX or title XXI of the Act when the
determination is initiated by a State Medicaid or CHIP agency; and (2)
as an Exchange function when the determination is initiated by an
Exchange.
While we believe the utilization of this optional data source is an
Exchange or State Medicaid and CHIP agency function, making the
optional data sources available through the Hub is consistent with the
requirements at sections 1411 and 1413 of the ACA related to
establishment and participation in a coordinated eligibility and
enrollment system for all insurance affordability programs. As such, to
facilitate Exchanges' and States Medicaid and CHIP agencies' access to
this optional CSI data that is available through the VCI Hub service,
HHS would continue to maintain contracts that make access to these
resources available through the Hub for Exchange and State Medicaid and
CHIP agency use.
In making this proposal, we note that while use of the VCI Hub
service is an integral part of the eligibility determination process in
most States, Exchanges and State Medicaid and CHIP agencies may have
access to other data sources to verify income. As noted previously, we
are aware that many States have access to other comprehensive data
sources, such as State quarterly wage data. Generally, as dictated by
individual State law, employers are required to report employee
information such as payroll and unemployment insurance contribution
data to a State department, such as the State Department of Labor or a
similar office. In place of the optional VCI Hub service, State
Exchanges continue to have flexibility under 45 CFR 155.315(h) and
155.320(c)(3)(iv) to use an alternative verification source, like State
wage data, when income is not verified using IRS tax data or SSA title
II data. We encourage State Exchanges, State Medicaid and CHIP
agencies, and other interested parties, to submit comments regarding
any operational burden, policy, or budget challenges regarding access
to other State data sources of this proposal change.
As part of our consideration of these proposals in this rulemaking,
we considered requiring State Medicaid agencies and State Exchanges to
obtain their own contracts to administer their CSI data usage; however,
we had concerns that these services cannot be procured reasonably and
expeditiously, which would undermine the system we have implemented
under section 1413 of the ACA. We also believe that there may be
benefits to the State Medicaid agencies and State Exchanges that prefer
to use the CSI data accessible through the VCI Hub service in their
States. Therefore, we propose to retain optional access to the VCI Hub
service on behalf of State Medicaid agencies and State Exchanges that
prefer to continue to use this service and are willing to pay for their
CSI data usage in advance. Under this proposal, State Medicaid agencies
and State Exchanges can choose to discontinue their use of the CSI data
accessible through the VCI Hub service.
Given these considerations, we propose to amend 45 CFR
155.320(c)(1) to add new paragraph (c)(1)(iii) to require that
beginning July 1, 2024, State Exchanges would be required to pay for
100 percent of their utilization of the CSI income data provided by the
VCI Hub service.\170\ To implement this proposal, States would be
required to pay for their usage of the CSI data in advance of their use
of the service in a timeline and manner established by HHS. HHS would
use the State's pre-payment to pay for the State's access, with the
amount of the pre-payment calculated as being equal to the product of
the number of projected purchased transactions to be returned from the
VCI Hub service, that is, the ``number of pings,'' and the price per
transaction established under the contract maintained by HHS to provide
the VCI Hub service. HHS is currently exploring the best mechanism to
project States' usage for their State Exchange's use of the VCI Hub
service. HHS anticipates leveraging lessons learned from its existing
financial management processes.
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\170\ The FFEs' and SBE-FPs' costs for accessing these services
would be covered by the FFEs' and SBE-FPs' user fees.
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Similarly, we propose to require that beginning July 1, 2024,
States pay for their Medicaid and CHIP utilization of the VCI Hub
service prior to obtaining information from data sources which these
State entities choose, but are not required, to use in fulfilling
Medicaid or CHIP eligibility determination requirements. As noted
above, consistent with the requirements at section 1413 of the ACA
(related to establishment and participation in a coordinated
eligibility and enrollment system for all insurance affordability
programs), which is incorporated into the Medicaid and CHIP statutes at
sections 1943(b)(3) and 2107(e)(1), respectively, of the Act, in order
to facilitate States' access to this optional CSI data that is
available through the VCI Hub service, we would continue to maintain
contracts that enable States to efficiently access CSI data through the
VCI Hub service. However, under our proposal, States would be required
to pay the advance cost incurred by HHS when the State requests CSI
data through the VCI service offered by the Hub.
In the alternative, HHS is also considering whether it could
invoice States on a monthly basis for their actual utilization of CSI
data provided by the VCI hub service after that

[[Page 82577]]

utilization occurs. If appropriate, this alternative proposal could be
adopted in the final rule. We are considering these mechanisms for
implementing State Exchange and Medicaid and CHIP agency payments for
use of the VCI Hub service and solicit comments on whether a different
implementation approach would be more efficient or otherwise
preferable.
To implement this proposal for the States to pay in advance for CSI
data services, we would anticipate working with States to develop an
estimate of their annual usage of the CSI data service and collecting
those amounts from the States. Under this approach, each State would
notify HHS that the State wants to continue to use the CSI data through
the VCI Hub service and will pay in advance for its usage of services.
In particular, HHS would estimate, based on historical utilization
trends taking into consideration other reasonable assumptions about the
State's usage, the anticipated annual number of each participating
State's purchased transactions to the VCI Hub service returning usable
CSI data, that is, the number of pings to the VCI Hub service returning
usable CSI data. The estimate for each participating State would be
multiplied by the fixed price set by the CSI contract HHS holds with
its vendor. HHS would collect that amount from the State, which would
be required to reconcile with HHS on an annual basis the anticipated
utilization of CSI data provided by the VCI Hub service with the actual
utilization.
Under this reconciliation process, HHS would offset payments for
the next annual payment cycle for States \171\ where actual utilization
is less than the anticipated utilization for which they were invoiced.
The offset amount would be equal to the difference in that State's
anticipated number of pings multiplied by the fixed price, and its
actual number of pings multiplied by the fixed price. States in which
actual utilization is greater than the anticipated utilization for
which they were invoiced would be assessed a charge for the difference
in that State's actual number of pings multiplied by the fixed price,
and the anticipated number of pings multiplied by the fixed price. We
seek comment on how HHS should estimate States' future anticipated
utilization of CSI data provided by the VCI Hub service. We also seek
comment on whether HHS should estimate, collect, and reconcile these
payments from States more frequently, such as biannually, quarterly, or
monthly, rather than annually, for their anticipated utilization.
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\171\ Utilization of CSI data through the VCI Hub will be
assessed for each relevant State Exchange, State Medicaid Agency, or
CHIP agency.
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Alternatively, we seek comment on HHS invoicing on a monthly basis
for their actual utilization of CSI data provided by the VCI Hub
service after that utilization occurs. To implement this alternative
approach, we anticipate that each month, States would receive an
invoice of the amount that must be paid to HHS for its usage in the
prior month. This amount would total each respective State Exchange's
and Medicaid and CHIP agencies' utilization in that month, specifically
the number of purchased transactions to the VCI Hub service that
returned usable CSI data, multiplied by the fixed price set by the CSI
contract HHS holds with its vendor. Therefore, we, on behalf of HHS,
would collect funds to cover the costs of these services from Medicaid
and CHIP agencies after the use of the service and on a regular basis.
State Medicaid and CHIP agencies would be eligible for Federal matching
for the cost of this service under this alternative proposal we have
opted to propose a July 1, 2024 effective, as described in this
section. We seek comment on this alternative approach, including
whether HHS should invoice States annually, biannually, or quarterly,
rather than monthly, if this alternative is adopted in the final rule.
In accordance with section 1903(a)(3)(B) of the Act and 42 CFR
433.116, Federal Financial Participation (FFP) is available at 75
percent of State expenditures for operations of approved State Medicaid
Enterprise Systems (MES) costs for data exchange between State systems
and the VCI Hub service and including for State costs to access the VCI
Hub service, as well as maintenance of associated State system
functionality and automation. Additionally, per section
1903(a)(3)(A)(i) of the Act and 42 CFR 433.112, FFP is available at 90
percent of State expenditures for MES design, development,
installation, or enhancement, including for such State costs as are
necessary to use the VCI Hub service. In CHIP, administrative expenses,
including those related to system operations, maintenance, design,
development, installation, and enhancement, are matched at the regular
CHIP enhanced FMAP. States that use a joint Medicaid and CHIP
eligibility system should cost allocate VCI Hub service expenses
between the programs. Prior to incurring MES development and
operational costs for the VCI Hub service, the State must submit an
Advance Planning Document requesting enhanced Federal match to us for
review and approval, in accordance with regulation at 45 CFR part 95,
subpart F. We intend to provide States with operational guidance with
options for how to comply with any new requirement finalized. We note
that the VCI Hub service use is considered to be a State Medicaid and
CHIP agency function, and therefore a cost for these agencies only when
the eligibility determination is initiated by the State agency. Costs
should be allocated to the requesting entity that is making the request
to the VCI Hub service, such that States are only liable for the cost
of the VCI Hub service responses for pings that originated from the
State Medicaid and CHIP agency. For example, if an applicant initiates
an application at HealthCare.gov or a State Exchange, but is then
transferred to a State Medicaid agency, those costs would be the
responsibility of HHS or the State Exchange and not the State Medicaid
agency.
Finally, we propose that the interpretation characterizing use of
the VCI Hub service as a function of State Exchanges and Medicaid and
CHIP agencies and not an HHS function be effective on July 1, 2024. We
recognize that this implementation date may be difficult for States,
especially those with biennial budget cycles. However, given our
determination that eligibility verifications using CSI data by State
Exchanges and Medicaid and CHIP agencies is most appropriately
characterized as a function of these agencies and not an HHS function,
we believe it is appropriate to move forward with this change as
expeditiously as possible, while giving States some time to plan for
the change. For this reason, we have opted to propose a July 1, 2024
effective date for this provision.
We seek comment on these proposed changes, including whether we
should make this interpretation effective as of July 1, 2024, or a
different date. We are also interested in learning how this change may
impact States' use of the VCI Hub service. Will State Exchanges and
Medicaid and CHIP agencies seek to cease or restrict their use of the
VCI Hub service, possibly using it as a last resort? What impact might
these proposed changes have on the amount of time it takes applicants
to verify their income or the time it takes for States to make an
eligibility determination? We would also be interested in learning the
extent to which States may be interested in potential avenues to reduce
operational burdens or address budget challenges facing State Exchanges
and Medicaid and CHIP agencies. Namely, we are interested in whether
States would be

[[Page 82578]]

interested in opportunities to pay an additional fee that would allow
them to reuse VCI Hub service verification results across multiple
Federally-funded and State-administered human service programs (with
cost allocation across those programs); whether States have separate,
direct access to the same or similar source of VCI Hub services, and
the cost of such direct access; and whether States anticipate that
reuse of verification data, coupled with cost allocation across
program, would reduce operational burdens or address budget challenges
facing State Exchanges and Medicaid and CHIP agencies.
13. Eligibility Redetermination During a Benefit Year (Sec.
155.330(d))
At Sec. 155.330, we propose to redesignate paragraph (d)(3) as
paragraph (d)(3)(i) and add paragraph (d)(3)(ii) to require Exchanges
to conduct periodic checks for deceased enrollees twice yearly and
subsequently end deceased enrollees' QHP coverage beginning with the
2025 calendar year. Additionally, we propose to add Sec.
155.330(d)(3)(iii) to grant the Secretary the authority to temporarily
suspend the periodic data-matching (PDM) requirement during certain
situations or circumstances that lead to the unavailability of data
needed to conduct PDM.
Under Sec. 155.330(d), Exchanges are required to periodically
examine available data sources, referred to as PDM, to identify whether
enrollees become deceased, and to identify whether enrollees on whose
behalf APTC or CSRs are being paid have been found eligible for or are
enrolled in Medicare, Medicaid, CHIP, or the BHP, if a BHP is operating
in the service area of the Exchange.
Currently, Sec. 155.330(d)(3) defines ``periodically'' only for
PDM activities that identify enrollment in Medicare, Medicaid, CHIP,
and, if applicable, BHP, meaning that Exchanges must conduct Medicare
PDM, Medicaid or CHIP PDM, and, if applicable, BHP PDM, twice a year.
The current regulation does not specify the frequency by which PDM
activities to identify deceased enrollees must occur, but the 2019
Program Integrity Rule requires that Death PDM be conducted once
annually, and we noted that we intend to update the frequency for Death
PDM in future rulemaking. As explained in the 2019 Program Integrity
Rule, we did not require Exchanges to perform PDM for death at least
twice in a calendar year so that Exchanges could prioritize the
implementation of the new requirement to conduct PDM for Medicare,
Medicaid, CHIP and, if applicable, BHP eligibility or enrollment at
least twice yearly. In this proposed rule, we are now proposing to add
Sec. 155.330(d)(3)(ii) to require Exchanges beginning with the 2025
calendar year to conduct periodic checks for deceased enrollees twice
yearly and subsequently end deceased enrollees' QHP coverage after
following the procedure specified in Sec. 155.330(e)(2)(i).
Periodic checks for deceased enrollees help ensure Exchange program
integrity. This proposal would not only align with current Federal
Exchange policy and operations but would also prevent overpayment of
QHP premiums and APTC/CSRs, and accurately capture household QHP
eligibility based on household size. Additionally, by conducting Death
PDMs twice a year, Exchanges can prevent future auto re-enrollments or
policy effectuation for deceased enrollees for the next plan year.
Additionally, we propose to add Sec. 155.330(d)(3)(iii) to grant
the Secretary the authority to temporarily suspend the PDM requirement
during certain situations or circumstances that lead to an
unavailability of data needed to conduct PDM. PDMs are conducted as a
program integrity measure where the prerequisite for conducting a
proper PDM is assurance of data quality. We recognize that during
certain circumstances data quality may be incomplete or lagging. During
the COVID-19 Public Health Emergency, State and local agencies had to
strain their resources to address backlogs due to job losses and other
administrative gaps further slowing down response times,\172\ thereby,
increasing the risk of the Exchanges making inaccurate eligibility
determinations due to potential data lags. In such cases, using such
data could pose a risk of improper termination of coverage or APTC/CSRs
for large numbers of enrollees. These improper terminations may be
particularly harmful during situations such as a public health
emergency. These potential harms can be even more likely to occur when
the additional burdens of DMI resolution are imposed on Medicare and
Medicaid beneficiaries, who can be vulnerable and underserved and more
likely to encounter gaps in coverage or a complete lack of coverage as
a result of failing to resolve the DMIs.\173\ Allowing the Secretary
the flexibility to temporarily suspend the PDM requirement during
certain situations may be able to prevent an inadvertent increase in
the uninsured population, largely consisting of vulnerable consumers.
We would notify Exchanges of such a suspension of PDM activities, and a
resumption of PDM activities, through subregulatory guidance.
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\172\ McDerrmott, D., Cox, C., Rudowitz, R, and Garfield, R.
(2020, Dec. 9). How Has the Pandemic Affected Health Coverage in the
U.S.? KFF. https://www.kff.org/policy-watch/how-has-the-pandemic-affected-health-coverage-in-the-u-s/.
\173\ Hirsch, M. (1994). Health Care of Vulnerable Populations
Covered by Medicare and Medicaid. Health Care Finance Rev.,15(4):1-
5. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4193433/.
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We anticipate most State Exchanges would be able to meet the
proposed requirements for Death PDM based on operations already
reported through the State-based Marketplace Annual Reporting Tool
(SMART) as well as discussions we have had with the State Exchanges on
PDM. We also anticipate that changes, including a suspension of the PDM
requirement, would be well received by the Exchanges and issuers, as it
is important that consumer information, such as eligibility for APTC or
QHP coverage, be accurate to avoid expending administrative resources
on complex processes to correct errors. Eleven State Exchanges reported
in their 2022 SMART submissions that they curtailed PDM checks only due
to the exigency resulting from the COVID-19 Public Health Emergency,
which expired in May of 2023. Furthermore, we do not anticipate the new
periodicity requirement for the Death PDM to result in a significant
administrative burden for State Exchanges because States previously
conducted PDM checks for deceased enrollees.
Under section 1313(a)(4) of the ACA, if HHS determines that an
Exchange has engaged in serious misconduct with respect to compliance
with Exchange requirements, it has the option to rescind up to 1
percent of payments due to a State under any program administered by
HHS until such misconduct is resolved. These existing authorities would
apply to the proposed PDM requirements in Sec. 155.330(d). If HHS were
to determine that it is necessary to apply this authority due to non-
compliance by an Exchange with Sec. 155.330(d), HHS would also
determine the HHS-administered program from which it would rescind
payments that are due to that State. However, if State Exchanges do not
comply with the proposed PDM requirements, we would generally first
direct a State Exchange to take corrective action. We utilize specific
oversight tools (for example, the SMART, independent external
programmatic & financial audits) to ensure compliance and that State
Exchanges take appropriate corrective action. HHS also provides
technical

[[Page 82579]]

assistance and ongoing monitoring to track those actions until the
State Exchange remediates the issue fully.
We seek comment on this proposal.
14. Incorporation of Catastrophic Coverage Into the Auto Re-Enrollment
Hierarchy (Sec. 155.335(j))
We propose to amend Sec. 155.335(j)(1) and (2) to require
Exchanges to re-enroll individuals who are enrolled in catastrophic
coverage as defined in section 1302(e) of the ACA into a new QHP for
the coming plan year. We believe that some Exchanges already re-enroll
these enrollees, including Exchanges on the Federal platform when
issuers include plan crosswalk information for catastrophic plans when
they submit the information as part of the annual QHP certification
process. However, explicitly incorporating catastrophic plan enrollees
into the rules at Sec. 155.335(j) would help ensure continuity of
coverage in cases where the issuer does not offer the catastrophic plan
for the subsequent plan year, and individuals enrolled in catastrophic
coverage do not actively select a different QHP. We also propose to add
new Sec. 155.335(j)(5) to establish that an Exchange may not newly
auto re-enroll into catastrophic coverage an enrollee who is currently
enrolled in coverage of a metal level as defined in section 1302(d) of
the ACA. This is consistent with the practice of the Exchanges on the
Federal platform, and we believe that State Exchanges likely also
adhere to this practice, but that all interested parties would benefit
from clear regulation on this aspect of the re-enrollment process.
If this proposal is finalized, we would also update the Federally-
facilitated Exchange (FFE) Enrollment Manual to incorporate
catastrophic coverage into the re-enrollment hierarchy for alternate
enrollments, which we use to implement the regulation to crosswalk
enrollees whose current issuer no longer offer plans available to them
through the Exchanges on the Federal platform under Sec.
155.335(j)(3).\174\
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\174\ For the 2023 plan year, see CMS. (2023, July 12).
Federally-facilitated Exchange (FFE) Enrollment Manual. CMS. Section
3.2.4, pp 29-30. https://www.cms.gov/files/document/ffe-enrollment-manual-2023-5cr-071323.pdf.
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In the 2013 Patient Protection and Affordable Care Act; Standards
Related to Essential Health Benefits, Actuarial Value, and
Accreditation Final Rule (78 FR 12833), we set forth Exchange and
issuer standards related to coverage of essential health benefits and
actuarial value to reflect section 1302 of the ACA, which specifies
levels of coverage or ``actuarial values'' that health plans in the
individual and small group markets, both inside and outside of an
Exchange, must meet as part of the requirement to cover an EHB package
beginning in 2014. Specifically, the final rule codified section
1302(d)(1) of the ACA, which specifies that actuarial values must be 60
percent for a bronze plan, 70 percent for a silver plan, 80 percent for
a gold plan, and 90 percent for a platinum plan.
In the 2013 Patient Protection and Affordable Care Act; Health
Insurance Market Rules; Rate Review Final Rule (78 FR 13405), we
established standards for catastrophic plans offered in the individual
market, consistent with section 1302(e) of the ACA, and codified the
statutory criteria identified in section 1302(e)(2) of the ACA listing
the two categories of individuals eligible to enroll in a catastrophic
plan. The first category includes individuals who are younger than age
30 before the beginning of the plan year. The second category includes
individuals who have been certified as exempt from the individual
responsibility payment because they cannot afford minimum essential
coverage or because they are eligible for a hardship exemption. Section
1302(e) of the ACA does not specify an actuarial value requirement for
a catastrophic plan, but states that a health plan not providing a
bronze, silver, gold, or platinum level of coverage shall be treated as
meeting the requirements of subsection (d) for any plan year if it
meets the requirements at section 1302(e)(1) of the ACA, providing an
option for basic protections for young adults and people who cannot
otherwise afford health insurance or have a hardship. However, section
36B(c)(3)(A) of the Code provides that PTC is not allowed for
individuals who enroll in catastrophic coverage described in section
1302(e) of the ACA. Consequently, those individuals are not eligible
for APTC.
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
ACA, Including Standards Related to Exchanges (79 FR 52994, 52998
through 53001), we established the Exchange re-enrollment hierarchy at
Sec. 155.335(j) to help ensure continuous coverage for consumers who
opt not to make an active plan selection for the upcoming year.\175\
This final rule provided standards that Exchanges must follow to place
current enrollees whose current year plan is no longer available, and
who do not terminate coverage or select a different QHP, into a new
plan for the coming year based on their current product, and their
current year plan's metal level and plan network type. For example, an
Exchange must place an enrollee whose current QHP is not available
through the Exchange, in a QHP within the same product as their current
year plan, and at the same metal level as the enrollee's current QHP.
The final rule also specified requirements at Sec. 155.335(j)(2) for
cases in which an enrollee's current product is no longer available.
For example, an Exchange must place an enrollee whose current product
is no longer available 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.\176\
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\175\ This final rule also made a technical correction to
catastrophic coverage regulation at Sec. 156.155 to incorporate
language in section 1302(e) of the ACA indicating that a
catastrophic plan provides ``no benefits'' for any plan year (except
for providing coverage for at least three primary care visits and
preventive health services in accordance with section 2713 of the
PHS Act) until the individual has incurred cost-sharing expenses in
an amount equal to the annual limitation on cost sharing in effect
under section 1302(c)(1) of the ACA.
\176\ ``Product'' means a discrete package of health insurance
coverage benefits that are offered using a particular product
network type (such as health maintenance organization, preferred
provider organization, exclusive provider organization, point of
service, or indemnity) within a service area. 45 CFR 144.103.
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In the 2017 Payment Notice (81 FR 12203), we amended Sec.
155.335(j) to provide for automatic re-enrollment in a QHP offered by
another issuer through the Exchange for enrollees whose current QHP
issuer no longer offered a QHP through the Exchange in the enrollee's
service area. This policy helped ensure that enrollees could maintain
coverage with APTC and income-based CSRs, as opposed to losing coverage
or re-enrolling in a plan outside the Exchange in cases where their
current issuer offered off-Exchange coverage. This rule at Sec.
155.335(j)(3) provides that the Exchange may direct these re-
enrollments, to the extent permitted by applicable State law, into a
QHP from a different issuer as directed by the applicable State
regulatory authority, or, if the applicable State regulatory authority
declines to direct this activity, directed by the Exchange.
In the 2023 Payment Notice (87 FR 27273), we solicited comments on
incorporating certain cost factors into the re-enrollment hierarchy,
including net premium, maximum out-of-pocket amount (MOOP), deductible,
and total

[[Page 82580]]

out-of-pocket cost.\177\ We also solicited comments on additional ways
we could ensure that the Exchange hierarchy for re-enrollment aligns
with plan generosity and consumer needs, such as re-enrolling a current
bronze QHP enrollee into a silver QHP with a lower net premium and
higher plan generosity offered by the same QHP issuer.
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\177\ MOOP refers to the limit on cost sharing an enrollee must
pay for covered services in a plan year. After the enrollee spends
this amount on cost sharing for in-network essential health
benefits, the health plan pays 100 percent of the costs of covered
essential health benefits. For purposes of this section of preamble,
the term total out-of-pocket costs refers to net premium and out-of-
pocket costs attributable to cost sharing and excludes any costs
attributable to balance billing.
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In the 2024 Payment Notice (87 FR 25740, 25821 through 25822), we
added Sec. 155.335(j)(4) to allow Exchanges to modify their re-
enrollment hierarchies such that enrollees who are eligible for CSRs in
accordance with Sec. 155.305(g) and who would otherwise be
automatically re-enrolled in a bronze-level QHP without CSRs, would
instead be automatically re-enrolled in a silver-level QHP (with
income-based CSRs) in the same product provided that certain conditions
are met.\178\ We also required Exchanges to ensure that enrollees whose
QHPs are no longer available to them and enrollees who would be re-
enrolled into a silver-level QHP to receive income-based CSRs are re-
enrolled into plans with the most similar network to the plan they had
in the previous year.
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\178\ Additional conditions at Sec. 155.335(j)(4) include that
the silver plan must have the same provider network, and 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 under paragraph (j)(1) or (2) of this section.
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We propose to amend the regulations at Sec. 155.335(j)(1) and (2)
to require Exchanges to re-enroll individuals enrolled in catastrophic
coverage as defined in section 1302(e) of the ACA into QHP coverage for
the coming plan year. Section 155.335(j) currently specifies re-
enrollment requirements for enrollees in coverage of a specific metal
level as defined by section 1302(d) of the ACA, but does not address
auto re-enrollment for catastrophic coverage enrollees nor does it
address a scenario in which a catastrophic coverage enrollee would lose
eligibility for catastrophic coverage in the coming plan year either
because they exceed the 30-year age limit or lose eligibility for the
exemption that allowed them to enroll in a catastrophic plan in spite
of exceeding the age limit.\179\
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\179\ See Sec. 155.305(h).
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To make this change, we propose to add new Sec. 155.335(j)(1)(v)
and (j)(2)(iv). We propose paragraph (j)(1)(v) to specify that if the
enrollee's current QHP is a catastrophic plan as described in section
1302(e) of the ACA, and the enrollee would no longer meet the criteria
for enrollment in a catastrophic plan as described in section
1302(e)(2) of the ACA, the Exchange would re-enroll the enrollee into a
bronze metal level QHP in the same product as the enrollee's current
QHP that has the most similar network compared to the enrollee's
current QHP; or if no bronze plan is available through this product,
the Exchange would re-enroll the enrollee in the QHP with the lowest
coverage level 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.
We propose paragraph (j)(2)(iv) to specify that if the enrollee's
current QHP is a catastrophic plan as described in section 1302(e) of
the ACA, and the enrollee would no longer meet the criteria for
enrollment in a catastrophic plan as described in section 1302(e)(2) of
the ACA, and if no bronze QHP is available in the same product as the
enrollee's current QHP, the Exchange would re-enroll the enrollee into
a bronze plan offered by the same issuer through the Exchange that has
the most similar network compared to the enrollee's current QHP, in the
product offered that is the most similar to the enrollee's current
product.
We also propose to amend Sec. 155.335(j)(1)(ii) to (iv) and
(j)(2)(i) to (iii) to use the term ``coverage level'' instead of
``metal level'' so that the rules in this section are inclusive of
catastrophic coverage enrollees to whom proposed paragraphs (j)(1)(v)
and (j)(2)(iv) would not apply. For example, this change would ensure
that paragraph (j)(1)(ii) requires an Exchange, if possible, to re-
enroll a catastrophic coverage enrollee who would remain eligible for
catastrophic coverage in the coming plan year into another catastrophic
plan within the same product as their current QHP that has the most
similar network compared to their current QHP.
In practice, we permit and encourage issuers as part of the annual
QHP Certification process to submit a crosswalk option for enrollees in
catastrophic coverage and for enrollees who would otherwise lose
eligibility for their catastrophic plan. While most issuers submit this
information, it is currently not required under the existing
regulation. For PY 2023, one issuer on HealthCare.gov did not submit a
crosswalk option for enrollees losing catastrophic coverage
eligibility, which resulted in the Exchanges not auto re-enrolling 37
people. By including catastrophic coverage and loss of eligibility for
catastrophic coverage in regulation at Sec. 155.335(j)(1) and (2),
Exchanges would require issuers to submit crosswalk plans for the
scenarios described in Sec. 155.335(j) and ensure auto re-enrollment
for all Exchange enrollees. It also improves transparency by
incorporating the current practice of auto re-enrolling catastrophic
enrollees in future year coverage to all issuers.
Finally, we propose adding a new Sec. 155.335(j)(5) to establish
that, for purposes of this section, catastrophic coverage is not a
coverage level that is considered higher or lower than metal level
coverage when moving an enrollee to a plan that is a metal level higher
or lower than their current plan, and an Exchange may not re-enroll an
enrollee that has coverage under section 1302(d) into catastrophic
coverage. For example, when applying paragraphs (j)(1)(iii)(B), or
(2)(ii), an Exchange may enroll bronze enrollees into silver level
coverage but not catastrophic level coverage. When applying paragraphs
(j)(1)(iv) or (2)(iii), an Exchange may enroll enrollees into a QHP
other than catastrophic. This rule reflects our re-enrollment process
for Exchanges on the Federal platform, and we believe it appropriately
reflects enrollees' decision to enroll in coverage with benefits beyond
those that catastrophic coverage provides, and the operational
processes to determine catastrophic coverage eligibility for a coming
plan year.
We solicit comment on these proposals, including from State
Exchanges regarding whether the proposals reflect their current auto
re-enrollment practices. If either or both of the policies proposed in
paragraphs (j)(1)(v) and (j)(2)(iv) do not reflect current practices
and would impose an implementation burden for State Exchanges or for
other interested parties, we solicit comment on whether to provide
flexibility on making this provision effective for plan years beginning
on or after January 1, 2025. We solicit comment on strategies for
helping enrollees who transition from catastrophic coverage into
coverage through a metal level QHP on how to understand and apply APTC
to their monthly premiums if they are eligible and wish to do so.
We also solicit comment on whether we should consider proposing
changes to the auto re-enrollment hierarchy to prioritize re-enrollment
in catastrophic coverage for enrollees who remain eligible for
catastrophic coverage in a

[[Page 82581]]

way that is similar to current prioritization of silver level coverage.
That is, Sec. 155.335(j)(1)(ii) specifies that if an enrollee's
current QHP is a silver plan that will not be available for the coming
plan year, and the enrollee's current product will no longer include a
silver level QHP, then 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. We seek
comment on whether it would be appropriate to prioritize continuity of
catastrophic coverage in a similar way. Finally, we solicit comment on
additional strategies to help ensure continuity of coverage for
enrollees in catastrophic QHPs, including those who lose eligibility
for catastrophic coverage.
15. Premium Payment Deadline Extensions (Sec. 155.400(e)(2))
We propose to amend Sec. 155.400(e)(2) to codify that the
flexibility for issuers experiencing billing or enrollment problems due
to high volume or technical errors, or issuers directed to do so by
applicable State or Federal authorities, is not limited to extensions
of the binder payment.
Section 155.400(e) specifies that Exchanges may require, and the
FFEs and SBE-FPs will require, enrollees to make a binder payment to
effectuate enrollment, and paragraph (e)(1) specifies the range of
dates within which an issuer may establish a deadline to pay binder,
depending on whether coverage is being effectuated under regular,
prospective, or retroactive effective dates. In the 2018 Payment Notice
(81 FR 94058), we added paragraph (e)(2) to address situations in which
an issuer is unable to timely process binder payments submitted by
enrollees, which may impact an enrollee's ability to effectuate
coverage. Specifically, we noted that based on our experience during
several Open Enrollment Periods, issuers occasionally experience
technical errors, or a processing backlog caused by an unusually high
volume of enrollments. As a result, enrollees may be temporarily unable
to submit premium payments, or the issuer may be unable to process
payments in a timely manner. We thus established an option for issuers
to implement a reasonable extension of binder payment deadlines,\180\
which ensures that enrollees do not have coverage cancelled due to non-
payment when the enrollee did not have adequate time to pay the binder
payment.
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\180\ We also stated that we do not anticipate extensions to be
greater than 45 calendar days.
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Although we only addressed extensions to the binder payment
deadlines in Sec. 155.400(e)(1), we did not intend to exclude other
premium payment scenarios in which Exchanges could, and the Exchanges
on the Federal platform would, provide similar flexibility. In
published guidance, such as the 2023 Federally-facilitated Exchange
(FFE) Enrollment Manual,\181\ we stated that we will exercise
enforcement discretion with regard to regulatory requirements such as
the binder payment and the deadline for payment of premiums under grace
periods if an issuer is complying with a State regulatory authority's
request to extend premium payment deadlines and delay termination of
coverage due to a natural disaster or other emergency within the State.
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\181\ CMS. (2023, July 12). 2023 Federally-facilitated Exchange
(FFE) Enrollment Manual. CMS. Section 6.1.3, p. 89, and Section
6.10, p. 110. https://www.cms.gov/files/document/ffe-enrollment-manual-2023-5cr-071323.pdf.
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For example, in connection with the COVID-19 Public Health
Emergency declared by the Secretary, HHS exercised enforcement
discretion \182\ regarding issuers extending premium payment deadlines
and delaying cancellations or terminations of coverage with the
permission of the applicable State regulatory authority. We propose to
codify that Exchanges may, and Exchanges on the Federal platform would,
provide flexibility in such circumstances, including circumstances in
which an issuer is directed to do so by applicable State or Federal
authorities.
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\182\ Pate, R. (2020, March 24). Payment and Grace Period
Flexibilities Associated with the COVID-19 National Emergency. CMS.
https://www.cms.gov/files/document/faqs-payment-and-grace-period-covid-19.pdf.
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Because current paragraph (e)(2) may be read to limit the
flexibility Exchanges could provide issuers regarding payments other
than the binder payment, we also propose to add the phrase ``and other
premium payment deadlines.'' Doing so would clarify for interested
parties, particularly issuers, that Exchanges may, and Exchanges on the
Federal platform would, provide flexibility regarding premium payment
requirements other than the binder payment, such as the requirement to
trigger a grace period to enrollees receiving APTC under Sec.
156.270(d) if enrollees fail to pay premiums timely.
We request comments on this proposal.
16. Initial and Annual Open Enrollment Periods (Sec. 155.410)
At Sec. 155.410, we propose to amend paragraph (e)(4)(ii) to
revise parameters around the adoption of an alternative open enrollment
period by a State Exchange. We propose to require that for benefit
years beginning on or after January 1, 2025, State Exchanges must adopt
an open enrollment period that begins on November 1 of the calendar
year preceding the benefit year and ends no earlier than January 15 of
the applicable benefit year, with the option to extend the open
enrollment period beyond January 15 of the applicable benefit year.
In part 3 of the 2022 Payment Notice final rule (86 FR 53429
through 53432), where we extended the open enrollment period for the
Exchanges on the Federal platform to January 15, we noted several
observations regarding a 6-week open enrollment period ending on
December 15. However, we also noted that for an open enrollment period
ending in December, certain consumers may be subjected to unexpected
plan cost increases that they may not be notified about until January,
after open enrollment concludes. We also observed that extending the
open enrollment period for the Exchanges on the Federal platform to
January 15 would ensure ample time for Navigators, assisters, certified
application counselors, agents, and brokers to fully assist all
interested consumers. We further noted that ending open enrollment on
January 15 would give consumers additional time to react to updated
plan cost information and more time to seek enrollment assistance,
which could improve access to health coverage, particularly for those
in underserved communities who face additional barriers to accessing
health coverage.
We believe these observations hold true as to State Exchanges and
warrant requiring that their open enrollment periods also end no
earlier than January 15. Since we extended the open enrollment period
for Exchanges on the Federal platform in part 3 of the 2022 Payment
Notice final rule, four States have transitioned to the State Exchange
model, and we anticipate that there will be additional State Exchanges
in future benefit years, which increases the potential for differing
open enrollment periods. While most of the State Exchanges already hold
an open enrollment period that ends on or after January 15 of the
benefit year, we believe that the risk of shorter open enrollment
periods in the future requires ensuring a minimum open enrollment
period across all Exchanges,

[[Page 82582]]

including State Exchanges. Notably, this proposal would impose a
minimal burden on most of the State Exchanges.
Additionally, we believe that ensuring State Exchanges' open
enrollment periods begin on November 1 of the calendar year and
continue through at least January 15 of the benefit year--thereby
ensuring substantial overlap between all Exchange open enrollment
periods--would reduce consumer confusion in States with State Exchanges
that currently hold open enrollment periods that are shorter than the
open enrollment period for the Exchanges on the Federal platform, or
that begin before November 1 and end earlier than January 15. Consumers
in these States would benefit from a longer open enrollment period by
having an increased opportunity to enroll in coverage or reducing
missed opportunities to enroll due to confusion about when open
enrollment begins and ends. The combined benefits of this proposal in
terms of reducing consumer confusion, building in additional time for
consumers to enroll, and aligning open enrollment periods with Medicare
and most employer open enrollment periods, could further increase
Exchange enrollment and potentially have downstream impacts like
improving the uninsured rate in States.
We seek comment on this proposal.
17. Special Enrollment Periods
a. Effective Dates of Coverage (Sec. 155.420(b))
We propose amending Sec. 155.420(b)(1) and (b)(3)(i) to align the
effective dates of coverage after selecting a plan during certain
special enrollment periods across all Exchanges, including State
Exchanges. In order to consolidate and integrate the requirements in
Sec. 155.420(b)(3), without affecting any rights or obligations, we
also propose to include the requirements currently in paragraph
(b)(3)(ii) into proposed paragraph (b)(3)(i) and to delete paragraph
(b)(3)(ii). For ease of consumer experience and to prevent coverage
gaps, particularly for consumers transitioning between different
Exchanges or from other insurance coverage, we propose amending Sec.
155.420(b)(1) and(b)(3)(i) so that qualifying individuals or enrollees
who select and enroll in a QHP during certain special enrollment
periods receive coverage beginning the first day of the month after the
consumer selects a QHP.
In accordance with Sec. 155.420(b)(3)(i), in the FFEs, SBE-FPs, as
well as several State Exchanges, during a special enrollment period,
consumers who select a QHP through the Exchange to which regular
effective dates specified in Sec. 155.420(b) apply have the plan's
coverage begin on the first day of the month after the consumer's
selection. For example, if a consumer selects a QHP on March 31, their
QHP coverage would start April 1.
However, in some State Exchanges, a consumer's coverage is only
made effective on the first day of the month after the consumer has
selected a plan during a special enrollment period to which regular
effective dates specified in Sec. 155.420(b) apply if the consumer
selects their plan between the 1st day and the 15th day of the previous
month, per Sec. 155.420(b)(1). In these State Exchanges, if a consumer
selects a plan between the 16th day and the last day of the month,
coverage will not become effective until the first day of the second
month after plan selection. For example, for these State Exchanges, if
a consumer selects a plan on March 1, Exchange QHP coverage would start
April 1, but if that consumer selected a plan on March 16, their
Exchange QHP coverage would start on May 1. This may result in a
coverage gap of more than a month for these consumers.
As consumers typically qualify for special enrollment periods due
to a life event that may disrupt their previous coverage (such as a
move to a new State, or a change in household size due to birth or
divorce, or a loss of other health insurance, such as a loss of
Medicaid), these consumers are less likely to have health insurance
coverage while they wait for their selected QHP coverage to begin.
In addition, when transitioning between Exchanges, such as from an
Exchange in a State that operates on the Federal platform to a State
Exchange that does not offer first-of-the-following-month coverage,
consumers may expect that their coverage becomes effective on the first
day of the month after selecting a QHP. These consumers might not be
aware that the effective dates of coverage may differ between
Exchanges, and they might not take appropriate steps to maintain or
access alternate coverage while waiting for their QHP to become
effective. As a result, these consumers may be at risk of coverage gaps
due to the existing policies governing effective dates of coverage.
To address this, we propose amending Sec. 155.420(b)(1) and
(b)(3)(i) to align effective dates of coverage across all Exchanges
under these special enrollment periods. The proposal would require all
State Exchanges, beginning on January 1, 2025, or an earlier date at
the option of the Exchange to provide coverage that is effective on the
first day of the month following plan selection, if a consumer enrolls
in a QHP during a Special Enrollment Period to which regular effective
dates specified in Sec. 155.420(b) apply.
We seek comment on this proposal.
b. Monthly Special Enrollment Period for APTC-Eligible Qualified
Individuals With a Household Income At or Below 150 Percent of the
Federal Poverty Level
At Sec. 155.420, we propose to amend paragraph (d)(16) to revise
the parameters around the availability of a special enrollment period
(SEP) for APTC-eligible qualified individuals with a projected
household income at or below 150 percent of the Federal Poverty Level
(FPL) hereinafter referred to as the ``150 percent FPL SEP.'' We are
proposing to amend the current text from ``no greater than'' to ``at or
below'' for improved readability and understanding. Specifically, we
are proposing to remove the limitation that this SEP be only available
during periods of time when APTC is available such that the applicable
taxpayers' applicable percentage is set to zero.
As background, in part 3 of the 2022 Notice of Benefit and Payment
Parameters (86 FR 53429 through 53432), we finalized, at the option of
an Exchange, a monthly SEP for APTC-eligible qualified individuals with
a projected household income at or below 150 percent of the FPL. We
also finalized a provision stating that this SEP is available only
during periods of time during which APTC is available such that the
applicable taxpayers' applicable percentage is set at zero, such as
during tax years 2021 through 2025, as provided by section 9661 of the
American Rescue Plan (ARP) and extended by the Inflation Reduction Act
(IRA).\183\ We also amended Sec. 147.104(b)(2)(i) to specify that
issuers are not required to provide the SEP in the individual market
with respect to coverage offered outside of an Exchange.
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\183\ Public Law 117-169.
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As a result of the enhanced financial assistance established by the
ARP and extended by the IRA until December 31, 2025, many consumers
with lower household incomes with a projected household income at or
below 150 percent of the FPL, have the opportunity to enroll in a much
wider range of affordable coverage. Specifically, as a result of the
legislative changes passed by Congress in the ARP and IRA, more
consumers have access to Exchange and QHP coverage with zero-dollar
premiums after financial subsidies, including more opportunities to
enroll in zero-dollar silver-level plans with

[[Page 82583]]

significant levels of CSRs. To provide these consumers--many of whom
might have had difficulty enrolling during standard SEP timelines due
to lack of awareness or other logistical difficulties--with the chance
to access this generous Exchange coverage, we finalized the 150 percent
FPL SEP.
We remain committed to ensuring that affordable Exchange coverage
is available for individuals with lower household incomes and who are
uninsured, and we believe that the availability of the 150 percent FPL
SEP has made significant strides in ensuring that this population has
real opportunities to enroll in free or extremely low cost Exchange
coverage.
Executive Order (E.O.) 14070, signed on April 5, 2022 (which
expanded upon E.O. 15009 signed on January 28, 2021), directs Federal
agencies to identify ways to continue to expand the availability of
affordable health coverage, to improve the quality of coverage, to
strengthen benefits, and to help more Americans enroll in quality
health coverage. To that end, this proposed change may further ensure
continued improved access to affordable coverage for this population.
Continuing to make this SEP available also may continue to help
consumers who lose other MEC coverage, especially those disenrolling
from Medicaid or CHIP coverage to regain health care coverage. We are
aware of the challenges many consumers disenrolling from Medicaid or
CHIP coverage have faced due to the end of the Medicaid continuous
enrollment condition as of March 31, 2023. During this time period, we
have observed, and expect to continue to observe, a higher than usual
volume of individuals with lower household incomes transitioning from
Medicaid or CHIP coverage to coverage through Exchanges due to the end
of the Medicaid continuous enrollment condition. As discussed in our
guidance released on January 27, 2023, consumers disenrolling from
Medicaid or CHIP because of the Medicaid continuous enrollment
condition are especially vulnerable and may face challenges with
transitioning from Medicaid or CHIP into other forms of coverage, such
as Exchange coverage.\184\ These challenges may include consumers'
confusion as to why their Medicaid coverage is ending due to irregular
or untimely communications from State Medicaid agencies about the
termination of coverage or coverage options for individuals with lower
household incomes. Due to these factors, consumers may be unable to
make an informed decision about their coverage options within the 60-
day window provided by the SEPs at Sec. 155.420(c)(1) and (d)(1) or
within the 90-day window provided at the option of the Exchange at
Sec. 155.420(c)(6) beginning on January 1, 2024. Given our
observations of these challenges, we believe that the existence of the
150 percent FPL SEP provides an additional safety-net, particularly for
consumers impacted by the Medicaid continuous enrollment condition, but
also generally for those who have historically faced challenges
transitioning from Medicaid or CHIP into other coverage, like Exchange
coverage.
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\184\ CMS. (2023, Jan. 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).
CMS. https://www.cms.gov/technical-assistance-resources/temp-sep-unwinding-faq.pdf.
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Finally, our experience with the 150 percent FPL SEP strongly
suggests that the policy has been successful. Based on our analysis,
between October 2022 and August 2023, about 1.3 million consumers who
reside in States with Exchanges on the Federal platform were APTC-
eligible, and had projected household incomes at or below 150 percent
of the FPL, enrolled in Exchange coverage under the 150 percent FPL
SEP. In 2022, 41.8 percent of enrollees on Exchanges on the Federal
platform had a projected household income of less than 150 percent of
the FPL, compared to 46.9 percent of Exchange enrollees in 2023, after
the implementation of the 150 percent FPL SEP. We believe the current
150 percent FPL SEP is one factor that significantly contributed to the
increase in the enrollees on the Federal platform with a projected
household income at or below 150 percent of the FPL.
In previous rulemaking, we expressed concern about offering the 150
percent FPL SEP when APTC does not always reduce the applicable
percentage of a taxpayer with projected annual household income at or
below 150 percent FPL to zero. We were also receptive to concerns
raised by issuers that this SEP would impact the Exchange risk pool,
lead to higher premiums, and impact the population with household
incomes above 400 percent FPL with higher premium contributions as the
APTC phases out. The possible increasing premiums also present a risk
of financial hardship for consumers who purchase insurance off Exchange
including those who are not eligible for APTC due to immigration
status, or any other consumers who would purchase unsubsidized plans,
or only receive small subsidies. At the time, we believed that the risk
for adverse selection was mitigated because consumers would not have an
incentive to drop their Exchange plans when healthy and resume coverage
when sick using the 150 FPL SEP since they would be enrolled in zero-
dollar premium plans due to the enhanced financial subsidies provided
by the ARP and IRA. Previously, we estimated that the adverse selection
risk may result in issuers increasing premiums by approximately 0.5 to
2 percent, and a corresponding increase in APTC outlays and decrease in
income tax revenues of approximately $250 million to $1 billion
annually, when the enhanced APTC provisions of the ARP (and later
extended by the IRA) are in effect. While it is challenging to predict
the future nature of the Exchanges in 2026, we estimate that some
adverse selection, though unknowable at this time, may occur once
enhanced subsidies sunset on December 31, 2025, and may result in
issuers increasing premiums. We acknowledge that there is a wide range
of predictions for an increase to premiums due to the adverse selection
risk associated with this proposed change and discuss this further in
the regulatory impact analysis section of this rule.
However, an analysis of the plans available to consumers in 2020,
just before implementation of the enhanced subsidies, suggests that the
risk of adverse selection we acknowledged may be lower than expected,
and therefore downstream impacts of that risk may be mitigated. When
consumers with household incomes at or below 150 percent of the FPL are
no longer eligible for enhanced subsidies, these consumers may still be
eligible for low-cost silver or bronze plans with zero-dollar premiums
after regular subsidies. In 2020, before the ARP provided enhanced
financial assistance in the form of enhanced subsidies, about 900,000
consumers were enrolled in bronze plans, which were fully subsidized by
APTC and where the consumer portion of premium was zero dollars.
Additionally, in 2020, 77 percent of the consumer population at or
below 150 percent FPL had access to a zero-dollar bronze plan with 16
percent of the same population having access to a zero-dollar silver
plan in addition to the zero-dollar bronze plan. We believe that if the
majority of consumers with income at or below 150 percent FPL would be
eligible for a zero-dollar premium plan absent the enhanced subsidies
provided under the ARP and IRA, then such consumers

[[Page 82584]]

would be unlikely to use the proposed 150 FPL SEP in a way that caused
adverse selection. In other words, we believe that the availability of
these zero-dollar bronze plans for consumers at or below 150 percent
FPL mitigates the risk pool impact this proposed change might cause in
addition to mitigating downstream hardships for consumers who purchase
insurance without subsidies or with only small subsidies. Therefore, we
are proposing to make the 150 percent FPL SEP, at the option of an
Exchange, permanent by amending Sec. 155.420(d)(16) to remove the
requirement that the SEP only be available during periods of time when
the applicable taxpayer's applicable percentage for purposes of
calculating the premium assistance amount, as defined in section
36B(b)(3)(A) of the Code, is set at zero.
We seek comment on this proposal.
18. Termination of Exchange Enrollment or Coverage (Sec. 155.430)
We propose to add Sec. 155.430(b)(1)(iv)(D) to permit enrollees on
Exchanges using the Federal platform to retroactively terminate their
enrollment in a QHP through the Exchange \185\ when the enrollee
enrolls in Medicare Parts A or B retroactively effective to the day
before the date Medicare coverage begins. We also propose making
implementation of this proposal optional for State Exchanges and
request comment on whether it should instead be mandatory.
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\185\ When an enrollee retroactively terminates QHP coverage,
State law generally requires that the premiums paid in the months
for which coverage is retroactively terminated be refunded by the
QHP issuer.
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In the 2017 Payment Notice (81 FR 12203), we implemented
regulations at Sec. 155.430(b)(1)(iv) to permit Exchange enrollees to
retroactively terminate coverage in the following circumstances: (1)
the enrollee demonstrates to the Exchange that the enrollee attempted
to terminate the enrollee's coverage or enrollment in a QHP and
experienced a technical error that did not allow the enrollee to
terminate the enrollee's coverage or enrollment through the Exchange;
(2) the enrollee demonstrates to the Exchange that the enrollee's
enrollment in a QHP through the Exchange was unintentional,
inadvertent, or erroneous and was the result of the error or misconduct
of an officer, employee, or agent of the Exchange or HHS, its
instrumentalities, or a non-Exchange entity providing enrollment
assistance or conducting enrollment activities; and (3) the enrollee
demonstrates to the Exchange that the enrollee was enrolled in a QHP
without the enrollee's knowledge or consent by any third party,
including third parties who have no connection with the Exchange.
Additionally, Sec. 155.430(d)(2)(v) authorizes Exchanges to
retroactively terminate QHP coverage effective the day before Medicaid,
CHIP, or BHP eligibility begins, though the Exchanges on the Federal
platform do not permit retroactive terminations in this scenario. While
SBE-FPs generally are required to follow the Exchanges on the Federal
platform in matters of enrollment and disenrollment policy and
operations, because this regulation relates to Medicaid, CHIP, or BHP
programs, with which States are more closely involved than we are, we
have provided SBE-FPs the option to implement retroactive terminations
in these circumstances, despite the Federal platform not doing so.
Currently, we do not permit enrollees in Exchanges on the Federal
platform to retroactively terminate QHP coverage due to retroactive
enrollment in other coverage, including Medicare. When coverage is
retroactively terminated, claims submitted during the period of
terminated coverage will be reversed by the QHP issuer and become the
responsibility of the enrollee, who must ensure claims are submitted by
the provider to the new insurance provider, if coverage is effective
retroactively.\186\ State law would generally require that QHP issuers
refund the enrollee any premiums paid during the months in which
coverage is retroactively terminated.
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\186\ Providers are generally required to submit claims to
Medicare no later than 12 months after the date of service. However,
in situations where Medicare Part A or B entitlement did not exist
at the time service was furnished, or the beneficiary receives
notice of Medicare Part A or B entitlement after the date of
service, the 12-month limit may be extended for 6 months following
the month in which the beneficiary receives notice of Medicare Part
A or Part B entitlement. CMS. (rev. 2023, Jan. 19). Medicare Claims
Processing Manual, 100-04, Chapter 1, Section 70.7.2 ``Retroactive
Medicare Entitlement.'' https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c01.pdf.
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In the 2017 Payment Notice (81 FR 12203), we stated that
retroactive terminations would be limited to situations in which an
enrollee was prevented from terminating coverage due to error or
misconduct, and was not intended for enrollees who did not understand
the rules of their enrollment and wished to avoid tax liability for
APTC for which they were ineligible, nor for enrollees who seek
retroactive termination of coverage at the end of the plan year because
they did not use the coverage. We continue to believe that it is
important to limit the scenarios in which enrollees can seek
retroactive termination of coverage, in part to address concerns raised
by issuers of adverse selection if healthy enrollees are able to
retroactively terminate coverage they did not use. However, we
regularly receive requests from Exchange enrollees through the
Marketplace Call Center to retroactively terminate QHP coverage because
they enrolled retroactively in Medicare, and these requests are denied
because they are not currently authorized by regulation. Unlike
enrollees who enroll in Medicare prospectively when they turn 65,
individuals who enroll in Medicare retroactively did not have the
opportunity to prospectively terminate Exchange coverage, and thus, did
not merely fail to understand the terms of their QHP enrollment.
Generally, consumers who become eligible for Medicare once they
turn 65 can enroll prospectively, and those who are enrolled in
Exchange coverage can normally terminate coverage prospectively so that
there is no overlap between the two. In accordance with Sec.
155.430(d)(2)(iii), Exchange enrollees may request same-day or
prospective termination of coverage,\187\ and Exchange communications
instruct enrollees to terminate coverage once they learn they will be
enrolled in other coverage to avoid an overlap. Exchange enrollees
approaching their 65th birthday also receive communications from the
Exchange advising them that they will be ineligible for APTC if they
enroll in Medicare and instructing them to terminate Exchange coverage
if they do not wish to have an overlap between the two. However, there
are scenarios in which a consumer may retroactively enroll in Medicare
Parts A or B coverage. For example, consumers can become eligible for
retroactive Medicare Parts A and B due to retroactive eligibility for
SSDI benefits, in which case the consumer is entitled to Medicare Parts
A and B beginning with the 25th month of SSDI entitlement (that is,
receipt of the SSDI benefit). If the SSA determines the consumer to be
eligible more than 25 months back, the consumer will receive Medicare
Part A automatically beginning with the 25th month of SSDI entitlement
and will have the option of enrolling in Part B Medicare retroactive to
the 25th month of SSDI entitlement (though they also have the choice to
enroll in Part B

[[Page 82585]]

prospectively). In addition, when a consumer has not been automatically
enrolled in Medicare Part A and applies for Medicare Part A after their
65th birthday, their entitlement to Part A begins (that is, when
coverage starts) up to six months prior to the date of the application
but no sooner than the consumer's 65th birthday.
---------------------------------------------------------------------------

\187\ Although this regulation permits QHP enrollees to request
prospective terminations, limitations in operations in the Exchanges
on the Federal platform prevent one enrollee in an enrollment group
from ending coverage prospectively when the other enrollees in the
group intend to remain enrolled.
---------------------------------------------------------------------------

Because consumers who enroll retroactively in Medicare Parts A or B
may not be able to avoid an overlap in coverage by prospectively
terminating their Exchange coverage, we believe it is appropriate to
allow them to retroactively terminate Exchange coverage back to the day
before Medicare coverage begins. Allowing consumers to request
retroactive terminations in these scenarios ensures they can avoid an
overlap between Exchange and Medicare coverage and avoid paying premium
unnecessarily (if the consumer owes premium after the application of
APTC). However, we note that consumers would not be required to request
a retroactive termination and could maintain both Exchange and Medicare
coverage if they wish. Consumers who enroll in Medicare retroactively
are not categorically excluded from PTC eligibility for the period of
retroactive coverage, and thus may not be required to repay APTC for
the months of overlap when they file their taxes, in accordance with 26
CFR 1.36B-2(c)(2)(iv); however, a QHP enrollee receiving APTC who is
voluntarily requesting and is granted a retroactive QHP termination
relieves the government of subsidizing two forms of coverage, as the
APTC is recouped for the terminated QHP coverage months.
Although it is also possible for consumers to become retroactively
eligible for Medicaid, and have an unavoidable overlap with Exchange
coverage, we believe it is appropriate to limit the applicability of
this provision in the Exchanges on the Federal platform to Medicare. We
previously allowed retroactive terminations of Exchange coverage due to
enrollment in Medicaid, CHIP, and the BHP, but removed this option for
the FFEs in the 2019 Payment Notice (83 FR 16930). This option was
retained for State Exchanges and SBE-FPs, which as previously mentioned
are more closely integrated into their State-administered Medicaid
programs. In response to commenters who opposed this change, we noted
that although consumers in these cases may wish to recoup premiums paid
during the period of overlapping coverage, there is significant risk
that providers who participate in the consumer's Exchange coverage do
not participate in Medicaid, CHIP, or BHP, which would leave the
consumer with unexpected out-of-pocket costs. However, because Medicare
is accepted by many, if not most, providers, it is less likely that a
retroactive QHP disenrollment would leave consumers responsible for
claims made during the period of retroactive Medicare enrollment.
We note that in the FFEs and SBE-FPs, Marketplace Call Center
workers and caseworkers have system-based evidence of both QHP and
Medicare eligibility dates and would be able to verify that an enrollee
requesting retroactive termination is enrolled in Medicare and approve
retroactive requests. This would ensure that enrollees cannot
retroactively terminate their QHP coverage for other, unauthorized
reasons such as low utilization of coverage, which could create an
adverse selection risk. We also note that, similar to retroactive
Medicare enrollment, consumers who retroactively enroll in Medicaid
coverage are not required to repay APTC for the months in which they
retroactively enrolled when they file their taxes, consistent with 26
CFR 1.36B-2(c)(2)(iv).
Finally, in recognition of the challenges associated with
retroactively adjusting coverage for preceding years, we propose to
require that enrollees must request retroactive termination of coverage
within 60 days of the date they retroactively enroll in Medicare (the
date the enrollment occurs, not the Medicare coverage effective date).
In the 2017 Payment Notice (81 FR 12203), we requested comment on and
finalized a similar requirement for the other retroactive enrollment
scenarios permitted under Sec. 155.430(b)(1)(iv). We believe
implementing this requirement would be appropriate here as well.
Permitting retroactive enrollments too far in the past can be
operationally burdensome for Exchanges, and for issuers that must
reverse claims and refund premiums for the months of terminated
coverage. We believe that a window of 60 days provides an appropriate
amount of time for an enrollee who retroactively enrolls in Medicare
coverage to request retroactive termination of Exchange coverage and is
consistent with the limitation placed on requests for the other
permissible retroactive termination scenarios at Sec.
155.430(b)(1)(iv).
We request comments on this proposal. Specifically, we request
comment on whether the public benefits of this proposal to honor an
enrollee's choice, recoup APTC for duplicative coverage, and protect
the individual market risk pool outweighs the risk that an enrollee
would be left with uncovered claims for the overlapping period. We also
request comment on the best way to ensure that enrollees have the
necessary information to make an informed decision about whether to
retroactively terminate coverage. If this proposal is finalized, we
intend to monitor the impact to minimize harm to consumers. We also
seek comment on whether this provision should be mandatory for State
Exchanges, rather than optional, and if so, how State Exchanges would
verify retroactive Medicare enrollment dates.
19. Establishment of Exchange Network Adequacy Standards (Sec.
155.1050)
We propose to require that State Exchanges and SBE-FPs establish
and impose quantitative time and distance QHP network adequacy
standards that are at least as stringent as the FFEs' time and distance
standards established for QHPs under Sec. 156.230. We also propose
that State Exchanges and SBE-FPs be required to conduct quantitative
network adequacy reviews prior to certifying any plan as a QHP,
consistent with the reviews conducted by the FFEs under Sec. 156.230.
We further propose to require State Exchanges and SBE-FPs to permit
issuers that are unable to meet the specified network adequacy
standards to participate in a justification process after submitting
their initial network adequacy data to account for variances and
potentially earn QHP certification. Finally, we propose to mandate that
State Exchanges and SBE-FPs require all issuers seeking QHP
certification to submit information to the State Exchange or SBE-FP
about whether network providers offer telehealth services.
Understanding that some State Exchanges or SBE-FPs may need to
promulgate regulations to comply with the proposed provisions requiring
State Exchanges and SBE-FPs to impose quantitative network adequacy
standards and conduct quantitative network adequacy reviews, as well as
the requirement related to QHP issuer submission of telehealth
information, we propose that these provisions would be effective for
plan years beginning on or after January 1, 2025, to accommodate the
time it may take for a State Exchange or SBE-FP to come into
compliance. We are of the view that strong network adequacy time and
distance standards across all Exchanges would enhance consumer access
to quality, affordable care through the Exchanges.

[[Page 82586]]

a. Federal Network Adequacy Policy Under the Affordable Care Act
Section 1311(c)(1)(B) of the ACA directs the Secretary of HHS to
establish by regulation certification criteria for QHPs, including
criteria that require QHPs to ensure a sufficient choice of providers
(in a manner consistent with applicable provisions under section
2702(c) of the PHS Act) and provide information to current and
prospective enrollees on the availability of in-network and out-of-
network providers. Federal network adequacy standards were first
detailed in the Exchange Establishment Rule (77 FR 18418) and codified
at Sec. 156.230.
In the Exchange Establishment Rule (77 FR 18418), we established
the minimum network adequacy criteria that plans must meet to be
certified as QHPs at Sec. 156.230. The Exchange Establishment Rule (77
FR 18409 through 18420) provided that an issuer of a QHP that uses a
provider network must maintain a network that is sufficient in number
and types of providers, including providers that specialize in mental
health and substance use disorder services, to ensure that all services
will be accessible to enrollees without unreasonable delay. In the 2016
Payment Notice (80 FR 10830 through 10833), we modified Sec.
156.230(a) in part to specify that network adequacy requirements only
apply to QHPs that use a provider network, and that a provider network
includes only providers that are contracted as in-network. For PYs 2015
through 2017, the FFEs conducted network adequacy reviews of time and
distance standards for QHP issuers.
The 2017 Market Stabilization final rule (82 FR 18371 through
18372) deferred reviews of network adequacy for QHPs to States that we
determined to have a sufficient network adequacy review process, an
approach that was expanded on in the 2019 Payment Notice (83 FR 17024
through 17026). In the 2019 Payment Notice (83 FR 17024 through 17026),
we deferred reviews of network adequacy for QHPs to States that
possessed sufficient legal authority to enforce standards that were at
least equal to the reasonable access standard defined in Sec. 156.230
and that had the means to assess the adequacy of plans' provider
networks. In States without the legal authority or means to assess and
ensure network adequacy, we relied on an issuer's accreditation
(commercial or Medicaid) from an HHS-recognized accreditation body to
determine compliance with network adequacy requirements. For PYs 2018
through 2022, we determined that all States had sufficient legal
authority and means to assess the adequacy of QHP provider networks.
In part 1 of the 2022 Payment Notice (86 FR 6154 through 6155), we
provided a clarification to the network adequacy rules to reflect that
Sec. 156.230 does not apply to plans seeking QHP certification that do
not differentiate benefits based on whether or not enrollees receive
covered services from providers that are members of the plan's provider
network.
The network adequacy review policy finalized in the 2019 Payment
Notice was challenged in City of Columbus, et al. v. Cochran, 523 F.
Supp. 3d 731 (D. Md. 2021). Specifically, on March 4, 2021, the United
States District Court for the District of Maryland vacated the 2019
Payment Notice's policy that deferred to States the Federal
government's reviews of the network adequacy of QHPs and plans seeking
QHP certification to be offered through the FFEs. With the FFE QHP
certification cycle for PY 2022 beginning on April 22, 2021, we were
not able to fully implement the aspects of the court's decision
regarding network adequacy in time for issuers to design plans and for
us to be prepared to consider whether to certify such plans as QHPs for
PY 2022. However, we noted in part 2 of the 2022 Payment Notice (86 FR
24264 through 24265) that we planned to propose specific steps to
address implementation of this aspect of the court's decision in future
rulemaking.
In the 2023 Payment Notice (87 FR 27322), we finalized network
adequacy standards for issuers in the FFEs that would apply for PYs
2023 and later. Specifically, in that rule (87 FR 27323 through 27328),
we finalized that we would evaluate plans seeking certification as QHPs
in all States served by an FFE, including conducting network adequacy
reviews based on time and distance standards. In PY 2023,\188\ we
assessed time and distance standards at the county level and classified
counties into five county type designations: Large Metro, Metro, Micro,
Rural, and Counties with Extreme Access Considerations (CEAC). We used
a county type designation method that is based upon the population size
and density parameters of individual counties. To assess whether QHPs
complied with these standards, we reviewed provider data for in network
providers that QHP issuers submitted to us via our ECP/NA
template.\189\ For each specialty and time and distance standard, we
reviewed the issuer-submitted data to ensure that the plan provided
access within specified times and distances to at least one provider in
each of the provider type categories for at least 90 percent of
enrollees. If a QHP did not meet one or more of the time and distance
standards, the issuer could (1) add more contracted providers to the
network to come into alignment with the standards and re-submit their
updated ECP/NA template to us, and/or (2) submit a completed Network
Adequacy Justification Form.\190\ This justification process required
issuers that did not yet meet the time and distance standards to
detail: (1) the reasons that one or more time and distance standards
were not met; (2) the mitigating measures the issuer is taking to
ensure enrollee access to respective provider specialty types; (3)
information regarding enrollee complaints regarding network adequacy;
and (4) the issuer's efforts to recruit additional providers. We used
the provider's data submitted on the ECP/NA template and the completed
Network Adequacy Justification Form submitted as part of the
certification process to assess whether the issuer met the regulatory
requirement, prior to making the certification decision.
---------------------------------------------------------------------------

\188\ 2023 Final Letter to Issuers in the Federally-facilitated
Exchanges. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/final-2023-letter-to-issuers.pdf.
\189\ Essential Community Providers and Network Adequacy.
https://www.qhpcertification.cms.gov/s/ECP%20and%20Network%20Adequacy.
\190\ Id.
---------------------------------------------------------------------------

In the 2023 Payment Notice (87 FR 27328), we also finalized that,
starting in PY 2025, we would also evaluate QHPs for compliance with
appointment wait time standards.In the 2023 Payment Notice (87 FR
27323), we finalized that CMS would not evaluate network adequacy in
States performing plan management functions that elect to perform their
own reviews of plans seeking QHP certification in their State, provided
that the State applies and enforces quantitative network adequacy
standards that are at least as stringent as the federal network
adequacy standards established for QHPs under 45 CFR 156.230, and that
reviews are conducted prior to plan confirmation to support timely QHP
certification.
In response to the network adequacy proposals proposed in the 2023
Payment Notice proposed rule, many commenters also requested that we
extend Federal network adequacy standards to State Exchanges in future
rulemaking (87 FR 27334). Several commenters suggested that State
alignment with Federal standards would be ideal, and that Federal
standards

[[Page 82587]]

should offer minimum standards, or a ``strong floor,'' that all States
must meet.
In the 2024 Payment Notice (87 FR 78285 through 78287), we
finalized that all individual market QHPs, including individual market
stand-alone dental plans (SADPs), and all SHOP QHPs across all
Exchanges must use a network of providers that complies with the
standards described in Sec. Sec. 156.230 and 156.235 (with a limited
exception for certain SADP issuers as specified under Sec.
156.230(a)(4)). We also further deferred the imposition of appointment
wait time standards to PY 2025.
b. Network Adequacy Standards and Reviews Across Exchanges
Network adequacy is a key factor affecting consumers' access to
care. While the FFEs impose uniform network adequacy standards across
the States they serve that require QHP issuers to meet quantitative
metrics, a similarly uniform network adequacy standard does not exist
for States served by State Exchanges and SBE-FPs. Indeed, these
circumstances prompted the National Association of Insurance
Commissioners to develop the NAIC Health Benefit Plan Network Access
and Adequacy Model Act (Model Act).\191\ The Model Act includes
recommendations for qualitative network adequacy standards to which
States could hold their issuers accountable and that require submission
of access plans. The Model Act, however, does not specify what
constitutes network adequacy, and, currently, only a few State
Exchanges and SBE-FPs have adopted the full Model Act, resulting in the
lack of a strong floor for network adequacy standards among State
Exchanges and SBE-FPs.
---------------------------------------------------------------------------

\191\ Health Benefit Plan Network Access and Adequacy Model Act.
(2015, 4th Quarter). https://www.nh.gov/insurance/legal/documents/naic_model_act_network_adequacy.pdf.
---------------------------------------------------------------------------

State Exchanges and SBE-FPs currently have a mix of network
adequacy policies in place, and approximately 25 percent of those fail
to impose any quantitative standard. Quantitative network adequacy
standards can be monitored relatively easily and applied objectively
and may include standards that measure provider-to-enrollee ratios,
time and distance, or appointment wait times.\192\ On the other hand, a
qualitative approach to network adequacy typically articulates a broad,
general standard of adequacy and typically grants regulators or
insurers discretion to determine how to measure compliance.\193\ State
regulators using this approach may require issuers to simply articulate
how they determine and measure adequacy in their networks.\194\ Once
regulators approve an issuer's network adequacy plan using this
approach, they then typically let issuers self-monitor their own
compliance.\195\ As opposed to conducting routine audits or requiring
periodic reports of compliance, State regulators usually rely on
consumer complaints to highlight situations that might require
investigation.\196\
---------------------------------------------------------------------------

\192\ Hall, Ginsburg. (2017, Sep.). A Better Approach to
Regulating Provider Network Adequacy. https://www.brookings.edu/wp-content/uploads/2017/09/regulatory-options-for-provider-network-adequacy.pdf.
\193\ Id.
\194\ Id.
\195\ Id.
\196\ Id.
---------------------------------------------------------------------------

Based on our experience conducting network adequacy reviews and
regulating QHPs, as well as feedback from interested parties, including
the many commenters who requested in the 2023 Payment Notice (87 FR
27334) that HHS extend Federal network adequacy standards to State
Exchanges in future rulemaking, we are now of the view that no matter
the State in which a QHP is offered, some quantitative analysis is
necessary for an Exchange to objectively monitor network adequacy and
determine whether a QHP provides enrollees in that State with access to
an adequate network of providers.
Moreover, the proliferation in recent years of QHP issuers with
narrower provider networks raises several consumer protection concerns.
QHPs with narrower networks may lack access to specific provider
specialties in-network, resulting in significant out-of-pocket expenses
for consumers who must seek care out-of-network or resulting in
consumers forgoing care to avoid these expenses. We have also been made
aware, through communications with interested parties, of issues faced
by consumers where in-network emergency physicians and mental health
providers are in limited supply or, in the case of in-network emergency
physicians, not available at in-network hospitals. Additionally, the
proliferation of narrower networks risks consumers being enrolled in
plans whose networks do not have sufficient capacity to serve them or
whose providers are too geographically dispersed to be reasonably
accessible.
Therefore, we propose to establish a national floor of quantitative
network adequacy standards and network adequacy reviews. Although a
number of State Exchanges and SBE-FPs have taken meaningful steps
towards ensuring the adequacy of QHP networks, we are of the view that
every Exchange should apply quantitative network adequacy standards and
conduct a thorough review and analysis of issuer compliance with these
standards to effectively evaluate the adequacy of QHP networks in order
to ensure that all consumers, regardless of which State they live in,
have timely access to providers to manage their health care needs.
c. Proposals Related to State Exchange and SBE-FP Network Adequacy
Standards and Reviews
We propose that for PY 2025 and future plan years, State Exchanges
and SBE-FPs must (1) establish and impose quantitative time and
distance network adequacy standards for QHPs that are at least as
stringent as standards for QHPs participating on the FFEs under Sec.
156.230; and (2) conduct reviews of a plan's compliance with those
quantitative network adequacy standards prior to certifying any plan as
a QHP, consistent with the manner in which the FFEs review the network
adequacy of plans under Sec. 156.230.
i. Quantitative Network Adequacy Time and Distance Standards
For plans years beginning on or after January 1, 2025, we propose
that State Exchanges and SBE-FPs establish and impose quantitative time
and distance network adequacy standards that are at least as stringent
as the FFEs' time and distance standards established for QHPs under
Sec. 156.230.
For purposes of this proposal, ``at least as stringent as'' means
time and distance standards that use a specialty list that includes at
least the same specialties as our provider specialty lists and time and
distance parameters that are at least as short as our parameters.
States would be permitted to implement network adequacy standards that
are more stringent than those performed by the FFEs under Sec.
156.230. In other words, States could use a specialty list that is
broader than our specialty lists, but it must include all the provider
specialties included in our lists. Similarly, the time and distance
parameters could also be narrower than our parameters, meaning they
could require shorter time and/or distances, but they cannot be less
demanding than our time and distance parameters.
Quantitative time and distance standards help strengthen QHP
enrollees' timely access to a variety of providers to meet their health
care needs, which in turn helps ensure that enrollees can receive
health care services without unreasonable delay. Additionally,
quantitative time and

[[Page 82588]]

distance standards, when varied by county type, provide a useful
assessment of whether QHPs provide reasonable access to care and a more
comprehensive evaluation of the adequacy of QHPs' networks.
In the 2023 Payment Notice (87 FR 27322), we adopted time and
distance standards that the FFEs would use to assess whether plans to
be certified as QHPs in the FFEs meet network adequacy standards. The
proposed provider specialty lists for time and distance standards for
PY 2023 were informed by prior HHS network adequacy requirements,
consultation with interested parties, and other Federal and State
health care programs, such as Medicare Advantage and Medicaid. The
provider specialty lists that were finalized for PY 2023 covered more
provider types than previously evaluated under FFE standards so that
QHP networks would be robust, comprehensive, and responsive to QHP
enrollees' needs. We believe that these provider specialty lists
promote access to a variety of provider types and as a result
strengthen consumer access to health care services without unreasonable
delay. To establish a national floor for quantitative network adequacy
standards, we propose that the provider specialty list that State
Exchanges and SBE-FPs use must include, at a minimum, the providers in
the provider specialty lists for the FFEs that were applicable to PY
2023. Those lists are included in this preamble, as well.
Consistent with the standards for the FFEs and to strengthen QHP
enrollees' timely access to a variety of providers to meet their health
care needs, we propose that State Exchanges and SBE-FPs' time and
distance standards would be calculated at the county level and vary by
county designation. State Exchanges and SBE-FPs would be required to
use a county type designation method that is based on the population
size and density parameters of individual counties. Under our proposal,
the time and distance standards State Exchanges and SBE-FPs would
establish and impose would apply to the provider specialty lists
contained in Tables 10 and 11. To count towards meeting the time and
distance standards, individual and facility providers listed on Tables
10 and 11 would have to be appropriately licensed, accredited, or
certified to provide services in their State, as applicable, and would
need to have in-person services available.
BILLING CODE 4120-01-P

[[Page 82589]]

[GRAPHIC] [TIFF OMITTED] TP24NO23.022

[GRAPHIC] [TIFF OMITTED] TP24NO23.023

BILLING CODE 4120-01-P
The county-specific time and distance parameters that QHPs would be
required to meet would be detailed in future guidance, in the annual
CMS Letter to Issuers in the Federally-facilitated Exchanges. We would

[[Page 82590]]

consider industry standards in developing these standards.
ii. Quantitative Network Adequacy Reviews
For plans years beginning on or after January 1, 2025, we propose
that State Exchanges and SBE-FPs be required to conduct quantitative
network adequacy reviews prior to QHP certification, and that they
conduct them consistent with network adequacy reviews conducted by the
FFEs under Sec. 156.230. Specifically, when we refer to the review
being consistent with the network adequacy reviews conducted by the
FFEs under Sec. 156.230, we propose that State Exchanges and SBE-FPs
would be required to conduct, prior to QHP certification, quantitative
network adequacy reviews to evaluate compliance with requirements under
Sec. 156.230(a)(1)(ii) and (iii), and (a)(2)(i)(A), while providing
QHP certification applicants the flexibilities described under Sec.
156.230(a)(2)(ii) and (a)(3) and (4). Under this proposal, State
Exchanges and SBE-FPs would be prohibited from accepting an issuer's
attestation as the only means for plan compliance with network adequacy
standards. We further propose that State Exchanges and SBE-FPs would
make available to SADP applicants the limited exception available to
SADPs under Sec. 156.230(a)(4), pursuant to which SADPs may not be
required to meet FFE network adequacy standards under Sec.
156.230(a)(4), for the same reasons we made this exception available in
the FFEs in the 2024 Payment Notice (88 FR 25878 through 25879). This
exception is not available to medical QHP issuers.
iii. Quantitative Network Adequacy Review Justification Process
We acknowledge that State-specific challenges may necessitate
exceptions, and so we propose to require State Exchanges and SBE-FPs to
permit issuers that are unable to meet the specified standards to
participate in a justification process after submitting their initial
data to account for variances, consistent with the processes specified
under Sec. 156.230(a)(2)(ii) and (a)(3) and (4). State-specific
challenges could include barriers beyond an issuer's control, such as
provider supply shortages or topographic barriers.
The issuer would include this justification as part of its QHP
application and describe how the plan's provider network provides an
adequate level of service for enrollees and how the plan's provider
network will be strengthened and brought closer to compliance with the
network adequacy standards prior to the start of the plan year. The
issuer would be required to provide information as requested by the
State Exchange or SBE-FP to support this justification. State Exchanges
and SBE-FPs would be required to review the issuer's justification to
determine whether making such health plan available through the
Exchange is in the interests of qualified individuals in the State or
States in which such Exchange operates as specified under Sec.
156.230(a)(3). In making this determination, the factors State
Exchanges and SBE-FPs could consider include whether the exception is
reasonable based on circumstances such as the local availability of
providers and variables reflected in local patterns of care. If the
State Exchange or SBE-FP determines that making such health plan
available through its Exchange is in the interests of qualified
individuals in the State or States in which such Exchange operates, it
could then certify the plan as a QHP.
iv. Exception Process for State Exchanges and SBE-FPs
We are aware that some States Exchanges employ robust, quantitative
network adequacy standards that differ from those used by the FFEs, but
still ensure that QHPs provide consumers with reasonable, timely access
to practitioners and facilities to manage their health care needs,
consistent with the ultimate aim of these proposals. In light of this,
we propose a framework for granting exceptions to the requirements that
State Exchanges and SBE-FPs are required to establish and impose
network adequacy time and distance standards for QHPs that are at least
as stringent as the standards applicable to QHPs in FFEs and conduct
quantitative network adequacy reviews that are consistent with those
carried out by the FFEs under Sec. 156.230. We propose that HHS could
grant State Exchanges and SBE-FPs an exception if it determines that
the Exchange applies and enforces quantitative network adequacy
standards that are different from the FFEs' but ensure reasonable
access as defined under Sec. 156.230. The exception would be available
only to State Exchanges and SBE-FPs that conduct quantitative reviews
of network adequacy prior to certifying plans as QHPs. Exchanges
seeking to employ alternative network adequacy standards would be
required to submit an exception request, in a form and manner specified
by HHS, and to support their exception request with evidence-based data
demonstrating that such standards ensure access as defined under Sec.
156.230.
For example, if a State were to provide quantitative evidence that
their network adequacy time and distance standards that measure access
by service types provide consumers with equal access to providers as
the Federal network adequacy standards under Sec. 156.230 that measure
access by provider types, we may grant the respective State's request
for an exception from measuring access by provider types. Additionally,
if a State were to use different county type designations than the five
county type designations that we use to assess QHP time and distance
standards at the county level (that is, Large Metro, Metro, Micro,
Rural, CEAC), we would consider the respective State's request for an
exemption from using the same five county type designations only if the
State were to provide evidence that their alternative county type
designations provide consumers with equal access to providers as the
Federal network adequacy standards under Sec. 156.230. Alternative
quantitative network adequacy standards that we would review for
potentially qualifying for the exemption must be supported by evidence-
based data, demonstrating that such standards provide enrollees with a
level of access to providers that is equal to or greater than that
ensured by the FFE network adequacy standards under Sec. 156.230.
Although we propose to establish minimum standards related to
network adequacy in this proposed rule, we solicit comment on how
States may be able to develop a combination of data-driven quantitative
and qualitative standards, developed with input from interested
parties, to assess network adequacy. In the 2020 Medicaid Program;
Medicaid and Children's Health Insurance Program (CHIP) Managed Care
final rule (85 FR 72754, 72802), we provided States the flexibility to
develop quantitative network adequacy standards for determining network
adequacy. In that rule, we noted that in some situations, time and
distance may not be the most effective type of standard for determining
network adequacy and that some States have found that the time and
distance analysis produces results that may not accurately reflect
provider availability. For example, a State that has a heavy reliance
on telehealth in certain areas of the State may find that a health care
provider-to-enrollee ratio is more useful in measuring meaningful
access to all services without unreasonable delay, as the time it would
take the enrollee, and the distance the enrollee would have to travel,
to access

[[Page 82591]]

the provider in-person could be well beyond applicable time and
distance standards, but the enrollee may still be able to easily and
quickly access many different providers on a virtual basis. (85 FR
72802) We seek comment on how we should administer the process for
Exchanges to apply for these exceptions, including the appropriate
timelines, and the data that would be required to be submitted as part
of this request. We also seek comment on how we should evaluate the
provider access offered by QHP issuers in a State that requests an
exception to establish and impose quantitative network adequacy
standards that are different from the FFEs', whether and how to measure
the access provided by those different standards over time, and how
long an approved exemption should last.
To ensure compliance with these proposed quantitative time and
distance QHP network adequacy standards and review requirements, we
would coordinate with State Exchanges and SBE-FPs to provide technical
assistance to support their compliance with the requirements of this
proposal and work with them should it be necessary to remedy any gaps
in compliance. However, if a State Exchange or SBE-FP fails to comply
with these standards, HHS could seek to take remedial action under its
authorities related to Exchange program integrity.
d. Proposal Related to QHP Reporting on Telehealth Services
We propose to require State Exchanges and SBE-FPs to require that
all issuers seeking certification of plans to be offered as QHPs submit
information to the respective State Exchanges or SBE-FPs about whether
network providers offer telehealth services. We propose that this
requirement would be applicable beginning with the QHP certification
cycle for PY 2025. This data would be for informational purposes; it
would be intended to help inform the future development of telehealth
standards and would not be displayed to consumers. We believe this
information could be relevant to State Exchange and SBE-FP analysis of
whether a QHP meets network adequacy standards. We note that this
proposal is not intended to suggest that telehealth services would be
counted in place of in-person service access for the purpose of meeting
network adequacy standards for PY 2025. While we acknowledge the
growing importance of telehealth, we want to ensure that telehealth
services do not reduce the availability of in-person care.
For this purpose, telehealth encompasses professional
consultations, office visits, and office psychiatry services delivered
through technology-based methods, including virtual check-ins, remote
evaluation of pre-recorded patient data, and inter-professional
internet consultations. Currently, for issuers in FFEs to comply with
telehealth reporting standards, issuers must indicate whether each
provider offers telehealth with the options ``Yes,'' ``No,'' or
``Requested information from the provider, awaiting their response.''
We are proposing that State Exchanges and SBE-FPs also impose this same
standard.
We seek comment on this proposal, including comments on how we
might incorporate telehealth availability into network adequacy
standards in future plan years.
f. Additional Network Adequacy Standards
To reduce burden on State Exchanges and SBE-FPs that are not yet
conducting quantitative network adequacy reviews, we are not proposing
at this time that State Exchanges and SBE-FPs enforce appointment wait
time standards or that State Exchanges and SBE-FPs ensure that the
provider network of each QHP meets applicable standards specified in
Sec. 156.230(b) through (e). However, we seek comment to inform any
potential future enforcement of appointment wait time standards as well
as the standards specified in Sec. 156.230(b) through (e), and look
forward to capturing a wide range of perspectives on these topics from
various interested parties. We are especially interested in comments
about how State Exchanges and SBE-FPs may enforce quantitative network
adequacy standards for appointment wait times, as well as the impact
enforcing these standards may have on issuers and consumers.
We also seek comment on our proposal for State Exchanges and SBE-
FPs to establish and impose quantitative time and distance QHP network
adequacy standards that are at least as stringent as the FFEs' time and
distance standards established for QHPs under Sec. 156.230 and to
conduct quantitative network adequacy reviews, prior to QHP
certification, that are consistent with the reviews conducted by the
FFEs under Sec. 156.230, including comment on whether we should amend
Sec. 156.230 in addition to Sec. 155.1050 to directly apply the same
standards applicable to issuers on FFEs to issuers in State Exchanges
and SBE-FPs for plan years beginning on or after January 1, 2025.

E. 45 CFR 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 2025 Benefit Year (Sec.
156.50)
For the 2025 benefit year, we propose to retain the 2024 benefit
year FFE user fee rate of 2.2 percent of total monthly premiums and an
SBE-FP user fee rate of 1.8 percent of the total monthly premiums.
Section 1311(d)(5)(A) of the ACA permits an Exchange to charge
assessments or user fees on participating health insurance issuers as a
means of generating funding to support its operations. If a State does
not elect to operate an Exchange or does not have an approved Exchange,
section 1321(c)(1) of the ACA directs HHS to operate an Exchange within
the State. Accordingly, in Sec. 156.50(c), we state that a
participating issuer offering a plan through an FFE or SBE-FP must
remit a user fee to HHS each month that is equal to the product of the
annual user fee rate specified in the annual HHS 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.\197\ OMB Circular A-25 provides that a user fee charge will be
assessed against each identifiable recipient of special benefits
derived from Federal activities beyond those received by the general
public.
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\197\ See Circular No. A-25 Revised. https://www.whitehouse.gov/wp-content/uploads/2017/11/Circular-025.pdf.
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a. FFE User Fee Rates for the 2025 Benefit Year
Based on estimated costs, enrollment (including anticipated
establishment of SBE-FPs or shifts to State Exchanges in certain States
in which FFEs or SBE-FPs currently are operating), and premiums for the
2025 benefit year, we propose a 2025 user fee rate for all
participating FFE issuers of 2.2 percent of total monthly premiums.
Section 156.50(c)(1) provides that, 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

[[Page 82592]]

charged by the issuer for each policy where enrollment is through an
FFE. As in benefit years 2014 through 2024, issuers seeking to
participate in an FFE in the 2025 benefit year will receive two special
benefits not available to issuers offering plans in State Exchanges:
(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 2025 benefit year, issuers
participating in an FFE will receive special benefits from the
following Federal activities:
Provision of consumer assistance tools;
Consumer outreach and education;
Management of a Navigator program;
Regulation of agents and brokers;
Eligibility determinations;
Enrollment processes; and
Certification processes for QHPs (including ongoing
compliance verification, recertification, and decertification).
Activities performed by the Federal government that do not provide
issuers participating in an FFE with a special benefit are not covered
by the FFE user fee.
The proposed user fee rate reflects our estimates for the 2025
benefit year of costs for operating the FFEs, premiums, enrollment, and
transitions in Exchange models from the FFE and SBE-FP models to either
the SBE-FP or State Exchange models. The total enrollment in Exchanges
in States anticipated to transition from operating an SBE-FP to a State
Exchange model represents premiums for which we will no longer collect
user fees, and the total enrollment in Exchanges in States anticipated
to transition from an FFE to an SBE-FP model represents premiums for
which we will assess user fees at the lower SBE-FP rate. Thus, these
anticipated transitions impact our total projected collections and may
affect the FFE and SBE-FP rates and are considered as part of our
calculation of our proposed user fee amounts.
To develop the proposed 2025 benefit year FFE user fee rates, we
considered a range of costs, premiums, and enrollment projections.\198\
For the proposed 2025 benefit year user fee rates, we estimated a
reduction in contract costs partially or fully funded out of FFE and
SBE-FP user fees from the 2024 benefit year due to the HHS funding for
Exchange outreach activities related to Medicaid unwinding ending in
2024. We took several factors into consideration in choosing which
premium and enrollment projections would inform the proposed 2025 FFE
user fee rates. The enhanced PTC subsidies in section 9661 of the ARP
were extended in section 12001 of the IRA through the 2025 benefit
year. The extension of enhanced PTC subsidies significantly influenced
our development of the 2025 enrollment and premium projections. We
expect this provision of the IRA to sustain the higher enrollment
levels observed in the 2021 and 2022 benefit years after the ARP was
established and, as a result, we expect the projected total premiums
where the user fee applies to increase, thereby increasing the amount
of user fees that will be collected. Our 2025 enrollment estimates also
account for the projected transitions of States from FFEs or SBE-FPs to
State Exchanges, the enrollment impacts of section 1332 waivers, and
transitioning Medicaid Expansion States.\199\ We project that 2025
benefit year premiums will generally increase at the rate of medical
inflation. After considering the range of costs, premiums, and
enrollment projections, we propose a 2025 user fee rate that will
ensure adequate funding for Federal Exchange operations.
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\198\ We considered the most recent projections from the
Congressional Budget Office (https://www.cbo.gov/system/files/2023-05/51298-2023-05-healthinsurance.pdf) and, as we have in prior
rulemakings, our own internal data. See, for example, 88 FR 25845.
\199\ In 2023, South Dakota implemented the Medicaid expansion
provision of the ACA, extending Medicaid eligibility to adults in
that State under the age of 65 with incomes up to 138 percent of the
Federal poverty level. North Carolina is expected to implement
Medicaid expansion in 2024.
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We note that if any events significantly change our estimates
around costs, premiums, or enrollment projections between this proposed
rule and the final rule, we may modify the FFE and SBE-FP user fee
rates that are proposed in this rule. For example, if enrollment during
the open enrollment period for the 2024 plan year is significantly
larger or smaller than anticipated, we would revise our enrollment
projections, which could result in a modification of the FFE and SBE-FP
proposed rates. The proposed FFE user fee rate for 2025 is 2.2 percent
of total monthly premiums and is the same user fee rate as for the 2024
benefit year. After accounting for the impact of the proposed user fee
rate, we estimate that we would have sufficient funding available to
fully fund user-fee-eligible FFE activities.
We seek comment on the proposed 2025 FFE user fee rate.
b. SBE-FP User Fee Rates for the 2025 Benefit Year
We propose to charge issuers offering QHPs through an SBE-FP a user
fee rate of 1.8 percent of the monthly premium charged by the issuer
for each policy under plans offered through an SBE-FP for the 2025
benefit year.
In Sec. 156.50(c)(2), we specify that an issuer offering a plan
through an SBE-FP must remit a user fee to HHS, in the timeframe and
manner established by HHS, equal to the product of the monthly user fee
rate specified in the annual HHS notice of benefit and payment
parameters for the applicable benefit year and the monthly premium
charged by the issuer for each policy where enrollment is through an
SBE-FP. SBE-FPs enter into a Federal platform agreement with HHS to
leverage the systems established for the FFEs to perform certain
Exchange functions and enhance efficiency and coordination between
State and Federal programs. The benefits provided to issuers in SBE-FPs
by the Federal government include use of the FFE information technology
and call center infrastructure used in connection with eligibility
determinations for enrollment in QHPs and other applicable State health
subsidy programs, as defined at section 1413(e) of the ACA, and QHP
enrollment functions under 45 CFR part 155, subpart E. The user fee
rate for SBE-FPs is calculated based on the proportion of total FFE
costs associated with Federal activities that provide SBE-FP issuers
with special benefits, including costs that are associated with the FFE
information technology infrastructure, the consumer call center
infrastructure, and eligibility and enrollment services.
To calculate the proposed SBE-FP rates for the 2025 benefit year,
we used the same assumptions related to contract costs, enrollment, and
premiums as we used for the proposed FFE user fee rates. As we
explained previously in this section, the user fee rate for SBE-FPs is
calculated based on the proportion of the total FFE costs associated
with Federal activities that provide SBE-FP issuers with special
benefits, which we estimate to be approximately 80 percent of total FFE
costs. These FFE costs associated with Federal activities that provide
SBE-FP issuers with special benefits include the costs associated with
the FFE information technology infrastructure, the consumer call center
infrastructure, and eligibility and enrollment services. Based on this
methodology, the proposed 2025 SBE-FP user fee rate is the same user
fee rate of 1.8 percent of

[[Page 82593]]

premiums that we established for the 2024 benefit year. The proposed
user fee rate for SBE-FP issuers for the 2025 benefit year also
includes assumptions about States transitioning from either the FFE
model to an SBE-FP, or from an SBE-FP to a State Exchange for the 2025
benefit year, which impacts the SBE-FP enrollment projections. As
mentioned above, we also note that if any events significantly change
our estimates around costs, premiums, or enrollment projections between
this proposed rule and the final rule, we may modify the FFE and SBE-FP
rates that are proposed in this rule.
We seek comment on the proposed 2025 SBE-FP user fee rate.
2. State Selection of EHB-Benchmark Plans for Plan Years Beginning on
or After January 1, 2027 (Sec. 156.111)
For benefit years beginning on or after January 1, 2027, we propose
to revise the standards for the State selection of EHB-benchmark plans
at Sec. 156.111 to: consolidate the options for States to change EHB-
benchmark plans at Sec. 156.111(a); revise the scope of benefit
requirements at Sec. 156.111(b)(2); and amend Sec. 156.111(e)(3) to
require States to submit a formulary drug list as part of its
application to change EHB-benchmark plans only if the State is seeking
to change its prescription drug EHB.
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. Among other
requirements, the law directs that the EHBs be equal in scope to the
benefits provided under a typical employer plan, and that they include
at least the following 10 general categories and the items and services
covered within the 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.
We established requirements relating to the coverage of EHBs in the
EHB Rule (78 FR 12834). In the 2019 Payment Notice (83 FR 17009), we
added Sec. 156.111 to provide States with additional options from
which to select an EHB-benchmark plan for plan years beginning on or
after January 1, 2020. In the 2023 Payment Notice (87 FR 27290), we
revised Sec. 156.111 to require States to notify HHS of the selection
of a new EHB-benchmark plan by the first Wednesday in May of the year
that is 2 years before the effective date of the new EHB-benchmark
plan, and stated that if a State did not provide such notification to
HHS, the State's EHB-benchmark plan for the applicable plan year would
be that State's EHB-benchmark plan applicable for the prior year. In
the EHB RFI (87 FR 74097), we solicited public comment on a variety of
topics related to the scope of benefits in health plans subject to the
EHB requirements of the ACA, including the description of the EHB, the
scope of benefits covered in typical employer plans, the review of EHB,
coverage of prescription drugs, and substitution of EHB.
Section 156.111(a) describes three options for States to change
their EHB-benchmark plan. States may: (1) select the EHB-benchmark plan
that another State used for the 2017 plan year under Sec. Sec. 156.100
and 156.110; (2) replace one or more categories of EHBs established at
Sec. 156.110(a) in the State's EHB-benchmark plan used for the 2017
plan year with the same category or categories of EHB from the EHB-
benchmark plan that another State used for the 2017 plan year under
Sec. Sec. 156.100 and 156.110; or (3) otherwise select a set of
benefits that would become the State's EHB-benchmark plan.
Among other requirements, a State changing its EHB-benchmark plan
must comply with two scope of benefit requirements at Sec.
156.111(b)(2)(i) and (ii). The first scope of benefit requirement at
Sec. 156.111(b)(2)(i), also known as the typicality standard, requires
the State's proposed EHB-benchmark plan to provide a scope of benefits
equal to the scope of benefits provided under a typical employer
plan,\200\ in accordance with section 1302(b)(2) of the ACA. As defined
at Sec. 156.111(b)(2)(i)(A) and (B), a typical employer plan is
either: one of the selecting State's 10 base-benchmark plan options
established at Sec. 156.100 and available for the selecting State's
selection for the 2017 plan year or the largest health insurance plan
by enrollment within one of the five largest large group health
insurance products by enrollment in the State.\201\ The second scope of
benefit requirement at Sec. 156.111(b)(2)(ii), also known as the
generosity standard, requires the State's proposed EHB-benchmark plan
to provide a scope of benefits that does not exceed the generosity of
the most generous among a set of comparison plans, including: the
State's EHB-benchmark plan used for the 2017 plan year, and any of the
State's base-benchmark plan options for the 2017 plan year described in
Sec. 156.100(a)(1), supplemented as necessary under Sec. 156.110.
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\200\ The scope of benefits of the State's new EHB-benchmark
plan may exceed the scope of benefits of the typical employer-
sponsored or other job-based plans only to the extent any
supplementation is required to provide coverage within each EHB
category at Sec. 156.110(a).
\201\ Provided that the product has at least 10 percent of the
total enrollment of the five largest large group health insurance
products in the State; the plan provides minimum value, as defined
under Sec. 156.145; the benefits are not excepted benefits, as
established under Sec. 146.145(b) and Sec. 148.220; and the
benefits in the plan are from a plan year beginning after December
31, 2013.
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Under Sec. 156.111(e)(3), if a State is selecting its EHB-
benchmark plan by selecting a set of benefits that would become the
State's EHB-benchmark plan under Sec. 156.111(a)(3), the State must
submit a formulary drug list in a format and manner specified by HHS.
Nine States have changed their EHB-benchmark plans since 2018 by
complying with the requirements at Sec. 156.111.\202\ Based on
interactions with these States and feedback received in response to the
EHB RFI,\203\ we understand that certain aspects of the process to
change EHB-benchmark plans may impose unanticipated difficulty on and
create confusion for States. We understand there are concerns that the
typicality standard, as implemented, is a burdensome way to ensure a
State's EHB-benchmark plan selection is equal in scope to a typical
employer plan. In addition, in limiting EHB-benchmark plan selections,
we understand that the generosity standard may also impede the ability
of States to select an EHB-benchmark that is equal in scope to the
benefits provided under a typical employer plan in the State, which we
understand States often find have become more generous over time. We
also understand that requiring States to submit a formulary drug list
to HHS as part of the documentation required under Sec. 156.111(e) can
be particularly onerous when a State is not seeking to change its
prescription drug EHBs.
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\202\ For more information on the changes States have made to
their EHB-benchmark plans, see https://www.cms.gov/CCIIO/Resources/Data-Resources/ehb.
\203\ For example, see https://www.regulations.gov/comment/CMS-2022-0186-0270; https://www.regulations.gov/comment/CMS-2022-0186-0412; and https://www.regulations.gov/comment/CMS-2022-0186-0559.
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As a result of that feedback, we are now proposing changes to Sec.
156.111 to reduce State burden to change EHB-benchmark plans. For
benefit years beginning on or after January 1, 2027, we propose three
revisions to the

[[Page 82594]]

standards for State selection of EHB-benchmark plans at Sec. 156.111.
First, we propose to consolidate the options for States to change EHB-
benchmark plans at Sec. 156.111(a) to reduce the burden on States to
decide between three functionally identical choices. Second, we propose
to revise the typicality standard at Sec. 156.111(b)(2) so that, in
demonstrating that a State's new EHB-benchmark plan provides a scope of
benefits that is equal to the scope benefits of a typical employer plan
in the State, the scope of benefits of a typical employer plan in the
State would be defined as any scope of benefits that is as or more
generous than the scope of benefits in the State's least generous
typical employer plan (supplemented by the State as necessary to
provide coverage within each EHB category at Sec. 156.110(a)), and as
or less generous than the scope of benefits in the State's most
generous typical employer plan (supplemented by the State as necessary
to provide coverage within each EHB category at Sec. 156.110(a)),
among the typical employer plans currently defined at Sec.
156.111(b)(2)(i)(A) and (B). We also propose to remove the generosity
standard at Sec. 156.111(b)(2)(ii) and to make a technical revision to
the language regarding supplementation at Sec. 156.111(b)(2)(i).
Third, we propose to revise Sec. 156.111(e)(3) to require States to
submit a formulary drug list as part of their documentation to change
EHB-benchmark plans only if the State is seeking to change its
prescription drug EHB.
a. Consolidating the State EHB-Benchmark Plan Options
First, we propose to consolidate the choices for States to change
their EHB-benchmark plan by revising Sec. 156.111(a) to add a new
paragraph (a)(2) which would simply state that, subject to paragraphs
(b), (c), (d), and (e) of Sec. 156.111, for plan years beginning on or
after January 1, 2027, a State may change its EHB-benchmark plan by
selecting a set of benefits that would become the State's EHB-benchmark
plan. The language at current Sec. 156.111(a) would be redesignated as
Sec. 156.111(a)(1) and would be revised to provide that this paragraph
applies to plan years beginning on or after January 1, 2020, through
December 31, 2026. Further, the language currently at Sec.
156.111(a)(1) through (3) would be redesignated as Sec.
156.111(a)(1)(i) through (iii).
This proposal would not substantively change the options for States
to change their EHB-benchmark plans, as current Sec. 156.111(a)(3)
already allows States to select a set of benefits that would become the
State's EHB-benchmark plan and this option functionally encompasses the
options at current Sec. 156.111(a)(1) and (a)(2), which allow States
to select the EHB-benchmark plan that another State used for the 2017
plan year under Sec. Sec. 156.100 and 156.110, in whole or in part.
Under this proposal, a State selecting a set of benefits to become the
State's EHB-benchmark plan that wants to use an EHB-benchmark plan from
another State, either in whole or in part, could still do so. The
flexibility that current Sec. 156.111(a)(3) offers is why all nine
States that have changed their EHB-benchmark plans since 2018 relied on
Sec. 156.111(a)(3) to do so, though they often made that decision
after spending time and resources to deliberate on the differences
between the three options. Therefore, we propose to revise Sec.
156.111(a) to reduce this burden on States without substantively
changing their options to select an EHB-benchmark plan.
Under 42 CFR 440.347, Medicaid ABPs authorized under section 1937
of the Act are required to meet EHB standards. Similarly, under 42 CFR
600.405, in States that elect to operate a BHP, the standard health
plans must meet EHB standards. The changes to State EHB-benchmark plan
options would also be applicable to States when choosing a benchmark
plan used to define EHBs in a Medicaid ABP or BHP standard health plan.
We seek comment on the proposal to consolidate State EHB-benchmark
plan options under Sec. 156.111(a).
b. Scope of Benefit Requirements
Second, we propose to revise the scope of benefit requirements at
Sec. 156.111(b)(2) for plan years beginning on or after January 1,
2027, with corresponding proposed revisions to the actuarial
requirements at Sec. 156.111(e)(2). Specifically, we propose that a
State's new EHB-benchmark plan would be required to provide a scope of
benefits that is equal to the scope of benefits of a typical employer
plan in the State, and that the scope of benefits of a typical employer
plan in the State would be defined as any scope of benefits that is as
or more generous than the scope of benefits in the State's least
generous typical employer plan (supplemented by the State as necessary
to provide coverage within each EHB category at Sec. 156.110(a)), and
as or less generous than the scope of benefits in the most generous
typical employer plan in the State (supplemented by the State as
necessary to provide coverage within each EHB category at Sec.
156.110(a)), among the typical employer plans currently defined at
Sec. 156.111(b)(2)(i)(A) and (B). We also propose to remove the
generosity standard at Sec. 156.111(b)(2)(ii) and to make a technical
revision to the language regarding supplementation at Sec.
156.111(b)(2)(i).
Since the effective date of the 2019 Payment Notice, States have
been required to perform detailed actuarial analyses to demonstrate
that their EHB-benchmark plans offer a scope of benefits equal to, or
greater than, to the extent any supplementation is required to provide
coverage within each EHB category at Sec. 156.110(a), the scope of
benefits provided under a typical employer plan from among the typical
employer plans identified in the regulation. To demonstrate this, a
State must first assess the value of the current EHB-benchmark plan.
Next, the State must determine how that valuation increases or
decreases depending on their proposed plan modifications. Finally, the
State must assess the value of each typical employer plan option to
identify an exact match for the expected value offered by the proposed
plan. To find such a match, the State may need to assess the value of
many typical employer plan options, and determine whether
supplementation is necessary, which requires both additional time and
potentially additional costs for actuarial services. Additionally, the
typical employer plan options available to the State may not yield an
exact match to the benefit changes the State wishes to make, requiring
the State to then modify its proposed benefit changes to be exactly
equal in value to one of the available typical employer plan options.
In this way, the existing typicality standard can inhibit the ability
of States to innovate benefits in the State's EHB-benchmark plan by
generally requiring an exact actuarial match. In contrast, under the
proposed approach to typicality, each State would need to assess only
two typical employer plan options (the most and least generous
available) to establish a range of scopes of benefits that would be
considered typical employer plans within which the State EHB-benchmark
plan values could then match. We believe that requiring States to
actuarially assess only two typical employer plan options would reduce
both the time and cost to States of seeking to update their EHB-
benchmark plans and support a wider range of possible benefit changes,
thereby enabling States to more easily propose such updates if and when
they deem it appropriate to do so.
As an example, a State seeks to add benefits to an existing EHB-
benchmark

[[Page 82595]]

plan that currently provides a scope of benefits equivalent to the
State's least generous typical employer plan. The benefits that the
State seeks to add to the existing EHB-benchmark plan would make it no
longer equivalent to the State's least generous typical employer plan.
The additional benefits would also result in an EHB-benchmark plan that
is still less generous than the State's most generous typical employer
plan. Under the current rules, the State could not add these benefits
to their existing EHB-benchmark unless there is another typical
employer plan listed in the regulation that provides an equivalent
scope of benefits that accounts for the State's proposed additions.
This could mean that the State's proposed EHB-benchmark plan would be
out of compliance with the typicality standard simply because it does
not provide a scope of benefits equivalent to one of the remaining
State's typical employer plans, even though the scope of benefits in
the State's proposed EHB-benchmark plan is more generous than the
State's least generous typical employer plan and less generous than the
State's most generous typical employer plan. States have expressed
frustration that this approach to the typicality standard is
unnecessarily restrictive.
We agree with States that this approach to the typicality standard
can lead to unnecessary burden for States to ensure compliance with
section 1302(b)(2) of the ACA. Accordingly, we propose to revise the
scope of benefits requirements at Sec. 156.111(b)(2) to redesignate
Sec. 156.111(b)(2)(i) and (ii) as Sec. 156.111(b)(2)(i)(A) and (B)
and to specify at redesignated Sec. 156.111(b)(2)(i) that these
provisions would apply for plan years beginning on or after January 1,
2020, through December 31, 2026. We further propose to add new Sec.
156.111(b)(2)(ii) to provide that, for plan years beginning on or after
January 1, 2027, States may select an EHB-benchmark plan that provides
a scope of benefits equal to that of a typical employer plan in the
State, where the scope of benefits of a typical employer plan is any
scope of benefits within a continuous range of the scope of benefits
that is as or more generous than that provided by State's least
generous typical employer plan (supplemented by the State as necessary
to provide coverage within each EHB category at Sec. 156.110(a)) and
as or less generous than that provided by the State's most generous
typical employer plan (supplemented by the State as necessary to
provide coverage within each EHB category at Sec. 156.110(a)), among
the plans described at the proposed Sec. 156.111(b)(2)(ii)(A) and (B).
Under this proposal, at proposed Sec. 156.111(b)(2)(ii)(A) and (B), a
State would identify the least and most generous typical employer plans
among the same typical employer plans currently defined at Sec.
156.111(b)(2)(i)(A) and (B) to determine the permissible continuous
range of the scope of benefits for a State's EHB-benchmark plan
selection. We believe that this approach would significantly reduce
State burden in changing EHB-benchmark plans while still ensuring that
they provide a scope of benefits in accordance with section 1302(b)(2)
of the ACA.
As noted above, we are not proposing to change the list of typical
employer plans in this proposed rule. Under current Sec.
156.111(b)(2)(i)(B) and proposed Sec. 156.111(b)(2)(ii)(B), for
purposes of complying with the proposed typicality standard, a State
may use the largest health insurance plan by enrollment within one of
the five largest large group health insurance products by enrollment in
the State, provided that the benefits in the plan are from a plan year
beginning after December 31, 2013.\204\ Nonetheless, if the scope of
benefits in these large group employer plans changes over time and such
plans are among a State's most generous typical employer plans, the
upper bound of that State's available scope of benefits could change
accordingly.\205\ We have received feedback from States that indicates
that the scope of benefits in some of these large group plans has
increased since 2017, so we believe it is appropriate to allow States
to select an EHB-benchmark plan with a scope of benefit requirement
that tracks with such changes to employer plans in the States, to the
extent they exist.
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\204\ In addition, the product must have at least 10 percent of
the total enrollment of the five largest large group health
insurance products in the State; the plan must provide minimum
value, as defined under Sec. 156.145; and the benefits must not be
excepted benefits, as established under Sec. Sec. 146.145(b) and
148.220. See Sec. 156.111(b)(2)(i)(B)(1) through (3).
\205\ It is our expectation that the changes to the scope of
benefits in these large group plans would only impact the upper
bound of EHB-benchmark plans' scope of benefits. We expect the small
group typical employer-sponsored or other job-based plans at Sec.
156.100(a)(1), which are only from PY 2017, to consistently be among
the least generous typical employer-sponsored or other job-based
plans.
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We continue to believe that this list of plans appropriately
represents the scope of benefits provided under typical employer plans.
Based on our research on how the scope of benefits in employer-
sponsored or other job-based coverage has changed since 2014, which
includes our review of the comments submitted in response to the EHB
RFI, we believe that the scope of benefits in employer-sponsored or
other job-based coverage has either remained the same or increased
incrementally overall since 2014. To the extent it has increased in
certain States or certain regions, we believe that the scope of
benefits in employer-sponsored or other job-based coverage increasingly
tends to provide coverage for telehealth services, gender-affirming
care, bariatric surgery, hearing aids, infertility treatment, routine
non-pediatric dental services, and travel-related benefits for certain
conditions.\206\
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\206\ We emphasize that, under current Sec. 156.111, States
that change their EHB-benchmark plan are generally permitted to
select a set of benefits as their EHB-benchmark plan without regard
to the specific benefits that the State's selected typical employer-
sponsored or other job-based plan covers. As implemented under Sec.
156.111(b)(2)(i) and (e)(2)(i), the State is only required to
provide an actuarial certification and an associated actuarial
report from an actuary, who is a member of the American Academy of
Actuaries, in accordance with generally accepted actuarial
principles and methodologies, that affirms that the State's EHB-
benchmark plan is actuarially equal to the scope of benefits under a
typical employer-sponsored or other job-based plan.
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When we finalized the addition of Sec. 156.111 in the 2019 Payment
Notice (83 FR 17009), we also included the generosity standard at Sec.
156.111(b)(2)(ii) among the scope of benefit requirements for State
EHB-benchmark plans. As described at Sec. 156.111(b)(2)(ii), the
generosity standard requires that the scope of benefits in a State's
proposed new EHB-benchmark plan not exceed the generosity of the most
generous among a set of comparison plans, including: the State's EHB-
benchmark plan used for the 2017 plan year, and any of the State's
base-benchmark plan options for the 2017 plan year described in Sec.
156.100(a)(1), supplemented as necessary under Sec. 156.110. In the
2019 Payment Notice (83 FR 17011), we supported the addition of the
generosity standard by stating that it would appropriately limit the
range of benefits that can be considered EHB. Ever since, we have
received significant feedback from States and interested parties that
the generosity standard ``hinders the ability of States to add
innovative benefits to their EHB-benchmark plans.'' \207\ States have
also shared that the generosity standard is not necessary to ensure the
State EHB-benchmark plan selections are not unbounded given that the
typicality standard can function as both a ceiling and floor to limit a
State's EHB selections. Specifically, the typicality standard alone
limits the

[[Page 82596]]

potential generosity of a State's EHB-benchmark plan to be no greater
than the generosity provided by the most generous typical employer
plan, because a State would be unable to demonstrate that a more
generous plan was equal in scope to any of the typical employer plans
defined at Sec. 156.111(b)(2)(i).
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\207\ See, for example, https://www.regulations.gov/comment/CMS-2022-0186-0412.
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Based on this feedback and our experience working with the nine
States that have changed their EHB-benchmark plans under Sec. 156.111,
we propose to remove the generosity standard from the scope of benefit
requirements at Sec. 156.111(b)(2), for plan years beginning on or
after January 1, 2027. Under this proposal, the scope of benefits in
the State's new EHB-benchmark plan would no longer be restricted by the
generosity of the set of prescribed comparison plans at Sec.
156.111(b)(2)(ii)(A) and (B), which should provide States with
significant flexibility to more easily select a new EHB-benchmark plan
and remove a burdensome step of the actuarial analysis that States are
required to complete under the existing generosity standard when
selecting a new EHB-benchmark plan. However, we still believe that it
is appropriate to limit the range of benefits that can be considered
EHB to ensure the affordability of the EHB, and believe that the
proposal to revise the typicality standard so that States may select an
EHB-benchmark plan that provides a scope of benefits along a continuous
range of the scope of benefits provided by a State's least and most
generous typical employer plans is a more appropriate way to limit
State EHB-benchmark plan selections in accordance with section
1302(b)(2) of the ACA. The proposed revisions to the typicality
standard and the proposed removal of the generosity standard would also
establish an upper bound for State EHB-benchmark plan selections that
better tracks with the scope of benefits in typical employer plans as
they change over time.
When we finalized the addition of Sec. 156.111 in the 2019 Payment
Notice, we also published an acceptable methodology for States to
comply with the scope of benefits requirements.\208\ If the proposals
contained in this proposed rule are finalized, this methodology would
no longer be applicable after the May 1, 2024 deadline for States to
notify us of a new EHB-benchmark plan selection for plans effective
beginning on or after January 1, 2027. Given that the proposed
revisions to the scope of benefit requirements are designed to reduce
State burden, we do not believe it is necessary to issue a new
standalone methodology at this time. We believe States could more
easily comply with these proposed requirements, if finalized, by
identifying the least and most generous typical employer plans at Sec.
156.111(b)(2) (supplemented by the State as necessary to provide
coverage within each EHB category at Sec. 156.110(a)) and assessing
their scope of benefits in some quantitative manner in accordance with
generally accepted actuarial principles and methodologies. The State
would then assess the scope of benefits in its selected EHB-benchmark
plan in the same manner. The State would be in compliance with the
proposed scope of benefit requirement if the assessed scope of benefits
in its proposed EHB-benchmark plan is as or more generous than the
least generous typical employer plan in the State (supplemented by the
State as necessary to provide coverage within each EHB category at
Sec. 156.110(a)) and as or less generous than the most generous
typical employer plan in the State (supplemented by the State as
necessary to provide coverage within each EHB category at Sec.
156.110(a)). For a State adding benefits to its existing EHB-benchmark
plan, an acceptable analysis under the proposed revisions to Sec.
156.111 could involve the State calculating the expected premium for
covering all the benefits in the State's proposed EHB-benchmark plan
and in the State's least and most generous typical employer plans at
Sec. 156.111(b)(2) at 100 percent actuarial value, in accordance with
generally accepted actuarial principles and methodologies. This
analysis would allow the State to confirm, on an estimated premium
basis, that the scope of benefits in the proposed EHB-benchmark plan is
as or more generous than the scope of benefits in the least generous
typical employer plan and as or less generous than the scope of
benefits in the most generous typical employer plan in the State
(supplemented by the State as necessary to provide coverage within each
EHB category at Sec. 156.110(a)). We anticipate that we would continue
working closely with States to provide technical assistance to comply
with the scope of benefit requirements at proposed Sec. 156.111(b)(2).
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\208\ ``Example of an Acceptable Methodology for Comparing
Benefits of a State's EHB-benchmark Plan Selection in Accordance
with 45 CFR 156.111(b)(2)(i) and (ii)''. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/final-example-acceptable-methodology-for-comparing-benefits.pdf.
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In addition, we propose corresponding edits to Sec. 156.111(e)(2)
to require States to submit an actuarial certification and an
associated actuarial report from an actuary, who is a member of the
American Academy of Actuaries, in accordance with generally accepted
actuarial principles and methodologies, that affirms that the State's
EHB-benchmark plan complies with the scope of benefits requirements at
proposed 156.111(b)(2).
We also propose a technical clarification to the language regarding
supplementation at Sec. 156.111(b)(2)(i), which currently states that
a State's new EHB-benchmark plan must ``provide a scope of benefits
equal to, or greater than, to the extent any supplementation is
required to provide coverage within each EHB category at Sec.
156.110(a), the scope of benefits provided under a typical employer
plan'' (emphasis added). We have found that the language regarding
supplementation is consistently misunderstood as allowing a State's
EHB-benchmark plan to be greater than the scope of benefits under a
typical employer plan for any reason. A State's EHB-benchmark plan may
only exceed the scope of benefits in a typical employer plan when
supplementation is required to provide coverage in the typical employer
plan within each category at Sec. 156.110(a). To address the confusion
created by this provision, we propose to make a technical clarification
at Sec. 156.111(b)(2)(i) (which would apply to State selections of
EHB-benchmark plans through plan year 2026) to state that a State's
EHB-benchmark plan must provide a scope of benefits equal to the scope
of benefits provided under a typical employer plan (supplemented by the
State as necessary to provide coverage within each EHB category at
Sec. 156.110(a)). This proposed technical clarification would not
substantively change the existing requirement regarding supplementation
at Sec. 156.111(b)(2)(i).
Under 42 CFR 440.347, Medicaid ABPs authorized under section 1937
of the Act are required to meet EHB standards. Under 42 CFR 600.405, in
States that elect to operate a BHP, the standard health plans are
required to meet EHB standards. The changes to State EHB-benchmark plan
requirements would also be applicable to States when choosing a
benchmark plan used to define EHBs in a Medicaid ABP or a BHP standard
health plan.
We seek comment on the proposals to revise the typicality standard
at Sec. 156.111(b)(2)(i), remove the generosity standard at Sec.
156.111(b)(2)(ii), make corresponding edits to Sec. 156.111(e)(2), and
make a technical revision to the language regarding supplementation at
Sec. 156.111(b)(2)(i).

[[Page 82597]]

c. Drug Formularies
We propose to revise Sec. 156.111(e)(3) to require States to
submit a formulary drug list as part of their documentation provided to
change EHB-benchmark plans only if the State is seeking to change its
prescription drug EHB. Currently, we require States to submit a
formulary drug list if the State is selecting its EHB-benchmark plan
using the option at current Sec. 156.111(a)(3), even if the State is
not seeking to change its prescription drug EHB. We understand that
creation and submission of this formulary drug list creates a
significant amount of burden for the State. Since we can carry over the
State's existing prescription drug EHB, as defined under Sec. 156.122,
without substantial input from the State if the State is not seeking to
change its prescription drug EHB, we propose to revise Sec.
156.111(e)(3) as specified to reduce the burden on States.
We seek comment on this proposal.
3. Provision of EHB (Sec. 156.115)
We propose to remove the regulatory prohibition at Sec. 156.115(d)
on issuers from including routine non-pediatric dental services as an
EHB.
In the EHB Rule, we finalized at Sec. 156.115(d) that issuers of a
plan offering EHB may not include, among other services and benefits,
routine non-pediatric dental services as an EHB, even if the State's
current EHB-benchmark plan includes such services as covered benefits.
Section 1302(b)(2) of the ACA directs the Secretary, in defining the
EHB, to ensure that they are equal in scope to the benefits provided
under a typical employer plan. In the proposed EHB Rule (77 FR 70644),
in support of the prohibition at Sec. 156.115(d), we stated that
routine non-pediatric dental services are not typically included in the
medical plans offered by employers and are often provided as excepted
benefits by the employer. We now believe a more natural reading of this
provision is one that considers all the benefits typically covered by
employers, regardless of whether such benefit is historically
considered a ``health benefit'' or whether such benefit is ``typically
covered'' by an employer's major medical plan or, for example, by a
limited scope excepted benefits plan. Given that oral health has a
significant impact on overall health and quality of life,\209\ and
several commenters on the EHB RFI \210\ advocated for adult dental EHB
coverage, we propose specifically to remove the regulatory prohibition
on issuers including routine non-pediatric dental services as an EHB.
We seek comment on whether similar changes should be proposed with
regard to routine non-pediatric eye exam services and long-term/
custodial nursing home care benefits as well.
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\209\ Spanemberg, J.C., Cardoso, J.A., Slob, E.M.G.B, &
L[oacute]pez-L[oacute]pez, J. (2019). Quality of life related to
oral health and its impact in adults. Journal of Stomatology, Oral
and Maxillofacial Surgery, 120(3), 234-239. https://doi.org/10.1016/j.jormas.2019.02.004.
\210\ For example, see https://www.regulations.gov/comment/CMS-2022-0186-0567; https://www.regulations.gov/comment/CMS-2022-0186-0586; and https://www.regulations.gov/comment/CMS-2022-0186-0626.
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In 2020, approximately 110 million Americans had private dental
coverage.\211\ Of the Americans that have private dental coverage,
about 91 percent get their dental benefits through their employer or
through affiliation with an entity such as the American Association of
Retired Persons (AARP).\212\ According to National Financial Partners
(NFP)'s 2023 US Benefits Trend Report, approximately two out of every
three employers offer at least one dental plan, with 46 percent
offering one plan, 18 percent offering two plans, and 3 percent
offering three or more plans.\213\ Furthermore, according to KFF,\214\
among firms offering health benefits in 2019 included in the report, 59
percent of small firms (3-199 workers) and 92 percent of large firms
(200 or more workers) offered a dental insurance program to their
workers separate from the health plan(s).\215\ Therefore, it appears
that routine non-pediatric dental services are commonly covered as an
employer-sponsored or other job-based benefit to a degree that warrants
removing the prohibition on their provision as an EHB. We solicit
comment on this understanding of the inclusion of routine non-pediatric
dental services in employer-sponsored or other job-based benefits.\216\
Additionally, we believe that prohibiting the inclusion of routine non-
pediatric dental services as an EHB on the basis that they are not
often covered by typical employer plans is a more restrictive reading
of section 1302(b)(2) of the ACA than is warranted by a plain reading
of the statute. Section 1302(b)(2) of the ACA states that, in defining
the EHB, the Secretary shall ensure that the scope of the EHB is equal
to the scope of benefits provided under a typical employer plan, as
determined by the Secretary and as informed by a survey by the
Secretary of Labor of employer-sponsored or other job-based coverage to
determine the benefits typically covered by employers. In considering
the benefits typically covered by employers, this statutory section
does not require the Secretary to consider only those benefits provided
in major medical plans. It also does not require the Secretary to
consider only those benefits that are strictly ``health benefits,'' if
such a term excludes coverage of routine non-pediatric dental services.
Therefore, we no longer believe that the prohibition on non-pediatric
dental services as an EHB is warranted. Accordingly, we propose to
remove the regulatory prohibition on including routine non-pediatric
dental services as an EHB at Sec. 156.115(d).
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\211\ National Association of Dental Plans (2023). Understanding
Dental Benefits. https://www.nadp.org/about-dental-plans-care/understanding-dental-benefits/.
\212\ See supra note 15. Also note that another 8.8 percent buy
individual dental coverage, while less than 1 percent obtain dental
benefits as part of a medical plan.
\213\ National Financial Partners. (2023). US Benefits Trend
Report 2023. https://www.nfp.com/Portals/25/2023USBenefitsTrendReport.pdf?ver=H3zZIbZ5N2KDLhC0UfyiYA%3D%3D.
\214\ Formerly the Kaiser Family Foundation. See KFF ``About
Us.'' https://www.kff.org/about-us/.
\215\ KFF (2019, September 25). 2019 Employer Health Benefits
Survey. https://www.kff.org/report-section/ehbs-2019-section-2-health-benefits-offer-rates/#figure217.
\216\ Section 156.115(d) also currently prohibits routine non-
pediatric eye exam services, long-term/custodial nursing home care
benefits, and non-medically necessary orthodontia as EHB. We are not
proposing to remove the prohibition on such services as EHB in this
proposed rule; however, we solicit comment on the extent to which
employer-sponsored or other job-based benefits provide coverage for
these services.
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Removing the prohibition on issuers from including routine non-
pediatric dental services as an EHB would remove regulatory and
coverage barriers to expanding access to routine non-pediatric dental
benefits for those plans that must cover EHB. This would allow States
to work to improve adult oral health and overall health outcomes, which
are disproportionately low among marginalized communities such as
people of color and people with low incomes.\217\ Lack of dental
insurance remains one of the primary barriers to accessing dental
care,\218\ and this proposed policy would help mitigate this barrier.
Oral health and overall health are inextricably linked; untreated oral
health conditions can increase risk for and complicate the management
of

[[Page 82598]]

other chronic conditions.\219\ For example, studies have shown that
periodontal disease and tooth loss are strongly associated with heart
health, and oral health care can reduce the risk for cardiovascular
disease,\220\ atrial fibrillation, and heart failure.\221\
Additionally, research indicates that oral health care has implications
for substance use disorder (SUD) treatment. Individuals who receive
comprehensive oral health care during SUD treatment have been shown to
remain in treatment longer and have improved treatment outcomes at
discharge, including an increase in employment and drug abstinence, as
well as a reduction in homelessness.\222\ Furthermore, access to oral
health care impacts employment prospects. Approximately 30 percent of
low-income adults in the U.S. and nearly 60 percent of Medicaid
beneficiaries without access to dental coverage report that the
appearance of their mouth and teeth limits their ability to interview
for a job.\223\
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\217\ Northridge, M.E., Kumar, A., & Kaur, R. (2020).
Disparities in Access to Oral Health Care. Annual review of public
health, 41, 513-535. https://doi.org/10.1146/annurev-publhealth-040119-094318.
\218\ Agency for Healthcare Research and Quality. (2022). 2022
National Healthcare Quality and Disparities Report. https://www.ahrq.gov/sites/default/files/wysiwyg/research/findings/nhqrdr/2022qdr.pdf.
\219\ Kapila Y.L. (2021). Oral health's inextricable connection
to systemic health: Special populations bring to bear multimodal
relationships and factors connecting periodontal disease to systemic
diseases and conditions. Periodontology 2000, 87(1), 11-16. https://doi.org/10.1111/prd.12398. Periodontal disease has been associated
with diabetes, metabolic syndrome, obesity, eating disorders, liver
disease, cardiovascular disease, Alzheimer disease, rheumatoid
arthritis, adverse pregnancy outcomes, and cancer.
\220\ Dietrich, T., Webb, I., Stenhouse, L., Pattni, A., Ready,
D., Wanyonyi, K.L., White, S., & Gallagher, J.E. (2017). Evidence
summary: the relationship between oral and cardiovascular disease.
British dental journal, 222(5), 381-385. https://doi.org/10.1038/sj.bdj.2017.224.
\221\ Chang, Y., Woo, H.G., Park, J., Lee, J.S., & Song, T.J.
(2020). Improved oral hygiene care is associated with decreased risk
of occurrence for atrial fibrillation and heart failure: A
nationwide population-based cohort study. European journal of
preventive cardiology, 27(17), 1835-1845. https://doi.org/10.1177/2047487319886018.
\222\ Hanson, G.R., McMillan, S., Mower, K., Bruett, C.T.,
Duarte, L., Koduri, S., Pinzon, L., Warthen, M., Smith, K., Meeks,
H., & Trump, B. (2019). Comprehensive oral care improves treatment
outcomes in male and female patients with high-severity and chronic
substance use disorders. Journal of the American Dental Association
(1939), 150(7), 591-601. https://doi.org/10.1016/j.adaj.2019.02.016.
\223\ Families USA in partnership with the American Dental
Association (ADA), Health Policy Institute (HPI), and Community
Catalyst. (2021, July). Making the Case for Dental Coverage for
Adults in All State Medicaid Programs. https://familiesusa.org/wp-content/uploads/2021/07/HPI-CC-FUSA-WhitePaper_0721.pdf.
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This proposed policy would also align with CMS' Oral Health Cross
Cutting Initiative, which aims to implement policy changes and consider
opportunities through existing authorities to expand access to oral
health coverage.\224\ Additionally, it would align with the request of
several commenters on the EHB RFI (87 FR 74097) for us to remove
regulatory and coverage barriers to expanding access to routine non-
pediatric dental care.
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\224\ CMS. (n.d.) Strategic Plan Cross-Cutting Initiatives.
https://www.cms.gov/files/document/strategic-plan-overview-fact-sheet.pdf.
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We emphasize that the removal of this prohibition would not, by
itself, mean that routine non-pediatric dental services would be an
EHB, even in States with an EHB-benchmark plan that currently describes
routine non-pediatric dental services as a non-EHB covered benefit. We
stress that this proposal would not require any State to add such
services as an EHB, nor would we consider any existing language
regarding routine non-pediatric dental services in any State's current
EHB-benchmark plan to have the effect of adding such services as an
EHB. Under this proposal, a State seeking to provide any routine non-
pediatric dental services as an EHB would be required to update its
EHB-benchmark plan to include such services as an EHB pursuant to Sec.
156.111. If a State does not update its EHB-benchmark plan to add
coverage of routine non-pediatric dental services as an EHB, then such
services would not be an EHB, even if the current benchmark plan
document includes routine non-pediatric dental services. However, we
believe this proposal would incentivize States to add routine non-
pediatric dental services as an EHB by updating their EHB-benchmark
plans pursuant to Sec. 156.111.
Under this proposal, we would expect States, in determining whether
it is appropriate to update their EHB-benchmark plan to add routine
non-pediatric dental services as an EHB, to weigh the advantages of
expanded dental services against the challenges of providing such
services. States should consider the ability of plans to add such
services as an EHB, which, as with pediatric oral care, may require
plans to establish new networks of dental providers. Alternatively,
issuers could comply with this policy by contracting with issuers of
SADPs to administer these services, as long as it is seamless to the
enrollee. This contracting arrangement would not be required, but it
could be permitted as an option. In addition, States should consider
that some health plans may not currently have infrastructure or
experience working with Current Dental Terminology (CDT) codes that
report dental procedures to dental payers.
We note that while section 1302(b)(4)(F) of the ACA permits a
medical QHP sold on the Exchange to omit coverage of pediatric dental
EHB services if a SADP is offered through an Exchange,\225\ there is no
statutory basis to extend this exception to routine non-pediatric
dental services. Thus, plans subject to an EHB-benchmark plan that
includes routine non-pediatric dental services as an EHB may not omit
such coverage on the basis that a SADP already provides such coverage
through an Exchange.
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\225\ See section 1311(d)(2)(B)(ii) of the ACA for more
information on offering SADP benefits.
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This proposal, if finalized, may impact plans that are not directly
subject to the EHB requirements, such as self-insured group health
plans and fully-insured group health plans in the large group market,
that are required to comply with the annual limitation on cost sharing
and restrictions on annual or lifetime dollar limits in accordance with
applicable regulations with respect to such EHBs.\226\ If a State
updates its EHB-benchmark plan to add coverage of routine non-pediatric
dental services as an EHB and the sponsor of a self-insured group
health plan or fully-insured group health plan in the large group
market selects that EHB-benchmark plan, any routine non-pediatric
dental services covered by such a group health plan would generally be
subject to the limitation on cost sharing and restrictions on annual or
lifetime dollar limits. However, if the sponsors of such plans offer
coverage of routine non-pediatric dental services through an excepted
benefit under 26 CFR 54.9831-1(c)(3), 29 CFR 2590.732(c)(3), and 45 CFR
146.145(b)(3), including a limited-scope dental plan, that benefit is
generally excepted from complying with the group market reforms,
including the limitation on cost sharing and restrictions on annual or
lifetime dollar limits.
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\226\ See parallel requirements to Sec. 147.126 at 26 CFR
54.9815-2711, and 29 CFR 2590.715-2711. Additionally, section
2707(b) of the PHS Act, as added by the ACA, was incorporated by
reference into section 9815 of the Code and section 715 of ERISA.
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Additionally, under 42 CFR 440.347, Medicaid ABPs authorized under
section 1937 of the Act are required to meet EHB standards. Under 42
CFR 600.405, in States that elect to operate a BHP, the standard health
plans are required to meet EHB standards. Under this proposal, States
would be permitted to include routine non-pediatric dental services as
EHB for purposes of their ABPs or BHP standard health plans.
We seek comment on the proposal to revise Sec. 156.115(d) to
remove the regulatory prohibition on issuers from including routine
non-pediatric dental services as an EHB, including the impact this
proposal would have, if

[[Page 82599]]

finalized, on health insurance coverage in the individual, small group,
and large group markets, as well as self-insured plans.
4. Prescription Drug Benefits (Sec. 156.122)
We propose revisions to certain EHB prescription drug benefit
requirements at Sec. 156.122, including proposals to revise the
minimum membership standards for pharmacy & therapeutics (P&T)
committees and to codify EHB policy related to prescription drugs in
excess of the benchmark. We seek comment on these proposals as well as
a possible future policy proposal to replace the United States
Pharmacopeia (USP) Medicare Model Guidelines (MMG) with the USP Drug
Classification system (DC) to classify the prescription drugs required
to be covered as EHB under Sec. 156.122(a)(1).
a. Classifying the Prescription Drug EHB
We seek public comment to confirm or further expand our
understanding of the risks and benefits associated with replacing the
reference to the USP MMG with a reference to the USP DC as a means of
classifying the drugs required to be covered as EHB under Sec.
156.122(a)(1). As finalized in the EHB Rule (78 FR 12845 through
12846), to provide EHB, a plan must comply with Sec. 156.122(a)(1) and
cover at least the same number of prescription drugs in every USP
category and class as covered by the State's EHB-benchmark plan, or one
drug in every category and class, whichever is greater. We stated in
the EHB Rule (78 FR 12845 through 12846) that plans could exceed the
minimum number of drugs required to be covered and that additional
drugs would still be considered EHB. In that final rule, we chose to
use USP MMG Version 5.0 (USP Guidelines) to classify the drugs required
to be covered as EHB under Sec. 156.122(a)(1). In so doing, we noted
in the EHB Rule (78 FR 12845 through 12846) that ``[w]hile there was
concern among commenters on the use of USP as the system, there was no
universal system identified as a potential alternative. We chose the
current version of USP Medicare Model Guidelines (version 5) because it
is publicly available, and many pharmacy benefit managers are familiar
with it. We believe the USP model best fits the needs for the years
2014 and 2015 during the transitional EHB policy.''
In the 2016 Payment Notice (80 FR 10814), we solicited comments on
whether to replace the USP Guidelines with a standard based on the
American Hospital Formulary Service (AHFS) or another drug
classification system. We ultimately decided in the 2016 Payment Notice
(80 FR 10815) to retain the USP Guidelines classification system
because ``[i]ssuers have already developed 2 years of formularies based
on it, States have already developed systems to review those
formularies, and interested parties are familiar with the system. Thus,
while AHFS had the benefit of being updated more frequently and
incorporating a broader set of classes and subclasses, commenters did
not uniformly support its use because of several issues, including a
lack of transparency, the need to supplement certain classes when
compared with USP, and the complexity of the AHFS system.'' In 2017,
the USP developed a second drug classification system, the USP DC, an
independent drug classification system ``developed in response to input
from interested parties that it would be helpful to have a
classification system beyond the MMG to assist with formulary support
outside of Medicare Part D.'' \227\
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\227\ USP Drug Classification. https://www.usp.org/health-quality-safety/usp-drug-classification-system.
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In the EHB RFI (87 FR 74097 through 74102), we sought input from
the public regarding a variety of topics related to the scope of
benefits in health plans subject to the EHB requirements of the ACA,
including whether we should consider using an alternative prescription
drug classification standard for defining the EHB prescription drug
category, such as the USP DC or others. Most commenters supported the
transition from the USP MMG, as currently used for EHB purposes and for
Medicare Part D, to USP DC as the standard for defining the EHB
prescription drug category. Commenters noted that USP DC is more
inclusive of drug classes relevant to the private insurance patient
base and is updated annually, while USP MMG is only updated once every
three years. In particular, advocacy groups and provider groups stated
that USP DC was developed to support formularies outside of the
Medicare Part D population, which is another advantage over the current
classification system designed specifically with Medicare beneficiaries
in mind. They noted that USP MMG inappropriately limits access to FDA-
approved therapies such as anti-obesity medications (AOMs), resulting
in fewer treatment options. A few commenters encouraged us to consider
implementing an annual review and update process that includes input
from consumers and other interested parties, to ensure USP DC continues
to remain current with the prescription drug landscape. Some commenters
recommended that we retain the USP MMG drug classification system.
These same commenters expressed concern regarding the potential
administrative burden with changing drug classification systems,
explained that both government and commercial plans have broad
experience with USP MMG, and stated that issuers would need to
undertake potentially significant information technology work and
expense to remap their data warehouses to include the new drug
categories. A few commenters also noted that changing to a new
classification standard could have negative consequences for patients
as issuers could be required to cover high-cost drugs with low clinical
value, increasing the total cost of care and potentially increasing
premiums for members.
Additionally, some commenters stated that new and expanded
categories and classes under USP DC include anti-obesity agents,
infertility agents, and several new classes of combination products,
the latter of which often are comprised of brand name drugs paired with
other drugs or devices and are more expensive coverage options than the
individual generic products. Some commenters recommended that we retain
the USP MMG drug classification system but noted that we should
consider adoption of a new classification system, while a few
commenters urged us to develop our own prescription drug classification
standards rather than relying on those developed by private entities
stating that our continued reliance on the USP does not address
substantial gaps in coverage of medically necessary drugs. Lastly, a
few commenters noted that replacement of USP MMG with the AHFS or USP
DC would not address certain prescription drug access issues and
instead recommended that the protected classes policy utilized in the
Medicare Part D prescription drug program be incorporated into the
prescription drug benefit.
After reviewing these comments, we agree that using the USP DC to
categorize the drugs provided as EHB would assist in strengthening the
drug benefit due to its inclusion of additional drug categories and
classes relevant to enrollees within the private insurance market. The
USP MMG was created for use by prescription drug plans for the Medicare
Part D population (eligibility for Medicare enrollment is 65) and not
designed with the health needs of the population covered by plans
subject to the requirement to cover EHB, which includes those receiving
coverage through the Exchanges, such as women

[[Page 82600]]

of reproductive age and children whose health needs are significantly
different than those of Medicare Part D beneficiaries, in mind. In
addition, the USP MMG includes notable gaps in coverage related to the
treatment of chronic conditions such as obesity, infertility agents,
and sexual disorder agents. We also note that inclusion of additional
categories and classes of drugs used to manage chronic conditions would
assist in mitigating future risks and complications associated with a
lack of access to these therapies, particularly for vulnerable
populations.
In addition, USP DC is updated annually instead of every three
years, allowing for a more rapid incorporation of new prescription
drugs, drugs that are newly or no longer used for a particular
indication, or discontinued drugs. While we are aware that the USP DC
system has many features that may be beneficial to consumers and meet
evolving public health challenges, we recognize the concerns as noted
by commenters to the EHB RFI regarding the potential challenges of
switching drug classification systems from USP MMG to USP DC for
defining EHB, including the administrative burdens to issuers and
negative premium impacts to patients. We seek public comment to confirm
or further expand our understanding of the risks and benefits
associated with potentially replacing USP MMG with USP DC.
Further, we seek comment regarding concerns noted by interested
parties in response to the EHB RFI related to the challenges that
issuers may experience transitioning from USP MMG to USP DC to include
administrative burdens, particularly relating to disruptive impacts to
issuer operations and systems to incorporate new drug categories and
classes into their formulary review process. Lastly, we seek comment on
a reasonable timeline for impacted entities to potentially migrate from
USP MMG to USP DC.
CMS and the USP developed the USP Guidelines in 2004 to implement
the Medicare Part D Prescription Drug Program,\228\ and as such, the
system was designed for the Medicare population. Section 1860D-2(e) of
the Act defines a ``covered part D drug'' for purposes of the Medicare
Part D program, and the statutory definition excludes drugs used for
anorexia, weight loss, weight gain, fertility, cosmetic purposes or
hair growth, symptomatic relief of cough and colds, smoking cessation,
prescription vitamins and mineral products, nonprescription drugs,
certain covered outpatient drugs, barbiturates, benzodiazepines, and
drugs for the treatment of sexual or erectile
dysfunction.^{229 230} Consequently, the USP Guidelines do not
include categories and classes to classify these excluded drugs, and as
a result, these drugs are not required to be covered as EHB under Sec.
156.122(a)(1), though there may be coverage requirements for a limited
subset of these drugs based on other requirements such as the
requirement to cover preventive services under section 2713 of the PHS
Act. However, certain types of AOMs may still be covered as EHB but
under a different drug category (for example, AOMs classified and
covered under the category for central nervous system drugs).
Additionally, nothing prevents issuers from voluntarily covering these
drugs as EHB. However, the variation in classification for these drugs
leads to potential coverage gaps for consumers.
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\228\ USP Medicare Model Guidelines. https://www.usp.org/health-quality-safety/usp-medicare-model-guidelines.
\229\ See section 1860D-2(e)(2) of the Act.
\230\ See section 1927(d)(2) of the Act. The list of drugs
subject to restriction include drugs used for anorexia, weight loss,
weight gain, fertility, cosmetic purposes or hair growth,
symptomatic relief of cough and colds, smoking cessation,
prescription vitamins and mineral products, nonprescription drugs,
certain covered outpatient drugs, barbiturates, benzodiazepines, and
drugs for the treatment of sexual or erectile disfunction.
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We recognize that there could be formulary challenges if we were to
change drug classification systems, particularly as it relates to
issuers' coverage and issuers' affordability of AOMs through the
formulary benefit design. Specifically, although issuers would not
necessarily be required to cover one of the more expensive AOMs looking
solely at the policy at Sec. 156.122(a)(1), under Sec.
156.122(a)(3)(iii)(H)(2), P&T committees are required to ensure that
issuer formulary drug lists provide appropriate access to drugs that
are included in broadly accepted treatment guidelines and that are
indicative of general best practices at the time. We have included a
review of current guidelines on pharmacological interventions for
adults with obesity to highlight some of the issues that issuers and
P&T committees would need to consider should we move from USP MMG to
USP DC. We solicit comment on the data summarized as well on additional
clinical data that we should review as we continue to consider possible
future policy proposals related to the EHB prescription drug benefit
requirements.
Two guidelines, one by the American College of Cardiology/American
Heart Association/The Obesity Society, and the other by the American
Association of Clinical Endocrinologists/American College of
Endocrinology are considered the standard of care in the management of
overweight and obesity in adults.\231\ In November 2022, the American
Gastroenterological Association (AGA) issued a new clinical practice
guideline on pharmacological interventions for adults with
obesity.\232\ This guideline advances those evidence-based
recommendations from the American College of Cardiology/American Heart
Association/The Obesity Society, the American Association of Clinical
Endocrinologists/American College of Endocrinology, and the Endocrine
Society. These guidelines note that AOMs used with lifestyle
modifications produce greater and more sustained weight loss when
compared with lifestyle modifications alone. Further, the authors of
the AGA guideline reiterate that AOM selection should be based on each
patient's needs and highlight that AOMs are generally used chronically
to treat the chronic disease of obesity. In addition, the AGA
guidelines note that Wegovy, Saxenda, Qsymia, and Contrave, which are
classified in USP DC 2023 as anti-obesity agents had a balance of
weight loss over harm that favored their use. The guidelines further
state, ``given the magnitude of net benefit, Wegovy may be prioritized
over other approved [anti-obesity medications] for the long-term
treatment of obesity for most patients.'' \233\ Additionally, the
guidelines recommend against the use of Xenical. Four drugs are
currently available in the United States for short-term weight loss:
phentermine, benzphetamine, diethylpropion, and phendimetrazine.
Although the American Association of Clinical Endocrinologists/American
College of Endocrinology guidelines recommend against use of these
treatments, the Endocrine Society guideline endorses the use of long-
term treatment with phentermine that is contingent upon several
conditions being met. The AGA guideline also provides a qualified
endorsement of long-term use of phentermine, noting a low quality of
evidence for this recommendation.

[[Page 82601]]

Phentermine is not FDA-approved for long-term treatment of obesity.
---------------------------------------------------------------------------

\231\ Cornier, M. (2002). A Review of Current Guidelines for the
Treatment of Obesity. Am J Manag Care, 28(15), S288-S296.
doi:10.37765/ajmc.2022.89292.
\232\ Grunvald, E., Shah, R., Hernaez, R., Chandar, A.K.,
Pickett-Blakely, O., Teigen, L.M., Harindhanavudhi, T., Sultan, S.,
Singh, S., Davitkov, P, (2022). AGA Clinical Practice Guideline on
Pharmacological Interventions for Adults With Obesity.
Gastroenterology, 163(5), 1198-1225. doi:10.1053/
j.gastro.2022.08.045.
\233\ Id.
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Although some issuers may cover AOMs, we are aware that demand for
effective AOMs is high and expected to increase.\234\ We seek comment
on the potential financial effects of covering AOMs by issuers should
we adopt the USP DC classification system to define EHB; in particular,
we are interested in understanding estimated enrollee medication uptake
within plans, associated total spending cost, overall impact to the
medical and prescription drug benefit as well as premium impact to
patients. Further, we seek comment on the estimated premium impact to
patients if issuers were required to cover drugs in additional
categories/classes of the USP DC such as infertility drugs, sexual
disorder agents and combination drugs as part of the transition from
USP MMG. Additionally, we seek comment on how issuers would try to
balance prescription benefit costs of these newly added categories and
classes within the USP DC with providing members access to affordable,
clinically proven medications. For example, if an issuer were to employ
utilization management strategies (for example, step therapy, prior
authorization, and quantity limits) to ensure that the appropriate
patient populations receive and benefit from these treatments, we are
interested in understanding how issuers determine which of these newly
added medications would require the implementation of utilization
management strategies and what would be included in the clinical
coverage criteria developed for prior authorization or step therapy as
well as quantity limit guidelines.
---------------------------------------------------------------------------

\234\ Duncan, I., Kerr, D., Aggarwal R., & Huynh, N. New Drugs
for Obesity, Is the Excitement Affordable? Population Health
Management. Oct 2023. 356-357.http://doi.org/10.1089/pop.2023.0086.
---------------------------------------------------------------------------

b. Coverage of Prescription Drugs as EHB
We propose to amend Sec. 156.122 to codify that prescription drugs
in excess of those covered by a State's EHB-benchmark plan are
considered EHB. As a result, they would be subject to requirements
including the annual limitation on cost sharing and the restriction on
annual and lifetime dollar limits, consistent with Sec. 156.130,
unless the coverage of the drug is mandated by State action and is in
addition to EHB pursuant to Sec. 155.170, in which case the drug would
not be considered EHB.
In the EHB Rule (78 FR 12845), in response to commenter concerns
regarding how plans must address new prescription drugs that come onto
the market during the course of a plan year pursuant to Sec. 156.122,
we stated that while plans must offer at least the greater of one drug
for each USP category and class or the number of drugs in the EHB-
benchmark plan, plans are permitted to go beyond the number of drugs
offered by the benchmark plan without exceeding EHB. Therefore, if the
plan is covering drugs beyond the number of drugs covered by the
benchmark, all drugs in excess of the drug count standard at Sec.
156.122(a) are considered EHB, such that they are subject to EHB
protections and must count towards the annual limitation on cost
sharing. Additionally, we noted this policy in the preamble of the 2016
Payment Notice (80 FR 10749) during a discussion of requirements
related to Sec. 156.122(c).
We believed that this policy as noted in both the EHB Rule and
preamble of the 2016 Payment Notice was clearly understood by issuers
until we received comments in response to the EHB RFI that included a
significant number of requests from interested parties to clarify this
policy in rulemaking. In addition, a small number of commenters noted
concerns regarding some plans in the individual, small group, and large
group markets that have stated that some drugs in excess of the drug
count standard at Sec. 156.122(a) are not EHB and have developed
programs to provide some drugs as ``non-EHB,'' outside of the terms of
the rest of the coverage. We seek comment regarding how widespread
these practices are.
To resolve these concerns, we propose to amend Sec. 156.122 to add
paragraph (f), which would explicitly state that drugs in excess of the
benchmark are considered EHB. To the extent that a health plan covers
drugs, in any circumstance, in excess of the benchmark, these drugs
would be considered an EHB and would be required to count towards the
annual limitation on cost sharing. This policy would apply unless the
coverage of the drug is mandated by State action and is in addition to
EHB pursuant to Sec. 155.170, in which case the drug would not be
considered EHB.
We have been made aware of a few plans within the individual and
small group markets that have either developed or are offering programs
that provide some drugs as ``non-EHB.'' As we have only recently begun
receiving comments from interested parties regarding this issue, we do
not believe that there are a large number of plans that offer these
types of programs; however, we seek comment regarding how widespread
these programs are.
We seek comment on this proposal.
c. Pharmacy and Therapeutics Committee Standards
For plan years beginning on or after January 1, 2026, we propose to
amend Sec. 156.122 to provide that the P&T committee must include a
consumer representative.
In the 2016 Payment Notice (80 FR 10749), we required plans
providing EHB to establish P&T committees to review and update plan
formularies in conjunction with the USP MMG. At Sec. 156.122(a)(3)(i),
we require P&T committees to: (a) have members that represent a
sufficient number of clinical specialties to adequately meet the needs
of enrollees; (b) consist of a majority of individuals who are
practicing physicians, practicing pharmacists, and other practicing
healthcare professionals who are licensed to prescribe drugs; (c)
prohibit any member with a conflict of interest with respect to the
issuer or a pharmaceutical manufacturer from voting on any matters for
which the conflict exists; and (d) require at least 20 percent of its
membership to have no conflict of interest with respect to the issuer
and any pharmaceutical manufacturer.
Many of the P&T committee requirements are also found in the
Principles of a Sound Drug Formulary System, which was first developed
in September 1999 by a coalition of national organizations representing
healthcare professionals, government, and business leaders and later
adopted in 2000 by the Academy of Managed Care Pharmacy (AMCP),
Alliance of Community Health Plans, American Medical Association,
American Society of Health-Systems Pharmacists, Department of Veterans
Affairs, Pharmacy Benefits Management Strategic Healthcare Group,
National Business Coalition on Health, and U.S. Pharmacopeia.\235\
Since that time, best practices for P&T committees have matured
throughout the healthcare system. In 2019, AMCP convened a group of
thought leaders, clinicians, academics, patient advocacy organizations,
payer organizations, and members of the pharmaceutical industry to
consider P&T committee best practices in today's evolving healthcare
system.\236\ Specifically, the group

[[Page 82602]]

provided perspectives on: (a) P&T committee composition and relevant
interested parties, (b) evaluation of emerging evidence for formulary
decisions and recommendations around training of P&T committee members,
and (c) characteristics and best practices of successful committees.
---------------------------------------------------------------------------

\235\ Hawkins, B., ed. (2011). Principles of a sound drug
formulary system. Best Practices for Hospital and Health System
Pharmacy: Positions and Guidance Documents of ASHP. American Society
of Health-System Pharmacists. https://www.ashp.org/-/media/assets/policy-guidelines/docs/endorsed-documents/endorsed-documents-principles-sound-drug-formulary-system.pdf.
\236\ AMCP Partnership Forum: Principles for Sound Pharmacy and
Therapeutics (P&T) Committee Practices: What's Next? (2020). J Manag
Care Spec Pharm, 26(1), 48-53. https://doi.org/10.18553/jmcp.2020.26.1.48.
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While a P&T committee is usually composed of actively practicing
physicians, pharmacists, and other healthcare professionals, forum
participants stated that a well-structured committee should also
include patient representation since it provides additional insight
into the patient perspective regarding the practical use of therapies
and effect on quality-of-life outcomes which can be a helpful component
of the formulary evaluation process. Additionally, participants noted
that the patient perspective should be considered a key voice in
formulary decisions as they are directly affected by P&T committee
decisions and can assist the committee in better understanding the
value of different treatments and medications for patients.
While we are aware that the inclusion of consumers in the P&T
committee process is not common, it has been observed in different
healthcare systems. One example of this practice includes the Uniform
Formulary Beneficiary Advisory Panel (UFBAP), which provides
independent advice and recommendation on the development of the TRICARE
Uniform formulary.\237\ Members of the UFBAP include nongovernmental
organizations and associations that represent the views and interests
of a large number of eligible covered beneficiaries, contractors
responsible for the TRICARE retail pharmacy program, contractors
responsible for the national mail-order pharmacy program, and TRICARE
network providers. Additional examples of States that include
clinicians such as physicians, pharmacists, and other specialists along
with consumer or patient representatives as members within their
respective P&T committees include Pennsylvania,\238\ Connecticut,\239\
and New York.\240\
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\237\ Charter: Uniform Formulary Beneficiary Advisory Panel.
https://health.mil/Military-Health-Topics/Access-Cost-Quality-and-Safety/Pharmacy-Operations/BAP.
\238\ The Pennsylvania Department of Human Services Pharmacy and
Therapeutics Committee. See: https://www.dhs.pa.gov/about/DHS-Information/Pages/Stakeholders/Pharmacy-Committee.aspx.
\239\ The Connecticut Medical Assistance Program Pharmaceutical
and Therapeutics Committee. See: https://www.cga.ct.gov/current/pub/chap_319v.htm#sec_17b-274d and https://www.ctdssmap.com/CTPortal/Portals/0/StaticContent/Publications/CT_PT_COMMITTEE_BYLAWS_v2.pdf.
\240\ New York State Department of Health Drug Utilization
Review (DUR). See: https://www.health.ny.gov/health_care/medicaid/program/dur/docs/board_membership.pdf.
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P&T committee decisions have the power to impact a consumer's
overall quality of life and encompass important elements of care and
cost for the consumer. Therefore, we propose to add paragraph
(a)(3)(i)(E) to Sec. 156.122 to update P&T membership standards to
require the P&T committee to include a consumer representative as part
of its membership for plan years beginning on or after January 1, 2026.
In addition, we propose to specify at Sec. 156.122(a)(3)(E)(1) through
(4) membership standards for consumer representatives. Specifically,
the consumer representative would be required to represent the consumer
perspective as a member of the P&T committee and would be required to
have an affiliation with and/or demonstrate active participation in
consumer or community-based organizations. Some examples of these types
of organizations include those that are representative of a community
or significant segments of a community that provide educational or
related direct services to individuals in the community as well as
organizations that protect consumer rights via advocacy, research, or
outreach efforts. As a P&T committee member, the consumer
representative would assume responsibility for highlighting and
addressing any potential risks and benefits observed that could have a
direct impact on consumers as a result of issues and actions before the
P&T committee. In addition, an affiliation with and/or active
participation in a consumer or community-based organization would
provide the consumer representative with the necessary background to
represent consumers' perspectives. If this rule is finalized as
proposed, issuers would also be required to select a consumer
representative who has experience in the analysis and interpretation of
complex data and is able to understand its public health significance,
bearing in mind that one of the duties as a member of a P&T committee
includes thoughtful consideration of clinical criteria, such as drug
safety and efficacy data, when making a recommendation regarding
products under review. This individual would also be required to have
no fiduciary obligation to a health facility or other health agency and
have no material financial interest in the rendering of health care
services. This conflict-of-interest standard is intended to ensure
that, as a member of the P&T committee, the consumer representative is
free from financial interests or other relationships that could
compromise the objectivity of the members of the committee as they
perform their duties. Nothing in this proposal would prevent the P&T
committee from defining additional membership standards pertaining to
the position of consumer representative.
We believe that proposed Sec. 156.122(a)(3)(i)(E) would ensure
that the consumer experience with a disease or condition is considered
in the design of formulary benefits. Consumer representatives would be
able to offer insight into real consumer experiences that P&T
committees may be unaware of that would help the committee better
understand consumer challenges related to medication use as well as
assist them in exploring solutions to these challenges during the
formulary development process. We also note that broader inclusion of
perspectives on the P&T committee would align with other groups,
including the AMCP.
We seek comment on these proposals. The consumer representative, as
a member of the P&T committee, would be subject to the conflict-of-
interest standards as specified in Sec. 156.122(a)(3); however, we are
interested in comments regarding whether we should further define
additional membership standards for the consumer representative. In
particular, we seek comments on the qualifications necessary to serve
as a consumer representative on a P&T committee, to include if the
representative should have a clinical background, have served as a
representative of organizations with a regional or Statewide
constituency, or have been involved in activities related to health
care consumer advocacy, including issues affecting individual and small
group market enrollees. We also seek comment on whether the current
conflict-of-interest provision is sufficient as applied to this
proposed role, or whether the consumer representative role should be
subject to additional conflict-of-interest standards. We seek comment
on whether a consumer representative should have a background for more
than one condition or disease to sufficiently represent the

[[Page 82603]]

concerns of a diverse population. Additionally, we seek comment on the
number of consumer representatives who should be included on a
committee and if that number should be directly proportional to the
size of the committee. We also recognize that a requirement to develop
additional P&T committee standards, solicit for applicants for this new
position, and provide any necessary training to new members would
require lead time for States, issuers, and pharmacy benefit managers to
implement and we seek comment on the proposed timing for
implementation.
5. Publication of the 2025 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 (86 FR 24238),
we will publish the premium adjustment percentage, the required
contribution percentage, and maximum annual limitations on cost sharing
and reduced maximum annual limitation on cost sharing, in guidance
annually starting with the 2023 benefit year. We note that these
parameters are not included in this rulemaking, as we do not propose
changing the methodology for these parameters for the 2025 benefit
year. Therefore, we will publish these parameters in guidance no later
than January 2024.
6. Standardized Plan Options (Sec. 156.201)
HHS proposes to exercise its authority under sections 1311(c)(1)
and 1321(a)(1)(B) of the ACA to make minor updates to the standardized
plan options for PY 2025. Specifically, we propose to make minor
updates to the plan designs for PY 2025 to ensure these plans have AVs
within the permissible de minimis range for each metal level, and we
propose to maintain a high degree of continuity with the approach to
standardized plan options finalized in the 2023 and 2024 Payment
Notices. We do not propose to amend Sec. 156.201.
Section 1311(c)(1) of the ACA directs the Secretary to establish
criteria for the certification of health plans as QHPs. Section
1321(a)(1)(B) of the ACA directs the Secretary to issue regulations
that set standards for meeting the requirements of title I of the ACA
for, among other things, the offering of QHPs through such Exchanges.
In the 2024 Payment Notice (88 FR 25847 through 25855), we
maintained a large degree of continuity with the approach to
standardized plan options finalized in the 2023 Payment Notice, aside
from several minor changes to the plan designs. Specifically, in
contrast to the policy finalized in the 2023 Payment Notice, we
finalized, for PY 2024 and subsequent plan years, to no longer include
a standardized plan option for the non-expanded bronze metal level,
primarily due to severe AV constraints. Thus, for PY 2024 and
subsequent PYs, we finalized standardized plan options for the
following metal levels: one bronze plan that meets the requirement to
have an AV up to five points above the 60 percent standard, as
specified in Sec. 156.140(c)(2) (known as an expanded bronze plan),
one standard silver plan, one version of each of the three income-based
silver CSR plan variations, one gold plan, and one platinum plan.
Consistent with our approach in the 2023 Payment Notice, in the
2024 Payment Notice (88 FR 25847 through 25848), we did not finalize
standardized plan options for the AI/AN 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. However, we
continued requiring issuers to offer these plan variations for all
standardized plan options offered, and we removed the regulation text
language that stated that standardized plan options for these plan
variations were not required to be offered. In the 2024 Payment Notice
(88 FR 25847 through 25848), we further clarified that while issuers
must continue to offer AI/AN CSR plan variations based on standardized
plan options under Sec. 156.420(b), those plan variations will
themselves not be standardized plan options based on designs specified
in that rulemaking.\241\ Instead, similar to how all the cost sharing
values for income-based silver CSR plan variations are automatically
imputed based on the corresponding standard silver plan when an issuer
enters required data into the Plans and Benefits Template as part of
QHP certification, all the cost sharing values for standardized plan
option AI/AN CSR plan variations will be automatically imputed based on
the corresponding standardized plan option standard silver plan.
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\241\ See also QHP Certification Standardized Plan Options FAQs,
https://www.qhpcertification.cms.gov/s/Standardized%20Plan%20Options%20FAQs.
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Similar to the approach taken in the 2023 Payment Notice, in the
2024 Payment Notice (88 FR 25848), we finalized standardized plan
options that once again resembled the most popular QHP offerings that
millions were already enrolled in by taking the following steps:
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 2023 cost sharing and enrollment data;
modifying these plans to ensure they comply with 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, in the 2024 Payment Notice (88 FR 25848), we finalized
two sets of standardized plan options at the aforementioned metal
levels, with the same sets of designs applying to issuers in the same
sets of States as in the 2023 Payment Notice. Specifically, the first
set of standardized plan options continued applying 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
continued applying to Exchange issuers in Delaware and Louisiana.
Also consistent with our approach in PY 2023, in the 2024 Payment
Notice (88 FR 25848), we continued requiring issuers in the individual
market Exchanges on the Federal platform to offer the standardized plan
options specified in the 2023 Payment Notice, but we did not apply this
requirement to issuers in the small group market SHOPs. We also
continued exempting issuers offering QHPs through FFEs and SBE-FPs that
were 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,\242\ from the requirement to offer the
standardized plan options included in the 2024 Payment Notice. We also
continued not requiring State Exchange issuers to offer the
standardized plan options included in the 2024 Payment Notice.
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\242\ See Or. Admin. R. 836-053-0009. https://secure.sos.state.or.us/oard/displayDivisionRules.action?selectedDivision=3778.
---------------------------------------------------------------------------

Furthermore, consistent with the policy finalized in the 2023
Payment Notice, in the 2024 Payment Notice (88 FR 25848), we stated
that we would continue differentially displaying standardized plan
options on HealthCare.gov pursuant to Sec. 155.205(b)(1), including
those standardized plan options required under State action taking
place on or before January 1, 2020. We also stated that we would
continue enforcing the standardized plan options display requirements
for approved web-brokers and QHP issuers using a direct

[[Page 82604]]

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.
As such, web-brokers and QHP issuers were required to
differentially display the PY 2024 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 we approved a deviation, beginning with the 2024
benefit year open enrollment period. Consistent with the PY 2023
policy, the 2024 Payment Notice (88 FR 25848) provided that any
requests from web-brokers and QHP issuers seeking approval for an
alternate differentiation format will continue to be reviewed based on
whether the same or similar level of differentiation and clarity would
be provided under the requested deviation as is provided on
HealthCare.gov.
Consistent with the approach to plan designs in the 2023 Payment
Notice, in the 2024 Payment Notice (88 FR 25848), we continued using
the following four tiers of prescription drug cost sharing in the
standardized plan options: generic drugs, preferred brand drugs, non-
preferred brand drugs, and specialty drugs. We explained that we
believed that continued use of four tiers of prescription drug cost
sharing in standardized plan options would result in more predictable
and understandable drug coverage. We also explained that we believed
that continuing to use four tiers of prescription drug cost sharing
would play an important role in helping consumers make informed QHP
selections by allowing consumers to more easily compare formularies
between plans and make 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 had already created
standardized plan options with formularies that included only four
tiers of prescription drug cost sharing.
We refer readers to the preambles to the 2023 and 2024 Payment
Notices discussing Sec. 156.201 (87 FR 27310 through 27322 and 88 FR
25847 through 25855, respectively) for more detailed discussion
regarding approaches to standardized plan options in PY 2024 and
previous PYs.
For PY 2025, we propose to follow the approach finalized in the
2024 Payment Notice concerning standardized plan option metal levels,
and to otherwise maintain continuity with our approach to standardized
plan options finalized in the 2023 and 2024 Payment Notices. We propose
to make only minor updates to the plan designs for PY 2025 to ensure
these plans have AVs within the permissible de minimis range for each
metal level. Our proposed updates to plan designs for PY 2025 are
detailed in Tables 12 and 13, later in this section. We propose to
maintain a high degree of continuity with the approach to standardized
plan options finalized in the 2023 and 2024 Payment Notices for several
reasons.
We are continuing to require FFE and SBE-FP issuers to offer
standardized plan options in large part due to continued plan
proliferation, which has only increased since the standardized plan
option requirements were finalized in the 2023 Payment Notice. In light
of this continued plan proliferation, it is increasingly important to
continue to attempt to streamline and simplify the plan selection
process for consumers on the Exchanges. We believe these standardized
plan options continue to play a meaningful role in that simplification
by reducing the number of variables that consumers must consider when
selecting a plan option, making it easier for consumers to compare
available plan options.
More specifically, with these standardized plan options, consumers
continue to be able to more quickly and more easily consider meaningful
factors, such as networks, formularies, and premiums, when selecting a
plan. We further believe these standardized plan options include
several distinctive features, such as enhanced pre-deductible coverage
for several benefit categories and copayments instead of coinsurance
rates for a greater number of benefit categories, that will continue to
play an important role in reducing barriers to access, combatting
discriminatory benefit designs, and advancing health equity. Including
enhanced pre-deductible coverage for these benefit categories
(specifically, primary care visits, specialist visits, speech therapy,
occupational and physical therapy, and generic drugs at all metal
levels, with an increasing number of benefit categories exempt at
higher metal levels) ensures consumers are more easily able to access
these services without first meeting their deductibles. Furthermore,
using copayments instead of coinsurance rates for a greater number of
benefit categories reduces the risk of unexpected financial expenses
sometimes associated with coinsurance rates.
Additionally, we propose to maintain a high degree of continuity
with many of the standardized plan option policies previously finalized
in the 2024 Payment Notice in order to reduce the risk of disruption
for all involved interested parties, including issuers, agents,
brokers, States, and enrollees. We believe making major departures from
the methodology used to create the standardized plan options finalized
in the 2023 and 2024 Payment Notices could result in drastic changes in
these plan designs that may create undue burden for interested parties.
For example, if the standardized plan options that we create vary
significantly from year to year, those enrolled in these plans could
experience unexpected financial harm if the cost sharing for services
they rely upon differs substantially from the previous year.
Ultimately, we believe consistency in standardized plan options is
important to allow issuers and enrollees to become accustomed to these
plan designs.
We seek comment on our proposed approach to standardized plan
options for PY 2025. Additionally, we seek comment on requiring issuers
offering QHPs in individual market State Exchanges to offer, in a
future plan year, some version of standardized plan options, while not
necessarily subjecting them to the full scope of standardized plan
option requirements applicable to issuers on the FFEs or SBE-FPs under
Sec. 156.201. In particular, we seek comment on requiring issuers
offering QHPs in individual market State Exchanges that are not already
required to offer standardized plan options under State requirements to
offer some version of standardized plan options, even if these plan
designs differ from the requirements of those included in the
applicable Payment Notice for that plan year. We also seek comment on
requiring States that intend to transition their Exchange model type
from an FFE or SBE-FP to a State Exchange to require their issuers to
offer standardized plan options as one condition of this transition. As
such, we are particularly interested in comments from individual market
State Exchanges that do not currently require QHP issuers to offer
standardized plan options, States with an FFE or SBE-FP Exchange model
type that intend to transition their Exchange model type to a State
Exchanges, and issuers offering QHPs through State Exchanges.
While we recognize that State Exchanges are best positioned to set
requirements that serve the nuances of their respective individual
markets, we underscore the benefits of offering at least some version
of standardized plan options, which we discussed in greater detail in
the preamble discussion of Sec. 156.201 in the 2023 Payment Notice

[[Page 82605]]

(87 FR 27316). We also believe that the fact that over half of State
Exchanges currently require issuers to offer standardized plan options
in one form or another suggests that they, too, see value in
standardized plan options.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP24NO23.024

[[Page 82606]]

[GRAPHIC] [TIFF OMITTED] TP24NO23.025

BILLING CODE 4120-01-C
7. Non-Standardized Plan Option Limits (Sec. 156.202)
HHS proposes to exercise its authority under sections 1311(c)(1)
and 1321(a)(1)(B) of the ACA to amend Sec. 156.202 by adding
paragraphs (d) and (e) to introduce an exceptions process that would
allow issuers to offer additional non-standardized plan options (in
excess of the limit of two) per product network type, metal level,
inclusion of dental and/or vision benefit coverage, and service area
for PY 2025 and subsequent plan years, if issuers demonstrate that
these additional non-standardized plans have specific design features
that would substantially benefit consumers with chronic and high-cost
conditions. Under this proposal, issuers would not be limited in the
number of exceptions permitted per product network type, metal level,
inclusion of dental and/or vision benefit coverage, and service area,
so long as they meet specified criteria. 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 2024 Payment Notice (88 FR 25855 through 25865), we
finalized requirements limiting the number of non-standardized plan
options that issuers of QHPs can offer through Exchanges on the Federal
platform (including SBE-FPs) to four non-standardized plan options per
product network type (as described in the definition of ``product'' at
Sec. 144.103), metal level (excluding catastrophic plans), inclusion
of dental and/or vision benefit coverage, and service area for PY 2024,
and two for PY 2025 and subsequent plan years.
We explained that we phased in this limit over 2 plan years
(instead of adopting the limit of two in PY 2024) primarily to decrease
the risk of disruption for both issuers and enrollees, and to provide
increased flexibility to issuers. Many commenters supported adopting a
more gradual approach in which the number of non-standardized plan
options that issuers can offer is incrementally decreased over a span
of 2 plan years, instead of

[[Page 82607]]

adopting a limit of two for PY 2024. Additionally, regarding the
modification to factor the inclusion of dental and 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 variations
(approximately 84 percent of such variation) offered by issuers within
a given metal level, network type, and service area in PY 2022. We
refer readers to the preamble of the 2024 Payment Notice discussing
Sec. 156.202 (88 FR 25855 through 25865) for more detailed discussion
of our approach to non-standardized plan option limits for PY 2024 and
related background.
As a result of the limit on the number of non-standardized plan
options that issuers can offer through the Exchanges being reduced from
four in PY 2024 to two in PY 2025, we estimate (based on current PY
2024 plan offering data) that the weighted average number of non-
standardized plan options available to each consumer will be reduced
from 67.3 in PY 2024 to approximately 41.7 in PY 2025. Furthermore, we
estimate that the weighted average total number of plans, including
standardized and non-standardized plan options, available to each
consumer will be reduced from 91.8 in PY 2024 to approximately 66.2 in
PY 2025.\243\
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\243\ The weighted average total number of plans available to
each consumer was 107.8 in PY 2022, prior to the introduction of
standardized plan option requirements, and 113.6 in PY 2023, the
first year that standardized plan option requirements were
introduced.
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Furthermore, based on current QHP submission data for PY 2024, we
estimate that approximately 28,275 of the total 109,229 non-
standardized plan option plan-county combinations \244\ (25.9 percent)
will be discontinued as a result of this limit in PY 2025. Relatedly,
based on trended enrollment data from PY 2023 (which we rely on for
purposes of this estimate because PY 2024 enrollment data is currently
unavailable), we estimate that approximately 1.78 million of the 14.94
million enrollees on the FFEs and SBE-FPs (11.9 percent) will be
affected by these discontinuations in PY 2025.
---------------------------------------------------------------------------

\244\ 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.
---------------------------------------------------------------------------

In the 2024 Payment Notice (88 FR 25858 through 25859), we also
announced our intent to propose an exceptions process in the 2025
Payment Notice proposed rule that would allow issuers to offer non-
standardized plan options in excess of the limit of two per product
network type, metal level, inclusion of dental and/or vision benefit
coverage, and service area for PY 2025 and subsequent plan years.
As such, in this proposed rule, we propose an exceptions process at
new Sec. 156.202(d) and (e) that would permit FFE and SBE-FP issuers
to offer more than two non-standardized plan options per product
network type, metal level, inclusion of dental and/or vision benefit
coverage, and service area for PY 2025 and subsequent plan years, if
issuers demonstrate that these additional non-standardized plans beyond
the limit at Sec. 156.202(b) have specific design features that would
substantially benefit consumers with chronic and high-cost conditions.
Issuers would not be limited in the number of exceptions permitted per
product network type, metal level, inclusion of dental and/or vision
benefit coverage, and service area, so long as they meet specified
criteria.
Specifically, pursuant to proposed Sec. 156.202(d), issuers would
be permitted to offer more than two non-standardized plan options if
these additional plans' cost sharing for benefits pertaining to the
treatment of chronic and high-cost conditions (including benefits in
the form of prescription drugs, if pertaining to the treatment of the
condition(s)) is at least 25 percent lower, as applied without
restriction in scope throughout the plan year, than the cost sharing
for the same corresponding benefits in an issuer's other non-
standardized plan option offerings in the same product network type,
metal level, and service area. The reduction could not be limited to a
part of the year, or an otherwise limited scope of benefits. Instead,
issuers would be required to apply the reduced cost sharing for these
benefits any time the covered item or service is furnished. For
example, an issuer could not reduce cost sharing for the first three
office visits or drug fills and then increase it for remaining visits
or drug fills. Furthermore, issuers would be prohibited from
conditioning reduced cost sharing for these benefits on a particular
diagnosis. That is, although the benefit design would have reduced cost
sharing to address one or more articulated conditions, the reduced cost
sharing must be available to all enrolled in the plan who receive the
service(s) covered by the benefit.
Under this proposal, no other plan design features (such as the
inclusion of additional benefit coverage, different provider networks,
different formularies, or reduced cost sharing for benefits provided
through the telehealth modality) would be evaluated under this
exceptions process, meaning no other differences in plan design
features would allow issuers to be excepted from the limit to the
number of non-standardized plan options offered per product network
type, metal level, inclusion of dental and/or vision benefit coverage,
and service area.
Additionally, as part of this exceptions process, at proposed Sec.
156.202(e), issuers would be required to submit a written justification
in a form and manner and at a time prescribed by HHS that provides
additional details and explains how the particular plan design the
issuer desires to offer above the non-standardized plan option limit of
two satisfies the proposed standards for receiving an exception to this
limit--namely, how the particular plan would substantially benefit
consumers with chronic and high-cost conditions. We would provide
issuers with a justification form upon publication of the final rule
and when the QHP templates for the applicable plan year are released.
This justification form would ask the issuer to (1) identify the
specific condition(s) for which cost sharing is reduced, (2) explain
which benefits would have reduced annual enrollee cost sharing (as
opposed to reduced cost sharing for a limited number of visits) for the
treatment of the specified condition(s) by 25 percent or more relative
to the cost sharing for the same corresponding benefits in an issuer's
other non-standardized plan offerings in the same product network type,
metal level, and service area, and (3) explain how the reduced cost
sharing for these services pertains to clinically indicated guidelines
for treatment of the specified chronic and high-cost condition(s).
Additionally, to allow the Exchange adequate time to review these
justification forms, issuers would need to submit their QHP application
in a form and manner and at a time specified by us. We anticipate
requesting that issuers submit QHP applications for non-standardized
plan options that exceed the two-plan limit by the QHP certification
Early Bird deadline.
We propose for PY 2025 to allow exceptions only for plans that meet
the previously described requirements for benefits pertaining to the
treatment of conditions that are chronic and high-cost in nature. We
clarify that, for purposes of this standard, chronic conditions are
those that have an average duration of one year or more and require
ongoing medical attention or limit activities of daily living, or

[[Page 82608]]

both.\245\ We also clarify that, for purposes of this standard, high-
cost conditions are those that account for a disproportionately high
portion of total Federal health expenditures. We note that the four
chronic and high-cost conditions included in the prescription drug
adverse tiering for PY 2025 (specifically, hepatitis C virus, HIV,
multiple sclerosis, and rheumatoid arthritis) are examples of
conditions that we would consider to be chronic and high-cost in nature
for purposes of this standard. However, for purposes of this standard,
we clarify that we would also consider additional conditions to be
chronic and high-cost in nature. Additional representative examples of
conditions that we would consider to be chronic and high-cost in nature
for purposes of this proposal include Alzheimer's disease, kidney
disease, osteoporosis, heart disease, diabetes, and all kinds of
cancer. Examples of conditions that we would not consider chronic and
high-cost in nature would be those that are generally acute in nature,
including bronchitis, the flu, pneumonia, strep throat, and respiratory
infections.
---------------------------------------------------------------------------

\245\ National Center for Chronic Disease Prevention and Health
Promotion. About Chronic Diseases, July 21, 2022, https://www.cdc.gov/chronicdisease/about/index.htm.
---------------------------------------------------------------------------

We propose this approach for several reasons. Considering that
chronic and high-cost conditions (including the examples previously
discussed) affect a comparatively low number of consumers, we
anticipate that a significant portion of the non-standardized plan
options that may be discontinued due to having comparatively lower
rates of enrollment among each issuer's portfolio of offerings could
potentially be those that have plan design features that benefit
consumers with these chronic and high-cost conditions (such as plans
with some combination of enhanced pre-deductible coverage for relevant
services, reduced cost sharing for relevant services, lower MOOPs,
lower deductibles, more comprehensive provider networks with more
specialized providers, more generous formularies with more specialized
medications, higher AVs, and higher premiums).
Even with comparatively lower rates of enrollment, we believe that
these non-standardized plan options can still fulfill an important role
in addressing chronic and high-cost conditions, which are responsible
for a disproportionate amount of health care expenditures.\246\ Thus,
we believe this proposed exceptions process could play an important
role in enhancing the quality of life for those affected by these
conditions, combatting health disparities, advancing health equity, and
reducing health care expenditures. We further believe that introducing
such an exceptions process while also reducing the non-standardized
plan option limit to two for PY 2025 would balance the dual aims of
reducing the risk of plan choice overload while simultaneously ensuring
that truly innovative plan designs that may benefit consumers with
chronic and high-cost conditions can continue to be offered.
---------------------------------------------------------------------------

\246\ Waters, H, & Graf, M. (2018). The Cost of Chronic Disease
in the U.S. Milken Institute. https://milkeninstitute.org/sites/default/files/reports-pdf/ChronicDiseases-HighRes-FINAL2.pdf.
---------------------------------------------------------------------------

We further believe that not limiting the number of permitted
exceptions per issuer, product network type, metal level, inclusion of
dental and/or vision benefit coverage, and service area (instead of
allowing exceptions for only two such plans, for example) would ensure
that issuers are not restricted in the number of innovative plans they
can offer. This would in turn help ensure that a greater portion of
consumers with chronic and high-cost conditions have access to plans
that reduce barriers to access to care for services critical to the
treatment of their conditions.
Although issuers would not be limited in the number of exceptions
they may be granted under this proposal, we anticipate that most
issuers would determine that the burden of creating and certifying
additional non-standardized plans intended to benefit a comparatively
small population of consumers would outweigh the benefit of doing so.
We also previously solicited comments on innovative plan designs, such
as in the 2024 Payment Notice proposed rule. In response to this
comment solicitation, we received only two examples of plan designs
that commenters considered to be innovative in nature: plan designs
that have reduced cost sharing for benefits provided through
telehealth, and plan designs that have reduced cost sharing for
services and medications related to the treatment of diabetes (such as
in the form of insulin). We clarify that the former example (reduced
cost sharing for benefits provided through the telehealth) would not
qualify for this exceptions process, while the latter example (reduced
cost sharing for benefits related to the treatment of diabetes) could
potentially qualify for this exceptions process, if the specified
criteria are met.
Regardless, given that we only received two examples of plan
designs that particular issuers considered to be innovative in nature,
we do not anticipate that issuers will seek to have a substantial
number of non-standardized plan options excepted from the non-
standardized plan option limit. As a result, we do not anticipate this
proposal would result in an increased risk of plan choice overload for
consumers interested in plans with better benefits for qualifying
conditions.
We further believe that permitting exceptions solely based on
whether a non-standardized plan option has reduced cost sharing of 25
percent or more for benefits pertaining to the treatment of chronic and
high-cost conditions, as opposed to considering other factors (such as
specialized networks, specialized formularies, or specialized benefit
packages), is appropriate since the current standardized plan option
requirements do not limit issuers in the number of standardized plan
options they can offer per product network type, metal level, or
service area. Standardized plan option requirements do not permit
issuers to deviate from the specified cost sharing parameters for
standardized plan options--meaning issuers would not be able to offer
standardized plan options with reduced cost sharing of 25 percent or
more for the treatment of specific conditions if the benefit category's
cost sharing does not comply with the specified standards.
As a result, issuers already have the flexibility to offer
specialized networks, formularies, and benefit packages (including
those that decrease barriers to access for the treatment of chronic and
high-cost conditions--such as by including additional specialized
providers, prescription drugs, or benefits) as standardized plan
options. We further believe that the cost sharing difference threshold
of 25 percent or more is appropriate since we have observed that cost
sharing differences below this threshold represent normal variation
within a particular metal level, while differences at or above this
threshold are more often associated with cost sharing differences
between different metal levels. Altogether, we do not believe that a
difference in a cost sharing amount that is of the same magnitude as
normal variation within a particular metal level (specifically, less
than 25 percent) would warrant being excepted from the non-standardized
plan option limit.
We note that under this proposed exceptions process, if additional
plans were permitted to be offered in excess of the limit of two non-
standardized plan options, in accordance with the guaranteed
availability requirements at

[[Page 82609]]

Sec. 147.104(a), these plans would also be required to be made
available on the same basis to consumers without these chronic and
high-cost conditions. Further, we emphasize that these plans would be
prohibited from discriminating in accordance with the nondiscrimination
requirements at Sec. Sec. 147.104(e), 156.125, and 156.200(e).\247\ To
meet these non-discrimination requirements, these plans would be
required to apply preferential cost sharing to all enrolled in the
plan, without regard to diagnosis. Furthermore, although we acknowledge
that non-standardized plan options excepted under this proposal would
primarily benefit consumers with chronic and high-cost conditions, we
believe that a sufficiently satisfactory range of both non-standardized
and standardized plan options currently exist that are primarily
intended for consumers without chronic and high-cost conditions. As a
result, we are not concerned that any risk of discrimination created by
this exceptions process would negatively impact consumers, including
but not limited to consumers with chronic and high-cost conditions.
---------------------------------------------------------------------------

\247\ The nondiscrimination requirements at Sec. 147.104(e)
apply to health insurance issuers offering non-grandfathered group
or individual health insurance coverage, and their officials,
employees, agents, and representatives. The nondiscrimination
requirements at Sec. 156.200(e) apply to QHPs in the individual and
small-group markets, and the nondiscrimination requirements at Sec.
156.125(b) apply to issuers providing EHB.
---------------------------------------------------------------------------

We seek comment on this proposed approach. Specifically, we seek
comment on the proposed exceptions process, and whether there should be
any exceptions at all to the limit on the number of non-standardized
plan options that issuers can offer through the Exchanges. In addition,
we are particularly interested in comments on the following topics:
whether exceptions should be permitted only for a specific set of
chronic and high-cost conditions as opposed to any chronic and high-
cost condition; whether there are other plan attributes we should
consider outside of sufficiently differentiated cost sharing, such as
the inclusion of alternative payment models or sufficiently
differentiated benefits, networks, or formularies; the specific
difference threshold for these cost-sharing amounts, including whether
a threshold higher or lower than 25 percent would be more appropriate;
the specific components of the justification form that issuers would be
required to submit; the deadline for issuers to submit the materials
necessary for us to consider whether non-standardized plan options
should be excepted from the limit; and whether we should require that
non-standardized plan options excepted from the limit be visually
differentiated from other non-standardized plan options not excepted
from the limit--such as by differentially displaying these excepted
plans on HealthCare.gov, or by requiring these excepted plans to adopt
a particular plan marketing name that accurately conveys how these
plans would substantially benefit consumers with chronic and high-cost
conditions (for example, by requiring that an excepted plan that
reduces cost sharing for the treatment of diabetes have a corresponding
plan marketing name related to diabetes).
We also seek comment on other ways to balance the dual aims of
reducing the risk of plan choice overload while simultaneously ensuring
that truly innovative plan designs that may benefit consumers with
chronic and high-cost conditions can continue to be offered.
Specifically, we seek comment on whether we should limit the number of
exceptions available such that issuers are only permitted to offer one
or several additional plans pursuant to the proposed exceptions process
above the limit of two non-standardized plans--as opposed to not
limiting the number of exceptions permitted per product network type,
metal level, inclusion of dental and/or vision benefit coverage, and
service area.
8. CO-OP Loan Terms (Sec. 156.520)
We propose to amend Sec. 156.520(f) to enable CMS to approve
requests by CO-OP borrowers to voluntarily terminate their loan
agreement with CMS, and thereby cease to constitute a qualified non-
profit health insurance issuer (QNHII),\248\ for the purpose of
permitting the loan recipient to pursue innovative business plans that
are not otherwise consistent with the governance requirements and
business standards applicable to a CO-OP borrower, provided certain
conditions are met as described in this section.
---------------------------------------------------------------------------

\248\ Section 1322(c)(1)(B) of the ACA and 42 U.S.C.
18042(c)(1)(B) define a QNHII.
---------------------------------------------------------------------------

Section 1322 of the ACA requires a CO-OP loan recipient, or QNHII,
to be, among other things, an entity ``substantially all of the
activities of which consist of the issuance of qualified health plans
in the individual and small group markets in each State in which it is
licensed to issue such plans.'' \249\ This requirement is set forth in
regulations which require that at least two-thirds of the policies or
contracts for health insurance coverage issued by a CO-OP in each State
in which it is licensed be qualified health plans offered in the
individual and small group markets.\250\
---------------------------------------------------------------------------

\249\ 42 U.S.C. 18042(c)(1)(B).
\250\ See Sec. 156.515(c)(1).
---------------------------------------------------------------------------

The ACA also mandates that a QNHII be subject to governance by ``a
majority vote of its members.'' \251\ Accordingly, Sec. 156.515(b)
imposes governance requirements for each CO-OP that include a
requirement that the entity remain under member control, such that a
majority of its directors are elected by a majority vote of the CO-OP's
members. A CO-OP ``member'' is an individual covered by a health
insurance policy issued by a CO-OP.\252\ A CO-OP's voting members
consist of all persons covered by health insurance policies issued by
the CO-OP who are 18 years of age or older.\253\
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\251\ ACA section 1322(c)(3)(A); 42 U.S.C. 18042(c)(3)(A).
\252\ See Sec. 156.505.
\253\ See Sec. 156.515(b)(1).
---------------------------------------------------------------------------

Section 1322 of the ACA mandates that the Secretary require an
entity receiving a CO-OP loan to enter into a loan agreement with the
Secretary. The required loan agreement must obligate the borrower to
``meet, and to continue to meet'' the requirements of a QNHII, and
``any other requirements contained in the agreement.'' \254\ No more is
specified concerning the required contents of the loan agreement.\255\
The requirement that a CO-OP be subject to a majority vote of its
members is, accordingly, imposed by regulation, at Sec. 156.515(b), as
well as the CO-OP loan agreement. Specifically, Section 18.2 of the CO-
OP loan agreement prohibits any ``[o]rganizational [c]hange . . . that
would result in . . . implementing a governance structure that does not
meet the governance standards codified at 45 CFR 156.515(b).''
---------------------------------------------------------------------------

\254\ 42 U.S.C. 18042(b)(2)(C).
\255\ 42 U.S.C. 18042(b)(2)(C)(iii) contains specific
prohibitions, and concomitant penalty, that are not relevant here.
---------------------------------------------------------------------------

As a result of these requirements, a CO-OP cannot pursue new
business arrangements that would impose a governance structure under
which it is possible for a majority of directors to be elected by a
majority vote of persons who are not covered by health insurance
policies issued by the CO-OP. A CO-OP also cannot enter into new
business arrangements under which voting members need not be
individuals covered by policies issued by the CO-OP. It is also not
possible for a CO-OP to enter into a business plan under which less
than two-thirds (``substantially all'') of the company's

[[Page 82610]]

activities potentially may not consist of issuing qualified health
plans.
The loan agreements currently in force only permit a CO-OP to
initiate voluntary termination of its loan agreement on grounds that
the loan recipient believes that it cannot create a viable and
sustainable CO-OP.\256\ The inability to create a viable or sustainable
CO-OP would consist of a failure to become or remain licensed as a
health insurance company, a failure to qualify as a QHP issuer, or a
failure to become or remain financially solvent. There is no avenue
currently for a CO-OP to request to terminate its loan agreement for
the purpose of pursuing new business ventures that involve a governance
structure or business model inconsistent with CO-OP governance or
operational standards.
---------------------------------------------------------------------------

\256\ CO-OP loan agreement, section 16.1.1(a).
---------------------------------------------------------------------------

Informed by 8 years of experience with business operations for the
CO-OP program, we have become aware of opportunities that may be
available to CO-OPs to terminate their loan agreement, cease to
constitute a QNHII, and thus become able pursue new opportunities that
appear well-calculated to expand operations from regional areas within
a State to Statewide operations, and also improve consumer access to
other health insurance products, while remaining a non-profit, member-
focused entity.
We therefore propose to amend Sec. 156.520(f) to add Sec.
156.520(f)(2) which would enable CMS, in its sole discretion, to
approve requests by CO-OP borrowers to voluntarily terminate their loan
agreement with CMS, and thereby cease to constitute a QNHII, for the
purpose of permitting the loan recipient to pursue innovative business
plans that are not otherwise consistent with the governance
requirements and business standards of a CO-OP borrower, provided that
(1) all outstanding CO-OP loans issued to the loan recipient are repaid
in full prior to termination of the loan agreement, and (2) we believe
granting the request would meaningfully enhance consumer access to
quality, affordable, member-focused, non-profit health care options in
affected markets. We propose to move the current regulation text at
Sec. 156.520(f) to new Sec. 156.520(f)(1).
As a general matter, we anticipate that plans could be deemed
innovative and likely to enhance consumer access to quality,
affordable, member-focused health care if they appear to be well-
calculated to lead directly to marketing non-profit, member-focused
health plans in new regions of a State, or to offer health plans on a
Statewide basis for the first time, or to expand operations into new
States, or to enhance consumer access to new non-profit products that
are not qualified health plans. These examples of innovative business
plans are illustrative, and not exclusive.
9. Conforming Amendment to Netting Regulation To Include Federal IDR
Administrative Fees (Sec. 156.1215)
We propose conforming amendments to the payment and collections
process set forth at Sec. 156.1215 to align with the policies and
regulations proposed in the Federal Independent Dispute Resolution
Operations proposed rules (88 FR 75744). If finalized, these amendments
would provide that the administrative fees for utilizing the No
Surprises Act \257\ Federal IDR process for health insurance issuers
that participate in financial programs under the Patient Protection and
Affordable Care Act would be subject to netting as part of HHS'
integrated monthly payment and collections cycle.\258\
---------------------------------------------------------------------------

\257\ The Consolidated Appropriations Act, 2021 (CAA) was
enacted on December 27, 2020. Title I, also known as the No
Surprises Act, and title II (Transparency) of Division BB of the CAA
amended chapter 100 of the Code, Part 7 of ERISA, and title XXVII of
the PHS Act. Administrative fees are charged in accordance with 45
CFR 149.510(d)(2), 26 CFR 54.9816-8T(d)(2), and 29 CFR 2590.716-
8(d)(2).
\258\ 88 FR 75798. The effective date of any finalized proposal
related to netting of amounts owed to the Federal government from
health insurance issuers for administrative fees for utilizing the
No Surprises Act Federal IDR process would be no earlier than a time
at which both the proposals related to netting proposed in the
Federal Independent Dispute Resolution Operations proposed rule and
the proposed amendments to Sec. 156.1215 in this proposed rule are
finalized.
---------------------------------------------------------------------------

To implement this policy, we propose to amend Sec. 156.1215(b) to
allow HHS to net payments owed to issuers and their affiliates \259\
operating under the same tax identification number (TIN) against
amounts due to the Federal Government from the issuers and their
affiliates operating under the same TIN for APTC, advance payments of
and reconciliation of CSRs, payment of FFE user fees, payment of SBE-FP
user fees, HHS risk adjustment, reinsurance, and risk corridors
payments and charges, and administrative fees from these issuers and
their affiliates for utilizing the Federal IDR process in accordance
with Sec. 149.510(d)(2). Additionally, we propose to amend Sec.
156.1215(c) to provide that any amount owed to the Federal Government
by an issuer and its affiliates for unpaid administrative fees due to
the Federal Government from these issuers and their affiliates for
utilizing the Federal IDR process in accordance with Sec.
149.510(d)(2), after HHS nets amounts owed by the Federal Government
under these programs, would be the basis for calculating a debt owed to
the Federal Government.
---------------------------------------------------------------------------

\259\ ``Affiliate'' refers to any affiliated issuer that
operates under the same taxpayer identification number as an issuer,
such as when there are multiple Health Insurance Oversight System
(HIOS) identifiers operating under the same taxpayer identification
number. See the 2015 Payment Notice proposed rule (78 FR 72371).
---------------------------------------------------------------------------

We seek comment on the proposed amendments to Sec. 156.1215(b) and
(c).

IV. Collection of Information Requirements

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

A. Wage Estimates

To derive wage estimates, we generally 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.\260\ Table 14 presents the median
hourly wage, the cost of fringe benefits and overhead, and the adjusted
hourly wage.
---------------------------------------------------------------------------

\260\ See May 2022 Bureau of Labor Statistics, Occupational
Employment Statistics, National Occupational Employment and Wage
Estimates. 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

[[Page 82611]]

doubling the hourly wage to estimate total cost is a reasonably
accurate estimation method.
[GRAPHIC] [TIFF OMITTED] TP24NO23.026

B. ICRs Regarding Proposed Amendments to Normal Public Notice
Requirements (31 CFR 33.112, 31 CFR 33.120 and 45 CFR Part 155.1312,
and 45 CFR 155.1320)

The Departments propose amendments to the section 1332 waiver
implementing regulations to set forth flexibilities related to State
public notice requirements and post-award public participation
requirements. Current regulations at 31 CFR 33.112 and 45 CFR 155.1312
specify State public notice and comment period and participation
requirements for proposed section 1332 waiver requests, and 31 CFR
33.116(b) and 45 CFR 155.1316(b) specify the public notice and comment
period and approval requirements under the accompanying Federal
process.
However, this proposed rule does not propose to alter any of the
requirements related to section 1332 waiver applications, compliance
and monitoring, or evaluation in a way that would impose any additional
costs or burdens for States seeking waiver approval or those States
with approved waiver plans that have not already been captured in prior
burden estimates. The Departments anticipate that implementing these
provisions, if finalized, would not significantly change or decrease
the associated burden currently approved under OMB control number:
0938-1389, expiration date: February 29, 2024.

C. ICRs Regarding Basic Health Program Regulations (42 CFR 600.320)

We propose at 42 CFR 600.320(c)(1) through (3) that a State
operating a BHP must establish a uniform method of determining the
effective date of eligibility for enrollment in a standard health plan
which follows: (1) the Exchange effective date standards at 45 CFR
155.420(b)(1); (2) the Medicaid effective date standards at 42 CFR
435.915 exclusive of Sec. 435.915(a); or (3) an effective date of
eligibility of the first day of the month following the month in which
BHP eligibility is determined. We note that only 42 CFR 600.320(c)(3)
is a new proposal. The options under 42 CFR 600.320(c)(1) and (2)
exist.
We estimate that the proposal under 42 CFR 600.320(c)(3) would have
no impact on the information collection burden. We note that any cost
would be incurred 100 percent by the State, as Federal BHP funds cannot
be used for program administration. We seek comment on these
assumptions.

D. ICRs Regarding Election To Operate an Exchange After 2014 (45 CFR
155.106)

We propose amending Sec. 155.106(a)(2) to add new paragraphs
(a)(2)(i) and (ii) to require that, as part of a State's activities for
its establishment of a State Exchange, the State provide supporting
documentation demonstrating progress

[[Page 82612]]

toward meeting State Exchange Blueprint requirements, or documentation
that details a State's plans for how it intends to implement and meet
the Exchange functional requirements as laid out in the State Exchange
Blueprint. This could include a State submitting detailed plans
regarding its State Exchange consumer assistance programs and
activities, such as information on its direct-to-consumer outreach
plans, for HHS to assess comparability to the FFEs' consumer assistance
programs and activities while allowing for State flexibility in its
approach to best serve the State's consumers. Additionally, we are
proposing to require that that when a State submits its State Exchange
Blueprint application to HHS for approval, the State must provide the
public with notice and a copy of its State Exchange Blueprint
application. Further, at some point following a State's submission of
its State Exchange Blueprint application to HHS, a State must conduct
at least one public engagement (such as a townhall meeting or public
hearing), in a timeline and manner considered effective by the State,
with concurrence from HHS, at which interested parties can learn about
the State's intent to establish a State Exchange and the State's
progress toward executing that transition. We also propose to require
that while a State is in the process of establishing a State Exchange
and until HHS has approved or conditionally approved the State Exchange
Blueprint application, a State conduct periodic public engagements at
which interested parties can continue to learn about the State's
progress towards establishing a State Exchange, in a timeline and
manner considered effective by the State, with concurrence from HHS.
These proposals, if finalized, would impact States that are
considering, or are in the process of, establishing a State Exchange
for PY 2025 and subsequent years. However, if finalized, we anticipate
minimal burden on these States, as we believe they would have
sufficient time to plan for such public-facing State Exchange
engagements and activities if not already in their plans.

E. ICRs Regarding Adding and Amending Language To Ensure Web-Brokers
Operating in State Exchanges Meet Certain Requirements Applicable in
the FFEs and SBE-FPs (45 CFR 155.220)

The following proposed changes will be submitted to OMB for review
under OMB control number 0938-New (CMS-#####). We seek comment on these
burden estimates.
We propose to amend Sec. 155.220 to apply to web-brokers operating
in State Exchanges, and consequently in State Exchanges, for both the
State Exchange's Individual Exchange and SHOP, certain existing Federal
standards governing web-brokers use of non-Exchange website to assist
consumers with enrolling in QHPs and applying for APTC/CSRs in a manner
that constitutes enrollment through the Exchange. The burden associated
with these proposed changes includes costs for web-brokers
participating in States with State Exchanges to meet the requirements
described in new proposed Sec. 155.220(n) and for State Exchanges
related to the development and oversight of web-broker programs within
their State. We anticipate that the same number of web-brokers
operating in the Exchanges on the Federal platform (20) would also
operate in the 5 State Exchanges and would be required to incur this
burden for each of the 5 State Exchanges they may operate in. We
estimate the relevant costs based on current Federal costs. These
estimates are described below.
These proposals would impose burdens on web-brokers participating
in State Exchanges for costs related to web-development to meet the
website display requirements proposed to be extended to web-brokers
operating in these State Exchanges and costs associated with creating
and submitting audit documentation for the applicable Exchange's
review. Although we have allowed States certain flexibility for State
Exchanges with regards to establishing procedures and requirements for
website displays and demonstration of operational readiness, we expect
the costs can be reasonably estimated based on the Federal costs as
follows. We also solicit feedback from State Exchanges regarding these
burden estimates and the number of web-brokers expected to participate
in State Exchanges pursuant to this proposal.
We estimate it would take 15 hours for a Business Operations
Specialist at an hourly rate of $73.12 to implement the standardized
disclaimers required under Sec. 155.220(c)(3)(i)(A) and (G), along
with 45 hours at an hourly rate of $80.04 for a Web and Digital
Interface Designer to modify the website to implement the standardized
disclaimers across 5 State Exchanges. Therefore, for the standardized
disclaimers under Sec. 155.220(c)(3)(i)(A) and (G), we estimate each
web-broker operating in State Exchanges that operate their own
eligibility and enrollment platform would incur a cost of $4,698.60 (15
hours x $73.12 per hour + 45 hours x $80.04 per hour). We estimate a
cumulative burden of $93,972 for the anticipated 20 web-brokers
operating across the State Exchanges ($4,698.60 x 20 web-brokers).
Additionally, proposed new paragraph Sec. 155.220(n)(1) allows State
Exchanges the flexibility to add State-specific information to the
standardized disclaimers that does not conflict with the HHS-provided
language. We solicit feedback from State Exchanges regarding how these
flexibilities would impact these burden estimates.
Additionally, we anticipate it would take up to 100 hours at an
hourly rate of $80.04 for a Web and Digital Interface Designer to
modify the website to implement and display the standardized QHP
comparative information required under Sec. 155.220(c)(3)(i)(A)
(including the quality ratings assigned by HHS and enrollee
satisfaction survey) across 5 State Exchanges. Therefore, for the
display of the QHP comparative information on web-broker non-Exchange
websites, we estimate each web-broker operating in State Exchanges
would incur a cost of $8,004 (100 hours x $80.04 per hour). We estimate
a cumulative burden of $160,080 for the anticipated 20 web-brokers
operating across the State Exchanges ($8,400 x 20 web-brokers).
We anticipate it would take 50 hours for a Web and Digital
Interface Designer at an hourly rate of $80.04 to modify the website to
display the APTC and CSR eligibility information required under Sec.
155.220(c)(3)(i)(I) across 5 State Exchanges. Therefore, for changes
related to implementation of the Federal minimum web-broker standards
related to display of consumer APTC and CSR eligibility information, we
estimate each web-broker operating in States with State Exchanges would
incur a cost of $4,002 (50 hours x $80.04). We therefore estimate a
cumulative burden of $80,040 for the anticipated 20 web-brokers
operating across the 5 State Exchanges ($4,002 x 20 web-brokers).
Additionally, proposed new paragraph Sec. 155.220(n)(1) allows State
Exchanges the flexibility to add State-specific information to the
standardized disclaimers that does not conflict with the HHS-provided
language and to define and review how consumer education information
about the State Exchange is customized and presented on web-brokers
websites. We solicit feedback from State Exchanges regarding how these
flexibilities would impact these burden estimates.
New proposed paragraph (c)(4)(iii) would extend certain downstream
agent and broker requirements at Sec. 155.220(c)(4)(i) that currently
apply to web-brokers in FFE and SBE-FP States and govern the use of the
web-broker's

[[Page 82613]]

non-Exchange website by other agents or brokers assisting Exchange
consumers to also apply to web-brokers, and their downstream agents and
brokers in State Exchanges. Under the proposed new provision, web-
brokers that permit other agents or brokers, through a contract or
other arrangement, to use the web-broker's non-Exchange website to help
and applicant or enrollee complete a QHP selection or complete the
Exchange eligibility application would be required to meet the
standards at Sec. 155.220(c)(4)(i)(A), (B), (D), and (F) when
assisting consumers in States with State Exchanges. This includes
extension of requirements for web-brokers to verify that any agent or
broker accessing or using the website is licensed in the State in which
the consumer is selecting the QHP and has completed training and
registration and has signed all required agreements with the applicable
State Exchange. It would also require web-brokers to terminate the
agent or broker's access to its website if the applicable State
Exchange determines the agent or broker is in violation of the
provisions described in this section and/or if the applicable State
Exchange terminates any required agreement with the agent or broker. In
addition, it would also extend a requirement for web-brokers to provide
State Exchanges with a list of agents and brokers who enter into such a
contract or other arrangement to use the web-broker's non-Exchange
website, in a form and manner to be specified by the State Exchanges
similar to the requirement in Sec. 155.220(c)(4)(i)(A) for web-brokers
in FFE and SBE-FP States to report the same information to HHS. We
understand that web-brokers who work with and allow other agents and
brokers to use the web-brokers' non-Exchange websites to assist
Exchange consumers typically obtain and manage information on each of
their downstream agents or brokers as part of an onboarding process. As
a result, we expect web-brokers would already have the necessary data
to provide a list to the applicable State Exchange of each of the other
agents or brokers that allows to use the web-brokers' non-Exchange
websites to assist Exchange consumers. We estimate that it would take
up to 240 hours at an hourly cost of $94.04 for a computer programmer
to perform the necessary programming to comply with these requirements
in Sec. 155.220(c)(4)(i)(A), (B), and (D), and 20 hours at an hourly
cost of $118.30 for a senior manager to develop a listing of affiliated
third-party agents and brokers across all 5 State Exchanges. Therefore,
for changes related to implementation of these Federal minimum web-
broker standards related to downstream agents or brokers, we estimate
each web-broker operating in State Exchanges would incur a cost of
$24,935.60 per web-broker (($94.04 x 240 hours) + ($118.30 x 20
hours)). We estimate a cumulative burden of $598,454.40 for an
anticipated 24 web-brokers operating across the State Exchanges
($24,935.60 x 24 web-brokers).
We estimate it would take 95 hours for a Business Operations
Specialist at an hourly rate of $73.12 to oversee and monitor
compliance with the operational readiness requirements established by
State Exchange, as required by new Sec. 155.220(n)(2) across 5 State
Exchanges. Therefore, for compliance requirements, we estimate each
web-broker operating in States with State Exchanges would incur a cost
of $6,946.40 (95 hours x $73.12) for the proposed operational readiness
requirements. We estimate a cumulative burden of $138,928 for the
anticipated 20 web-brokers operating across the 5 State Exchanges
($6,946.40 x 20 web-brokers). These burden estimates are provided based
on the estimates of the cost for DE entities to comply with the
operational readiness requirements established by HHS. Proposed new
paragraph Sec. 155.220(n)(2) would allow State Exchanges to define and
establish the form and manner for their web-brokers to establish
operational readiness. Although we anticipate State Exchanges would
establish requirements similar to the requirements for demonstrating
operational readiness to operate in the FFE or SBE-FPs, we solicit
feedback from State Exchanges regarding how well these burden estimates
reflect their anticipated requirements.
Therefore, we estimate each web-broker operating in all 5 State
Exchanges would incur a one-time burden in PY 2025 of 565 hours at a
cost of $48,586.60. We estimate a cumulative burden of 11,300 hours at
an estimated cost of $1,071,474.40 for all 20 web-brokers operating
across the 5 State Exchanges. We seek comment on the number of State
Exchanges that would be interested in establishing a web-broker program
to allow web-brokers to host non-Exchange websites to assist Exchange
consumers in their State and on the number of web-brokers interested in
operating in those State Exchanges.
New proposed paragraph 155.220(n) requires State Exchanges to
comply with the Federally-facilitated Exchange standards described
above and in the preamble. Proposed paragraph 155.220(n)(1) allows
State Exchanges the flexibility to add State-specific information to
the standardized disclaimers that does not conflict with the HHS-
provided language and provides flexibility for the State Exchanges to
define how consumer educational information is displayed on websites by
web-brokers in State Exchanges. Proposed paragraph (2) under this new
section also requires State Exchanges to establish the form and manner
for their web-brokers to demonstrate operational readiness and
compliance with applicable requirements, in the form and manner
specified by the Exchange. The burden associated with these proposed
changes includes costs for existing and future State Exchanges related
to drafting new policy, updating standards, and potentially hiring
additional staff to perform functions not currently being performed by
the State Exchange, such as for drafting web-broker disclaimer
language, drafting consumer-facing educational content, and engaging
web-brokers in operational readiness, that would now incur new costs
related to establishment of a web-broker program and ongoing monitoring
of web-brokers to enforce the minimum Federal standards and any
additional State-specific requirements.
We estimate the relevant costs based on current Federal costs as
follows. We estimate that 5 States will opt to host a web-broker
program for their State Exchanges. We anticipate the total burden
associated with the State Exchanges developing the associated policies
and procedures, including providing web-brokers with examples and
technical assistance (including technical implementation guidance such
as providing the quality ratings assigned and enrollee satisfaction
survey data) to be up to 528 hours per State. This assumes 480 hours
for a GS-13, Step 5 employee at an hourly rate of $121.66 (the hourly
wage rate for a GS-13, Step 5 employee in the Washington, DC area,\261\
doubled to account for fringe benefits and overhead) and 48 hours for a
GS-15, Step 5 employee at an hourly rate of $169.10 (the hourly wage
rate for a GS-15, Step 5 employee in the Washington, DC area,\262\
doubled to account for fringe benefits and overhead). In total, for the
5 State Exchanges anticipated to participate, we estimate a burden of
2,640 hours (5

[[Page 82614]]

State Exchanges x 528 hours per State Exchange) at a cost of $332,568
(2,400 hours x $121.66 + 240 x $169.10).
---------------------------------------------------------------------------

\261\ OPM. (2023, January). Salary Table 2023-DCB Incorporating
the 4.1% General Schedule Increase and a Locality Payment of 32.49%
For the Locality Pay Area of Washington-Baltimore-Arlington, DC-MD-
VA-WV-PA Total Increase: 4.86%. https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2023/DCB_h.pdf.
\262\ Id.
---------------------------------------------------------------------------

We estimate it would take 40 hours each for the State Exchange
equivalent of 2 GS-13, Step 5 employees at an hourly rate of $121.66
(the hourly wage rate for a GS-13, Step 5 employee in the Washington,
DC area,\263\ doubled to account for fringe benefits and overhead) to
complete initial documentation review related to all web-broker
requirements pursuant to this proposal, for a total cost to State
governments of $9,732.8 (2 x 40 hours x $121.66) per State Exchange. We
estimate it would take 8 hours for the equivalent of 1 GS-15, Step 5
employee at an hourly rate of $169.10 (the hourly wage rate for a GS-
15, Step 5 employee in the Washington, DC area,\264\ doubled to account
for fringe benefits and overhead) to provide managerial review and
oversight, for a total cost to State governments of $1,352.8 (1 x 8
hours x $169.10) per State Exchange. Additionally, we estimate the
total burden for each State government for State contract and
contractors ongoing reviews for oversight would include 1,087 hours at
GS-12, Step 5 with an hourly rate of $102.30 (the hourly wage rate for
a GS-12, Step 5 employee in the Washington, DC area,\265\ doubled to
account for fringe benefits and overhead) and 2,305 hours at GS-13,
Step 5 with an hourly rate of $121.66 (the hourly wage rate for a GS-
13, Step 5 employee in the Washington, DC area,\266\ doubled to account
for fringe benefits and overhead), and the total burden across all 5
States to be 16,960 hours. Therefore, we estimate a cost to each State
governments of $469,225.60, with a total estimated cost to State
governments of $2,346,128 (5 States x $469,225.60). We seek comment
from State Exchanges on these burden estimates.
---------------------------------------------------------------------------

\263\ Id.
\264\ Id.
\265\ Id.
\266\ Id.
---------------------------------------------------------------------------

We recognize that some State Exchanges may utilize web-brokers
already participating in the FFEs and SBE-FPs, and encourage State
Exchanges to leverage web-broker operational readiness demonstrated to
participate in the FFEs or SBE-FPs when possible, as to minimize both
burden on the State Exchanges and their web-brokers.

F. ICRs Regarding Establishing Requirements for DE Entities Mandating
HealthCare.gov Changes To Be Reflected on DE Entity Non-Exchange
Websites Within a Notice Period Set by HHS (45 CFR 155.221(b))

The following proposed changes will be submitted to OMB for review
under OMB control number 0938-New (CMS-#####). We seek comment on these
burden estimates.
As discussed in the preamble of this proposed rule, we propose to
add language to Sec. 155.221 requiring that display changes adopted by
HealthCare.gov be reflected on DE entity non-Exchange websites within a
time period specified by HHS, unless HHS approves a deviation.
Based on our experience with operating the DE program on the FFEs
and SBE-FPs over the past several years, we estimate that approximately
three or fewer display changes would be required annually. We estimate
that a total of 100 web-brokers and QHP issuers participating in DE in
FFE and SBE-FP States would be required to comply with these
requirements. These display changes may range from changes such as, but
not limited to, relatively simple text-based updates to more complex
display changes involving the website's backend display methodology or
algorithms. We estimate approximately two simpler and one more complex
display change annually. We estimate that it would take a Web and
Digital Interface Designer 30 hours annually, at a cost of $80.04 per
hour, to implement these changes, at a total annual cost of
approximately $2,401.20 ($80.04 x 30 hours) per web-broker or QHP
issuer. We therefore estimate a total annual burden of 3,000 hours (30
x 100) at a cost of $240,120 (3,000 hours x $80.04 per hour) for all
applicable web-brokers and QHP issuers.
We recognize that system constraints may prevent DE entity websites
from conforming to the minimum standards defined by HHS for certain
HealthCare.gov display changes, and that DE entities may have an idea
for implementation that does not meet the standards but would
effectively communicate the same information to consumers. We propose
DE entities participating in FFE and SBE-FPs that intend to deviate
from the standards defined by HHS would be required to submit a
deviation request. Those requests would be subject to review by HHS in
advance of implementation of any alternative website displays.
Based on internal data, we estimate that 25 web-brokers and QHP
issuers participating in FFE or SBE-FP States would submit a request to
deviate from the standards defined by HHS annually. We estimate it
would take a compliance officer approximately 3 hours annually, at a
rate of $68.94 per hour, to prepare and submit the request to deviate
from the communicated standards, including preparing the rationale
explaining for the request. We therefore estimate the total annual
burden for all web-brokers and issuers in completing and submitting a
request to deviate to be approximately $5,170.50 annually.
We do not expect this proposal to impose a new burden on EDE
entities, if finalized, as EDE entities are already following the
process outlined in this proposal through the change request processes
described in the Third Party Auditor Guidelines.
If the proposal to add and amend language to ensure DE entities
participating in Exchanges, at proposed new Sec. 155.221(j), is
finalized, we estimate that DE entities may incur burden related to the
website development needed to implement changes made to State Exchange
websites per the standards defined by the State Exchange. We anticipate
that the web-development costs cited above would apply for each DE
entity assisting consumers in State Exchanges. As described in the
preamble, there may be burden associated with maintaining DE
environments tailored to each States' display requirements. However,
based on our experience conducting oversight of DE entity websites, it
is our understanding that DE entities are familiar with and capable of
tailoring website displays based on specific criteria and, as such, we
anticipate entities are capable of tailoring website displays to the
requirements of the State the consumer is seeking assistance in. We
anticipate a total annual burden of $1,226,452.50 for DE entities
participating in States with State Exchanges associated with
implementing display changes and submitting requests to deviate from
the standards defined by the State Exchange across 5 State Exchanges
($245,290.50 x 5 State Exchanges). Deviation requests would be subject
to review by the State Exchange in advance of implementation of any
alternative website displays. We seek comment on the burden of this
proposal on DE entities planning to operate in State Exchanges.

G. ICRs Regarding Adding and Amending Language To Ensure DE Entities
Operating in State Exchanges Meet Certain Standards Applicable in the
FFEs and SBE-FPs (45 CFR 155.221)

The following proposed changes will be submitted to OMB for review
under

[[Page 82615]]

OMB control number 0938-New (CMS-#####). We seek comment on these
burden estimates.
We propose to amend Sec. 155.221 to apply to DE entities operating
in State Exchanges, and consequently State Exchanges that choose to
implement a DE program, certain existing Federal standards regarding DE
entities assisting consumers with enrolling in QHPs and applying for
APTC/CSRs, both for the State Exchange's Individual Exchange and SHOP
program. We anticipate that the same number of DE entities operating in
the Exchanges on the Federal platform (100) would also operate in the 5
State Exchanges and would be required to incur this burden for each of
the 5 State Exchanges they may operate in. The burden associated with
these proposed changes includes costs for DE entities participating in
State Exchanges to meet the requirements described in new proposed
Sec. 155.221(j) and for State Exchanges related to the development and
oversight of DE programs within their State. We estimate relevant costs
based on current Federal costs. These estimates are described below.
The burden associated with operating a DE program includes costs
for DE entities related to web-development to meet the website display
requirements being applied to DE entities operating in States with
State Exchanges and costs for creating, storing, and submitting
operational readiness documentation for Exchange review. Although these
proposals allow States certain flexibility for State Exchanges with
regards to establishing procedures and requirements for website
displays and demonstration of operational readiness, we expect the
costs to reasonably be estimated based on the Federal costs as follows.
We estimate it would take 15 hours for a DE entity's Business
Operations Specialist at an hourly rate of $73.12 to implement the
standardized disclaimer required under Sec. 155.221(b)(2), along with
20 hours at an hourly rate of $80.04 for a Web and Digital Interface
Designer to modify the DE entity non-Exchange website to implement the
standardized disclaimer across 5 State Exchanges. Therefore, for the
standardized disclaimer under Sec. 155.221(b)(2), we estimate each DE
entity operating in State Exchanges that operate their own eligibility
and enrollment platform would incur a burden of 35 hours at an
estimated cost of $2,697.60 (15 hours x $73.12 per hour + 20 hours x
$80.04 per hour). We estimate the anticipated 100 DE entities would
incur a cumulative burden 3500 hours at an estimated cost of $269,760
($2,697.60 x 100 DE entities).
Costs related to demonstrating operational readiness at new
proposed Sec. 155.221(j) would depend on the DE entity's desired
enrollment pathway and the options made available by the State
Exchange. Although we are allowing States the flexibility to establish
operational readiness requirements, including the form and manner for
their DE entities to demonstrate operational readiness, we encourage
State Exchanges to leverage the existing items in Sec.
155.220(b)(4)(i) and (ii) as the starting point for their operationally
readiness reviews. If State Exchanges leverage these items, we
anticipate the burden associated with DE entity demonstration of
operational readiness can be estimated based on the Federal costs as
follows. We estimate it would take up to 360 hours for an Auditor at an
hourly rate of $75.00 to submit business audit documentation across 5
State Exchanges, and we estimate 4 DE entities would participate in a
manner that would trigger this information collection, resulting in an
estimated cost of $27,000 per DE entity (360 hours x $75.00). We
estimate it would take up to 610 hours for an Auditor at an hourly rate
of $75.00 to submit a security and privacy audit documentation across 5
State Exchanges, and we estimate 14 DE entities would participate in a
manner that would trigger this information collection, resulting in an
estimated cost of $45,750 per DE entity (610 hours x $75.00). We
estimate it would take 45 hours for a Business Operations Specialist to
complete and submit a typical Enhanced Direct Enrollment (EDE)
documentation package and related information across 5 State Exchanges
at an hourly rate of $73.12, and 77 DE entities would participate in a
manner that would trigger this information collection, resulting in an
estimated cost of $3,290.40 per DE entity (45 hours x $73.12).
Therefore, for a DE entity to demonstrate operational readiness and
compliance with applicable requirements to State Exchanges, we estimate
each DE entity would incur a burden of up to 1,015 hours at an
estimated cost of up to $76,040.40 (360 hours x $75.00 per hour + 610
hours x $75.00 per hour + 45 hours x $73.12), but many DE entities
would incur a lower burden and cost due to not participating in a
manner that would trigger some of these information collection costs.
We estimate a cumulative burden of 13,445 hours at an estimated cost of
$1,001,860.80 for all applicable DE entities operating across the 5
State Exchanges ($27,000 x 4 DE entities + $45,750 x 14 DE entities +
$3,290.40 x 77 entities). We solicit feedback from State Exchanges with
regards to how the form and manner of documentation they would require
DE entities to submit to demonstrate operational readiness, along with
the estimated burden associated with those submissions.
We estimate it would take 100 hours for a Web and Digital Interface
Designer at a rate of $80.04 per hour to modify the DE entity's non-
Exchange website to comply with the requirements to display and market
QHPs offered through the Exchange, individual health insurance
coverage, and any other products on at least three separate websites
pages in accordance with Sec. Sec. 155.221(b)(1) and (3) and (c)
across 5 State Exchanges. Therefore, for these website display
requirements, we estimate each DE entity operating in State Exchanges
would incur an estimated cost of $8,004 (100 hours x $80.04 per hour).
We estimate 40 DE entities would trigger this information collection
with a cumulative burden of 4,000 hours at an estimated cost of
$320,160 across the State Exchanges ($8,004 x 40 DE entities).
The burden associated with this change also includes costs for DE
entities operating in State Exchanges with oversight of direct
enrollment entity application assisters, as described in Sec.
155.221(d) (citing Sec. 155.415(b)), for those DE entities that opt to
use these application assisters. As described in the preamble, the
requirements at 155.415(b)(2) and (b)(3) are already applicable to DE
entities operating in all Exchanges and therefore do not represent a
new burden for DE entities. The extension of Sec. 155.221(d) to DE
entities operating in State Exchanges would require DE entities'
application assisters to complete appropriate State-required training
and registration in a manner specified by the State Exchange consistent
with Sec. 155.415(b)(1). We estimate that up to 1,000 application
assisters will operate in each State that opts to implement a DE
program and allows DE entity application assisters to assist Exchange
consumers. Accordingly, we anticipate that 5,000 application assisters
across an estimated 5 States will participate. We estimate the burden
for 100 DE entities to comply with this requirement at 3 hours per
assister for a total annual burden of 15,000 hours for a Compliance
Officer at an hourly wage of $68.94 for a total cost of $51,705 per
entity. We estimate a cumulative burden of 75,000 hours at an estimated
cost of $5,170,500 for 100 DE entities operating across the 5 State
Exchanges ($51,705 x 100 entities).

[[Page 82616]]

Proposed new paragraph Sec. 155.221(j)(3) extends requirements for
DE entities operating in State Exchanges to implement and prominently
display changes adopted for display on the State Exchanges' websites
and with standards defined by State Exchange, unless the State Exchange
approves a deviation. The costs associated with DE entities
implementing this proposal in State Exchanges is discussed in the ICR
section related to new proposed paragraph Sec. 155.221(b)(6).
Regarding new proposed paragraph Sec. 155.221(a) extending
requirements under Sec. 156.1230(a) to DE QHP issuers operating in
State Exchanges, we do not anticipate additional burden for QHP
issuers, beyond the estimated burdens for the website display
requirements described above, to provide consumers with correct
information, without omission of material fact, regarding the
Exchanges, QHPs offered through the Exchanges, and insurance
affordability programs, or to refrain from marketing or conduct that is
misleading, coercive, or discrimination based on race, color, national
origin, disability, age, or sex.
Therefore, we estimate each DE entity operating in State Exchanges
would incur a one-time burden in PY 2025 of up to 1,900 hours at a cost
of up to $138,447 for an overall total for all DE entities operating
across the State Exchanges of up to 95,945 hours at an estimated cost
of $6,762,280.80 to comply with these proposed requirements. We seek
comment on the burden of this proposal on DE entities planning to
participate in State Exchanges. For the purposes of better determining
burden estimates, we also seek comment on the number of State Exchanges
that operate their own eligibility and enrollment platforms and would
be interested in implementing a DE program in their State and on the
number of DE entities interested in operating in those State Exchanges.
New proposed paragraph Sec. 155.221(j) requires State Exchanges to
comply with the Federally-facilitated Exchange standards described
above and in the preamble. Sec. 155.221(j)(1) allows State Exchanges
the flexibility to add State-specific information to the standardized
disclaimer that does not conflict with the HHS-provided language.
Proposed paragraph (2) under this new section also requires State
Exchanges to establish the form and manner for their DE entities to
demonstrate operational readiness and compliance with applicable
requirements, in the form and manner specified by the Exchange.
Proposed paragraph (3) requires State Exchanges establish requirements
for their DE entities to implement and prominently display changes
adopted for display on the State Exchanges' website at the direction of
the State Exchange. The burden associated with these proposed changes
includes costs for State Exchanges related to drafting new policy,
updating standards, and potentially hiring additional staff to perform
functions not currently being performed by the State Exchange, such as
for drafting DE entity program requirements and guidelines, including
establishment of DE entity operational readiness programs,
establishment of procedures related to defining and communicating
standards for required display changes, establishment of any State-
specific disclaimer text, and ongoing monitoring of DE entity
compliance with applicable Federal standards and any additional State-
specific requirements. DE entities operating in States transitioning
off of the Federal Platform to a State Exchange would likely have fewer
costs as they should already be meeting the Federal minimum
requirements. No State Exchange has implemented DE to date, so we are
not able to provide precise costs estimates of the burden associated
with these proposed changes for State Exchanges. However, we anticipate
that operational costs related to establishing polices and adding staff
in order to operate a compliant DE program under Sec. 155.221 may be
estimated based on Federal platform costs and would be added to the
costs and burdens of transitioning to State Exchange.
We estimate that 5 States will opt to host a DE program for their
State Exchanges. We anticipate the total burden associated with the
State Exchanges developing the associated policies and procedures to be
up to 528 hours per State. This assumes 480 hours for a GS-13, Step 5
employee at an hourly rate of $121.66 (the hourly wage rate for a GS-
13, Step 5 employee in the Washington, DC area,\267\ doubled to account
for fringe benefits and overhead) and 48 hours for a GS-15, Step 5
employee at an hourly rate of $169.10 (the hourly wage rate for a GS-
15, Step 5 employee in the Washington, DC area,\268\ doubled to account
for fringe benefits and overhead). In total, for the 5 State Exchanges
anticipated to participate, we estimate a burden of 2,640 hours (5
State Exchanges x 528 hours per State Exchange) at a cost of $332,568
(2,400 hours x $121.66 per hour + 240 hours x $169.10 per hour).
---------------------------------------------------------------------------

\267\ OPM. (2023, January). Salary Table 2023-DCB Incorporating
the 4.1% General Schedule Increase and a Locality Payment of 32.49%
For the Locality Pay Area of Washington-Baltimore-Arlington, DC-MD-
VA-WV-PA Total Increase: 4.86%. https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2023/DCB_h.pdf.
\268\ Id.
---------------------------------------------------------------------------

Based on the Federal platform costs, we estimate it would take 60
hours each for the State Exchange equivalent of 2 GS-13, Step 5
employees at an hourly rate of $121.66 (the hourly wage rate for a GS-
13, Step 5 employee in the Washington, DC area,\269\ doubled to account
for fringe benefits and overhead) to complete initial documentation
review related to all DE entity requirements pursuant to this proposal,
for a total cost to State governments of $14,599.20 (2 employees x 60
hours per employee x $121.66 per hour) per State Exchange. We estimate
it would take 12 hours for the equivalent of 1 GS-15, Step 5 employee
at an hourly rate of $169.10 (the hourly wage rate for a GS-15, Step 5
employee in the Washington, DC area,\270\ doubled to account for fringe
benefits and overhead) to provide managerial review and oversight, for
a total cost to State governments of $2,029.20 (12 hours x $169.10 per
hour) per State Exchange. Additionally, we estimate the total burden
for each State government for State contract and contractors ongoing
reviews for oversight would include 1,631 hours for a GS-12, Step 5
employee with an hourly rate of $102.30 (the hourly wage rate for a GS-
12, Step 5 employee in the Washington, DC area,\271\ doubled to account
for fringe benefits and overhead) and 3,458 hours for a GS-13, Step 5
employee with an hourly rate of $121.66 (the hourly wage rate for a GS-
13, Step 5 employee in the Washington, DC area,\272\ doubled to account
for fringe benefits and overhead). We estimate a burden to each State
government of 5,089 hours at an estimated cost of $587,551.58 for State
contracts and contractors ongoing reviews for oversight. Therefore,
each State would incur a burden of 5,749 hours at an estimated cost of
$670,693.58 ($66,513.60 + $14,599.20 + $2,029.20 + $587,551.58) in
total for these proposals, and all 5 States would incur a total burden
of 28,745 hours at an estimated cost of $3,353,468 (5 States x
$670,693.58). We seek comment from State Exchanges on these burden
estimates.
---------------------------------------------------------------------------

\269\ Id.
\270\ Id.
\271\ Id.
\272\ Id.
---------------------------------------------------------------------------

We recognize that some State Exchanges may decide to utilize DE
entities already participating in the FFEs and SBE-FPs and encourage
State Exchanges to leverage DE operational readiness demonstrated to
participate in the FFEs or SBE-FPs when possible, so

[[Page 82617]]

as to minimize burden on both the State Exchanges that operate their
own eligibility and enrollment platform and their DE entities.

H. ICRs Regarding Failure To File and Reconcile Process (45 CFR
155.305(f)(4))

We propose amending Sec. 155.305(f)(4) to provide that State
Exchanges must notify a tax filer that has been identified as having
FTR status for one-year of the requirement to file and reconcile their
APTC, or risk losing their eligibility for APTC if they remain FTR for
the subsequent tax-year. This proposed requirement would ensure that
State Exchanges provide notifications, similar to how Exchanges on the
Federal platform do, and that tax filers on State Exchanges are
adequately educated on the requirement to file and reconcile. The
proposed rule, if finalized, would impact State Exchange FTR noticing
processes for PY 2025 and subsequent years. For State Exchanges, FTR
would be conducted in the same 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 proposed
amendment, if finalized, would not impact the existing information
collection requirements (OMB control number: 0938-1191) or burden for
consumers.
Under previous FTR policy, State Exchanges were already required to
notify tax filers identified as FTR at a minimum of once per year. As
such, we do not anticipate this requirement increasing State Exchanges'
burden of noticing beyond their existing FTR processes. We seek comment
on these assumptions.

I. ICRs Regarding Verification Process Related to Eligibility for
Enrollment in a QHP Through the Exchange (45 CFR 155.315(e))

The following proposed changes will be submitted to OMB for review
under OMB control number 0938-1312 (CMS-10593). We seek comment on
these burden estimates.
We propose several revisions to Sec. 155.315(e) that, if
finalized, would allow Exchanges to accept consumer attestation of
incarceration status without further verification or, alternatively, to
propose an alternative data source for incarceration verification for
HHS approval. Exchanges that elect to verify incarceration status would
continue to be required to use the DMI process if the data source
provides a mismatch against the consumer attestation of incarceration
status or other information provided by the applicant or in the records
of the Exchange. Should a State Exchange choose to propose using an
alternative electronic data source for verifying incarceration status,
HHS would review such proposals for consistency with the proposed
standard in Sec. 155.315(e)(2).
Of the 18 State Exchanges (operating in 12 States and the District
of Columbia) that have incarceration verification processes, 8 conduct
incarceration verifications similar to the one used to date by
Exchanges on the Federal platform, and 5 have connected to an
individual State or local incarceration facility for verifications and
have received approval to do so from HHS. Additionally, 3 States are
currently in process of transitioning to State Exchanges for PY 2024 or
beyond and may choose to connect to an alternative incarceration
verification data source with HHS approval. Subtracting the 5 Exchanges
with preexisting approvals, we anticipate 11 State Exchanges could
connect to an alternative incarceration verification data source,
should they assess that an alternative data source exists and want to
continue verification of consumer incarceration status using it.
For the purposes of assessing whether an alternative data source
should be used, we estimate that a Management Analyst would spend 20
hours, at an hourly rate of $91.62, to synthesize a cost-benefit
analysis regarding whether the Exchange should continue to verify
incarceration status using an approved data source instead of accepting
a consumer's attestation that they are not incarcerated. If the
Exchange finds a viable alternative data source and determines that it
should be used, we anticipate that a Business Operations Specialist
would take about 2 hours, at an hourly rate of $73.12, to submit a
request for HHS approval. We also anticipate that it would take a Chief
Executive equivalent for the Exchange 1 hour, at an hourly rate of
$182.24, to approve the paperwork for submission to request HHS
approval of the alternative incarceration data source. In total, the
assessment of whether the Exchange should continue to verify
incarceration status using an alternative data source instead of
accepting consumer attestation would take 20 hours at a cost of
$1,832.40, and the process of approving and submitting a request for
HHS approval would take 3 hours at a cost of $328.48. Therefore, the
total one-time burden for each Exchange that elects to verify
incarceration status using an HHS-approved data source in 2025 would be
23 hours at a cost of approximately $2,161, and the total burden across
all 11 State Exchanges would be 253 hours at a cost of approximately
$23,770.

J. ICRs Regarding Eligibility Redetermination During a Benefit Year (45
CFR 155.330(d))

The following proposed changes will be submitted to OMB for review
under OMB control number 0938-1207 (CMS-10468). We seek comment on
these burden estimates.
We propose amending Sec. 155.330(d) to require that Exchanges
periodically examine available data sources described in Sec. Sec.
155.315(b)(1) and 155.320(b) to identify changes related to death of an
applicant on whose behalf advance payments of the premium tax credit or
cost-sharing reductions are being provided. The Exchanges have
developed electronic data exchanges to support obtaining this
information to determine the applicant's eligibility at the point of
application and could reuse those data exchanges here. Consequently, we
estimate costs associated with this requirement to be minimal.
However, State Exchanges not already conducting death PDM with the
required frequency or not deemed in compliance with the newly proposed
PDM requirements would be required to engage in IT system development
activity to communicate with these programs and act on enrollment data
either in a new way, or in the same way more frequently. Thus, there
may be additional associated administrative cost for these State
Exchanges to implement the proposed PDM requirement.
Based on experience with other PDMs, for each State Exchange not
already conducting death PDM at least twice a year, we estimate that it
would take 40 hours by a Computer Systems Analyst at an hourly rate of
$98.30 to implement this proposed provision, for a cost of $3,932 per
State Exchange. Therefore, for all 11 State Exchanges not currently
meeting the proposed requirement, we estimate a total burden of 440
hours at a cost of $43,252. We assume that this burden would be
incurred primarily in 2025.

K. ICRs Regarding Establishment of Exchange Network Adequacy Standards
(45 CFR 155.1050)

The burden associated with subjecting QHP issuers in State
Exchanges and SBE-FPs to time and distance standards as proposed at
Sec. 155.1050 is covered by the information collection currently
approved under OMB control number 0938-1312 (CMS-10593). We note that
we are also revising the information

[[Page 82618]]

collection currently approved under OMB control number 0938-1415 (CMS-
10803) regarding appointment wait time standards encompassed in
previously finalized regulations at 45 CFR 156.230(a)(2)(B). We seek
comment on these burden estimates.
Effective for plan years beginning on or after January 1, 2025, we
propose to amend Sec. 155.1050 to require that State Exchanges and
SBE-FPs establish and impose quantitative time and distance QHP network
adequacy standards that are at least as stringent as the FFEs' time and
distance standards established for QHPs under Sec. 156.230. We also
propose that State Exchanges and SBE-FPs be required to conduct
quantitative network adequacy reviews prior to certifying any plan as a
QHP, consistent with the reviews conducted by the FFEs under Sec.
156.230. Specifically, when we refer to the review being consistent
with the network adequacy reviews conducted by the FFEs under Sec.
156.230, we propose that State Exchanges and SBE-FPs would be required
to conduct, prior to QHP certification, quantitative network adequacy
reviews to evaluate compliance with requirements under Sec.
156.230(a)(1)(ii) and (iii), and (a)(2)(i)(A), while providing QHP
certification applicants the flexibilities described under Sec.
156.230(a)(2)(ii) and (a)(3) and (4). Under this proposal, State
Exchanges and SBE-FPs would be prohibited from accepting an issuer's
attestation as the only means for plan compliance with network adequacy
standards. We further propose to require State Exchanges and SBE-FPs to
permit issuers that are unable to meet the specified network adequacy
standards to participate in a justification process after submitting
their initial network adequacy data, consistent with the processes
specified under Sec. 156.230(a)(2)(ii) and (a)(3) and (4), to account
for variances and potentially earn QHP certification. In addition, for
States Exchanges that employ robust, quantitative network adequacy
standards that differ from those used by the FFEs, but still ensure
that QHPs provide consumers with reasonable, timely access to
practitioners and facilities to manage their health care needs, we
propose a framework for granting exceptions to the requirements that
State Exchanges and SBE-FPs are required to establish and impose
network adequacy time and distance standards for QHPs that are at least
as stringent as the standards applicable to QHPs in FFEs and conduct
quantitative network adequacy reviews that are consistent with those
carried out by the FFEs under Sec. 156.230. Finally, we propose to
mandate that State Exchanges and SBE-FPs require all issuers seeking
QHP certification to submit information to the State Exchange or SBE-FP
about whether network providers offer telehealth services.
We estimate that the total annual burden associated with State
Exchanges and SBE-FPs establishing and imposing the proposed network
adequacy standards, conducting the network adequacy reviews as
proposed, collecting telehealth information from issuers seeking QHP
certification, and submitting any exception to be up to 900 hours.
Assuming the compliance officer average hourly rate of $68.94 per hour,
we estimate the cost of the data collection, operations, and
maintenance pertaining to these proposed requirements on each State
Exchange and SBE-FP to be $62,046 per year (900 hours x $68.94 per
hour). In total, for the 19 State Exchanges and 3 SBE-FPs anticipated
to be operational in 2025, we estimate a burden of 19,800 hours (22
State Exchanges and SBE-FPs x 900 hours per Exchange) at a cost of
$1,365,012 (22 State Exchanges and SBE-FPs x 900 hours per Exchange x
$68.94 per hour).
We estimate that the burden for QHP issuers in State Exchanges and
SBE-FPs to gather and submit the time and distance data, including any
justification, to the respective State Exchanges or SBE-FPs would be 10
hours in total for each medical QHP issuer (a QHP issuer that is not an
SADP issuer) and 2 hours in total for each SADP issuer submitted by a
compliance officer at a rate of $68.94 per hour. The 10-hour estimate
includes the burden associated with the requirement that all issuers
seeking QHP certification submit information to the State Exchange or
SBE-FP about whether network providers offer telehealth services.
Approximately half of the parent companies of issuers on the State
Exchanges also offer Medicare Advantage plans. Since Medicare Advantage
offers a telehealth credit for network adequacy, we expect those
issuers would already have telehealth information available for their
providers. We further believe that those QHP issuers that do not
currently collect this information may do so using the same means and
methods by which they already collect information from their network
providers relevant to time and distance standards and provider
directory information. For these reasons, we estimate that any
additional burden relative to the requirement that all issuers seeking
QHP certification submit information to the State Exchange or SBE-FP
about whether network providers offer telehealth services would lead to
a minimal increase in burden for many issuers.
The requirement that all issuers seeking QHP certification submit
information to the State Exchange or SBE-FP about whether network
providers offer telehealth services would account for 3 of the total 10
hours we estimate for gathering and submitting the time and distance
data to the respective State Exchange or SBE-FP for medical QHP issuers
and 30 minutes of the total 2 hours we estimate for SADP issuers. We
believe the cost estimates of 3 hours for medical QHP issuers and 30
minutes for SADP issuers to be a maximum and that the burden could be
less to issuers that are already collecting telehealth data for other
purposes.
We estimate that the total annual burden associated with QHP
issuers in State Exchanges and SBE-FPs to gather and submit the time
and distance and telehealth data to the respective State Exchanges or
SBE-FPs for up to 149 medical QHP issuers in State Exchanges and SBE-
FPs would be up to 1,490 hours (10 hours x 149 medical QHP issuers).
Assuming the compliance officer average hourly rate of $68.94 per hour,
we estimate that the cost of gathering and submitting this network
adequacy data for an individual medical QHP issuer could be up to
$689.40 (10 hours x $68.94 per hour), and for all 149 medical QHP
issuers in State Exchanges and SBE-FPs, up to $102,720.60 (149 medical
QHP issuers x 10 hours per issuer x $68.94 per hour). We estimate that
the total annual burden associated with this requirement for 89 SADP
issuers in State Exchanges and SBE-FPs would be up to 178 hours (2
hours x 89 SADP issuers). Assuming the compliance officer average
hourly rate of $68.94 per hour, we estimate that the cost of gathering
and submitting the network adequacy data for an individual SADP could
be up to $137.88 (2 hours x $68.94 per hour), and for all 89 SADP
issuers in State Exchanges and SBE-FPs, up to $12,271.32 (89 SADP
issuers x 2 hours per issuer x $68.94 per hour). We estimate the total
annual burden associated with this proposed requirement across both
medical QHP and SADP issuers in State Exchanges and SBE-FPs beginning
in 2025 would be approximately $114,992.

L. ICRs Regarding the State Selection of EHB-Benchmark Plans for Plan
Years Beginning on or After January 1, 2027 (45 CFR 156.111)

The existing OMB approval (0938-1174) PRA package, for which we are

[[Page 82619]]

seeking a renewal for use beginning in March 2024, would remain in
effect until the proposed changes to Sec. 156.111 would come into
effect, if finalized, for the State selection of EHB-benchmark plans in
2025, impacting plans that are effective beginning on January 1, 2027.
We seek comment on these burden estimates.
We propose several revisions to Sec. 156.111 that, if finalized as
proposed, would reduce the burden associated with State selection of
EHB-benchmark plans. For plan years beginning on or after January 1,
2027, we propose to revise the standards for State selection of EHB-
benchmark plans at Sec. 156.111 to consolidate the options for States
to change EHB-benchmark plans at Sec. 156.111(a); revise the scope of
benefit requirements at Sec. 156.111(b)(2); and revise Sec.
156.111(e)(3) to require States to submit a formulary drug list as part
of their application to change EHB-benchmark plans only if the State is
seeking to change their prescription drug EHB. We also propose
revisions to the actuarial certification requirements at Sec. 156.111
to reflect the proposed scope of benefit changes. If the proposed
changes to Sec. 156.111 are finalized as proposed, they would not be
effective until 2025, and the anticipated reduction in burden to States
would not be realized until that time.
If the proposed changes to Sec. 156.111 are finalized as proposed,
we anticipate an overall reduction in burden on States to change their
EHB-benchmark plans in accordance with the revisions to Sec. 156.111.
If finalized as proposed in this rule, the revisions to Sec. 156.111
would remove the requirement that States report which option under
Sec. 156.111(a) they are using as a basis to change their EHB-
benchmark plans, their methodology for confirming compliance with the
generosity standard at current Sec. 156.111(b)(2)(ii), and the
submission of a formulary drug list under Sec. 156.111(e)(3) unless
the State is seeking to make changes to their prescription drug EHB. We
would also change the information States submit to HHS to confirm
compliance with the scope of benefit requirements at Sec.
156.111(b)(2), for which we estimate an overall reduction in burden.
These proposals would not change the number of documents States
would be required to submit to change their EHB-benchmark plans under
Sec. 156.111(e)(3), unless the State is not seeking to make changes to
its prescription drug EHB, in which case, the State would not be
required to submit a formulary drug list as specified in Sec.
156.111(e)(3). In addition, a response would not be required from all
States under current Sec. 156.111 and its proposed revisions, if
finalized as proposed in this rule. Only States choosing to modify the
State's EHB-benchmark plan would need to submit this information to
HHS.
Since finalizing the addition of Sec. 156.111 in the 2019 Payment
Notice, between one and three States have changed their EHB-benchmark
plan each year between 2019 and 2023. While we anticipate that the
proposed revisions to Sec. 156.111 would reduce overall burden on
States and incentivize more frequent changes to EHB-benchmark plans, we
anticipate that at most 5 States would choose to make a change to their
EHB-benchmark plans in any given year (15 States over 3 years within
the authorization of this ICR).
To change an EHB-benchmark plan, a State currently provides
confirmation that the State's EHB-benchmark plan selection complies
with certain requirements, including those under Sec. 156.111(a), (b),
and (c). This information collection would be revised under the
proposals in this rule, if finalized. To comply with the proposed
requirement, we estimate that a financial examiner would require 4
hours (at a rate of $79.04 per hour) to fill out, review, and transmit
a complete and accurate document. We estimate that it would cost each
State approximately $316.16 to meet the proposed reporting requirement,
with a total annual burden for all 5 States of 20 hours and an
associated total cost of $1,580.80.
Section 156.111(e)(2) currently requires States to submit an
actuarial certification and associated actuarial report of the methods
and assumptions when selecting options under Sec. 156.111(a).
Presently, before compiling this report, States must consider which of
the options provided at current Sec. 156.111(a) best facilitate their
intended EHB-benchmark changes. This deliberation often involves both
research and discussion within the State and between the State and HHS.
The proposed consolidation of the options currently available at Sec.
156.111(a) into one overarching approach for EHB-benchmark plan updates
would eliminate the need for, and time spent by, States contemplating
the merits of one option or another. This actuarial certification and
associated actuarial report must also demonstrate compliance with
section Sec. 156.111(b)(2)(i), which requires a State's EHB-benchmark
plan to provide a scope of benefits that is equal in scope to the scope
of benefits under one of the typical employer plans at Sec.
156.111(b)(2)(i)(A) and (B). While the proposed revisions to Sec.
156.111(b)(2)(i) would still require a State's EHB-benchmark plan to
provide benefits that are equal in scope to the scope of benefits under
a typical employer plan, they would also allow a State to select any
scope of benefits that is as or more generous than the scope of
benefits in the least generous plan (supplemented by the State as
necessary to provide coverage within each EHB category at Sec.
156.110(a)), and as or less generous than the scope of benefits in the
most generous plan in the State (supplemented by the State as necessary
to provide coverage within each EHB category at Sec. 156.110(a)),
among the plans currently defined at Sec. 156.111(b)(2)(i)(A) and (B).
We anticipate that these proposed revisions would substantially reduce
the burden on States to perform the required actuarial analyses. Under
this proposed revision, we anticipate that a State would typically only
need to perform three actuarial analyses to determine the scope of
benefits in the least and most generous plans among the plans currently
defined at Sec. 156.111(b)(2)(i)(A) and (B), and the scope of benefits
in the State's new EHB-benchmark plan. Under current regulation, a
State may need to perform an indeterminate number of actuarial analyses
of the plans defined at Sec. 156.111(b)(2)(i)(A) and (B) until the
State identifies a plan with a scope of benefits equal to the State's
EHB-benchmark plan. This proposed revision would significantly reduce
the likelihood that a State would need to perform as many actuarial
analyses. Accordingly, we would anticipate a reduction in the estimated
burden on States to perform the actuarial analysis to confirm
compliance with Sec. 156.111(b)(2)(i).
This actuarial certification and associated actuarial report must
also demonstrate compliance with Sec. 156.111(b)(2)(ii), which
currently requires a State's EHB-benchmark plan to not exceed the
generosity of the most generous among a set of comparison plans. For
benefit years beginning on or after January 1, 2027, we are proposing
to remove this requirement and would revise this estimate to reflect a
reduced burden on States that would no longer need perform the
actuarial analyses required to confirm compliance with Sec.
156.111(b)(2)(ii).
The actuarial certification that would be collected under this ICR
would be required to include an actuarial report that complies with
generally accepted actuarial principles and methodologies. This
estimate includes complying with all applicable actuarial standards of
practice (ASOPs) (including ASOP 41 on actuarial communications). For

[[Page 82620]]

example, ASOP 41 on actuarial communications includes disclosure
requirements, including those that apply to the disclosure of
information on the methods and assumptions being used for the actuarial
certification and report. The actuarial certification for this
requirement currently includes an attestation that the standard
actuarial practices have been followed or that exceptions have been
noted. The signing actuary is required to be a Member of the American
Academy of Actuaries. These requirements would continue to apply if
this policy is finalized as proposed.
We estimate that an actuary, who is a member of the American
Academy of Actuaries, would be required to complete 12 hours of work
(at a rate of $109.60 per hour) on average for Sec. 156.111(e)(2).
This would include the certification and associated actuarial report
from an actuary to affirm, in accordance with generally accepted
actuarial principles and methodologies that the State's EHB-benchmark
plan must provide a scope of benefits that is equal to the scope of
benefits provided under a typical employer plan. For these
calculations, the actuary would need to conduct the appropriate
calculations to create and review an actuarial certification and
associated actuarial report, including minimal time required for
recordkeeping. The precise level of effort for the actuarial
certification and associated actuarial report under Sec. 156.111(e)(2)
would likely vary depending on the State's approach to its EHB-
benchmark plan and this certification requirement, but we are
estimating 12 hours of work for the actuary to complete the actuarial
certification and associated report in this proposed rule in
recognition that the definition of typical employer plan may require
the actuary to determine whether the typical employer plan meets
minimum value requirements. We estimate that it would cost each State
approximately $1,315.20 to meet this reporting requirement, with a
total annual burden for all 5 States of 60 hours and an associated
total cost of $6,576.
We estimate that a financial examiner would require 1 hour (at a
rate of $79.04 per hour) to review, combine, and electronically
transmit these documents to HHS, as part of a State's EHB-benchmark
plan submission. We estimate that each State would incur a burden of 1
hour with an associated cost of $79.04 with a total annual burden for 5
States of 5 hours at associated total cost of $395.20.
We require at Sec. 156.111(e)(3) that each State submit its new
EHB-benchmark plan documents. The level of effort associated with this
requirement could depend on the State's selection of the EHB-benchmark
plan options under the regulation at Sec. 156.111(a). However, for the
purposes of this estimate, we estimate that it would require a
financial examiner (at a rate of $79.04 per hour) 12 hours on average
to create, review, and electronically transmit the State's EHB-
benchmark plan document that accurately reflects the benefits and
limitations, resulting in a burden of 12 hours and an associated cost
of $948.48, with a total annual burden for all 5 States of 60 hours and
an associated cost of $4,742.40. This estimate of 12 hours would also
include the burden necessary for a State to submit a formulary drug
list for the State's EHB-benchmark plan in a format and manner
specified by HHS, in accordance with Sec. 156.111(e)(3). However, we
propose to revise Sec. 156.111(e)(3) in this proposed rule to require
a State to submit this formulary drug list only if the State is
changing the prescription drug EHB. We do not anticipate that all
States would change prescription drug EHB, so we anticipate this burden
would be lower for some States. To collect the formulary drug list, the
State would be required to use the template provided by HHS and must
submit the formulary drug list as a list of RxNorm Concept Unique
Identifiers (RxCUIs).
Section 156.111(e)(4) requires a State to submit the documentation
necessary to operationalize the State's EHB-benchmark plan. This
reporting requirement includes the EHB summary file that is currently
posted on CCIIO's website and is used as part of the QHP certification
process and is integrated into HHS' IT Build systems that feeds into
the data that is displayed on HealthCare.gov.\273\ We estimate that it
requires a financial examiner 12 hours, on average, (at a rate of
$79.04 per hour) to create, review, and electronically submit a
complete and accurate document to HHS resulting in a burden of 12 hours
and an associated cost of $948.48, with a total annual burden for all 5
States of 60 hours and an associated cost of $4,742.40.
---------------------------------------------------------------------------

\273\ Information on Essential Health Benefits (EHB) Benchmark
Plans. Accessed at https://www.cms.gov/CCIIO/Resources/Data-Resources/ehb.html.
---------------------------------------------------------------------------

We estimate that the total number of respondent States would be 5
per year, for a total yearly burden of 205 hours \274\ and an
associated cost of approximately $18,036 \275\ to meet these reporting
requirements.
---------------------------------------------------------------------------

\274\ This is calculated as follows: (29 hours for the financial
examiner + 12 hours for the actuary) x 5 States = 205 hours.
\275\ This is calculated as follows: ($11,460.80 for the
financial examiner + $6,576.00 for the actuary) x 5 States =
$18,036.80.
---------------------------------------------------------------------------

M. ICRs Regarding Non-Standardized Plan Option Limits (45 CFR 156.202)

The following proposed changes will be submitted to OMB for review
under OMB control number 0938-New (CMS-#####). We seek comment on these
burden estimates.
As was previously discussed in the preamble to this proposed rule,
we propose to permit issuers to offer non-standardized plan options in
excess of the limit of two per product network type, metal level,
inclusion of dental and/or vision benefit coverage, and service area
for PY 2025 and subsequent years, if issuers demonstrate that these
additional non-standardized plans beyond the limit at Sec. 156.202(b)
have specific design features that would substantially benefit
consumers with chronic and high-cost conditions.
Specifically, issuers would be permitted to offer more than two
non-standardized plan options if these additional plans' cost sharing
for benefits pertaining to the treatment of chronic and high-cost
conditions (including benefits in the form of prescription drugs, if
pertaining to the treatment of the condition(s)) is at least 25 percent
lower, as applied without restriction in scope throughout the plan
year, than the cost sharing for the same corresponding benefits in an
issuer's other non-standardized plan option offerings in the same
product network type, metal level, and service area. The reduction
could not be limited to a part of the year, or an otherwise limited
scope of benefits. Instead, issuers would be required to apply the
reduced cost sharing for these benefits any time the covered item or
service is furnished. For example, an issuer could not reduce cost
sharing for the first three office visits or drug fills and then
increase it for remaining visits or drug fills. Furthermore, issuers
would be prohibited from conditioning reduced cost sharing for these
benefits on a particular diagnosis. That is, although the benefit
design would have reduced cost sharing to address one or more
articulated conditions, the reduced cost sharing must be available to
all enrolled in the plan who receive the service(s) covered by the
benefit.
Under this proposal, no other plan design features (such as the
inclusion of additional benefit coverage, different provider networks,
different formularies, or reduced cost sharing for

[[Page 82621]]

benefits provided through the telehealth modality) would be evaluated
under this exceptions process, meaning no other differences in plan
design features would allow issuers to be excepted from the limit to
the number of non-standardized plan options offered per product network
type, metal level, inclusion of dental and/or vision benefit coverage,
and service area.
Additionally, as part of this exceptions process, issuers would be
required to submit a written justification in a form and manner and at
a time prescribed by HHS that provides additional details and explains
how the particular plan design the issuer desires to offer above the
non-standardized plan option limit of two satisfies the proposed
standards for receiving an exception to this limit--namely, how the
particular plan would substantially benefit consumers with chronic and
high-cost conditions. We would provide issuers with a justification
template upon publication of the final rule and when the QHP templates
for the applicable plan year are released. We anticipate requesting
that issuers submit QHP applications for non-standardized plan options
that exceed the two-plan limit by the QHP certification Early Bird
deadline.
This justification form would ask the issuer to: (1) identify the
specific condition(s) for which cost sharing is reduced, (2) explain
which benefits would have reduced annual enrollee cost sharing (as
opposed to reduced cost sharing for a limited number of visits) for the
treatment of the specified condition(s) by 25 percent or more relative
to the cost sharing for the same corresponding benefits in an issuer's
other non-standardized plan offerings in the same product network type,
metal level, and service area, and (3) explain how the reduced cost
sharing for these services pertains to clinically indicated guidelines
for treatment of the specified chronic and high-cost condition(s).
In order for an issuer to complete the necessary documentation to
submit a request to be excepted from the non-standardized plan option
limit at Sec. 156.202(b) in accordance with the proposed requirements
at Sec. 156.202(d), we estimate that it would take an actuary (OES
occupational code 15-2011) 5 hours annually at a median hourly cost of
$109.60 per hour (amounting to $548 annually) to create a new plan
design with sufficiently differentiated cost sharing and to set the
premium rate for this plan; a general internal medicine physician (OES
occupational code 29-1216) 2 hours annually at a median hourly cost of
$206.22 (amounting to $412.44 annually) to complete the justification
form for this exceptions process; and a general and operations manager
(OES occupational code 11-1021) 10 hours annually at a median hourly
cost of $94.32 per hour (amounting to $943.20 annually) to review and
submit the justification form, including all required data, as part of
an issuer's portfolio of plan offerings that it seeks certification of
during QHP certification.
Altogether, we estimate a total burden of 17 hours at a cost of
$1,903.64 per issuer annually to submit a request for each additional
non-standardized plan option to be excepted from the non-standardized
plan option limit. Although issuers would not be limited in the number
of potential exceptions they may be granted under this proposal, we do
not anticipate that issuers would seek to have more than one additional
non-standardized plan options excepted from the limit. We further
estimate that approximately 50 FFE and SBE-FP issuers (of the 228
issuers based on current PY 2024 plan offering data, amounting to
approximately 22 percent) would request to be excepted from the non-
standardized plan option limit in order to offer these additional plans
annually, at a total burden of 850 hours and associated cost of $95,182
for all issuers annually. We estimate that only 50 issuers would submit
a request to be excepted from the non-standardized plan option limit
since we anticipate that most issuers would believe that the burden of
creating and certifying additional plans intended to benefit a
comparatively small population of consumers would outweigh the benefit
of doing so.

N. Summary of Annual Burden Estimates for Proposed Requirements

[[Page 82622]]

[GRAPHIC] [TIFF OMITTED] TP24NO23.027

O. Submission of PRA-Related Comments

We have submitted a copy of this proposed rule to OMB for its
review of the rule's information collection and recordkeeping
requirements. These requirements are not effective until they have been
approved by the OMB.
To obtain copies of the supporting statement and any related forms
for the proposed collections discussed above, please visit our website
at www.cms.hhs.gov/PaperworkReductionActof1995, or call the Reports
Clearance Office at 410-786-1326.
We invite public comments on these potential information collection
requirements. If you wish to comment, please submit your comments
electronically as specified in the ADDRESSES section of this proposed
rule and identify the rule (CMS-9895-P), the ICR's CFR citation, CMS ID
number, and OMB control number.
ICR-related comments are due January 16, 2024.

V. Response to Comments

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

VI. Regulatory Impact Analysis

A. Statement of Need

This rule proposes to make several HHS risk adjustment updates,
such as to use the 2019, 2020, and 2021 data for recalibration of the
HHS risk adjustment models for benefit year 2025; to update and retain
the AI/AN CSR adjustment factors for benefit year 2025 and beyond,
unless changed through notice-and-comment rulemaking; to establish the
risk adjustment user fee for benefit year 2025; and to give HHS the
authority to require corrective action plans for certain observations
identified as a result of high-cost risk pool audits. The rule further
proposes State Exchange and agent, broker, web-broker, and DE entity
standards; requiring State Exchanges and State Medicaid and CHIP
agencies to pay to access and use optional CSI data from the Hub for
income verification; eligibility and auto re-enrollment standards; open
enrollment period and special enrollment period standards; and
permitting enrollees to retroactively terminate their enrollment in a
QHP through the Exchange when the enrollee enrolls in Parts A or B
Medicare retroactively effective to the date Medicare coverage begins.
Additionally, the rule proposes the FFE and SBE-FP user fee rates for
the 2025 benefit year, as well as EHB-benchmark plan selection updates,
other EHB updates, minor updates to the standardized plan options for
PY 2025, an exceptions process for issuers to offer additional non-
standardized plan options in excess of the limit of two for PY 2025,
Consumer Operated and Oriented Plan (CO-OP) loan term revisions, and
modifications to section 1332 waiver implementing regulations governing
public hearing procedures.

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), Executive Order 14094 entitled ``Modernizing
Regulatory Review'' (April 6, 2023), 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), and Executive Order 13132 on Federalism (August
4, 1999).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory

[[Page 82623]]

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 \276\ 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
OMB's 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.
---------------------------------------------------------------------------

\276\ Executive Order 14094. https://www.whitehouse.gov/briefing-room/presidential-actions/2023/04/06/executive-order-on-modernizing-regulatory-review/.
---------------------------------------------------------------------------

A regulatory impact analysis (RIA) must be prepared for significant
rules. OMB's OIRA has determined that this rulemaking is `significant'
as measured by the $200 million threshold under section 3(f)(1). We
have prepared an RIA that to the best of our ability presents the costs
and benefits of the rulemaking. OMB has reviewed these proposed
regulations, and the Departments have provided the following assessment
of their impact.

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

As required by OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf.), we have prepared an accounting statement in
Table 16 showing the classification of the impact associated with the
provisions of this proposed rule.
This proposed rule implements standards for programs that will have
numerous effects, including providing consumers with access to
affordable health insurance coverage, reducing the impact of adverse
selection, and stabilizing premiums in the individual and small group
(including merged) health insurance markets and in Exchanges. We are
unable to quantify all the benefits and costs of this proposed rule.
The effects in Table 16 reflect qualitative assessment of impacts and
estimated direct monetary costs and transfers resulting from the
provisions of this proposed rule for health insurance issuers and
consumers. The annual monetized transfers described in Table 16 include
changes to costs associated with the risk adjustment user fee paid to
HHS by issuers.

[[Page 82624]]

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[[Page 82625]]

[GRAPHIC] [TIFF OMITTED] TP24NO23.029

[[Page 82626]]

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[[Page 82627]]

[GRAPHIC] [TIFF OMITTED] TP24NO23.031

1. Proposed Amendments to Normal Public Notice Requirements (31 CFR
33.112, 31 CFR 33.120, 45 CFR 155.1312, and 45 CFR 155.1320)
In this proposed rule, the Departments propose modifications to the
section 1332 waiver implementing regulations to set forth flexibilities
in the public notice requirements and post-award public participation
requirements for section 1332 waivers. However, this proposed rule does
not propose to alter any of the requirements related to section 1332
waiver applications, compliance and monitoring, or evaluation in a way
that would create any additional costs or burdens for States submitting
proposed waiver applications or those States with approved waiver plans
that have not already been captured in prior burden estimates. The
Departments are of the view that both States with approved section 1332
waivers and States that apply for section 1332 waivers would be
minimally impacted or would benefit from reduced burden by these
proposed changes in policy, if finalized. The Departments anticipate
that implementing these provisions would not significantly change the
associated burden currently approved under OMB control number: 0938-
1389, Expiration date: February 29, 2024. The Departments are of the
view that section 1332 waivers help increase State innovation, which in
turn could lead to more affordable health coverage for individuals and
families in States that consider implementing a section 1332 waiver
program.
---------------------------------------------------------------------------

\277\ Reinsurance collections ended in FY 2018 and outlays in
subsequent years reflect remaining payments, refunds, and allowable
activities.
---------------------------------------------------------------------------

The Departments seek comment on these impacts and assumptions.
2. Increase State Flexibility in the Use of Income and Resource
Disregards for Non-MAGI Populations (42 CFR 435.601)
Current 42 CFR 435.601(d) authorizes States to apply less
restrictive methodologies than those that would otherwise be required
to be considered in the individual's eligibility determination.
Paragraph (d)(4) requires that the application of less restrictive
methodologies by State Medicaid agencies be comparable for all persons
within each Medicaid eligibility group. For example, if a State wants
to apply an income disregard to an eligibility group serving
individuals who are 65 years old or older, it must either agree to
apply the income disregard to all members of the eligibility group who
are 65 years old or older or forego application of the disregard.
In this proposed rule, we propose to remove the requirement that
less restrictive methodologies be comparable for all members of an
eligibility group. This would allow States that want to expand their
Medicaid eligibility rules through the use of less restrictive
methodologies to have more flexibility in managing the extent to which
their programs are expanded.
This proposed rule, however, would not create an entirely new State
option, but, instead, would permit States to exercise an existing
option in a more limited manner. Additionally, the proposed rule, if
finalized, would not require new State plan material or impose any new
administrative tasks for States in their development and submission of
State plan amendments. We therefore do not anticipate that implementing
this provision would create any new information collection burden for
States.
Estimating the impact on Medicaid enrollment and expenditures is
difficult. Notably, it is not known how many States would use this new
authority, and the extent to which they would use this. Some States may
be interested in using this flexibility to make a significant expansion
to coverage, and in turn, spending on Medicaid services. Other States
may not use these options at all or may use them to a limited degree.
Moreover, how States use this authority--which populations would be
affected, the number of people in these groups, and the underlying
healthcare needs of these individuals--is also unknown. Therefore, we
have estimated a range of potential impacts as part of the regulatory
impact analysis.
At the low end of the range, we have assumed that the impact on
enrollment and Medicaid expenditures would be 0 (or negligible). In
this scenario, we assume that States do not make any substantial
changes under this new authority, and as a result there is no
measurable increase in enrollment or spending. Historically, States
have had many options in expanding coverage, including but not limited
to other authorities to use income and resource disregards and section
1115 waivers. Recent State plan amendments to expand the use of income
disregards (either broadly or targeted to certain groups) have been
modest, ranging from estimated impacts of $0 million to $49 million per
year. Thus, it may be possible that the use of these flexibilities is
limited and the impacts relatively small.
On the other hand, it is possible that States may be more active in
using these proposed options. To estimate the high end of the range, we
made the following assumptions. First, we assumed that 10 States would
take up these options. Second, we assumed that States would apply these
options to non-MAGI populations (mainly enrollees age 65 and over, and
enrollees qualifying on the basis of a disability) and have an average
increase of 1 percent in enrollment among these groups. We assumed the
average total, Federal, and State Medicaid costs for these enrollees

[[Page 82628]]

would be equal to the national average for these groups.
Under these assumptions, we project that enrollment would increase
by 36,000 to 38,000 across 10 States (or 3,600 to 3,800 per State) and
Medicaid expenditures would increase by about $4,660 million over the
first 5 years ($2,700 million Federal, $1,960 million State share).
(The estimates rely on projections of enrollment and spending from the
Mid-Session Review of the President's FY 2024 Budget.)
[GRAPHIC] [TIFF OMITTED] TP24NO23.032

It is important to note that there is a wide range of outcomes due
to the flexibility afforded in the proposed rule. We expect actual
costs and enrollment impacts to fall within the range shown here, but
the effects are highly dependent on which States would take up these
options and how extensively such options are used.
We seek comment on these impacts and assumptions.
3. Changes to the Basic Health Program Regulations (42 CFR 600.320)
Section 1331 of the ACA (42 U.S.C. 18051) requires the Secretary to
establish a BHP, and section 1331(c)(4) specifically provides that a
State shall coordinate the administration of, and provision of benefits
under the BHP with other State programs. These proposed regulations
build from previous BHP regulations to provide for options for BHP
implementation and operations beginning with program year 2024.
In this proposed rule, we propose to add an option for a State
establishing a uniform method of determining the effective date of
eligibility for enrollment in a standard health plan. We believe this
proposal would provide additional flexibility for States when
implementing their BHP. If the State chooses to follow this new
effective date of eligibility option, we believe this proposal would
also benefit enrollees by providing coverage sooner than if the State
were to follow the Exchange effective date of eligibility option. We do
not anticipate any costs to States because of this proposal, as we are
only proposing to provide another option by which a State could
determine the effective date of eligibility for purposes of its BHP. We
seek comment on these impacts and assumptions.
4. HHS Risk Adjustment (45 CFR 153.320)
We propose to recalibrate the HHS risk adjustment models for the
2025 benefit year using the 2019, 2020, and 2021 enrollee-level EDGE
data. We believe that continuing to maintain the approach of blending
(or averaging) 3 years of separately solved coefficients provides
stability within the HHS-operated risk adjustment program and minimizes
volatility in changes to risk scores from the 2024 benefit year to the
2025 benefit year. We also propose to continue applying a market
pricing adjustment to the plan liability associated with Hepatitis C
drugs in the HHS risk adjustment models, consistent with the approach
adopted beginning with the 2020 benefit year HHS risk adjustment
models.
We propose to recalibrate the CSR adjustment factors for AI/AN
zero-cost sharing and limited cost sharing CSR plan variant enrollees
for the 2025 benefit year, and to retain the proposed AI/AN CSR
adjustment factors, if finalized, for all future benefit years unless
changed through notice-and-comment rulemaking. We also propose to
maintain the current CSR adjustment factors for silver plan variant
enrollees (70 percent, 73 percent, 87 percent, and 94 percent AV plan
variants) \278\ for the

[[Page 82629]]

2025 benefit year and beyond, unless changed through notice-and-comment
rulemaking. In addition, we affirm that for plan liability risk score
calculations under the State payment transfer formula, we use the CSR
adjustment factors that align with the AV of the plan. Thus, for unique
State-specific plans that have higher plan liability than the standard
silver plan variants (for example, CSR wrap-around and Medicaid-
expansion plans), we would continue to apply the applicable CSR
adjustment factor that corresponds to the plan's AV, as determined by
HHS in consultation with the applicable State Departments of Insurance
and other relevant State institutions.
---------------------------------------------------------------------------

\278\ See 83 FR 16930 at 16953; 84 FR 17478 through 17479; 85 FR
29190; 86 FR 24181; 87 FR 27235 through 27236; and 88 FR 25772
through 25774.
---------------------------------------------------------------------------

We anticipate that this proposal would result in an increase in
overall individual market risk pool HHS risk adjustment transfers under
the State payment transfer formula in States with a sizable share of
AI/AN enrollees. All things being equal, we anticipate that
recalibrating the AI/AN CSR adjustment factors as proposed would
increase transfer payments (or decrease transfer charges) to the
issuers with the larger shares of the AI/AN subpopulation and increase
transfer charges (or decrease transfer payments) under the State
payment transfer formula for the issuers with smaller shares of the AI/
AN subpopulation. Therefore, we anticipate that issuers with larger
shares of AI/AN enrollees would have the ability to lower premium rates
slightly, as the additional plan liability associated with AI/AN CSR
recipients would be offset by the increase in HHS risk adjustment
transfer payments (or decrease in transfer charges) to these issuers.
Based on internal analyses, the States with the highest proportion
of AI/AN enrollees as a percentage of member months in the 2021 benefit
year were Oklahoma (15 percent), Alaska (4 percent), Montana (2
percent), South Dakota (2 percent), and North Dakota (1 percent). Based
on internal analyses of 2021 enrollee-level EDGE data, we anticipate
that recalibrating the AI/AN CSR adjustment factors as proposed would
increase total transfers under the State payment transfer formula by 8
percent in Oklahoma, 2.5 percent in Alaska, 2 percent in Montana, and
less than 0.5 percent in South Dakota and North Dakota. We further
anticipate that these transfer impacts would result in modest decreases
in premiums among issuers that enroll a high proportion of AI/AN
consumers, as issuers with larger AI/AN enrollment would benefit from
increased transfer payments (or decreased transfer charges) under the
State payment transfer formula. We do not anticipate that States with a
low proportion of AI/AN enrollees would experience a transfer or
premium impact due to the very low number of enrollees (less than 1
percent) who would be impacted by the proposed recalibrated CSR
adjustment factors for this population in those States.
We seek comment on these impacts and assumptions.
5. HHS Risk Adjustment User Fee for 2025 Benefit Year (45 CFR
153.610(f))
For the 2025 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 under section 1343 of the ACA on behalf of States is funded
through a risk adjustment user fee. For the 2025 benefit year, we
propose to use the same methodology to estimate our administrative
expenses to operate the HHS risk adjustment program as was used in the
2024 Payment Notice. As discussed previously in this proposed rule,
risk adjustment user fee costs for the 2025 benefit year are expected
to increase from the prior 2024 benefit year estimates. However, we
project higher enrollment than our prior estimates in the individual
and small group (including merged) markets in the 2024 and 2025 benefit
years due to the enhanced PTC subsidies provided for in section 9661 of
the ARP \279\ and extended through the 2025 benefit year pursuant to
section 12001 of the IRA.
---------------------------------------------------------------------------

\279\ Public Law 117-2.
---------------------------------------------------------------------------

We estimate that the total cost for HHS to operate the risk
adjustment program on behalf of all States and the District of Columbia
will increase from $60 million in 2024 to approximately $65 million in
2025. However, we believe that the increased enrollment projections
will more than offset the increased risk adjustment user fee costs, and
therefore, the proposed risk adjustment user fee would be reduced from
the $0.21 PMPM for the 2024 benefit year to $0.20 PMPM for the 2025
benefit year. We expect the proposed risk adjustment user fee for the
2025 benefit year to reduce the amount transferred from issuers of risk
adjustment covered plans to the Federal government by approximately
$3.5 million.
We seek comment on these impact estimates and assumptions.
6. Audits and Compliance Reviews of Risk Adjustment Covered Plans (45
CFR 153.620(c))
We propose amending Sec. 153.620(c)(4) to require issuers of risk
adjustment covered plans to complete, implement, and provide to HHS
written documentation of any corrective action plans when required by
HHS if a high-cost risk pool audit results in the inclusion of a
finding or certain observations in the final audit report. Based on
data from the 2018 benefit year high-cost risk pool audits, we estimate
that each issuer audited may receive approximately 2 observations on
average in future benefit years of high-cost risk pool audits where
there is evidence of non-compliance with applicable Federal
requirements, thereby triggering the proposed requirement for the
issuer to take corrective action. We also estimate that it would take
approximately 4 hours by a business operations specialist (at $73.12
per hour), 2 hours by a compliance officer (at $68.94 per hour), and 2
hours by a computer systems analyst (at $98.30 per hour) to complete,
implement, and provide documentation to HHS of a corrective action plan
for 2 observations. This results in a total cost per issuer of $626.96
(4 hours x $73.12 per hour + 2 hours x $68.94 per hour + 2 hours x
$98.30 per hour). We estimate that we may conduct high-cost risk pool
audits for approximately 40 issuers for each benefit year. Therefore,
the total estimated cost to issuers of risk adjustment covered plans
for each benefit year being audited would be approximately $25,078.40
(40 issuers x $626.96 per issuer).
We seek comment on these burden estimates and assumptions.
7. Approval of a State Exchange (45 CFR 155.105)
We propose to add a requirement that a State seeking to transition
to a State Exchange must first operate an SBE-FP, meeting all
requirements under Sec. 155.200(f), for at least one plan year,
including its first open enrollment period.
We do not anticipate this proposal would create an additional
burden to the States that are currently transitioning to a State
Exchange, since those States have already operated an SBE-FP for at
least 1 year or will first be operating an SBE-FP. Since PY 2020, all
States that have transitioned to a State Exchange have first
transitioned to an SBE-FP for one or more plan years. Furthermore,
based on our experience, the costs for a State to transition from the
FFE to operating an SBE-FP is relatively low in comparison to the costs
a State would incur to transition from an FFE, or an SBE-FP, to
establishing a State Exchange. This is due to the significant
investment of costs incurred in implementing and operating a State

[[Page 82630]]

Exchange consumer-facing website, eligibility and enrollment technology
platform, and associated eligibility and enrollment support
infrastructure, such as the State Exchange's consumer call center
technology and resources, that FFEs and SBE-FPs rely on HHS to provide.
We would also expect the impact and costs to States that are
considering, or may consider, establishing a State Exchange in the
future to be minimal because we believe there would be sufficient time
to plan for operating as an SBE-FP before operating as a State
Exchange.
We believe that one of the primary benefits of States operating an
SBE-FP prior to implementing and operating a State Exchange lies in the
investment of time and resources that a State transitioning to, and
operating, an SBE-FP makes in the establishment of direct relationships
with their consumers, assisters, issuers, and other interested parties
that will ultimately help in the successful implementation and
operation of its State Exchange. Furthermore, we believe that the
benefit of these activities to a State and its consumers and partners
far outweigh the relatively low cost for the State to first transition
to, and operate, an SBE-FP for at least one year before implementing
and operating a State Exchange. We are also of the view that this
proposal would mitigate the significant risk and disruption, for
consumers, assisters, issuers, and other interested parties, associated
with a scenario where a State wishes to transition from an FFE to
establishing and operating a State Exchange in a timeframe of less than
a year or otherwise not in alignment with the timelines associated with
the approval of a State Exchange specified in Sec. 155.106.
We seek comment on these assumptions of the financial impact of
this proposal, if finalized, on States that transition to an SBE-FP for
at least one plan year before operating a State Exchange pursuant to
this proposal, if finalized.
8. Election To Operate an Exchange After 2014 (45 CFR 155.106)
As discussed in the preamble, we propose to add that we may require
that a State submitting a Blueprint Application to implement a State
Exchange provide supplemental documentation demonstrating progress
toward meeting State Exchange Blueprint requirements, or documentation
that details a State's implementation of its State Exchange Blueprint
requirements. This could include a State submitting detailed plans
regarding its State Exchange consumer assistance, such as information
on its direct outreach plans.
We do not anticipate additional burden associated with this
proposal, as HHS already has the authority to request any evidence it
determines necessary for the State to show progress towards
implementing the required Exchange functionality in the State Exchange
Blueprint, or documentation that details the implementation of the
required Exchange functionality. In this proposal, we are merely
seeking to codify in our regulations a clear expectation for a State
establishing a State Exchange that, as part of the State's submission
of a State Exchange Blueprint Application. The information collection
burden associated with this proposal is already accounted for under
approved OMB control number: 0938-1172, Expiration date: August 31,
2025.
Further, as discussed in the preamble, we propose to require that
when a State submits its State Exchange Blueprint application to HHS
for approval, the State must provide the public with notice and a copy
of its State Exchange Blueprint application. We also propose to require
that at some point following a State's submission of its State Exchange
Blueprint application to HHS, a State must conduct at least one public
engagement (such as a townhall meeting or public hearing), in a
timeline and manner considered effective by the State, with concurrence
from HHS, at which interested parties can learn about the State's
intent to transition to a State Exchange and the State's progress
toward effectuating that transition. We also propose to require that
while a State is making this transition and until HHS has approved or
conditionally approved the State Exchange Blueprint application, a
State conducts periodic public engagements at which interested parties
can continue to learn about the State's progress toward finalizing its
transition to a State Exchange, in a timeline and manner, either in-
person or virtually, considered effective by the State.
We do not anticipate significant additional burden associated with
these proposals, as States are currently required to submit a State
Exchange Blueprint application to HHS for approval, and so the impact
of sharing a copy of the submitted Exchange Blueprint application with
the public using their website would be de minimis. Further, we believe
that since States seeking to establish, or are in the process of
establishing, a State Exchange for PY 2025 or in subsequent years would
be given broad flexibility to design the public engagements in a manner
that best suits their respective State, for meeting the interested
party consultation requirement under Sec. 155.130, that States will
design their public engagements in a manner such that the additional
burden incurred by the State would be minimal. The goal of the proposed
changes at Sec. 155.106(a)(2)(ii) is to clearly state, for States who
are seeking to establish State Exchanges, HHS' expectations of the
State engaging with the public regarding its transition to a State
Exchange, thus strengthening the transparency requirements of the State
Exchange Blueprint review and approval process. We believe this
proposal would help States that establish a State Exchange meet the
consultation requirements of interested parties at Sec. 155.130 during
the period when the State is establishing a State Exchange, by
formalizing a process whereby States and interested parties communicate
about the State's establishment of a State Exchange throughout the
transition process. As such, we believe the impact of this proposal
would be de minimis.
We seek comment on this burden estimate and assumptions.
9. Additional Required Benefits (45 CFR 155.170)
We propose to amend Sec. 155.170(a)(2) to provide that benefits
covered in a State's EHB-benchmark plan would not be considered in
addition to EHB and thus would not be subject to defrayal by the State
beginning with PY 2025. We believe that this revision would have a
mixed effect on the cost to the Federal government. In States that
update EHB-benchmark plans to include benefits, the costs of which are
currently being defrayed, the percentage of premium attributable to
coverage of EHB for purpose of calculating APTC may increase just as if
the State updated its EHB-benchmark plan through the process set forth
in Sec. 156.111 and any increase remains subject to the typicality
requirement in that section. In a State that enacts a mandate for a
benefit that is currently covered in its EHB-benchmark plan, there will
be no effect on Federal government expense as the benefit was already
included in the percentage of premium attributable to coverage of EHB
for purpose of calculating APTC since it was EHB. States may choose to
evaluate the overlap between mandates and EHB benchmark-plans for
benefits they are currently defraying the costs of but are not required
to. Issuers may have to make modifications to their plan designs and
plan filings to reflect any possible changes in designation of benefits
as EHB because of this

[[Page 82631]]

proposal, if finalized, in the regular course of updating those annual
materials. We do not anticipate an additional burden on States or
issuers associated with this proposal.
We seek comment on these impacts and assumptions.
10. Consumer Assistance Tools and Programs of an Exchange (45 CFR
155.205)
As discussed in the preamble, we propose additional minimum
standards for Exchange call center operations, such that Exchanges,
other than SBE-FPs and SHOP Exchanges that do not provide for
enrollment in SHOP coverage through an online SHOP enrollment platform,
meet the following additional requirements: their call center must
provide consumers with access to a live call center representative
during the Exchanges' published hours of operation and their live call
center representatives must be able to assist consumers with submitting
their application for QHP coverage.
We believe this proposal would support the intent of sections
1311(d)(4)(B) and 1413(b)(1)(A)(ii) of the ACA by codifying the
requirement that a consumer must be able to obtain live call center
support with submitting an application for QHP coverage during
reliable, published hours of operation. It is our presumption that
speaking to a live representative would better aid in troubleshooting
consumer QHP application issues, provide a real time opportunity for a
live representative to explain QHP application terminology to a
consumer, provide for a live representative to ensure the consumer
provides the most correct information to the QHP application (thereby
alleviating unnecessary follow-up), and provide greater overall
consumer satisfaction.
As stated in the preamble, we believe that all State Exchanges
already meet these proposed minimum standards, and we know that the
Exchanges on the Federal platform do. As such, we do not anticipate an
additional burden associated with this proposal.
We seek comment on these impacts and assumptions.
11. Requirement for Centralized Exchange Eligibility and Enrollment
Platform on the Exchange's Website (45 CFR 155.205(b) and
155.302(a)(1))
We propose to amend Sec. 155.205(b)(4) to require that an Exchange
operate a centralized eligibility and enrollment platform on the
Exchange's website (or, for an SBE-FP, through the Federal eligibility
and enrollment platform) such that the Exchange allows for the
submission of the single, streamlined application for enrollment in a
QHP and insurance affordability programs by consumers, in accordance
with Sec. 155.405, through the Exchange's website and performs
eligibility determinations for all consumers based on submissions of
the single, streamlined application. Further, we propose to amend Sec.
155.302(a)(1) to clarify that the Exchange, through the centralized
eligibility and enrollment platform operated on the Exchange's website
(or, for an SBE-FP, the Federal eligibility and enrollment platform) is
the entity responsible for making all determinations regarding the
eligibility for QHP coverage and insurance affordability programs
regardless of whether an individual files an application for enrollment
in a QHP on the Exchange's website, or on a website operated by an
entity described under Sec. 155.220, such as a web-broker defined at
Sec. 155.20, or a direct enrollment entity or QHP issuer described
under Sec. 155.221. This amendment to Sec. 155.302(a)(1) would also
clarify that only entities that an Exchange elects to contract with to
operate its centralized eligibility and enrollment platform can perform
this function on behalf of an Exchange and would prohibit Exchanges
from solely relying on non-Exchange entities, including a web-broker
(defined at Sec. 155.20) or other entities under Sec. 155.220 or
Sec. 155.221, from making such eligibility determinations on behalf on
an Exchange.
We also propose to amend Sec. 155.205(b)(5) to require that an
Exchange operate a centralized eligibility and enrollment platform
through the Exchange's website (or, for an SBE-FP, by relying on the
Federal eligibility and enrollment platform) so that the Exchange (or,
for an SBE-FP, the Federal eligibility and enrollment platform) meets
the requirement under Sec. 155.400(c) to maintain records of all
effectuated enrollments in QHPs, including changes in effectuated QHP
enrollments.
Since all Exchanges, including State Exchanges, SBE-FPs, and FFEs,
currently provide access to a centralized eligibility and enrollment
platform and process for consumers that they serve, and all Exchanges
also currently perform all eligibility determinations through the
operation of a centralized eligibility and enrollment platform on their
websites, we believe the burden of this proposal on Exchanges and
interested parties would be minimal.
We seek comment on the assumptions and estimated impacts of this
proposal.
12. Adding and Amending Language To Ensure Web-Brokers Operating in
State Exchanges Meet Certain Standards Applicable in the FFEs and SBE-
FPs (45 CFR 155.220)
We propose to amend Sec. 155.220 to apply to web-brokers operating
in State Exchanges, and consequently in State Exchanges, for both the
State Exchange's Individual Exchange and SHOP, certain existing Federal
standards governing use of web-brokers' non-Exchange websites to assist
consumers with enrolling in QHPs and applying for APTC/CSRs in a manner
that constitutes enrollment through an Exchange. As discussed in the
preamble of this proposed rule, the proposed regulatory amendments
would require these State Exchanges to draft policy, update standards,
and potentially hire more staff to perform functions not currently
being performed by the State Exchange as a result of applying the
identified Sec. 155.220 standards to web-brokers participating in
State Exchanges. These proposed changes would also require web-brokers
hosting non-Exchange websites in these State Exchanges to perform web-
development and oversight to ensure compliance with the Federal minimum
standards this rulemaking proposes to extend to these web-brokers.
These proposed changes would also require web-brokers in State
Exchanges who want to assist consumers with enrolling in QHPs and
applying for ATPC and CSRs to display standardized disclaimers, display
QHP comparative information, display information pertaining to a
consumer's eligibility for APTC or CSRs, to participate in operational
readiness reviews and potentially maintain relevant documentation, and
to extend downstream agent and broker requirements to web-brokers
operating in State Exchanges. Although these proposals allow States
certain flexibility for State Exchanges with regards to establishing
procedures and requirements for website displays (including flexibility
to add State-specific information to required disclaimers and for the
State Exchange to determine how consumer educational information is
displayed), downstream agent and broker access to and use of web-broker
non-Exchange websites, and demonstration of operational readiness, we
expect the impact and costs to be reasonably based on the impacts seen
on the FFEs and SBE-FPs.
Although there would be some additional burden for web-brokers
operating in State Exchanges, amounting to approximately $48,586.60 per
web-broker as discussed in the

[[Page 82632]]

information collection requirements section of this proposed rule, we
anticipate that some of these State Exchanges may utilize web-broker
entities already participating in the FFEs and SBE-FPs, which would
help provide administrative savings related to the approval process if
the State Exchange does not impose additional State-specific
requirements beyond the HHS minimum standards. We encourage State
Exchanges to leverage web-broker operational readiness demonstrated for
the FFEs and SBE-FPs when possible. Additionally, we expect those web-
brokers already participating in the FFEs and SBE-FPs to be able to
leverage their existing web-development work with additional burden and
costs only required for tailoring the website display, operational
readiness, and downstream agent and broker access to any State-specific
requirements adopted by the applicable State Exchange. Additionally, as
described in the accompanying ICR discussion, we anticipate an impact
on State governments totaling $2,346,128 for 5 States to opt to host a
web-broker program for their State Exchange.
We estimate a total cumulative burden of $1,071,474.40 associated
with this proposal for an estimated 20 web-brokers operating across the
5 State Exchanges. We anticipate these proposed changes to extend
certain HHS minimum standards governing web-broker participation in
FFEs and SBE-FPs to also apply to State Exchanges and their web-brokers
would be beneficial to consumers by establishing uniform, baseline
requirements for agent, broker, and web-broker participation across all
Exchange types. These proposed changes would allow State Exchanges to
leverage the framework that has already been established and currently
applies to FFEs and SBE-FPs, thereby decreasing the burden to these
State Exchanges to establish such a program, while providing some
flexibility for these State Exchanges to tailor the new requirements to
include State-specific content (such as the updating disclaimer
language to refer to the State Exchange website rather than the
HealthCare.gov website). Additionally, these proposed changes would
establish administrative and operational consistency throughout the
Exchanges, which is beneficial to agents, brokers, and web-brokers by
allowing them to expand their business into States with State Exchanges
in a more streamlined fashion, as well as to Exchanges and their
consumers.
We seek comment on these estimated impacts and assumptions.
13. Ability of States To Permit Agents and Brokers and Web-Brokers To
Assist Qualified Individuals, Qualified Employers, or Qualified
Employees Enrolling in QHPs (45 CFR 155.220(h))
As discussed in the preamble to this proposed rule, we propose to
revise and add language to Sec. 155.220(h) to specify that the CMS
Administrator, a principal officer, would review agent, broker, and
web-broker requests for reconsideration of decisions to terminate their
Exchange agreement(s) under Sec. 155.220(h)(3). We propose that the
CMS Administrator's determination would be final and binding. We
believe this proposal would positively impact agents, brokers, and web-
brokers by ensuring entities who utilize the FFE and SBE-FPs know,
through increased transparency, who would be responsible for handling
these reconsideration decisions under Sec. 155.220(h)(3).
14. Establishing Requirements for DE Entities Mandating HealthCare.gov
Changes Be Reflected on DE Entity Non-Exchange Websites Within a Notice
Period Set by HHS (45 CFR 155.221(b))
We propose to amend Sec. 155.221 to require that DE Entity non-
Exchange websites implement and prominently display website changes in
manner consistent with that adopted by HHS for HealthCare.gov by
implementing standards defined by HHS within a notice period set by
HHS, unless HHS approves a deviation. We also propose to require State
Exchanges implement a similar process to require display changes on
State Exchange websites be reflected on the websites of their DE
entities, with the procedures for defining standards defined by the
State Exchange
As discussed in the preamble of this proposed rule, this proposal
would require web-brokers and QHP issuers participating in DE to update
their non-Exchange websites to incorporate website display changes that
mirror those adopted by HHS for HealthCare.gov by conforming with
standards defined by HHS. This proposal would provide DE entities
flexibility in their user interface graphic design, provided that their
design complies with the standards defined by HHS. This proposal would
also allow DE entities to submit a deviation request for review and
approval by HHS if they would like to implement a display that does not
meet those standards. We anticipate an average of three or fewer
required display changes annually, with the majority of changes being
simpler website display changes that are relatively easy to implement.
Furthermore, HHS would provide examples and associated disclaimer text
with the release of any required website display changes pursuant to
this proposal, and therefore we expect the overall impact of these
simple website display changes to be minimal. As described in the
information collection requirements section of this proposed rule, we
estimate a total cumulative annual burden of $240,120 associated with
the requirement for DE entity non-Exchange websites to incorporate
website display changes that mirror those adopted by HHS for
HealthCare.gov and a burden of $5,171 associated with completing and
submitting a request to deviate from the HealthCare.gov display.
As discussed in the preamble for this rule, we continue to support
DE entities' use of innovative decision-support tools and user
interface designs, and this proposal is not intended to prohibit the
implementation of display features beyond the baseline provided by
HealthCare.gov. As such, there may be occasions where some web-brokers
and QHP issuers participating in direct enrollment may have implemented
the standards of the desired display before the change was made on
HealthCare.gov. In these instances where the DE entity non-Exchange
website is already meeting the minimum standards associated with the
website display changes communicated by HHS pursuant to this proposal,
the entity would not have to make any further website updates. We also
anticipate approximately one more complex display change per plan year,
potentially involving updates to backend UI algorithms and display
methodologies. Although more complex display changes may represent
additional burden for DE entities, we would ease the burden by
providing them with examples of HealthCare.gov's display, technical
implementation guidance (including Marketplace API (MAPI) or Public Use
Files (PUF) data integration guidance), and technical assistance as
needed. We anticipate that giving examples of a user interface design
that meets HHS' standards will ease the burden of implementation as
compared to solely providing HHS' standards and relying on DE entities
to determine how to configure their websites to meet those standards.
The proposed new Sec. 155.221(j) would extend this new proposed DE
entity non-Exchange website display requirement to require State
Exchanges to require their DE entities to implement and prominently
display changes adopted for display on the State Exchanges' websites on
their non-

[[Page 82633]]

Exchange websites for purposes of assisting consumers with DE in QHPs
offered through the Exchange in a manner that constitutes enrollment
through the Exchange. This would require State Exchanges to establish
requirements for DE entities operating in State Exchanges to reflect
changes to the State Exchange website on their DE entity non-Exchange
websites. This change would also require State Exchanges to establish
processes for communicating and defining standards and for setting
advance notice periods. We also encourage State Exchanges to consider
the same factors (that is, complexity of the change and the urgency
with which the change must be reflected on the DE entity's non-Exchange
website) when setting advance notice periods. Similarly, we encourage
State Exchanges to provide DE entities operating in their States
examples of the State Exchange display, and technical assistance,
including technical implementation guidance, to ease the burden of
required display changes.
We anticipate this proposal would benefit consumers by codifying
and expanding our existing EDE HHS-initiated change request process to
apply to all DE entities and ensuring that all Exchange consumers
receive consistent, clear, and accurate information in a timely fashion
as they navigate the QHP selection and enrollment process. We are
further of the view that this proposal would mitigate the risk that
consumers receive different, and possibly confusing or misleading,
information based on the platform they choose to utilize when enrolling
in or applying for coverage. This proposal would help ensure consumers
using the DE pathways benefit from policies we introduce to improve the
HealthCare.gov website display, and in State Exchanges the State
Exchange website, by enhancing the consumer experience, increasing
consumer understanding, and simplifying the plan selection process.
As discussed in the ICR for this proposal, the cumulative cost
estimate as a result of this proposal would be approximately $1,226,453
for 100 entities operating in the Exchanges (including State Exchanges
under new proposed paragraph Sec. 155.221(j)(3)) in the 2025 benefit
year. Entities that submit a request to deviate from the display
approach adopted by HealthCare.gov, or in State Exchanges, the State
Exchange website, would incur a cumulative cost of approximately
$31,023 annually.
We seek comment on the estimated impacts associated with this
proposal.
15. Adding and Amending Language To Ensure DE Entities Operating in
State Exchanges Meet Certain Standards Applicable in the FFEs and SBE-
FPs (45 CFR 155.221)
We propose to amend Sec. 155.221 to apply to DE entities operating
in State Exchanges, and consequently State Exchanges that utilize DE
entities, certain existing Federal standards regarding DE entities
assisting consumers with enrolling in QHPs and applying for APTC/CSRs,
both for the State Exchange's Individual Exchange and SHOP.
As discussed earlier in this proposed rule, the proposed regulatory
amendments would require these State Exchanges to draft policy, update
standards, and potentially hire additional staff to perform functions
not currently being performed by the State Exchange because of applying
certain Sec. 155.221 standards to State. The proposal would also
require DE entities participating in DE programs in State Exchanges to
perform web-development to ensure compliance with the Federal minimum
standards this rulemaking proposes to extend to these DE entities,
along with any State-specific requirements that may be adopted under
the proposed flexibility provided to State Exchanges in this
rulemaking.
Although there will be additional burden for DE entities operating
in State Exchanges, amounting to approximately $138,447 per DE entity,
as discussed in the information collection requirements section of this
proposed rule, we anticipate that some of these State Exchanges may
utilize DE entities already participating in the FFEs and SBE-FPs,
which would help provide administrative savings related to the approval
process under Sec. 155.221(b)(4) if the State does not impose
additional State-specific requirements beyond the Federal standards. We
encourage State Exchanges to leverage DE operational readiness
demonstrated for the FFEs and SBE-FPs when possible. Additionally, we
expect those DE entities already participating in the FFEs and SBE-FPs
to be able to leverage their existing web-development work with
additional burden only required for tailoring the website display to
any State-specific requirements adopted by the State Exchange (for
example, updating website disclaimers to reference the State Exchange
website rather than the HealthCare.gov website). Although these
proposals allow States certain flexibility for State Exchanges with
regards to establishing procedures and requirements for website
displays and demonstration of operational readiness, we expect the
impact and costs to be reasonably based on the impacts seen on the FFEs
and SBE-FPs. As described in the information collection requirements
section, we anticipate a total cumulative burden of $6,762,281 for DE
entities in State Exchanges to comply with this proposal to ensure DE
entities operating in these State Exchanges are meeting certain
requirements applicable in the FFEs and SBE-FPs. Additionally, we
anticipate this proposal would have an impact on State governments
totaling $3,353,467.90 for 5 States to opt to host a DE program for
their State Exchange.
We anticipate that these proposed changes to extend certain minimum
Federal standards governing DE entity participation in FFEs and SBE-FPs
to also apply to State Exchanges would benefit consumers by
establishing uniform, baseline requirements for DE entity participation
across all Exchange types. These proposed changes would allow State
Exchanges to leverage the framework that has already been established
and currently applies to FFEs and SBE-FPs, thereby decreasing the
burden to these State Exchanges to establish such a program, while
providing some flexibility for these State Exchanges to tailor the
applicable standards to include State-specific content. Additionally,
this proposal would establish administrative and operational
consistency throughout the Exchanges, which benefits DE entities by
allowing them to expand their business into States with State Exchanges
with minimal costs and burdens. Consumers would also benefit by the
expansion of entities and enrollment pathways available to assist with
enrolling in health insurance coverage.
We seek comment on these estimated impacts and assumptions.
16. Failure To Reconcile (FTR) Process (45 CFR 155.305(f)(4))
We are proposing in connection with the FTR process described in
Sec. 155.305(f)(4) that Exchanges would be required to send notices to
tax filers for the first year in which they failed to reconcile APTC as
an initial warning to inform and educate tax filers 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 year.
Under this policy, Exchanges on the Federal platform would continue
to send notices to tax filers for the year in which they have failed to
reconcile APTC as an initial warning to inform and educate tax filers
that they need to file and reconcile, or risk being

[[Page 82634]]

determined ineligible for APTC if they fail to file and reconcile for a
second consecutive tax year. Our proposal to codify this practice and
require it of all Exchanges, including State Exchanges, would ensure
that tax filers who have been determined to have FTR status for 1 year
are adequately educated on the file and reconcile requirement, and have
ample opportunity to address the issue and file and reconcile their
APTC before they are determined to have FTR status for 2 consecutive
years. We request comment on how best to conduct outreach to tax filers
who need more intensive assistance in understanding FTR status,
including directing them to resources such as Navigator or Assisters
that could help explain what they need to do to reconcile their APTC.
This proposal would support compliance with the filing and
reconciling requirement under 36B(f) of the Code and its implementing
regulations at 26 CFR 1.36B-4(a)(1)(i) and (a)(1)(ii)(A), 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. Additionally, this proposal
would better align State Exchanges' failure to reconcile processes with
that of the Exchanges on the Federal platform.
We are aware of seven States that will operate their own State
Exchange for PY 2025 and have not yet fully implemented the
infrastructure to run FTR operations for plan years through 2024 due to
the flexibility the Exchanges were given to temporarily pause FTR
operations due to the COVID-19 PHE. We are seeking comment on the
estimated one-time costs for these States to fully implement the
functionality and infrastructure to conduct FTR operations, and the
estimated annual costs to maintain FTR operations.
17. Verification Process Related to Eligibility for Enrollment in a QHP
Through the Exchange (45 CFR 155.315(e))
We believe that the proposal to revise Sec. 155.315(e) so that
Exchanges can accept incarceration attestations without further
verification and verify incarceration status using an HHS-approved data
source only if they choose to, would minimize administrative costs and
burdens for Exchanges. Flexibility in verifying incarceration status
for Exchanges would result in significant cost savings through not
creating and processing incarceration DMIs. The current incarceration
verification process resulted in a high number of DMIs, almost all of
which are resolved in favor of the applicant and has been burdensome
and costly for the Exchanges to implement. By revising the current
incarceration verification process, this proposal would also eliminate
undue burdens and barriers to care for applicants, particularly
formerly incarcerated people, a population comprised of a significant
number of people with disabilities.\280\ Many documents that can prove
incarceration status cannot be obtained without an unexpired proof of
identity document, and most cannot be obtained without submitting non-
refundable payments. Incarceration may inhibit one's financial savings,
and formerly incarcerated individuals are less likely to secure
employment.\281\ As discussed further in the information collection
requirements section for this proposal, we anticipate a one-time cost
to 11 State Exchanges of approximately $23,770 to conduct analyses to
determine whether to accept consumer attestation of incarceration
status or use an alternative data source to verify incarceration status
and to submit such request to HHS, and make associated changes to their
eligibility systems and processes to implement the option they choose.
---------------------------------------------------------------------------

\280\ Robert Apel, Gary Sweeten, The Impact of Incarceration on
Employment during the Transition to Adulthood, Social Problems,
Volume 57, Issue 3, 1 August 2010, Pages 448-479, https://doi.org/10.1525/sp.2010.57.3.448.
\281\ Id.
---------------------------------------------------------------------------

From PY 2018 to 2019, there were 110,802 incarceration DMIs
generated. In PY 2019, nearly 38,000 out of 78,000 applicants submitted
documents to attempt to resolve the incarceration DMI. Conducting an
intensive incarceration verification check through the DMI process for
each DMI caused HHS to incur additional costs totaling about $0.57
million per year for verification of incarceration along with the PUPS
annual maintenance and transaction fees. The additional costs
associated with generating incarceration DMIs include the costs to
inform applicants of their DMI through their eligibility determination
notice, and to process the DMI and any documentation mailed by the
applicants. State Exchanges have likely incurred similar costs. Of the
13 State Exchanges (operating in 12 States and the District of
Columbia) with incarceration verification processes, eight conduct
incarceration verifications similar to those conducted by the Exchanges
on the Federal platform. We estimate that incarceration DMI processing
costs approximately $9,561,000 annually across all eight of these State
Exchanges. Of the 13 State Exchanges with incarceration verification
processes, five State Exchanges connected to an individual State or
local incarceration facility for verifications and fully process
incarceration DMIs. These State Exchanges currently incur DMI
processing costs, including costs associated with noticing the
applicant of their DMIs and costs associated with DMI and appeals
casework. Based on costs incurred by the Exchanges on the Federal
platform to process DMIs, we estimate that incarceration DMI processing
costs State Exchanges approximately $7,171,000 annually across all 5 of
these State Exchanges. Finally, 3 States are transitioning to State
Exchanges. We anticipate their incarceration verification operations
would cost approximately $3,585,000 annually. In total, the costs to an
anticipated 16 State Exchanges would be approximately $20,317,000
annually if current policy continued.
By providing flexibility to Exchanges to verify incarceration
status and allowing Exchanges to accept applicant attestations without
verification, this proposal would enable HHS and Exchanges to avoid
incurring the aforementioned costs associated with DMI creation and
processing. Exchanges would not have to invest resources into building
data transfer connections with an alternative incarceration
verification data source and would not have to invest in providing DMI
notices and support to applicants. Therefore, the cost savings to State
Exchanges associated with this proposal would be approximately
$20,317,000.
As previously mentioned, conducting an intensive incarceration
verification check through the DMI process for each DMI caused HHS to
incur additional costs totaling approximately $570,000 per year for
verification of incarceration along with the PUPS annual maintenance
and transaction fees. While overall, this proposal would reduce the
burden and costs associated with incarceration verification operations
and data sourcing, there would be a modest up-front cost of $1,200,000
to HHS to modify the Federal platform's current incarceration
verification processes for the purposes of verifying eligibility for
QHP, and it would cost $340,000 to update the Federal platform's system
logic for HHS to stop sending incarceration verification requests to
PUPS. Once these operations and noticing have stopped, no further costs
should be incurred by HHS, or by Exchanges that opt to act on the
flexibilities provided by this proposal.

[[Page 82635]]

In total, we anticipate a cost of $1,540,000 to HHS because of this
proposal. We reiterate that this cost would be overshadowed by the
expected savings of approximately $20,317,000 as a result of this
proposal, if finalized.
We seek comment on these estimates.
18. Verification Process Related to Eligibility for Insurance
Affordability Programs (45 CFR 155.320)
We are proposing to amend Sec. 155.320(c) by adding a new
requirement at paragraph (c)(1)(iii) to now require that State
Exchanges pay in advance for their utilization of the CSI data provided
by the VCI Hub service to verify a tax household's attested annual
income and, or the current income of the Medicaid household for an
application member due to our reinterpretation of State Exchange and
State Medicaid and CHIP agency use of the Hub to access and use the
income data provided by the optional VCI Hub service as a State
Exchange or a State Medicaid and CHIP agency function. We propose that
beginning on July 1, 2024, State Exchanges will be required to pay in
advance for 100 percent of the costs of their utilization of the CSI
data. We anticipate working with States to develop an estimate of their
annual usage of the CSI data service. States that notify HHS that they
want to continue to use the CSI data through the VCI Hub service must
pay in advance to HHS for the total each respective State Exchange's
anticipated annual utilization, specifically the anticipated number of
successful transactions to the VCI Hub service that return usable CSI
data, as defined by the criteria discussed above in preamble,
multiplied by the fixed price. We are also planning that beginning on
July 1, 2024, State Medicaid agencies and HHS will share in the costs
with State Medicaid agencies being responsible for 25 percent of the
cost of the utilization of the VCI Hub service and HHS responsible for
the remaining 75 percent of the costs.
Because the price per transaction for CSI data is proprietary
information, we are unable to provide those numbers, or the precise
utilization rates for State Exchanges and State Medicaid agencies as
this would be a direct conflict of the contract that HHS holds with the
CSI contractor. However, based on HHS' own analysis, in fiscal year
(FY) 2022, State Exchange utilization of the VCI Hub service led to
costs of approximately $26 million dollars. Similarly, in FY 2022,
State Medicaid agency utilization of the VCI Hub service resulted in
costs of approximately $77 million dollars. We also estimate that by
having State Medicaid agencies pay for 25 percent of their transaction
costs, the Federal government can save between $32 to $55 million per
year. By having State Exchanges pay for 100 percent of their
transaction costs, we estimate savings to the Federal government could
be between $39 and $67 million per year; this cost estimate includes an
assumption of one to two States transitioning to State Exchanges in
future years. Assuming one to two new States transition to a State
Exchange in the next 4 years, we applied a 5 percent increase to
estimate the additional pings from these additional States. We estimate
that taken together, this proposed policy would result in a transfer of
between $72 to $122 million per year of costs from the Federal
government to States beginning in 2024.
We are aware that six State Exchanges currently only have one
connection for both their State Exchange and State Medicaid agency,
which may pose a challenge when determining which VCI Hub transactions
are attributable to the State Exchange, and which are attributed to the
State Medicaid agency. We anticipate that one to three State Exchanges
may elect to build a separate connection in order to accurately account
for which VCI Hub transactions originate from their State Exchange and
their State Medicaid agency and we estimate about $1 to 3 million in
one-time costs in 2024 to build the IT infrastructure for a second Hub
connection, totaling about $3 to 6 million in one-time costs for the
one to three States that choose to make any changes with how they
currently access the VCI Hub service. States that do not elect to build
a separate connection would instead need to develop a cost allocation
methodology to track VCI Hub transaction volume from their State
Exchange and State Medicaid agency and communicate this to HHS so that
HHS can invoice accurately and appropriately.
As noted in preamble, under this proposal, States would pay
annually in advance for their anticipated utilization of the optional
VCI Hub service. States would be required to reconcile with HHS on an
annual basis the anticipated utilization of CSI data provided by the
VCI Hub service with the actual utilization. In the alternative, HHS
would invoice States on a monthly basis for their actual utilization of
CSI data provided by the VCI Hub service after that utilization occurs.
Because we are still exploring how HHS will invoice States and State
Medicaid agencies for their respective utilization of the VCI Hub
Service depending on which invoicing methodology HHS ultimately
finalizes, we believe that there may be some increased costs to the
Federal Government, including contractor resources and administrative
costs associated with collecting these funds from States. We estimate
the ongoing administrative annual costs beginning in 2024 to be
approximately $1 million and cover operational expenses for maintaining
systems and collections. We estimate an additional $2.3 million as a
one-time cost in 2024 to build the invoicing process/structure and
setup operations. We note, however, that these estimates may be higher
or lower, as they are dependent on whether HHS finalizes advanced
billing as proposed or an alternative invoicing structure, such as
monthly billing.
We seek comment on these estimates.
19. Eligibility Redetermination During a Benefit Year (45 CFR
155.330(d))
We propose to revise Sec. 155.330(d) to require Exchanges to
conduct periodic checks for deceased enrollees twice yearly and
subsequently end deceased enrollees' QHP coverage beginning with the
2025 calendar year. Additionally, we propose to amend Sec.
155.330(d)(3) to grant the Secretary the authority to temporarily
suspend the PDM requirement during certain situations or circumstances
that lead to the unavailability of data needed to conduct PDM.
Currently, Sec. 155.330(d)(3) defines ``periodically'' only for
PDM activities that identify enrollment in Medicare, Medicaid, CHIP,
and BHP, meaning that Exchanges must conduct Medicare PDM, Medicaid or
CHIP PDM, and BHP PDM twice a year. The current regulation does not
specify the frequency by which PDM activities to identify deceased
enrollees must occur. The 2019 Program Integrity Rule did not require
Exchanges to perform PDM for death at least twice in a calendar year so
that Exchanges could prioritize the implementation of the new
requirement to conduct PDM for Medicare, Medicaid, CHIP and, if
applicable, BHP eligibility or enrollment at least twice yearly.
Periodic checks for deceased enrollees are a critical aspect to
ensuring Exchange program integrity.
We propose to revise Sec. 155.330(d) to require Exchanges to
conduct periodic checks for deceased enrollees twice yearly and
subsequently end deceased enrollees' QHP coverage beginning with the
2025 calendar year. This proposal would not only align with current
policy and operations on the Exchanges on the Federal platform but
would also prevent overpayment of QHP premiums

[[Page 82636]]

and accurately capture household QHP eligibility based on household
size.
Based on internal data, we anticipate that it will cost the Federal
Government approximately $58,923 to conduct an additional check for
deceased enrollees per year. In 2023, we conducted two rounds of Death
PDM where the average number of expired households was 7,151; the
average APTC amount per household was $549 per month; and, at the time
of the expiration activities, there was an average of 6.5 months left
in the plan year. We calculate the APTC savings to be approximately $25
million. Prior to implementing Death PDM in 2019, we looked at the
number of consumers that were removed from coverage by the surviving
family without the aid of Death PDM and close to 50 percent of the
deceased consumers were removed from coverage. Thus, we estimate the
net amount of APTC saved is estimated would be approximately $12.5
million per year beginning in 2025.
State Exchanges that are not already conducting Death PDM with the
proposed required frequency, or deemed in compliance with PDM
requirements, would be required to engage in IT system development
activity to communicate with these programs and act on enrollment data
either in a new way, or in the same way more frequently if this
proposal is finalized. Thus, there may be additional associated
administrative cost for these State Exchanges to implement the proposed
PDM requirement, if finalized. As discussed in the information
collection requirements section of this proposed rule, for a State
Exchange not already conducting death PDM at least twice a year, we
estimate that it would cost approximately $3,932 per State Exchange (a
total of $43,252 for all 11 State Exchanges currently not meeting the
proposed requirement) to implement this proposed provision through
their system. We assume that this cost would be incurred primarily in
2025 by State Exchanges. These costs would be incurred by the State
Exchanges as they are required to be financially self-sustaining and do
not receive Federal funding for their establishment or operations.
We seek comments in response to the burden estimates for this
policy.
20. Incorporation of Catastrophic Coverage Into the Auto Re-Enrollment
Hierarchy (45 CFR 155.335(j))
We propose to amend the regulations at Sec. 155.335(j)(1) and (2)
to require Exchanges to re-enroll enrollees in catastrophic coverage as
defined in section 1302(e) of the ACA into QHP coverage for the coming
plan year. We believe that some Exchanges already re-enroll these
enrollees, and we generally do so in Exchanges on the Federal platform
when issuers include a plan crosswalk information for catastrophic
plans when they submit the information part of the annual QHP
Certification process. However, explicitly incorporating catastrophic
plan enrollees into the rules at Sec. 155.335(j) would help ensure
continuity of coverage in cases where the issuer does not offer the
catastrophic plan for the subsequent plan year and these enrollees do
not actively select a different QHP. We also propose to add new Sec.
155.335(j)(5) to establish that an Exchange may not newly auto re-
enroll an enrollee into catastrophic coverage who is currently enrolled
in coverage of a metal level as defined in section 1302(d) of the ACA.
We believe that Exchanges likely also adhere to this practice, but that
all interested parties would benefit from clear regulation on this
aspect of the re-enrollment process.
If this proposal is finalized, we would also update the FFE
Enrollment Manual to incorporate catastrophic coverage into the re-
enrollment hierarchy for alternate enrollments, which we use to
implement the regulation to crosswalk enrollees whose current issuer
will no longer offer plans available to them through the Exchange under
Sec. 155.335(j)(3).
The inclusion of additional criteria in the auto re-enrollment
process may result in a small increase in costs and burden for issuers
and Exchanges. However, burden in Exchanges on the Federal platform
would be mitigated because we already encourage issuers to submit
crosswalk options for catastrophic enrollees, including those who will
lose eligibility for catastrophic coverage. We solicit comment on
whether these proposals reflect current practices of State Exchanges
that are not on the Federal platform. Finally, we believe this change
would make it more likely that catastrophic coverage enrollees will be
auto re-enrolled. This support may disproportionately benefit enrollees
who are less likely to have the time or background knowledge to compare
their coverage options for the coming plan year, such as those with
limited health insurance literacy.
We seek comment on these impacts and assumptions.
21. Premium Payment Deadline Extensions (45 CFR 155.400(e)(2))
We anticipate that the proposal to amend Sec. 155.400(e)(2) to
codify that flexibility for issuers experiencing billing or enrollment
problems due to high volume or technical errors is not limited to
extensions of the binder payment will benefit issuers. Because HHS has
already provided enforcement discretion in the past to account for such
situations, we do not anticipate that there would be any additional
costs for HHS associated with this proposal, nor do we anticipate any
costs to interested parties.
We seek comment on these impacts and assumptions.
22. Initial and Annual Open Enrollment Periods (45 CFR 155.410)
We propose amending Sec. 155.410(e)(4)(ii) to revise parameters
around the adoption of an alternative open enrollment period by a State
Exchange not utilizing the Federal platform. We propose that for
benefit years beginning on or after January 1, 2025, State Exchanges
may extend the open enrollment period so that the open enrollment
period begins on November 1 of the calendar year preceding the benefit
year and ends no earlier than January 15 of the applicable benefit
year.
We have previously observed that when open enrollment ends in
December, certain consumers may be subjected to unexpected plan cost
increases that they may not be notified about until January. This
proposal would benefit consumers by reducing the number of consumers
who may be subjected to such unexpected plan cost increases. This
proposal would also ensure ample time for Navigators, certified
application counselors, agents, and brokers to fully assist all
interested consumers during open enrollment while also improving access
to health coverage by giving consumers ample time to react to updated
plan cost information and seek enrollment assistance, including
consumers in underserved communities who face additional barriers to
accessing health coverage. Finally, by reducing consumer confusion,
increasing consumer access to assisters, and giving consumers more time
to consider up-to-date plan cost information, this proposal could
increase QHP enrollment, benefiting all interested parties, including
consumers, Exchanges, issuers, and assisters.
All 18 State Exchanges except one already meet these proposed
parameters, beginning their annual open enrollment periods on November
1 and concluding on or after January 15 of the benefit year, pursuant
to current Sec. 155.410(e)(4)(ii). Moreover, many continue open
enrollment beyond January 15 of the benefit year. Since most State
Exchanges already are aligned with the parameters described

[[Page 82637]]

in the new proposal, we anticipate that this proposal would have a de
minimis impact and not impose significant additional burden overall.
We seek comment on this burden estimate and assumptions. We are
particularly interested in comments regarding whether this proposal
would impose a significant burden on outlying State Exchanges and
interested parties (for instance, Navigators, assisters, issuers).
23. Special Enrollment Periods--Effective Dates of Coverage (45 CFR
155.420(b))
We propose amending Sec. 155.420(b)(1) and (b)(3)(i) to align the
effective dates of coverage after selecting a plan during certain
special enrollment periods across all Exchanges, including State
Exchanges, so that during a special enrollment period that follows the
regular effective dates of coverage listed at Sec. 155.420(b)(1),
qualifying individuals or enrollees who select and enroll in a QHP
receive coverage beginning the first day of the month after the
consumer selects a QHP.
In the 2021 Payment Notice final rule (85 FR 29251) where this
policy was finalized for Exchanges on the Federal platform, we noted
that ensuring that consumers who select a plan during a special
enrollment period provided using the regular effective dates at Sec.
155.420(b)(1) receive coverage on the first day of the following month,
rather than on the first day of the second month following plan
selection, would result in several benefits, such as reducing consumer
confusion and minimizing coverage gaps while also enhancing operational
efficiency. In addition, we noted that the standardization of effective
coverage dates for special enrollment periods provided using the
regular effective dates at Sec. 155.420(b)(1) would result in
standardization for issuers due to more plans beginning in the same
month, Exchanges, and consumers; the reduction of system errors and
related casework, including reduced confusion among relevant consumer
support staff; and simplified Exchange billing practices due to the
expedited effective dates. We believe that State Exchanges, and the
issuers and consumers in those States will also experience these
benefits under the proposal to align the effective coverage dates
across all Exchanges for special enrollment periods that use the
regular effective dates of coverage at Sec. 155.420(b)(1) (unless an
earlier coverage effective date were selected pursuant to Sec.
155.420(b)(3), which would reduce potential burdens associated with
this proposal.
Additionally, we maintain our expectation that issuers will not
incur substantial new costs as a result of applying this policy across
Exchanges since they routinely effectuate coverage on the first of the
month following plan selection or earlier when permitted or required
under applicable regulation. We expect that consumers in States which
do not currently apply this policy will also benefit from a faster
effectuation of coverage, as this will result in fewer coverage gaps
for consumers transitioning between or newly enrolling in a health
insurance plan.
We seek comment on these assumptions.
24. Special Enrollment Periods--Monthly Special Enrollment Period for
APTC-Eligible Qualified Individuals With a Household Income At or Below
150 Percent of the Federal Poverty Level (45 CFR 155.420(d)(16))
We are proposing to amend Sec. 155.420(d)(16) to revise the
parameters around the availability of a special enrollment period (SEP)
for APTC-eligible qualified individuals with a projected household
income at or below 150 percent of the Federal Poverty Level (FPL),
hereinafter referred to as the ``150 percent FPL SEP.'' Specifically,
we are proposing to remove the limitation that this SEP be available
only when the applicable taxpayer's applicable tax percentage is set to
zero, a circumstance provided for under section 9661 of the American
Rescue Plan (ARP) and later under the Inflation Reduction Act (IRA).
The impact of this policy would be zero if enhanced subsidies under
the IRA were continued beyond 2025. It is difficult to estimate, with
confidence, the impacts of this policy on premiums, PTC payments, and
enrollment if the enhanced subsidies are not continued, and we note
that those impacts are likely to be quite different by State. However,
under various scenarios, we estimate that if this proposed policy were
to be finalized, national premiums in the individual market could
increase by an average of 3 to 4 percent for plan year 2026 when the
enhanced PTC provisions of the IRA are due to expire. We would expect
that any average national impact would have a high variance between
States that have expanded Medicaid coverage compared to States that
have not, because States that have not expanded Medicaid coverage are
likely to have more consumers with projected annual household income
below 150 percent FPL applying for coverage through the Exchange.
Unknown factors making these parameters difficult to estimate include
the utilization of this SEP by healthy and unhealthy enrollees, the
impact to the average duration of coverage for enrollees, and
additional policy changes between now and 2025. At an aggregate level,
PTC outlays could increase nationally up to $2 billion to $3 billion
beginning in 2026. The direction and magnitude of enrollment changes in
the individual market is also highly uncertain.
We seek comment on these estimates, including on the premium
impacts at the State level.
25. Termination of Exchange Enrollment or Coverage (45 CFR 155.430)
We anticipate that the proposal to permit enrollees in Exchanges on
the Federal platform to retroactively terminate coverage back to the
date in which they retroactively enroll in Medicare Part A or B would
benefit enrollees by allowing them to avoid an overlap in coverage and
paying premiums for coverage they do not need. We anticipate that there
would be some minor costs for HHS associated with processing the
additional requests for retroactive terminations of coverage allowed by
this proposal. However, we do not have adequate data to estimate the
number of requests for retroactive termination HHS is likely to
receive, and so we cannot provide an estimate for these costs, nor for
the amount of APTC that is likely to be returned to the government as a
result of this proposal. In addition, we anticipate that there would be
a minor financial impact to issuers associated with processing the
additional retroactive termination requests allowed by this proposal,
including reversing claims and refunding premium paid by the enrollee,
but we likewise do not have adequate data to estimate these costs.
Finally, we also anticipate that there may be a financial impact to
State Exchanges associated with implementing this proposal if the rule
is finalized such that implementation is optional for State Exchanges
or required for all Exchanges. However, we do not have access to the
data necessary to estimate the costs to State Exchanges associated with
implementing this proposal, nor do we have access to the data necessary
to determine how long it would take State Exchanges to implement it.
We seek comment on these impacts and assumptions, as well as any
additional data sources we could use to estimate the costs associated
with this proposal.

[[Page 82638]]

26. Establishment of Exchange Network Adequacy Standards (45 CFR
155.1050)
Effective for plan years beginning on or after January 1, 2025, we
propose to require that State Exchanges and SBE-FPs establish and
impose quantitative time and distance QHP network adequacy standards
that are at least as stringent as the FFEs' time and distance standards
established for QHPs under Sec. 156.230. We also propose that State
Exchanges and SBE-FPs be required to conduct quantitative network
adequacy reviews prior to certifying any plan as a QHP, consistent with
the reviews conducted by the FFEs under Sec. 156.230. We further
propose to require State Exchanges and SBE-FPs to permit issuers that
are unable to meet the specified network adequacy standards to
participate in a justification process after submitting their initial
network adequacy data to account for variances and potentially earn QHP
certification. Finally, we propose to mandate that State Exchanges and
SBE-FPs require all issuers seeking QHP certification to submit
information to the State Exchange or SBE-FP about whether network
providers offer telehealth services.
For purposes of the proposal to require State Exchanges and SBE-FPs
to establish and impose quantitative time and distance network adequacy
standards for QHPs that are at least as stringent as standards for QHPs
participating on the FFEs under Sec. 156.230, ``as stringent as''
means time and distance standards that use a specialty list that
includes at least the same specialties as our provider specialty lists
and time and distance parameters that are at least as short as our
parameters. States would be permitted to implement network adequacy
standards that are more stringent than those performed by the FFEs
under Sec. 156.230. In other words, States could use a specialty list
that is broader than our specialty lists, but it must include all the
provider specialties included in our lists. Similarly, the time and
distance parameters could also be narrower than our parameters, meaning
they could require shorter time and/or distances, but they cannot be
less demanding than our time and distance parameters. Consistent with
the standards for the FFEs, the State Exchanges and SBE-FPs' time and
distance standards would be calculated at the county level and vary by
county designation. State Exchanges and SBE-FPs would be required to
use a county type designation method that is based upon the population
size and density parameters of individual counties. Under this
proposal, the time and distance standards State Exchanges and SBE-FPs
would establish and impose would apply to our provider specialty lists.
To count towards meeting the time and distance standards, individual
and facility providers in these lists would have to be appropriately
licensed, accredited, or certified to provide services in their State,
as applicable, and would need to have in-person services available.
We propose that State Exchanges and SBE-FPs be required to conduct
quantitative network adequacy reviews prior to QHP certification, and
that they conduct them consistent with network adequacy reviews
conducted by the FFEs under Sec. 156.230. When we refer to the review
being consistent with the network adequacy reviews conducted by the
FFEs under Sec. 156.230, we propose that State Exchanges and SBE-FPs
would be required to conduct, prior to QHP certification, quantitative
network adequacy reviews to evaluate compliance with requirements under
Sec. 156.230(a)(1)(ii) and (iii), and (a)(2)(i)(A), while providing
QHP certification applicants the flexibilities described under Sec.
156.230(a)(2)(ii) and (a)(3) and (4). Under this proposal, State
Exchanges and SBE-FPs would be prohibited from accepting an issuer's
attestation as the only means for plan compliance with network adequacy
standards. We further propose that State Exchanges and SBE-FPs would
make available to SADP applicants the limited exception available to
SADPs under Sec. 156.230(a)(4), pursuant to which SADPs may not be
required to meet FFE network adequacy standards under Sec.
156.230(a)(4). This exception is not available to medical QHP issuers.
We acknowledge that State-specific challenges may necessitate
exceptions, and so we propose to require State Exchanges and SBE-FPs to
permit issuers that are unable to meet the specified standards to
participate in a justification process after submitting their initial
data to account for variances, consistent with the processes specified
under Sec. 156.230(a)(2)(ii) and (a)(3) and (4). The issuer would
include this justification as part of its QHP application and describe
how the plan's provider network provides an adequate level of service
for enrollees and how the plan's provider network will be strengthened
and brought closer to compliance with the network adequacy standards
prior to the start of the plan year. The issuer would be required to
provide information as requested by the State Exchange or SBE-FP to
support this justification. State Exchanges and SBE-FPs would be
required to review the issuer's justification to determine whether
making such health plan available through the Exchange is in the
interests of qualified individuals in the State or States in which such
Exchange operates as specified under Sec. 156.230(a)(3). In making
this determination, the factors State Exchanges and SBE-FPs could
consider include whether the exception is reasonable based on
circumstances such as the local availability of providers and variables
reflected in local patterns of care. If the State Exchange or SBE-FP
determines that making such health plan available through its Exchange
is in the interests of qualified individuals in the State or States in
which such Exchange operates, it could then certify the plan as a QHP.
We are aware that some States Exchanges employ robust, quantitative
network adequacy standards that differ from those used by the FFEs, but
still ensure that QHPs provide consumers with reasonable, timely access
to practitioners and facilities to manage their health care needs,
consistent with the ultimate aim of these proposals. In light of this,
we propose a framework for granting exceptions to the requirements that
State Exchanges and SBE-FPs are required to establish and impose
network adequacy time and distance standards for QHPs that are at least
as stringent as the standards applicable to QHPs in FFEs and conduct
quantitative network adequacy reviews that are consistent with those
carried out by the FFEs under Sec. 156.230. HHS could grant State
Exchanges and SBE-FPs an exception if it determines that the Exchange
applies and enforces quantitative network adequacy standards that are
different from the FFEs' but ensure reasonable access as defined under
Sec. 156.230. The exception would be available only to State Exchanges
and SBE-FPs that conduct quantitative reviews of network adequacy prior
to certifying plans as QHPs. Exchanges seeking to employ alternative
quantitative network adequacy standards would be required to submit an
exception request, in a form and manner specified by HHS, and to
support their exception request with evidence-based data demonstrating
that such standards ensure reasonable access as defined under Sec.
156.230.
We further propose to require State Exchanges and SBE-FPs to
require that all issuers seeking certification of plans to be offered
as QHPs submit information to the respective State Exchanges or SBE-FPs
about whether network providers offer telehealth services. This data
would be for informational purposes; it would be

[[Page 82639]]

intended to help inform the future development of telehealth standards
and would not be displayed to consumers. We note that this proposal is
not intended to suggest that telehealth services would be counted in
place of in-person service access for the purpose of meeting network
adequacy standards for PY 2025. While we acknowledge the growing
importance of telehealth, we want to ensure that telehealth services do
not reduce the availability of in-person care. For this purpose,
telehealth encompasses professional consultations, office visits, and
office psychiatry services delivered through technology-based methods,
including virtual check-ins, remote evaluation of pre-recorded patient
data, and inter-professional internet consultations. Currently, for
issuers in FFEs to comply with telehealth reporting standards, issuers
must indicate whether each provider offers telehealth with the options
`Yes,' `No,' or `Requested information from the provider, awaiting
their response.' We are proposing that State Exchanges and SBE-FPs also
impose this same standard.
As discussed in the information collection requirements section of
this proposed rule, we estimate that the total annual burden associated
with State Exchanges and SBE-FPs establishing and imposing the proposed
network adequacy standards, conducting the network adequacy reviews as
proposed, collecting telehealth information from issuers seeking QHP
certification, and submitting any exception to be up to 19,800 hours
and to have a total cost of $1,365,012 per year. This estimate includes
State Exchanges and SBE-FPs developing the proposed standards,
reviewing any issuer justification, and submitting any exception
requests to HHS. We further estimate that the total annual burden
associated with both medical QHP and SADP issuers in State Exchanges
and SBE-FPs gathering and submitting the time and distance and
telehealth data, including any justification, to the respective State
Exchanges or SBE-FPs beginning in 2025 would be approximately $114,992.
As discussed in the information collection requirements section of
this proposed rule, the proposed requirement that State Exchanges and
SBE-FPs collect telehealth data may increase related administrative
costs for State Exchange and SBE-FP issuers that do not already possess
these data, though many issuers already collect and submit this
information for network adequacy submissions in other markets. While we
anticipate that increased burden related to telehealth data collection
would be minimal for many State Exchange and SBE-FP issuers, the
increased burden could ultimately lead to an increase in premiums for
consumers. As noted previously, we believe that obtaining telehealth
information and using it to inform future network adequacy standards is
in the best interests of both QHP enrollees and QHP issuers. As such,
we anticipate that the additional burden would be outweighed by the
expected benefits.
We seek comment on the potential costs and benefits associated with
this proposal.
27. FFE and SBE-FP User Fee Rates for the 2025 Benefit Year (45 CFR
156.50)
We propose an FFE user fee rate of 2.2 percent of monthly premiums
for the 2025 benefit year, which is the same FFE user fee rate
finalized in the 2024 Payment Notice (88 FR 25845 through 25847). We
also propose an SBE-FP user fee rate of 1.8 percent for the 2025
benefit year, which is the same SBE-FP user fee rate finalized in the
2024 Payment Notice. Therefore, because this proposal would impose the
same user fee rates as the 2024 Payment Notice, we do not anticipate
that these proposed user fee rates would have any impact on premiums
compared to the 2024 benefit year. We believe that maintaining the same
user fee rates as in the 2024 Payment Notice (that is, the previous
benefit year) will provide stability and certainty to issuers and
enrollees.
We seek comment on these impact estimates and assumptions.
28. State Selection of EHB-Benchmark Plans for Plan Years Beginning on
or After January 1, 2027 (45 CFR 156.111)
For plan years beginning on or after January 1, 2027, we propose to
revise the standards for State selection of EHB-benchmark plans at
Sec. 156.111 to consolidate the options for States to change EHB-
benchmark plans at Sec. 156.111(a); revise the regulatory standard for
States to comply with scope of benefit requirements at Sec.
156.111(b)(2); and revise Sec. 156.111(e)(3) to require States to
submit a formulary drug list as part of their application to change
EHB-benchmark plans only if the State is seeking to change their
prescription drug EHB.
We understand that certain aspects of the current process to change
EHB-benchmark plans under Sec. 156.111 may impose unanticipated
difficulty for and burden on States, and we have received feedback that
this difficulty can have a chilling effect on States' ability to make
more frequent or more substantial changes to their EHB-benchmark plans.
We believe that, to the extent States take advantage of the proposed
changes to the EHB-benchmark plan standards, if finalized, States would
experience an overall decrease in burden to develop new EHB-benchmark
plans compared to if they were to do so under the existing requirements
at Sec. 156.111. We anticipate that these proposals would reduce the
burden on States to perform additional actuarial analyses to comply
with the typicality and generosity standards at Sec. 156.111(b)(2)(i)
and (ii), respectively. Instead of performing an indeterminate number
of actuarial analyses to find a typical employer plan with an actuarial
equivalent scope of benefits, a State may only need to perform two such
actuarial analyses to identify the State's least generous typical
employer plan and the State's most generous typical employer plan.
Further, States would no longer need to perform an actuarial analysis
to demonstrate compliance with the generosity standard at Sec.
156.111, which we are proposing to remove as a requirement in this
proposed rule. As a result, we estimate an overall decrease in burden
to States utilizing this proposed provision to change their EHB-
benchmark plan.
We also estimate a potential increase in burden to States and
issuers to develop new policies and implement new plan designs, to the
extent these proposed changes would result in more frequent or more
substantial changes to EHB-benchmark plans by States. It is our aim
that these proposals would allow States and issuers to offer more
comprehensive and innovative benefit structures that benefit the
consumer, including by addressing health equity concerns. However, we
realize that this proposed policy would have varied impact on consumers
depending on how a State chooses to implement these proposals. To the
extent these proposed changes result in more frequent or more
substantial changes to EHB-benchmark plans by States, consumers
enrolled in individual and small group market plans would be impacted
by changes to EHB in that their benefits may change, and in some cases,
premiums could increase or decrease depending upon State implementation
of the proposed policies. Additionally, a new EHB-benchmark plan
selection may impact the amount of PTC and CSRs for enrollees in a
State. For these consumers, subsidies would increase or decrease when
compared to their State's current EHB-benchmark plan. PTC is available
only for that portion of a plan's premium attributed to EHB, so to the
extent that a State's EHB-benchmark plan leads to lower premiums for
the second lowest cost silver plan, PTC

[[Page 82640]]

would be reduced, but not the percent of income a consumer with PTC is
expected to contribute to their premium. This effect would represent a
transfer from consumers who receive PTC to the Federal government.
Individual and small group market enrollees who do not receive PTC
would experience lower premiums for less comprehensive coverage that
could result in more affordable coverage options but possibly higher
out-of-pocket costs for the consumer. To the extent that a State's EHB-
benchmark plan leads to higher premiums for the second lowest cost
silver plan, we expect the opposite outcome to occur.
Consumers who have specific health needs may also be impacted by
the proposed changes. In the individual and small group markets,
depending on the selection made by the State in which the consumer
lives, consumers with more comprehensive plans may gain coverage for
certain services. In other States, again depending on State choices,
consumers may no longer have coverage for some services, though we note
that no State has sought to remove benefits from their EHB-benchmark
plan to date under Sec. 156.111.
Although we are uncertain as to how States might take advantage of
these proposals, if finalized, and as States are not required to make
any changes under this policy, we also believe the reduced burden might
produce premium savings in the long-term, as States would have greater
incentive to update their EHB-benchmark plans more frequently and more
substantively. We believe that States with more regular and more
substantive EHB-benchmark plan changes would better respond to public
health priorities and would contribute to greater overall population
health, which would improve the health of the State's risk pool over
time and reduce plan premiums, increasing affordability of health
insurance for consumers in the individual and small group markets in
the State.
We stress that States would not be required to make any changes
under this proposal; as already implemented at Sec. 156.115(d)(1), if
a State does not make an EHB-benchmark plan selection by the first
Wednesday in May of the year that is 2 years before the effective date
of the new EHB-benchmark plan, or its benchmark plan selection does not
meet the requirements of this section and section 1302 of the ACA, the
State's EHB-benchmark plan for the applicable plan year will be that
State's EHB-benchmark plan applicable for the prior year.
As discussed in the ICR for this policy, we anticipate a total
annual cost estimate associated with this policy of approximately
$18,036.
We solicit comments on the impact of these proposals on the EHB-
benchmark plan selection process and whether other impacts should be
considered.
29. Provision of EHB (45 CFR 156.115)
We propose to remove the regulatory prohibition at Sec. 156.115(d)
on issuers from including routine non-pediatric dental services as an
EHB.
Removing the prohibition on issuers from including routine non-
pediatric dental services as an EHB would remove regulatory and
coverage barriers to expanding access to adult dental benefits. This
would allow States greater flexibility to add benefits to improve adult
oral health and overall health outcomes, which are disproportionately
low among marginalized communities such as people of color and people
with low incomes. Therefore, this policy would promote health equity by
addressing adult oral health disparities and improving the health
outcomes of vulnerable populations.
Pursuant to section 2707(b) of the ACA, a group health plan must
ensure that any annual cost sharing imposed under the plan does not
exceed the limitations provided for under section 1302(c)(1) of the
ACA. To the extent that a group health plan selects an EHB-benchmark
plan that includes non-routine pediatric dental coverage as an EHB,
such plan would need to ensure that any cost sharing for those services
is limited in accordance with section 1302(c)(1) of the ACA.
We do not anticipate any immediate costs to the Federal government,
States, issuers, or enrollees because of this proposed policy. This
proposal would simply remove the prohibition on issuers from including
routine non-pediatric dental services as an EHB; it would not
automatically make any routine non-pediatric dental services an EHB.
This policy would only have a premium impact to the extent that States
choose to include routine non-pediatric dental services in their EHB-
benchmark plans. It may also increase costs for issuers to expand their
networks to cover these new required services, although issuers could
contract with a dental vendor to administer the routine non-pediatric
dental EHB if such a benefit is adopted by a State as an EHB. It should
also be noted that the size of adult dental networks varies by State.
Therefore, some States would be affected by the need to build a new
network of dental providers (or contract with dental vendors) more than
others. It is up to each State to consider the potential costs and
network burden and determine whether to add routine non-pediatric
dental services as an EHB.
We solicit comment on the impact of this proposal to remove the
regulatory prohibition on issuers from including routine non-pediatric
dental services as an EHB and whether other impacts should be
considered.
30. Prescription Drug Benefits (45 CFR 156.122)
At Sec. 156.122(a)(3)(i), we propose to update P&T membership
standards by adding a new proposed Sec. 156.122(a)(3)(i)(E), which
would require the P&T committee to include a consumer representative as
part of its membership for plan years beginning on or after January 1,
2025. While there is no Federal requirement to provide compensation to
P&T committee members, those plans or issuers that choose to compensate
their P&T committee members for their service to the committee may
incur a nominal fee when adding an additional member to the committee.
Further, we estimate a potential increase in burden to States and
issuers to develop criteria used to select a consumer representative
for the P&T committee, to create or revise standard operating
procedures for the committee, as well as for any additional training
that may be required of the selectee because of the new membership
standard. We believe that the impact of this burden would be most
notable during the initial plan year that this policy, if finalized,
goes into effect and should be minimal in future years. We solicit
comments on the impact of this proposal to the P&T committee membership
standards and whether other impacts should be considered.
We also propose to amend Sec. 156.122 to codify the requirement
for coverage of prescription drug benefits. Specifically, we propose to
amend Sec. 155.122 by adding a new Sec. 156.122(f) to further clarify
that, to the extent that a health plan covers drugs in excess of the
benchmark, these drugs would be considered an EHB and are subject to
requirements, including that cost sharing incurred for drugs must count
towards the annual limitation on cost sharing and the restriction on
annual and lifetime dollar limits, consistent with Sec. 156.130. This
policy would apply unless the coverage of the drug is mandated by State
action and is in addition to EHB pursuant to Sec. 155.170, in which
case the drug would not be considered EHB. Given that this revision
merely codifies our existing policy regarding the coverage of
prescription drugs as EHB, we do not anticipate any additional burden
on States or issuers.

[[Page 82641]]

We seek comment on these impact estimates and assumptions.
31. Standardized Plan Options (45 CFR 156.201)
We propose to update the standardized plan options for PY 2025 with
minor changes to ensure these plans continue to have AVs within the
permissible de minimis range for each metal level. We believe that
maintaining a high degree of continuity in the approach to standardized
plan options year over year minimizes the risk of disruption for
interested parties, including issuers, agents, brokers, States, and
enrollees. We believe that making major departures from the approach to
standardized plan options set forth in the 2023 and 2024 Payment
Notices could result in changes that may cause undue burden for
interested parties. For example, if the standardized plan options we
create vary significantly from year to year, those enrolled in these
plans could experience unexpected financial harm if the cost sharing
for services they rely upon differs substantially from the previous
year. Ultimately, we believe consistency in standardized plan options
is important to allow both issuers and enrollees to become accustomed
to these plan designs.
Thus, like the approach taken in the 2023 and 2024 Payment Notices,
we propose standardized plan options that would continue to resemble
the most popular QHP offerings that millions of consumers are already
enrolled in. As such, these proposed standardized plan options are
based on updated PY 2023 cost sharing and enrollment data to ensure
that these plans continue to reflect the most popular offerings in the
Exchanges.
By proposing to maintain an approach to standardized plan options
like that taken in the 2023 and 2024 Payment Notices, issuers would
continue to be able to utilize many existing benefit packages,
networks, and formularies, including those paired with standardized
plan options for PY 2024. Also, issuers would continue to not be
required to extend plan offerings beyond their existing service areas.
Furthermore, as discussed earlier in the preamble, we would
continue to differentially display standardized plan options on
HealthCare.gov per Sec. 155.205(b)(1). Since we would continue to
assume responsibility for differentially displaying standardized plan
options on HealthCare.gov, FFE and SBE-FP issuers would continue to not
be subject to this burden.
In addition, as noted in the preamble, we would continue
enforcement of the standardized plan option display requirements for
approved web-brokers and QHP issuers using a direct enrollment pathway
to facilitate enrollment through an FFE or SBE-FP--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 would not impose a significant burden
on these entities or require major modification of their non-Exchange
websites, especially since the bulk of this burden was previously
imposed in the 2018 Payment Notice,\282\ which finalized the
standardized plan option differential display requirements, or during
the PY 2023 open enrollment period, when enforcement of these
requirements resumed.
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\282\ These differential display requirements were first
effective and enforced beginning with PY 2018. See 81 FR 94117
through 94118, 94148.
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Finally, since we would continue to allow approved web-brokers and
QHP issuers to submit requests to deviate from the manner in which
standardized plan options are differentially displayed on
HealthCare.gov, the burden on these entities would continue to be
minimal. 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 by ensuring that affected entities have timely access
to accurate and helpful information on standardized plan option
requirements, including those related to the differential display of
these plans.
We seek comment on these impact estimates and assumptions.
32. Non-Standardized Plan Option Limits (45 CFR 156.202)
In this proposed rule, we propose an exceptions process at Sec.
156.202 that would allow issuers to offer additional non-standardized
plan options more than the limit of two per product network type, metal
level, inclusion of dental and/or vision benefit coverage, and service
area if particular requirements are met. We previously finalized this
limit in the 2024 Payment Notice (88 FR 25855 through 25865).
Specifically, issuers would be permitted to offer more than two
non-standardized plan options if these additional plans' cost sharing
for benefits pertaining to the treatment of chronic and high-cost
conditions (including benefits in the form of prescription drugs, if
pertaining to the treatment of the condition(s)) is at least 25 percent
lower, as applied without restriction in scope throughout the plan
year, than the cost sharing for the same corresponding benefits in an
issuer's other non-standardized plan option offerings in the same
product network type, metal level, and service area. The reduction
could not be limited to a part of the year, or an otherwise limited
scope of benefits. Instead, issuers would be required to apply the
reduced cost sharing for these benefits any time the covered item or
service is furnished. For example, an issuer could not reduce cost
sharing for the first three office visits or drug fills and then
increase it for remaining visits or drug fills. Furthermore, issuers
would be prohibited from conditioning reduced cost sharing for these
benefits on a particular diagnosis. That is, although the benefit
design would have reduced cost sharing to address one or more
articulated conditions, the reduced cost sharing must be available to
all enrolled in the plan who receive the service(s) covered by the
benefit.
Under this proposal, no other plan design features (such as the
inclusion of additional benefit coverage, different provider networks,
different formularies, or reduced cost sharing for benefits provided
through the telehealth modality) would be evaluated under this
exceptions process, meaning no other differences in plan design
features would allow issuers to be excepted from the limit to the
number of non-standardized plan options offered per product network
type, metal level, inclusion of dental and/or vision benefit coverage,
and service area.
We do not anticipate that the exceptions process proposed in this
rule would substantially impact the average weighted number of non-
standardized plan options available to each consumer, the average
weighted number of standardized plan options available to each
consumer, the average weighted number of total plan options available
to each consumer, the number of plan-county discontinuations, or the
number of affected enrollees since we do not anticipate a substantial
number of issuers would utilize this exceptions process to offer the
aforementioned additional non-standardized plan options that would
substantially benefit consumers with chronic and high-cost conditions.
This is because we expect that most issuers would believe that the
burden of creating and certifying additional plans intended to benefit
a comparatively small population of consumers would outweigh the
benefit of doing so. We also previously solicited comment on innovative
plan designs, such as in the 2024 Payment Notice

[[Page 82642]]

proposed rule, but received only two examples of such plan designs.
Although we do not anticipate that a substantial number of issuers
would utilize this exceptions process, we acknowledge that issuers that
choose to do so would be impacted. Specifically, if issuers choose to
utilize this exceptions process, they would be required to design
additional non-standardized plan options and proceed through QHP
certification for these plans, which would necessarily entail
additional burden.
Furthermore, issuers would be required to submit a written
justification in a form and manner and at a time prescribed by HHS that
would: (1) identify the specific condition(s) for which cost sharing is
reduced, (2) explain which benefits would have reduced annual enrollee
cost sharing (as opposed to reduced cost sharing for a limited number
of visits) for the treatment of the specified condition(s) by 25
percent or more relative to the cost sharing for the same corresponding
benefits in an issuer's other non-standardized plan offerings in the
same product network type, metal level, and service area, and (3)
explain how the reduced cost sharing for these services pertain to
clinically indicated guidelines for treatment of the specified chronic
and high-cost condition(s). We estimate the burden of this would be
approximately $95,182 for an estimated 50 issuers annually, and we
discuss this burden in further detail in the ICRs Regarding Non-
Standardized Plan Option Limits (Sec. 156.202) section of the
Collection of Information Requirements section of this proposed rule.
We also acknowledge that this exceptions process could impact
consumers in a range of ways. Specifically, if we were to finalize this
proposed exceptions process, and if issuers choose to utilize this
exceptions process to offer additional non-standardized plan options,
consumers with qualifying chronic and high-cost conditions would
benefit from reduced cost sharing for benefits that pertain to the
treatment of these conditions. We reiterate that, for purposes of this
standard, chronic conditions are those that have an average duration of
one year or more and require ongoing medical attention or limit
activities of daily living, or both. We also reiterate that, for
purposes of this standard, high-cost conditions are those that account
for a disproportionately high portion of total Federal health
expenditures. Reduced cost sharing for these benefits would reduce
barriers to access to benefits important to consumers with these
chronic and high-cost conditions, which could play an important role in
combatting health disparities and advancing health equity since
disadvantaged populations \283\ are disproportionately affected by many
of these conditions.\284\ In addition to enhancing health outcomes,
this exceptions process could also reduce the risk of financial harm to
individuals with chronic and high-cost conditions by reducing their
cost sharing obligations for treatment for those conditions.
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\283\ Disadvantaged populations are groups of persons that
experience a higher risk of poverty, social exclusion,
discrimination, and violence than the general population, including,
but not limited to, ethnic minorities, migrants, people with
disabilities, isolated elderly people, and children.
\284\ Waters, H, & Graf, M. (2018). The Cost of Chronic Disease
in the U.S. Milken Institute. https://milkeninstitute.org/sites/default/files/reports-pdf/ChronicDiseases-HighRes-FINAL_2.pdf.
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We do not have sufficient data to further estimate the costs
associated with these proposed changes. As such, we seek comment from
interested parties regarding cost estimates associated with this
proposal and data sources that may be used to determine those
estimates.
33. CO-OP Loan Terms (45 CFR 156.520)
In this rule, we propose to revise Sec. 156.520(f) to provide a
clear mechanism by which an existing CO-OP may request termination of
its loan agreement with CMS to enable it to pursue new, innovative
business plans that are otherwise not compatible with CO-OP
requirements, but which CMS believes would be in the best interest of
affected consumers. Of the 23 CO-OP loan agreements CMS successfully
executed with qualified borrowers in 2012, only 3 remain in operation
as active insurance companies offering QHPs. The others have been
placed in receivership by State regulators, or otherwise gone out of
business due to the borrower's inability to establish a viable CO-OP
that is financially stable and on course to ultimately repay the loans.
As discussed in section III.E.8 of this preamble, CO-OPs operate under
governance and product limitations that can present significant
obstacles to new business opportunities. To provide a means to overcome
these limitations, under the proposed revisions to Sec. 156.520(f), we
would be able to consider proposals initiated by a CO-OP to terminate
its loan agreement with us if we believe the proposal would benefit
consumers by enhancing consumer access to quality, affordable, member-
focused, non-profit health care options in affected markets. Examples
of such proposals that may be deemed innovative and in the interests of
consumers would be plans that appear well-calculated to lead directly
to marketing non-profit, member-focused health plans in new regions of
a State, to offer health plans on a Statewide basis for the first time,
to expand operations into new States, or enhance consumer access to new
non-profit products that are not qualified health plans, in particular
when such plans are likely to favorably impact traditionally
underserved communities. These examples are illustrative, however, not
exclusive.
This regulatory proposal also contemplates plans that involve non-
profit enterprises, and that reflect a strong consumer focus. A strong
consumer focus would generally consist of an enterprise that focuses
informational or financial resources, or plans to focus informational
or financial resources, on member-oriented programs such as health
education, consumer education, or forms of direct or indirect health-
related financial assistance. We recognize that significant
coordination with State regulators would be essential to implementing
any plans to act on the proposed regulatory changes, if finalized.
Given that only three CO-OPs remain in business operating with
small portfolios across five States, we do not believe there would be a
significant economic impact because of this proposal for at least
several years, if ever. We seek comment on these impact estimates and
assumptions.
34. Conforming Amendment to Netting Regulation To Include Federal IDR
Administrative Fees (45 CFR 156.1215)
We propose to amend Sec. 156.1215(b) and (c) to align with the
policies and regulations proposed in the Federal Independent Dispute
Resolution Operations proposed rule (88 FR 75744). If finalized, these
amendments would provide that administrative fees for utilizing the No
Surprises Act Federal IDR process for health insurance issuers that
participate in financial programs under the ACA would be subject to
netting as part of HHS' integrated monthly payment and collections
cycle.
To implement this policy, we propose to amend Sec. 156.1215(b) to
allow HHS to net payments owed to issuers and their affiliates
operating under the same TIN against amounts due to the Federal
government from the issuers and their affiliates operating under the
same TIN for APTC, advance payments of and reconciliation of CSRs,
payment of FFE user fees, payment of SBE-FP user fees, HHS risk
adjustment, reinsurance, and risk corridors payments and charges,

[[Page 82643]]

and administrative fees from these issuers and their affiliates for
utilizing the Federal IDR process in accordance with Sec.
149.510(d)(2). We also propose to amend Sec. 156.1215(c) to provide
that any amount owed to the Federal government by an issuer and its
affiliates for unpaid administrative fees due to the Federal government
from these issuers and their affiliates for utilizing the Federal IDR
process after netting under proposed Sec. 156.1215(b) would be the
basis for calculating a debt owed to the Federal government.
We do not believe that the proposed amendments would impose
substantial additional costs to HHS beyond the costs previously
estimated in the Federal Independent Dispute Resolution Process
proposed rule.\285\ Furthermore, this proposal would only apply to
those issuers and their affiliates operating under the same TIN that
participate in the financial programs under the ACA. Since the
provisions of the Federal IDR process apply more broadly to include
issuers and their affiliates that do not participate in the financial
programs under the ACA currently specified in the list of programs for
which netting is permitted,\286\ we believe that only a small
proportion of issuers that utilize the Federal IDR process would be
subject to netting under this proposal.
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\285\ 88 FR 75814 through 75815.
\286\ See 86 FR at 55982 (explaining that the No Surprises Act
applies to group health plans and health insurance issuers offering
group or individual health insurance coverage in the Code, ERISA,
and the PHS Act).
---------------------------------------------------------------------------

Therefore, we anticipate that this proposal would streamline our
payments and collections processes and limit the administrative burden
for operating our programs.
We seek comment on these impact estimates and assumptions.
35. Regulatory Review Cost Estimation
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this proposed rule, we
should estimate the cost associated with regulatory review. Due to the
uncertainty involved with accurately quantifying the number of entities
that will review the rule, we assume that the total number of unique
commenters on last year's proposed rule (286) will be the number of
reviewers of this proposed rule. We acknowledge that this assumption
may understate or overstate the costs of reviewing this rule. It is
possible that not all commenters reviewed last year's rule in detail,
and it is also possible that some reviewers chose not to comment on the
proposed rule. For these reasons, we believe that the number of past
commenters would be a fair estimate of the number of reviewers of this
rule. We welcome any comments on the approach in estimating the number
of entities which will review this proposed rule.
We also recognize that different types of entities are in many
cases affected by mutually exclusive sections of this proposed rule,
and therefore, for the purposes of our estimate we assume that each
reviewer reads approximately 50 percent of the rule. We seek comments
on this assumption.
Using the wage information from the BLS for medical and health
service managers (Code 11-9111), we estimate that the cost of reviewing
this rule is $100.80 per hour, including overhead and fringe
benefits.\287\ Assuming an average reading speed of 250 words per
minute, we estimate that it would take approximately 4.75 hours for the
staff to review half of this proposed rule. For each entity that
reviews the rule, the estimated cost is $478.80 (4.75 hours x $100.80
per hour). Therefore, we estimate that the total cost of reviewing this
regulation is approximately $136,937 ($478.80 per reviewer x 286
reviewers).
---------------------------------------------------------------------------

\287\ https://www.bls.gov/oes/current/oes_nat.htm.
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D. Regulatory Alternatives Considered

For the HHS-operated risk adjustment program (Sec. 153.320), we
propose to recalibrate the CSR adjustment factors for AI/AN zero cost
sharing and limited cost sharing CSR plan variant enrollees for the
2025 benefit year, and we propose to retain the proposed AI/AN CSR
adjustment factors for future benefit years unless changed through
notice-and-comment rulemaking. We also propose to maintain the current
CSR adjustment factors for silver plan variant enrollees (70 percent,
73 percent, 87 percent, and 94 percent AV plan variants) \288\ for the
2025 benefit year and beyond, unless changed through notice-and-comment
rulemaking. As an alternative, we considered not proposing any changes
to the CSR adjustment factors used in the State payment transfer
formula. However, after continuing to conduct analyses on more recently
available enrollee-level EDGE data, we found the underprediction of
plan liability in the State payment transfer formula for AI/AN zero
cost sharing and limited cost sharing CSR plan variant enrollees
continued. We also considered recalibrating all the silver CSR
adjustment factors. However, we are not proposing any changes to those
factors at this time, because we continue to find that the current
silver CSR adjustment factors (70 percent, 73 percent, 87 percent, and
94 percent plan variants) are reasonably accurately predicted given the
offsets, described above, that continue to occur for these enrollees.
---------------------------------------------------------------------------

\288\ See 83 FR 16930 at 16953; 84 FR 17478 through 17479; 85 FR
29190; 86 FR 24181; 87 FR 27235 through 27236; and 88 FR 25772
through 25774.
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As an alternative to our proposed amendments to Sec. 155.315(e),
we considered using an electronic data source other than PUPS to verify
applicant incarceration status. However, we estimate that sourcing an
alternative national incarceration verification data source would be a
significant expense to HHS, costing the agency approximately $35
million annually. Additionally, these other data sources are currently
not sufficiently comprehensive to meet the needs of the Exchanges using
the Federal eligibility and enrollment platform and therefore may not
provide Exchanges with accurate results on a consistent basis. Thus,
the alternative data source must be current, accurate, and minimize
burden and costs to administration.
About the proposed changes to Sec. 155.320(c), we considered
taking no action to add new language in paragraph (c)(1)(iii) that
State Exchanges and State Medicaid agencies must pay in advance for
their use of the VCI Hub service to verify income. However, we
determined that this proposed reinterpretation and proposed policy
change is appropriate given our better understanding of how the VCI Hub
service is used by State Exchanges and State Medicaid agencies to
verify eligibility for QHP coverage or other insurance affordability
programs. We also considered requiring State Medicaid agencies and
State Exchanges to obtain their own contracts to administer their CSI
data usage; however, we had concerns that these services cannot be
procured reasonably and expeditiously, which would undermine the system
we have implemented under section 1413 of the ACA. We also believe that
there may be benefits to the State Medicaid agencies and State
Exchanges that prefer to use the CSI data accessible through the VCI
Hub service in their States. Therefore, we propose to retain optional
access to the VCI Hub service on behalf of State Medicaid agencies and
State Exchanges that prefer to continue to use this service and are
willing to pay for their CSI data usage in advance. Under this
proposal, State Medicaid agencies and State Exchanges can choose to
discontinue their use of the CSI data accessible through the VCI Hub
service. As described in the preamble of this rulemaking, we are also
seeking comment on an alternative approach

[[Page 82644]]

that we could finalize that would have HHS invoice States on a monthly
basis for their actual utilization of CSI data provided by the VCI Hub
service after that utilization occurs.
About amending 155.330(d)(2), we have considered maintaining the
status quo for continuing the PDM requirements under Sec.
155.330(d)(1)(i) and (d)(ii) but note that it may be difficult or
infeasible to operationalize existing processes and operations during
certain emergency situations. Allowing consumers to go uninsured during
a national emergency, such as a public health emergency like the COVID-
19 public health emergency, will not improve the national health and
well-being of all consumers. We found it to be least burdensome for
Exchanges to implement as a successful pause of PDM operations occurred
during the 2020 pandemic.
We considered only updating sub-regulatory guidance to incorporate
catastrophic coverage into the auto re-enrollment hierarchy, for
example, through the annual draft and final Letters to Issuers.
However, we believe that instead incorporating catastrophic coverage
into the auto re-enrollment hierarchy in regulation at Sec. 155.335(j)
creates stronger authority for Exchanges to auto re-enroll catastrophic
enrollees and provides better transparency for our auto re-enrollment
operations in the Exchanges on the Federal platform.
We considered taking no action regarding the proposal to amend
Sec. 155.400(e)(2) to codify that the flexibility for issuers
experiencing billing or enrollment problems due to high volume or
technical errors is not limited to extensions of the binder payment.
However, we believe it is important to clarify for interested parties
that HHS may provide enforcement discretion for other premium payment
requirements.
We considered taking no action related to amending Sec.
155.420(d)(16), to revise the parameters around the availability of a
SEP that grants APTC-eligible qualified individuals with a projected
household income at or below 150 percent of the FPL. However, HHS
believes that many consumers will benefit from having additional
opportunities to enroll in low-cost Exchange coverage, and that those
who will be eligible for this special enrollment period and who do not
enroll during the annual open enrollment period are likely to have been
unaware of their option to enroll in a plan with no monthly premium
through the Exchange, after application of APTC.
We considered taking no action regarding our proposal to modify
Sec. 155.430(b)(1)(iv) to permit enrollees in Exchanges on the Federal
Platform to retroactively terminate coverage back to the date in which
they retroactively enroll in Medicare Part A. However, we believe it is
important to allow enrollees to retroactively terminate coverage when
they were unable to do so prospectively due to retroactive enrollment
in Medicare coverage. We considered whether to also permit Exchange
enrollees to retroactively terminate coverage back to the date in which
they enrolled in Medicaid, CHIP, or BHP coverage retroactively, but we
determined that this would not be appropriate due to the increased risk
that claims reversed by QHP issuers would not be covered by providers
under these programs.
For standardized plan options (Sec. 156.201), we considered a
range of proposals, such as modifying the methodology used to create
the standardized plan options for PY 2025. Specifically, we 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 increase the AVs of
these plans to the ceiling of each AV de minimis range. Ultimately, we
decided to propose to maintain the AVs of these plans near the floor of
each de minimis range by largely maintaining the cost sharing
structures and deductible values from the standardized plan options
from PY 2024, as well as by increasing the MOOP values and, to a lesser
degree, the deductible values for these plan designs. We believe this
proposed approach strikes the greatest balance in providing enhanced
pre-deductible coverage while ensuring competitive premiums for these
standardized plan options.
For non-standardized plan option limits (Sec. 156.202), we
considered a range of proposals. Specifically, for PY 2025 and
subsequent years, we considered maintaining the PY 2024 limit of four
non-standardized plan options per product network type, metal level,
inclusion of dental and/or vision benefit coverage, and service area.
We also considered not proposing an exceptions process that would allow
issuers to offer non-standardized plan options more than the limit of
two that we previously finalized for PY 2025 and subsequent years. We
also considered basing this exceptions process on a range of other
factors, including the degree of plan proliferation in a given service
area (as determined by the number of plan offerings per consumer or
issuer), whether a plan has a sufficiently differentiated network, and
whether a plan has a sufficiently differentiated formulary. We also
considered permitting issuers to request to offer only one additional
non-standardized plan option per product network type, metal level, and
service area, as opposed to an indefinite number (as in the current
proposal). We also considered permitting exceptions only for an
exclusive list of chronic and high-cost conditions, as opposed to any
condition that is chronic and high-cost in nature (as described in the
current proposal).
However, we ultimately decided to propose an exceptions process
that would allow issuers to offer more than two non-standardized plan
options if these additional plans' cost sharing for benefits pertaining
to the treatment of chronic and high-cost conditions (including
benefits in the form of prescription drugs, if pertaining to the
treatment of the condition(s)) is at least 25 percent lower, as applied
without restriction in scope throughout the plan year, than the cost
sharing for the same corresponding benefits in an issuer's other non-
standardized plan option offerings in the same product network type,
metal level, and service area, which is discussed in greater detail in
section III.E.7 of the preamble to this rule.
We proposed this approach primarily because we believe that
allowing exceptions to the non-standardized plan option limit of two
could play an important role in enhancing the quality of life for those
affected by these conditions, combatting health disparities, advancing
health equity, and reducing health care expenditures. We further
believe that introducing this exceptions process would balance the dual
aims of reducing the risk of plan choice overload while simultaneously
ensuring that issuers can continue to offer truly innovative plan
designs that may benefit consumers with chronic and high-cost
conditions.

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

[[Page 82645]]

other healthcare 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). We do not anticipate that providers would be
directly impacted by the provisions in this proposed rule. Individuals
and States are not included in the definition of a small entity. The
provisions in this proposed rule would affect issuers, agents, brokers,
web-brokers, and DE entities.
For purposes of the RFA, we believe that health insurance issuers
and DE entities \289\ 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 $47 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 $44.5 million or less.\290\ 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 87 out of 483 issuers of health insurance
coverage nationwide had total premium revenue of $47 million or
less.\291\ This estimate may overstate the actual number of small
health insurance issuers that may be affected, since over 77 percent of
these small issuers belong to larger holding groups, and many, if not
all, of these small companies are likely to have non-health lines of
business that will result in their revenues exceeding $47 million.
Therefore, although it is likely that fewer than 87 issuers are
considered small entities, for the purposes of this analysis, we assume
87 small issuers/DE entities would be impacted by this proposed rule.
---------------------------------------------------------------------------

\289\ DE entities are QHP issuers approved by CMS to enroll
consumers in Exchange coverage directly from their websites.
\290\ https://www.sba.gov/document/support--table-size-standards.
\291\ https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html.
---------------------------------------------------------------------------

We further believe that agents, brokers, and web-brokers will be
classified under NAICS code 524210 (Insurance Agencies and Brokerages).
According to SBA size standards, entities with average annual receipts
of $15 million or less will be considered small entities for these
NAICS codes. Therefore, based on SBA data and for purposes of this
analysis, we assume 122,547 agents, brokers, and web-brokers are small
entities. However, the policies impacting agents, brokers, and web-
brokers proposed in this rule would only impact such entities in States
with State Exchanges that host web-broker programs. Currently, no
States with State Exchanges host web-broker programs, but we estimate 5
States could opt to host a web-broker program for their State Exchange
in the future. We further estimate that 20 web-brokers could operate in
those States in the future and seek comment on this estimate.
The proposed policies that would result in an increased burden to
small entities are described below.
We propose to require issuers of risk adjustment covered plans to
complete, implement, and provide to HHS written documentation of any
corrective action plans when required by HHS if a high-cost risk pool
audit results in the inclusion of a finding or certain observations in
the final audit report. The annual burden per issuer associated with
this proposal is $627. For more details, please refer to the Regulatory
Impact Analysis section associated with this policy in this proposed
rule.
We propose to apply to agents, brokers, and web-brokers operating
in State Exchanges that operate their own eligibility and enrollment
platform, and consequently in State Exchanges, for both the State
Exchange's Individual Exchange and SHOP, certain existing Federal
standards regarding web-brokers assisting consumers with enrolling in
QHPs and applying for APTC/CSRs. The one-time burden per agent, broker,
or web-broker associated with this proposal is $48,587. For more
details, please refer to the information collection requirements
section associated with this policy in this proposed rule.
We propose to require that display changes adopted by
HealthCare.gov be reflected on DE entity websites within a time period
specified by HHS, unless HHS approves a deviation. The annual burden
associated with this proposal is $2,608 ($2,401 to comply with the
requirements and $207 to make a request to deviate from the
requirements). For more details, please refer to the information
collection requirements section associated with this policy in this
proposed rule.
We propose to apply to DE entities operating in State Exchanges
that operate their own eligibility and enrollment platform, and
consequently State Exchanges that utilize DE entities, certain existing
Federal standards regarding DE entities assisting consumers with
enrolling in QHPs and applying for APTC/CSRs, both for the State
Exchanges Individual Exchange and SHOP program. The one-time burden per
DE entity associated with this proposal is $138,447. For more details,
please refer to the information collection requirements section
associated with this policy in this proposed rule.
We also propose to require State Exchange and SBE-FP issuers to
gather and submit network adequacy data, including time and distance
data and telehealth data. The annual burden per issuer associated with
this proposal is $689. For more details, please refer to the
information collection requirements section associated with this policy
in this proposed rule.
Finally, we propose to permit issuers to offer non-standardized
plan options in excess of the limit of two per product network type,
metal level, inclusion of dental and/or vision benefit coverage, and
service area for PY 2025 and subsequent years, if issuers demonstrate
that these additional non-standardized plans beyond the limit at Sec.
156.202(b) have specific design features that would substantially
benefit consumers with chronic and high-cost conditions. The annual
burden per issuer associated with this proposal is $1,904. For more
details, please refer to the information collection requirements
section associated with this policy in this proposed rule.
Thus, the per-entity estimated annual cost for small issuers and DE
entities is $5,828, and the total estimated annual cost for small
issuers and DE entities is $507,036. The per-entity estimated one-time
cost for small issuers and DE entities is $138,447, and the total
estimated one-time cost for small issuers and DE entities is
$12,044,889. The per-entity estimated one-time cost for small agents,
brokers, and web-brokers is $48,587, and the total estimated one-time
cost for small agents, brokers, and web-brokers is $971,740. There is
no estimated annual cost for small agents, brokers, and web-brokers.
See Tables 19, 20, 21, and 22.

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The annual cost per small issuer/DE entity of $5,828 is
approximately 0.32 percent of the average annual receipts per small
issuer. We anticipate that small issuers could pass on these increased
costs to consumers in the form of higher premiums, resulting in an
increase in receipts commensurate with the increase in costs. However,
because the proportion of cost to receipts is so small, we anticipate
this would have a de minimis impact on premiums, if any impact at all.
We seek comment on this assumption.
We seek comment on this analysis and seek information on the number
of small issuers/DE entities, agents, brokers, or web-brokers that may
be affected by the provisions in these proposed rules.
As its measure of significant economic impact on a substantial
number of small entities, HHS uses a change in revenue of more than 3
to 5 percent. We do not believe that this threshold will be reached by
the requirements in this proposed rule, given that the annual per-
entity cost of $5,828 per small issuer represents approximately 0.32
percent of the average annual receipts for a small issuer,\292\ and
there is no annual per-entity cost per small agent, broker, or web-
broker. Therefore, the Secretary has certified that this proposed rule
will not have a significant economic impact on a substantial number of
small entities.
---------------------------------------------------------------------------

\292\ United States Census Bureau (March 2020). 2017 SUSB Annual
Data Tables by Establishment Industry, Data by Enterprise Receipt
Size. https://www.census.gov/data/tables/2020/econ/susb/2020-susb-annual.html.
---------------------------------------------------------------------------

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
the 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 proposed rule will not have a significant impact on
the operations of a substantial number of small rural hospitals.

F. Unfunded Mandates Reform Act (UMRA)

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

[[Page 82647]]

sector does not meet the UMRA definition of unfunded mandate.

G. Federalism

Executive Order 13132 establishes certain requirements that an
agency must meet when it issues a proposed rule (and subsequent final
rule) that imposes substantial direct requirement costs on State and
local governments, preempts State law, or otherwise has Federalism
implications.
In compliance with the requirement of E.O. 13132 that agencies
examine closely any policies that may have Federalism implications or
limit the policy making discretion of the States, we have engaged in
efforts to consult with and work cooperatively with affected States,
including participating in conference calls with and attending
conferences of the NAIC, and consulting with State insurance officials
on an individual basis.
While developing this rule, we attempted to balance the States'
interests in regulating health insurance issuers with the need to
ensure market stability. By doing so, we complied with the requirements
of E.O. 13132.
Because States have flexibility in designing their Exchange and
Exchange-related programs, State decisions will ultimately influence
both administrative expenses and overall premiums. States are not
required to establish an Exchange or risk adjustment program. For
States that elected previously to operate an Exchange, those States had
the opportunity to use funds under Exchange Planning and Establishment
Grants to fund the development of data. Accordingly, some of the
initial cost of creating programs was funded by Exchange Planning and
Establishment Grants. After establishment, Exchanges must be
financially self-sustaining, with revenue sources at the discretion of
the State. Current State Exchanges charge user fees to issuers.
In our view, while this proposed rule 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, we propose to add requirements by which a State
seeking to transition to a State Exchange provide the public with a
notice and copy of its State Exchange Blueprint application. We further
propose to require that a State, within 3 months of submitting its
State Exchange Blueprint to HHS for approval, conduct at least one
public hearing whereby interested parties can learn about the State's
intent to transition, as well as a State's progress toward
transitioning, and conduct regular hearings every 3 months until the
transition is complete. However, we believe the Federalism implications
of this proposal are mitigated because States have the option to
establish their own Exchange, and we do not anticipate any additional
burden on States because of this proposal.
We believe that the proposal to revise Sec. 155.220(h) does not
have Federalism implications as the CMS Administrator review of agent,
broker, and web-broker requests for reconsideration of decisions to
terminate their Exchange agreement(s) is not based on State law, nor
does it prevent a State from taking other legal actions under State law
against an entity whose Exchange agreement(s) are terminated for cause
by HHS.
We believe that the proposals to revise Sec. Sec. 155.220 and
155.221 to apply certain web-broker and DE entity standards to State
Exchanges that operate their own eligibility and enrollment platform
may have Federalism implications, but they are substantially mitigated
by allowing State Exchanges to leverage the oversight framework
established by HHS for Exchanges that utilize the Federal Platform to
evaluate web-broker and DE entity operational readiness to participate
in an Exchange. We expect State Exchanges would be able to leverage
audits conducted for the FFEs and SBE-FPs, as well as disclaimer
language developed by HHS, while State operational costs would include
any State-specific requirements or language to be added at the States'
discretion. We believe that providing State Exchanges the opportunity
to leverage the FFEs' oversight framework would likely reduce costs to
State Exchanges as compared to the costs associated with State
Exchanges establishing an independent framework for oversight and web-
broker or DE entity approval independent of the FFEs.
We believe that the proposal to revise Sec. 155.315(e) has
Federalism implications due to our proposal to use existing
requirements and flexibilities under Sec. 155.315(e) permitting all
Exchanges to accept consumer attestation of incarceration status
without further electronic verification. However, Exchanges that wish
to continue electronically verifying an individual's incarceration
status would be permitted do so, if HHS determines their data source is
current, accurate, and minimizes administrative costs and burdens.
In addition, we believe this proposed rule does have Federalism
implications due to the proposed revisions pertaining to State
selection of EHB-benchmark plans. The existing requirements pertaining
to State selection of EHB-benchmark plans at Sec. 156.111 already
imposed Federalism implications on States that choose to change or
revise their EHB-benchmark plans. As discussed elsewhere in this
proposed rule, we understand that certain aspects of the current
process to change or revise EHB-benchmark plans may impose
unanticipated difficulty on and create confusion for States.
Accordingly, the proposals to revise Sec. 156.111 are intended to
reduce State burden and confusion to change or revise EHB-benchmark
plans. As a result, we believe the proposals to revise Sec. 156.111
would reduce the existing Federalism implications.
We believe that our proposal to amend Sec. 155.320 by adding new
paragraph (c)(1)(iii) does have Federalism implications for States
given that State Exchanges and State Medicaid agencies use the VCI Hub
service. However, we believe that the Federalism implications are
mitigated as State Exchanges and State Medicaid agencies continue to
have flexibility as the use of the VCI Hub service is optional and that
States continue to have flexibility under Sec. 155.315(h) and Sec.
155.320(c)(3)(iv) to use other data sources, like State wage data, when
income is not verified using IRS tax data or SSA Title II data.
We believe that our proposal to amend Sec. 155.420(d)(16) has
Federalism implications; however, we believe that by maintaining the
150 percent FPL SEP to be available at the option of the Exchange,
these implications are mitigated because we allow State Exchanges to
decide whether to implement it based on their specific market dynamics,
needs, and priorities.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on XX XX, 2023.

List of Subjects

31 CFR Part 33

Health care, Health insurance, and Reporting and recordkeeping
requirements.

42 CFR Part 435

Eligibility in the States, District of Columbia, the Northern
Mariana Islands, and American Samoa.

[[Page 82648]]

42 CFR Part 600

Administrative practice and procedure, Health care, health
insurance, Intergovernmental relations, Penalties, Reporting and
recordkeeping requirements.

45 CFR Part 153

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

45 CFR Part 155

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

45 CFR Part 156

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

Department Of The Treasury

For the reasons set forth in the preamble, the Department of the
Treasury proposes to amend 31 CFR subtitle A, part 33 as set forth
below:

PART 33--WAIVERS FOR STATE INNOVATION

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

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

0
2. Section 33.112 is amended by adding paragraph (c)(3) to read as
follows:

Sec. 33.112 State public notice requirements.

* * * * *
(c) * * *
(3) Such public hearings shall be conducted in an in-person,
virtual (that is, one that uses telephonic, digital, and/or web-based
platforms), or hybrid (that is, one that provides for both in-person
and virtual attendance) format.
* * * * *
0
3. Section 33.120 is amended by revising paragraph (c) introductory
text to read as follows:

Sec. 33.120 Monitoring and compliance.

* * * * *
(c) Post award. Within at least 6 months after the implementation
date of a section 1332 waiver and annually thereafter, a State must
hold a public forum to solicit comments on the progress of a section
1332 waiver. The State must hold the public forum at which members of
the public have an opportunity to provide comments and must provide a
summary of the forum to the Secretary as part of the quarterly report
specified in Sec. 33.124(a) that is associated with the quarter in
which the forum was held, as well as in the annual report specified in
Sec. 33.124(b) that is associated with the year in which the forum was
held. The public forum shall be conducted in an in-person, virtual
(that is, one that uses telephonic, digital, and/or web-based
platforms), or hybrid (that is, one that provides for both in-person
and virtual attendance) format.
* * * * *

Department Of Health And Human Services

For the reasons set forth in the preamble, under the authority at 5
U.S.C. 301, the Department of Health and Human Services proposes to
amend 42 CFR chapter IV, subchapters C and I, and 45 CFR subtitle A,
subchapter B, as set forth below.

Title 42 Public Health

PART 435--ELIGIBILITY IN THE STATES, DISTRICT OF COLUMBIA, THE
NORTHERN MARIANA ISLANDS, AND AMERICAN SAMOA.

0
1. The authority citation of part 435 continues to read as follows:

Authority: 42 U.S.C 1302.

Sec. 435.601 [Amended]

0
2. Section 435.601 is amended by removing paragraph (d)(4),
redesignating paragraph (d)(5) as paragraph (d)(4).

PART 600--ADMINISTRATION, ELIGIBILITY, ESSENTIAL HEALTH BENEFITS,
PERFORMANCE STANDARDS, SERVICE DELIVERY REQUIREMENTS, PREMIUM AND
COST SHARING, ALLOTMENTS, AND RECONCILIATION

0
3. The authority citation for part 600 continues to read as follows:

Authority: Section 1331 of the Patient Protection and
Affordable Care Act of 2010 (Pub. L. 111-148, 124 Stat. 119), as
amended by the Health Care and Education Reconciliation Act of 2010
(Pub. L. 111-152, 124 Stat. 1029).

0
4. Section 600.320 is amended by revising paragraph (c) to read as
follows:

Sec. 600.320 Determination of eligibility for and enrollment in a
standard health plan.

* * * * *
(c) Effective date of eligibility. The State must establish a
uniform method of determining the effective date of eligibility for
enrollment in a standard health plan which -
(1) Follows the Exchange effective date standards at 45 CFR
155.420(b)(1);
(2) Follows the Medicaid effective date standards at 42 CFR 435.915
exclusive of Sec. 435.915(a); or
(3) Follows an effective date of eligibility of the first day of
the month following the month in which BHP eligibility is determined.
* * * * *

Title 45 Public Welfare

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

0
5. The heading for Part 153 is revised to read as set forth above:
0
6. The authority citation for part 153 continues to read as follows:

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

0
7. Section 153.620 is amended by revising the section heading and
paragraph (c)(4) introductory text to read as follows:

Sec. 153.620 Compliance with HHS risk adjustment standards.

* * * * *
(c) * * *
(4) Final audit findings. If an audit results in the inclusion of a
finding or observation in the final audit report, the issuer must
comply with the actions set forth in the final audit report in the
manner and timeframe established by HHS, and the issuer must complete
all of the following, if required by HHS:
* * * * *

[[Page 82649]]

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

0
8. 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
9. Section 155.105 is amended--
0
a. In paragraph (b)(2) by removing ``and'' after the semicolon;
0
b. In paragraph (b)(3) by removing ``.'' and adding in its place ``;
and''; and
0
c. Adding paragraph (b)(4).
The revision reads as follows:

Sec. 155.105 Approval of a State Exchange.

* * * * *
(b) * * *
(4) The Exchange first operates successfully a State Exchange on
the Federal platform under Sec. 155.106(c), meeting all requirements
established under Sec. 155.200(f), for at least one plan year,
including its first open enrollment period, as part of the
establishment of a State Exchange.
* * * * *
0
10. Section 155.106 is amended by revising paragraph (a)(2) to read as
follows:

Sec. 155.106 Election to operate an Exchange after 2014.

(a) * * *
(2) Submit an Exchange Blueprint application for HHS approval at
least 15 months prior to the date on which the Exchange proposes to
begin open enrollment as a State Exchange. HHS requires that a State
submitting a Blueprint Application to operate a State Exchange provide,
upon request, supplemental documentation to HHS detailing the State's
implementation of its State Exchange functionality.
(i) Public notice. Upon submission of an Exchange Blueprint
application to operate a State Exchange, the State shall issue a public
notice of its Exchange Blueprint application submission through its
website and include a copy of the Exchange Blueprint application, a
description of the Plan Year for which the State seeks to transition to
a State Exchange, language indicating that the State is seeking
approval from HHS to transition to a State Exchange, and information
about when and where the State will conduct public engagements
regarding the State's Exchange Blueprint application, as described in
paragraph (a)(2)(ii) of this section.
(ii) Public engagements. After a State issues its public notice as
described in paragraph (a)(2)(i) of this section and until HHS
approves, or conditionally approves, the State's Exchange Blueprint
application, a State must conduct at least one public engagement (such
as a townhall meeting or public hearing) either in-person or virtually,
regarding the State's Exchange Blueprint application progress, in a
timeline and manner considered effective by the State and with HHS'
concurrence. A State shall provide public notice of the public
engagement. Such public engagement shall also provide interested
parties the opportunity to learn about the State's progress in
transitioning to a State Exchange and offer input on that transition.
Following the initial public engagement described in this paragraph and
until HHS approves or conditionally approves the State Exchange
Blueprint application, a State shall conduct periodic public
engagements, either in-person or virtually, in a timeframe and manner
considered effective by the State.
* * * * *
0
11. Section 155.170 is amended by revising paragraph (a)(2) to read as
follows:

Sec. 155.170 Additional required benefits.

(a) * * *
(2) A benefit required by State action taking place on or before
December 31, 2011, a benefit required by State action for purposes of
compliance with Federal requirements, or a benefit covered in the
State's EHB-benchmark plan is considered an EHB. A benefit required by
State action taking place on or after January 1, 2012, other than for
purposes of compliance with Federal requirements that is not a benefit
covered in the State's EHB-benchmark plan, is considered in addition to
the essential health benefits.
* * * * *
0
12. Section 155.205 is amended by revising paragraphs (a) introductory
text and (b)(4) and (5) to read as follows:

Sec. 155.205 Consumer assistance tools and programs of an Exchange.

(a) Call center. If the Exchange is not an Exchange described in
paragraphs (a)(1) or (2) of this section, the Exchange must provide for
operation of a toll-free call center that addresses the needs of
consumers requesting assistance and meets the requirements outlined in
paragraphs (c)(1), (c)(2)(i), and (c)(3) of this section. At a minimum,
the Exchange call center must provide consumers with access to a live
call center representative during an Exchange's published hours of
operation and a live call center representative who must be able to
assist consumers with their QHP application, including providing
consumers with information on their eligibility for advance premium tax
credits and cost-sharing reductions, helping consumers understand their
QHP options, helping consumers select a QHP, and helping consumers
submit QHP enrollment applications to the Exchange. If the Exchange is
an Exchange described in paragraphs (a)(1) or (2) of this section, the
Exchange must provide at a minimum a toll-free telephone hotline that
includes the capability to provide information to consumers about
eligibility and enrollment processes, and to appropriately direct
consumers to the applicable Exchange website and other applicable
resources.
* * * * *
(b) * * *
(4) Allows for an individual to submit a single streamlined
eligibility application to the Exchange in accordance with Sec.
155.405 and for the Exchange to make all determinations of eligibility
for enrollment in a QHP and insurance affordability programs, in
accordance with subpart D of this part, through the operation of a
centralized eligibility and enrollment platform on the Exchange's
website; or, if the Exchange is a State-based Exchange on the Federal
platform, through the Federal eligibility and enrollment platform.
(5) Allows a qualified individual to select a QHP and allows the
Exchange to maintain records of all QHP enrollments, in accordance with
subpart E of this part, through the operation of a centralized
eligibility and enrollment platform on the Exchange's website; or, if
the Exchange is a State-based Exchange on the Federal platform, through
the Federal eligibility and enrollment platform.
* * * * *
0
13. Section 155.220 is amended by--
0
a. Adding paragraph (c)(4)(iii);
0
b. Revising paragraphs (h)(2) and (3); and
0
c. Adding paragraph (n).
The additions and revisions 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.

* * * * *
(c) * * *
(4) * * *
(iii) Web-brokers operating in State Exchanges that do not use the
Federal platform that permit other agents and brokers, through a
contract or other arrangement, to use their internet website to help an
applicant or enrollee complete a QHP selection or complete

[[Page 82650]]

the Exchange eligibility application must comply with the standards in
paragraphs (c)(4)(i)(A), (B), (D) and (F), except that all references
to ``Federally-facilitated Exchange'' or ``HHS'' in paragraphs
(c)(4)(i)(A), (B), (D), and (F) of this section will be understood to
mean ``the applicable State Exchange.''
* * * * *
(h) * * *
(2) Timeframe for request. The agent, broker, or web-broker must
submit a request for reconsideration to the CMS Administrator within 30
calendar days of the written notice from HHS.
(3) Notice of reconsideration decision. The CMS Administrator will
provide the agent, broker, or web-broker with a written notice of the
reconsideration decision within 60 calendar days of the date the CMS
Administrator receives the request for reconsideration. This decision
will constitute HHS' final determination.
* * * * *
(n) Application to State Exchanges that do not use the Federal
platform. A web-broker that assists or enrolls qualified individuals,
qualified employers or qualified employees in coverage in a manner that
constitutes enrollment through the State Exchange, or assists
individual market consumers with submission of applications for advance
payments of the premium tax credit and cost-sharing reductions through
the State Exchange, must comply with the Federally-facilitated Exchange
standards in paragraphs (c)(3)(i)(A), (G), (I), and (j)(2)(i) of this
section, including any additional State-specific standards under
paragraph (n)(1) of this section, and the State Exchange's operational
readiness standards under paragraph (n)(2) of this section. For the
purposes of paragraph (j)(2)(i) of this section, references to ``HHS''
and ``the Federally-facilitated Exchanges'' will be understood to mean
``the applicable State Exchange, applied for web-brokers'', and the
reference to ``HealthCare.gov'' will be understood to mean ``the State
Exchange website, applied for web-brokers.''
(1) State Exchanges may add State-specific information to the
standardized disclaimers and information under paragraphs (c)(3)(i)(A),
(G), and (I) of this section that does not conflict with the HHS-
provided language.
(2) State Exchanges must establish the form and manner for their
web-brokers to demonstrate operational readiness and compliance with
applicable requirements prior to the web-broker's internet website
being used to complete an Exchange eligibility application or a QHP
selection, which may include submission or completion of the following
items to the State Exchange, in the form and manner specified by the
Exchange:
(i) Operational data including licensure information, points of
contact and third-party relationships;
(ii) Enrollment testing, prior to approval or renewal;
(iii) website reviews performed by the State Exchange;
(iv) Security and privacy documentation, including:
(A) Penetration testing results;
(B) Security and privacy assessment reports;
(C) Vulnerability scan results;
(D) Plans of action and milestones; and
(E) System security and privacy plans.
(v) Agreements between the web-broker and the State Exchange.
0
14. Section 155.221 is amended by--
0
a. Revising paragraphs (a) introductory text; and
0
b. Adding paragraphs (a)(1)(i) and (ii), (b)(6), and (j).
The revisions and addition read as follows:

Sec. 155.221 Standards for direct enrollment entities and for third-
parties to perform audits of direct enrollment entities.

(a) Direct enrollment entities. All Exchanges may permit the
following entities to assist consumers with direct enrollment in QHPs
offered through the Exchange in a manner that is considered to be
through the Exchange, to the extent permitted by applicable State law:
(1) * * *
(i) For purposes of applying the requirements of Sec. 156.1230(b)
of this subchapter to State Exchanges, all references to ``Federally-
facilitated Exchange'' and ``HHS'', and ``HealthCare.gov'' will be
understood to mean ``the applicable State Exchange'', ``the applicable
State Exchange'', and ``the applicable State Exchange website'',
respectively.
(ii) [Reserved]
* * * * *
(b) * * *
(6) Implement and prominently display website changes in a manner
consistent with display changes made to the Federally-facilitated
Exchange website by meeting standards communicated and defined by HHS
within a time period set by HHS, unless HHS approves a deviation from
those standards. Direct enrollment entities may request a deviation by
submitting a proposed alternative display and accompanying rationale to
HHS for review.
* * * * *
(j) Application to State Exchanges that do not use the Federal
platform. A direct enrollment entity that enrolls qualified
individuals, qualified employers, or qualified employees in coverage in
a manner that constitutes enrollment through the State Exchange, or
assists consumers with submission of applications for advance payments
of the premium tax credit and cost-sharing reductions through the State
Exchange, must comply with the Federally-facilitated Exchange standards
in paragraphs (b)(1), (2), (3), and (d) of this section, including the
exceptions in paragraph (c) of this section, where applicable; any
additional State-specific standards under paragraph (j)(1) of this
section; the State Exchange's operational readiness standards under
paragraph (j)(2) of this section; and the State Exchange's website
display change standards under paragraph (j)(3) of this section.
Paragraph (d) references Sec. 155.415(b), and Sec. 155.415(b)(1) will
be understood to also apply to State Exchanges.
(1) State Exchanges may add State-specific information to the
standardized disclaimer under paragraph (b)(2) of this section that
does not conflict with the HHS-provided language.
(2) State Exchanges must establish the form and manner for their
direct enrollment entities to demonstrate operational readiness and
compliance with applicable requirements prior to the direct enrollment
entity's internet website being used to complete an Exchange
eligibility application or a QHP selection, which may include
submission or completion of the following documentation to the State
Exchange, in the form and manner specified by the Exchange:
(i) Business audit documentation including:
(A) Notices of intent to participate including auditor information;
(B) Documentation packages including privacy questionnaires,
privacy policy statements, and terms of service; and
(C) Business audit reports including testing results.
(ii) Security and privacy audit documentation including:
(A) Interconnection security agreements;
(B) Security and privacy controls assessment test plans;
(C) Security and privacy assessment reports;
(D) Plans of action and milestones;
(E) Privacy impact assessments;
(F) System security and privacy plans;
(G) Incident response plans; and
(H) Vulnerability scan results.
(3) State Exchanges must require their direct enrollment entities
to implement

[[Page 82651]]

and prominently display changes adopted for display on the State
Exchanges' websites, consistent with the process of defining and
communicating standards and setting advance notice periods in paragraph
(b)(6) of this section, except that all references to ``Federally-
facilitated Exchange website'' would be understood to mean ``State
Exchange website'' and references to ``HHS'' would be understood to
mean ``State Exchange'' in paragraph (b)(6) of this section.
0
15. Section 155.302 is amended by revising paragraph (a)(1) to read as
follows:

Sec. 155.302 Options for conducting eligibility determinations.

(a) * * *
(1) Directly, through contracting arrangements in accordance with
Sec. 155.110(a) under which the Exchange carries out all eligibility
determinations for QHP coverage and related insurance affordability
programs; or, as a State-based Exchange on the Federal platform,
through a Federal platform agreement under which HHS carries out
eligibility determinations and other requirements contained within this
subpart; or
* * * * *
0
16. Section 155.305 is amended by adding paragraphs (f)(4)(i) and (ii)
to read as follows:

Sec. 155.305 Eligibility standards.

* * * * *
(f) * * *
(4) * * *
(i) 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 1
year for which tax data would be utilized for verification of household
income and family size in accordance with Sec. 155.320(c)(1)(i), 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 as required by
26 U.S.C. 6011, 6012, and their implementing regulations and reconcile
APTC for that period, the Exchange must send a notification, consistent
with the standards applicable to the protection of Federal Tax
Information to the tax filer, that informs the tax filer that the
Exchange has determined that the tax filer or the tax filer's spouse,
if the tax filer is part of a married couple, has failed to file and
reconcile, and educate the tax filer 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. Only the FTR Open
Enrollment notices sent directly to the tax filer may directly state
that the IRS data indicates the tax filer failed to file and reconcile.
(ii) [Reserved]
* * * * *
0
17. Section 155.315 is amended by revising paragraph (e) to read as
follows:

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

* * * * *
(e) Verification of incarceration status. The Exchange must verify
an applicant's attestation that the applicant meets the requirements of
Sec. 155.305(a)(2) by--
(1) Accepting an applicant's attestation that they are not
currently incarcerated; or
(2) Verifying an applicant's attestation of incarceration status
using any electronic data source that is available to the Exchange and
which has been approved by HHS for this purpose. HHS will approve an
electronic data source for incarceration verification if it provides
data that are current and accurate, and if its use minimizes
administrative costs and burdens.
(3) If an Exchange verifies an applicant's attestation of
incarceration status using an approved data source under paragraph
(e)(2) of this section, to the extent that an applicant's attestation
is not reasonably compatible with information from the approved data
source or other information provided by the applicant or in the records
of the Exchange, the Exchange must follow the procedures specified in
Sec. 155.315(f).
* * * * *
0
18. Section 155.320 is amended by adding paragraph (c)(1)(iii) to read
as follows.

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

* * * * *
(c) * * *
(1) * * *
(iii) Payment to use income data through the Verify Current Income
Hub service. Beginning July 1, 2024, State Exchanges that elect the
option to access the Verify Current Income service through the Federal
Data Services Hub (``the Hub'') to verify an individual's income as
described in paragraph (c)(3)(vi)(A) of this section, must pay an
annual advanced payment to HHS, in the timeframe and manner established
by HHS, for use of the income data provided by the Verify Current
Income Hub service equal to the product of the anticipated number of
purchased transactions returned from the Verify Current Income Hub
service and the price per transaction established under the contract
maintained by HHS to provide the VCI Hub service. Participating States
would be required to reconcile with HHS on an annual basis the
anticipated utilization of CSI data provided by the VCI Hub service
with the actual utilization.
* * * * *
0
19. Section 155.330 is amended by revising paragraph (d)(3) to read as
follows:

Sec. 155.330 Eligibility redetermination during a benefit year.

* * * * *
(d) * * *
(3) Definition of periodically. (i) Beginning with the 2021
calendar year, the Exchange must perform the periodic examination of
data sources described in paragraphs (d)(1)(ii) of this section at
least twice in a calendar year. State Exchanges that have implemented a
fully integrated eligibility system with their respective State
Medicaid programs, that have a single eligibility rules engine that
uses MAGI to determine eligibility for advance payments of the premium
tax credit, cost-sharing reductions, Medicaid, CHIP, and the BHP, if a
BHP is operating in the service area of the Exchange, will be deemed in
compliance with the Medicaid/CHIP PDM requirements and, if applicable,
BHP PDM requirements, in paragraphs (d)(1)(ii) and (d)(3) of this
section.
(ii) Beginning with the 2025 calendar year, the Exchange must
perform the periodic examination of data sources described in paragraph
(d)(1)(i) of this section at least twice in a calendar year.
(iii) Notwithstanding the requirements of paragraphs (d)(3)(i) and
(ii) of this section, the Secretary has authority to temporarily
suspend the requirement that Exchanges conduct the PDM processes
described at paragraphs (d)(3)(i) or (ii) of this section during
certain situations or circumstances that lead to the unavailability of
data needed to conduct PDM.
* * * * *
0
20. Section 155.335 is amended by--
0
a. Revising paragraphs (j)(1)(ii) through (iv);
0
b. Adding paragraph (j)(1)(v);
0
c. Revising paragraphs (j)(2)(i) through (iii); and
0
d. Adding paragraphs (j)(2)(iv) and (j)(5).
The revisions and additions read as follows:

Sec. 155.335 Annual eligibility redetermination.

* * * * *
(j) * * *

[[Page 82652]]

(1) * * *
(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 coverage level as described in sections
1302(d) or (e) of the ACA as the enrollee's current QHP that has the
most similar network compared to the enrollee's current QHP;
(iii) If the enrollee's current QHP is not available through the
Exchange and the enrollee's product no longer includes a QHP at the
same coverage level as described in sections 1302(d) or (e) of the ACA
as the enrollee's current QHP and--
(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 coverage
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 coverage level higher or lower than the enrollee's current
QHP and that has the most similar network compared to the enrollee's
current QHP;
(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 coverage level as described in sections 1302(d) or (e) of the
ACA as, or one coverage 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; or
(v) Notwithstanding the other provisions in paragraph (j)(1) of
this section, if the enrollee's current QHP is a catastrophic plan as
described in section 1302(e) of the ACA, and the enrollee will no
longer meet the criteria for enrollment in a catastrophic plan as
described in section 1302(e)(2) of the ACA:
(A) The Exchange will re-enroll the enrollee in a bronze metal
level QHP within the same product as the enrollee's current QHP that
has the most similar network compared to the enrollee's current QHP; or
(B) If no bronze plan is available through this product, the
Exchange will re-enroll the enrollee in the QHP with the lowest
coverage level 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) * * *
(i) The Exchange will re-enroll the enrollee in a QHP at the same
coverage 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 similar network compared to the
enrollee's current QHP;
(ii) If the issuer does not offer another QHP at the same coverage
level as the enrollee's current QHP, the Exchange will re-enroll the
enrollee in a QHP that is one coverage 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;
(iii) If the issuer does not offer another QHP through the Exchange
at the same coverage 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; or
(iv) Notwithstanding the other provisions in paragraph (j)(2) of
this section, if the enrollee's current QHP is a catastrophic plan as
described in section 1302(e) of the ACA, and the enrollee will no
longer meet the criteria for enrollment in a catastrophic plan as
described in section 1302(e)(2) of the ACA:
(A) The Exchange will re-enroll the enrollee in a bronze metal
level 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; or
(B) If no bronze plan is available through this product, the
Exchange will re-enroll the enrollee in the QHP with the lowest
coverage level 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.
* * * * *
(5) For purposes of this section, catastrophic coverage is not a
coverage level that is considered higher or lower than metal level
coverage when re-enrolling an enrollee to a plan that is a metal level
higher or lower than their current plan, and an Exchange may not re-
enroll an enrollee that has coverage under section 1302(d) into
catastrophic coverage.
* * * * *
0
21. Section 155.400 is amended by revising paragraph (e)(2) to read as
follows:

Sec. 155.400 Enrollment of qualified individuals into QHPs.

* * * * *
(e) * * *
(2) Premium payment deadline extension. Exchanges may, and the
Federally-facilitated Exchanges and State-based Exchanges on the
Federal platform will, allow issuers experiencing billing or enrollment
problems due to high volume or technical errors, or issuers directed to
do so by applicable State or Federal authorities, to implement a
reasonable extension of the binder payment and other premium payment
deadlines.
* * * * *
0
22. Section 155.410 is amended by revising paragraph (e)(4)(ii) to read
as follows:

Sec. 155.410 Initial and annual open enrollment periods.

* * * * *
(e) * * *
(4) * * *
(ii) For State Exchanges, for the benefit years beginning on or
after January 1, 2025, a longer annual open enrollment period end date
may be adopted, such that the open enrollment period begins on November
1 of the calendar year preceding the benefit year and ends no earlier
than January 15 of the benefit year.
* * * * *
0
23. Section 155.420 is amended by revising paragraphs (b)(1), (b)(3)(i)
and (d)(16) to read as follows:

Sec. 155.420 Special enrollment periods.

* * * * *
(b) * * *
(1) Regular effective dates. Except as specified in paragraphs
(b)(2) and (3) of this section, for a QHP selection received by the
Exchange from a qualified individual, the Exchange must ensure a
coverage effective date of the first day of the month following the QHP
selection; except that before

[[Page 82653]]

January 1, 2025, for a QHP selection received by the Exchange from a
qualified individual between the sixteenth and the last day of any
month, the Exchange may ensure a coverage effective date of the first
day of the second month following QHP selection.
* * * * *
(3) * * *
(i) For a QHP selection received by the Exchange under a special
enrollment period for which the effective dates of coverage specified
in paragraph (b)(1) or (b)(2)(i) of this section would apply, the
Exchange may provide a coverage effective date that is earlier than
specified in such paragraph.
* * * * *
(d) * * *
(16) At the option of the Exchange, a qualified individual or
enrollee, or the dependent of a qualified individual or enrollee, who
is eligible for advance payments of the premium tax credit, and whose
household income, as defined in 26 CFR 1.36B-1(e), is expected to be at
or below 150 percent of the Federal poverty level, may enroll in a QHP
or change from one QHP to another one time per month.
* * * * *
0
24. Section 155.430 is amended by revising paragraph (b)(1)(iv)
introductory text and adding paragraph (b)(1)(iv)(D) to read as
follows:

Sec. 155.430 Termination of Exchange enrollment or coverage.

* * * * *
(b) * * *
(1) * * *
(iv) The Exchange must permit an enrollee to retroactively
terminate or cancel the enrollee's coverage or enrollment in a QHP in
the following circumstances, and State Exchanges may permit an enrollee
to retroactively terminate or cancel the enrollee's coverage or
enrollment in a QHP in accordance with paragraph (D):
* * * * *
(D) In a Federally-facilitated Exchange or a State-based Exchange
on the Federal platform, the enrollee demonstrates to the Exchange that
the enrollee enrolled in Medicare Part A or B coverage with a
retroactive effective date, and requests retroactive termination within
60 days of the enrollment. The effective date of the retroactive
termination must be no sooner than the day before the first day of
coverage under Medicare Part A or B.
* * * * *
0
25. Section 155.1050 is amended by revising paragraph (a) to read as
follows:

Sec. 155.1050 Establishment of Exchange network adequacy standards.

(a) Except with regard to multi-State plans:
(1) A Federally-facilitated Exchange must ensure that the provider
network of each QHP meets the standards specified in Sec. 156.230 of
this subtitle.
(2) State Exchanges and State-based Exchanges on the Federal
Platform must ensure that the provider network of each QHP meets
applicable standards specified in Sec. 156.230(a)(1)(ii), (a)(1)(iii)
and (a)(4) of this subtitle.
(i) For plan years beginning on or after January 1, 2025, to comply
with the requirement under paragraph (a)(2) of this section, State
Exchanges and State-based Exchanges on the Federal platform must:
(A) Establish and impose network adequacy time and distance
standards for QHPs that are at least as stringent as standards for QHPs
participating on the Federally-facilitated Exchanges under Sec.
156.230(a)(2)(i)(A) of this subtitle;
(B) Conduct, prior to QHP certification, quantitative network
adequacy reviews to evaluate compliance with requirements under Sec.
156.230(a)(1)(ii), (a)(1)(iii), and (a)(2)(i)(A) of this subtitle,
while providing QHP certification applicants the flexibilities
described under Sec. 156.230(a)(2)(ii) and (a)(3) and (4) of this
subtitle; and
(C) Require that all issuers seeking certification of a plan as a
QHP submit information to the Exchange reporting whether or not network
providers offer telehealth services.
(ii) HHS may grant an exception to the requirements described under
paragraph (a)(2)(i) of this section to a State Exchange or State-based
Exchange on the Federal platform that demonstrates with evidence-based
data, in a form and manner specified by HHS, that:
(A) the Exchange applies and enforces alternate quantitative
network adequacy standards that are reasonably calculated to ensure a
level of access to providers that is as great as that ensured by the
Federal network adequacy standards established for QHPs under Sec.
156.230 of this subtitle; and
(B) the Exchange evaluates whether plans comply with applicable
network adequacy standards prior to certifying any plan as a QHP.
* * * * *
0
26. Section 155.1312 is amended by adding paragraph (c)(3) to read as
follows:

Sec. 155.1312 State public notice requirements.

* * * * *
(c) * * *
(3) Such public hearings shall be conducted in an in-person,
virtual (that is, one that uses telephonic, digital, and/or web-based
platforms), or hybrid (that is, one that provides for both in-person
and virtual attendance) format.
* * * * *
0
27. Section 155.1320 is amended by revising paragraph (c) introductory
text to read as follows:

Sec. 155.1320 Monitoring and compliance.

* * * * *
(c) Post award. Within at least 6 months after the implementation
date of a section 1332 waiver and annually thereafter, a State must
hold a public forum to solicit comments on the progress of a section
1332 waiver. The State must hold the public forum at which members of
the public have an opportunity to provide comments and must provide a
summary of the forum to the Secretary as part of the quarterly report
specified in Sec. 155.1324(a) that is associated with the quarter in
which the forum was held, as well as in the annual report specified in
Sec. 155.1324(b) that is associated with the year in which the forum
was held. The public forum shall be conducted in an in-person, virtual
(that is, one that uses telephonic, digital, and/or web-based
platforms), or hybrid (that is, one that provides for both in-person
and virtual attendance) format.
* * * * *

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

0
28. 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
29. Section 156.111 is amended by revising paragraphs (a), (b)(2), and
(e)(2) and (3) to read as follows:

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

(a)(1) Subject to paragraphs (b) through (e) of this section, for
plan years beginning on or after January 1, 2020 through December 31,
2026, a State may change its EHB-benchmark plan by:
(i) Selecting the EHB-benchmark plan that another State used for
the 2017 plan year under Sec. Sec. 156.100 and 156.110;
(ii) Replacing one or more categories of EHBs established at Sec.
156.110(a) in the State's EHB-benchmark plan used for the 2017 plan
year with the same category or categories of EHB from the EHB-benchmark
plan that another State

[[Page 82654]]

used for the 2017 plan year under Sec. Sec. 156.100 and 156.110; or
(iii) Otherwise selecting a set of benefits that would become the
State's EHB-benchmark plan.
(2) Subject to paragraphs (b), (c), (d), and (e) of this section,
for plan years beginning on or after January 1, 2027, a State may
change its EHB-benchmark plan by selecting a set of benefits that would
become the State's EHB-benchmark plan.
(b) * * *
(2) Scope of benefits. (i) For plan years beginning on or after
January 1, 2020 through December 31, 2026:
(A) Provide a scope of benefits equal to the scope of benefits
provided under a typical employer plan (supplemented by the State as
necessary to provide coverage within each EHB category at Sec.
156.110(a)), defined as either:
(1) One of the selecting State's 10 base-benchmark plan options
established at Sec. 156.100, and available for the selecting State's
selection for the 2017 plan year; or
(2) The largest health insurance plan by enrollment within one of
the five largest large group health insurance products by enrollment in
the State, as product and plan are defined at Sec. 144.103 of this
subchapter, provided that:
(i) The product has at least 10 percent of the total enrollment of
the five largest large group health insurance products in the State;
(ii) The plan provides minimum value, as defined under Sec.
156.145;
(iii) The benefits are not excepted benefits, as established under
Sec. 146.145(b), and Sec. 148.220 of this subchapter; and
(iv) The benefits in the plan are from a plan year beginning after
December 31, 2013.
(B) Not exceed the generosity of the most generous among a set of
comparison plans, including:
(1) The State's EHB-benchmark plan used for the 2017 plan year, and
(2) Any of the State's base-benchmark plan options for the 2017
plan year described in Sec. 156.100(a)(1), supplemented as necessary
under Sec. 156.110.
(ii) For plan years beginning on or after January 1, 2027, provide
a scope of benefits that is equal to the scope benefits of a typical
employer plan in the State. The scope of benefits in a typical employer
plan in a State is any scope of benefits that is as or more generous
than the scope of benefits in the least generous plan (supplemented by
the State as necessary to provide coverage within each EHB category at
Sec. 156.110(a)), and as or less generous than the scope of benefits
in the most generous plan in the State (supplemented by the State as
necessary to provide coverage within each EHB category at Sec.
156.110(a)), among the following:
(A) One of the selecting State's 10 base-benchmark plan options
established at Sec. 156.100, and available for the selecting State's
selection for the 2017 plan year; or
(B) The largest health insurance plan by enrollment within one of
the five largest large group health insurance products by enrollment in
the State, as product and plan are defined at Sec. 144.103 of this
subchapter, provided that:
(1) The product has at least 10 percent of the total enrollment of
the five largest large group health insurance products in the State;
(2) The plan provides minimum value, as defined under Sec.
156.145;
(3) The benefits are not excepted benefits, as established under
Sec. 146.145(b), and Sec. 148.220 of this subtitle; and
(4) The benefits in the plan are from a plan year beginning after
December 31, 2013.
* * * * *
(e) * * *
(2) An actuarial certification and an associated actuarial report
from an actuary, who is a member of the American Academy of Actuaries,
in accordance with generally accepted actuarial principles and
methodologies, that affirms that the State's EHB-benchmark plan
complies with the applicable scope of benefits requirements at
paragraph (b)(2) of this section.
(3) The State's EHB-benchmark plan document that reflects the
benefits and limitations, including medical management requirements, a
schedule of benefits and, if the State is changing the number of
prescription drugs pursuant to Sec. 156.122(a)(1)(ii), a formulary
drug list in a format and manner specified by HHS; and
* * * * *
0
30. Section 156.115 is amended by revising paragraph (d) to read as
follows:

Sec. 156.115 Provision of EHB.

* * * * *
(d) An issuer of a plan offering EHB may not include routine non-
pediatric eye exam services, long-term/custodial nursing home care
benefits, or non-medically necessary orthodontia as EHB.
0
31. Section 156.122 is amended by adding paragraphs (a)(3)(i)(E) and
(f) to read as follows:

Sec. 156.122 Prescription drug benefits.

(a) * * *
(3) * * *
(i) * * *
(E) For plan years beginning on or after January 1, 2026, include a
consumer representative who must:
(1) Represent the consumer perspective as a member of the P&T
committee.
(2) Have an affiliation with and/or demonstrate active
participation in consumer or community-based organizations.
(3) Have experience in the analysis and interpretation of complex
data and be able to understand its public health significance.
(4) Have no fiduciary obligation to a health facility or other
health agency and have no material financial interest in the rendering
of health services.
* * * * *
(f) If a health plan covers prescription drugs in excess of the
prescription drugs required to be covered under paragraph (a)(1) of
this section, the additional prescription drugs are considered an
essential health benefit and subject to the cost-sharing requirements
at Sec. 156.130, unless coverage of the drug is mandated by State
action and is in addition to an essential health benefit pursuant to
Sec. 155.170, in which case the drug would not be considered an
essential health benefit.
0
32. Section 156.202 is amended by adding paragraphs (d) and (e) to read
as follows:

Sec. 156.202 Non-standardized plan option limits.

* * * * *
(d) For plan year 2025 and subsequent years, an issuer may offer
additional non-standardized plan options per product network type,
metal level, inclusion of dental and/or vision benefit coverage, and
service area if it demonstrates that these additional plans' cost
sharing for benefits pertaining to the treatment of chronic and high-
cost conditions (including benefits in the form of prescription drugs,
if pertaining to the treatment of the condition(s)) is at least 25
percent lower, as applied without restriction in scope throughout the
plan year, than the cost sharing for the same corresponding benefits in
an issuer's other non-standardized plan option offerings in the same
product network type, metal level, and service area. The reduction must
not be limited to a part of the year, or an otherwise limited scope of
benefits, and the reduced cost sharing for these benefits cannot be
conditioned on a consumer having a particular diagnosis. Chronic and
high-cost

[[Page 82655]]

conditions that may qualify an issuer for this exception will be
determined by HHS.
(e) An issuer that seeks to utilize this exceptions process is
required to submit a written justification in a form and manner and at
a time prescribed by HHS that:
(1) Identifies the specific condition(s) for which cost sharing is
reduced;
(2) Explains which benefit(s) would have reduced annual enrollee
cost sharing (as opposed to reduced cost sharing for a limited number
of visits) for the treatment of the specified condition(s) relative to
the same corresponding benefits in an issuer's other non-standardized
plan offerings in the same product network type, metal level, and
service area; and
(3) Explains how the reduced cost sharing for these benefits
pertain to clinically indicated guidelines for treatment of the
specified chronic and high-cost condition(s).
0
33. Section 156.520 is amended by revising paragraph (f) to read
follows:

Sec. 156.520 Loan terms.

* * * * *
(f) Conversions and voluntary terminations. (1) The loan recipient
shall not convert or sell to a for-profit or non-consumer operated
entity at any time after receiving a loan under this subpart. The loan
recipient shall not undertake any transaction that would result in the
CO-OP implementing a governance structure that does not meet the
standards in this subpart.
(2) CMS may, in its sole discretion, approve a request by a loan
recipient to voluntarily terminate its loan agreement with CMS, and
cease to constitute a QNHII, for the purpose of permitting a loan
recipient to pursue innovative business plans that are not otherwise
consistent with the requirements of this subpart, provided that all
outstanding CO-OP loans issued to the loan recipient are repaid in full
prior to termination of the loan agreement, and CMS believes granting
the request would meaningfully enhance consumer access to quality,
affordable, member-focused, non-profit health care options in affected
markets.
0
34. Section 156.1215 is amended by revising paragraphs (b) and (c) to
read as follows:

Sec. 156.1215 Payment and collections processes.

* * * * *
(b) Netting of payments and charges for later years. As part of its
payment and collections process, HHS may net payments owed to issuers
and their affiliates operating under the same tax identification number
against amounts due to the Federal government from the issuers and
their affiliates under the same taxpayer identification number for
advance payments of the premium tax credit, advance payments of and
reconciliation of cost-sharing reductions, payment of Federally-
facilitated Exchange user fees, payment of State Exchanges utilizing
the Federal platform user fees, HHS risk adjustment, reinsurance, and
risk corridors payments and charges, and administrative fees for
utilizing the Federal Independent Dispute Resolution process in
accordance with Sec. 149.510(d)(2).
(c) Determination of debt. Any amount owed to the Federal
government by an issuer and its affiliates for advance payments of the
premium tax credit, advance payments of and reconciliation of cost-
sharing reductions, Federally-facilitated Exchange user fees, including
any fees for State-based Exchanges utilizing the Federal platform, HHS
risk adjustment, reinsurance, risk corridors, and unpaid administrative
fees for utilizing the Federal Independent Dispute Resolution process
in accordance with Sec. 149.510(d)(2), after HHS nets amounts owed by
the Federal government under these programs, is a determination of a
debt.

Xavier Becerra,
Secretary, Department of Health and Human Services.
Lily L. Batchelder,
Assistant Secretary of the Treasury (Tax Policy), Department of the
Treasury.
[FR Doc. 2023-25576 Filed 11-16-23; 4:15 pm]
BILLING CODE 4120-01-P